/raid1/www/Hosts/bankrupt/TCR_Public/230331.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 31, 2023, Vol. 27, No. 89
Headlines
11680 ROYAL RIDGE: Unsecureds Owed $283K Unimpaired in Plan
2377 NW KEARNEY: Taps The Francis Group as Loan Placement Agent
300 BROADWAY: Case Summary & Two Unsecured Creditors
307 ASSETS LLC: Says 2nd Mortgagee Objections Resolved
5280 AURARIA: Property Sale Proceeds to Fund Plan
67 BROADWAY: Amends US Bank & LBHoney Secured Claims Pay Details
9TH & 10TH STREET: Owner of Historic NY Building Enters Chapter 11
ACADIA HEALTHCARE: Moody's Ups CFR to Ba2 & Unsecured Notes to Ba3
AIR CANADA: Fitch Alters Outlook on 'B+' LongTerm IDR to Positive
AKOUSTIS TECHNOLOGIES: Appoints W Greig CEO to Board
ALL AMERICAN BLACK: Seeks Cash Collateral Access
ASURION LLC: Owl Rock III Marks $15M Loan at 23% Off
ASURION LLC: Owl Rock III Marks $5M Loan at 22% Off
BASIS TEXAS: Moody's Upgrades Rating on Education Bonds to Ba2
BERWICK CLINIC: PCO Says Patient Care 'Compromised'
BERWICK HOSPITAL: Maintains Patient Care Quality, PCO Says
BIG DADDY: Gun Shop Starts Subchapter V Case
BIOPLAN USA: Moody's Hikes CFR to Caa1, Outlook Stable
BLUE SEVEN LLC: Seeks Cash Collateral Access
BRAINERD INDUSTRIES: Files for Chapter 11 Bankruptcy
CALIFORNIA-NEVADA METHODIST: 3 Creditors Out as Committee Members
CANADIAN HOSPITAL: Blackstone Fund Marks CAD10.5M Loan at 32% Off
CARVANA CO: Moody's Lowers CFR to 'Ca', Outlook Negative
CBC RESTAURANT: SSCP Seeks Chapter 11 Trustee Appointment
CENTURION PIPELINE: Moody's Puts 'B1' CFR on Review for Upgrade
CFCRE COMMERCIAL 2011-C2: Moody's Cuts Rating on Cl. D Certs to B1
CINEWORLD PLC: Regal Cinemas Closes Portland Theater
COCOMOES LLC: Seeks to Tap Darby Law Practice as Bankruptcy Counsel
CODIAK BIOSCIENCES: Seeks Cash Collateral Access
COOK & BOARDMAN: Blackstone Fund Marks $49M Loan at 15% Off
COOPER'S HAWK: Moody's Lowers CFR to Caa2, Outlook Stable
COSMOS HEALTH: Secures EUR4.1 Million Promissory Note From Cana
CYPRESS COVE: Fitch Affirms 'BB+' IDR, Outlook Stable
DIAMOND SPORTS: U.S. Trustee Appoints Creditors' Committee
DIOCESE OF ALBANY: Seeks to Tap Nolan Heller Kauffman as Counsel
DIOCESE OF ALBANY: Taps Donlin Recano as Claims and Noticing Agent
DIOCESE OF ALBANY: Taps Keegan Linscott as Financial Advisor
DIOCESE OF SANTA ROSA: U.S. Trustee Appoints Creditors' Committee
DIVERSIFIED MEDICAL: Seeks $5MM DIP Loan from Bay Point
DMD SERVICES: Seeks to Hire Rittenhouse as Real Estate Appraiser
EASCO BOILER: Court Confirms Liquidating Plan
EVERGLADES CITY: Voluntary Chapter 11 Case Summary
FARADAY FUTURE: Inks 7th Amendment to 2022 Purchase Agreement
FREE SPEECH SYSTEMS: Meets Test as Small Business in Chapter 11
FTX TRADING: Fee Examiner Taps Godfrey & Kahn as Legal Counsel
FUTURE VALUE: Unsecureds to Get Quarterly Payments with 4% Interest
GARDNER-WEBB UNIVERSITY: Moody's Affirms 'Ba1' Issuer Rating
GENOCEA BIOSCIENCES: To Seek Plan Confirmation on May 10
GREAT LAKES: S&P Downgrades ICR to 'CCC+', Outlook Negative
GREEN POINT: Voluntary Chapter 11 Case Summary
GREEN ROADS: Seeks Approval to Hire Dentons as Bankruptcy Counsel
GWG HOLDINGS: Unsecureds to Get Series B WDT Interests
HERC HOLDINGS: Moody's Ups CFR to Ba2 & Sr. Unsecured Notes to Ba3
HISTORIA INSPIRED: Taps Steidl & Steinberg as Bankruptcy Counsel
IHEARTCOMMUNICATIONS INC: Moody's Alters Outlook on B2 CFR to Neg.
INSPIRED ENTERTAINMENT: Fitch Hikes LongTerm IDR to 'B'
JONES DESLAURIES: Blackstone Fund Marks CAD86.3M Loan at 31% Off
KCW GROUP: Files for Chapter 11 to Stop Foreclosure
KCW GROUP: May 2 Hearing on Plan & Disclosures
KREATIIVELY KREATIVE: Seeks to Tap DeMarco-Mitchell as Counsel
LABL INC: Moody's Rates New $300MM Secured Notes 'B2'
LAKEVIEW VILLAGE: Fitch Affirms BB+ Rating on 2017A/2018A Bonds
LASHLINER INC: Unsecureds Owed $2M Get Share of Income
LAURA'S ORIGINAL: Seeks to Hire Franklin Soto Leeds as Counsel
LEVEL 3 FINANCING: Moody's Rates New 1st Lien Secured Notes 'Ba2'
LIFETIME BRANDS: Moody's Cuts CFR to B2 & Secured Term Loan to B3
LUCKY BUCKS: Moody's Cuts CFR to 'Caa3', Outlook Negative
M RENTAL BROOKLYN: Taps Law Offices of Avrum J. Rosen as Counsel
MARCH ON HOSPITALITY: Seeks to Use $2.443MM of Cash Collateral
MERIDIAN RESTAURANTS: Taps Keen-Summit as Real Estate Advisor
MERIDIAN RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
MIDTOWN DEVELOPMENT: Black's Building Bankruptcy Sale Challenged
MOVIMIENTO PENTECOSTAL: No Objections Filed, Amended Plan Okayed
NATIONAL CINEMEDIA: Unit Amends Indenture to Extend Grace Period
NETFLIX INC: Moody's Withdraws 'Ba1' CFR, Outlook Positive
NEW ORLEANS CREMATION: Seeks to Hire Cloreece Knight as Accountant
NIGHTMARE GRAPHICS: Seeks to Hire The Coyle Law Group as Counsel
NORTH SHORE ASSOCIATES: U.S. Trustee Appoints Leah McMahon as PCO
OLYMPIA SPORTS: Seeks Approval of Disclosure Statement
OLYMPIA SPORTS: Unsecureds Owed $73M to Get 10% to 15% in Plan
ORIGINCLEAR INC: Reports Unregistered Sales of Equity Securities
OUTERSTUFF LLC: S&P Downgrades ICR to 'CCC-', Outlook Negative
PARFUMS HOLDING: Moody's Rates New Senior Secured Debt 'B3'
PERFORMANCE POWERSPORTS: $10MM DIP Loan from Tankas Funding OK'd
PLANDAI BIOTECH: Incurs $1.1M Loss for Quarter Ended Sept. 30, 2016
POINT BUCKLER: Seeks to Hire Marc Voisenat as Bankruptcy Counsel
PREMIER CAJUN: Seeks to Hire Cole Schotz as Bankruptcy Counsel
PREMIER CAJUN: Seeks to Hire Holland & Knight as Legal Counsel
PREMIER CAJUN: Taps Aurora Management Partners as Financial Advisor
PROFRAC HOLDINGS II: Moody's Affirms 'B2' CFR, Outlook Stable
PWM PROPERTY: HNA Group Says Plan Ignores Equity Cushion
QUARTZ HOLDING: Moody's Affirms 'B3' CFR, Outlook Remains Stable
R&W CLARK: Seeks to Hire Ziegler & Associates as Accountant
RDX TECHNOLOGIES: U.S. Trustee Unable to Appoint Committee
REPC HOLDINGS: Taps Nelson Mullins Riley & Scarborough as Counsel
REVERSE MORTGAGE: Unsecureds Owed $226M Get 2.7% to 6.1% Under Plan
SERTA SIMMONS: Disclosure Objections Consensually Resolved
SERTA SIMMONS: Ongoing Unsecureds to Get 100% in Plan
SHEFA LLC: Plan Disclosures Deadline Extended to April 10
SIGNIFY HEALTH: Moody's Withdraws B1 CFR Following Debt Repayment
SILVER STATE: Trustee Taps Garman Turner Gordon as Legal Counsel
SIXTH AVE RETAIL: 735 Sixth Avenue Property Auction Set for May 3
SOURCEWATER INC: Kicks Off Subchapter V Proceeding
STARRY GROUP: U.S. Trustee Says Plan Has a "Death Trap"
STS OPERATING: Moody's Ups CFR & Secured 1st Lien Term Loan to B2
SUPERIOR EMERGENCY: Case Summary & Six Unsecured Creditors
SUREFUNDING LLC: Creditors to Get Proceeds From Liquidation
SURRENDER SOLUTIONS: Files Emergency Bid to Use Cash Collateral
SVB FINANCIAL GROUP: U.S. Trustee Appoints Creditors' Committee
T-ROLL CONSTRUCTION: Seeks Cash Collateral Access
TENET HEALTHCARE: Fitch Affirms LongTerm IDR at B+, Outlook Stable
TGP HOLDINGS III: Moody's Lowers CFR to 'Caa1', Outlook Neg.
TIMBERSTONE 4038T: Taps Law Offices of Stuppi & Stuppi as Counsel
TKEES INC: Flip Flops Maker Hits Chapter 11 Bankruptcy
TKEES INC: Seeks to Hire Shraiberg Page as Bankruptcy Counsel
TPC GROUP: Appoints New Executives After Emerging from Bankruptcy
UKG INC: Moody's Affirms 'B2' CFR, Outlook Remains Negative
UNITED FURNITURE: Trustee Taps NC Eminent Domain as Special Counsel
USA ROOFING: Disposable Income to Fund Plan
VEREGY CONSOLIDATED: Blackstone Fund Marks $20.8M Loan at 18% Off
WALKER EDISON: Owl Rock III Marks $25.5M Loan at 49% Off
WBS CAPITAL: Owner of $35-Mil. NY Property Seeks Chapter 11
WESTBANK HOLDINGS: Sole Member Submits Chapter 11 Plan
WICHITA HOOPS: Seeks Cash Collateral Access
YIELD10 BIOSCIENCE: Registers 247,210 Shares Under 2018 Plan
[^] BOOK REVIEW: PANIC ON WALL STREET
*********
11680 ROYAL RIDGE: Unsecureds Owed $283K Unimpaired in Plan
-----------------------------------------------------------
11680 Royal Ridge Mob1 SPE, LLC, submitted an Amended Disclosure
Statement for the Plan of Reorganization.
The Debtor is a Georgia-based company that owns a commercial rental
property located at 11680 Great Oaks Way, Alpharetta, Georgia
30022. The Property is a medical office building. 11680 Royal
Ridge MEZZ, LLC (the "Sole Member") is the Sole Member and Manager
of the Debtor. 11680 Royal Ridge JV, LLC is the Manager of the Sole
Member (the "Sole Member's Manager"). Scott Honan is the Manager of
the Sole Member's Manager. Mr. Honan has over 22 years of
experience successfully managing medical office buildings in metro
Atlanta, Texas, Florida, and Tennessee.
The Debtor has now secured tenants for 100% of the Property and
currently approximately half of the building is occupied. The
Debtor anticipates that tenants will begin paying rent in June
2023, after the refinance has closed.
The plan provides for the payment in full of all secured, priority,
and general unsecured claims (except for the claims of the Honan
Entities) and retention of equity interests.
The Debtor estimates, based on its schedules and proofs of claims
that have been filed, that there will be approximately $283,107.23
in allowed general unsecured claims, excluding the Honan Entities.
The Debtor proposes to pay General Unsecured Claims with
post-petition interest in full on the Effective Date.
Under the Plan, Class 3 General Unsecured Claims is unimpaired and
deemed to accept the Plan.
The Debtor has secured a bridge-to-permanent loan with A10 Capital
("A10"). The initial advance under the loan is $42,900,000.
Attorneys for the Debtor:
Elizabeth Childers, Esq.
William A. Rountree, Esq.
Will Geer, Esq.
Benjamin R. Keck, Esq.
ROUNTREE LEITMAN KLEIN & GEER, LLC
Century Plaza I, 2987 Clairmont Road, Suite 350
Atlanta, GA 30329
Tel: (404) 584-1238
E-mail: wrountree@rlklglaw.com
wgeer@rlklglaw.com
echilders@rlkglaw.com
A copy of the Disclosure Statement dated March 24, 2023, is
available at https://bit.ly/3Zj9KHt from PacerMonitor.com.
About 11680 Royal Ridge Mob1 SPE
11680 Royal Ridge MOB1 SPE, LLC sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-57946) on
Oct. 3, 2022. In the petition signed by Scott C Honan, designated
manager, the Debtor disclosed up to $50 million in both assets and
liabilities.
Judge Paul Baisier oversees the case.
Will Geer, Esq., at Rountree, Leitman, Klein & Geer, LLC, is the
Debtor's counsel.
Morris, Manning & Martin, LLP is the attorney for lenders RGA
Reinsurance Company and RGA Real Estate Holdings, LLC.
2377 NW KEARNEY: Taps The Francis Group as Loan Placement Agent
---------------------------------------------------------------
2377 NW Kearney, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Oregon to employ Thomas Gilleese, a principal
at The Francis Group, as its loan placement agent.
The Debtor requires a loan placement agent to find financing for a
loan of approximately $1.05 million related to the property at 2377
NW Kearney St., Portland, Ore. Mr. Gilleese's services may also
include preparation, participation, and testimony in any
confirmation hearing.
Mr. Gilleese's commission rate for his services is 1.50 percent of
the amount of any loan procured by him from a lending source, due
and payable at the time the loan is closed. His hourly rate for
preparation for and testimony in court is $200.
Mr. Gilleese disclosed in a court filing that he is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The professional can be reached at:
Thomas Gilleese
The Francis Group
11018 SW 113th Terrace
Tigard, OR 97223
Telephone: (503) 753-1349
Email: Tomg.wamu@comcast.net
About 2377 NW Kearney
2377 NW Kearney, LLC, a company in Portland, Ore., filed a Chapter
11 petition (Bankr. D. Ore. Case No. 22-31209) on July 26, 2022,
with between $1 million and $10 million in both assets and
liabilities. Jacqueline Alexander, member, signed the petition.
Judge David W. Hercher oversees the case.
The Law Offices of Keith Y. Boyd and the Law Office of Conde Cox
serve as the Debtor's bankruptcy counsel and special counsel,
respectively.
300 BROADWAY: Case Summary & Two Unsecured Creditors
----------------------------------------------------
Debtor: 300 Broadway Healthcare Center, L.L.C.
2 University Plaza, Suite 600
Hackensack, NJ 07601
Case No.: 23-12643
Chapter 11 Petition Date: March 30, 2023
Court: United States Bankruptcy Court
District of New Jersey
Debtor's Counsel: Eric H. Horn, Esq.
A.Y. STRAUSS LLC
101 Eisenhower Parkway, Suite 412
Roseland, NJ 07068
Tel: 973-287-5006
Fax: 973-226-4104
Email: ehorn@aystrauss.com
Total Assets: $2,953,429
Total Liabilities: $784,374
The petition was signed by David Goldwasser as member of Manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/FEG5BAQ/300_Broadway_Healthcare_Center__njbke-23-12643__0001.0.pdf?mcid=tGE4TAMA
307 ASSETS LLC: Says 2nd Mortgagee Objections Resolved
------------------------------------------------------
307 Assets LLC submitted a response to the March 20, 2023 objection
filed by Sei Inseime LLC ("Second Mortgagee") to the Disclosure
Statement with respect to the Debtor's January 9, 2023 Chapter 11
Plan.
The Debtor points out that the Second Mortgagee's primary concern
is that since the Debtor has a close relationship with 307-309
Sixth Avenue LLC (the "First Mortgagee"), the Debtor may collude to
chill the bidding for 307-309 Sixth Avenue (the "Property") to
effectuate a reduced credit bid Property transfer. That has never
been the Debtor's intent. The Debtor's engagement of Meridian
Capital Group, LLC ("Meridian") under the direction of David
Schechtman should resolve all doubts. Meridian intends to implement
a transparent marketing plan that will yield the highest price the
market will bear.
The Debtor further points out that Meridian has agreed to create a
full offering memorandum, and then disseminate a teaser and
confidentiality agreement to more than 30,000 potential buyers.
Meridian will also use press and media outlets including foreign
language outlets to capture a global bidding pool. Meridian has
agreed further that after a week or two of marketing, they will
report in writing on a weekly basis updating the Debtor, the First
Mortgagee and the Second Mortgagee on the marketing progress and to
promptly convey any offers whether oral or in writing.
The Debtor asserts that against this background, the Debtor
respectfully submits that the Second Mortgagee's objections can be
resolved by revisions to the Disclosure Statement and or preserved
as Plan confirmation objections.
The Debtor points out that the Second Mortgagee's headline argument
is that "the Debtor has not addressed the potential merger of the
deed and note which would extinguish 307-309 Sixth Avenue LLC's
mortgage." The Debtor proposes to address this issue with the
following revision:
* The Second Mortgagee contends that the transfer of the
membership interests may have resulted in a merger of the deed and
note. The Debtor believes that the merger doctrine does not apply
because no mortgage was extinguished by the transfer of membership
interests as evidenced by the subsequent Supreme Court foreclosure
judgment. In addition, even if it were possible to vacate the
foreclosure judgment, the beneficial owner of 307-309 Sixth Owner
LLC has no "insider" relationship to the First Mortgagee, as the
term insider is defined by the Bankruptcy Code.
* After beneficial ownership of the Property was transferred to
307-309 Sixth Owner LLC, efforts were made to enhance the Property
value by advancing the Property's development prospects. Thus the
Debtor applied for zoning approval for development, as a
prerequisite to landmark commission approval and Department of
Buildings approval. The initial Department of Buildings application
incorrectly listed the First Mortgagee as owner. That mistake was
subsequently corrected.
The Debtor further points out that the Second Mortgagee argues that
"the relationship between the Debtor and 307-309 Sixth Avenue LLC,
the purported first mortgage holder ("First Mortgage Holder") is
not fully described." The Debtor proposes to address this issue
with the following revision:
* Recognizing that the Property was underwater, George
Filoupolos, the Debtor's beneficial owner agreed not to contest the
foreclosure and to transfer ownership to an entity friendly to the
Mortgagee. In June 2022, he thus transferred the Debtor's sole
membership interest from Emilio Holdings LLC to 307-309 Sixth Owner
LLC. 307-309 Sixth Owner LLC is the Debtor's sole member. The
Mortgagee released Mr. Filoupolos' personal guarantee in connection
with the transfer.
According to the Debtor, the Second Mortgagee argues that the
classes of creditors do not place creditors in classes as required
by section 1122 of the Bankruptcy Code because the Second Mortgagee
should be in the same class as the First Mortgagee. The Debtor
disagrees. Since the second mortgage is subordinate to the first
mortgage, the Second Mortgagee must be separately classified
because it is not entitled to the same priority payment as the
First Mortgagee. This is a plan confirmation issue.
The Debtor points out that the Second Mortgagee argues that "the
Plan pays administrative expenses before secured debt which without
a carve out is inappropriate and violates the provisions of the
Bankruptcy Code." On this point, the Debtor agrees that the Second
Mortgagee may be technically correct if the Property Sale Proceeds
exceed the First Mortgagee's lien. The Debtor proposes to defer the
carve out issue until the confirmation hearing, which will also be
the hearing on sale approval, by which time the purchase price will
be known.
The Debtor further points out that the Second Mortgagee argues that
"While not in the Plan, the source of funds for bankruptcy
counsel's legal fees state that payment was from the Debtor, but it
is unclear how and from whom the Debtor received the funds." The
Debtor proposes to address this issue with the following revision:
* This case was primarily filed to effectuate an orderly sale
of the Property with marketing pursuant to a Chapter 11 plan to
ensure a fair recovery for all parties in interest, including the
Second Mortgagee. Since the Debtor has no income, the First
Mortgagee loaned the Debtor the funds necessary to retain
Backenroth Frankel & Krinsky, LLP as bankruptcy attorneys and FIA
and David Goldwasser as CRO. The First Mortgagee has agreed to
subordinate its loans for fees paid to Debtor's counsel and
Debtor's Chief Restructuring Officer to all other claims in the
case.
The Debtor asserts that the Second Mortgagee found a typo in the
bidding increments section of the Sale Procedures. The Debtor
intended that bidding increments be $50,000, understanding that the
auctioneer will enjoy discretion to change the increments to
maximize the purchase price. With regard, to the other bidding
procedure comments, (a) Backenroth Frankel & Krinsky, LLP's IOLA
account is at Chase Bank, (b) the Sale Procedures state that after
the auction has concluded, the Debtor shall return deposits to all
bidders except the winning purchaser and the backup purchaser.
Counsel for the Debtor:
Mark Frankel, Esq.
BACKENROTH FRANKEL & KRINSKY, LLP
800 Third Avenue
New York, NY 10022
Tel: (212) 593-1100
About 307 Assets
307 Assets LLC is a single asset real estate as defined in 11
U.S.C. Section 101(51B). The company is the fee simple owner of a
property located at 307 Sixth Avenue New York, valued at $14.5
million.
307 Assets filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y.
Case No. 23-10027) on Jan. 9, 2023. In the petition signed by its
chief restructuring officer, David Goldwasser, the Debtor disclosed
$14,500,000 in assets and $22,699,338 in liabilities.
Judge James L. Garrity Jr. oversees the case.
Backenroth Frankel & Krinsky, LLP, led by Mark Frankel, Esq., is
the Debtor's counsel.
5280 AURARIA: Property Sale Proceeds to Fund Plan
-------------------------------------------------
5280 Auraria, LLC filed with the U.S. Bankruptcy Court for the
District of Colorado a Disclosure Statement to accompany First
Amended Plan of Reorganization dated March 27, 2023.
The Debtor is organized as a Delaware limited liability company.
Nelson Partners, LLC, a Utah limited liability company, is the
Member and Manager of the Debtor, and Patrick Nelson owns the
equity interests in Nelson Partners.
The Debtor owns certain real property located at 1051 14th Street,
Denver, Colorado 80202 and 1405 Curtis Street, Denver, Colorado
80202 (the "Real Property," also known as the "Auraria Student
Lofts"). The Auraria Student Lofts provides off-campus student
housing apartments near the University of Colorado – Denver,
Metropolitan State University, Denver Community College, and the
University of Denver. The Property has 125 rental units with 438
beds, occupying 153,860 square feet in downtown Denver.
The Debtor's only assets are the Real Property and fixtures and
leasing office equipment at the Real Property. Other than the
secured debts described, the Debtor's debts consist of legal fees,
ordinary course trade debt, and similar industry standard
obligations.
The primary driver of the Debtor's bankruptcy filing was the
foreclosure proceeding in Denver County District Court, Case No.
2022CV031030, filed by Fortress. The foreclosure sale date was set
for June 9, 2022 at 10 a.m. The Debtor commenced this bankruptcy
case on June 9, 2022, in order to prevent the foreclosure. Chapter
11 protection was necessary to preserve value for the benefit of
all stakeholders and to regain the Debtor's ability to provide
service to the student-tenants who reside at the Real Property.
The Debtor's Plan provides for the renovation and sale of the
principal asset of the Debtor, the Auraria Student Lofts, under
Chapter 11 of the Bankruptcy Code. Pursuant to the Plan, once the
Real Property has been liquidated, the Debtor shall distribute
funds to creditors in conformity with the Bankruptcy Code. The Plan
is a relatively simple Chapter 11 plan of reorganization.
Class 3 consists of Other General Unsecured Claims. Class 3 is
impaired under the Plan. The holders of Allowed Unsecured Claims in
Class 3 shall be paid from Net Sale Proceeds upon the closing of
the Sale in accordance with the Waterfall Recovery specified in
Section 4.05 of the Plan. For the avoidance of doubt, a Class 3
claimant shall not receive a greater amount under the Plan than the
amount of its Allowed Claim.
Class 4 consists of the prepetition member interest of Nelson
Partners, as the sole member and manager of the Debtor. Class 4 is
impaired under the Plan. Unless and until all Allowed Claims of a
higher priority are paid in full, the holder of the Class 4 Equity
Interest will receive no rights in respect of its ownership in the
Debtor. If the Allowed Unsecured Claims are paid in full, the Class
4 Equity Interest shall be paid the remaining Net Sale Proceeds.
Upon the Effective Date, the Estate's Assets shall vest with the
reorganized Debtor. The reorganized Debtor will complete
renovations on the Real Property, to the extent applicable, and
shall operate the Real Property consistent with the Debtor's
practices during the Chapter 11 case.
The Debtor's Real Property and associated Personal Property will be
sold and proceeds used to pay Allowed Claims and, if sufficient,
provide a return to the Class 4 Claim holder.
A full-text copy of the Disclosure Statement dated March 27, 2023
is available at https://bit.ly/3JZsy8H from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Michael J. Pankow, Esq.
Amalia Sax-Bolder, Esq.
BROWNSTEIN HYATT FARBER SCHRECK, LLP
410 17th Street, Suite 2200
Denver, CO 80202
Tel: (303) 223-1100
Fax: (303) 223-1111
E-mail: mpankow@bhfs.com
asax-bolder@bhfs.com
About 5280 Auraria
5280 Auraria, LLC, owns Auraria Student Lofts, a high-rise building
in downtown Denver aimed at providing housing for college students.
5280 Auraria's sole member and manager is Nelson Partners, LLC, a
Utah limited liability company. The individual principal is
Patrick Nelson.
5280 Auraria sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Case No. 22-12059) on June 9,
2022. In the petition filed by Patrick Nelson, as managing member,
the Debtor listed between $50 million and $100 million in both
assets and liabilities.
Judge Kimberley H. Tyson oversees the case.
Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP is
the Debtor's counsel.
67 BROADWAY: Amends US Bank & LBHoney Secured Claims Pay Details
----------------------------------------------------------------
67 Broadway Realty, LLC, submitted an Amended Disclosure Statement
in support of Chapter 11 Liquidation Plan dated March 27, 2023.
This is a liquidation plan. The Debtor will fund the Plan from the
sale of real estate owned in addition to cash on hand as of the
date of Confirmation. The Effective Date of the proposed Plan is
thirty days after entry of the order confirming the Plan unless the
Plan or confirmation order provides otherwise.
Class Two consists of a Secured Claim held US Bank Cust for Pro Cap
8. At the closing of the sale of the Property, US Bank Cust for Pro
Cap 8 ("PC8") tax sale certificate number 21- 03859 (the "Tax
Lien") shall be paid in full through the City of Paterson's tax
collector's office pursuant to the Tax Sale Law, N.J.S.A. 54:5-1 et
seq., and the redemptive amount (the "Redemptive Amount") of the
Tax Lien shall be calculated by the City of Paterson tax collector
as required by N.J.S.A. 54:5-60. The Debtor shall file a motion to
approve the sale of the Property to a buyer upon notice to PC8, and
shall include the foregoing language in an order approving the
sale. PC8's Tax Lien shall remain secured by the Property, and
shall not be discharged or subject to the discharge injunction,
until such time as the Redemptive Amount is paid in full.
In the event that the Debtor fails to complete the closing the sale
of the Property and pay the Redemptive Amount of PC8's Tax Lien on
or prior to October 1, 2023, PC8 is relieved from the terms and
conditions of the confirmation order, and any automatic stay in
effect is vacated pursuant to 11 U.S.C. 362(a), without further
order of the Court, to permit PC8 its successors and/or assigns to
constitute or resume and prosecute to conclusion one or more
action(s), including, but not limited to, foreclosure and eviction
proceedings, in the court(s) or appropriate jurisdiction to
foreclose the Tax Lien held by the PC8 upon the following: Lands
and premises known as: 67 Broadway, Paterson, NJ, Block 3710, Lot
13.
Class Four consists of a Secured Claim held LBHoney Badger,
SBMuni%Cust. At the closing of the sale of the Property, LBHoney
Badger, SBMuni%Cust's ("LBHB") tax sale certificate numbers 2019
001041, 20-01731 and 20-01728 (the "Tax Liens") shall be paid in
full through the City of Paterson's tax collector's office pursuant
to the Tax Sale Law, N.J.S.A. 54:5-1 et seq., and the redemptive
amount (the "Redemptive Amount") of the Tax Liens shall be
calculated by the City of Paterson tax collector as required by
N.J.S.A. 54:5-60. The Debtor shall file a motion to approve the
sale of the Property to a buyer upon notice to LBHB, and shall
include the foregoing language in an order approving the sale.
LBHB's Tax Liens shall remain secured by the Property, and shall
not be discharged or subject to the discharge injunction, until
such time as the Redemptive Amount is paid in full.
In the event that the Debtor fails to complete the closing the sale
of the Property and pay the Redemptive Amount of LBHB's Tax Liens
on or prior to October 1, 2023 (the "Sale Deadline"), LBHB is
relieved from the terms and conditions of the confirmation order,
and any automatic stay in effect is vacated pursuant to 11 U.S.C.
362(a), without further order of the Court, to permit LBHB its
successors and/or assigns to constitute or resume and prosecute to
conclusion one or more action(s), including, but not limited to,
foreclosure and eviction proceedings, in the court(s) or
appropriate jurisdiction to foreclose the Tax Liens held by the
LBHB upon the following: Lands and premises known as: (1) 65
Broadway, Paterson, NJ, Block 3710, Lot 14; and (2) 73 Broadway,
Paterson, NJ, Block 3710, Lot 11.
Class Five consists of a Secured Claim held LBHoney Badger,
SBMuni%Cust. At the closing of the sale of the Property, LBHoney
Badger, SBMuni%Cust's ("LBHB") tax sale certificate numbers 2019
001041, 20-01731 and 20-01728 (the "Tax Liens") shall be paid in
full through the City of Paterson's tax collector's office pursuant
to the Tax Sale Law, N.J.S.A. 54:5-1 et seq., and the redemptive
amount (the "Redemptive Amount") of the Tax Liens shall be
calculated by the City of Paterson tax collector as required by
N.J.S.A. 54:5-60. The Debtor shall file a motion to approve the
sale of the Property to a buyer upon notice to LBHB, and shall
include the foregoing language in an order approving the sale.
LBHB's Tax Liens shall remain secured by the Property, and shall
not be discharged or subject to the discharge injunction, until
such time as the Redemptive Amount is paid in full.
In the event that the Debtor fails to complete the closing the sale
of the Property and pay the Redemptive Amount of LBHB's Tax Liens
on or prior to October 1, 2023 (the "Sale Deadline"), LBHB is
relieved from the terms and conditions of the confirmation order,
and any automatic stay in effect is vacated pursuant to 11 U.S.C.
362(a), without further order of the Court, to permit LBHB its
successors and/or assigns to constitute or resume and prosecute to
conclusion one or more action(s), including, but not limited to,
foreclosure and eviction proceedings, in the court(s) or
appropriate jurisdiction to foreclose the Tax Liens held by the
LBHB upon the following: Lands and premises known as: (1) 65
Broadway, Paterson, NJ, Block 3710, Lot 14; and (2) 73 Broadway,
Paterson, NJ, Block 3710, Lot 11. To the extent that there has been
substantial progress in the closing of the sale of the property
(sale contract executed and/or closing scheduled), the Sale
Deadline shall be extended by mutual consent to allow the Debtor to
effectuate the sale.
The Plan will be funded from (i) funds on hand at the time of
Confirmation; and (ii) sale proceeds from the sale of the Debtor's
Property. The sale of the Debtor's Property shall be subject to
Court Authorization.
A full-text copy of the Amended Disclosure Statement dated March
27, 2023 is available at https://bit.ly/3M3vO5B from
PacerMonitor.com at no charge.
Debtor's Counsel:
Carlos D. Martinez, Esq.
SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA, LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: 973-696-8391
E-mail: cmartinez@scura.com
About 67 Broadway Realty
67 Broadway Realty LLC is a single asset real estate (as defined in
11 U.S.C. Sec. 101(51B)). 67 Broadway Realty LLC sought Chapter 11
bankruptcy protection (Bankr. D.N.J. Case No. 22-12713) on April 4,
2022. In the petition filed by Sandra Jaquez, as managing member,
the Debtor estimated assets and liabilities between $1 million and
$10 million. The case is assigned to Honorable Judge Vincent F.
Papalia. David L. Stevens, of Scura, Wigfield, Heyer & Stevens, is
the Debtor's counsel.
9TH & 10TH STREET: Owner of Historic NY Building Enters Chapter 11
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9th & 10th Street LLC filed for chapter 11 protection in the Middle
District of Florida.
This chapter 11 case has been filed to protect the Debtor's one and
only asset, its property located at 605 East 9th Street a/k/a 350
East 10 th Street, New York, New York 10009, while the Debtor
pursues valuable litigation claims against Bill DeBlasio, the City
of New York, billionaire Aaron Sosnick and numerous other parties,
for their tortious actions in preventing the Debtor from renovating
their existing building on the Property for their own personal and
political gain.
"What began as a hunch of impropriety over a decade ago has now
turned into a complex web of emails, letters, conversations, press
statements, and other actions that culminate into a multi-level
plan for one primary purpose: the City's re-acquisition of the
Property, so they can turn it over to Aaron Sosnick. Fueled by
powerful mega-political individual donors, these
efforts have stymied the Debtor's efforts to develop the property,
resulted in hundreds of millions of dollars in damages, caused a
historical building with opportunity and potential for both its
owner and its community to lay fallow and fall into disrepair, and
risk the loss of the Property to a mortgage foreclosure sale to the
detriment of the Debtor's numerous creditors, investors and
interest holders," the Debtor said in court filings.
The Property is a 5-story, 152,075 rentable square feet historic
property built in the early 1906 and operated as a public
elementary school (P.S. 64) from 1907 to 1977. In 1998 the Debtor
purchased the Property from the City of New York (the "City") at a
public auction, which sale closed on July 21, 1999. The Property
was sold with a deed restriction for a Community Facility Use
In late 2005 the Debtor moved forward with development of the
Property as a
college student dormitory, which is an "as of right" use. When the
Property was sold it included approximately 100,000 square feet of
valuable additional development rights. Although these rights
allowed for a 30-story dorm tower, the Debtor agreed -- at the
request of the NYC Landmarks Preservation Commission ("LPC") -- to
save the Old P.S. 64 façade and front half of the building and
construct a less imposing 19-story dorm, to which the Debtor
agreed.
The New York City Department of Buildings ("DOB") failed to grant
the request for a building permit. In 2006, the City "landmarked"
the Property and in 2008 the East village was “downzoned." The
landmarking of the Property as well as the downzoning had the same
result; they prevented the Debtor from adding any additional square
footage to the Property despite the 100,000 square feet of
development rights the Debtor previously acquired.
On Oct. 12, 2017, former Mayor De Blasio announced publicly that it
was in the City's interest to buy the Property and that it was a
mistake for the City (under a prior administration) to have sold
it.
On Jan. 24, 2018, the Debtor, together with other related parties,
filed an
action in United States District Court against the City, DOB, Mayor
De Blasio and others asserting violations of the First Amendment,
Equal Protection, Due Process, Conspiracy as well as state law
tortious interference claims. Ultimately in September of 2019, the
District Court granted the defendants Motion to Dismiss the Federal
Claims and declined to exercise supplemental jurisdiction over the
state law claims.
On October 19, 2020, the Debtor filed an action in state court
captioned Gregg Singer, Sing Fina Corp. and 9th & 10th Street LLC
v. Bill De Blasio, Aaron Sosnick, et.al., New York State Supreme
Court, New York County, 158766/2020 (the "TI Action"), asserting
the state law tortious interference claims which is currently
pending. The Debtor estimates the damages sought in the TI Action
to exceed $82,495,980 in actual damages and $26,801,352 in
lost cash flow, both of which have been calculated through February
28, 2023, and filed in the TI Action.
On March 20, 2023, the Plaintiffs in the TI Action moved the court
for leave to amend the complaint based on newly discovered
evidence. In the Second Amended Complaint, Plaintiffs allege that
the long running abuse by Sosnick and Michael Rosen, the founder of
EVCC, of the laws governing tax-exempt nonprofit groups—by
forming the East Village Community Coalition ("EVCC") to pursue a
"private benefit" of protecting their views – and thereafter
falsely presented EVCC as a "local non-profit" that was intended to
create the illusion of serving the interests of the community, when
in reality a sham front for their private interest. Moreover, the
Second Amended Complaint alleges that Sosnick and Rosen's
maintenance of EVCC as a tax-exempt charity through a pattern of
mail and wire fraud, and their consistent use of EVCC as a front
for their lobbying against the Property (which EVCC did not
disclose) – with their real goal being to coerce a distressed
sale by creating a nuisance at the Property -- checks every box of
a civil RICO claim under 18 U.S.C. Sec. 1962(c) and (d). The Second
Amended Complaint maintains that Civil racketeering claims are
especially appropriate against the Aaron Sosnick and his group of
lobbyists given Sosnick's use of his well-connected lobbyist to
present his cash offer of more than $50,000,000 to the City; his
encouragement of "behind the scenes" discussions at City Hall about
that offer; his personal inducement of the Mayor's public
statements to push the Property into foreclosure; and the City's
awareness of the risks caused by Sosnick's offer. The Second
Amended Complaint, in addition to treble damages under RICO also
seeks equitable relief in the form of building permit to allow the
Debtor to renovate the Property so that he can re-finance it
through either debt or equity. The motion to amend the complaint
is currently pending.
Goals of Chapter 11
The Debtor's primary goal is to develop the Property. To achieve
this the Debtor must (1) obtain a building permit, (2) restructure
and/ or refinance the secured debt on the Property, (3) secure a
tenant (or tenants) for the Property and (4) recover on its claim
in the TI Action Also, the Debtor must have access to the Property
which has been blocked by the City. After battling for two
decades, the Debtor finally has been able to conduct discovery and
obtain documentary proof of what really happened. The Debtor
believes that armed with the proof of this plot, its goals are
within reach and, it will finally be in a position to develop the
Property and realize its value such that all creditors can be paid
in full with a return to investors and equity holders.
It is the Debtor's fervent belief that by proceeding in this
manner, under the watchful eye of the Bankruptcy Court, it will be
able to squash the interference, back channeling and bad faith
tactics that have long plagued this project and achieve the best
outcome for all constituencies.
Alternatively, if the Debtor is unable to accomplish these goals,
it shall seek a sale of the Property under the supervision and with
the protection of the Bankruptcy Court, for the highest and best
price.
According to court filings, 9th & 10th Street estimates between
$100 million and $500 million in debt owed to 1 to 49 creditors.
The petition states that funds will be available to unsecured
creditors.
A teleconference meeting of creditors under 11 U.S.C. Section
341(a) is slated for April 27, 2023 at 1:00 p.m. at the Office of
UST.
About 9th & 10th Street LLC
9th & 10th Street LLC is a Single Asset Real Estate as defined in
11 U.S.C. Section 101(51B).
9th & 10th Street LLC filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10423) on March
21, 2023. In the petition filed by Gregg Singer, president of Sing
Fina Corp., Manager of the Debtor, the Debtor reported assets and
liabilities between $100 million and $500 million.
The Debtor is represented by:
Erica Feynman Aisner, Esq.
Kirby Aisner & Curley LLP
605 East 9th Street
New York, NY 10009
Email: eaisner@kacllp.com
ACADIA HEALTHCARE: Moody's Ups CFR to Ba2 & Unsecured Notes to Ba3
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Acadia Healthcare
Company, Inc.'s, including its Corporate Family Rating to Ba2 from
Ba3 and Probability of Default Rating to Ba2-PD from Ba3-PD.
Moody's also upgraded Acadia's senior secured ratings to Baa3 from
Ba1 and its senior unsecured ratings to Ba3 from B1. The rating
agency also changed Acadia's Speculative Grade Liquidity Rating to
SGL-1 from SGL-2. The rating outlook is stable.
The ratings upgrade reflects the ongoing deleveraging and improved
operating performance due to strong demand and volume growth at the
company. Organic growth has been between 3-4% over the past few
years. Acadia was still impacted by labor pressures impacting the
healthcare services industry, but peak contract labor has fallen
and the use of premium labor and wage inflation were manageable and
margins have been stable. Acadia continued to invest in its growth
through new facilities and partnerships to further build out its
geographic footprint while also maintaining very good liquidity.
The change in the Speculative Grade Liquidity Rating to SGL-1 from
SGL-2 considers Moody's expectation that Acadia will generate
positive free cash flow over the next year despite its heightened
capital investment in its operations. It is also underpinned by the
rating agency's expectation that Acadia will maintain good cash
balances and significant access to its revolving credit facility.
As of December 31, 2022, Acadia had about $100 million of cash and
access to about $525 million under its $600 million revolving
credit facility. The company has no near term debt maturities, with
its revolving credit facility set to expire in March 2026. Acadia
has a good mix of fixed to variable debt.
Upgrades:
Issuer: Acadia Healthcare Company, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Senior Secured Rev Term Loan, Upgraded to Baa3 (LGD2) from Ba1
(LGD2)
Senior Secured Revolving Credit Facility, Upgraded to Baa3 (LGD2)
from Ba1 (LGD2)
Senior Unsecured Global Notes, Upgraded to Ba3 (LGD5) from B1
(LGD5)
Outlook Actions:
Issuer: Acadia Healthcare Company, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The Ba2 CFR is supported by the company's large scale and good
business and geographic diversity within the domestic behavioral
healthcare industry. It is also supported by attractive industry
fundamentals including growing demand for services and increasing
willingness of payors, including governments, to pay for behavioral
health and addiction treatment services. The rating is further
underpinned by the company's strong operating cash flow and very
good liquidity.
The rating constrained by Acadia's reliance on government
reimbursement from Medicare and Medicaid and risks associated with
the rapid pace of growth through acquisitions, opening of new
facilities and the addition of new beds in existing facilities.
Despite labor pressures impacting most of the healthcare services
industry, Acadia was able to de-lever in 2022 with adjusted debt to
EBITDA of 2.5 times as of December 31, 2022. Moody's forecasts
Acadia will be able to maintain leverage below 2.5x while still
investing in its growth strategy.
The stable outlook reflects the non-elective nature of Acadia's
services, good scale and diversity by geography and behavioral
service line. It also reflects Moody's expectation that the company
will continue to operate with conservative financial policies.
The senior secured revolving credit facility and term loan are each
rated Baa3, or two notches above the Ba2 Corporate Family Rating.
The senior unsecured notes are rated Ba3, or one notch below the
CFR. The senior unsecured notes provide first loss absorption for
the senior secured classes in the event of a default.
ESG considerations have a moderately negative impact on Acadia's
rating (CIS-3). Acadia's credit impact score reflects highly
negative exposure to social risk (S-4) namely due to exposure to
government payors as it relates to demographic and societal trends
as well as customer relations serving a high-risk population.
Acadia has moderately negative exposure to environmental (E-3) and
governance (G-3) risks given its exposure to physical climate risks
with its locations in Puerto Rico, Florida and Texas and its
history of debt funded acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if debt to EBITDA is expected to be
sustained above 3.0 times, or if Moody's does not expect Acadia to
produce consistently positive free cash flow. Adverse reimbursement
developments could also result in a ratings downgrade. Moody's
could also downgrade the ratings if Acadia resumes more aggressive
financial policies with respect to the use of leverage for
acquisitions or shareholder returns.
The ratings could be upgraded if the company reduces and sustains
debt/EBITDA below 2.0 times while generating substantially higher
levels of free cash flow and balancing expansion opportunities and
acquisitions with debt reduction. Reduced reliance on Medicaid
would also support an upgrade.
Acadia is a provider of behavioral health care services. Acadia
provides psychiatric and chemical dependency services to its
patients in a variety of settings, including inpatient psychiatric
hospitals, residential treatment centers, outpatient clinics and
therapeutic school based programs. Acadia operates behavioral
health facilities spanning across the US and Puerto Rico. As of
December 31, 2022, Acadia generated LTM pro forma revenue of
approximately $2.6 billion.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
AIR CANADA: Fitch Alters Outlook on 'B+' LongTerm IDR to Positive
-----------------------------------------------------------------
Fitch Ratings has affirmed Air Canada's Long-Term Issuer Default
Rating at 'B+'. The Rating Outlook has been revised to Positive
from Negative.
The Outlook revision reflects an improving environment for travel
demand and reduced concerns around items such as elevated fuel
prices and prolonged impacts of inflation. Fitch expects
profitability at Air Canada to improve through 2023 and 2024, from
low levels in 2022, which was still heavily impacted by COVID-19.
YE 2022 leverage remains high for Air Canada's 'B+' rating on a
gross basis, but Fitch expects leverage to improve within its
negative sensitivity by YE 2024. Leverage remains more manageable
on a net basis due to Air Canada's healthy liquidity balance.
Air Canada's 'B+' rating is supported by quickly improving traffic
in Canada leading to better profit margins and normalizing credit
metrics. The company also benefits from a solid liquidity balance,
which provides protection in the case of a downturn. Air Canada
also retains sufficient financial flexibility from unencumbered
assets including its loyalty program, to support further capital
raises if needed.
KEY RATING DRIVERS
Rapid Recovery in Canadian Air Traffic: Canadian passenger traffic
experienced a sharp rebound over the course of 2022 after lagging
substantially behind the recovery in the U.S. Average daily
passenger counts in Canada are now running roughly 10 points below
the same period in 2019, only a few percentage points behind the
U.S. Fitch expects continued growth in 2023 based on current demand
relative to historical levels.
The rebound, along with strong yields has driven Air Canada's
revenue and profitability higher in recent quarters. The company
reported fourth quarter passenger revenues 2% higher than the same
period in 2019 despite capacity remaining 15% lower. The company is
guiding to a further 20+% increase in capacity in 2023, bringing
full year capacity to 90% of pre-pandemic levels, with full
restoration in 2024.
De-Leveraging Progress: Air Canada maintains conservative financial
policies which Fitch views as supportive of the rating. The company
maintains a public net leverage target of 1.5x by YE 2024. Fitch's
forecasts are conservative to management's estimates. Fitch
anticipates leverage declining towards 4.5x on a gross basis or
2.5x on a net basis through 2024, which nevertheless, represents a
meaningful improvement from current levels, and would support
positive rating momentum.
Fitch believes that improving profitability and modest upcoming
capital spending requirements provide Air Canada with de-leveraging
capacity. However, the company still needs to execute in an
uncertain economic environment. At YE 2022 Air Canada's debt burden
remained well above historical levels. Gross debt stood at CAD16.5
billion, 77% above YE 2019 levels. On a net basis, debt remained
more than double pre-pandemic levels despite Air Canada's sizeable
liquidity balance.
Margins Improving but Remain Behind Historical Levels: Fitch
expects improving traffic and operational efficiencies that come
from network restoration to drive EBITDAR margins in to the low
double digits in 2023 and modestly higher in 2024. Fitch expects
margins to remain several hundred basis points below pre-pandemic
levels through 2024 in part due to higher operating costs. Jet fuel
remains well above historical levels, while general inflationary
pressures and the inefficiencies of running at less than full
capacity also pressure unit costs. The company has publicly guided
to 2024 unit costs remaining 8-10% above 2019 levels, an
improvement from its 2023 guidance of 13%-15% above 2019 levels.
Modest Near-term Capex Requirements: Air Canada has a relatively
modest aircraft delivery schedule through 2026, translating into
manageable capex and the capacity to reduce debt. Fitch expects the
company to generate modestly negative FCF in 2023 before turning
positive in 2024. Air Canada expects capital investments of roughly
CAD2 billion/year through 2026 as it takes delivery of its
remaining A220s, A321 XLRs and freighter aircraft.
Cargo and Other Ancillaries Diversify Revenues: The growing
importance of cargo and loyalty program revenue continue to
diversify Air Canada's revenue streams. The company began operating
its first dedicated freighter in 2021 and expects to end 2024 with
nine dedicated 767 freighters and two 777s. Cargo comprised 7.6% of
total revenue in 2022, which is well above U.S. network carrier
peers. Fitch expects the cargo business to experience some softness
in 2023 due to normalizing freight rates and a softer economic
environment. Cargo should represent a longer-term positive assuming
the company can leverage existing relationships and generate
sustainable growth. Total company operating margins may benefit as
pure play air cargo peers can demonstrate margins that are better
than those historically generated by Air Canada.
Aeroplan, Air Canada's loyalty program, remains a key growth
platform, and it has outperformed initial expectations since Air
Canada originally purchased it from Aimia in 2019. The company
reported proceeds from Aeroplan points issued to partners of
CAD1.25 billion in 2022, which was 52% above 2021 levels. Air
Canada states that it is on track to grow program membership to
seven million by YE 2023, which would represent a 40% increase over
the membership base at acquisition in 2019. Based on the
contribution of loyalty program revenues of peer airlines, Fitch
views Aeroplan as representing upside to Air Canada's margin
trajectory over time.
DERIVATION SUMMARY
Air Canada's 'B+' rating is in line with United Airlines. Air
Canada's financial metrics compare favorably to United's and Fitch
believes that Air Canada has a better de-leveraging trajectory.
These factors are partly offset by Air Canada's smaller size and
scale and higher exposure to international travel. Air Canada is
three notches below Delta, which is a larger, more diversified
airline with lower leverage.
KEY ASSUMPTIONS
- Airline traffic continues to rebound through the forecast. Fitch
expects Air Canada's total capacity to reach 2019 levels by 2024,
in line with management's public guidance;
- Yields are flat or slightly up through the forecast period
reflecting potential economic pressures and competitive pressures
in the Canadian market;
- Brent crude prices around USD$85/barrel in 2023, declining
marginally through the forecast period;
- Capex is in line with the company's guidance.
Recovery Ratings: Fitch's recovery analysis assumes that Air Canada
would be reorganized as a going-concern (GC) in bankruptcy rather
than liquidated. Fitch has assumed a 10% administrative claim. The
GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which the agency bases the
enterprise valuation. Fitch uses a GC EBITDA estimate of CAD$2.1
billion and a 5.5x multiple, generating an estimated GC enterprise
value of CAD$11.55 billion after an estimated 10% in administrative
claims
The GC EBITDA is modestly below Fitch's forecast for 2024
reflecting a scenario where the company comes under financial
distress in a prolonged economic downturn scenario. The EBITDA
estimate is in line with historical results generated in 2019 and
prior, assuming that either the company would shrink through the
restructuring process or that forward EBITDA margins may be partly
impaired due to industry pressures/competition.
An EV multiple of 5.5x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considers historical bankruptcy case study exit
multiples for peer companies, which ranged from 3.1x to 6.8x
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Adjusted debt/EBITDAR trending towards 4.0x;
- FFO fixed-charge coverage trending towards 2.5x;
- Neutral to positive sustained FCF.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A slower than expected recovery in air traffic;
- Adjusted debt/EBITDAR sustained above 5.0x;
- FFO fixed charge coverage sustained below 1.5x;
- Persistently negative or negligible FCF;
- Operational driven cash outflows causing total liquidity (cash
plus revolver availability) to fall towards CAD$5 billion.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: Air Canada ended the year with CAD$8.0 billion in
cash and short-term investments and full availability under both
its USD$600 million revolver and CAD$200 million revolvers.
Liquidity Remained well above pre-pandemic levels through 2022
despite the company prepaying some debt as an improving operating
environment allowed the company to generate a modest amount of FCF.
Fitch considers Air Canada's liquidity balance to be more than
sufficient to cover near-term obligations. Upcoming debt maturities
are manageable at CAD$713 million in 2023 and CAD$525 million in
2024. Fitch expects the company to utilize some of its existing
cash balance to pay for aircraft deliveries allowing debt balances
to decline through its forecast period
Air Canada's debt stack primarily consists of CAD$6.4 billion in
debt secured by its slots, gates and routes credit facility
completed in mid-2021. The facility consists of CAD$2 billion of
secured notes due in 2029, CAD$1.6 billion of notes due in 2026, a
CAD$3.1 billion TLB maturing in 2028 and a USD$600 million revolver
due in 2025.
The company also has CAD$1.05 billion outstanding on a credit
facility provided by the Canadian government that was utilized to
issue refunds for flights cancelled during the pandemic. The credit
facility is unsecured, has a seven-year term, and has a 1.21%
coupon.
The remainder of the company's debt primarily consists of aircraft
secured EETCs and other aircraft financings.
ISSUER PROFILE
Air Canada is Canada's largest airline, serving more than 200
destinations with a fleet of 345 aircraft (mainline and regional).
Air Canada maintains major hub operations in Toronto, Montreal and
Vancouver.
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
----------- ------ -------- -----
Air Canada LT IDR B+ Affirmed B+
senior secured LT BB Affirmed RR2 BB
AKOUSTIS TECHNOLOGIES: Appoints W Greig CEO to Board
----------------------------------------------------
Akoustis Technologies, Inc. announced it has appointed Michelle L.
Petock as a new member of its board of directors. The appointment
brings the total number of board members to eight. Ms. Petock will
serve on the Strategic Development Committee and the Audit
Committee of the Company's board of directors.
Jerry Neal, co-Chairman of the board, stated, "Ms. Petock is a
welcome addition to our board given her extensive accomplishments
in finance, operations, tax and corporate law. Her substantial
knowledge, experience and leadership will be significant assets to
the Akoustis board and management team."
Michelle L. Petock has 25 years of legal, tax, investment banking,
hedge fund, and investment management experience in both the United
States and the United Kingdom. Ms. Petock currently serves as the
chief executive officer of W Greig & Company, an investment
platform which invests and manages the capital of a single-family
office. Ms. Petock has served in this role since May 2017 and is
responsible for sourcing and performing due diligence for
investment opportunities, allocating capital, and managing a
portfolio of private equity, private credit, venture, real estate,
and commodity related investments. Ms. Petock previously served as
the Chief Operating Officer of Datum 9 Analytics LLC, an
SEC-registered investment management firm which offered hedge fund
investment opportunities to institutions and qualified clients.
Ms. Petock has also worked at both Morgan Stanley and Citigroup,
where she was a trader on the Global Structured Products and the
Global Capital Structuring desks. A corporate tax lawyer by
training, Ms. Petock also spent many years practicing law in the
tax group at Shearman & Sterling LLP and in the international and
cross-border transactions group at Holland & Knight LLP, where she
focused on the taxation of financial products and cross-border
structured finance. Ms. Petock earned a bachelor's degree, cum
laude, from the University of Pennsylvania and a Juris Doctorate,
summa cum laude, from the George Washington University Law School.
Ms. Petock commented, "It is a great privilege to join the Akoustis
board of directors. It is an exciting time for the company as it
is uniquely positioned to monetize tremendous market opportunities
and continue its growth. I am thrilled to work with this extremely
impressive board and management team to continue advancing the
company's strategic vision and deliver long-term value for
shareholders."
Ms. Petock will receive compensation for her service as a director
in accordance with the Company's Director Compensation Program,
which provides for, among other things, annual compensation of
$140,000, plus additional amounts for service on committees of the
Board, in each case to be pro-rated to reflect her service for a
partial year prior to the Company's 2023 annual meeting of
stockholders. The Director Compensation Program provides for
compensation to be paid in the form of one or both of stock options
or restricted stock units ("RSUs") and allows for directors to
elect to receive up to 25% of such compensation in cash in lieu of
stock options or RSUs. Equity grants made in accordance with the
Director Compensation Program are issued subject to and in
accordance with the Company's 2018 Stock Incentive Plan.
About Akoustis Technologies
Headquartered in Huntersville, NC, Akoustis Technologies, Inc. is
focused on developing, designing, and manufacturing innovative RF
filter products for the mobile wireless device industry, including
for products such as smartphones and tablets, cellular
infrastructure equipment, and WiFi premise equipment.
Akoustis reported a net loss of $59.19 million for the year ended
June 30, 2022, a net loss of $44.15 million for the year ended June
30, 2021, a net loss of $36.14 million for the year ended June 30,
2020, and a net loss of $29.25 million for the year ended June 30,
2019. As of Dec. 31, 2022, the Company had $132.26 million in
total assets, $53.18 million in total liabilities, and $79.08
million in total stockholders' equity.
In its Quarterly Report for the three months ended Dec. 31, 2022,
Akoustis said, "The Company has incurred losses and negative cash
flow from operations since inception. Our operations thus far have
been funded primarily with sales of equity and debt securities, as
well as contract research and government grants, foundry services
and engineering services. We expect our operating expenditures to
continue to increase to support future growth of our manufacturing
capabilities and expansion of our product offerings, as well as an
increase in research and development and headcount costs to support
this growth. We believe we currently have sufficient resources to
fund operations and planned investments for at least the next
twelve months."
* * *
This concludes the Troubled Company Reporter's coverage of Akoustis
until facts and circumstances, if any, emerge that demonstrate
financial or operational strain or difficulty at a level sufficient
to warrant renewed coverage.
ALL AMERICAN BLACK: Seeks Cash Collateral Access
------------------------------------------------
All American Black Car Service, Inc. asks the U.S. Bankruptcy Court
for the Eastern District of Virginia, Alexandria Division, for
authority to use the cash collateral of Swift Financial.
With the exclusion of a motor vehicles, Swift Financial has a lien
against the Debtor's assets by reason of a UCC-1 Financing
Statement filed with the Clerk of the State Corporation Commission.
As a result, Swift Financial holds a security interest in the
Debtor's cash collateral -- its cash in hand, accounts receivable,
and proceeds -- pursuant to 11 U.S.C. section 363.
The Debtor will use cash collateral to maintain and operate its
business affairs and pay the Debtor's post-petition secured and
ongoing obligations as and when they come due.
The Debtor proposes that Swift Financial, pursuant to 11 U.S.C.
section 363, be granted a valid and perfected lien with the same
priority as held on the Petition Date on all present and
after-acquired property of the Debtor of any nature whatsoever. The
Replacement Lien will secure the Creditor's prepetition claim in
the amount equal to the amount by which the value of the
pre-petition collateral as of any post-petition date of
determination is less than the value as of the Petition Date. The
Replacement Lien will be in addition to the lien the Creditor had
in the assets and property of the Debtor as of the Petition Date.
Incident to any Replacement Lien to secure the Adequate Protection
Amount, the Debtor proposes that the Creditor will have an allowed
administrative claim with priority.
A copy of the motion is available at https://bit.ly/3ZtFf1r from
PacerMonitor.com.
About All American Black Car Service, Inc.
All American Black Car Service, Inc. designs, builds, and installs
custom closet packages.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Va. Case No. 23-10468) on March 23,
2023. In the petition signed by Sohail Cheema, president, the
Debtor disclosed up to $500,000 in both assets and liabilities.
John P. Forest, II, Esq., at Law Office of John P. Forest, II,
represents the Debtor as legal counsel.
ASURION LLC: Owl Rock III Marks $15M Loan at 23% Off
----------------------------------------------------
Owl Rock Capital Corporation III has marked its $15,000,000 loan
extended to Asurion, LLC to market at $11,594,000 or 77% of the
outstanding amount, as of December 31, 2022, according to a
disclosure contained in Owl Rock 's Form 10-K for the fiscal year
ended December 31, 2022, filed with the Securities and Exchange
Commission.
Owl Rock III is a participant in a Second lien senior secured loan
to Asurion, LLC. The loan has a reference rate and spread of
L+5.25% per annum. The loan matures on January 22, 2029.
Owl Rock III is a Maryland corporation formed on January 27, 2020.
The Company was formed primarily to originate and make loans to,
and make debt and equity investments in middle-market companies
based primarily in the United States. The Company invests in senior
secured or unsecured loans, subordinated loans or mezzanine loans
and, to a lesser extent, equity and equity-related securities
including warrants, preferred stock and similar forms of senior
equity, which may or may not be convertible into a portfolio
company's common equity.
Asurion, LLC is a privately held company based in Nashville,
Tennessee, that provides insurance for smartphones, tablets,
consumer electronics, appliances, satellite receivers and jewelry.
ASURION LLC: Owl Rock III Marks $5M Loan at 22% Off
---------------------------------------------------
Owl Rock Capital Corporation III has marked its $5,000,000 loan
extended to Asurion, LLC to market at $3,875,000 or 78% of the
outstanding amount, as of December 31, 2022, according to a
disclosure contained in Owl Rock III's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission.
Owl Rock Capital III is a participant in a Second lien senior
secured loan to Asurion, LLC. The loan has a reference rate and
spread of L+5.25% per annum. The loan matures on January 31, 2028.
Owl Rock Capital III is a Maryland corporation formed on January
27, 2020. The Company was formed primarily to originate and make
loans to, and make debt and equity investments in middle-market
companies based primarily in the United States. The Company invests
in senior secured or unsecured loans, subordinated loans or
mezzanine loans and, to a lesser extent, equity and equity-related
securities including warrants, preferred stock and similar forms of
senior equity, which may or may not be convertible into a portfolio
company's common equity.
Asurion, LLC is a privately held company based in Nashville,
Tennessee, that provides insurance for smartphones, tablets,
consumer electronics, appliances, satellite receivers and jewelry.
BASIS TEXAS: Moody's Upgrades Rating on Education Bonds to Ba2
--------------------------------------------------------------
Moody's Investors Service has upgraded the underlying rating of
BASIS Texas Charter Schools, Inc.'s previously issued education
revenue bonds to Ba2 from Ba3. Concurrently, Moody's has assigned a
Ba2 rating to the Arlington Higher Education Finance Corporation,
TX's approximately $16.7 million Education Revenue Bonds (BASIS
Texas Charter Schools, Inc.), Series 2023. Post sale, BASIS Texas
will have about $137.5 million in revenue bonds outstanding. The
outlook was revised to positive from stable.
RATINGS RATIONALE
The upgrade to Ba2 reflects BASIS Texas Charter Schools, Inc.'s
very strong demand profile, evidenced by the school's ability to
largely meet projected enrollment at the new senior participating
campuses and very strong demand at the new obligated Cedar Park
campus that opens in fall 2023 (fiscal 2024). The demand profile is
supported by well above average academic performance and healthy
waitlists across the organization.
The upgrade also considers the operational stability of the
subordinate participating campuses and the strength provided by a
pledge of the excess revenue of those campuses to support the debt
of the senior participating campuses, if needed. The positive
attributes are balanced by BASIS Texas Charter Schools, Inc.'s very
aggressive Texas expansion plans that have resulted in extremely
high leverage and weak operating margins, debt service coverage,
and days cash on hand, which is partially mitigated by the school's
very strong governance and management teams that have experience
replicating the BASIS formula across more than 30 campuses in
multiple states.
RATING OUTLOOK
The positive outlook reflects the likelihood of improved operating
revenue over the next several years driven by continued enrollment
gains as the organization expands in the Texas market. These gains
are expected to result in improved operating margin, liquidity and
debt service coverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Financial results of Texas MTI that outpace current
projections regarding operating margins, debt service
coverage, and days cash on hand
-- Continued ability to fill enrollment at new and
expanding campuses
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Financial results of Texas MTI that are materially
weaker than current projections regarding operating
margins, debt service coverage, and days cash on hand
-- Construction delays or material cost overruns that
disrupt the opening of the Cedar Park campus
LEGAL SECURITY
The bonds are special limited obligations of the Arlington Higher
Education Finance Corporation, payable solely from payments to be
made by BASIS Texas Charter Schools, Inc. pursuant to the Loan
Agreement and related trust indentures. The network's principal
source of revenue is state funding derived from its charter school
operations. The network has also executed a deed of trust
mortgaging each senior campus location as security for repayment.
The senior participating campuses benefit from a subordinate pledge
of excess revenue of the legacy campuses.
USE OF PROCEEDS
The proceeds of the Series 2023 bonds will be loaned by the
Arlington Higher Education Finance Corporation to BASIS Texas
Charter Schools, Inc. to finance phase two of the Pflugerville
campus and fund a debt service reserve and capitalized interest.
PROFILE
BASIS Texas Charter Schools, Inc. is a multiple-campus charter
school network and nonprofit corporation organized under the laws
of the State of Texas. The organization was granted an initial
charter in 2013 for a period of five years. The charter was renewed
in 2018 for a period of ten years ending in July 2028.
The network is divided into nine senior participating campuses (the
obligated campuses) and three subordinate campus (the legacy
schools) serving the Austin, Dallas/Fort Worth, and San Antonio
metropolitan areas. All Texas schools operate under a single MTI
and served nearly 5,000 students in the fall of 2023.
METHODOLOGY
The principal methodology used in these ratings was US Charter
Schools published in September 2016.
BERWICK CLINIC: PCO Says Patient Care 'Compromised'
---------------------------------------------------
Deborah Fish, the patient care ombudsman appointed in Berwick
Clinic Company, LLC's Chapter 11 case, filed with the U.S.
Bankruptcy Court for the Eastern District of Michigan a fifth
report regarding the quality of patient care provided at the
company's vascular clinic.
As a result of the clinic closures pursuant to Section 333 (b)(3)
of the Bankruptcy Code, the quality of patient care provided to
patients of the closed clinics declined significantly or was
otherwise materially compromised since the filing of Berwick's
Chapter 11 case, according to the report, which covers the period
from Jan. 24 to March 21.
After the clinics were closed, Berwick provided limited transition
services (described in prior reports) to the patients and the
quality of care did not decline during the transition process.
As previously reported to the court, all of the clinics were closed
and Berwick was providing transition services to its former
patients. Currently, the company is in the process of mailing a
letter to all former patients advising them of the procedure to
obtain their medical records. The letter will advise patients as to
the various methods to obtain their medical records now and into
the future.
A copy of the fifth ombudsman report is available for free at
https://bit.ly/3JPXJ6q from PacerMonitor.com.
The ombudsman may be reached at:
Deborah L. Fish, Esq.
Allard & Fish, P.C.
1001 Woodward Avenue, Suite 850
Detroit, MI 48226
Telephone: 313-309-3171
Email: dfish@allardfishpc.com
About Berwick Clinic Company
Berwick Clinic Company, LLC operates a health care business. The
company is based in Bloomfield Hills, Mich.
Berwick Clinic filed a Chapter 11 petition (Bankr. E.D. Mich. Case
No. 22 45589) on July 18, 2022, with $100,000 to $500,000 in assets
and $1 million to $10 million in liabilities. Judge Lisa S.
Gretchko oversees the case.
The Debtor is represented by Robert Bassel, Esq., a practicing
attorney in Clinton, Mich.
Deborah Fish, Esq., at Allard & Fish, P.C., is the patient care
ombudsman appointed in the Debtor's Chapter 11 case.
BERWICK HOSPITAL: Maintains Patient Care Quality, PCO Says
----------------------------------------------------------
Deborah Fish, the patient care ombudsman appointed in Berwick
Hospital Company, LLC's Chapter 11 case, filed with the U.S.
Bankruptcy Court for the Eastern District of Michigan her third
report regarding the quality of patient care provided at the
company's health care facility.
The quality of care provided to patients has been maintained since
Berwick's bankruptcy filing, according to the third report, which
covers the period Jan. 25 to March 23. The PCO, however, remains
concerned about the staffing issues at the hospital. A review of
the schedule indicates that Berwick continues to fill the gaps in
the schedule with staff working overtime or extra shifts or with
agency employees. It is clear the company does not have sufficient
full-time and part-time staff to fill all positions in each shift
every day, according to the PCO.
Currently, Berwick relies on a staffing agency to fill the shifts
and has recently contracted with a second agency. Although this is
not a long-term solution, Berwick is not unlike many other
hospitals throughout the country dealing with a labor shortage. It
would be helpful for this company to exit this bankruptcy as soon
as possible, the PCO said in her report.
According to the PCO, the company needs to continue to hire staff
for the unit, the patient census should not increase beyond the
current number (the unit currently has 11 patients) and the census
cannot increase to 14 without a substantial number of new hires.
The PCO said she will continue to monitor the staffing issues.
The PCO also reported that concerns relating to the acute care
patients are access to and proper storage of medical records and
collection on invoices for prior services rendered.
A copy of the third ombudsman report is available for free at
https://bit.ly/40BPv8R from PacerMonitor.com.
The ombudsman may be reached at:
Deborah L. Fish, Esq.
Allard & Fish, P.C.
1001 Woodward Avenue, Suite 850
Detroit, MI 48226
Telephone: 313-309-3171
Email: dfish@allardfishpc.com
About Berwick Hospital
Berwick Hospital Company, LLC is a Bloomfield Hills, Mich.-based
company, which operates in the health care industry.
Berwick filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 22-47699) on Sept. 30,
2022, with $100,000 to $500,000 in assets and $1 million to $10
million in liabilities. Richardo I. Kilpatrick has been appointed
as Subchapter V trustee.
Judge Lisa S. Gretchko oversees the case.
Robert Bassel, Esq., serves as the Debtor's legal counsel.
Deborah Fish, Esq., at Allard & Fish, P.C., is the patient care
ombudsman appointed in the Debtor's Chapter 11 case.
BIG DADDY: Gun Shop Starts Subchapter V Case
--------------------------------------------
Big daddy Guns Inc filed for chapter 11 protection in the Northern
District of Florida. The Debtor elected on its voluntary petition
to proceed under Subchapter V of chapter 11 of the Bankruptcy
Code.
The Debtor is engaged in the business of firearm and survival gear
retail, in the state of Florida. The Debtor is properly Alcohol,
Tobacco, and
Firearms ("ATF") certified and is in good standing with all
certifications in relation to the sale of firearms in the state of
Florida. The Debtor operates a retail store located at 3558 SW
College Road, Suite 400, Ocala, FL 34474.
Due to a series of replevins from one of the Debtor's prepetition
lenders, the Debtor's store is almost barren with inventory and
faces serious financial harm.
THe Debtor filed a motion for approval to obtain credit from Big
Daddy Guns 12, Inc. ("Lender") pursuant to §364(b) of the
Bankruptcy Code. To preserve its ongoing concern as a business,
the Debtor seeks to obtain credit, in the form of an inventory
advance from Lender, a related non debtor entity who operates a
similar store under the "Big Daddy Guns" tradename located at 285
Columbiana Drive, Suite J, Columbia, SC 29212.
According to court filings, Big daddy Guns Inc estimates between
$10 million to $50 million in debt owed to 1 to 49 creditors. The
petition states that funds will be available to unsecured
creditors.
About Big daddy Guns
Big daddy Guns Inc. is a gun shop in Florida.
Big daddy Guns Inc. filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Fla. Case No.
23-10053) on March 21, 2023. In the petition filed by Anthony W.
McKnight as president, the Debtor reported assets between $1
million and $10 million and liabilities between $10 million and $50
million.
The Debtor is represented by:
Jose I. Moreno, Esq.
Jose I Moreno, P.A.
7600 NW 5th Place
suite C
Gainesville, FL 32607
Tel: 352-332-4422
Fax: 352-332-4462
Email: jimoreno@bellsouth.net
BIOPLAN USA: Moody's Hikes CFR to Caa1, Outlook Stable
------------------------------------------------------
Moody's Investors Service upgraded Bioplan USA, Inc.'s (d.b.a
Arcade Beauty, Bioplan) Corporate Family Rating to Caa1 from Caa2
following the recent restructuring of its capital structure in
which all prior debt was impacted. Moody's also assigned a B1
rating to the new senior secured priority term loan, Caa1 rating to
the new senior secured takeback term loan and withdrew ratings on
the old credit facilities. Concurrent with this rating action,
Moody's downgraded Bioplan's Probability of Default Rating to D-PD
from Caa2-PD because the restructuring is considered a distressed
exchange and thus a default under Moody's definition. The D-PD will
be a temporary assignment and the PDR will be upgraded to Caa1-PD
in around three business days. The outlook is stable.
The rating action follows Bioplan's completion of a comprehensive
restructuring of its capital structure in which all prior debt was
impacted. The lenders of the prior first lien term loan due
December 2023 converted to a $160 million senior secured takeback
loan and received 92.5% of the new common equity of the company
while the existing 2024 second lien term loan lenders received 7.5%
of the common equity in exchange for the cancellation of their
prior claims. A large portion of the outstanding unsecured
revolving credit facility expiring December 2023 was cancelled. In
addition, the lenders of the prior first lien term loan provided
$50 million of additional capital in connection with a new senior
secured priority term loan.
Upgrades:
Issuer: Bioplan USA, Inc.
Corporate Family Rating, Upgraded to Caa1 from Caa2
Downgrades:
Issuer: Bioplan USA, Inc.
Probability of Default Rating, Downgraded to D-PD from Caa2-PD
Assignments:
Issuer: Bioplan USA, Inc.
Senior Secured Priority Term Loan, Assigned B1 (LGD1)
Senior Secured Takeback Term Loan, Assigned Caa1 (LGD4)
Withdrawals:
Issuer: Bioplan USA, Inc.
Backed Senior Secured First Lien Term Loan, Withdrawn, previously
rated Caa1 (LGD3)
Backed Senior Secured Second Lien Term Loan, Withdrawn, previously
rated Caa3 (LGD5)
Outlook Actions:
Issuer: Bioplan USA, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
On March 8, 2023, Bioplan completed an out-of-court restructuring
that significantly reduced total funded debt and resulted in the
company's former creditors becoming majority equity holders of the
company. The restructuring reduced total debt (excluding account
receivable facilities) by 45% to $210 million from approximately
$384 million. The debt post-restructuring consists of a new $50
million senior secured priority term loan due March 2027 and a $160
million senior secured takeback term loan due March 2028.
Post-restructuring, Bioplan extended the debt maturities by an
additional 2.75 years which reduced refinancing risks in the near
term and improved financial flexibility during a period of
macroeconomic uncertainty and tighter financial conditions. With
the sizable reduction in total debt, adjusted total debt to EBITDA
is expected to be in the mid-5x in 2023. Total interest expense
will be in line with the prior year although cash interest costs
will be lower due to reduced debt levels.
However, the take back term loan contains an option to pay interest
expense fully in cash or a mix of cash and payment-in-kind (PIK)
toggle until the maturity date. The PIK toggle is structured to
have the cash portion increase each year. The company is expected
to elect the PIK toggle option at least for the first year to
preserve cash holdings.
The 2023 debt restructuring follows a period in which Bioplan
operated with unsustainably high financial leverage in the 9x-11x
range and persistently negative free cash flow which made it
challenging for the company to address scheduled debt maturities in
2023. This is the second debt restructuring following a 2021
restructuring which Moody's deemed a distressed exchange.
Governance risks have a very highly negative impact on Bioplan's
credit profile and remain a key consideration to the ratings.
The Caa1 CFR reflects Moody's view that Bioplan will have improved
financial flexibility resulting from the balance sheet
restructuring and additional liquidity, which provides the company
with the buffer to invest in premium product sampling and new
initiatives to enhance productivity and quality. However, there are
secular industry pressures due to the ongoing shift to the
internet, social media and e-commerce platforms for the purchase of
beauty products, and reduced product sampling demand, particularly
from North American fragrance and consumer packaged goods (CPG)
clients. Additionally, lower CPG client marketing spend, changes in
customer product sales and marketing plans as well as shifts in
product mix may also contribute to volatility and operating margin
compression.
Bioplan's ESG Credit Impact Score is very highly-negative (CIS-5),
reflecting the company's highly-negative exposure to demographic
and societal trends and very highly-negative governance risks.
Social considerations are highly-negative (S-4) driven principally
by demographic and societal trends. As consumer purchasing behavior
of beauty products is evolving, Bioplan's clients are shifting
advertising dollars to digital, social media and e-commerce
platforms which has impacted the company's overall volumes. In
order to mitigate the impact of the changing behavior, the company
is expanding its customer relationships with newer, independent
online brands that are emerging. Governance risks are very
highly-negative (G-5) due to Bioplan's history of elevated and
untenable financial leverage, missed forecasts, negative free cash
flow generation and weak liquidity.
The stable outlook reflects Moody's view that Bioplan will grow
revenue in the low-single digits and maintain adjusted EBITDA
margins at approximately 16% over the next 12 to 18 months
resulting from the demand for fragrance sampling in Europe, North
and Latin America despite secular declines in magazines and
catalogs mainly in North America. Moody's expects Bioplan to
partially offset higher raw material costs through price increases.
While the total leverage ratio will remain in the mid-5x from the
restructuring efforts, free cash flow will remain negative.
Moody's expects Bioplan to maintain adequate liquidity over the
next 12-18 months. While Moody's expects Bioplan to generate
negative free cash flow driven by one-off expenses related to the
transaction and increased capital expenditures to support growth
initiatives, the proceeds from the $50 million new priority term
loan is expected to offset negative operating cash flow and support
the company's liquidity profile. While Bioplan's liquidity is
limited by the absence of a committed revolving credit facility,
the company maintains access to a EUR39 million accounts receivable
factoring program (i.e., Europe: EUR29 million; North America:
EUR10 million post-recapitalization), of which $32 million was
outstanding as of end-September 2022.
The B1 rating on the new senior secured priority term loan reflects
the instrument's small size and priority position in the capital
structure versus the new takeback term loan. The Caa1 rating on the
takeback term loan reflects the instrument's subordinated position
relative to the priority loan and low anticipated recovery
prospects as a result of its junior position. The new term loans
are secured by substantially all tangible as well as intangible
assets.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Bioplan effectively navigates the
rapidly changing purchasing behavior in the beauty industry by
developing new sampling products and generating sustained revenue
and EBITDA growth. In addition, the company would need to maintain
stable EBITDA margins amid an expanding revenue base, generate
positive free cash flow, maintain a good liquidity position and
exhibit prudent financial policies.
The rating could be downgraded if Moody's adjusted total debt to
EBITDA or liquidity materially weakens or the operating and
competitive environments were to weaken as evidenced by erosion in
market share, product prices and/or EBITDA margins.
Headquartered in New York, NY, privately-owned Bioplan USA, Inc.,
through its direct parent, Tripolis Holdings Sàrl, is a leading
global provider of marketing, packaging and interactive sampling
products to the fragrance, beauty, cosmetic and personal care
industries. The company does business under the name Arcade Beauty
and has operations in the United States, France, Poland, Brazil and
China. Following the recapitalization, Bioplan is now owned by a
consortium of global investment firms. Net revenue totaled
approximately $303.3 million for the twelve months ended September
30, 2022.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
BLUE SEVEN LLC: Seeks Cash Collateral Access
--------------------------------------------
Blue Seven, LLC dba Indigo Float asks the U.S. Bankruptcy Court for
the Middle District of Florida, Jacksonville Division, for
authority to use cash collateral to continue the operation of its
business to pay operating costs.
The cash collateral consists of the Debtor's revenue and deposits
in its authorized Debtor-in-Possession account.
Newtek Small Business Finance, LLC has a lien on the Debtor's cash
collateral, up to $165,000.
The Debtor is offering Newtek the following adequate protection:
a. Newtek will have a perfected post-petition lien against
cash collateral to the same extent and with the same validity and
priority as the pre-petition lien, without the need to file or
execute any document as may otherwise be required under applicable
non-bankruptcy law.
b. The Debtor will pay $3,563 per month as an adequate
protection payment, which represents the monthly $2,563 payment,
plus $1,000 toward arrears, to be paid prior to the last day of
each month. The Debtor has already initiated payments prepetition,
and has continued to make the March 2023 payment, and will continue
to do so after the entry of the Order approving the Motion.
c. The adequate protection payments will continue until
confirmation of the plan. The plan contemplates paying off the
Newtek arrearage based on negotiated payoff amounts.
A copy of the motion is available at https://bit.ly/3M0D3LG from
PacerMonitor.com.
About Blue Seven, LLC
Blue Seven, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-00401) on February
27, 2023. In the petition signed by Jacki Stewart, owner, the
Debtor disclosed up to $50,000 in both assets and liabilities.
Adina Pollan, Esq., at McGlinchey Stafford, represents the Debtor
as legal counsel.
BRAINERD INDUSTRIES: Files for Chapter 11 Bankruptcy
----------------------------------------------------
Brainerd Industries Incorporated filed for chapter 11 protection in
the Southern District of Ohio.
Formed in Ohio in 1969, Brainerd Industries provides manufacturing
services, including, but not limited to, metal and plastic trim
parts that are typically powder coated and printed for other major
manufacturers. The Debtor’s customers have included well-known
brands such as YETI, Bose, Honda, and Toyota.
Gregory W. Fritz, is the president and sole owner. The Debtor's
principal place of business is located at 680 Precision Court,
Miamisburg, Ohio 45342 (the "Property"). The Debtor operates in
the greater Dayton area and employs 13 employees.
Events Leading to Chapter 11
Before mid-January 2018, Brainerd had a large order with YETI
Corporation powder coating plain stainless drinkware and
repackaging this product. In addition, Brainerd stamped and
powder-coated speaker grilles for Bose, nameplates for Siemens,
interior instructional labels for Honda and Toyota, and many other
customers. Brainerd had sales of $7-$8 million with approximately
30 employees and 80 temporaries.
In mid-January 2018, Brainerd had a fire/smoke/soot incident in its
plant. Due to the complexity of its insurance claim the cleaning
process dragged on for 16-18 months into May of 2019. As the
cleanup of Brainerd's facility finally approached completion in May
2019, the contractor failed at effectively sealing the tent
enclosure and Brainerd’s plant was re-contaminated. The
additional downtime forced the return into production into early
2020.
The environment during the first quarter of 2020 is underscored by
the onslaught of COVID-19. Brainerd unfortunately suffered the
full force of the COVID environment through most of 2020, and well
into 2021. With the outbreak of COVID-19 going into 2020 and 2021,
the road has been tough for many small manufacturing operations
including Brainerd.
As 2022 began, Brainerd was making progress in re-building its
customer base, but not without struggling to support the normal
debt it was carrying pre-fire/soot incident of 2018 that was
continuing to build in the months of 2020 and 2021. By mid-2022,
with global supply chain issues, increasing interest rates, legal
fees and the effects of the war in Ukraine things were really
slowing down for the business once again.
Its customers that have product utilizing its parts or finishes and
ship to big box stores like Menards, Home Depot, etc., as well as
other customers like automotive components and appliances
components had cancelled or placed their monthly orders on hold.
Most importantly, after the loss of customers during the years
following 2018, its customer base was beginning to stabilize in
2022.
The business has also struggled due to the lack of operating
capital. The materials used in the business are all purchased on
terms that require cash on or before delivery. Without operating
capital to fund the purchase of materials and the labor required to
complete contracts, the business has been unable to grow.
According to court filings, Brainerd Industries Incorporated
estimates between $1 million and $10 million in debt owed to 1 to
49 creditors. The petition states that funds will be available to
unsecured creditors.
About Brainerd Industries
Brainerd Industries Incorporated is a fabricated metal product
manufacturer in Miamisburg, Ohio.
Brainerd Industries Incorporated filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ohio Case No.
23-30432) on March 22, 2023. In the petition filed by Gregory W.
Fritz as president, the Debtor reported assets and liabilities
between $1 million and $10 million each.
The case is overseen by Honorable Bankruptcy Judge Guy R.
Humphrey.
The Debtor is represented by:
Patricia J Friesinger, Esq.
Coolidge Wall Co., L.P.A.
680 Precision Court
Miamisburg, OH 45342
Tel: 937-223-8177
Fax: 937-223-6705
Email: friesinger@coollaw.com
CALIFORNIA-NEVADA METHODIST: 3 Creditors Out as Committee Members
-----------------------------------------------------------------
The U.S. Trustee for Region 17 disclosed in a notice that as of
March 27, these creditors are the remaining members of the official
committee of unsecured creditors in the Chapter 11 case of
California-Nevada Methodist Homes:
1. Jeffrey Rhodenbaugh
Successor Trustee of the Rhodenbaugh Family Trust
Counsel: Mark Hirsch
New Tech Law Group
40815 Grimmer Blvd.
Fremont, CA 94538
Phone: (510) 659-8884
Email: mark@ntlg.us
2. Martin Overstreet
3. Whendee Silver
Trustee of the Silver Family Trust
4. Joanne Kelly
Counsel: Chris D. Kuhner
Nyberg, Bendes, Kuhner & Little, P.C.
1970 Broadway, Suite 600
Oakland, CA 94612
Phone: (510) 763-1000
Email: c.kuhner@kornfieldlaw.com
Suzanne Kaufmann, Edward Keech and Astrid Anderson were previously
identified as members of the creditors committee. Their names no
longer appear on the new notice.
About California-Nevada Methodist Homes
California-Nevada Methodist Homes -- http://www.cnmh.org/-- is a
California non-profit public benefit corporation that operates
nursing homes and long-term care facilities. It presently operates
two continuing care retirement communities, one known as Lake Park,
in Oakland Calif., and the other, known as Forest Hill, in Pacific
Grove, Calif.
On March 16, 2021, California-Nevada Methodist Homes filed a
Chapter 11 petition (Bankr. N.D. Calif. Case No. 21-40363), with
$10 million to $50 million in assets and $50 million to $100
million in liabilities.
The Hon. Charles Novack is the case judge.
The Debtor tapped Hanson Bridgett LLP, led by Neal L. Wolf, Esq.,
as legal counsel; and Silverman Consulting and B.C. Ziegler and
Company as financial advisors. Stretto, LLC is the claims agent.
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case. The
committee is represented by Perkins Coie, LLP.
CANADIAN HOSPITAL: Blackstone Fund Marks CAD10.5M Loan at 32% Off
-----------------------------------------------------------------
Blackstone Secured Lending Fund has marked its CAD10,533,000 loan
extended to Canadian Hospital Specialties Ltd. to market at
CAD7,171,000 or 68% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Blackstone Secured
Lending's Form 10-Q for the quarterly period ended December 31,
2022, filed with the Securities and Exchange Commission.
Blackstone Secured Lending is a participant in a First Lien Debt to
Canadian Hospital Specialties Ltd. The loan accrues interest at a
rate of 8.75% per annum. The loan matures on April 15, 2029.
Blackstone Secured Lending is a Delaware statutory trust formed on
March 26, 2018, and structured as an externally managed,
non-diversified closed-end management investment company. On
October 26, 2018, the Company elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, the Company elected to be treated for U.S.
federal income tax purposes, and intends to qualify annually, as a
regulated investment company, under Subchapter M of the Internal
Revenue Code of 1986, as amended. The Company is externally managed
by Blackstone Credit BDC Advisors LLC.
Established 1967, Canadian Hospital Specialties Limited is a
privately held medical device manufacturer and specialty
distributor located in Oakville, Ontario. Customers served are in
the acute hospital and non-acute healthcare space in Canada and
internationally.
CARVANA CO: Moody's Lowers CFR to 'Ca', Outlook Negative
--------------------------------------------------------
Moody's Investors Service downgraded Carvana Co.'s corporate family
rating to Ca from Caa1 and probability of default rating to Ca-PD
from Caa1-PD. The company's senior unsecured notes ratings were
also downgraded to Ca from Caa2. The speculative grade liquidity
rating (SGL) is SGL-4 and the outlook remains negative.
The downgrade reflects Carvana's proposed offer to exchange some of
the company's outstanding senior unsecured debt into $1 billion of
new 2nd lien secured debt at a substantial discount to face value.
Should the exchange offer close on the proposed terms, Moody's
would view this event as a distressed exchange and a limited
default under Moody's definition due to the material economic loss
to lenders. As such, following the closing of the exchange offer,
Moody's would append the /LD designation to Carvana's Ca-PD
probability of default rating.
The downgrade also considers that Carvana's weak operating
performance, ongoing EBITDA deficits and negative free cash flow
generation will continue given the challenging economic environment
despite Carvana's attempts to right size its capital structure and
reduce costs to be more in-line with lower unit volumes. As a
result, Moody's believes further defaults are highly likely.
Lastly, the downgrade also reflects governance considerations
particularly Carvana's aggressive financial policies towards
existing unsecured noteholders. Prior to the launch of the exchange
offer, Carvana also designated ADESA US Auction, LLC (ADESA) as an
unrestricted subsidiary. The designation of ADESA as an
unrestricted subsidiary eliminates its requirement to guarantee
Carvana's debt. Moody's highlighted Carvana's weak covenant
protections in May 2022 when it scored Carvana's covenant
protection as overall weak (4.16) with the weakest covenant
protections related to investments in risky assets (scored 5.0)
particularly the provisions which allowed for significant
investments in unrestricted subsidiaries. In April 2022, Carvana
issued $3.275 billion of 10.25% senior unsecured notes due 2030 to
acquire ADESA for about $2.2 billion and pre-fund around $1.0
billion to build out acquired properties.
Downgrades:
Issuer: Carvana Co.
Corporate Family Rating, Downgraded to Ca from Caa1
Probability of Default Rating, Downgraded to Ca-PD from Caa1-PD
Senior Unsecured Regular Bond/Debenture, Downgraded to Ca (LGD4)
from Caa2 (LGD4)
Outlook Actions:
Issuer: Carvana Co.
Outlook, Remains Negative
RATINGS RATIONALE
Carvana's Ca CFR reflects the high likelihood of further defaults
as well as the low expected recovery rates given its lack of
profitability, negative free cash flow and very weak credit
metrics. Moody's expects Carvana's EBITDA and free cash flow
deficits will continue as gross profit per vehicle and inventories
remain under pressure. The ratings also reflect the company's very
aggressive financial policies that resulted in its designating its
ADESA operations as an unrestricted subsidiary to the detriment of
existing senior unsecured note holders. Carvana also faces the
challenge of right sizing its capital structure and reducing
operating costs while growth continues to moderate.
The negative outlook reflects the potential for further erosion in
recovery rates should Carvana fail to stem the pace of EBITDA and
free cash flow deficits.
Carvana's ESG credit impact score was revised to CIS-5 (very
highly negative) from CIS-4 (highly negative) and reflects Moody's
assessment that Carvana's corporate governance has become a very
highly negative rating factor. Carvana's G-5 governance score
reflects its very aggressive financial strategies given its history
of very high leverage, weak free cash flow and pursuit of a
distressed debt exchange. It also reflects weak management
credibility following Carvana's decision to designate ADESA as an
unrestricted subsidiary and its failure to improve its operating
losses and negative free cash flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded once the company is able to generate
consistent positive earnings and free cash flow while maintaining
adequate liquidity that would result in a lower likelihood of
default.
Ratings could be downgraded if recovery values are less than
expected or the should Carvana fail to make its interest or
principal payments in a timely manner or should the company file
for bankruptcy.
Headquartered in Tempe, Arizona, Carvana Co., is a leading online
retailer of used vehicles, with LTM December 2022 revenue of around
$13.6 billion.
The principal methodology used in these ratings was Retail
published in November 2021.
CBC RESTAURANT: SSCP Seeks Chapter 11 Trustee Appointment
---------------------------------------------------------
A creditor of CBC Restaurant Corp. called for an independent
trustee to take over the Chapter 11 case of the company, citing
"lack of honesty and transparency" in the company's operations.
In a motion filed with the U.S. Bankruptcy Court for the District
of Delaware, attorneys for SSCP Restaurant Investors, LLC said
control of CBC's estate should be given to a bankruptcy trustee in
light of Jay Pandya's questionable dealings in the company's
business.
Mr. Pandya, who operates CBC's parent Pandya Restaurant Growth
Brands, LLC, allegedly took more than $21 million of funds out of
the company for the benefit of entities he owns or controls and
used funds from the company's operations to pay his other
businesses. Moreover, CBC has continued to default on its secured
loan under his watch.
"At the hand of Mr. Pandya, [CBC] was driven into irrefutable
insolvency," said Ricardo Palacio, Esq., one of the attorneys at
Ashby & Geddes, P.A. representing SSCP. "[Mr. Pandya] should not be
allowed to remain as the sole executive decision maker."
SSCP can be reached through its attorneys:
Ricardo Palacio, Esq.
Ashby & Geddes, P.A.
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Wilmington, DE 19899
Tel: (302) 654-1888
Fax: (302) 654-2067
Email: RPalacio@ashbygeddes.com
-- and --
Holland N. O'Neil, Esq.
Mark C. Moore, Esq.
Stephen A. Jones, Esq.
Foley & Lardner, LLP
2021 McKinney Avenue, Suite 1600
Dallas, TX 75201
Tel: (214) 999-3000
Fax: (214) 999-4667
Email: honeil@foley.com
mmoore@foley.com
sajones@foley.com
About CBC Restaurant
CBC Restaurant Corp. and its affiliates operate and franchise
quick-casual eateries under the name Corner Bakery Cafe.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-10245) on Feb. 22,
2023. In the petition signed by its chief executive officer and
chief operating officer, Jignesh Pandya, CBC Restaurant disclosed
up to $50 million in both assets and liabilities.
Judge Karen B. Owens oversees the cases.
The Debtors tapped Mette H. Kurth, Esq., at Culhane Meadows PLLC as
legal counsel and Hilco Trading LLC, doing business as Hilco
Global, as financial advisor and investment banker. Kurtzman Carson
Consultants, LLC is the Debtors' claims and noticing agent.
CENTURION PIPELINE: Moody's Puts 'B1' CFR on Review for Upgrade
---------------------------------------------------------------
Moody's Investors Service placed Centurion Pipeline Company LLC's
ratings on review for upgrade following the announcement that
Energy Transfer LP will acquire Centurion's owner Lotus Midstream
Operations, LLC. The Centurion ratings on review include its B1
Corporate Family Rating, B1-PD Probability of Default Rating, B1
senior secured revolving credit facility rating and B1 senior
secured term loan rating.
Energy Transfer is acquiring Lotus from an affiliate of EnCap
Flatrock Midstream in a transaction valued at $1.45 billion,
comprised of $900 million of cash and approximately 44.5 million
newly issued Energy Transfer common units.
"The likely acquisition by Energy Transfer should enhance value for
Centurion's owners and creditors given Energy Transfer's stronger
credit profile," said Amol Joshi, Moody's Vice President and Senior
Credit Officer.
On Review for Upgrade:
Issuer: Centurion Pipeline Company LLC
Corporate Family Rating, Placed on Review for
Upgrade, currently B1
Probability of Default Rating, Placed on Review for
Upgrade, currently B1-PD
Senior Secured Revolving Credit Facility, Placed on
Review for Upgrade, currently B1 (LGD4)
Senior Secured Term Loan B, Placed on Review for Upgrade,
currently B1 (LGD4)
Senior Secured Term Loan B1, Placed on Review for Upgrade,
currently B1 (LGD4)
Outlook Actions:
Issuer: Centurion Pipeline Company LLC
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Centurion's ratings were placed on review for upgrade based on its
owner Lotus' likely acquisition by Energy Transfer LP (Baa3
positive), which has a stronger credit profile and favorable
governance considerations, a more diversified portfolio of
midstream assets and greater financial resources. As a standalone
company, Moody's expected Centurion to generate meaningful earnings
growth in 2023 following certain projects completed in the last
year. Centurion has benefitted from contractual relationships with
Occidental Petroleum Corporation (Baa3 positive) and other
investment-grade rated shippers, with an improving leverage profile
upon incremental earnings and cash flow from completed projects.
Moody's expects Centurion's debt will be fully paid off at closing.
Moody's will likely withdraw all of Centurion's ratings upon full
extinguishment of the company's debt. Moody's estimates Centurion
had approximately $422 million of balance sheet debt outstanding at
September 30, 2022. The transaction is expected to close in the
second quarter of 2023, subject to regulatory approval and
customary closing conditions.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
Centurion Pipeline Company LLC is owned by Lotus Midstream
Operations, LLC, and is comprised of a network of approximately
3,000 miles of crude oil gathering and transportation pipelines
that extends from southeast New Mexico across the Permian Basin of
West Texas to Cushing, Oklahoma.
CFCRE COMMERCIAL 2011-C2: Moody's Cuts Rating on Cl. D Certs to B1
------------------------------------------------------------------
Moody's Investors Service has affirmed the ratings on four classes
and downgraded the rating on one class in CFCRE Commercial Mortgage
Trust 2011-C2, Commercial Mortgage Pass-Through Certificates,
Series 2011-C2 as follows:
Cl. D, Downgraded to B1 (sf); previously on Feb 15, 2022 Downgraded
to Ba3 (sf)
Cl. E, Affirmed Caa2 (sf); previously on Feb 15, 2022 Downgraded to
Caa2 (sf)
Cl. F, Affirmed C (sf); previously on Feb 15, 2022 Downgraded to C
(sf)
Cl. G, Affirmed C (sf); previously on Feb 15, 2022 Affirmed C (sf)
Cl. X-B*, Affirmed Ca (sf); previously on Feb 15, 2022 Affirmed Ca
(sf)
* Reflects Interest-Only Classes
RATINGS RATIONALE
The rating on one P&I class was downgraded due to potential for
higher losses and increased interest shortfalls driven primarily by
the significant exposure to the RiverTown Crossings Mall loan (100%
of the pool). The loan passed its original maturity date in June
2021 and has been in special servicing since October 2020. While
the asset maintains a positive NOI DSCR and remains current on
monthly debt service payments, the regional mall has exhibited
declining performance since 2019.
The rating on three P&I classes were affirmed because the ratings
are consistent with Moody's expected loss.
The rating on the IO class X-B was affirmed based on the credit
quality of its referenced classes. The IO class references all P&I
classes including Class NR, which is not rated by Moody's.
Moody's regard e-commerce competition as a social risk under
Moody's ESG framework. The rise in e-commerce and changing consumer
behavior presents challenges to brick-and-mortar discretionary
retailers.
Moody's rating action reflects a base expected loss of 59.5% of the
current pooled balance, compared to 51.4% at Moody's last review.
Moody's base expected loss plus realized losses is now 6.7% of the
original pooled balance, compared to 6.4% at the last review.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
The performance expectations for a given variable indicate Moody's
forward-looking view of the likely range of performance over the
medium term. Performance that falls outside the given range can
indicate that the collateral's credit quality is stronger or weaker
than Moody's had previously expected. Additionally, significant
changes in the 5-year rolling average of 10-year US Treasury rates
will impact the magnitude of the interest rate adjustment and may
lead to future rating actions.
Factors that could lead to an upgrade of the ratings include a
significant amount of loan paydowns or amortization, an increase in
the pool's share of defeasance or an improvement in pool
performance.
Factors that could lead to a downgrade of the ratings include a
decline in the performance of the pool, an increase in realized and
expected losses from specially serviced and troubled loans or
interest shortfalls.
METHODOLOGY UNDERLYING THE RATING ACTION
The principal methodology used in rating all classes except
interest-only classes was "Large Loan and Single Asset/Single
Borrower Commercial Mortgage-Backed Securitizations Methodology"
published in July 2022.
Moody's analysis incorporated a loss and recovery approach in
rating the P&I classes in this deal since 100% of the pool is in
special servicing. In this approach, Moody's determines a
probability of default for each specially serviced and troubled
loan that it expects will generate a loss and estimates a loss
given default based on a review of broker's opinions of value (if
available), other information from the special servicer, available
market data and Moody's internal data. The loss given default for
each loan also takes into consideration repayment of servicer
advances to date, estimated future advances and closing costs.
Translating the probability of default and loss given default into
an expected loss estimate, Moody's then applies the aggregate loss
from specially serviced to the most junior classes and the recovery
as a pay down of principal to the most senior classes.
DEAL PERFORMANCE
As of the March 17, 2023 distribution date, the transaction's
aggregate certificate balance has decreased by 89% to $84 million
from $774 million at securitization. The certificates are
collateralized by one mortgage loan, which is in special servicing
(100% of the pool).
Moody's uses a variation of Herf to measure the diversity of loan
sizes, where a higher number represents greater diversity. Loan
concentration has an important bearing on potential rating
volatility, including the risk of multiple notch downgrades under
adverse circumstances. The credit neutral Herf score is 40. The
pool has a Herf of 1, the same as at Moody's last review.
As of the March 2023 remittance report, the remaining loan in the
pool is past past its maturity date. One loan has been liquidated
from the pool, resulting in an aggregate realized loss of $2.2
million (for an average loss severity of 29%).
The specially serviced loan is the RiverTown Crossings Mall Loan
($83.6 million – 100% of the pool), which represents a pari-passu
portion of a $129 million mortgage loan. The loan is secured by an
approximately 635,800 square feet (SF) portion of a 1.2 million SF
regional mall located in Grandville, Michigan. The property was
built in 2000 and is anchored by Macy's, Kohl's, J.C. Penney,
Dick's Sporting Goods and Celebration Cinemas. The sponsor
purchased a vacant, former non-collateral Younkers (closed 2018)
anchor box (150,081 SF) in 2019 for $4.4 million. There was also a
former non-collateral Sears which closed in January 2021. The only
collateral anchors are Dick's Sporting Goods and Celebration
Cinemas, and both tenants have renewed their leases in early 2020
for an additional five years. As of September 2022, the collateral
and inline occupancy were 93% and 78%, respectively, compared to an
in-line occupancy of 79% in September 2021 and 88% in March 2020.
As of March 2022, comparable in-line sales (less than 10,000 SF)
were $443 PSF, compared to $449 PSF in December 2021. While
property performance generally improved through 2016, it has since
declined primarily due to lower rental revenues. The year-end 2022
net operating income (NOI) was lower than in 2020 and underwritten
levels. The loan transferred to special servicing in October 2020
due to imminent monetary default and failed to pay off at its
maturity date in June 2021. Cash management is in place and the
borrower and special servicer are discussing a potential loan
modification or deed-in-lieu of foreclosure. In August 2022, an
updated appraisal indicated an As-Is market value of $68.9 million,
a 73% decline in value since securitization. As of the March 2023
payment date, this loan was last paid through March 2023, and has
amortized by 15.8% since securitization.
CINEWORLD PLC: Regal Cinemas Closes Portland Theater
----------------------------------------------------
Kristine de Leon of The Oregonian reports that the lights have gone
out for Regal Cinemas' Tigard theater, according to a post on the
company's website.
Regal Tigard posted an undated announcement on its website that the
theater at 11626 S.W. Pacific Highway has closed. It directed
customers to locations at the Bridgeport Village, Pioneer Place and
Lloyd Center malls.
The closure comes after Regal's parent company, Cineworld, filed
for Chapter 11 bankruptcy in September 2022 following a massive
decline in the domestic box office during the COVID-19 pandemic.
The national chain has been closing theaters since last year. A
week after filing for bankruptcy, Regal closed its Sherwood
location, Willamette Week reported. The Sherwood theater opened in
2000.
Cineworld, which is the world's second-largest movie theater chain
behind AMC Entertainment Holdings, revealed the planned closure of
39 Regal locations across the United States, citing fallout from
the pandemic in bankruptcy filings in January 2023. The company
also stated in court documents that monthly rent per theater
increased by nearly 30% from 2019 to 2022.
Before the bankruptcy filing, there were roughly 500 Regal cinemas
in the U.S. The company took a loss of $3 billion in 2020, as many
theaters remained shuttered because of COVID-19, and a $708.3
million loss before tax in 2021. The net debt, excluding lease
liabilities, was $4.84 billion, according to an interim earnings
report filed last September 2022.
An email request for comment to Regal's corporate office was not
immediately returned.
Regal's Bridgeport Village Stadium theater, which opened in 2005
and is also in Tigard, remains open. Joy Cinema, located at 11959
S.W. Pacific Highway in Tigard, shows first-run and older movies.
About Cineworld Group
London-based Cineworld Group PLC was founded in 1995 and is the
world's second-largest cinema chain. Cineworld operates 751 sites
with 9,000 screens in 10 countries, including the Cineworld and
Picturehouse screens in the UK and Ireland, Yes Planet in Israel,
and Regal Cinemas in the United States.
According to The Guardian, the Griedinger family, including Mooky's
brother and deputy chief executive, Israel, have struggled to
maintain control of the ailing business but have been forced to
reduce their stake from 28% in recent years. Cineworld's top five
investors include the Chinese Jangho Group at 13.8%, Polaris
Capital Management (7.82%), Aberdeen Standard Investments (4.98%)
and Aviva Investors (4.88%).
The London-listed Cineworld, which has run up debt of more than
$4.8 billion after losses soared during the pandemic, is pinning
its hopes on a meatier slate of movies in 2022 to bounce back from
a two-year lull.
Cineworld Group plc and 104 affiliates sought Chapter 11 protection
(Bankr. S.D. Texas Lead Case No. 22-90168) on Sept. 7, 2022,
estimating more than $1 billion in assets and debt. Judge Marvin
Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Jackson Walker, LLP as
bankruptcy counsels; PJT Partners, LP as investment banker;
AlixPartners, LLP as restructuring advisor; and Ernst & Young, LLP
as tax services provider. Kroll Restructuring Administration, LLC
is the claims agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases on Sept. 23,
2022. The committee tapped Weil, Gotshal & Manges, LLP and
Pachulski Stang Ziehl & Jones, LLP as legal counsels; FTI
Consulting, Inc., as financial advisor; and Perella Weinberg
Partners, LP as investment banker.
COCOMOES LLC: Seeks to Tap Darby Law Practice as Bankruptcy Counsel
-------------------------------------------------------------------
Cocomoes, LLC seeks approval from the U.S. Bankruptcy Court for the
District of Nevada to employ Darby Law Practice, Ltd. as its
bankruptcy counsel.
The firm will render these legal services:
(a) advise the Debtor of its rights, powers and duties in the
continued operation of business and management of its properties;
(b) take all necessary action to protect and preserve the
Debtor's estate;
(c) prepare legal papers;
(d) attend meetings and negotiations with the Subchapter 5
trustee, representatives of creditors, equity holders or
prospective investors or acquirers and other parties in interest;
(e) appear before the court, any appellate courts and the
Office of the United States Trustee to protect the interests of the
Debtor;
(f) pursue approval of confirmation of a plan of
reorganization and approval of the corresponding solicitation
procedures and disclosure statement; and
(g) perform all other necessary legal services.
The Debtor paid Darby Law Practice a retainer fee in the amount of
$16,738.
The hourly rate for the firm's professionals is $500.
Kevin Darby, Esq., an attorney at Darby Law Practice, disclosed in
a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kevin A. Darby, Esq.
Darby Law Practice, Ltd.
499 W. Plumb Lane, Suite 202
Reno, NV 89509
Telephone: (775) 322-1237
Email: kevin@darbylawpractice.com
About Cocomoes LLC
Cocomoes, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Nev. Case No. 23-50160) on March 15,
2023. In the petition signed by Maurice Larimer, managing member,
the Debtor disclosed up to $50,000 in assets and up to $1 million
in liabilities.
Kevin A. Darby, Esq., at Darby Law Practice, Ltd., represents the
Debtor as legal counsel.
CODIAK BIOSCIENCES: Seeks Cash Collateral Access
------------------------------------------------
Codiak BioSciences, Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for authority to use
cash collateral and provide adequate protection.
The Debtors require the use of cash collateral to fund the
day-to-day operating expenses, including payments to employees and
otherwise sustaining the going concern value of the Debtors'
business.
Codiak BioSciences, Inc. and Codiak Securities Corporation, as
borrowers, Hercules Capital, Inc., Hercules Capital Funding Trust
2018-1, and Hercules Capital Funding Trust 2019-1, as lenders, and
Hercules Capital, Inc., as agent, are parties to the Loan and
Security Agreement, dated as of September 30, 2019, as amended by
(i) the First Amendment to Loan and Security Agreement, dated April
20, 2020, (ii) the Second Amendment to Loan and Security Agreement,
dated September 16, 2021, and (iii) the Consent and Third Amendment
to Loan and Security Agreement, dated October 29, 2021.
As of the Petition Date, the Prepetition Borrowers were indebted to
the Prepetition Secured Parties under the Prepetition Financing
Documents, for (a) an aggregate principal amount of approximately
$25 million and (b) accrued and unpaid interest, fees, and costs,
expenses, charges, indemnities, and all other obligations incurred
or accrued with respect to the foregoing pursuant to, and in
accordance with, the Prepetition Financing Documents.
As adequate protection for the use of Cash Collateral and
Prepetition Collateral, the Debtors propose providing the
Prepetition Secured Parties with, among other things: (a) perfected
security interests, replacement liens, and superpriority
administrative claims upon all Prepetition Collateral and
Postpetition Collateral for any Diminution in Value of the
Prepetition Collateral and, subject to entry of a Final Order, the
Prepetition Secured Obligations; (b) postpetition interest, debt
paydowns and payment of certain reasonable and necessary pre and
postpetition Agent Advisors' fees and expenses incurred by the
Prepetition Secured Parties; and (c) payment of certain reasonable
and necessary pre and postpetition fees and expenses incurred by
the Agent.
A copy of the motion is available at https://bit.ly/3Kh1oLV from
PacerMonitor.com.
About Codiak BioSciences, Inc.
Codiak BioSciences, Inc. is a clinical-stage biopharmaceutical
company focused on pioneering the development of exosome-based
therapeutics, a new class of medicines with the potential to
transform the treatment of a wide spectrum of diseases with high
unmet medical need.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10350) on March 27,
2023. In the petition signed by Paul Huygens, as chief
restructuring officer, the Debtor disclosed $106,167,706 in assets
and $85,374,781 in liabilities.
The Debtor tapped Ryan M. Bartley, Esq., at Young Conaway Stargatt
& Taylor, LLP as legal counsel, Stretto, Inc. as claims, noticing
agent and administrative advisor, and Province, LLC as
restructuring advisor.
COOK & BOARDMAN: Blackstone Fund Marks $49M Loan at 15% Off
-----------------------------------------------------------
Blackstone Secured Lending Fund has marked its $49,193,000 loan
extended to The Cook & Boardman Group, LLC to market at $41,998,000
or 85% of the outstanding amount, as of December 31, 2022,
according to a disclosure contained in Blackstone Secured Lending's
Form 10-Q for the quarterly period ended December 31, 2022, filed
with the Securities and Exchange Commission.
Blackstone Secured Lending is a participant in a First Lien Debt to
The Cook & Boardman Group, LLC. The loan accrues interest at a rate
of 9.99% (SOFR +5.75%) per annum. The loan matures on October 17,
2025.
Blackstone Secured Lending is a Delaware statutory trust formed on
March 26, 2018, and structured as an externally managed,
non-diversified closed-end management investment company. On
October 26, 2018, the Company elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, the Company elected to be treated for U.S.
federal income tax purposes, and intends to qualify annually, as a
regulated investment company, under Subchapter M of the Internal
Revenue Code of 1986, as amended. The Company is externally managed
by Blackstone Credit BDC Advisors LLC.
The Cook & Boardman Group, LLC, headquartered in Winston-Salem,
North Carolina, is a national distributor of commercial doors and
related products primarily used in commercial applications.
Littlejohn & Co., through its affiliates, is the primary owner of
C&B.
COOPER'S HAWK: Moody's Lowers CFR to Caa2, Outlook Stable
---------------------------------------------------------
Moody's Investors Service downgraded Cooper's Hawk Intermediate
Holding, LLC's corporate family rating to Caa2 from Caa1, its
probability of default rating to Caa3-PD from Caa2-PD and its
senior secured bank credit facilities to Caa2 from Caa1. The
outlook remains stable.
The downgrade reflects Cooper's Hawk's weakened liquidity and very
high leverage as a result of a difficult operating environment that
has pressured margins due to high primary commodity costs and wage
inflation. It also reflects Cooper's Hawk's increasing level of
free cash flow deficits given the company's high capital spending
on new restaurants. This has resulted in significantly diminished
financial flexibility that leaves little cushion to absorb any
softness in discretionary consumer spending or further earnings
weakness. To that end, Moody's adjusted debt/EBITDA has increased
to around 14x as of September 30, 2022 and EBIT/interest coverage
was -0.3x. While Moody's expects some abatement in commodity and
wage pressures, the expected improvement in metrics over the latter
part of the year would still result in leverage above the 9.0x
downgrade trigger and the potential need to seek outside capital to
fund the business
Downgrades:
Issuer: Cooper's Hawk Intermediate Holding, LLC
Corporate Family Rating, Downgraded to Caa2 from Caa1
Probability of Default Rating, Downgraded to Caa3-PD
from Caa2-PD
Backed Senior Secured 1st Lien Term Loan B, Downgraded to
Caa2 (LGD3) from Caa1 (LGD3)
Backed Senior Secured 1st Lien Revolving Credit Facility,
Downgraded to Caa2 (LGD3) from Caa1 (LGD3)
Outlook Actions:
Issuer: Cooper's Hawk Intermediate Holding, LLC
Outlook, Remains Stable
RATINGS RATIONALE
Cooper's Hawk's Caa2 CFR reflects its small size relative to its
rated restaurant peers, limited geographic diversification, weak
credit metrics and weakened liquidity. While sales have rebounded
as restaurants are now operating at full capacity and consumer
demand for experiential food and entertainment has increased,
pressures from high commodities, wages and other operating expenses
have pressured the company's earnings and resulted in very high
financial leverage. Moody's adjusted debt/EBITDA was 14.0x for the
LTM period ending September 30, 2022, which include Moody's
standard lease adjustments. Also reflected in the rating are
governance considerations, including private equity ownership,
which has led to high financial leverage, and an aggressive growth
strategy. However, its sponsor, Ares, has demonstrated its
commitment to support the company's growth by providing additional
liquidity at Cooper's Hawk's parent holding company.
The rating is supported by Cooper's Hawk's solid position in the
nascent restaurant/wine club space which caters to the increasing
demand for experiential gatherings. As one of the first movers with
multiple locations, its wine club is the largest in the US. With
monthly membership fees accounting for about 30% of the company's
total revenue, the segment provides a base level of revenue,
earnings and cash flow support. The wine club also bolsters
restaurant traffic considerably due to the very high rate of
customer in-store pickup. Further support is provided by its
diverse customer base and broad appeal among varying demographics.
Moody's expects continued organic revenue growth over the next few
years, in addition to significant new unit growth.
The stable outlook reflects Moody's expectation that liquidity will
improve, supported by balance sheet cash at its parent holding
company and previosly provided by its financial sponsor owner and
revolver availability. The outlook also reflects Moody's
expectation that operating performance will improve due to
normalizing commodity and wage costs and the company's expense
structure will result in better cash flows.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if operating performance sustainably
improves such that the company generates at least break even free
cash flow to support growth plans with ample revolver availability.
An upgrade would also require leverage and coverage approaching
sustainable levels to support refinancing on economically viable
terms.
Ratings could be downgraded if liquidity does not improve at least
from current levels or if the probability of default increases for
any reason.
Cooper's Hawk Intermediate Holding, LLC ("Cooper's Hawk") is an
experiential concept restaurant chain that also features the
largest wine club in the US. The company currently operates 55
restaurants, which also serve as the primary pickup location for
recurring monthly wine purchases by its wine club members. Cooper's
Hawk was established in 2005 by founder and CEO Tim McEnery and was
purchased by Ares Private Equity Group in July 2019. Revenue for
2022 was around $500 million.
The principal methodology used in these ratings was Restaurants
published in August 2021.
COSMOS HEALTH: Secures EUR4.1 Million Promissory Note From Cana
---------------------------------------------------------------
Cosmos Health Inc. was issued a five-year secured promissory note
in the principal amount of EUR4,100,000 by Cana Laboratories
Holdings (Cyprus) Limited, a corporation organized under the laws
of the Republic of Cyprus. The Note bears interest at 5% plus 1
month LIBOR per annum and will be used by Cana Holdings to cover
specified obligations. Cana Holdings and its wholly-owned
subsidiary, Pharmaceutical Laboratories Cana S.A., a corporation
organized under the laws of Greece are prohibited from using the
proceeds of the Note for any capitalization or debt repayment
without the Company's prior written consent. The principal amount
and all accrued interest and other fees are due upon maturity and
may not be prepaid in whole or in part, except as provided therein.
The Note is a senior secured obligation of Cana Holdings with
first priority on all current and future indebtedness of Cana
Holdings and its subsidiaries. A breach or default under any other
financial instrument by Cana Holdings or Cana Pharmaceutical that
results in a Material Adverse Effect shall, at the Company's
option, be declared a default under this Note.
The Note is secured by: (a) a share pledge agreement of same date
over all of the issued and outstanding shares of Cana
Pharmaceutical held by Cana Holdings; and (b) a share pledge
agreement of same date over all of the issued and outstanding
shares of Cana Holdings held by the two shareholders of Cana
Holdings, Konstantinos-Gaston Kanaroglou and Konstantina-Mathilde
Kanaroglou.
Issuance of the Note and the two share pledges completes the first
of two transactions contemplated by the Binding Letter of Intent
concluded by the Company, Cana Holdings, Cana Pharmaceutical and
the Cana Shareholders, dated July 19, 2022, and amended on Jan. 10,
2023. The second transaction contemplated by the LOI is the
acquisition of all of the outstanding shares of Cana Holdings by
the Company pursuant to a stock purchase agreement to be concluded
no later than March 31, 2023.
About Cosmos Health Inc.
Cosmos Health Inc. (Nasdaq: COSM), formerly known as Cosmos
Holdings, is a global healthcare group that was incorporated in
2009 and is headquartered in Chicago, Illinois. Cosmos Health is
engaged in the nutraceuticals sector through its own proprietary
lines of products "Sky Premium Life" and "Mediterranation."
Additionally, the Company is operating in the pharmaceutical sector
through the provision of a broad line of branded generics and OTC
medications and is involved in the healthcare distribution sector
through its subsidiaries in Greece and UK serving retail pharmacies
and wholesale distributors. Cosmos Health is strategically focused
on the R&D of novel patented nutraceuticals (IP) and specialized
root extracts as well as on the R&D of proprietary complex generics
and innovative OTC products. Cosmos has developed a global
distribution platform and is currently expanding throughout Europe,
Asia and North America. Cosmos Health has offices and distribution
centers in Thessaloniki and Athens, Greece and Harlow, UK. More
information is available at www.cosmoshealthinc.com and
www.skypremiumlife.com.
Cosmos Holdings reported a net loss of $7.96 million for the year
ended Dec. 31, 2021, compared to net income of $820,786 for the
year ended Dec. 31, 2020. As of Sept. 30, 2022, the Company had
$45.62 million in total assets, $40.46 million in total
liabilities, $1.71 million in preferred stock, and $3.44 million in
total stockholders' equity.
San Francisco, California-based Armanino LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 15, 2022, citing that the Company has suffered
recurring losses and cash used in operations that raises
substantial doubt about its ability to continue as a going concern.
CYPRESS COVE: Fitch Affirms 'BB+' IDR, Outlook Stable
-----------------------------------------------------
Fitch Ratings has affirmed Cypress Cove at HealthPark Florida,
Inc.'s Issuer Default Rating (IDR) at 'BB+' and the revenue rating
on the following Lee County Industrial Development Authority (FL)
bond issued on behalf of Cypress Cove at 'BB+':
- $43,850,000, (Cypress Cove at HealthPark Florida, Inc. Project)
healthcare facilities revenue bonds series 2022A;
- $7,200,000 (Cypress Cove at HealthPark Florida, Inc. Project)
healthcare facilities revenue bonds series 2022B-1;
- $16,800,000 (Cypress Cove at HealthPark Florida, Inc. Project)
healthcare facilities revenue bonds series 2022B-2.
The Rating Outlook is Stable.
Entity/Debt Rating Prior
----------- ------ -----
Cypress Cove at
Health Park (FL) LT IDR BB+ Affirmed BB+
Cypress Cove
at Health Park
(FL) /General
Revenues/1 LT LT BB+ Affirmed BB+
SECURITY
The 2022 bonds are secured by a pledge of gross revenues, a
leasehold mortgage on the land on which the community is located,
and a debt service reserve fund.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects Cypress Cove's elevated leverage position
and thinner operating profile, balanced by a steady market position
as a single site life care community (LPC) in the generally
favorable service area of Fort Myers, FL and strong net entrance
fee receipts, which provide for good levels of debt service
coverage for the rating level and reflect Cypress Cove's mostly
fully amortizing contracts.
Construction on the Oaks, Cypress Cove's 48 unit independent living
(IL) villa and hybrid home expansion, continues, with move-ins
expected to begin by the end of 2023. The Oaks remains 100%
pre-sold, with 10% depositors, and has a 24-person depositor
waitlist, which indicates very good demand for the project. The
Oaks project includes a new dining venue and clubhouse with a pub,
fitness center, and pool and is being built within walking distance
of Cypress Cove's current campus. Cypress Cove's elevated debt
burden is related to the 2022 bonds -- about $43.9 million in
permanent debt and $24 million in short-term debt -- issued to fund
the Oaks' construction.
Cypress Cove management reports that Hurricane Ian caused minimal
damage to the Oaks construction site and that construction crews
were back on site working within a few days after the hurricane.
However, Cypress Cove's current campus sustained more damage,
mostly from flooding. The first floors in most of the buildings on
campus were affected. Repairs have been underway since immediately
after the hurricane, and Cypress Cove management expects most units
in the affected areas to be back online within the next three to
six months. Some first floor units have already been returned to
service.
Cypress Cove management also reported they will take the
opportunity to renovate and upgrade two dining venues, the medical
clinic, and auditorium that were in affected areas. The rest of the
campus, including the upper floors in the building that were
flooded, are in service and management reports a recent increase in
demand, with IL occupancy growing in fiscal 2023.
The recovery from Hurricane Ian will require additional capital
spending. The cost will be offset by funds expected from insurance
and FEMA, although Cypress Cove is expected to absorb some of the
additional spending. Overall, Fitch's forward look, which includes
the capital spending for the Hurricane Ian recovery, shows Cypress
Cove's financial profile remaining consistent with a non-investment
grade credit. Stabilized occupancy for the Oaks (95% occupied) is
expected by November 2024. Cypress Cove continues to cover the full
maximum annual debt service (MADS) of $7.3 million, which includes
the project debt, with coverage averaging about 1.9x, over the last
four audited years.
Cypress Cove's ability to cover the full MADS without the benefit
of any of the revenues from the 48 expansion IL villas and hybrid
homes is viewed as a positive. Cypress Cove will not be tested on
the higher MADS until fiscal 2026.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Single Site LPC with Good Market Position
The midrange revenue defensibility reflects Cypress Cove's market
position as a single site LPC operating in a relatively competitive
service area, with competition coming from full continuum of care
facilities, as well as providers that offer select continuum of
care services, such as standalone assisted living (AL) facilities.
The competitive service area is balanced by a good demand for
services, Cypress Cove's relationship with Lee Memorial Health
System (LMHS), especially for Medicare rehabilitation referrals,
and a demographically solid service area with very good population
growth, and wealth indicators that are consistent with state and
national averages.
IL occupancy is consistent with the midrange revenue defensibility
assessment, averaging approximately 90% over the last four audited
years, although management reports IL occupancy rising above 90% as
a result of recent sales.
Operating Risk: 'bb'
Thinner Operating Profile; Elevated Capex Spend and Debt Burden
The weak operating risk assessment is largely due to a thinner
underlying operating performance, with operating ratios well above
100% through the five-year historical period, and capital metrics
that are expected to remain elevated over the next two to four
years as Cypress Cove completes and fills the Oaks. The operating
ratio was 116.5% in fiscal 2022 (Sept. 30 year-end). The weaker
operating ratio has historically been offset by Cypress Cove's net
operating margin, adjusted (NOMA), which averaged about 26.8% over
this time. The NOMA, which is more consistent with a midrange
operating risk assessment, is supported by strong net entrance fee
receipts that reflect Cypress Cove's mostly fully amortizing
contracts.
Fitch expects the operating ratio to improve from the additional
revenues from the Oak's IL units. Capex has been adequate at
Cypress Cove, averaging 111% of depreciation over the last four
fiscal years with an average age of plant of 8.5 years at FYE 2022.
The Oaks project will keep capex elevated over the next three
years. Fitch expects capex to moderate to below depreciation after
that, with Cypress Cove having minimal capital needs. The debt
associated with the Oaks will keep Cypress Cove's capital-related
metrics stressed. MADS of $7.3 million, equates to 16.9% of 2022
revenues, which is consistent with the weak operating risk
assessment.
Financial Profile: 'bb'
Financial Profile Steady Through a Moderate Stress Scenario
Given Cypress Cove's midrange revenue defensibility assessment and
weak operating risk assessment and Fitch's forward-looking scenario
analysis, Fitch expects key leverage metrics to remain consistent
with the 'bb' financial profile throughout the current economic and
business cycle. At FYE 2022, Cypress Cove had approximately $45.1
million of unrestricted cash and investments and 412 days cash on
hand (DCOH), as calculated by Fitch .
Fitch's baseline scenario, which is a reasonable forward look of
financial performance over the next five years given current
economic expectations, shows Cypress Cove maintaining operating and
financial metrics that are largely consistent with historical
levels of performance as the Oaks is built and filled. The
operating ratio is expected to show improvement in the out years,
given the additional IL revenue.
Capital spending is expected to be above depreciation through
fiscal 2023, and return to normal levels after that. As part of the
forward look, Fitch assumes an economic stress (to reflect
financial market volatility), which is specific to Cypress Cove's
asset allocation. Additionally, Fitch included Cypress Cove's
ground lease with LHR as a contingent liability and that assumes
Cypress Cove's adoption of the updated operating lease accounting.
The ground lease suppresses Cypress Cove's adjusted leverage
metrics. However, the 'BB' financial profile reflects Fitch view of
the ground lease as credit neutral given the close relationship
between Cypress Cove and LHR, including overlapping governance,
subordination of the ground lease to MTI debt, and deferring of
lease payments as necessary should Cypress Cove experience
operating difficulties.
For the Oaks project, LHR is waving lease payments on the parcel of
land upon which the project is being built until project
stabilization. Overall, Cypress Cove's cash-to-adjusted debt levels
remain consistent with a 'bb' category credit. Debt service
coverage remains good for the rating level, and DCOH remains well
above 200 days throughout the stress.
Asymmetric Additional Risk Considerations
No asymmetric risks informed the rating assessments.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Weakening in the financial profile such that cash to adjusted
debt falls to below 20% and is not expected to improve;
- Weaker than expected debt service coverage that falls below 1.5x,
during both the project construction period and through
post-project stabilization;
- Project-related challenges, such as construction delays, slow
fill-up, or cost overruns that threaten to weaken the financial
profile and the ability for Cypress Cove to paydown the short-term
debt and cover MADS.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Improved financial profile post-project stabilization such that
cash to adjusted to debt is expected to stabilize above 70% and
MADS coverage is consistently above 2x.
CREDIT PROFILE
Cypress Cove is a type-A life plan community (LPC) located in Fort
Myers, FL. The community consists of 337 IL unit (ILU) apartments,
44 IL villas, 44 AL unit (ALU) apartments, 44 memory care
apartments, and a 60 skilled nursing beds. Cypress Cove offers
fully-amortizing and 75% refundable entrance fee plans, as well a
Type 'B' and Type 'C' contracts. A majority of residents select the
Type 'A' fully-amortizing plan. Additionally, Cypress Cove does not
take Medicaid in its skilled nursing unit. In FY22, Cypress Cove
had total operating revenues of $43.9 million.
Opened in 1999, Cypress Cove is situated on a 48-acre parcel of
land that is part of 402-acre master development called HealthPark
Florida, which also features the HealthPark Medical Center (a
368-bed acute care hospital), that is part of Lee Health (LH), a
four hospital public health system that is located in Lee County,
FL. Cypress Cove is not part of LH, but the two organizations
mutually benefit from a close working relationship.
Lee Healthcare Resources (LHR) is the sole corporate member of
Cypress Cove. Cypress Cove is located on land owned by LHR for
which it pays an annual ground lease payment, of approximately $1.5
million, which is subordinate to debt service payments. LHR is also
a support organization for LH. However, LH is not owned by or
formally a part of LHR or Cypress Cove.
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.
DIAMOND SPORTS: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Diamond
Sports Group, LLC and its affiliates.
The committee members are:
1. Harte-Hanks Response Management/Austin, Inc.
1 Executive Drive, Suite 303
Chelmsford, MA 01824
Attention: Brian Linscott
Phone: (978) 436-2728
Email: brian.linscott@hartehanks.com
2. U.S. Bank Trust Company, National Association
as Indenture Trustee
60 Livingston Avenue
St. Paul, MN 55107
Attention: Barry Ihrke
Phone: (651) 466-5858
Email: Barry.ihrke@usbank.com
3. Intelsat US LLC
7900 Tysons One Place
McLean VA 22102
Attention: Stephen Chernow
Phone: (703)-559-8133
Email: Stephen.Chernow@intelsat.com
4. VITAC Corporation
8300 East Maplewood Ave., Suite 310
Greenwood Village, CO 80111
Attention: JP Son
Phone: (866) 821-6580
Email: Jp.son@verbit.ai
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 Diamond Sports Group
Diamond Sports Group, LLC operates as a sports marketing company.
It offers seminars, combine, speed and agility assessments,
recruiting tools, and online training sessions for sports including
football, baseball, soccer, and basketball.
Diamond Sports Group and 29 of its affiliates sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case
No. 23-90116) on March 14, 2023. In the petition filed by David F.
DeVoe, Jr., as chief financial officer and chief operating officer,
Diamond Sports Group listed $1 billion to $10 billion in both
assets and liabilities.
The Debtors tapped Porter Hedges, LLP as general bankruptcy
counsel; Wilmer Cutler Pickering Hale and Dorr, LLP as conflicts
counsel; AlixPartners, LLP as financial advisor; and Moelis &
Company, LLC and Liontree Advisors, LLC as investment bankers.
Kroll Restructuring Administration, LLC is the claims agent.
DIOCESE OF ALBANY: Seeks to Tap Nolan Heller Kauffman as Counsel
----------------------------------------------------------------
The Roman Catholic Diocese of Albany, New York seeks approval from
the U.S. Bankruptcy Court for the Northern District of New York to
employ Nolan Heller Kauffman LLP as its counsel.
The firm will render these services:
(a) advise the Debtor with respect to its powers and duties in
the continued operation of the business and management of its
property;
(b) prepare legal papers;
(c) represent the Debtor in litigation;
(d) represent the Debtor in various transactional and other
legal matters as may be required or desirable;
(e) assist in the preparation of the schedules and statement
of financial affairs for the Debtor's petition;
(f) negotiate with creditors;
(g) advise the Debtor regarding the assumption or rejection of
executory contracts and unexpired leases;
(h) draft and file retention applications for such special
counsel as is necessary to represent the interests of the Debtor
regarding non-bankruptcy matters that may arise during the course
of the case; and
(i) perform all legal services for applicant as may be
necessary herein.
The hourly rates of the firm's counsel and staff are as follows:
Senior Partners $425
Partners and Of Counsel $405
Associates $375
Paralegals $150
The firm received pre-petition retainers in the aggregate amount of
$300,000, each in the amount of $150,000. In addition, the Debtor
paid $9,055 on account of fees and expenses incurred during the
month of November 2022.
Francis Brennan, Esq., an attorney at Nolan Heller Kauffman,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Francis J. Brennan, Esq.
Nolan Heller Kauffman LLP
80 State Street, 11th Floor
Albany, NY 12207
Telephone: (518) 449-3300
Facsimile: (518) 432-3123
Email: fbrennan@nhkllp.com
About the Roman Catholic Diocese of Albany
Roman Catholic Diocese of Albany is a religious organization in
Albany, New York. The Roman Catholic Diocese of Albany covers 13
counties in Eastern New York, including a portion of a 14th county.
Its Mother Church is the Cathedral of the Immaculate Conception in
the city of Albany.
New York's Child Victims Act, which took effect in August 2019,
temporarily sets aside the usual statute of limitations for
lawsuits to give victims of childhood sexual abuse a year to pursue
even decades-old claims. Hundreds of new lawsuits have been filed
against churches and other institutions since the law took effect
Aug. 14, 2019.
Facing the financial weight of new sexual misconduct lawsuits, at
least four of the eight Roman Catholic dioceses in the state, has
already sought Chapter 11 protection. The dioceses that have
declared bankruptcy include the Diocese of Rochester and the
Diocese of Rockville Centre on Long Island.
The Catholic Diocese of Alabany sought relief under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case No. 23-10244) on
March 15, 2023. In the petition filed by Fr. Robert P. Longobucco,
the Debtor estimated assets between $10 million and $50 million and
liabilities between $50 million and $100 million.
The Debtor tapped Nolan Heller Kauffman LLP as counsel and Keegan
Linscott & Associates, PC as financial advisor. Donlin, Recano &
Company, Inc. is the claims and noticing agent.
DIOCESE OF ALBANY: Taps Donlin Recano as Claims and Noticing Agent
------------------------------------------------------------------
The Roman Catholic Diocese of Albany, New York seeks approval from
the U.S. Bankruptcy Court for the Northern District of New York to
employ Donlin, Recano & Company, Inc. as claims and noticing
agent.
The firm will oversee the distribution of notices and will assist
in the maintenance, processing and docketing of proofs of claim
filed in the Chapter 11 case of the Debtor.
The Debtor has agreed to provide the firm a retainer in the amount
of $20,000. The firm has agreed to waive fees incurred prepetition
in the amount of $1,808.
Nellwyn Voorhies, an executive director at Donlin, Recano &
Company, disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Nellwyn Voorhies
Donlin, Recano & Company, Inc.
48 Wall Street
New York, NY 10016
Telephone: (619) 346-1628
Email: nvoorhies@donlinrecano.com
About the Roman Catholic Diocese of Albany
Roman Catholic Diocese of Albany is a religious organization in
Albany, New York. The Roman Catholic Diocese of Albany covers 13
counties in Eastern New York, including a portion of a 14th county.
Its Mother Church is the Cathedral of the Immaculate Conception in
the city of Albany.
New York's Child Victims Act, which took effect in August 2019,
temporarily sets aside the usual statute of limitations for
lawsuits to give victims of childhood sexual abuse a year to pursue
even decades-old claims. Hundreds of new lawsuits have been filed
against churches and other institutions since the law took effect
Aug. 14, 2019.
Facing the financial weight of new sexual misconduct lawsuits, at
least four of the eight Roman Catholic dioceses in the state, has
already sought Chapter 11 protection. The dioceses that have
declared bankruptcy include the Diocese of Rochester and the
Diocese of Rockville Centre on Long Island.
The Catholic Diocese of Alabany sought relief under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case No. 23-10244) on
March 15, 2023. In the petition filed by Fr. Robert P. Longobucco,
the Debtor estimated assets between $10 million and $50 million and
liabilities between $50 million and $100 million.
The Debtor tapped Nolan Heller Kauffman LLP as counsel and Keegan
Linscott & Associates, PC as financial advisor. Donlin, Recano &
Company, Inc. is the claims and noticing agent.
DIOCESE OF ALBANY: Taps Keegan Linscott as Financial Advisor
------------------------------------------------------------
The Roman Catholic Diocese of Albany, New York seeks approval from
the U.S. Bankruptcy Court for the Northern District of New York to
employ Keegan Linscott & Associates, PC as its financial advisor.
The firm will render these services:
(a) develop reorganization and liquidation models;
(b) consult with respect to the Debtor's accounting systems
and procedures;
(c) analyze financing and financial alternatives for the
Debtor; and
(d) provide advisory services on the reorganization and
restructuring of the Debtor.
The hourly rates of the firm's counsel and staff are as follows:
Director $350 - $375
Manager $250 - $275
Supervisor $200
Senior $150
Staff $125
In addition, the firm will seek reimbursement for expenses
incurred.
Christopher Linscott, co-founder of Keegan Linscott & Associates,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Christopher G. Linscott
Keegan Linscott & Associates, PC
3443 N. Campbell Ave., #115
Tucson, AZ 85719
Telephone: (520) 884-0176
Facsimile: (520) 884-8767
Email: clinscott@keeganlinscott.com
About the Roman Catholic Diocese of Albany
Roman Catholic Diocese of Albany is a religious organization in
Albany, New York. The Roman Catholic Diocese of Albany covers 13
counties in Eastern New York, including a portion of a 14th county.
Its Mother Church is the Cathedral of the Immaculate Conception in
the city of Albany.
New York's Child Victims Act, which took effect in August 2019,
temporarily sets aside the usual statute of limitations for
lawsuits to give victims of childhood sexual abuse a year to pursue
even decades-old claims. Hundreds of new lawsuits have been filed
against churches and other institutions since the law took effect
Aug. 14, 2019.
Facing the financial weight of new sexual misconduct lawsuits, at
least four of the eight Roman Catholic dioceses in the state, has
already sought Chapter 11 protection. The dioceses that have
declared bankruptcy include the Diocese of Rochester and the
Diocese of Rockville Centre on Long Island.
The Catholic Diocese of Alabany sought relief under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case No. 23-10244) on
March 15, 2023. In the petition filed by Fr. Robert P. Longobucco,
the Debtor estimated assets between $10 million and $50 million and
liabilities between $50 million and $100 million.
The Debtor tapped Nolan Heller Kauffman LLP as counsel and Keegan
Linscott & Associates, PC as financial advisor. Donlin, Recano &
Company, Inc. is the claims and noticing agent.
DIOCESE OF SANTA ROSA: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of The Roman
Catholic Bishop of Santa Rosa.
The committee members are:
1. Robin Kiraly
2. Kristen Walton
3. Kevin Kielty
4. Michael Andrew Mugridge
5. Darryl Evans
6. James Demartini
7. Mark Eugene Amador
8. Paul Verdu
9. Patricia Johnson-Martinez
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 Santa Rosa Roman Catholic Diocese
The Roman Catholic Diocese of Santa Rosa in California is a
diocese, or ecclesiastical territory, of the Roman Catholic Church
in the northern California region of the United States, named in
honor of St. Rose of Lima.
Abuse victims filed hundreds lawsuits after the state of California
paused for three years its statute of limitation on claims for
child sexual abuse. The pause ended on Dec. 31, 2022.
Facing more than 200 new legal claims over childhood sexual abuse,
the Roman Catholic Bishop of Santa Rosa, also known as the Diocese
of Santa Rosa, filed a Chapter 11 petition (Bankr. N.D. Calif. Case
No. 23-10113) on March 13, 2023. The Debtor estimated $10 million
to $50 million in both assets and liabilities.
The Hon. Charles Novack is the case judge.
Felderstein Fitzgerald Willoughby Pascuzzi & Rios, LLP, led by Paul
J. Pascuzzi, is the Debtor's counsel. Donlin, Recano & Company,
Inc. is the claims agent.
DIVERSIFIED MEDICAL: Seeks $5MM DIP Loan from Bay Point
-------------------------------------------------------
Diversified Medical Healthcare, Inc. and affiliates ask the U.S.
Bankruptcy Court for the District of South Carolina for authority
to use cash collateral and obtain postpetition financing from Bay
Point Advisors, LLC.
The DIP Facility consists of:
(i) upon entry of the Interim Order, an amount up to $300,000
to be used for priority wage claims and certain operating expenses
of the Debtors in accordance with the Budget (subject to the
provisions of the DIP Order and the DIP Term Sheet); and
(ii) upon entry of the Final Order, a senior secured
super-priority non-revolving line of credit to Borrower in an
aggregate principal amount of up to $5 million.
The Debtors' use of the proceeds of the DIP Facility is subject to
the DIP Budget and the terms and conditions of the DIP Term Sheet.
The Interim DIP Loan will mature as follows: Subject to the
provisions of the DIP Order and the DIP Term Sheet, the earlier of
(i) three months after the closing, and (ii) the occurrence of a
Termination Event, as set forth in the DIP Order.
The Final DIP Loan will mature as follows: Subject to the
provisions of the DIP Order and the DIP Term Sheet, the earlier of
(i) 12 months after the closing, and (ii) the occurrence of a
Termination Event, as set forth in the DIP Order. The Interim DIP
Loan will bear interest at a fixed rate equal to 10% per annum. The
Final DIP Loan will bear interest at a fixed rate equal to 15% per
annum.
The DIP Facility includes these fees:
(i) An origination fee for the Interim DIP Loan in the amount
of 10% of the Loan A amount, or $30,000. An origination fee for
Loan B in the amount of 5% of the Loan B amount;
(ii) A Lockout Fee consisting of six months minimum interest of
the Final DIP Loan at closing; and
(iii) A $250,000 Break-up Fee in the event the Final DIP Loan is
approved but does not close.
The events that constitute an "Event of Default" include:
a. The entry of a Court order terminating the right of the
Debtors to use the DIP Facility;
b. The entry of a Court order that impairs in any way the
security interests, liens, priority claims or rights granted to the
DIP Lender under the terms of the Interim Order;
c. The Interim Order will cease, for any reason, to be in full
force and effect, or the Debtors will so assert in writing, or any
liens or claims created in favor of the DIP lender under the
Interim Order will cease to be enforceable and of the same effect
and priority purported to be created, or the Debtors will so assert
in writing;
d. A Court order is entered reversing, staying, vacating or
otherwise modifying the Interim Order or any provision contained
therein without the prior written consent of the DIP Lenders; and
e. The Debtors' failure to comply with the Budget, including
any Permitted Variances.
The Debtors missed payroll on Friday, March 17, 2023. Despite this,
the Debtors' more than 125 loyal employees have largely remained on
site and have continued to carry on the Debtors' business and
operations. Absent entry of an order allowing the Debtors to secure
funds with which to pay their employees for the services provided,
the Debtors are unlikely to be able to continue operating as a
going concern.
The Debtors' ability to continue their operations and reorganize
depends on obtaining access to the DIP Facility to immediately fund
an overdue payroll that was missed on March 17.
On November 12, 2021, Premier Medical, Inc., Diversified Property
Ventures, LLC, and Diversified Properties 2, LLC, Diversified
Medical Healthcare, Inc., Vessel Medical, Inc., CPT Medical, Inc.,
OnGen, Inc., and Kevin Murdock, as guarantors, and Southern First
Bank, as lender, entered into a Loan and Security Agreement,
pursuant to which SFB agreed to provide the Borrowers (i) a term
loan in the original principal amount of $11 million, and (ii) a
revolving line of credit for advances up to $5 million. To evidence
the Borrowers' obligations under the Property Loan, DPV and DP2
issued a Term Note in favor of SFB in the original principal amount
of $11 million. To evidence the Borrowers' obligations under the
RLOC, Premier issued the RLOC Note in favor of SFB in the original
principal amount of $5 million.
As of the Petition Date, the Debtors owed SFB in the aggregate
principal amount of $19.403 million.
On August 19, 2022, Diversified Property Holdings, LLC, as
borrower, made a Promissory Note with a Balloon Payment in favor of
First Carolina Holdings, LLC, as lender, in the original principal
amount of $4 million. To secure DPH's obligations under the First
Carolina Note, DPV and DP2 executed the Mortgage pursuant to which
First Carolina was granted a second priority security interest in
and liens on the Real Property.
As of the Petition Date, the Debtors owed First Carolina in the
aggregate principal amount of $4.785 million.
As adequate protection, the DIP Lender will have a first-priority
security interests in and liens on the New Money and the
Unencumbered Assets, neither of which are Prepetition Collateral.
The DIP Lender will have liens junior to the Prepetition Liens on
the Prepetition Collateral. The Debtors submit that they may grant
the Interim DIP Liens without providing adequate protection to the
Prepetition Lenders.
Meanwhile, the Prepetition Lenders are given (i) continuing, valid,
binding, enforceable and perfected post-petition "replacement"
liens on the Prepetition Collateral to the extent of any
post-petition Diminution in Value of the Prepetition Collateral;
(ii) an allowed superpriority administrative expense claim in each
of the Chapter 11 Cases to the extent of any post-petition
Diminution in Value of the Prepetition Lenders' interest in the
Prepetition Collateral; and (iii) access to the Debtors' books and
records and such financial reports as are provided to the DIP
Lender.
A copy of the motion is available at https://bit.ly/3lWxQd9 from
PacerMonitor.com.
About Diversified Medical Healthcare, Inc.
Diversified Medical Healthcare, Inc. sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.S.C. Case No.
23-00813) on March 21, 2023. In the petition signed by Kevin
Murdock, sole owner, the Debtor disclosed up to $50,000 in assets
and up to $50 million in liabilities.
Judge Helen E. Burris oversees the case.
Robert H. Cooper, Esq., at the Cooper Law Firm, represents the
Debtor as legal counsel.
DMD SERVICES: Seeks to Hire Rittenhouse as Real Estate Appraiser
----------------------------------------------------------------
DMD Services, Inc. seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Pennsylvania to employ Rittenhouse
Appraisals as real estate appraiser.
The Debtor requires the services of a real estate appraiser in
order to establish the value of its real estate located at 891 Main
Street, Darby, Pennsylvania.
The firm will charge the Debtor a flat fee of $3,985 for its
services.
To the best of the Debtor's knowledge, Rittenhouse Appraisals has
no other connection and/or interest adverse to the Debtor, its
creditors, any other party in interest, their respective attorneys
and accountants, the United States Trustee, or any person employed
in the office of the United States Trustee in the matter upon which
it is to be engaged.
The firm can be reached at:
Rittenhouse Appraisals
1800 John F. Kennedy Blvd., Suite 300
Philadelphia, PA 19103
Telephone: (267) 314-8635
About DMD Services
DMD Services, Inc. filed a Chapter 11 bankruptcy petition (Bankr.
E.D. Pa. Case No. 23-10152) on January 18, 2023, with as much as
$50,000 in both assets and liabilities. Kim Graves, president,
signed the petition.
Judge Magdeline D. Coleman oversees the case.
The Law Offices of Timothy Zearfoss serves as the Debtor's legal
counsel.
EASCO BOILER: Court Confirms Liquidating Plan
---------------------------------------------
Judge James L. Garrity, Jr., has entered an order confirming the
Amended Chapter 11 Plan of Liquidation of Easco Boiler Corp., et
al.
The sale of the Grinnell Membership Interest by the Debtor to
Equity pursuant to the Plan and in accordance with the terms of the
Grinnell Plan Funding Agreement is approved; provided that the
Debtor may pay the Net Grinnell Proceeds to the Lender directly in
connection with the sale closing for the Randall Property.
The appointment of the Plan Administrator under the Plan, and
payment of the Administrator Fund as set forth in the Plan are
approved.
The following non-material modification of the Plan with respect to
agreement between the Debtor and New York State Department of
Taxation and Finance ("NYS") is approved: NYS will have an Allowed
NYS Secured Tax Claim under Class 4 in the approximate amount of
$178,931.31 (subject to agreed upon final reconciliation), subject
to potential additional amounts for sales tax ($21,295.93) and
corporate tax liability for the period ending December 31, 2021
($7,669.54) after verification by NYS (the "NYS Secured Priority
Claim"). The NYS Secured Priority Claim will be treated as part of
NYS' Allowed Priority Tax Claim and shall be paid as promptly as
reasonably practicable on or immediately after the Effective Date,
with the balance of the NYS Tax Claim to be treated as a Class 6
General Unsecured Claim.
The sale or transfer of the Grinnell Membership Interest by the
Debtor to Equity is an essential element of the Debtor's Plan and
the consummation of the sale will be a transfer under, pursuant to,
in connection with and in furtherance of the Plan. Pursuant to and
to the fullest extent permitted under section 1146 of the
Bankruptcy Code, the Debtor's sale or transfer of the Grinnell
Membership Interest to Equity shall be exempt from transfer, stamp,
sales, use, recording, and similar taxes, as may be applicable,
subject to confirmation and occurrence of the Effective Date of the
Plan.
About Easco Boiler
Founded in 1926, Easco Boiler Corp. is the oldest minority-owned
and operated steel boiler and tank manufacturer in the country.
Easco Boiler and affiliate, Leggett Real Estate Holdings, LLC,
filed petitions under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Lead Case No. 22-10881) on June 27, 2022. In their
petitions, Easco Boiler listed up to $10 million in assets and up
to $50 million in liabilities while Leggett Real Estate Holdings
listed as much as $50 million in both assets and liabilities. Tyren
Eastmond, president, signed the petitions.
Judge James L. Garrity, Jr. oversees the cases.
The Debtors tapped Riemer & Braunstein, LLP as legal counsel and
ASI Advisors, LLC as financial advisor.
EVERGLADES CITY: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Everglades City Express, LLC
1575 Pine Ridge Rd
Suite 10
Naples, FL 34109
Case No.: 23-00356
Chapter 11 Petition Date: March 30, 2023
Court: United States Bankruptcy Court
Middle District of Florida
Debtor's Counsel: Mike Dal Lago, Esq.
DAL LAGO LAW
999 Vanderbilt Beach Rd. Suite 200
Naples, FL 34108
Tel: 239-571-6877
Email: mike@dallagolaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by William Odrey as managing member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZRFNT7Y/Everglades_City_Express_LLC__flmbke-23-00356__0001.0.pdf?mcid=tGE4TAMA
FARADAY FUTURE: Inks 7th Amendment to 2022 Purchase Agreement
-------------------------------------------------------------
Faraday Future Intelligent Electric Inc. entered into that certain
Amendment No. 7 to Securities Purchase Agreement with FF Simplicity
Ventures LLC, a Delaware limited liability company, as
administrative agent, collateral agent and purchaser, Senyun
International Ltd., as purchaser, and FF Prosperity Ventures LLC, a
Delaware limited liability company, as purchaser, which amends that
certain Securities Purchase Agreement, dated as of Aug. 14, 2022
(as amended by that certain Amendment No. 1 to Securities Purchase
Agreement and Convertible Senior Secured Promissory Notes, dated as
of Sept. 23, 2022, that certain Joinder and Amendment Agreement,
dated as of Sept. 25, 2022, that certain Limited Consent and Third
Amendment to Securities Purchase Agreement, dated as of Oct. 24,
2022, that certain Limited Consent, dated as of Nov. 8, 2022, that
certain Letter Agreement, dated as of Dec. 28, 2022, that certain
Limited Consent and Amendment No. 5, dated as of Jan. 25, 2023, and
that certain Amendment No. 6, dated as of Feb. 3, 2023.
Pursuant to Amendment No. 7, the Company, Senyun, FF Prosperity and
FF Simplicity agreed to amend the funding timeline of certain
Tranche C Notes (as defined in the SPA), and FF Simplicity agreed
to purchase additional Tranche B Notes (as defined in the SPA) in
accordance with Section 2.1(f) of the SPA.
Under the amended funding timeline, (i) Senyun agreed to purchase
(a) $10.0 million in principal amount of Tranche C Notes (amended
to include an additional original issue discount of four percent,
which additional original issue discount shall not impact the
Interest Make-Whole Amount in such Tranche C Notes) no later than
one business day (amended from five business days) after the
effectiveness of the Company's registration statement on Form S-1
(File No. 333-269729) and receipt of Shareholder Approval (as
defined in the SPA) (for which the Company filed a definitive proxy
statement on March 2, 2023 for a special meeting of stockholders),
subject to the filing by the Company of a current report on Form
8-K disclosing the Shareholder Approval, and (b) $15.0 million in
principal amount of Tranche C Notes no later than five business
days after the effectiveness of the Registration Statement and
receipt of Shareholder Approval (for which the Company filed a
definitive proxy statement on March 2, 2023 for a special meeting
of stockholders), and (ii) FF Prosperity agreed to purchase the
remaining aggregate principal amount of the Tranche C Notes equal
to 50% of FF Prosperity's commitment in respect of Tranche C Notes
(amended to include an additional original issue discount of four
percent, which additional original issue discount shall not impact
the Interest Make-Whole Amount in such Tranche C Notes) no later
than one business day (amended from five business days) after the
effectiveness of the Registration Statement and receipt of
Shareholder Approval (for which the Company filed a definitive
proxy statement on March 2, 2023 for a special meeting of
stockholders), subject to the filing by the Company of a current
report on Form 8-K disclosing the Shareholder Approval.
Pursuant to Amendment No. 7 and in accordance with Section 2.1(f)
of the SPA, FF Simplicity further agreed to purchase $5.0 million
in principal amount of Tranche B Notes subject to an additional
original issue discount of six percent (which additional original
issue discount shall not impact the Interest Make-Whole Amount in
such Tranche B Notes). Such notes were originally permitted to be
purchased on or prior to April 21, 2023.
The Company also agreed to reimburse each of Senyun and FF
Simplicity up to $20,000 each for reasonable and documented
out-of-pocket legal expenses incurred in connection with Amendment
No. 7.
About Faraday Future
Gardena, CA-based Faraday Future -- www.ff.com -- is a luxury
electric vehicle company. The Company has pioneered numerous
innovations relating to its products, technology, business model,
and user ecosystem since inception in 2014. Faraday Future aims to
perpetually improve the way people move by creating a
forward-thinking mobility ecosystem that integrates clean energy,
AI, the Internet.
Faraday Future reported a net loss of $552.07 million for the year
ended Dec. 31, 2022, a net loss of $516.50 million for the year
ended Dec. 31, 2021, compared to a net loss of $147.08 million for
the year ended Dec. 31, 2020.
New York, NY-based Mazars USA LLP, the Company's auditor since
2022, issued a "going concern" qualification in its report dated
March 9, 2023, citing that the Company has incurred operating
losses since inception, has continued cash outflows from operating
activities, and has an accumulated deficit. These conditions raise
substantial doubt about its ability to continue as a going concern.
FREE SPEECH SYSTEMS: Meets Test as Small Business in Chapter 11
---------------------------------------------------------------
Steven Church of Bloomberg News reports that the production company
of right-wing radio host Alex Jones can reorganize itself as a
small business even though Jones owes $1.4 billion to the families
of Sandy Hook school shooting victims, a Texas judge ruled Monday,
March 27, 2023.
US Bankruptcy Judge Christopher M. Lopez agreed with Jones'
company, Free Speech Systems, which argued that it met the test as
a small business when it filed for bankruptcy in July 2022. The
families and the US Trustee argued that Free Speech lost
eligibility when Jones filed a related, personal bankruptcy a few
months later.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FTX TRADING: Fee Examiner Taps Godfrey & Kahn as Legal Counsel
--------------------------------------------------------------
Katherine Stadler, the fee examiner appointed in the Chapter 11
cases of FTX Trading Ltd. and affiliates, seeks approval from the
U.S. Bankruptcy Court for the District of Delaware to employ
Godfrey & Kahn, SC as her legal counsel.
The firm will render these services:
(a) monitor, review, and be heard in any hearing or other
proceedings to consider interim and final applications for fees and
reimbursement of expenses filed by retained professionals;
(b) establish measures to help the court ensure that
compensation and expenses paid by the Debtors' estates are
reasonable, actual, and necessary;
(c) review all interim and final applications submitted after
the effective date of the fee examiner order by the retained
professionals;
(d) serve objections to monthly statements, in whole or in
part, precluding the payment of the amount questioned following the
procedures outlined in the Interim Compensation Order;
(e) prepare applications for the fee examiner to retain
professionals and consultants to assist in discharging her duties;
(f) conduct discovery in the event of a contested matter
involving the professional fees of any retained professional;
(g) negotiate with the retained professionals regarding
objections to interim and final fee applications and monthly
statements and consensually resolving such objections where
possible;
(h) present confidential letter reports, on a timely basis, to
the retained professionals;
(i) periodically, consistent with the Fee Examiner Order and
at the fee examiner's direction, file summary reports with the
court on the retained professionals' applications;
(j) establish guidelines and requirements for the preparation
and submission to the fee examiner of non-binding budgets by
retained professionals;
(k) where necessary, attend meetings between the fee examiner
and the retained professionals; and
(l) such other services as the fee examiner may request.
The hourly rates of the firm's counsel and staff range from $325 to
$695.
The firm also provided the following in response to the request for
additional information set forth in Paragraph D.1. of the U.S.
Trustee Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Yes. Mr. Dalton's hourly rate has been discounted from
$720 to $695 in recognition of the U.S. Trustee's request to reduce
the Fee Examiner's rate to that level.
Question: Do any of the professionals included in this engagement
vary their rate based on the geographic location of the bankruptcy
case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference?
Response: Not applicable.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: Godfrey & Kahn has provided a staffing plan. Going
forward, it will provide staffing plans and budgets for each
three-month interim fee period.
Mark Hancock, Esq., a shareholder at Godfrey & Kahn, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Mark W. Hancock, Esq.
Godfrey & Kahn, SC
One East Main Street, Suite 500
Madison, WI 53703
Telephone: (608) 257-3911
Facsimile: (608) 257-0609
Email: mhancock@gklaw.com
About FTX Trading
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.
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.
Katherine Stadler, the court-appointed fee examiner, is represented
by Godfrey & Kahn, SC.
FUTURE VALUE: Unsecureds to Get Quarterly Payments with 4% Interest
-------------------------------------------------------------------
Future Value Construction, Inc., filed with the U.S. Bankruptcy
Court for the Eastern District of California a Disclosure Statement
describing Plan of Reorganization dated March 27, 2023.
The Debtor is engaged in the business of constructing custom and
semi-custom homes. It is incorporated in 2012. Chuck R. Thomason is
its sole shareholder and officer and is 65 years old.
The Debtor acquired the real property known as LakeView at Rio
Bravo in February 2018. The project had been owned by a developer
who is the owner of Cavu Rock, LLC. Cavu Rock carries second
position lien on the development and is to be paid $20,000 as each
lot is sold until the balance of its claim is paid in full.
The Thomas fire of 2018 resulted in changes to building codes that
caused delays and compliance. Non-judicial foreclosure commenced in
July 2022 and the lender was to conduct a trustee's sale in
November that prompted the Chapter 11 filing.
Debtor's proposed Plan is dependent on completion of 266 Mountain
Drive wherein $3.445 million will be utilized to pay creditors,
FCI, who is the first trust lender on 260 and 262 is paid from both
Lake View and Montecito sales beginning at the end of 2023.
The three lots will typically be sold at the framing stage where
they have maximum value and the average buyer can visualize the
property. The Plan pays over $9.2 million over its term.
General unsecured are projected at $917,000. The largest general
unsecured creditor is Kathy Grahek, who is a friend of Chuck R.
Thomason and supports confirmation of Debtor's Plan.
Debtor's Disclosure Statement prepared by Mr. Thomason projects
payment to all creditors based on sales of LakeView at Rio Bravo
and Mountain Drive, Montecito properties over a 30-month term.
Class 12 consists of General Unsecured Claims. General unsecured
claims in this class are impaired. General unsecured claims shall
accrue interest at the rate of 4% per annum. Class 12 shall receive
quarterly payments generated from the pre-sold and spec-sales of
homes purchased at Lakeview at Rio Bravo and in Montecito,
California.
Projected quarterly payments shall commence on or before the
following dated in the amounts stated as follows:
Date Amount
---- ------
Dec. 31, 2023 $70,000
March 31, 2024 $30,000
June 30, 2024 $40,000
Sept. 30, 2024 $70,000
Dec. 31, 2024 $70,000
March 31, 2025 $175,000
June 30, 2025 $170,000
Sept. 30, 2025 $125,000
The Plan will be funded by the Reorganized Debtor who shall make
all payments due under the Plan out of the funds on hand in the
Estate on or after the effective date, together with acquired
funding obtained through what is projected to be priming loans on
seven affected lots.
A full-text copy of the Disclosure Statement dated March 27, 2023
is available at https://bit.ly/3LYPpEh from PacerMonitor.com at no
charge.
Attorney for Debtor:
D. Max Gardner, Esq.
Law Office Of D. Max Gardner
930 Truxtun Ave., Suite 203
Bakersfield, CA 93301
Tel: (661) 864-7373
Fax: (661) 591-7366
Email: dmgardner@dmaxlaw.com
About Future Value Construction
Future Value Construction, Inc., is engaged in the business of
constructing custom and semi-custom homes.
Future Value Construction filed a Chapter 11 bankruptcy petition
(Bankr. E.D. Cal. Case No. 22-12016) on Nov. 28, 2022, with up to
$50,000 in assets and up to $10 million in liabilities.
Judge Jennifer E. Niemann oversees the case.
The Debtor is represented by the Law Office of D. Max Gardner.
GARDNER-WEBB UNIVERSITY: Moody's Affirms 'Ba1' Issuer Rating
------------------------------------------------------------
Moody's Investors Service has affirmed Gardner-Webb University's
(NC) Ba1 issuer and revenue bond ratings. The university has
approximately $62 million of outstanding debt. The outlook is
stable.
RATINGS RATIONALE
The affirmation of the university's Ba1 issuer rating is largely
driven by its solid liquidity and manageable financial leverage
with total wealth providing a good cushion to operating expenses.
These credit strengths partially mitigate the university's exposure
to heightened student market challenges, reflected in a recent
enrollment decline and stagnant net student revenue. The highly
competitive student market in North Carolina, driven by strong and
low-cost public institutions and a high proportion of
price-sensitive students, will continue to weigh on net student
revenue resulting in narrow operating performance. Favorably, GWU
has a track record of good fiscal management and has identified a
number of strategic measures to build on its institutional
strengths as a faith-based, private university with diverse
academic and athletic programs. The trajectory of credit quality
will largely be determined by the university's ability to execute
its various initiatives to strengthen demand leading to net tuition
revenue growth and continued surplus operations.
The affirmation of the Ba1 rating on the university's outstanding
revenue bonds incorporates the university's credit quality, pledge
on unrestricted revenue, mortgage on certain campus facilities and
a debt service reserve fund.
RATING OUTLOOK
The stable outlook is supported by Moody's expectations of
stabilizing student demand leading to growing net student revenue
as the university undertakes initiatives to bolster recruitment and
retention. It also incorporates expectations that the university
will generate sufficient cash flow to sustain above 1.2x debt
service coverage and maintain stable liquidity levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Demonstrated strengthening of brand and strategic
positioning leading to improved student demand,
philanthropy and revenue growth
-- Substantial increase in total wealth relative to debt
and expenses
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Inability to stabilize enrollment and grow net tuition revenue
-- Significant deterioration in operating performance
-- Material decline in total wealth or liquidity
-- Substantial increase in financial leverage
LEGAL SECURITY
GWU's outstanding revenue bonds are secured by a pledge of the
university's revenue excluding amounts restricted by law and any
gifts, grants, bequests, donations or contributions designated by
the donor or maker as being for a certain specific purpose. The
bonds are further secured by a mortgage on GWU's 50,000-square-foot
College of Health Sciences facility. There is a debt service
reserve fund that totaled about $2.4 million as of fiscal 2022.
Bondholders also benefit from a negative pledge relating to GWU's
core campus. Certain real property including about 13 acres of raw
land near the College of Health Sciences as well as GWU's real
property located in Charlotte are not subject to the pledge.
There is a 1.2x debt service coverage covenant, tested annually.
For fiscal 2022, total income available for debt service was about
$7 million, which covered total principal and interest of $2.4
million by 2.87x. Management reports the university expects to meet
this covenant for fiscal 2023. If coverage is less than 1.2x,
within 45 days the university shall retain a consultant who, within
75 days of being retained, shall submit recommendations relevant to
achieving the required level. So long as the university complies
with any reasonable recommendations, there will be no event of
default. However, a coverage ratio less than 1x shall constitute an
event of default.
PROFILE
Gardner-Webb University is a small, private Christian university
with its primary campus situated about 50 miles west of Charlotte.
Originally founded in 1905, GWU is a Baptist affiliated university
that offers undergraduate, graduate and doctoral level programming.
The university also serves a relatively large cohort of degree
completion students. Total FTE enrollment for fall 2022 was 2,714,
and fiscal 2022 operating revenue totaled $68 million.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education Methodology published in August 2021.
GENOCEA BIOSCIENCES: To Seek Plan Confirmation on May 10
--------------------------------------------------------
Genocea Biosciences, Inc., and its Official Committee of Unsecured
Creditors filed a First Amended Disclosure Statement.
The Plan is a liquidating plan and does not contemplate the
financial rehabilitation of the Debtor or the continuation of its
business. The Plan provides for the establishment of a Liquidating
Trust and the appointment of a Liquidating Trustee who will be
responsible for the liquidation of the Assets, the resolution of
Disputed Claims, and the distribution of Net Asset Proceeds to
holders of Allowed Nonpriority Unsecured Claims.
Funding for the Liquidating Trust will consist of Cash on the
Effective Date, the proceeds of the CARES Act receivable, and any
recoveries on account of the Joint Venture and Causes of Action.
The application for payment of the CARES Act receivable in the
approximate amount of $1,400,000 was filed in December 2021 and the
funds were received on or about February 22, 2023. The value of
the Debtor's interest in the Joint Venture and in any Causes of
Action is uncertain. The Debtor has not conducted an analysis of
potential Causes of Action. These Assets will be assigned to the
Liquidating Trust for investigation and pursuit if appropriate.
The dividend to be paid to holders of Allowed Nonpriority Unsecured
Claims will be affected by the resolution of Disputed Claims,
including the contested Administrative Expense Claim of Discovery,
the former landlord, in the approximate amount of $600,000. The
Nonpriority Unsecured Claims filed or scheduled total approximately
$13,000,000. Of this amount, approximately $4,600,000 consists of
the Nonpriority Unsecured Claim of Discovery which is contested.
In addition, more than $2,000,000 of Claims have been filed that
were not scheduled and will be the subject of investigation.
Because of the foregoing uncertainties, the timing and amount of
distributions that may be made by the Liquidating Trustee cannot be
predicted with any certainty as of the date of this Disclosure
Statement.
The claims of unsecured creditors asserted against the Debtor total
approximately $13,000,000. This amount includes approximately
$4,600,000 asserted by Discovery on account of unliquidated claims
arising under the rejected Lease. The allowed amount of
Nonpriority Unsecured Claims will not be determined until the
claims resolution process has been completed.
The Plan provides the mechanism for distribution of the Net Asset
Proceeds to holders of Allowed Claims. Under the Plan, holders of
Allowed Administrative and Priority Claims will be paid in full.
Holders of Allowed Unsecured Claims in Class 2 will receive a
proportionate share of the Net Asset Proceeds available after
payment of Claims senior in priority and establishment of reserves
necessary to wind-down the Debtor and administer the Liquidating
Trust.
The Plan assets consist of Cash in the estimated amount of $400,000
as of December 31, 2022, the CARES Act receivable in the
approximate amount of $1,400,000 received in February 2023, and
amounts realized from the disposition of the Joint Venture and any
Causes of Action, both of which are of undetermined value. The Plan
assets will be used to fund payments to creditors under the Plan.
Class 2 consists of those Allowed Nonpriority Unsecured Claims. The
Nonpriority Unsecured Claims filed or scheduled total approximately
$13,000,000. Discovery has filed a Claim in the approximate amount
of $4,600,000 that the Debtor intends to contest, and there are
more than $2,000,000 in Nonpriority Unsecured Claims filed that
were not scheduled. The Debtor has not conducted a detailed review
of the Nonpriority Unsecured Claims. This analysis will be
performed by the Liquidating Trustee. Each holder of an Allowed
Nonpriority Unsecured Claim shall receive from the Liquidating
Trustee on the Plan Distribution Date its pro rata share of its
beneficial interest in the Liquidating Trust as a Liquidating Trust
Beneficiary, entitling such holder to receive Net Asset Proceeds on
account of such beneficial interest. The Nonpriority Unsecured
Claims are impaired under the Plan.
The Bankruptcy Court has scheduled a hearing on confirmation of the
Plan to commence on May 10, 2023 at 2:00 p.m. Eastern, or as soon
thereafter as the parties can be heard. The confirmation hearing
will be held before the United States Bankruptcy Court, Honorable
Christopher J. Panos J. Donohue Federal Building, 595 Main Street,
Courtroom 3, Worcester, MA 01608-2076
Ballots must be completed in accordance with the instructions set
forth therein and must be received on or before 4:30 P.M. (Eastern
Time) on Apri125, 2023 to be counted in the voting.
Counsel to the Debtor:
Harold B. Murphy, Esq.
Andrew G. Lizotte, Esq.
MURPHY &KING, Professional Corp.
28 State Street, Suite 3101
Boston, MA 02109
Telephone: (617) 423-0400
Facsimile: (617) 423-0498
Counsel to the Creditors' Committee:
Jesse Harris, Esq.
FOX ROTHSCHILD LLP
2000 Market Street, 20th Floor
Philadelphia, PA 19103-3222
Telephone: (215) 299-2864
Facsimile: (215) 299-2150
A copy of the Disclosure Statement dated March 22, 2023, is
available at https://bit.ly/42zEA1n from PacerMonitor.com.
About Genocea Biosciences
Genocea Biosciences, Inc., is a biopharmaceutical company dedicated
to discovering and developing novel cancer immunotherapies using
its proprietary ATLASTM platform. The ATLAS platform can profile
each patient's CD4+ and CD8+ T cell immune responses to every
potential target or "antigen" identified by next-generation
sequencing of that patient's tumor.
Genocea Biosciences sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Mass. Case No. 22-10938) on July 5,
2022. In the petition signed by William Clark, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
Andrew G. Lizotte, Esq., at Murphy and King, Professional Corp. is
the Debtor's counsel.
The Debtor tapped Murphy & King, Professional Corporation, as
bankruptcy counsel; Ropes and Gray, LLP as special corporate
counsel; and Rock Creek Advisors, LLC as financial advisor. Omni
Agent Solutions is the notice, claims, and balloting agent and
administrative advisor.
The U.S. Trustee for Region 1 appointed an official committee of
unsecured creditors in the Debtor's case on July 25, 2022. The
committee is represented by Fox Rothschild, LLP.
GREAT LAKES: S&P Downgrades ICR to 'CCC+', Outlook Negative
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Great Lakes
Dredge & Dock Corp. (Great Lakes) to 'CCC+' from 'B' and its
issue-level rating on its senior unsecured notes to 'CCC+' from
'B'. S&P's '4' recovery rating on the unsecured notes is
unchanged.
The negative outlook reflects S&P's view that Great Lakes faces
heightened liquidity risk in the near term.
S&P said, "The downgrade reflects Great Lakes' underperformance,
heightened liquidity risk, elevated leverage, and negative FOCF
generation, which we expect will persist in 2023. The company's
revenue contracted 10.7% in 2022 due to a weak order backlog
stemming from delayed projects in the dredging market and its
losing bid for a large capital project. Great Lakes' S&P Global
Ratings-adjusted EBITDA margins substantially declined to 8.5% in
2022, from 21.5% in 2021, due to its lower fleet utilization, a
decrease in its higher-margin capital projects, inflationary
pressures, and one-time charges. The company's S&P Global
Ratings-adjusted debt leverage increased to 7.5x as of Dec. 31,
2022, from 2.5x in 2021. Great Lakes spent about $143 million on
capex in 2022 for fleet maintenance and its new build program,
which led to a free cash flow deficit of about $140 million in
2022, which follows the about $70 million deficit it experienced in
2021.
"In our view, Great Lakes' liquidity will remain challenged over
the next 12 months. With minimal cash on its balance sheet and
modest cash flow generation from its operations, we anticipate the
company will heavily rely on its asset-based lending (ABL) facility
to provide it with liquidity to fund its potential working capital
uses and capex. Under our base-case scenario, we assume $175
million of capex annually in 2023-2024, which we believe will
consume most of Great Lakes's revolver capacity in the next 12
months or so. Our assumptions incorporate reduced availability of
$190 million under the company's ABL due to covenant restrictions
and amount withdrawn. Beyond that, we believe the company will need
to secure other financing to cover the significant payments for its
new vessel builds. Great Lakes does not face any near-term
maturities because its $300 million ABL facility matures in 2027
and its unsecured notes are due in 2029.
"We anticipate Great Lakes' credit metrics will remain elevated
over the next 12 months. While we currently anticipate the
conditions in the dredging bidding market will gradually return to
normal in 2023-2024, we believe it will take some time for the
company to improve its backlog and recover its top-line revenue and
earnings. Our base case assumes its revenue is flat or declining in
2023-2024 relative to 2022. We also expect its EBITDA margins to be
in the mid- to high-teen percent area, primarily due to an
improvement in its project mix (with higher-margin capital
projects) and cost-saving opportunities. Further, we assume Great
Lakes S&P Global Ratings-adjusted leverage will remain high on a
rolling-12-month basis throughout 2023 before improving toward 6x
by the end of 2024. We also anticipate continued negative FOCF in
2023 and 2024. Our calculation of the company's adjusted debt
incorporates the potential draws on its revolver and its lease
liabilities.
"We also note that dredging business is cyclical and entails
inherent volatility and operating risks. Great Lakes' earnings can
fluctuate significantly due to unanticipated project delays,
project losses, or adverse weather. This could pose further
downside risk to our base case because almost all of Great Lakes'
contracts are fixed price.
"The negative outlook reflects our view that Great Lakes faces
heightened liquidity risk over the near term. We believe the
company's liquidity will remain constrained, primarily due to its
significant annual capex of $175 million in 2023 and 2024. We
expect its S&P Global Ratings-adjusted debt leverage will remain
high while it generates materially negative FOCF throughout 2023."
S&P could lower its ratings on Great Lakes if:
-- S&P views its liquidity position as persistently constrained or
further impaired; or
-- S&P comes to believe the company will likely default in the
next 12 months. This could occur, for example, due to a near-term
liquidity or payment shortfall or a distressed exchange offer.
S&P could raise its ratings on Great Lakes by one notch over the
next 12 months if:
-- It secures additional financing, such as from government loans,
the sale and lease-back of its equipment, etc., that alleviates its
liquidity pressure and we come to believe it can maintain adequate
liquidity on a sustained basis;
-- The dredging market stabilizes, with Great Lakes winning
capital projects such that its EBITDA margin improves toward the
high-teen percent area; and
-- The company's debt leverage improves below 6.5x on solid
project execution and/or an improved project mix.
ESG credit indicators: E-2, S-2, G-2
GREEN POINT: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Green Point Management Systems, LLC
293 Bayport Avenue
Bayport, NY 11705
Case No.: 23-41081
Chapter 11 Petition Date: March 29, 2023
Court: United States Bankruptcy Court
Eastern District of New York
Judge: Hon. Nancy Hershey Lord
Debtor's Counsel: Leo Jacobs, Esq.
JACOBS PC
595 Madison Avenue FL 39
New York, NY 10022
Tel: (718) 772-8704
Email: leo@jacobspc.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Adam Rosen as managing member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/XUMFAUY/Green_Point_Management_Systems__nyebke-23-41081__0001.0.pdf?mcid=tGE4TAMA
GREEN ROADS: Seeks Approval to Hire Dentons as Bankruptcy Counsel
-----------------------------------------------------------------
Green Roads, Inc. seeks approval from the U.S. Bankruptcy Court for
the Southern District of Florida to employ Dentons Bingham
Greenebaum LLP and Dentons US LLP as its counsel.
Dentons will render these services:
(a) advise the Debtor with respect to its rights, duties, and
powers in this case;
(b) assist and advise the Debtor in its consultations with
creditors relating to the administration of this case;
(c) assist the Debtor in analyzing the claims of creditors,
the Debtor's capital structure, and in negotiating with the holders
of claims and, if appropriate, equity interests;
(d) assist the Debtor's investigation of its acts, conduct,
assets, liabilities and financial condition and other parties
involved in the operation of its business;
(e) assist the Debtor in its analysis of, and negotiations
with third party concerning matters related to, among other things,
the assumption or rejection of certain leases of non-residential
real property and executory contracts, asset dispositions,
financing transactions and the terms of a plan of reorganization or
liquidation for the Debtor;
(f) represent the Debtor at all hearings and other
proceedings;
(g) review, analyze, and advise the Debtor with respect to
applications, orders, statements of operations and schedules filed
with the court;
(h) assist the Debtor in preparing pleadings and applications
as may be necessary in furtherance of its interests and objectives;
and
(i) perform such other services as may be required and are
deemed to be in the interests of the Debtor.
During the 90-day period prior to the petition date, Dentons
received payments and advances in the aggregate amount of $40,000.
The hourly rates of the firm's counsel and staff are as follows:
Jonathan Kaskel, Partner $955
James R. Irving, Partner $600
Andrew C. Helman, Partner $590
Gina M. Young, Associate $400
Kyle D. Smith, Associate $365
Jacob S. Margolies, Associate $350
Samantha Hayes, Paralegal $215
In addition, the firm will seek reimbursement for expenses
incurred.
James Irving, Esq., a partner at Dentons, disclosed in a court
filing that the firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
James R. Irving, Esq.
Dentons Bingham Greenebaum LLP
3500 PNC Tower, 101 S. Fifth Street
Louisville, KY 40202
Telephone: (502) 587-3606
Email: james.irving@dentons.com
- and -
Jonathan Kaskel, Esq.
Dentons US LLP
1 Alhambra Plaza, Penthouse
Coral Gables, FL 33134
Telephone: (305) 537-0009
Email: jonathan.kaskel@dentons.com
About Green Roads
Green Roads Inc. is a privately-owned CBD company that supplies
natural CBD infused products.
Green Roads Inc. filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-11738) on March
6, 2023. In the petition filed by Julie Pilch, interim chief
executive officer, the Debtor reported between $1 million and $10
million in both assets and liabilities.
Judge Scott M. Grossman oversees the case.
Dentons Bingham Greenebaum LLP and Dentons US LLP serve as the
Debtor's counsel.
GWG HOLDINGS: Unsecureds to Get Series B WDT Interests
------------------------------------------------------
GWG Holdings, Inc., et al., the Bondholder Committee, and L Bond
Management, LLC as Co-Proponents, filed a Second Amended Joint
Chapter 11 Plan and a Disclosure Statement.
The Second Amended Plan provides that the Debtors will be
liquidated and two liquidating trusts will be created: (i) the Wind
Down Trust and (ii) the Litigation Trust. The Wind Down Trust will
take all necessary steps to wind down the business affairs of the
Debtors and liquidate the Wind Down Trust Assets, which include the
Debtors' equity interests in the Policy Portfolio (i.e., the Policy
Portfolio Equity Interests), Beneficient and FOXO, with a view
toward maximizing the value of such assets for the benefit of
creditors and promptly distributing such liquidation proceeds to
creditors. The trustee of the Wind Down Trust will be the Debtors'
Chief Executive Officer and Chief Restructuring Officer, Jeffrey S.
Stein (or an affiliate of Mr. Stein). The Wind Down Trust will
issue trust interests (the New WDT Interests) to Holders of Claims
and Interests that are not paid in full in cash on the Effective
Date of the Second Amended Plan. Distributions resulting from the
monetization of the Policy Portfolio Equity Interests and the
Debtors' interests in Beneficient and FOXO will be distributed to
holders of New WDT Interests pursuant to the priority of payment
waterfall set forth in Article IV.G of the Second Amended Plan.
The Litigation Trust will receive all non-released litigation
assets of the Debtors as well as the Debtors' interests in the D&O
Liability Insurance Policies. The trustee for the Litigation Trust
(i.e., the Litigation Trustee) will have the sole authority to make
decisions and take action with respect to the Initial Litigation
Trust Assets, the Retained Causes of Action, and the Litigation
Trust Reconciliation Claims, and shall have the duty to maximize
the value of the assets of the Litigation Trust in accordance with
the Litigation Trust Agreement. The Litigation Trustee will be
appointed by the Bondholder Committee and will be an independent,
third-party fiduciary with no affiliation with any Bondholder or
member of the Bondholder Committee. All proceeds of the Litigation
Trust will be distributed to the Wind Down Trust, as the
beneficiary of the Litigation Trust, for further distribution to
the holders of New WDT Interests pursuant to the priority of
payment waterfall set forth in Article VI.C of the Second Amended
Plan.
The Wind Down Trust will be established for the purpose of
liquidating the Wind Down Trust Assets, with a view towards
maximizing the value of such assets, for the benefit of New WDT
Interest holders and distributing such liquidation proceeds to New
WDT Interest holders. The Wind Down Trust Assets include the Policy
Portfolio Equity Interests, the Debtors' interests in Beneficient
and FOXO, all reversionary and beneficial interests in the
Litigation Trust and any remaining Assets of the Debtors, other
than the Initial Litigation Trust Assets. The Wind Down Trust will
be initially funded with the Wind Down Amount, which is an amount
that will be agreed to by the Debtors and the Creditor Proponents,
subject to the Proponents' Consent Right, and will be set forth in
the Plan Supplement.
Under the Plan, Class 4(a) General Unsecured Claims total
$20,253,401. Each Holder of an Allowed General Unsecured Claim
shall receive its pro rata share of the New Series B WDT Interests.
The New Series B WDT Interests may be redeemed at any time without
penalty at stated value and, pending any such redemption, shall be
entitled to Cash distributions, but only pursuant to the priority
of payment waterfalls described in Article IV.H and Article VI.C of
the Second Amended Plan. This class is impaired.
Class 4(b) GUC Convenience Claims totaling $124,169 will recover
100% of claims. Each Holder thereof shall receive, and the option
of the applicable Debtor either: (i) payment in full in Cash of the
due and unpaid portion of its Allowed GUC Convenience Claim on the
later of (x) the Effective Date (or as soon thereafter as
reasonably practicable), or (y) as soon as practicable after the
date such Claim becomes due and payable; or (ii) such other
treatment rendering its Allowed GUC Convenience Claim Unimpaired.
Pursuant to the Second Amended Plan, a "GUC Convenience Claim"
means an Allowed Claim in an amount greater than $0.01 but less
than or equal to $10,000.00, that would otherwise qualify as a
General Unsecured Claim; provided, that any Holder of an Allowed
General Unsecured Claim may elect to have such Claim reduced to
$10,000.00 and treated as an Allowed GUC Convenience Claim for
purposes of the Second Amended Plan; provided, further, that
notwithstanding the foregoing, the total GUC Convenience Claims
shall not exceed $150,000 in the aggregate. This class is
unimpaired.
The Confirmation Order shall provide that, upon the occurrence of
the Effective Date, the Wind Down Trust shall be deemed established
in accordance with the Wind Down Trust Agreement and the Second
Amended Plan. On the Effective Date, the Wind Down Trust shall
commence the taking of all necessary steps to wind down the
business affairs of the Debtors. The Wind Down Trust Assets shall
be deemed disbursed by the Debtors and transferred to the Wind Down
Trust on the Effective Date, the proceeds of which shall be
distributed in accordance with the waterfall set forth in Article
IV.H of the Second Amended Plan. The powers, authorities,
responsibilities, and duties of the Wind Down Trust and the Wind
Down Trustee are set forth in and shall be governed by the Second
Amended Plan and the Wind Down Trust Agreement. The Wind Down Trust
Agreement, which shall be part of the Plan Supplement, shall be
consistent with the Second Amended Plan and shall contain
provisions customary to trust agreements utilized in comparable
circumstances, including, without limitation, any and all
provisions necessary to ensure the continued treatment of the Wind
Down Trust as a grantor trust. The Wind Down Trust Agreement may
provide powers, duties, and authorities in addition to those
explicitly stated herein, but only to the extent that such powers,
duties, and authorities do not affect the status of the Wind Down
Trust as a "liquidating trust" for United States federal income tax
purposes or as an entity that can fall within the exception from
registration in Section 7 of the 1940 Act for activities of
companies that are merely incidental to their dissolution.
In accordance with the Second Amended Plan, the Wind Down Trust's
sole purpose is to liquidate the Wind Down Trust Assets with a view
towards maximizing the value of such assets for the benefit of New
WDT Interest holders, and promptly distributing such liquidation
proceeds (in accordance with the provisions of the Second Amended
Plan) to New WDT Interest holders. The Wind Down Trust will have no
going concern operations and will not be permitted to continue or
engage in the conduct of a trade or business or to make any
investments (other than holding, on a temporary basis (pending
distribution to holders or use for payment of permitted expenses)
certain short-term, high-quality cash equivalents (as set out in
the Wind Down Trust Agreement); instead the Wind Down Trust's
activities will be limited to those reasonably necessary to, and
consistent with, the Wind Down Trust's liquidating purpose and
reasonably necessary to conserve, protect, and/or maximize the
value of the Wind Down Trust Assets and provide for the orderly
liquidation thereof. The Wind Down Trust Agreement shall contain
appropriate provisions for monetizing the Wind Down Trust Assets in
an orderly fashion, subject to the Wind Down Trustee's reasonable
business judgment. The Wind Down Trustee, on behalf of the Wind
Down Trust, will have discretion to enter into, consummate, settle,
or otherwise resolve any transaction or dispute with respect to
each of the Wind Down Trust Assets that have an economic value of
less than $5 million (in the Wind Down Trustee's good faith
determination) as of the date of the consummation, settlement, or
resolution of such transaction or dispute. The Wind Down Trustee
will submit all other matters to the Bankruptcy Court for approval
after notice and an opportunity for a hearing.
The Wind Down Trust will have an initial term of three years,
which, subject to applicable law, may be extended by the Wind Down
Trustee Filing a motion with the Bankruptcy Court prior to the
expiration of the existing term and obtaining Bankruptcy Court
approval of an extension for up to two years per request (subject,
in each instance, to reasonable due consideration being given to
implications of tax law and other applicable law of the proposed
extension of the term of the Wind Down Trust). The Wind Down
Trustee and the Litigation Trustee will cooperate and confer to
ensure that the Wind Down Trust does not terminate prior to the
Litigation Trust.
The deadline to vote on the Second Amended Plan is May 2, 2023 at
4:00 p.m. (prevailing Central Time).
Co-Counsel for the Debtors:
Matthew D. Cavenaugh, Esq.
Kristhy M. Peguero, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Telephone: (713) 752-4200
E-mail: kpeguero@jw.com
mcavenaugh@jw.com
- and -
Charles S. Kelley, Esq.
MAYER BROWN LLP
700 Louisiana Street, Suite 3400
Houston, TX 77002-2730
Telephone: (713) 238-3000
E-mail: ckelley@mayerbrown.com
- and -
Thomas S. Kiriakos, Esq.
Louis S. Chiappetta, Esq.
Jamie R. Netznik, Esq.
Lisa Holl Chang, Esq.
Joshua R. Gross, Esq.
Jade Edwards, Esq.
71 S. Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 782-0600
E-mail: tkiriakos@mayerbrown.com
lchiappetta@mayerbrown.com
jnetznik@mayerbrown.com
lhollchang@mayerbrown.com
jgross@mayerbrown.com
jedwards@mayerbrown.com
- and -
Adam C. Paul, Esq.
Lucy F. Kweskin, Esq.
Ashley Anglade, Esq.
1221 Avenue of the Americas
New York, NY 10020-1001
Telephone: (212) 506-2500
E-mail: apaul@mayerbrown.com
lkweskin@mayerbrown.com
aanglade@mayerbrown.com
A copy of the Disclosure Statement dated March 22, 2023, is
available at https://bit.ly/3nmfSBv from PacerMonitor.com.
About GWG Holdings
Headquartered in Dallas Texas, GWG Holdings, Inc. (NASDAQ: GWGH)
conducts its life insurance secondary market business through a
wholly-owned subsidiary, GWG Life, LLC, and GWG Life's wholly-owned
subsidiaries.
GWG Holdings Inc. and affiliates sought Chapter 11 bankruptcy
protection (Bankr. S.D. Texas Lead Case No. 22-90032) on April 20,
2022. In the petition filed by Murray Holland, president and chief
executive officer, GWG Holdings disclosed between $1 billion and
$10 billion in both assets and liabilities.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Mayer Brown, LLP, and Jackson Walker, LLP, as
bankruptcy counsels; Tran Singh, LLP as special conflicts counsel;
FTI Consulting, Inc., as financial advisor; and PJT Partners, LP as
investment banker. Donlin Recano & Company is the Debtors' notice
and claims agent.
National Founders LP, a debtor-in-possession (DIP) lender, is
represented by Michael Fishel, Esq., Matthew A. Clemente, Esq., and
William E. Curtin, Esq., at Sidley Austin, LLP.
The U.S. Trustee for Region 7 appointed an official committee to
represent bondholders in the Debtors' cases. The committee tapped
Akin Gump Strauss Hauer & Feld, LLP and Porter Hedges, LLP as legal
counsel; Piper Sandler & Co. as investment banker; and
AlixPartners, LLP, as financial advisor.
HERC HOLDINGS: Moody's Ups CFR to Ba2 & Sr. Unsecured Notes to Ba3
------------------------------------------------------------------
Moody's Investors Service upgraded Herc Holdings Inc.'s ("Herc" dba
Herc Rentals) ratings including the corporate family rating to Ba2
from Ba3, probability of default rating to Ba2-PD from Ba3-PD, and
senior unsecured rating to Ba3 from B1. The company's speculative
grade liquidity rating was unchanged at SGL-2. The outlook is
stable.
"Herc's size and profitability will continue to grow, while
debt-to-EBITDA gradually improves as the company reduces its ABL
reliance to fund growth initiatives," said Brian Silver Moody's
Vice President and lead analyst for Herc.
Upgrades:
Issuer: Herc Holdings Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD
from Ba3-PD (LGD5) from B1 (LGD5)
Outlook Actions:
Issuer: Herc Holdings Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Herc is one of the largest equipment rental companies in the highly
fragmented North American market supported by a $5.6 billion fleet
of rental equipment (at original equipment cost). The company
benefits from healthy end-market and customer diversification and a
young rental fleet relative to its peers. Herc also has moderate
debt-to-EBITDA that Moody's expect will improve to 2.7 times by the
end of 2023 (all ratios are Moody's adjusted unless otherwise
stated). However, Herc has high exposure to cyclical end markets,
most notably construction, infrastructure and oil and gas,
increasing the potential for volatility in revenue growth and
profitability. The company also needs to continue to invest and
grow its rental equipment fleet to remain competitive and increase
its scale over time. Moody's expect the company to have negative
free cash flow in 2023 from high growth capex and a recently
initiated dividend.
Herc's SGL-2 speculative grade liquidity rating reflects the
company's good liquidity supported by $1.57 billion of
availability, subject to borrowing limitations, on a $3.5 billion
ABL facility expiring in July 2027. The ABL had $1.34 billion of
borrowings and $25.8 million of letters of credit outstanding at
December 31, 2022. Herc also had $53.5 million of cash at year end
2022 and is expected to maintain cash of at least $20 million at
all times over the next year.
The stable outlook reflects Moody's expectation that Herc will grow
revenue and profitability while deleveraging such that
debt-to-EBITDA improves to 2.7 times.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Herc is able to increase its size
and scale, debt-to-EBITDA is sustained around 2.0 times, and EBITDA
margin is sustained in the low-to-mid 50% range. Moody's would also
expect the company to reduce its ABL reliance to fund its growth
initiatives.
The ratings could be downgraded if Herc's debt-to-EBITDA is
sustained above 3.0 times, EBITDA margin declines to the low-40%
range, or the company engages in debt-funded acquisitions that
significantly alter the company's strategy or capital structure.
Also, if there is a meaningful deterioration in liquidity for any
reason the ratings could be downgraded.
The principal methodology used in these ratings was Equipment and
Transportation Rental published in February 2022.
Headquartered in Bonita Springs, Florida, Herc Holdings Inc. is the
parent company of Herc Rentals Inc. ("Herc" NYSE: HRI). Herc is an
equipment rental company with 356 branches spanning 42 states and
five provinces in North America. Herc's basic fleet includes aerial
work platforms, earthmoving and material handling equipment, trucks
and trailers, air compressors, compaction and lighting. Herc's
specialty fleet includes its ProContractor professional grade tools
and ProSolutions offerings, which consists of power generation,
climate control, remediation and restoration, and studio and
production equipment.
HISTORIA INSPIRED: Taps Steidl & Steinberg as Bankruptcy Counsel
----------------------------------------------------------------
Historia Inspired LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Pennsylvania to employ Steidl &
Steinberg, PC to handle its Chapter 11 case.
Christopher Frye, Esq., an attorney at Steidl & Steinberg, will be
paid at his hourly rate of $350, plus reimbursement for expenses
incurred.
Prior to the petition date, the Debtor paid the firm a retainer of
$7,500, plus the filing fee of $1,738.
Mr. Frye disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Christopher M. Frye, Esq.
Steidl & Steinberg, PC
2830 Gulf Tower
707 Grant Street
Pittsburgh, PA 15219
Telephone: (412) 391-8000
Email: chris.frye@steidl-steinberg.com
About Historia Inspired
Historia Inspired LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Pa. Case No. 23-10126) on March
16, 2023. In the petition signed by Ronald Mattocks, member, the
Debtor disclosed up to $50,000 in assets and up to $500,000 in
liabilities.
Christopher M. Frye, Esq., at Steidl & Steinberg, PC serves as the
Debtor's legal counsel.
IHEARTCOMMUNICATIONS INC: Moody's Alters Outlook on B2 CFR to Neg.
------------------------------------------------------------------
Moody's Investors Service affirmed iHeartCommunications, Inc.'s
(iHeart) B2 Corporate Family Rating and B2-PD Probability of
Default Rating. The B1 rating on the senior secured term loan and
senior secured notes, and Caa1 rating on the senior unsecured notes
were also affirmed. iHeart's Speculative Grade Liquidity (SGL)
rating remains unchanged at SGL-2. The outlook was changed to
negative from stable.
The change in the outlook to negative reflects Moody's expectation
for a decline in radio advertising demand due to economic weakness
and social risks arising from negative secular pressures in
broadcast radio. National advertising demand has started to decline
and Moody's projects local radio advertising revenue will
deteriorate as the economy continues to slow in 2023. While
iHeart's leverage has improved to 6.3x as of YE 2022 (excluding
Moody's standard lease adjustments) from over 12x at YE 2020,
leverage is likely to increase towards 7x in 2023 as operating
performance decreases. The radio industry is very sensitive to the
economy due to the ability for advertisers to reduce ad spend
quickly as radio advertising is typically purchased close to the
time the ad campaign airs. Declines in revenue can also lead to
significant declines in profitability due to the high operating
leverage of the industry. iHeart will continue to focus on cost and
debt reduction to partially offset the impact on leverage.
iHeart will maintain good liquidity due to $336 million of cash on
the balance sheet and access to an undrawn ABL revolving credit
facility due May 2027. While iHeart will have higher interest
expense and cash taxes in 2023, Moody's projects free cash flow
(FCF) as a percentage of debt will be in the low to mid-single
digit range in 2023. iHeart doesn't have any significant debt
maturities until May 2026.
Affirmations:
Issuer: iHeartCommunications, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Backed Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)
Backed Senior Secured Regular Bond/Debenture, Affirmed B1 (LGD3)
Backed Senior Unsecured Regular Bond/Debenture, Affirmed
Caa1 to (LGD6) from (LGD5)
Outlook Actions:
Issuer: iHeartCommunications, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
iHeart's B2 CFR reflects the high leverage level (6.3x as of Q4
2022 excluding Moody's standard lease adjustments) and challenging
radio advertising conditions due to slow economic growth and high
inflation which will lead to an increase in leverage toward 7x in
2023. The radio industry is also being negatively affected by the
shift of advertising dollars to digital mobile and social media as
well as heightened competition for listeners from a number of
digital music providers. Secular pressures in broadcast radio and
the cyclical nature of radio advertising demand have the potential
to exert significant pressure on profitability in the near term.
iHeart benefits from its size as the largest radio operator in the
US as well as its geographic diversity and leading market positions
in most of the approximately 160 markets in which it operates.
iHeart also derives significant strength from its diversified
service offering including podcasting, the iHeartRadio service,
live events, syndicated network, and data analytics services.
Moody's expect iHeart's podcasting and digital services will
continue to be a source of growth going forward. While local
advertising revenue accounts for a significant portion of revenue,
iHeart has an advantage in obtaining national advertising dollars
given its leading position in radio and podcasting. Live event
represents a small portion of total revenue (6% of revenue in
2019), but Moody's project live event revenue will continue to
recover to pre-pandemic levels due to consumer demand for live
entertainment in 2023.
Social considerations were a key driver of the rating action as
Moody's expects the negative secular pressures in broadcast radio
to increase during a period of weak economic performance. iHeart's
ESG Credit Impact Score is highly-negative (CIS-4) driven by the
company's exposure to governance risks (G-4). iHeart will continue
to reduce outstanding debt, but leverage will remain at high levels
as the company is subject to the secular pressures in broadcast
radio. iHeart's exposure to social risks is moderately-negative
(S-3). A significant percentage of the company's revenue and
profitability are generated from radio broadcasting which faces
risk from social and demographical trends as competition for
listeners from digital music services has increased and advertising
dollars have shifted to digital and social media advertising.
iHeart's leading market position in broadcast radio and in digital
services such as podcasting offsets a portion of the risk in
broadcast radio.
iHeart's Speculative Grade Liquidity rating of SGL-2 reflects a
good liquidity position with $336 million of cash on the balance
sheet and an undrawn ($25 million of L/Cs) $450 million ABL
revolving credit facility due May 2027 (not rated by Moody's). Free
cash flow as a percentage of debt was 5% in 2022, but Moody's
expects FCF to decline modestly due to higher interest expense and
cash taxes in 2023. Lower capex will offset a portion of the impact
on FCF as spending will decline to approximately $100 to $120
million in 2023 compared to $161 million in 2022 following the
completion of the consolidation of its real estate footprint.
Moody's expects a significant portion of FCF will be used to reduce
debt in 2023 and 2024. iHeart has made several acquisitions in the
past to bolster digital capabilities, including the Triton Digital
acquisition in 2021, but additional activity is likely to be
limited in 2023.
The ABL credit facility is subject to a fixed charge coverage ratio
of at least 1x if borrowing availability is less than the greater
of $40 million and 10% of the aggregate commitments for two
consecutive days. The term loans and secured notes are covenant
lite. Moody's project iHeart will remain well within compliance
with the ABL covenant.
The negative outlook reflects Moody's expectation that leverage
will increase toward the 7x range in 2023 due to declines in
national and local advertising revenue. While local advertising
revenue has been more resilient than national in recent quarters,
Moody's projects local ad demand will decline over the course of
2023 due to weak economic conditions. The lack of high margin
political revenue during a non-election year will also weigh on
results in 2023, although iHeart will remain focused on additional
cost savings to partially offset the impact. iHeart will maintain a
good liquidity position and continue to direct FCF toward debt
reduction in 2023. Leverage will decrease in 2024 as the economy
improves and from additional debt reduction. However, operating
performance will be very sensitive to the economy and the secular
pressure facing the radio industry which has the potential to
elevate volatility in results.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
iHeart's outlook could be changed to stable if Moody's expects
leverage to decline well below 6x on a sustained basis with
maintenance of a good liquidity position. An upgrade is unlikely in
the near term; however, iHeart's ratings could be upgraded if
leverage was sustained below 4x with good organic revenue and
EBITDA growth. Free cash flow as a percentage of debt would also
have to be well above 5% with a strong liquidity position and no
near term debt maturities. iHeart would also have to maintain
financial policies consistent with a higher rating.
iHeart's rating could be downgraded if leverage was expected to be
sustained above 6x due to a decline in the economy or heightened
secular pressures in the radio industry. A deterioration in
iHeart's liquidity position could also pressure the ratings. The
senior secured debt ratings could face negative rating pressure if
the percentage of subordinated debt outstanding continues to
decline.
iHeartCommunications, Inc. (iHeart) with its headquarters in San
Antonio, Texas, is the leading terrestrial radio operator and
podcasting service provider in the US. In addition, iHeart operates
its iHeartRadio digital platform, data analytics services, live
events, syndicated networks, and the Katz Media Group. iHeart
emerged from Chapter 11 bankruptcy protection and separated from
Clear Channel Outdoor Holdings, Inc. in Q2 2019. Revenue was
approximately $3.9 billion as of LTM Q4 2022.
The principal methodology used in these ratings was Media published
in June 2021.
INSPIRED ENTERTAINMENT: Fitch Hikes LongTerm IDR to 'B'
-------------------------------------------------------
Fitch Ratings has upgraded Inspired Entertainment, Inc.'s
(Inspired) Long-Term Issuer Default Rating (IDR) to 'B' from 'B-'.
The Outlook on the IDR is Stable. Fitch has also upgraded Inspired
Entertainment (Financing) PLC senior secured instrument rating to
'BB-'/'RR2'(85%) from 'B'/'RR3'(70%).
The 'B' IDR reflects Inspired's sustained high profitability that
translates into free cash flow (FCF) generation capacity and sound
organic deleveraging ahead of refinancing approaching in 2026. The
company's solid financial profile is balanced against its small
scale compared with peers and retained high concentration of
revenue on the UK gaming market.
The Stable Outlook reflects its assumptions that Inspired will not
engage in aggressive debt-funded growth in 2023-2025 and that
revenue and profitability will not be materially affected by the
adverse impact of upcoming changes to UK regulations.
KEY RATING DRIVERS
Structural Profitability Improvement: The rating upgrade to 'B' is
driven by Inspired's strongly improved operating profitability
stemming from gaming and virtual sports with the EBITDA margin
having increased to 34% in 2022 from 28% in 2021. Fitch views this
profitability improvement as sustainable, and estimate a mild
margin expansion to 37% by 2026 underpinned by the renewal of key
account contracts in the gaming segment, and fueled by the growing
EBITDA contribution from the scalable virtual sports unit with the
highest divisional profitability.
Lower Leverage Ahead of Refinancing: Strong top-line growth and
structural profitability improvement allowed Inspired to reduce its
adjusted EBITDAR leverage organically below 3.5x as of end-2022.
The rating upgrade reflects its view that the company will be able
to maintain leverage below 3.5x until 2026, when refinancing will
have to be addressed.
Strong Trading Across Segments: Inspired has shown strong revenue
in 2022 of over 50% yoy in UK pound terms. There was growth in all
segments, with significant post-pandemic recovery of the leisure
segment and high double-digit growth of its innovative virtual
sports segment. Fitch expects further revenue growth in 2023,
albeit with lower profitability, taking into account the lower
gross margin assumed for some one-off hardware sales by the
management. As a result, in its rating case, Fitch forecasts an
EBITDA of GBP93 million-101 million in 2023-2025.
Positive FCF Expected from 2023: Inspired did not generate positive
FCF in 2022 despite a strong improvement in profitability, due to
sizeable one-off working capital investments and a post-pandemic
catch-up in capex. Its forecast includes partial unwinding of
inventories throughout 2023-2024, but Fitch expects the capex
intensity to remain high at 12%-14%. Inspired should still be able
to generate positive FCF, albeit at a moderate level of GBP15
million-20 million per year (mid-single digit FCF margin), assuming
that its 2026 senior secured notes are refinanced.
Intact Business Model: Fitch views Inspired's business model as
intact based on its performance through and after the pandemic.
Inspired has established itself in the global gaming sector as an
innovative and reliable provider of virtual, mobile and
server-based games. This enables it to win new medium-term
contracts for the supply of technology and the management of online
games and virtual sports-betting in its markets, supporting its
improved medium-term operating profitability and cash flow
visibility.
Geographic Concentration Risks: Inspired is highly dependent on the
UK gaming market. Over 70% of sales come from products and services
related to land-based venues in the UK, even though virtual sports
and interactive segments' products allow for higher geographical
diversification. As a result, the company is exposed to changes in
consumer spending trends in the UK, in particular in the more
cyclical leisure segment. Fitch takes into account weaker
consumption forecast for the UK in 2023, affecting both the revenue
and profitability of the leisure segment.
Moderate Exposure to Regulatory Risks: About 50% of the company's
revenue continues to be gaming-related, despite some
diversification into non-regulated (leisure) and less regulated
(virtual sports) segments. Although not directly exposed to many
regulatory restrictions, Inspired can be affected through more
onerous contract terms with its customers - B2C gaming companies.
In the short to medium term, Fitch views this risk as mostly
relevant to the interactive segment that generates less than 10% of
revenue, as Fitch does not forecast further significant pressure on
physical retail in the upcoming UK Gambling Act review.
DERIVATION SUMMARY
Inspired is a medium-sized B2B gaming technology company, with
similar EBITDA scale but much stronger leverage compared with
Intralot S.A. (CCC+), another gaming company with a high B2B focus.
Inspired compares well in terms of scale, leverage and geographic
diversification to Meuse Bidco SA (B+/Stable), the Belgian gaming
operator of Gaming1 brand, although the latter enjoys more
supportive regulation in its core market as well as lower capex
intensity.
Inspired is considerably smaller and has weaker FCF than its global
peers such as International Game Technology plc (BB+/Stable) and
Light & Wonder, Inc. (BB/Stable). This, along with limited
financial flexibility, constrains Inspired's ability to compete
should these larger groups decide on aggressive marketing and
pricing policies. This is partially mitigated by Inspired's strong
presence in the fast-growing gaming software market in a diverse
number of countries.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue reaching about USD320 million in 2023 including
one-off hardware sales, following normalisation at
USD270 million in 2024
- 3% growth per year in 2025-2027
- 2023 EBITDA margin down to 30% in 2023, reflecting
hardware sales
- EBITDA margin growing to 37% over the forecast period,
as the contribution of the virtual sports and
interactive segments increase
- Annual capex of about USD40 million on average over
2023-2027
- No drawings under a GBP20 million revolving credit
facility (RCF)
- No dividends or acquisitions over the next four years
- Share buyback programme of USD25 million forecast
to be fully completed by 2024
- Exchange rate of GBP/USD 1.15 over 2023-2027
Key Recovery Rating Assumptions
Fitch assumes that Inspired would be considered a going-concern
(GC) in bankruptcy and that it would be re-organised rather than
liquidated.
The GC EBITDA estimate reflects its view of a sustainable,
post-reorganisation EBITDA level upon which Fitch bases the
enterprise valuation. In its bespoke GC recovery analysis, Fitch
considered an estimated post-restructuring EBITDA available to
creditors of about USD60 million, compared with USD55 million
previously, reflecting its assumptions of structural EBITDA margin
shift with the increased revenue in the higher-margin segments of
virtual sports and interactive gaming. This improvement is offset
by forecast of GBP/USD 1.15 exchange rate (previously 1.21).
Fitch applied a distressed enterprise value (EV)/ EBITDA multiple
of 5x, in line with the mid-point Fitch uses for the corporate
portfolio outside of the US. In its view, the high intangible value
of Inspired's brands and high switching cost for customers leading
to satisfactory customer turnover is offset by the moderate size of
the company combined with regulatory pressure on gaming operators.
This multiple is aligned with that of comparable companies in the
same sector.
As per its criteria, the GBP20 million super senior secured RCF,
assumed fully drawn at default, ranks ahead of the prospective
GBP235 million senior secured notes.
After deducting 10% for administrative claims, its principal
waterfall analysis generated a ranked recovery in the 'RR2' band,
indicating a 'BB-' instrument rating. The waterfall analysis output
percentage on current metrics and assumptions is 85%. The senior
secured notes upgrade to 'BB-'/'RR2'/85% from 'B'/'RR3'/70%
reflects the upgrade of the IDR in combination with its higher
assessment of the GC EBITDA following the company's structural
profitability improvement.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Growth in scale and EBITDA expansion with higher
geographical diversification of revenue, while
maintaining
- Operating EBITDAR / gross interest + rents above 3.5x
- FCF margin sustainably in high single digits
- Total adjusted gross debt/ EBITDAR below 4.0x on a
sustained basis
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Weaker-than expected profitability due to loss of
contracts or weaker terms of contracts, more negative
impact from UK Gambling Act Review than incorporated
in its rating case and/or lack of control on cost
leading to:
- Volatile FCF profile leading to neutral or negative FCF margin
- Total adjusted gross debt/ EBITDAR above 4.5x
LIQUIDITY AND DEBT STRUCTURE
Satisfactory Liquidity: Inspired has no maturities outstanding
until 2026, which leads to a limited near-term pressure on
liquidity. Fitch forecasts a normalisation of the trade working
capital from 2023 as inventories are gradually reducing with easing
supply chain challenges observed in 2022 causing material working
capital outflows of USD20 million. Liquidity is further supported
by an undrawn RCF of about USD24 million (GBP20 million), and by
forecast positive single-digit FCF margins. Its liquidity
assessment assumes a timely refinancing of the senior secured notes
due mid-2026, with refinancing supported by lower financial
leverage and the prospects of positive FCF.
ISSUER PROFILE
Inspired Entertainment Inc. (Inspired) is a global B2B gaming
technology company. It provides content, platform and other
services to online and land-based regulated lottery, betting and
gaming operators worldwide. The group, overall, is involved across
the gaming machine value chain from manufacturing to distribution
and management.
ESG CONSIDERATIONS
Inspired Entertainment, Inc. has an ESG Relevance Score of '4' for
Customer Welfare - Fair Messaging, Privacy & Data Security due to
due to increasing regulatory scrutiny on the sector, amid a greater
awareness around social implications of gaming addiction and an
increasing focus on responsible gaming, which has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Inspired
Entertainment
(Financing) PLC
senior secured LT BB- Upgrade RR2 B
Inspired
Entertainment,
Inc. LT IDR B Upgrade B-
JONES DESLAURIES: Blackstone Fund Marks CAD86.3M Loan at 31% Off
----------------------------------------------------------------
Blackstone Secured Lending Fund has marked its CAD86,367,000 loan
extended to Jones Deslauriers Insurance Management, Inc. to market
at CAD59,917,000 or 69% of the outstanding amount, as of December
31, 2022, according to a disclosure contained in Blackstone Secured
Lending's Form 10-Q for the quarterly period ended December 31,
2022, filed with the Securities and Exchange Commission.
Blackstone Secured Lending is a participant in a First Lien Debt to
Jones Deslauriers Insurance Management, Inc. The loan accrues
interest at a rate of 8.81% (C+4.25%) per annum. The loan matures
on March 27 2028.
Blackstone Secured Lending is a Delaware statutory trust formed on
March 26, 2018, and structured as an externally managed,
non-diversified closed-end management investment company. On
October 26, 2018, the Company elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, the Company elected to be treated for U.S.
federal income tax purposes, and intends to qualify annually, as a
regulated investment company, under Subchapter M of the Internal
Revenue Code of 1986, as amended. The Company is externally managed
by Blackstone Credit BDC Advisors LLC.
Jones Deslauriers Insurance Management Inc. operates as an
insurance and risk management brokerage firm. The Company offers
property and casualty insurance, surety, employee benefits,
retirement, and personal insurance products. Jones Deslauriers
Insurance Management serves customers in Canada.
KCW GROUP: Files for Chapter 11 to Stop Foreclosure
---------------------------------------------------
KCW Group LLC filed for chapter 11 protection in the Southern
District of Texas.
The Debtor was formed on August 14, 2015, and is in the business of
providing a large facility for weddings, quincineras and other
events for residents in Houston and the surrounding areas.
1996, BGH, Inc., purchased an office complex located at 6303
Beverly Hills in Houston with the idea of turning it into one of
the leading wedding and non-wedding event spaces in the Greater
Houston area. The Gallery is one of first free standing and
longest running venues in the Greater Houston area.
Edward Schulenburg owns 50% of the Debtor and Paula Schulenburg
owns the other 50%.
In 2018, they obtained a loan from Allegiance Bank to finance the
Venue.
The mortgage was in the amount of $1,750,000 with interest at the
rate of 5.5% for the first five years, with monthly payments in the
amount of $12,118.00. The current balance due on the Mortgage is
approximately $1,600,000. The Mortgage is secured by a lien on the
Venue and a blanket lien on all of the Debtor's assets.
The Covid-19 pandemic severely impacted The Gallery's ability to
host weddings and events for new clients in 2022 and 2023, which in
turn severely impacted The Gallery’s financials.
In February of 2023, the Debtor sent a mortgage payment to
Allegiance Bank which was returned without explanation.
On Feb. 21, 2023, Mr. Schulenburg received a notice of default,
opportunity to cure default and notice of intent to accelerate from
Texas Capital Loan, LLC. The Notice referenced the $225,000 note
which was believed to be the LOC Loan from Allegiance Bank. In
March, he received a second letter for the Mortgage. The Venue was
allegedly set for foreclosure on April 4, 2023.
In order to stop the foreclosure and to understand who Texas
Capital Loan is and what their position is with respect to The
Gallery and its Venue, The Gallery elected to file a Voluntary
Petition under Chapter 11 of the United States Code.
According to court filings, KCW Group estimates $1 million to $10
million in debt to 1 to 49 creditors. The petition states that
funds will not be available to unsecured creditors.
About KCW Group
KCW Group, LLC, owns and operates a large facility for weddings,
quincineras and other events for residents in Houston and the
surrounding areas.
KCW Group sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D. Tex. Case No. 23-30988) on March 22, 2023. In the
petition signed by Edward Schulenburg, Jr., the Debtor disclosed up
to $10 million in both assets and liabilities.
Julie M. Koenig, Esq., at Cooper & Scully, P.C., is the Debtor's
legal counsel.
KCW GROUP: May 2 Hearing on Plan & Disclosures
----------------------------------------------
Judge Jeffrey Norman has entered an order conditionally approving
the Disclosure Statement filed by KCW Group, LLC.
May 2, 2023, at 11:00 a.m. is fixed for the hearing on final
approval of the Disclosure Statement (if a written objection has
been timely filed) and for the hearing on confirmation of the Plan.
The hearing will be held at Courtroom 403, United States
Courthouse, 515 Rusk Street, Houston, Texas.
April 27, 2023, is fixed as the last day for filing written
acceptances or rejections of the Disclosure Statement and
confirmation of the Plan.
About KCW Group
KCW Group, LLC, owns and operates a large facility for weddings,
quincineras and other events for residents in Houston and the
surrounding areas.
KCW Group sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D. Tex. Case No. 23-30988) on March 22, 2023. In
the petition signed by Edward Schulenburg, Jr., the Debtor
disclosed up to $10 million in both assets and liabilities.
Julie M. Koenig, Esq., at Cooper & Scully, P.C., is the Debtor's
legal counsel.
KREATIIVELY KREATIVE: Seeks to Tap DeMarco-Mitchell as Counsel
--------------------------------------------------------------
Kreatiively Kreative, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Texas to employ DeMarco-Mitchell,
PLLC as its counsel.
The firm will render these services:
(a) take all necessary action to protect and preserve the
estate;
(b) prepare legal papers;
(c) formulate, negotiate, and propose a plan of
reorganization; and
(d) perform all other necessary legal services.
The hourly rates of the firm's counsel and staff are as follows:
Robert T. DeMarco $400
Michael S. Mitchell $300
Barbara Drake $125
The Debtor paid the firm a retainer of $4,000 for legal services to
be rendered on or after the petition date. The firm requested an
additional retainer of $2,000 to represent the Debtor in this
Chapter 11 case.
Robert DeMarco, Esq., a member of DeMarco-Mitchell, disclosed in a
court filing that the firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Robert T. DeMarco, Esq.
DeMarco-Mitchell, PLLC
1255 W. 15th Street, 805
Plano, TX 75075
Telephone: (972) 578-1400
Facsimile: (972) 346-6791
Email: robert@demarcomitchell.com
About Kreatiively Kreative
Kreatiively Kreative Inc. -- https://KREATIVELYKREATIVE -- is
engaged in activities related to real estate.
Kreatiively Kreative Inc. filed a petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. E.D. Texas Case No. 23-40420) on
March 6, 2023. In the petition filed by Johnny Robert, director,
the Debtor reported between $1 million and $10 million in both
assets and liabilities.
Judge Brenda T. Rhoades oversees the case.
DeMarco-Mitchell, PLLC serves as the Debtor's counsel.
LABL INC: Moody's Rates New $300MM Secured Notes 'B2'
-----------------------------------------------------
Moody's Investors Service affirmed LABL, Inc.'s (doing business as
Multi-Color Corporation) B3 corporate family rating, its B3-PD
probability of default rating, B2 senior secured rating, and Caa2
senior unsecured rating upon the company's announcement of a
potential acquisition under a LOI.
Moody's also assigned a B2 rating to LABL's proposed $300 million
senior secured notes. The company plans to use the proceeds from
the placement to finance the acquisition and repay outstanding
borrowing under the asset-based revolver. The outlook remains
negative.
"The affirmation of B3 CFR reflects Moody's expectation that
Multi-Color will continue to generate sufficient funds from
operations, which support the company's ability to meet scheduled
debt service despite added debt and increasing interest rates,"
says Motoki Yanase, VP-Senior Credit Officer at Moody's.
"However, higher debt load resulting from the acquisition will
delay improvement of very high leverage which stood at 8.5x in
2022, while Multi-Color is projected to generate negative free cash
flow in the next 12-18 months, for which Moody's keep the negative
outlook," added Yanase.
Assignments:
Issuer: LABL, Inc.
Senior Secured Global Notes, Assigned B2 (LGD3)
Affirmations:
Issuer: LABL, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured Bank Credit Facility, Affirmed B2 (LGD3)
Senior Secured Global Notes, Affirmed B2 (LGD3)
Backed Senior Secured Global Notes, Affirmed B2 (LGD3)
Senior Unsecured Global Notes, Affirmed Caa2 (LGD5)
Outlook Actions:
Issuer: LABL, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The affirmation of B3 CFR reflects Moody's expectation that
Multi-Color will generate positive funds from operations and
maintain its fundamental capacity to service debt. The proposed
addition of $300 million senior secured notes amounts to about 6%
of total reported debt as of December 2022 and will keep its
leverage elevated. Moody's expects it will take more than 18 months
for the company to reduce leverage to below 7x Debt/EBITDA level,
Moody's lower bound leverage guidance for the B3 CFR. Moody's also
expects the company to increase its capital spending in 2023, which
could result in modest negative free cash flow. The company retains
flexibility to delay or curtail growth capital spending to support
its cash flow, if required. Moody's does not project the company to
pay material dividend in the next 12-18 months.
Affirmation of B3 CFR also reflects adequate liquidity of the
company, supported by cash on hand and availability under two
revolving bank facilities. As of December 31, 2022, the company had
about $69 million in cash balances, excluding $3.9 million in
restricted cash. It also had access to about half of $590 million
asset-based revolver and had further $200 million undrawn cash
revolver. Sufficient availability under the two revolvers will
support Multi-Color's liquidity for the next 12-18 months, while
Moody's expects the company to generate modest negative free cash
flow. Multi Color's next significant maturity is 6.75% senior
secured notes in July 2026.
Multi-Color's credit profile is constrained by high absolute amount
of debt accumulated as a result of its LBO and debt-funded
acquisitions, including the acquisition of Multi-Color by Clayton,
Dubilier & Rice (CD&R) and combining its business with Fort
Dearborn Holding Company, Inc. in 2021. The credit profile is also
constrained by Moody's expectation of negative free cash flow
generation in the next 12-18 months, which will limit the company's
debt repayment capacity. Moody's further factors in Multi-Color's
acquisition-driven growth strategy and challenges in integrating
acquired businesses and achieving synergies.
These credit weaknesses are counterbalanced by strengths in the
company's credit profile, including its scale with close to $3
billion of revenue. The company predominantly serves customers in
stable end markets, including food & beverage and home & personal
care, with long-term relationships, which provides a stable revenue
base.
The negative rating outlook reflects Moody's expectation that it
will take beyond the next 12-18 months for Multi-Color to reduce
leverage to below 7x Debt/EBITDA level. The negative outlook
further reflects Moody's expectation of negative free cash flow
generation for the next 12-18 months.
The new senior secured debt is rated B2, one notch above the B3
corporate family rating and at the same level as the company's
existing senior secured notes. The B2 rating reflects its position
in the capital structure and Moody's expectation of recovery rates
on senior secured debt in a distressed scenario. The rating also
reflects the loss absorption provided by the existing unsecured
notes and other unsecured debt.
The unsecured notes are rated Caa2, reflecting their subordinated
lien on the collateral pledged to the senior secured facilities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if credit metrics, liquidity or
operating and competitive environment deteriorate. Specifically,
the rating could be downgraded if liquidity weakens, or if
debt/EBITDA remained above 7 times, while debt service coverage
deteriorates with EBITDA to interest coverage declining to below
1.5 times or free cash flow and funds from operations turning
negative.
An upgrade of the ratings is unlikely given the negative outlook.
However, the ratings could be upgraded overtime if Multi-Color
continues to realize projected synergies from the Fort Dearborn
merger and other acquisitions and develops a less aggressive
financial policy. Specifically, the rating could be upgraded if
debt/EBITDA is sustained below 6.0 times, EBITDA to interest
coverage rises above 2.75 times, and free cash flow to debt rises
above 2.5% on a sustained basis.
Headquartered in Elk Grove Villiage, Illinois, LABL, Inc. is a
provider of pressure sensitive labels, flexible film packaging and
other packaging solutions for the food and beverage, health and
beauty, and consumer products markets. The company operates under
the name of Multi-Color. The company is owned by Clayton, Dubilier
& Rice (CD&R) and generated about $3.3 billion in revenue in 2022.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
LAKEVIEW VILLAGE: Fitch Affirms BB+ Rating on 2017A/2018A Bonds
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating assigned to series
2017A and 2018A revenue bonds issued by the City of Lenexa, KS
Health Care Facility on behalf of Lakeview Village, Inc. (Lakeview)
and Lakeview's Issuer Default Rating (IDR) at 'BB+'.
The Rating Outlook is Stable.
Entity/Debt Rating Prior
----------- ------ -----
Lakeview Village,
Inc. (KS) LT IDR BB+ Affirmed BB+
Lakeview
Village, Inc.
(KS) /General
Revenues/1 LT LT BB+ Affirmed BB+
SECURITY
The bonds are secured by a pledge of unrestricted receivables, a
leasehold interest on the existing facility, and a debt service
reserve fund (DSRF).
ANALYTICAL CONCLUSION
The 'BB+' rating and Stable Outlook reflects Fitch's expectation
that Lakeview will continue to demonstrate balance sheet and
profitability metrics that are consistent with historical
performance. In fiscal 2022, Lakeview exceeded their budgeted goal
of closing 31 units by closing 38 life care contracts. Similar to
sector trends, Lakeview has experienced macro staffing challenges
resulting in community-wide wage adjustments and a reduction of
short-term rehabilitation beds utilizing 20 semi-private rooms as
private.
Lakeview's independent living unit (ILU) occupancy remains
consistent with historical levels. The community continues to
redevelop older 4-plex cottage inventory with more modern single
family and duplex buildings. Management is reporting favorable
market response to its repositioning of outdated, smaller ILUs into
larger, more modern units.
KEY RATING DRIVERS
Revenue Defensibility: 'bb'
Demand Remains Consistent Despite Competition
Lakeview's marketable ILU occupancy is consistently in the mid to
low 80% range, consistent with a weaker revenue defensibility.
Occupancy remained flat from 82.4% in 2021 to 82.7% in 2022, due to
higher than average attrition. Assisted living (AL) occupancy
increased slightly to 79.7% compared to 77.5% in the prior fiscal
year. SNF occupancy was about 77.6%, which is in line with the
prior year average of 77.5%. Lakeview currently has one floor
consisting of 19 short-term rehab beds closed due to staffing
challenges.
Lakeview Village is located in a highly competitive area with new
inventory in the form of IL and AL rental units coming on line
throughout Johnson County. Fitch expects that IL occupancy should
remain at its current level with incremental improvement possible
as management continues to reposition older less desirable 4-plex
cottage units to more marketable single family and duplex
structures.
Operating Risk: 'bbb'
Adequate Cost Management and Capital Spending
Lakeview is a type-A community that continues to post core
operating results that are consistent with a midrange operating
risk assessment. Lakeview's five-year averages for operating ratio,
net operating margin (NOM) and NOM - adjusted are 100.3%, 5.6% and
20.1%, respectively. Inflated operating ratios are reflective of
Managements report of supply chain pressures and increased wages
for employees.
In fiscal 2022 (FYE Dec 2022), Lakeview exceeded budget by closing
38 Lifecare contracts, resulting in $12.6 million in fees (compared
to the 31 contracts and 7.6 million in collections that were
forecasted). Offsetting this, in 2022 the community experienced a
vacate rate that matched actual projections, with a lower than
expected refill rate. Lakeview's average age of plant is elevated
at around 16.7 years at FYE 2022. To address this, management has
focused capex plans on renovating and repositioning the community
to meet rising market demands for larger and more modern units as
evidence by its cottage and villa initiative.
Lakeview's capital-related metrics indicate that its long-term
liabilities are supportable based on its consistent operating
performance. Its five-year average for revenue-only MADS coverage,
MADS as a percentage of revenue, and debt-to-net available are
0.7x, 12.3%, and 6.0x.
Financial Profile: 'bb'
Steady Margins Drive Incremental Cash Growth
Lakeview's unrestricted cash and investments totaled $35.6 million
at FYE 2022 representing 64% cash-to-adjusted debt. Lakeview's
five-year average MADS coverage is solid at 1.9x with fiscal 2022
ending at 2.3x. As of FYE 2022, Lakeview had 297 days cash on hand
(DCOH), which is neutral to Fitch's assessment of its financial
profile. Fitch believes Lakeview's financial profile will remain
consistent with a 'bb' assessment throughout a stress case
scenario.
Asymmetric Additional Risk Considerations
There are no asymmetric risk factors affecting this rating
determination. All of Lakeview's outstanding debt is fixed rate and
fully-amortizing.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Decline in ILU occupancy sustained below 80%;
- Sustained weakness in core operating metrics, resulting in NOM
and operating ratio maintained at levels of about 12%-15% and
103%-105%, respectively;
- Days Cash on hand dropping below 200 days.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Improved ILU occupancy that is consistently around 90%;
- NOMA that stays around 28%-30%, leading to commensurate growth in
liquidity.
CREDIT PROFILE
Lakeview is located on a 96-acre campus in Lenexa, Kansas. The
community consists of 533 ILUs (479 Marketable), 24 ALUs (21
marketable), a 120-bed SNF (98 marketable), and 38 short-term rehab
beds. All occupancy statistics are calculated on a marketable unit
basis. Lakeview has three affiliated entities outside the obligated
group (OG), including a foundation and two independent living HUD
properties. Fitch uses OG financials for its analysis and all
figures cited in this press release. Lakeview had approximately
$48.8 million in total revenues in fiscal 2022.
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.
LASHLINER INC: Unsecureds Owed $2M Get Share of Income
------------------------------------------------------
Lashliner, Inc., submitted a Modified Fifth Amended Small Business
Debtor's Plan of Reorganization.
The LashLiner values are estimated by the Debtor. The Debtor's
primary assets consist of the LashLiner Merchandise, deposits,
equipment and intellectual property including two new patents
covering LashLiner products in Japan. The Debtor estimates the
value of the patents as of the date of the filing of this Plan as
$371,410.
No independent appraisal of the assets has been performed, but the
Debtor estimates that the total retail value of LashLiner
Merchandise/Inventory and patents is approximately $5,949,635.
Under the Plan, Class 4 is comprised of all holders of Allowed
General Unsecured Claims against the Debtor. Based upon the Proofs
of Claim (POC) that have been filed and the Debtor's adjustments to
the POC. The Debtor estimates some 1,983,570 in Allowed Class 4
Claims on the Effective Date of the Plan.
The Debtor has reached an agreement with Tori Belle to have Tori
Belle further secure the Class 4 claim through the recordation of
third position UCC-1 on the TB Collateral after senior first lien
of PIRS and conditional second junior lien of Bank of America;
provided, however, any liens on TB Collateral granted to any
creditor under or related to this Plan shall be (i) subordinate to
PIRS' firstposition liens on the TB Collateral in all respects, and
(ii) further conditioned on and subject to the creditor and Tori
Belle accepting and duly executing the Subordination Agreement in
favor of PIRS. With respect to Class 4 creditors, acceptance and
execution of the Subordination Agreement by the Debtor and the
Subchapter V Trustee shall be sufficient to effectuate the
subordination agreement and record the junior liens on TB
Collateral in Lashliner's name for the benefit of Class 4.
In full and complete settlement, satisfaction and release of all
Allowed Class 4 Claims, each holder of an Allowed Class 4 Claim
will receive its pro rata share of all of the Debtor's projected
net disposable income and value contributions from Tori Belle, on
as needed basis, over the five-year (sixty- month) period following
the Effective Date and be paid in full, subject to the following
terms and conditions: such amount equals 100% of the Class 4
Allowed Claims.
Said payments will be made on the 30th day of the month following
the Effective Date as follows:
Year 1: $186,930: (Two payments of $ 38,971.50 each in month 6 and
12 from Debtor + $26,240.00 in month 6 in security deposit
reimbursement for use of premises by Tori Belle from Tori Belle +
two payments of $25,986.00 each in month 6 and 12 in rent
reimbursement for use of premises by Tori Belle from Tori Belle +$
30,775.00 in month 12, guaranteed by the new value contribution
from Tori Belle);
Year 2: $296,513: (two payments of $93,763 each in months 18 and 24
from Debtor + two payments of $54,493.50 each in month 18 and 24,
guaranteed by the new value contribution from Tori Belle);
Year 3: $278,843: (two payments of $84,928 each in months 30 and 36
from Debtor +two payments of $54,493.50 each in months 30 and 36,
guaranteed by the new value contribution from Tori Belle);
Year 4: $284,646: (two payments of $87,829.50 each in months 42 and
48 from Debtor + two payments of $54,493.50 each in month 42 and
48, guaranteed by the new value contribution from Tori Belle); and
Year 5: $290,681: (two payments of $90,847 each in months 54 and 60
from Debtor + two payments of $54,493.50 each, guaranteed by the
new value contribution from Tori Belle).
Except for the TB Rent Contribution (Tori Belle's unconditional
plan contributions of $25,986 each in month 6 and 12 in rent
reimbursement and $26,240 in month 6 in security deposit
reimbursement), any and all other plan contributions toward the
Plan from Tori Belle are subject to and conditioned on Tori Belle
first fully satisfying its obligations to PIRS under the TB
Settlement Agreement or a judgment thereon prior to the date of any
such contributions. If Tori Belle timely and fully performs its
obligations under the TB Settlement Agreement, then the date of the
last scheduled payment under the TB Settlement Agreement is
projected to occur before the date of Plan payment in month 12 from
the Effective Date. Class 4 is impaired.
The Plan will be funded from a combination of (i) funds on hand in
the estate at the time of Confirmation; and (ii) future income
generated through sale of LashLiner merchandise, as well as (iii)
new value contributed to the Debtor by Tori Belle as necessary.
Counsel for LashLiner, Inc.:
Dmitry Merrit, Esq.
14205 S.E. 36th Street, Suite 100
Bellevue, WA 98006
Tel: (360) 322-4511
Fax: (323) 978-6598
E-mail: merritlaw@yahoo.com
A copy of the Plan of Reorganization dated March 24, 2023, is
available at https://bit.ly/3K6CBKG from PacerMonitor.com.
About LashLiner Inc.
LashLiner Inc., doing business as Lashliner LLC, is an innovative
cosmetics brand. The company's initial product is a patent-pending
magnetic eyeliner and eyelash system. LashLiner Inc. filed a
petition for relief under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Wash. Case No. 22-11273) on August 8,
2022. In the petition filed by Robert Kitzberger, as president, the
Debtor reported assets and liabilities between $1 million and $10
million.
Kathryn E Perkins has been appointed as Subchapter V trustee.
The Law Offices of D. Merrit & Associates, is the Debtor's counsel.
LAURA'S ORIGINAL: Seeks to Hire Franklin Soto Leeds as Counsel
--------------------------------------------------------------
Laura's Original Boston Brownies, Inc. seeks approval from the U.S.
Bankruptcy Court for the Southern District of California to employ
Franklin Soto Leeds LLP as its counsel.
The firm will render these services:
(a) advise the Debtor regarding matters of bankruptcy law;
(b) represent the Debtor in proceedings or hearings in the
bankruptcy court involving matters of bankruptcy law;
(c) prepare and assist the Debtor in the preparation of
reports, accounts, applications, and orders;
(d) advise the Debtor concerning the requirements of the
Bankruptcy Code and rules relating to administration of this
bankruptcy case; and
(e) assist the Debtor in the negotiation, formulation,
confirmation, and implementation of the plan of reorganization.
The hourly rates of the firm's counsel and staff are as follows:
Paul J. Leeds, Partner $500
Meredith King, Associate $400
Other Partners $400 - $500
Other Associates $300 - $400
Paralegals $175
Between December 19, 2022 and March 13, 2023, the Debtor paid the
firm a total of $48,205 in fees and $99 in costs for prepetition
services.
The Debtor will also pay the firm a supplemental retainer of
$16,696.
Paul Leeds, Esq. a partner at Franklin Soto Leeds, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Paul J. Leeds, Esq.
Meredith King, Esq.
Franklin Soto Leeds, LLP
444 West C Street, Suite 300
San Diego, CA 92101
Telephone: (619) 872-2520
Facsimile: (619) 566-0221
Email: pleeds@fsl.law
mking@fsl.law
About Laura's Original Boston Brownies
Laura's Original Boston Brownies, Inc. offers low sugar, high
fiber, and clean label products. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Calif. Case No.
23-00656) on March 13, 2023. In the petition signed by Laura
Katleman, chief executive officer, the Debtor disclosed $6,651,309
in assets and $6,498,970 in liabilities.
Judge Christopher B. Latham oversees the case.
Paul Leeds, Esq., and Meredith King, Esq., at Franklin Soto Leeds
LLP represent the Debtor as legal counsel.
LEVEL 3 FINANCING: Moody's Rates New 1st Lien Secured Notes 'Ba2'
-----------------------------------------------------------------
Moody's Investors Service assigned Ba2 rating to Level 3 Financing,
Inc.'s $1,100 million first lien senior secured notes maturing in
2030. Lumen Technologies, Inc.'s B2 Corporate Family Rating, and
all other ratings at Lumen, Level 3 and Qwest Corporation are not
impacted by the proposed transaction. The outlook is negative.
Lumen's SGL-3 Speculative Grade Liquidity rating remains
unchanged.
On March 16, 2023, Lumen announced an offer to exchange a basket of
outstanding unsecured senior notes issued by Lumen maturing in
2025, 2026, 2028 and 2029 for 10.5% first lien senior secured notes
due 2030 by Level 3. The exchange offer also includes the Lumen
unsecured senior notes due in 2039 and 2042. The terms and
conditions of the proposed 10.5% first lien senior secured notes
are expected to be the same as the existing first lien senior
secured debt at Level 3 and enjoy the same downstream guaranteed
from Level 3 Parent, LLC.
The exchange offer remains in its initial stages. If completed, the
$1,100 million exchange offer will improve the company's maturity
profile, liquidity and address refinancing needs in 2025 and 2026.
However, financial and operating risks remain high. The negative
outlook continues to reflect Moody's concerns over Lumen's
declining operating performance, reduced financial flexibility, and
elevated leverage.
The Ba2 rating assigned to the $1,100 million first lien senior
secured notes is three notches higher than Lumen's B2 CFR
reflecting their priority position to the unsecured notes and
collateral securing these notes at the Level 3 level, as well as
their structural senior position to the outstanding debt at Lumen.
If any of the outstanding unsecured debt securities are fully
exchanged into the 10.5% first lien senior secured notes, their
ratings will be withdrawn at the close of the transaction.
Assignments:
Issuer: Level 3 Financing, Inc.
Backed Senior Secured First Lien Global Notes, Assigned Ba2
(LGD1)
LGD Adjustments:
Issuer: Level 3 Financing, Inc.
LGD Backed Senior Secured Global Notes, Adjusted to (LGD1) from
(LGD2)
LGD Senior Secured Bank Credit Facility, Adjusted to (LGD1) from
(LGD2)
RATINGS RATIONALE
Lumen's B2 CFR reflects the company's elevated leverage, declining
operating performance, sizable capex initiatives, and execution
risks associated with the company's turn-around efforts. In
addition, the rating considers the competitive nature of the
business Lumen operates in and the deteriorating economic
environment. At the same time the rating takes into consideration,
the company's leading position in providing communications services
and solutions to fortune 500 clients and US government agencies,
adequate liquidity and commitment from the management team to use
the net proceeds from the EMEA asset sale to reduce leverage.
Moody's expects Lumen to maintain adequate liquidity over the next
12-18 months. Lumen's liquidity position is supported by around
$1.25 billion in cash, and full availability under the company's
$2,200 million undrawn revolving credit facility, expiring January
2025. The revolving credit facility is governed by a maximum total
leverage ratio of 4.75x and a minimum consolidated interest
coverage ratio of at least 2.0x. Moody's estimates Lumen will
remain in compliance with the total leverage ratio and interest
coverage ratio for the next 12 months.
Lumen's ESG Credit Impact Score is highly negative (CIS-4). The
score reflects aggressive financial policy, negative social trends
that the company is experiencing in its legacy business, and cyber
security risk exposure given the company's collection of sensitive
consumer data.
The negative outlook reflects Moody's concerns over Lumen's
declining operating performance, reduced financial flexibility, and
elevated leverage during a period of increased financial and
operating risks. While Moody's believes that Lumen remains
committed to reducing leverage, Moody's is concerned about the
company's execution risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could downgrade Lumen's CFR if: 1) the pace of revenue
contraction across the bulk of the company's business segments is
not expected to steadily and sustainably slow over the next 12-18
months, 2) targeted capital investing to grow fiber-enabled
locations proves insufficient to deliver a fully sustained
flattening of negative aggregate broadband revenue trends within
its Mass Markets segment in 2023, 3) the disposition of EMEA assets
is delayed or prohibited from closing for regulatory or other
reasons, 4) free cash flow is expected to become significantly
negative on a sustained basis, 5) the company's liquidity and/or
access to capital markets materially deteriorates, or 6) the
company is unable or unwilling to refinance its senior credit
facilities due January 31, 2025 over the next few quarters. In
addition, the rating could be further downgraded if there is
deterioration of Lumen's competitive market positioning
irrespective of its credit metrics.
Moody's could upgrade Lumen's CFR if: 1) both revenue and EBITDA
had first stabilized and inflected for a sustained period of at
least 12-18 months, 2) leverage (Moody's adjusted) is expected to
be sustained below 4.5x, 3) free cash flow to debt was in the
mid-single digit percentage range and 4) liquidity improves and is
considered good.
The principal methodology used in this rating was
Telecommunications Service Providers published in September 2022.
Headquartered in Monroe, Louisiana, Lumen is an integrated
communications company that provides an array of communications
services to large enterprise, mid-market enterprise, government and
wholesale customers in its larger Business segment. The company's
smaller Mass Markets segment primarily provides broadband services
to its residential and small business customer base. The company
generated $17.5 billion in revenue over the last 12 months ended
December 31, 2022.
LIFETIME BRANDS: Moody's Cuts CFR to B2 & Secured Term Loan to B3
-----------------------------------------------------------------
Moody's Investors Service downgraded Lifetime Brands, Inc.'s
Corporate Family Rating to B2 from B1, Probability of Default
Rating to B2-PD from B1-PD, and senior secured term loan rating to
B3 from B2. The company's Speculative Grade Liquidity Rating (SGL)
remains SGL-2, and the outlook is stable.
The ratings downgrade reflects Lifetime Brands' elevated financial
leverage with debt/EBITDA at around 5.2x for the fiscal year-end
period December 31, 2022, up from 3.6x as of fiscal 2021, and
Moody's expectations that leverage will remain high amid a
challenging operating environment. Lifetime Brands reported a
year-over-year revenue decline of 15.7% in fiscal 2022, and its
profitability weakened considerably with company-adjusted EBITDA
lower by 38.9%. The high inventory levels in the retail channel are
negatively impacting reordering activity, and persistently high
inflation is pressuring consumer discretionary spending and demand
for the company's products.
Lifetime Brands' estimates that inventory at retail started to
decrease in early 2023, and the order flow from its retail
customers also started to improve in the 1Q-2023. The company
anticipates more normalization of replenishment orders in 2Q-2023.
Lifetime expects its revenue and earnings will improve in fiscal
2023, benefitting from a stable supply chain, a normalization in
customer order patterns, and restructuring initiatives. The company
implemented a restructuring of its European-based international
operations in 4Q-2022 and expects a meaningful improvement in
profitability of its international business in fiscal 2023.
Moody's expects Lifetime Brands' financial leverage will improve
but will remain high with debt/EBITDA in a 4.8x-5.0x range by the
end of fiscal 2023. Moody's also expects demand pressures will
persist in 2023, including retail channel destocking at least
through the first half. Weakening macro-economic conditions and the
ongoing shift in spending from goods to services create uncertainty
around the stability of consumer demand for the company's products,
and the company's ability to improve profitability amid a lower
demand environment. Moody's projects that Lifetime Brands will
generate free cash flow of around $30 million over the next 12-18
months, which provides the financial flexibility to reduce debt and
execute its strategy even if demand is lower than anticipated.
Moody's took the following rating actions:
Downgrades:
Issuer: Lifetime Brands, Inc.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD
from B1-PD
Senior Secured Term Loan B, Downgraded to B3 (LGD4)
from B2 (LGD4)
Outlook Actions:
Issuer: Lifetime Brands, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Lifetime Brands' B2 CFR reflects its strong market position in the
homewares industry with many leading brands in narrowly defined
product categories, and its good brand and product diversification.
Lifetime Brands' well-diversified retail distribution channel,
which includes e-commerce, positions the company well to benefit
from the continued shift of consumer spending to online. The
company's SGL-2 liquidity rating reflects Moody's expectation for
positive free cash flow of around $30 million over the next 12
months, and access to a mostly undrawn $200 million ABL revolving
facility. Governance considerations include the company's financial
policy that targets a net debt-to-EBITDA leverage ratio (company's
calculation) of below 3.0x, which supports moderate leverage,
although the company has a history of operating above its stated
target.
The credit profile also considers Lifetime Brands' small scale with
annual revenue under $1.0 billion, high geographic and customer
concentration, and its low EBIT margin in the mid-single digit. The
company's products are discretionary in nature and susceptible to
consumer spending reductions. Lifetime Brands operates in the
mature, highly price-sensitive and competitive kitchenware product
category, which limits pricing flexibility and contributes to the
low margin. The company's financial leverage is high with
debt/EBTIDA at 5.2x as of fiscal 2022 and Moody's projects a
decline to a 4.8x-5.0x range in 2023. Lifetime Brands' cash and
cash flow provide capacity to repay debt and reduce leverage.
However, Moody's believes that the low product category growth
creates acquisition event risk as a means of pursuing growth.
Lifetime Brands sources its products mostly from China, exposing
the company's supply chain to manufacturing issues affecting the
region, as well as social risk factors such as responsible
sourcing. The outsourced manufacturing leads to good cost
variability that limits downward gross margin pressure when sales
contract
Lifetime Brand's ESG credit impact score is highly negative
(CIS-4), mainly driven by highly negative exposure to governance
risks, primarily related to its aggressive financial strategy that
includes operating with high leverage given the company's operating
profile and debt-financed acquisitions. The company is publicly
traded but private equity firm Centre Partners Management LLC. has
a large ownership stake (approximately 27%) that creates some
concentration in decision making. The company is moderately
negatively exposed to environmental and social risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook also reflects Moody's expectation that the
company will proactively address the approaching maturity of the
first lien term loan and the springing maturity of its revolver at
a cash interest cost that preserves positive free cash flow.
The ratings could be upgraded if the company generates consistent
organic revenue growth an improves the EBIT margin to a high single
digit percentage range. A ratings upgrade would also require
debt/EBITDA sustained below 4.5x, and financial policies that
maintains credit metrics at the above levels, as well as
maintaining good liquidity including good free cash flow relative
to debt.
The ratings could be downgraded if Lifetime Brands' operating
performance deteriorates due to ongoing organic revenue declines or
EBIT margin deterioration, or debt/EBITDA is sustained above 5.5x.
The ratings could also be downgraded if liquidity deteriorates,
including weaker free cash flow or high reliance on revolver
borrowings, or if financial policies become more aggressive, in
particular regarding a material debt-finance acquisition or
shareholder distribution.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
Lifetime Brands, Inc. designs, sources, and sells branded
kitchenware, tableware and other products used in the home.
Lifetime Brands is publicly traded (ticker: LCUT) with Centre
Partners Management LLC owning approximately 27%. The company
reported revenue of approximately $728 million for the fiscal
year-end period December 31, 2022.
LUCKY BUCKS: Moody's Cuts CFR to 'Caa3', Outlook Negative
---------------------------------------------------------
Moody's Investors Service downgraded Lucky Bucks, LLC's Corporate
Family Rating to Caa3 from Caa1. The company's Probability of
Default Rating was downgraded to Caa3-PD from Caa1-PD and its
senior secured first lien bank credit facility ratings were
downgraded to Caa3 from Caa1. The rating outlook is negative. This
concludes the review initiated on October 13, 2022.
Downgrades:
Issuer: Lucky Bucks, LLC
Corporate Family Rating, Downgraded to Caa3 from Caa1
Probability of Default Rating, Downgraded to Caa3-PD from Caa1-PD
Senior Secured 1st Lien Bank Credit Facility, Downgraded to
Caa3 (LGD4) from Caa1 (LGD4)
Outlook Actions:
Issuer: Lucky Bucks, LLC
Outlook, Changed To Negative From Rating Under Review
The downgrade considers several factors, including the unfavorable
impact on EBITDA from the increase in regulatory enforcement in the
Georgia coin-operated amusement machine market, along with Moody's
heightened concern regarding inflation and recession, particularly
the potential impact on consumer discretionary spending. Combined,
these factors have resulted in increased leverage levels and weak
liquidity. Moody's believes the company is at risk of a covenant
violation. Lucky Buck's is required to meet a debt-to-pro forma
adjusted EBITDA leverage covenant of 7.75x. The financial covenant
is a springing covenant when the revolver is drawn at 35%. The
stress on EBITDA has also caused overall liquidity stress,
particularly given the company's relatively large mandatory term
loan debt amortization requirement, at $27.75 million per year, and
the fact that the company's credit facilities are not currently
hedged, exposing the company to interest rate risk that accompanies
inflation. Lucky Bucks does have equity cure rights.
While Moody's expects Lucky Bucks has been working with its lenders
to address the risks cited above, the downgrade to Caa3
acknowledges the elevated possibility that an agreement between the
company and its lenders (debt or amortization modification,
restructuring, covenant modification, etc.) could result in what
Moody's considers to be a distressed exchange.
RATINGS RATIONALE
Lucky Bucks' Caa3 rating reflects weakened operating performance,
as the Georgia Lottery Commission recently increased enforcement of
its 50 Percent Rule, among other rules. The 50 Percent Rule
mandates that no location owner or operator can derive more than
50% of gross retail receipts at its locations from Class B
machines. This increased enforcement resulted in a number of Lucky
Bucks' machines being taken out of operation. Lower machine counts
will continue to have a negative impact on EBITDA performance
relative to Moody's initial expectations. Leverage is expected to
remain elevated and this could lead to a covenant breach. Lucky
Buck's is required to meet a debt-to-pro forma adjusted EBITDA
leverage covenant of 7.75x. The financial covenant is a springing
covenant when the revolver is drawn at 35%. The stress on EBITDA
could also cause an overall liquidity stress, particularly given
the company's relatively large mandatory term loan debt
amortization requirement, at $27.75 million per year. Credit
concerns include Lucky Bucks' small size in terms of revenue -- for
the latest 12- month period ended September 30, 2022, Lucky Bucks
had revenue near $90 million -- single product focus with all
operations located in one state, and high leverage. Additionally,
despite the favorable regulatory history of Georgia supporting
COAMs, the company remains inherently exposed to unfavorable
regulatory and legislative changes including higher tax rates,
shifts in the allocation of COAM revenue, or adjustments to the
type of gaming permitted in Georgia, should they occur.
The negative outlook reflects the company's high leverage, weak
liquidity, and weaker than expected operating performance.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could also be downgraded if for any reason, including
further enforcement by the Georgia Lottery Commission that results
in additional machines being taken out of service, EBITDA or
liquidity worsens in the near-term to the degree that a payment
default is likely.
Ratings could be upgraded if Moody's believes there is a very high
likelihood Lucky Bucks will meet its covenants, any agreement with
its lenders that will not result in a distressed exchange, and
EBITDA trends and liquidity are strong enough to support the
company over the long-term without risk of a covenant breach,
payment default, or distressed exchange over the longer-term.
The principal methodology used in these ratings was Gaming
published in June 2021.
Lucky Bucks, LLC is a Coin Operated Amusement Machine (COAM)
operator in the state of Georgia. COAMs are placed in high traffic
sites, such as convenience stores and gas stations, and provide
patrons with a slot-machine type gaming experience. Reported net
revenue for the 12 months ended September 30, 2022 was $90 million.
M RENTAL BROOKLYN: Taps Law Offices of Avrum J. Rosen as Counsel
----------------------------------------------------------------
M Rental Brooklyn LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ The Law Offices of
Avrum J. Rosen, PLLC as its counsel.
The firm will render these services:
(a) advise the Debtor of its rights and duties;
(b) oversee preparation of necessary reports to the courts or
creditors;
(c) conduct all appropriate investigation or litigation; and
(d) perform any other necessary duty in aid of the
administration of the estate.
The hourly rates of the firm's counsel and staff are as follows:
Partners $625
Associates $325 - $450
The Debtor also seeks approval to pay a retainer to Steinbrecher &
Span in the amount of $50,000.
Avrum Rosen, Esq., disclosed in a court filing that his firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Nico G. Pizzo, Esq.
Avrum J. Rosen, Esq.
Law Offices of Avrum J. Rosen, PLLC
38 New Street
Huntington, NY 11743
Telephone: (631) 423-8527
Email: npizzo@ajrlawny.com
arosen@ajrlawny.com
About M Rental Brooklyn
M Rental Brooklyn LLC is a Single Asset Real Estate (as defined in
11 U.S.C. Sec. 101(51B)).
M Rental Brooklyn LLC filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42858) on Nov.
15, 2022. In the petition filed by Rafi Manor, managing member of
M1 Development LLC, the Debtor reported between $1 million and $10
million in both assets and liabilities.
Judge Nancy Hershey Lord oversees the case.
The Law Offices of Avrum J. Rosen, PLLC serves as the Debtor's
counsel.
MARCH ON HOSPITALITY: Seeks to Use $2.443MM of Cash Collateral
--------------------------------------------------------------
March on Hospitality LLC asks the U.S. Bankruptcy Court for the
Northern District of Texas, Fort Worth Division, for authority to
use cash collateral, which is already subject to Simmons Bank's
asserted lien.
The Debtor's principal asset was a La Quinta hotel located at 1503
Breckinridge Road, Mansfield, Texas and certain property relating
to the Hotel, located in Tarrant County, Texas.
The Debtor sold the hotel and all property relating to the hotel.
The sale generated net proceeds to the Debtor of $5.285 million.
Simmons Bank asserted a lien against the Hotel pursuant to a Deed
of Trust, Security Agreement, Financing Statement and Assignment of
Rents, which was given to Simmons' predecessor, Southwest Bank, as
part of a loan from Southwest Bank to Summerfest Hospitality, LLC.
On March 28, 2023, Simmons filed Proof of Claim No. 5, asserting a
prepetition claim against the Debtor in the amount of $2.869
million.
With the accrual of post-petition interest, however, which Simmons
contends is accruing at the default rate of 18%, or $1,160 per day,
the Debtor believes Simmons asserts a secured claim against the
Debtor in the amount of not less than $3 million, which is the
amount reflected in the Simmons Claim plus interest at the default
rate through March 24.
The Debtor seeks authorization to use cash collateral, which is
already subject to Simmons' asserted lien, to pay Simmons the
amount of $2.443 million -- the amount Simmons would have received
from Summerfest if Simmons had not defaulted on its loan
obligations to Simmons.
To avoid Simmons continuing to insist that it is entitled to daily
default rate interest at the rate of 18%, the Debtor seeks to pay
Simmons immediately and requests a waiver the 14-day stay imposed
by Rule 6004(h).
A copy of the motion is available at https://bit.ly/3M6Dvs5 from
PacerMonitor.com.
About March on Hospitality LLC
March on Hospitality LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 23-40140) on
January 17, 2023. In the petition signed by Douglas Whatley, the
Debtor disclosed up to $10 million in both assets and liabilities.
Jude Mark X. Mullin oversees the case.
Suzanne K. Rosen, Esq., at Forshey & Prostok, LLP, represents the
Debtor as legal counsel.
MERIDIAN RESTAURANTS: Taps Keen-Summit as Real Estate Advisor
-------------------------------------------------------------
Meridian Restaurants Unlimited, LC and its affiliates seek approval
from the U.S. Bankruptcy Court for the District of Utah to employ
Keen-Summit Capital Partners LLC as real estate advisor.
The firm will render these services:
(a) provide lease information and economics;
(b) contact the landlord for each property and seek to
negotiate with the landlord for modifications; and
(c) work with the landlords, the Debtors, and their counsel to
assist in documenting all lease modification proposals.
The firm will be compensated as follows:
(a) a lease modification transaction fee based on monetary and
nonmonetary savings to the Debtors; and
(b) reimbursement for reasonable out-of-pocket expenses
incurred.
Harold Bordwin, principal and co-president of Keen-Summit Capital
Partners, disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Harold Bordwin
Keen-Summit Capital Partners LLC
3 Columbus Circle, 15th Fl.
New York, NY 10019
Telephone: (914) 980-8555
Email: hbordwin@keen-summit.com
About Meridian Restaurants Unlimited
Meridian Restaurants Unlimited, LC and its affiliates, owners and
operators of restaurants in Utah, concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Utah Case No. 23-20731) on March 2, 2023. In the
petitions signed by James Winder, manager for PSCP Meridian, LLC,
Meridian Restaurants Unlimited and LoveLoud Restaurants, LC
disclosed $10 million to $50 million in both assets and
liabilities. AZM Restaurants, LC listed $1 million to $10 million
in assets and $10 million to $50 million in liabilities.
Judge Kevin R. Anderson oversees the cases.
The Debtors tapped Markus Williams Young & Hunsicker LLC as
bankruptcy counsel; Ray Quinney & Nebeker P.C. as local and
litigation counsel; and Peak Franchise Capital, LLC as financial
advisor. BMC Group, Inc. is the noticing agent.
MERIDIAN RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------------
The U.S. Trustee for Region 19 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Meridian
Restaurants Unlimited, LC and its affiliates.
The committee members are:
1. City National Bank
Attn: Raymond Forgette
555 S. Flower St., 16th Floor
Los Angeles, CA 90071
Phone: (213) 673-8951
Email: ray.forgette@cnb.com
Attorneys for City National Bank:
Katten Muchin Rosenman LLP
Attn: William Freeman
Attn: Michaela Crocker
515 S. Flower St., Suite 4150
Los Angeles, CA 90071-2212
Phone: (213) 443-9000
Email: bill.freeman@katten.com
Email: michaela.crocker@katten.com
Dorsey & Whitney LLP
Attn: Steven Waterman
111 Main Building
111 South Main Street, Suite 2100
Salt Lake City, UT 84111-2176
Phone: (801) 933-7365
Email: waterman.steven@dorsey.com
2. Bridge Funding Group Inc.
Attn: Jackie Garuz
Bank United, N.A.
7765 NW 148th Street
Miami Lakes, FL 33016
Phone: (305) 818-8583
Email: jgaruz@bankunited.com
Attorneys for Bridge Funding Group Inc.:
Geoffrey A. Heaton
Duane Morris LLP
One Market Plaza, Spear Street Tower, Ste. 2200
San Francisco, CA 94105-1127
Phone: (415) 957-3122
Email: gheaton@duanemorris.com
Fabian VanCott
Attn: David P. Billings
95 South State Street, Suite 2300
Salt Lake City, UT 84111
Phone: (801) 323-2205
Email: dbillings@fabianvancott.com
3. Vu Credit Shelter Trust
Attn: Paul Vu
65 East Wadsworth Park Drive, Suite 110
Draper, UT 84020
Phone: (408) 893-5077
Email: docvu@yahoo.com
Attorney for Vu Credit Shelter Trust:
Andrew Welch
65 East Wadsworth Park Drive, Suite 110
Draper, UT 84020
Phone: (801) 683-2032
Email: andrew.welch@messner.com
4. Reinhart Foodservice, LLC
Attn: David Easton
Attn: Randy Klopp
Lacrosse Corporate Office Attn: Credit Dept
100 Harborview Plaza, Suite 200
Lacrosse, WI 54601
Phone: (804) 380-4005 (David Easton)
Phone: (608) 793-9438 (Randy Klopp)
Email: david.easton@pfgc.com
Email: randy.klopp@pfgc.com
5. Shamrock Foods Company
Attn: Patricia King
3900 E Camelback Rd #300
Phoenix, AZ 85018
Phone: (602) 694-9013
Email: patricia_king@shamrockfoods.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 Meridian Restaurants Unlimited
Meridian Restaurants Unlimited, LC and its affiliates, owners and
operators of restaurants in Utah, concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Utah Case No. 23-20731) on March 2, 2023. In the
petitions signed by James Winder, manager for PSCP Meridian, LLC,
Meridian Restaurants Unlimited and LoveLoud Restaurants, LC
disclosed $10 million to $50 million in both assets and
liabilities. AZM Restaurants, LC listed $1 million to $10 million
in assets and $10 million to $50 million in liabilities.
Judge Kevin R. Anderson oversees the cases.
The Debtors tapped Markus Williams Young & Hunsicker LLC as
bankruptcy counsel; Ray Quinney & Nebeker P.C. as local and
litigation counsel; and Peak Franchise Capital, LLC as financial
advisor. BMC Group, Inc. is the noticing agent.
MIDTOWN DEVELOPMENT: Black's Building Bankruptcy Sale Challenged
----------------------------------------------------------------
Jeff Reinitz of The Courier reports that the sale of the Black's
Building in an attempt to settle bankruptcy is being challenged.
Midtown Development, which operates the historic nine-story
property at 501 Sycamore St., put the building up for bid on the
Ten-X auction site earlier this month with a plan to apply the
proceeds to outstanding debts.
The winning bid was submitted by MBM Development, an LLC based in
North Bay Village, Florida, for $1.9 million plus a $57,000
transaction fee to the auction site.
But the sale is subject to approval by a bankruptcy judge, and the
creditor holding primary interest in the building is objecting to
the sale, the price for which was well below what was expected.
Attorneys for OSK XII, which bought Midtown's main debt from
MidWestOne Bank, said the sale was improper and didn't meet a $3.25
million reserve. OSK XII also said it wasn’t allowed to credit
bid on the property.
"OSK does not consent to any such sale, the amount the debtor
wishes to sell the Black's Building for is nowhere close to the
aggregate value of all liens on the Black's Building," attorney for
OSK XII said in court records.
Black Hawk County had valued the property at about $3.9 million for
tax purposes.
And Midtown had attempted to sell the property for $7.9 million to
a Colorado company in a deal that fell through last 2022.
About Midtown Development
Midtown Development, LLC, a real estate developer in Iowa, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Iowa Case No. 21-00478) on May 25, 2021. In the petition signed by
Donna L. Nelson, managing member, the Debtor disclosed $1 million
to $10 million in both assets and liabilities.
Judge Thad J. Collins oversees the case.
The Debtor tapped Day Rettig Martin, PC, as legal counsel,
BerganKDV as accountant, and Moglia Advisors as financial advisor.
Clark, Butler, Walsh & Hamann and Greenstein Sellers PLLC represent
MidWestOne Bank, secured creditor.
MOVIMIENTO PENTECOSTAL: No Objections Filed, Amended Plan Okayed
----------------------------------------------------------------
Judge Mildred Caban Flores has entered an order that the Amended
Disclosure Statement filed on March 3, 2023 of Movimiento
Pentecostal Apostolico Cristiano, Incorporado, is finally approved.
The Amended Plan filed by the Debtor dated March 2, 2023, is
confirmed as supplemented on March 8, 2023.
There are no objections to the final approval of the amended
disclosure statement and confirmation of the amended plan. In
light of Debtor's representation in open court, and based on
proffers made in the Sec. 1129 statement, the amended disclosure
statement filed on March 3, 2023 is finally approved. The amended
plan dated March 2, 2023 is confirmed as supplemented on March 8,
2023.
This is a 5-year plan.
About Movimiento Pentecostal
Movimiento Pentecostal Apostolico Cristiano, Incorporado, is a
non-profit corporation duly organized under the laws of the
Commonwealth of Puerto Rico engaged in religious activities and in
the managing of a church located at Urb. Villa Carolina 143, Calle
401, Apt. 7, Carolina, PR 00985-4022.
Movimiento Pentecostal Apostolico Cristiano filed a Chapter 11
bankruptcy petition (Bankr. D.P.R. Case No. 21-02645) on Sept. 1,
2021, listing as much as $500,000 in both assets and liabilities.
The Debtor is represented by Almeida & Davila, P.S.C.
NATIONAL CINEMEDIA: Unit Amends Indenture to Extend Grace Period
----------------------------------------------------------------
National CineMedia, LLC, a subsidiary of National CineMedia, Inc.,
entered into a First Supplemental Indenture to the Indenture, dated
as of Aug. 19, 2016, relating to NCM LLC's 5.75% Senior Notes due
2026 with Computershare Trust Company, N.A., as Trustee. The First
Supplemental Indenture was approved by holders of the Notes holding
at least a majority of the aggregate principal amount of the
Notes.
The Supplemental Indenture amends Section 6.01(a) of the Indenture
by extending the grace period for payment of interest due on the
Notes from 30 days to 47 days. Although NCM LLC has sufficient
liquidity to pay interest on the Notes that otherwise became due on
Feb. 15, 2023, extending the grace period will enable NCM LLC to
continue engaging in negotiations with certain of NCM LLC's lenders
regarding NCM LLC's indebtedness. At this time, no agreement has
been reached regarding NCM LLC's indebtedness.
About National Cinemedia Inc.
National CineMedia Inc. (NCM) is a cinema advertising network in
the U.S. NCM's Noovie pre-show is presented exclusively in 47
leading national and regional theater circuits including AMC
Entertainment Inc. (NYSE:AMC), Cinemark Holdings, Inc. (NYSE:CNK)
and Regal Entertainment Group (a subsidiary of Cineworld Group PLC,
LON: CINE). NCM's cinema advertising network offers broad reach
and audience engagement with over 20,100 screens in over 1,600
theaters in 195 Designated Market Areas (all of the top 50). NCM
Digital and Digital-Out-Of-Home (DOOH) go beyond the big screen,
extending in-theater campaigns into online, mobile, and place-based
marketing programs to reach entertainment audiences. National
CineMedia, Inc. (NASDAQ:NCMI) owns a 48.3% interest in, and is the
managing member of, National CineMedia, LLC. On the Web:
HTTP://www.ncm.com/ and HTTP://www.noovie.com/
As of Sept. 29, 2022, the Company had $775.4 million in total
assets, $1.23 billion in total liabilities, and a total deficit of
$453.8 million.
* * *
As reported by the TCR on March 21, 2023, S&P Global Ratings
lowered its issuer credit rating on National CineMedia Inc. (NCM)
to 'D' from 'CCC-'. NCM missed the interest payment due Feb. 15,
2023, on its 5.75% unsecured notes due 2026. While the company has
extended its grace period to 47 days, it failed to pay this
interest obligation within 30 calendar days. S&P said, "Therefore,
we view this as an event of default. NCM is using the extended
grace period to negotiate with its lenders. No cross-default
provisions are currently active under its credit agreements.
However, we expect it will likely engage in an in- or out-of-court
restructuring."
NETFLIX INC: Moody's Withdraws 'Ba1' CFR, Outlook Positive
----------------------------------------------------------
Moody's Investors Service upgraded Netflix, Inc.'s senior unsecured
notes ratings to Baa3 from Ba1. As the company is now investment
grade, Moody's has withdrawn Netflix's Ba1 Corporate Family Rating,
Ba1-PD probability of default rating, and SGL-1 speculative grade
liquidity (SGL) rating. The outlook is positive.
Upgrades:
Issuer: Netflix, Inc.
Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3 from Ba1
(LGD4)
Withdrawals:
Issuer: Netflix, Inc.
Corporate Family Rating, Withdrawn, previously rated Ba1
Probability of Default Rating, Withdrawn, previously
rated Ba1-PD
Speculative Grade Liquidity Rating, Withdrawn, previously
rated SGL-1
Outlook Actions:
Issuer: Netflix, Inc.
Outlook, Remains Positive
RATINGS RATIONALE
The upgrade to Netflix's senior unsecured notes ratings to
investment grade reflects Moody's expectation that Netflix will
remain the leading direct-to-consumer subscription-video-on-demand
(SVOD) single Tier-1 platform in the world, execute effectively
despite an increasingly competitive landscape, and continue to
improve its fundamental and financial credit profile. Fundamental
improvement is expected from revenue and membership growth and
operating margin expansion. Governance considerations, specifically
the company's implementation of a target debt range of $10 to $15
billion which they are now squarely in, demonstrates their
commitment to sustaining investment grade credit metrics.
Moody's anticipates that growth in subscribers from the recently
launched ad supported service will be gradual but steady and
provide a strong long-term opportunity for revenue growth given the
mass audience potential and shrinking ad avails in the linear
television ecosystem. Moody's also anticipates that the only
near-term price increase will be related to the password sharing
initiative, which could cause short term subscriber discontent and
disruption, but presents the company with a material revenue growth
and margin expansion opportunity. There is some risk that
aggressive rate hikes over the long term along with greater SVOD
competitive options will raise churn as consumers learn to lower or
cap their spending by rotating in and out of SVOD platforms since
all Tier 1 and tier 2 platforms are presently spending record
amounts on content and new production to attract subscribers.
However, Moody's believes that Netflix's consistent considerable
spending on content will likely mean that it will be a leader in
retaining subscribers. Moody's is confident that Netflix's leading
levels of spending on content, increasingly on owned originals,
will not only increase the asset value of its library, but will
result in many successful global and regional series and film hits
capturing the zeitgeist of Moody's time, as evidenced by the
plethora of awards Netflix has earned so far.
"Moody's believe Netflix will continue to be a leader in streaming
despite the increasing competition, and Moody's forecast the
subscriber base to grow to around 250 million globally and revenues
to reach at least $38 billion by the end of 2025" stated Begley.
Moody's expects gross debt-to-EBITDA with Moody's adjustments to
drop to around 2.5x by year end 2023, which positions the company
strongly for the Baa3 rating. Moody's believes that static debt
levels coupled with continuing revenue growth and margin
improvement would result in continuing strengthening of credit
metrics over the medium-term and leverage could drop to under 2.0x
by FYE 2025.
Netflix's positive free cash flow going forward, coupled with the
company's plan to keep cash on hand consistent with at least two
month's revenue, and $1 billion unused revolving credit facility,
all bolster the company's excellent liquidity profile. There are no
debt maturities in 2023, only $400 million in 2024 and
approximately $1.8 billion in 2025. Moody's anticipates that excess
cash beyond investment in the business, will be used to repurchase
shares and to opportunistically make tuck in acquisitions.
Netflix's ESG Credit Impact Score is Neutral-to-Low (CIS-2).
Netflix is benefiting from its leading position in the social trend
surrounding the consumer transition to proprietary
direct-to-consumer television streaming video platforms. The
company is very transparent, has sustained strong cash liquidity,
and management has a financial policy targeting investment credit
metrics.
The positive outlook reflects Moody's expectation for growth in
revenues and EBITDA combined with the company's implementation of a
target debt range of $10 to $15 billion to result in declining
financial leverage and sustainably improving free cash flow
generation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider upgrading Netflix's ratings if management
continues to remain committed to investment grade metrics; the
company is or will sustain debt-to-EBITDA leverage below 2.5x
(including Moody's adjustments); free cash flow to debt is at least
20% and liquidity remains strong; and revenue, subscribers and
margins continue to expand. Moody's would consider a downgrade of
Netflix's ratings if management's financial policies are no longer
consistent with investment grade ratings; the company is or will
sustain debt-to-EBITDA leverage above 3.0x (including Moody's
adjustments); free cash flow to debt is expected to be sustained
below 10%; revenue, subscriber and margin trends turn negative
leading to sustained contraction; or liquidity materially narrows.
Netflix, Inc., with its headquarters in Los Gatos, California, is
the world's leading SVOD streaming television platform, with total
streaming subscribers reaching over 230 million as of December 31,
2022. Consolidated revenues for FY 2022 were over $31.6 billion.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
NEW ORLEANS CREMATION: Seeks to Hire Cloreece Knight as Accountant
------------------------------------------------------------------
New Orleans Cremation Service, Inc. seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Louisiana to employ
Cloreece Davis Knight, a certified public accountant based in New
Orleans, La.
Ms. Knight will render these services:
(a) assume a primary responsibility for bringing the books and
records of the Debtor;
(b) report to the Debtor regarding its financial status;
(c) develop short term cash flow projections and financial
projections of profitability of the business operations;
(d) supervise in house bookkeeping and accounting personnel of
the Debtor;
(e) assume primary responsibility for the preparation and
filing of periodic reports as required by the office of the United
States trustee and in connection therewith maintain all necessary
books and records for the administrative period of this case;
(f) assume primary responsibility for the preparation and
filing of necessary tax returns;
(g) provide day to day monitoring of the Debtor's financial
activities and recommend improvements in financial management; and
(h) provide other accountant services as may be required by
the Debtor.
Ms. Knight will charge $225 per hour for general accounting
services and $700 for tax return preparation services.
Ms. Knight disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The accountant can be reached at:
Cloreece Davis Knight, CPA
Knight CPA Services, LLC
10001 Lake Forest Blvd., Ste. 505
New Orleans, LA 70127
Telephone: (504) 762-0855
About New Orleans Cremation Service
New Orleans Cremation Service, Inc. sought protection for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La. Case No.
23-10105) on Jan. 24, 2023. At the time of filing, the Debtor
estimated $500,001 to $1 million in assets and $100,001 to $500,000
in liabilities.
Judge Meredith S. Grabill presides over the case.
The Debtor tapped Robert Marrero, LLC as legal counsel and Cloreece
Davis Knight, CPA, as accountant.
NIGHTMARE GRAPHICS: Seeks to Hire The Coyle Law Group as Counsel
----------------------------------------------------------------
Nightmare Graphics, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Maryland to employ The Coyle Law Group as
its counsel.
The firm will render these services:
(a) advise the Debtor in the continued possession and
management of its property;
(b) prepare all schedules and statements required by the
Bankruptcy Code Bankruptcy Rules or Local Bankruptcy Rules;
(c) represent the Debtor in connection with any proceedings
for relief from stay which may be instituted in this court;
(d) represent the Debtor at any meetings of creditors convened
pursuant to Section 341 of the Bankruptcy Code;
(e) prepare legal papers;
(f) represent the Debtor in collateral litigation before the
Bankruptcy Court and other courts; and
(g) perform such other legal services for the Debtor which may
be necessary herein
The Debtor has agreed to pay the firm a retainer in the amount of
$8,000.
The hourly rates of the firm's counsel and staff are as follows:
Counsel $425
Paralegal $125
Michael Coyle, Esq., owner of The Coyle Law Group, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Michael P. Coyle, Esq.
The Coyle Law Group
7061 Deepage Drive, Ste. 101B
Telephone: (443) 545-1215
Email: mcoyle@thecoylelawgroup.com
About Nightmare Graphics
Nightmare Graphics, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Md. Case No. 23-11647) on March 12,
2023. In the petition signed by Robert Andelman, owner, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Michael Coyle, Esq., at The Coyle Law Group represents the Debtor
as legal counsel.
NORTH SHORE ASSOCIATES: U.S. Trustee Appoints Leah McMahon as PCO
-----------------------------------------------------------------
Patrick Layng, the U.S. Trustee for Region 19, appointed Leah
McMahon as patient care ombudsman for North Shore Associates, LLP.
The appointment was made pursuant to the order from the U.S.
Bankruptcy Court for the District of Colorado.
A patient care ombudsman refers to an individual appointed in
healthcare bankruptcies filed under Chapters 7, 9 or 11 of the
Bankruptcy Code to ensure the safety of patients. The ombudsman is
responsible for monitoring the quality of patient care and
representing the interest of the patients of the healthcare
debtor.
In court filings, Ms. McMahon disclosed that she does not have an
interest materially adverse to the interest of North Shore
Associates' estate, creditors and equity security holders.
About North Shore Associates
North Shore Associates, LLP is a single asset real estate as
defined in 11 U.S.C. Section 101(51B).
North Shore Associates filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No.
23-10808) on March 6, 2023, with $1 million to $10 million in
assets and $10 million to $50 million in liabilities. The Debtor
stated it has no creditors holding unsecured claims.
Judge Joseph G Rosania Jr. oversees the case.
Keri L. Riley, Esq., at Kutner Brinen Dickey Riley, PC represents
the Debtor as legal counsel.
OLYMPIA SPORTS: Seeks Approval of Disclosure Statement
------------------------------------------------------
Olympia Sports Acquisitions, LLC, et al., move the Court for entry
of any order:
(i) granting permission to file a combined plan and disclosure
statement;
(ii) approving the disclosure statement on an interim basis;
(iii) scheduling a hearing (the "Confirmation Hearing") to consider
confirmation of the Combined Disclosure Statement and Chapter 11
Plan of Liquidation (the "Plan"); and
(iv) approving the solicitation, notice and tabulation procedures
related to solicitation of the Plan and the forms related thereto.
A hearing is scheduled for April 19, 2023, at 10:30 AM at US
Bankruptcy Court, 824 Market St., 5th Fl., Courtroom #4,
Wilmington, Delaware. Objections are due by April 12, 2023.
A summary of the key dates the Debtors seek to establish by the
Solicitations Procedures Order are as follows:
* The voting record date will be on April 19, 2023.
* The Plan service date will be on April 25, 2023.
* Solicitation Completed will be on May 1, 2023.
* The hearing on Interim Approval of Disclosure Statement will
be on April 19, 2023.
* The confirmation objection deadline will be on June 8, 2023.
* The voting deadline will be on June 8, 2023.
* The deadline to file voting tabulations affidavit will be on
June 15, 2023.
* The confirmation brief will be on June 15, 2023.
* The confirmation hearing will be on June 22, 2023.
Attorneys for the Debtors:
Jeffrey R. Waxman, Esq.
Brya M. Keilson, Esq.
MORRIS JAMES LLP
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Telephone: (302) 888-6800
Facsimile: (302) 571-1750
E-mail: jwaxman@morrisjames.com
bkeilson@morrisjames.com
- and -
Alan J. Friedman, Esq.
Melissa Davis Lowe, Esq.
Max Casal, Esq.
SHULMAN BASTIAN FRIEDMAN & BUI LLP
100 Spectrum Center Drive; Suite 600
Irvine, CA 92618
Telephone: (949) 340-3400
Facsimile: (949) 340-3000
E-mail: afriedman@shulmanbastian.com
mlowe@shulmanbastian.com
mcasal@shulmanbastian.com
About Olympia Sports Acquisitions
Olympia Sports Acquisitions, LLC, is a sporting goods retail
company that maintains brick and mortar locations across the East
Coast, including Maine, New Hampshire, Vermont, New York,
Massachusetts, Rhode Island, and New Jersey.
On Sept. 11, 2022, Olympia Sports and several affiliates,
including, RSG Acquisitions, LLC, Project Running Specialties,
Inc., and The Running Specialty Group, LLC, sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 22-10853).
Olympia Sports estimated assets of $1 million to $10 million and
liabilities of $10 million to $50 million as of the bankruptcy
filing.
The Debtors tapped Shulman Bastian Friedman & Bui LLP as general
bankruptcy counsel; Morris James LLP as local counsel; and Force 10
Partners as financial advisor. BMC Group is the claims agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in Debtors' cases on
Sept. 23, 2022. Kelley Drye & Warren, LLP, Emerald Capital
Advisors, and Potter Anderson & Corroon, LLP as lead bankruptcy
counsel, financial advisor and Delaware counsel, respectively.
OLYMPIA SPORTS: Unsecureds Owed $73M to Get 10% to 15% in Plan
--------------------------------------------------------------
Olympia Sports Acquisitions, LLC, et al., and the Official
Committee of Unsecured Creditors submitted a Combined Disclosure
Statement and Chapter 11 Plan of Liquidation.
The Plan is a liquidating chapter 11 plan. The Plan provides for
the proceeds from the Assets already liquidated or to be liquidated
over time to be distributed to holders of Allowed Claims in
accordance with the terms of the Plan and the priority of claims
provisions in the Bankruptcy Code. The Plan is premised upon
maximizing the liquidation value of the Assets to benefit
creditors. Specifically, the Debtors have two primary assets: (i)
Cash on hand from the liquidation of their stores and the sale of
their IP and related intangible assets, and (ii) Causes of Action.
On the Effective Date, the Trust will be established for the
benefit of creditors holding Allowed Claims, and the Debtors will
transfer all Cash on hand and all rights with respect to Causes of
Action, including the net proceeds from the Causes of Action, all
of which will be vested in and retained by the Trust. All
Distributions on account of Allowed Claims will be paid from the
Trust.
On December 22, 2022, the Debtors filed their Motion for Entry of
an Order: (I)(A) Approving Bidding Procedures in Connection With a
Sale of the Debtors' Intangible Assets Free and Clear of Liens,
Claims, Encumbrances and Other Interests; (B) Scheduling an Auction
and Sale Hearing; (C) Approving the Form and Manner of Notice
Thereof; and (D) Granting Related Relief; and (II) Authorizing Sale
of Debtors' Intangible Assets Free and Clear of Liens, Claims,
Encumbrances and Other Interests; and (B) Granting Related Relief
("IP Sale Motion"). By the IP Sale Motion, the Debtors sought to
sell their intellectual property and other intangible assets
(collectively, the "Intangible Assets") at a public auction. On
January 12, 2023, the Court entered an order approving the bidding
procedures for the sale of the Intangible Assets. At an auction
held on February 9, 2023, 54 Glen Cove Realty, LLC was named the
successful bidder to purchase the Intangible Assets for the sum of
$180,000. The sale was approved pursuant to an order entered on
February 16, 2023 and the sale of the Intangible Assets closed
shortly thereafter.
Under the Plan, Class 2 General Unsecured Claims total approx. $73
million before claims objections and expected to be $51 million or
less after objections to General Unsecured Claims. Creditors will
recover 10% to 15% of their claims. Each Holder of an Allowed
General Unsecured Claim shall receive a Trust Interest, which shall
entitle each Holder thereof to its Pro Rata share of Trust Assets
after satisfaction in full of Allowed Administrative Claims,
Allowed Professional Compensation Claims, Allowed Secured Claims,
Allowed Priority Tax Claims, Allowed Priority Non-tax Claims, and
payment of, or provision for, all Trust Expenses. Class 2 is
impaired.
The Plan will be funded by the Cash and Cash equivalents held by
the Debtors generated from the liquidation of their assets,
including their store closing sales, the sale of their remaining IP
and the Causes of Action. As of the Effective Date, the Debtors
expect to be holding approximately $9 million in Cash.
Counsel to the Debtors:
Jeffrey R. Waxman, Esq.
Brya M. Keilson, Esq.
MORRIS JAMES LLP
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Telephone: (302) 888-6800
Facsimile: (302) 571-1750
E-mail: jwaxman@morrisjames.com
bkeilson@morrisjames.com
- and -
Alan J. Friedman, Esq.
Melissa Davis Lowe, Esq.
Max Casal, Esq.
SHULMAN BASTIAN FRIEDMAN & BUI LLP
100 Spectrum Center Drive; Suite 600
Irvine, CA 92618
Telephone: (949) 340-3400
Facsimile: (949) 340-3000
E-mail: afriedman@shulmanbastian.com
mlowe@shulmanbastian.com
mcasal@shulmanbastian.com
Counsel to the Official Committee of Unsecured Creditors:
Christopher M. Samis, Esq.
Aaron H. Stulman, Esq.
POTTER ANDERSON & CORROON LLP
1313 N. Market Street, 6th Floor
Wilmington, DE 19801
Telephone: (302) 984-6000
Facsimile: (302) 658-1192
E-mail: csamis@potteranderson.com
astulman@potteranderson.com
- and -
James S. Carr, Esq.
Jason R. Adams, Esq.
Lauren S. Schlussel, Esq.
KELLEY DRYE & WARREN LLP
3 World Trade Center, 175 Greenwich Street
New York, NY 10007
Telephone: (212) 808-7800
Facsimile: (212) 808-7897
E-mail: jcarr@kelleydrye.com
jadams@kelleydrye.com
lschlussel@kelleydrye.com
A copy of the Combined Disclosure Statement and Chapter 11 Plan of
Liquidation dated March 24, 2023, is available at
https://bit.ly/40kEQjg from Creditorinfo, the claims agent.
About Olympia Sports Acquisitions
Olympia Sports Acquisitions, LLC, is a sporting goods retail
company that maintains brick and mortar locations across the East
Coast, including Maine, New Hampshire, Vermont, New York,
Massachusetts, Rhode Island, and New Jersey.
On Sept. 11, 2022, Olympia Sports and several affiliates,
including, RSG Acquisitions, LLC, Project Running Specialties,
Inc., and The Running Specialty Group, LLC, sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 22-10853).
Olympia Sports estimated assets of $1 million to $10 million and
liabilities of $10 million to $50 million as of the bankruptcy
filing.
The Debtors tapped Shulman Bastian Friedman & Bui LLP as general
bankruptcy counsel; Morris James LLP as local counsel; and Force 10
Partners as financial advisor. BMC Group is the claims agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in Debtors' cases on
Sept. 23, 2022. Kelley Drye & Warren, LLP, Emerald Capital
Advisors, and Potter Anderson & Corroon, LLP as lead bankruptcy
counsel, financial advisor and Delaware counsel, respectively.
ORIGINCLEAR INC: Reports Unregistered Sales of Equity Securities
----------------------------------------------------------------
Between Feb. 2, 2022 and Feb. 27, 2023, OriginClear, Inc. entered
into subscription agreements with certain accredited investors
pursuant to which the Company sold an aggregate of 1.9 shares of
the Company's Series Y preferred stock for an aggregate purchase
price of $190,000. The Company also issued an aggregate of
1,520,000 warrants to purchase shares of its common stock to these
investors.
In connection with the foregoing, the Company relied upon the
exemption from registration provided under Section 4(a)(2) under
the Securities Act for transactions not involving a public
offering.
Conversion of Preferred Shares
On Feb. 24, 2023, holders of the Company's Series O preferred stock
converted an aggregate of 40 Series O shares into an aggregate of
7,722,008 shares of the Company's common stock.
On March 20, 2023, holders of the Company's Series Y preferred
stock converted an aggregate of 3.2 Series Y shares into an
aggregate of 50,769,232 shares of the Company's common stock.
On March 21, 2023, holders of the Company's Series R preferred
stock converted an aggregate of 210 Series R shares into an
aggregate of 41,338,583 shares of the Company's common stock.
In connection with the foregoing, the Company relied upon the
exemption from registration provided under Section 4(a)(2) under
the Securities Act for transactions not involving a public
offering.
Restricted Stock Grant Agreement Issuances
Between Feb. 23, 2023 and March 3, 2023, per electing and
qualifying for the Restricted Stock Grant Agreement alternate
vesting schedule, the Company issued to Mr. Eckelberry, employees
and one consultant an aggregate of 8,830,859 shares of the
Company's common stock.
In connection with the foregoing, the Company relied upon the
exemption from registration provided under Section 4(a)(2) under
the Securities Act for transactions not involving a public
offering.
Issuance of Common Stock
Between Feb. 1, 2023 and March 15, 2023, the Company issued to
consultants an aggregate of 9,625,450 shares of the Company's
common stock for services.
In connection with the foregoing, the Company relied upon the
exemption from registration provided under Section 4(a)(2) under
the Securities Act for transactions not involving a public
offering.
About OriginClear
Headquartered in Clearwater, Florida, Originclear, Inc. --
www.originclear.tech -- is a water technology company which has
developed in-depth capabilities over its 14-year lifespan. Those
technology capabilities have now been organized under the umbrella
of OriginClear Tech Group. OriginClear, under the brand of
OriginClear Tech Group, designs, engineers, manufactures, and
distributes water treatment solutions for commercial, industrial,
and municipal end markets.
OriginClear reported a net loss of $2.12 million for the year ended
Dec. 31, 2021. As of June 30, 2022, the Company had $5.01 million
in total assets, $17.70 million in total liabilities, $12.18
million in commitments and contingencies, and a total shareholders'
deficit of $24.87 million.
Houston, Texas-based M&K CPAS, PLLC, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
April 6, 2022, citing that the Company suffered a net loss from
operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
OUTERSTUFF LLC: S&P Downgrades ICR to 'CCC-', Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
Outerstuff LLC to 'CCC-' from 'CCC'.
S&P said, "Concurrently, we lowered our issue-level rating on the
company's ABL to 'B-' from 'B'. The '1+' recovery rating is
unchanged. We also lowered our issue-level rating on the senior
secured term loan to 'CCC-' from 'CCC', and the '3' recovery rating
is unchanged.
"The negative outlook reflects the increasing risk that Outerstuff
cannot refinance its near-term debt maturities and our view that it
could default in the next six months.
"The downgrade reflects our view that a default appears to be
inevitable within the next six months absent a successful
refinancing to address its looming maturities.
"We believe the company's capital structure is unsustainable and it
may need to restructure its balance sheet to address its sizable
upcoming 2023 maturities. Its $155 million term loan matures in
December, and the $100 million ABL revolver maturity, which is
already current, will spring to 90 days ahead of the term loan
maturity if the loan is outstanding at that time, which would be
early October. We believe there is heightened refinancing risk
given volatile market conditions and rising interest rates. Even if
Outerstuff can refinance, debt service may become onerous under new
terms given current market conditions. We revised our liquidity
assessment to weak from less than adequate because we expect
Outerstuff's sources of liquidity over uses will be a substantial
deficit over the next 12 months due to the significant upcoming
debt maturities.
"The negative outlook reflects the likelihood that we will lower
our rating on Outerstuff if it cannot refinance near-term debt
maturities and defaults."
S&P could lower the rating if the company:
-- Cannot extend maturities of its ABL and term loan on
satisfactory terms; or
-- It seeks to restructure its balance sheet.
S&P could take a positive rating action if:
-- Outerstuff addresses its near-term debt maturities by
refinancing its capital structure on satisfactory terms; and
-- S&P no longer expect a default in the next six months.
PARFUMS HOLDING: Moody's Rates New Senior Secured Debt 'B3'
-----------------------------------------------------------
Moody's Investors Service assigned B3 ratings to Parfums Holding
Company, Inc.'s new senior secured credit facility, consisting of a
$39 million senior secured revolving credit facility expiring in
March 2026 and a $648.6 million senior secured first lien term loan
due in June 2026. All other ratings, including Parfums' B3
Corporate Family Rating and B3-PD Probability of Default Rating are
unaffected. The rating outlook is stable.
The proposed transaction will extend the maturities of revolving
credit facility and term loans by two years to 2026, which is
credit positive because it addresses the maturity of the company's
revolver (March 2024) and term loan (June 2024). However, the B3
CFR and stable outlook are unchanged because leverage is not
meaningfully affected and the $13 million expected increase in
annual cash interest costs will reduce Parfums' free cash flow.
Moreover, the company is expected to pay approximately $20 million
amortization in the next 12 months and about $32 million annual
mandatory term loan amortization afterwards, which helps to reduce
debt but the increase in required cash payments will add pressure
to free cash flow to meet fixed charges.
Assignments:
Issuer: Parfums Holding Company, Inc.
Backed Senior Secured 1st Lien Term Loan, Assigned B3 (LGD4)
Backed Senior Secured 1st Lien Revolving Credit Facility, Assigned
B3 (LGD4)
RATINGS RATIONALE
Parfums' B3 CFR reflects its high financial leverage of 7.5x
debt-to-EBITDA as of September 30, 2022, small scale relative to
larger and better capitalized competitors, and event risk related
to its majority ownership by a financial sponsor. Demand for the
company's products is vulnerable to shifts in consumer preferences,
weakness in household income, retailers' shelf space allocation and
marketing support. The mass fragrance, bath, multicultural hair
care and beauty segments are highly competitive and Parfums faces
steep competition from branded product companies that are
significantly larger, more diverse, financially stronger, and which
have much greater investment capacity. These factors are partially
balanced by the company's projected ability to generate free cash
flow, good geographic and product diversification and solid
historical organic growth in several of the company's key product
categories. The rating is also supported by Parfums'
well-recognized brand names and product offerings in niche
categories, good liquidity and Moody's expectation that benefits
from pricing actions implemented in 2022, continued distribution
gains and product development will support the company's operating
performance over the next 12 to 18 months, including debt-to-EBITDA
declining to below 7.0x and free cash flow in a $15-20 million
range.
The majority of Parfums' operations were assembled through a series
of acquisitions prior to 2017. Since then, revenue grew at about
10% organically over the last four years. The management team has
delivered strong growth despite the uncertain economic environment
through actions such as increasing distribution and focusing on
products with favorable demographics. Moody's expects performance
to gradually moderate following a period of strong growth. In
addition, the company's revenues and earnings are vulnerable to
changing customer preferences and competition -- in particular from
much larger, better capitalized competitors in the beauty and
multi-cultural haircare care categories. Continued investment in
new product development and marketing is necessary to attract and
retain consumers.
Parfums' CIS-4 Credit Impact Score represents Moody's view that ESG
factors have a highly negative impact on its rating, mainly
reflecting the governance considerations associated with the
company's concentrated private equity ownership including use of
high leverage. The company's exposure to environmental risks and
social risks is moderately negative.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's view that Parfums will maintain
a mid-teens EBITA margin despite higher costs and lower revenue
growth. The stable outlook also reflects Moody's expectation that
the company will generate positive free cash flow and maintain good
liquidity.
The ratings could be downgraded if market share, retail
distribution or pricing deteriorate as a result of customer or
competitor actions that pressure Parfums' revenue and EBITDA.
Acquisitions, shareholder distributions, earnings weakness or other
actions that lead to debt-to-EBITDA above 7.5x, or a deterioration
in liquidity or failure to refinance in a timely fashion could also
result in a downgrade.
An upgrade could be considered if Parfums continues to demonstrate
a track record of profitable growth. An upgrade would also require
that Parfums maintains more conservative financial policies that
support debt-to-EBITDA sustained below 6.0x and free cash flow to
debt sustained above 6%. Parfums will also need to maintain good
liquidity.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
Parfums Holding Company, Inc. headquartered in Stamford, CT,
develops, markets and sells fragrance, bath care and specialty bath
and hair care products to mass market consumers. Key brands include
Dr. Teal's, Cantu, Body Fantasies, Eylure, BODman, and Bodycology.
Parfums has been majority-owned by CVC Partners since a leveraged
buyout in 2017 and the company generates annual revenues of about
$600 million.
PERFORMANCE POWERSPORTS: $10MM DIP Loan from Tankas Funding OK'd
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Performance Powersports Group Investor, LLC and its
debtor-affiliates to, among other things, obtain senior and junior
secured superpriority postpetition financing from Tankas Funding
VI, LLC, on a final basis.
The DIP Lender agreed to make junior lien superpriority
debtor-in-possession term loans in an aggregate principal amount
not to exceed $10 million in "new money" loans to the DIP Borrower.
The DIP Loans will be made available in two separate borrowings:
(1) $3.5 million under the DIP Credit Facility to be drawn
following entry in the Bankruptcy Cases of the Interim DIP Order
approving the DIP Credit Facility on the Closing Date; and
(2) the remainder of the DIP Credit Facility to be drawn
following entry of a Final DIP Order upon the Final Closing Date;
provided, the DIP Borrower may elect to draw a portion (not to
exceed $4.7 million) of such Final DIP Loan on one additional
business day after the Final Closing Date that is specified by the
DIP Borrower.
The Debtor requires the use of cash collateral and DIP Loan to,
among other things, permit the orderly continuation of the
operation of their businesses, minimize the disruption of their
business operations, and preserve and maximize the value of the
assets of the Debtors' Estates to maximize the recovery to all
creditors of the Estates.
As previously reported by the Troubled Company Reporter, the
Debtors are required to achieve these milestones:
(i) The Interim DIP Order will be entered in the Bankruptcy
Cases by no later than five calendar days of the date of
commencement of the Bankruptcy Cases;
(ii) A final order authorizing the borrowings under the DIP
Credit Facility on terms acceptable to the DIP Lender will be
entered in the Bankruptcy Cases within 30 calendar days of the
Petition Date;
(iii) The Debtors will file a motion requesting an order from
the Bankruptcy Court approving bid procedures relating to the
solicitation of qualified bids for the sale of substantially all of
the Debtors' assets and businesses, which motion will be in form
and substance satisfactory to the DIP Lender, within two calendar
days of the Petition Date, and the Bankruptcy Court will have
entered an order approving the Bidding Procedures within 30
calendar days after the Petition Date; and
(iv) Within 60 calendar days after the Petition Date, subject
to extension solely on account of the availability of the
Bankruptcy Court, the hearing to consider the approval of the sale
transaction will have occurred and the Bankruptcy Court will have
approved the transaction contemplated by the Bidding Procedures.
The DIP Credit Facility must be repaid in full in cash on the
earliest of these dates:
(i) March 31, 2023;
(ii) The consummation of any sale of all or substantially all
of the assets of the Debtors;
(iii) 30 days after the Petition Date if the Final DIP Order has
not been entered;
(iv) The acceleration of the DIP Credit Facility;
(v) The effective date of any plan of reorganization;
(vi) The filing of an Unapproved Plan;
(vii) The failure of DIP Borrower or any Guarantor timely to
satisfy any Milestone; and
(viii) With respect to Events of Default, two business days after
receipt by the DIP Borrower of a written notice from the DIP Lender
of the occurrence of any such Event of Default.
As adequate protection, the Prepetition Lenders are granted, in
each case subject to the Carve Out:
(i) Current payment of all reasonable and documented
out-of-pocket fees, costs and expenses of the Prepetition Agent;
(ii) Replacement liens on the collateral securing the
Prepetition Credit Agreement;
(iii) Superpriority administrative expense claims with respect
to the foregoing and to the extent of any post-petition diminution
in value of the Prepetition Lenders' interest in the collateral
securing the Prepetition Credit Agreement; and
(iv) Access to the Debtors' books and records and such
financial reports as are provided to the DIP Lender.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3U0BM9C from Omni Agent Solutions, the claims
agent.
The Debtor projects total disbursements, on a weekly basis, as
follows:
$2,858,722 for the week ending March 12, 2023;
$2,909,047 for the week ending March 19, 2023;
$3,661,375 for the week ending March 26, 2023; and
$8,560,688 for the week ending April 2, 2023.
About Performance Powersports Group Investor, LLC
Performance Powersports Group Investor, LLC and affiliates are in
the business of adventure, selling dirt bikes, go-karts, ATVs, golf
carts, and the like to retailers throughout the US.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10047) on January 16,
2023. In the petition signed by Ken Vanden Berg, chief financial
officer, the Debtor disclosed up to $500 million in both assets and
liabilities.
Judge Laurie Selber Silverstein oversees the case.
Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP,
represents the Debtor as legal counsel.
Tankas Funding VI, LLC, as DIP lender, is represented by Kirkland &
Ellis LLP.
PLANDAI BIOTECH: Incurs $1.1M Loss for Quarter Ended Sept. 30, 2016
-------------------------------------------------------------------
Plandai Biotechnology, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $1.11 million on $80,820 of revenues for the three months ended
Sept. 30, 2016, compared to a net loss of $1.19 million on $40,831
of revenues for the three months ended Sept. 30, 2015.
As of Sept. 30, 2016, the Company had $6.83 million in total
assets, $19.38 million in total liabilities, $10.28 million in
total stockholders' deficit, and ($2.27) million in non-controlling
interest.
Plandai stated, "The Company's long-term existence is dependent
upon our ability to execute our operating plan and to obtain
additional debt or equity financing to fund payment of obligations
and provide working capital for operations. In April 2012, the
Company through majority-owned subsidiaries of Dunn Roman Holdings
Africa (Pty) Limited, executed a loan for 100 million Rand (approx.
$6.5 million at current rate of exchange) financing with the Land
and Agriculture Bank of South Africa and began rehabilitating the
Senteeko Tea Estate so that it can begin producing up to 20 metric
tons of tea leaf per day commencing with the September 2015 growing
season. The Company also completed construction of the factory and
associated equipment necessary to begin the extraction process on
live botanical matter, including green tea and citrus, with the
factory becoming operational in December 2014. The facility
commenced processing green tea material for its Phytofare Catechin
Complex in January 2015 and sales commenced in May 2015. In
addition, the Company borrowed $6,900,000 from an unrelated third
party and sold shares of restricted common stock to raise operating
capital. Management anticipates that, over the coming several
months, the Company will continue to need additional investment in
the form of either debt or proceeds from the sale of stock until
such time as it can generate sufficient cash flow from the sale of
its products."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1317880/000182912623002145/plandaibiotech_10q.htm
About Plandai
London, England-based Plandai Biotechnology, Inc., and its
subsidiaries focus on the production of proprietary botanical
extracts for the nutriceutical and pharmaceutical industries. The
company grows the green tea used in its products on a 3,000-hectare
estate in the Mpumalanga region of South Africa. PlandaI uses a
proprietary extraction process that is designed to yield highly
bioavailable products of pharmaceutical-grade purity. The first
product brought to market is Phytofare Catechin Complex, a
green-tea derived extract that has multiple potential wellness
applications.
Plandai reported a net loss of $4.74 million for the year ended
June 30, 2016, compared to a net loss of $10.07 million for the
year ended June 30, 2015. As of June 30, 2016, the Company had
$6.45 million in total assets, $18.43 million in total liabilities,
$9.80 million in total stockholders' deficit, and a non-controlling
interest of ($2.18) million.
In its Annual Report for the fiscal year ended June 30, 2016,
Plandai Biotechnology, Inc. said, "As at June 30, 2016, the Company
had yet to establish a proven, reliable, recurring source of
revenue to fund its ongoing operating costs and with insufficient
funds to fully implement its proposed business plan. This raises
substantial doubt about the Company's ability to continue as a
going concern. The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to
fund operating losses until it becomes profitable. If the Company
is unable to obtain adequate capital, it could be forced to cease
operations."
POINT BUCKLER: Seeks to Hire Marc Voisenat as Bankruptcy Counsel
----------------------------------------------------------------
Point Buckler Club, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of California to employ Marc
Voisenat, Esq., an attorney practicing in Alameda, Calif.
Mr. Voisenat will assist the Debtor in preparing and filing a plan
of reorganization and disclosure statement.
The attorney will be paid at his hourly rate of $450.
On March 13, 2023, Mr. Voisenat received from the Debtor an initial
retainer of $8,262 and a filing fee of $1,738.
The attorney disclosed in a court filing that he is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The attorney can be reached at:
Marc Voisenat, Esq.
2329A Eagle Avenue
Alameda, CA 94501
Telephone: (510) 263-8664
Facsimile: (510) 272-9158
Email: voisenat@gmail.com
About Point Buckler Club
Point Buckler Club, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Calif. Case No. 23-20755) on
March 10, 2023. In the petition signed by John Sweeney, managing
member, the Debtor disclosed $1 million to $10 million in assets
and $10 million to $50 million in liabilities.
Judge Fredrick E. Clement oversees the case.
Marc Voisenat, Esq., serves as the Debtor's counsel.
PREMIER CAJUN: Seeks to Hire Cole Schotz as Bankruptcy Counsel
--------------------------------------------------------------
Premier Cajun Kings, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Alabama to employ Cole Schotz PC
as its legal counsel.
The firm will render these services:
(a) advise the Debtor with respect to its powers and duties in
the continued management and operation of its business and
property;
(b) advise and consult on the conduct of this Chapter 11
case;
(c) attend meetings and negotiate with representatives of
creditors and other parties in interest;
(d) take all necessary actions to protect and preserve the
Debtor's estate;
(e) prepare pleadings in connection with this Chapter 11
case;
(f) represent the Debtor in connection with obtaining
authority to continue using cash collateral and obtaining
post-petition financing;
(g) advise the Debtor in connection with any potential sale of
assets;
(h) appear before this court and any appellate courts to
represent the interests of the Debtor's estate;
(i) advise the Debtor regarding tax matters;
(j) take any necessary action on behalf of the Debtor to
negotiate, prepare, and obtain approval of a disclosure statement
and confirmation of a Chapter 11 plan and all documents related to
the foregoing; and
(k) perform all other necessary legal services for the Debtor
in connection with the prosecution of this Chapter 11 case.
The hourly rates of the firm's counsel and staff are as follows:
Members $485 - $1,200
Special Counsel $575 - $730
Associates $335 - $685
Paralegals $245 - $410
Litigation Support Specialists $380 - $405
In addition, the firm will seek reimbursement for expenses
incurred.
The firm received $25,000 on February 2, 2023 and $75,000 on
February 8, 2023 as advance payment retainers from the Debtor in
connection with this engagement.
The Debtor then replenished the retainer with an additional
$100,000 prior to the filing on March 6, 2023. Cole Schotz still
holds $79,085.15 in retainer.
The firm also provided the following in response to the request for
additional information set forth in Paragraph D.1. of the U.S.
Trustee Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Cole Schotz has not agreed to a variation of its
standard or customary billing arrangements for this engagement.
Question: Do any of the professionals included in this engagement
vary their rate based on the geographic location of the bankruptcy
case?
Response: None of Cole Schotz's professionals included in this
engagement have varied their rate based on the geographic location
of this Chapter 11 case.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference?
Response: Cole Schotz was retained by the Debtor pursuant to an
engagement letter dated as of February 2, 2023. The material terms
of the prepetition engagement are the same as the terms described
in the application and herein, and the billing rates have not
changed other than periodic annual increases as provided in the
engagement letter and explained in the application.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: The Debtor has approved or will be approving a
prospective budget and staffing plan for Cole Schotz's engagement
for the post-petition period as appropriate. The budget may be
amended as necessary to reflect changed or unanticipated
developments.
Gary Leibowitz, Esq., a partner at Cole Schotz, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Gary H. Leibowitz, Esq.
Irving E. Walker, Esq.
H.C. Jones III, Esq.
Cole Schotz, PC
300 East Lombard Street, Suite 1111
Baltimore, MD 21202
Telephone: (410) 230-0660
Facsimile: (410) 230-0667
Email: gleibowitz@coleschotz.com
iwalker@coleschotz.com
hjones@coleschotz.com
About Premier Cajun Kings
Premier Cajun Kings, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-00656) on March
14, 2023. In the petition signed by Joginder Sidhu, Personal Rep.
for Estate of deceased sole member Manraj Sidhu, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge D. Sims Crawford oversees the case.
The Debtor tapped Holland and Knight, LLP and Cole Schotz PC as
legal counsel and Aurora Management Partners as financial advisor.
PREMIER CAJUN: Seeks to Hire Holland & Knight as Legal Counsel
--------------------------------------------------------------
Premier Cajun Kings, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Alabama to employ Holland &
Knight LLP as its legal counsel.
The firm will render these services:
(a) advise the Debtor with respect to its powers and duties in
the continued management and operation of its business and
property;
(b) advise and consult on the conduct of this Chapter 11
case;
(c) attend meetings and negotiate with representatives of
creditors and other parties in interest;
(d) take all necessary actions to protect and preserve the
Debtor's estate;
(e) prepare pleadings in connection with this Chapter 11
case;
(f) represent the Debtor in connection with obtaining
authority to continue using cash collateral and obtaining
post-petition financing;
(g) advise the Debtor in connection with any potential sale of
assets;
(h) appear before this court and any appellate courts to
represent the interests of the Debtor's estate;
(i) advise the Debtor regarding tax matters;
(j) take any necessary action on behalf of the Debtor to
negotiate, prepare, and obtain approval of a disclosure statement
and confirmation of a Chapter 11 plan and all documents related to
the foregoing; and
(k) perform all other necessary legal services for the Debtor
in connection with the prosecution of this Chapter 11 case.
The hourly rates of the firm's counsel and staff are as follows:
Partner $420 - $875
Sr. Counsel $540 - $755
Counsel $430 - $710
Sr. Associate $345 - $445
Associate $320 - $370
Staff Attorney $230 - $415
Paralegal $210 - $305
In addition, the firm will seek reimbursement for expenses
incurred.
On February 7, 2023, the firm received $130,000 from the Debtor as
an advance payment retainer in connection with this engagement.
The firm also provided the following in response to the request for
additional information set forth in Paragraph D.1. of the U.S.
Trustee Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Holland & Knight has not agreed to a variation of its
standard or customary billing arrangements for this engagement.
Question: Do any of the professionals included in this engagement
vary their rate based on the geographic location of the bankruptcy
case?
Response: None of Holland & Knight's professionals included in
this engagement have varied their rate based on the geographic
location of this Chapter 11 case.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference?
Response: Holland & Knight was retained by the Debtor pursuant to
an engagement letter dated as of February 7, 2023. The material
terms of the prepetition engagement are the same as the terms
described in the application and herein, and the billing rates have
not changed other than periodic annual increases as provided in the
engagement letter and explained in the application.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: The Debtor has approved or will be approving a
prospective budget and staffing plan for Holland & Knight's
engagement for the post-petition period as appropriate. The budget
may be amended as necessary to reflect changed or unanticipated
developments.
Jesse Vogtle, Jr., Esq., a partner at Holland & Knight, disclosed
in a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jesse S. Vogtle, Jr., Esq.
Eric T. Ray, Esq.
Holland & Knight LLP
1901 Sixth Avenue North, Suite 1400
Birmingham, AL 35203
Telephone: (205) 226-5700
Facsimile: (205) 214-8787
Email: jesse.vogtle@hklaw.com
etray@hklaw.com
About Premier Cajun Kings
Premier Cajun Kings, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-00656) on March
14, 2023. In the petition signed by Joginder Sidhu, Personal Rep.
for Estate of deceased sole member Manraj Sidhu, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge D. Sims Crawford oversees the case.
The Debtor tapped Holland and Knight, LLP and Cole Schotz PC as
legal counsel and Aurora Management Partners as financial advisor.
PREMIER CAJUN: Taps Aurora Management Partners as Financial Advisor
-------------------------------------------------------------------
Premier Cajun Kings, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Alabama to employ Aurora
Management Partners as its financial advisor.
The firm will render these services:
I. Financial Review:
(a) review the adequacy of and assist the Debtor in the
development of near-term cash flow projections to achieve an
accurate 13-week detail and annual cash flow; and
(b) based on a review of the Debtor's historical and projected
monthly and annual financial statements.
II. Analysis of Ongoing Operations:
(a) review the Debtor's operations; and
(b) interview and evaluate current management and provide
recommendations regarding each.
III. General Terms:
(a) communicate regularly with the board to update them on
Aurora's findings;
(b) review and provide recommendations on the operating plan
of the Debtor as part of an ongoing entity;
(c) receive and review weekly performance reports detailing
key operating and financial performance;
(d) provide an assessment of the Debtor's viability and
overall financial condition with suggestions for change. In the
event the board chooses a scenario requiring a transaction, assist
the board with the same; and
(e) consult on any additional matters as requested by the
Debtor.
The hourly rates of the firm's professionals are as follows:
Director/Managing Director/Sr. Managing $375 - $745
Director/Managing Partner
Associate Director $350 - $375
Consultant/Senior Consultant $250 - $350
Administrative $275
In addition, the firm will seek reimbursement for expenses
incurred.
Aurora received $40,000 as a retainer in connection with this
engagement.
David Baker, the founder and managing partner at Aurora Management
Partners, disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
David M. Baker
Aurora Management Partners
112 South Tryon St., Suite 1770
Charlotte, NC 28284
Telephone: (828) 638-5744
Email: dbaker@auroramp.com
About Premier Cajun Kings
Premier Cajun Kings, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-00656) on March
14, 2023. In the petition signed by Joginder Sidhu, Personal Rep.
for Estate of deceased sole member Manraj Sidhu, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge D. Sims Crawford oversees the case.
The Debtor tapped Holland and Knight, LLP and Cole Schotz PC as
legal counsel and Aurora Management Partners as financial advisor.
PROFRAC HOLDINGS II: Moody's Affirms 'B2' CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service downgraded ProFrac Holdings II, LLC's
Speculative Grade Liquidity Rating to SGL-3, from SGL-2 previously,
and affirmed the company's B2 CFR and the B2 rating on its secured
term loan. The rating outlook remains stable.
The following summarizes the ratings activity:
Affirmations:
Issuer: ProFrac Holdings II, LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Backed Senior Secured Term Loan, Affirmed B2 (LGD4)
Downgrades:
Issuer: ProFrac Holdings II, LLC
Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-2
Outlook Actions:
Issuer: ProFrac Holdings II, LLC
Outlook, Remains Stable
RATINGS RATIONALE
ProFrac's B2 CFR reflects the company's improving business profile
and Moody's expectation that the company's free cash flow
generation will continue to grow, offset by the highly cyclical
nature of the oilfield services sector and the pressure pumping
business in particular. The company's cash flow generation benefits
from strong demand for pressure pumping services and growth from
acquisitions. The rating is tempered by the company's acquisitive
growth strategy, Moody's expectation that debt will continue to
comprise a meaningful portion of acquisition funding, and the
inherent valuation and execution risks in the company's repeated
acquisitions. Pressure pumping, which accounts for the vast
majority of the company's EBITDA, is a highly competitive sector.
ProFrac's senior secured term loan due 2025 is rated B2, the same
as the CFR, and comprises the majority of the company's debt. The
company also has a $400 million ABL revolver due 2027 which has a
first lien on working capital assets and a second lien on other
assets. The B2 term loan rating could be downgraded if revolver
borrowings do not decline as expected or if the facility size
increases. The term loan has a first lien on non-ABL priority
collateral. The ABL has a stated maturity of March 2027 but will
accelerate to 91 days ahead of the stated maturity of any material
indebtedness (other than $17 million the First Financial Loan due
January 2024). The company's debt also includes the $39 million REV
Energy seller note due in June 2025 (secured by REV Energy's
assets, including working capital), the $88 million Monarch Silica
seller note due in December 2024 (secured by Monarch assets,
including working capital), and the $24 million USWS equipment
debt.
The downgrade of ProFrac's Speculative Grade Liquidity (SGL) rating
to SGL-3 reflects the company's reduced, but still adequate
liquidity. ProFrac significantly increased borrowings under its
$400 million secured ABL revolving credit facility to fund a
portion of its recently closed $475 million acquisition of
Performance Proppants, resulting in a meaningful reduction in the
company's available liquidity. The $469 million cash consideration
for the acquisition was funded with a combination of incremental
term loan borrowings, borrowings under the ABL, and internally
generated cash flow. Available borrowing capacity under ProFrac's
ABL credit facility currently stands at $79 million, down from $190
million at year end 2022, and the company had $38 million of cash
on hand as of year end 2022. The term loan facility contains
financial covenants including a maximum net leverage covenant of
1.25x, a minimum liquidity covenant of $30 million, and a maximum
capital expenditures covenant of the greater of $275 million or 50%
of the previous four consecutive fiscal quarters' total Ebitda. The
ABL facility has covenant requiring maintenance a minimum 1.0x
fixed charge coverage ratio and a minimum liquidity covenant of $10
million. Moody's expects that ProFrac will remain in compliance
with its covenants into 2024.
ProFrac's stable outlook reflects Moody's expectations for growth
in cash flow generation through fleet growth and margin
improvements, with rising free cash flow used to repay revolver
borrowings and bolster liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a rating upgrade include sustainable
EBITDA growth, debt reduction, maintaining good liquidity and
conservative financial policies.
Factors that could lead to a rating downgrade include debt/EBITDA
above 4x, EBITDA/interest below 3x, deterioration in liquidity, or
more aggressive financial policies.
ProFrac (NASDAQ: ACDC), headquartered in Willow Park, Texas, is a
vertically integrated provider of hydraulic fracturing services to
E&P companies in the United States. ProFrac is substantially owned
by the Wilks family.
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
PWM PROPERTY: HNA Group Says Plan Ignores Equity Cushion
--------------------------------------------------------
HNA Group North America LLC), the direct and indirect 100% common
member of the Debtors, files this objection to the Second Amended
Joint Chapter 11 Plan of Reorganization of PWM Property Management
LLC and its Debtor Affiliates.
HNAGNA points out that the March 2023 Plan, when coupled with the
Stay Relief Motion and the Modified Sale Procedures Motion, is
devised to coerce HNAGNA's silence. If the March 2023 Plan is not
confirmed, then the nuclear option is triggered -- a sale of the
West Madison Property and/or the granting (months in advance) of
stay relief so that the Special Servicer can attempt to foreclose.
This is an unjust result in a case with an equity cushion exceeding
$130 million.
HNAGNA further points out that under this backdrop, HNAGNA should
have a significant and persuasive voice in determining the contours
of the Plan under which the 181 West Madison property ultimately
exits these bankruptcy cases. HNAGNA understands the concerns
raised by this Court at the November confirmation hearing. HNAGNA
would support a plan that recognizes HNA Capital's indirect
ownership of the West Madison Property, and that includes
reasonable protections to preserve the status quo claims and rights
of SLG Member pending the outcome of the litigation in the U.S.
District Court for the Southern District of New York over SLG
Member's arbitration judgment. This reasonable solution would give
SLG Member the assurances it requires while respecting the plan
structure preferred by HNAGNA. HNAGNA urges the Court to deny the
March 2023 Plan and to revisit the construct of the plan filed by
the West Madison Debtors in October 2022 (the "October 2022 Plan"),
with status quo protections for SLG Member.
Notwithstanding HNAGNA's position that SLG Member's judgment has
already been satisfied, the March 2023 Plan disregards HNAGNA's
preferences in favor of the wishes of SLG Member, which is neither
a creditor nor an equity holder in these cases. Indeed, SLG Member
is merely a judgment creditor of a non-debtor, HNAGNA's indirect
parent, HNA Group (International) Company Limited ("HNAI").
HNAGNA asserts that the March 2023 Plan not only disregards the
reasonable wishes of equity, but also does so at an increased cost
to theses estates. In order to secure the consent of the Special
Servicer to the March 2023 Plan, the Debtors are required to pay an
additional "Effective Date Settlement Payment" of $600,000
(bringing the $3,500,000 total Effective Date Settlement Payment,
previously negotiated under the loan modification agreement in the
context of the October 2022 Plan, up to $4,100,000). Additionally,
the loan modification agreement requires that the borrower under
the loan agreement (the owner of the West Madison Property) to pay
an additional 0.50% fee (i.e., approximately $1,200,000) to the
lender in return for transferring the property back to HNA Capital
if and when HNAI defeats SLG Member's spurious litigation efforts.
None of these additional payments was required under the October
2022 Plan (under which ownership of the indirect equity in the West
Madison Property would have resided with HNA Capital), another
reason why HNAGNA believes that the October 2022 Plan contemplated
a more favorable outcome for the estates.
Counsel to HNAGNA:
Daniel J. DeFranceschi, Esq.
Robert C. Maddox, Esq.
Huiqi Liu, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 N. King Street
Wilmington, DE 19801
Tel: (312) 651-7700
E-mail: defranceschi@rlf.com
maddox@rlf.com
liu@rlf.com
- and -
Douglas B. Rosner, Esq.
GOULSTON & STORRS PC
400 Atlantic Avenue
Boston, MA 02110-3333
Tel: (617) 482-1776
E-mail: drosner@goulstonstorrs.com
- and -
Trevor R. Hoffmann, Esq.
GOULSTON & STORRS PC
885 Third Avenue, 18th Floor
New York, NY 10022
Tel: (212) 878-6900
E-mail: thoffman@goulstonstorrs.com
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.
QUARTZ HOLDING: Moody's Affirms 'B3' CFR, Outlook Remains Stable
----------------------------------------------------------------
Moody's Investors Service affirmed Quartz Holding Company's
("QuickBase") B3 Corporate Family Rating, B3-PD Probability of
Default Rating, and B1 rating on the company's first lien senior
secured bank credit facilities. The outlook is stable.
Affirmations:
Issuer: Quartz Holding Company
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Backed Senior Secured 1st Lien Term Loan, Affirmed B1 (LGD3)
Backed Senior Secured 1st Lien Revolving Credit
Facility, Affirmed B1 (LGD3)
Outlook Actions:
Issuer: Quartz Holding Company
Outlook, Remains Stable
RATINGS RATIONALE
The B3 CFR reflects Moody's expectation that adjusted debt/EBITDA
leverage will improve to 7x over the next 12 - 18 months from 8.3x
as of December 31, 2022 (on a cash EBITDA basis, including change
in deferred revenue and expensing capitalized software development
costs). QuickBase has invested significantly in sales, channel
partners and international expansion through 2022. Although
revenues grew 21% in 2022, ahead of the company's budget, operating
margins and cash flow were constrained. Moody's projects continued
double digit percentage top line growth in 2023 with expanded
profit margins driven by realized benefits from prior investments
and normalized levels of operating expenses. Nevertheless, free
cash flow will remain constrained due to unhedged exposure to
rising interest rates. QuickBase's business scale is also small
compared to a number of larger competitors possessing significant
resources and product development capabilities.
Moody's affirmed ratings for QuickBase given the company's solid
organic revenue growth driven by new logo wins and continued
improvements in retention metrics. As of December 31, 2022, the
company's gross and net retention rates averaged 91% and 116%
respectively, improving from the prior year. QuickBase's bookings
growth of approximately 35% and annual recurring revenue growth of
approximately 21% in fiscal year 2022 demonstrate the success of
recent investments undertaken by the company in building up its
sales capacity and channel partners, as well as expanding
internationally. QuickBase also benefits from a highly diversified
revenue base, across customers and end markets, which is expected
to provide revenue stability and mitigate risks during an economic
downturn.
Moody's projects that QuickBase's debt/EBITDA leverage will
approach approximately 7x (on a cash EBITDA and Moody's adjusted
basis) over the next 12-18 months driven by organic revenue growth
in the low double digit percentage range and improvement in EBITDA
margins. While leverage is expected to improve, it remains high
compared to the broader B3 rating category which limits financial
flexibility for QuickBase in a weakening macroeconomic environment.
Rising interest rates will dampen QuickBase's free cash flow which
will limit the company's ability to reduce debt balances.
QuickBase's liquidity profile is adequate reflecting a cash balance
of approximately $11 million as of December 2022 and Moody's
expectation of breakeven to slightly positive free cash flow
generation over the next 12 to 18 months. To the extent revenue
growth or profit margins are less than expected over the next year,
the company has the ability to reduce discretionary growth
investments to support liquidity. QuickBase has access to an
undrawn $40 million revolving credit facility which expires in
April 2024 and is expected to be renewed prior to year-end 2023.
The company could face potential refinancing risks due to
heightened volatility in the credit and financial markets and
significant uncertainty regarding the trajectory of monetary policy
tightening which could impair QuickBase's ability to refinance
timely with favorable economic terms. The revolving facility
contains a springing maximum first lien senior secured leverage
covenant of 8.0x (springing at 40% draw). Moody's does not project
the covenant to be triggered and expects ample EBITDA cushion over
the next 12-18 months if the revolver were to be drawn.
The stable outlook reflects Moody's expectation that QuickBase's
top line will grow in the low double digit percentage range over
the next 12-18 months and adjusted EBITDA margins will improve
driven by realized benefits from prior investments in growth
initiatives. Moody's expects leverage to approach 7x (on a cash
EBITDA and Moody's adjusted basis) over the outlook period.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
QuickBase's ratings could be upgraded if the company maintains
strong organic revenue growth, sustains leverage below 6.5x (on a
cash EBITDA basis), and produces consistent adjusted free cash flow
to debt around 5%. Ratings could be downgraded if organic growth
were to slow substantially while outsized investments continue,
leverage were to be sustained above 8.5x (on a cash EBITDA basis),
or Moody's expects free cash flow generation will remain negative.
ESG CONSIDERATIONS
QuickBase's ESG credit impact score (CIS-4) is highly negative,
driven primarily by the company's governance risks characterized by
controlled ownership and tolerance for financial risk. As a
provider of low code/no code platforms, QuickBase has
neutral-to-low credit risks (E-2) from environmental
considerations, consistent with the software industry.
QuickBase has neutral-to-low exposure (S-2) to social risks. The
company has moderate risk of reputational harm from cybersecurity
breaches and data privacy concerns. In addition, human capital
risks are moderately negative from QuickBase's dependence on highly
skilled technical and engineering talent which is characteristic of
the software sector broadly. These risks are tempered by positive
social and demographic trends driven by business automation and
shortages of professional software developers.
QuickBase's exposure to governance risks is highly negative (G-4)
reflecting the company's controlled ownership and aggressive
financial policy, including very high leverage. Lack of public
financial disclosure and the absence of majority board independence
add to governance risks.
The principal methodology used in these ratings was Software
published in June 2022.
QuickBase is a provider of low code/no code platforms that allow
enterprise customers to develop proprietary customized applications
quickly and cost-efficiently with no software development expertise
required (citizen development). In 2022 revenue was approximately
$200 million. QuickBase is owned by Vista, Welsh, Carson, Anderson
& Stowe ("WCAS") and management since its LBO in April 2019.
R&W CLARK: Seeks to Hire Ziegler & Associates as Accountant
-----------------------------------------------------------
R&W Clark Construction, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to employ
Ziegler & Associates, Ltd. as its accountant.
The firm will render these services:
(a) review of general ledger and preparation of financial
statements, as needed;
(b) prepare tax returns, both federal and state;
(c) provide federal and state income tax advice to the Debtor
and negotiate with taxing authorities as necessary;
(d) aid and assist the attorney(s) of record with regard to
any legal issues;
(e) aid and assist the Debtor in inventorying books and
records and advise the Debtor regarding books and records
retention;
(f) aid and assist the Debtor in preparation of budgets and
cash flow projections; and
(e) perform all other accounting services for the Debtor,
which may be necessary or in furtherance of reorganizational
goals.
The firm will charge $225 per hour for its services.
William Zeigler, an accountant at Ziegler & Associates, disclosed
in a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
William Zeigler, CPA
Ziegler & Associates, Ltd.
507 Apache Trail
Lake Villa, IL 60046
Telephone: (847) 265-8215
Facsimile: (847) 265-8257
About R&W Clark Construction
R&W Clark Construction, Inc. filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
23-03279) on March 11, 2023. In the petition filed by Richard
Clark, president and sole shareholder, the Debtor reported up to
$50,000 in assets and up to $10 million in liabilities.
Judge Timothy A. Barnes oversees the case.
The Debtor tapped Gregory K. Stern, PC as counsel and Ziegler &
Associates, Ltd. as accountant.
RDX TECHNOLOGIES: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------
The U.S. Trustee for Region 14 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of RDX Technologies Corporation.
About RDX Technologies
RDX Technologies Corporation sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D. Ariz. Case No. 23-01373) on March 6,
2023, with $100,001 to $500,000 in assets and $10 million to $50
million in liabilities. Judge Madeleine C. Wanslee oversees the
case.
Scott R. Goldberg, Esq., at Moyes Sellers & Hendricks, Ltd. is the
Debtor's legal counsel.
REPC HOLDINGS: Taps Nelson Mullins Riley & Scarborough as Counsel
-----------------------------------------------------------------
REPC Holdings, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Massachusetts to employ Nelson Mullins Riley &
Scarborough LLP as its bankruptcy counsel.
The firm will render these services:
(a) prepare all legal papers;
(b) advise the Debtor of its rights, powers, and duties under
Chapter 11 of the Bankruptcy Code;
(c) prepare on behalf of the Debtor all motions, applications,
answers, orders, reports, and papers in connection with the
administration of the Debtor's estate;
(d) take action to protect and preserve the Debtor's estate;
(e) assist the Debtor with the sale of any of its assets
pursuant to section 363 of the Bankruptcy Code;
(f) seek confirmation of the Debtor's plan of reorganization;
(g) prosecute on behalf of the Debtor, the proposed Chapter 11
plan and seek approval of all transactions contemplated therein
and, in any amendments thereto; and
(h) perform all other necessary legal services in connection
with the Chapter 11 case.
The firm has received a retainer of $13,117.50 from the Debtor.
Peter Haley, Esq., an attorney at Nelson Mullins Riley &
Scarborough, disclosed in a court filing that the firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Peter J. Haley, Esq.
Nelson Mullins Riley & Scarborough LLP
One Financial Center, Suite 3500
Boston, MA 02111
Telephone: (617) 217-4714
Facsimile: (617) 217-4710
Email: peter.haley@nelsonmullins.com
About REPC Holdings
REPC Holdings, Inc. filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-30075) on March
3, 2023, with as much as $1 million in both assets and liabilities.
David Mosier, treasurer, signed the petition.
Judge Elizabeth D. Katz oversees the case.
Peter J. Haley, Esq., at Nelson Mullins Riley & Scarborough LLP
serves as the Debtor's counsel.
REVERSE MORTGAGE: Unsecureds Owed $226M Get 2.7% to 6.1% Under Plan
-------------------------------------------------------------------
Judge Mary F. Walrath has entered an order conditionally approving
the Disclosure Statement of Reverse Mortgage Investment Trust Inc.,
et al.
The following dates are established with respect to the
solicitation of votes to accept, and voting on, the Plan as well as
filing objections to final approval of the Disclosure Statement and
the Plan and confirming the Plan (all times are prevailing Eastern
Time):
* The voting deadline will be on April 20, 2023 at 4:00 p.m.
ET.
* The objection deadline April 20, 2023 at 4:00 p.m. ET.
* The voting affidavit Deadline April 24, 2023.
* The deadline to file confirmation brief and reply and proposed
confirmation order will be on April 24, 2023.
* The Confirmation Hearing Date will be on April 27, 2023 at
10:30 a.m. ET.
Liquidating Plan
Reverse Mortgage Investment Trust Inc., et al. submitted an Amended
Disclosure Statement for the Joint Chapter 11 Plan of Liquidation.
The Plan provides for the full satisfaction of Allowed
Administrative Claims, Priority Tax Claims, Other Secured Claims,
and Other Priority Claims.
Under the Plan, Class 9 General Unsecured Claims total $213.9
million to 226.6 million and will recover 2.7% to 6.1% of their
claims. Each Holder of an Allowed General Unsecured Claim shall
receive, in full and final satisfaction of such General Unsecured
Claim, up to the Allowed amount of such General Unsecured Claim,
its Pro Rata share of the GUC Reserve. Class 9 is impaired.
A copy of the Disclosure Statement Approval Order dated March 22,
2023, is available at https://bit.ly/42CEANZ from
PacerMonitor.com.
A copy of the Disclosure Statement dated March 22, 2023, is
available at https://bit.ly/3niSJj9 from PacerMonitor.com.
Counsel to the Debtors:
Stephen Hessler, Esq.
Thomas Califano, Esq.
Anthony Grossi, Esq.
SIDLEY AUSTIN LLP
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
E-mail: shessler@sidley.com
tom.califano@sidley.com
agrossi@sidley.com
- and -
Michael J. Barrie, Esq.
Jennifer R. Hoover, Esq.
John C. Gentile, Esq.
BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP
1313 North Market Street, Suite 1201
Wilmington, DE 19801
Telephone: (302) 442-7010
Facsimile: (302) 442-7012
E-mail: mbarrie@beneschlaw.com
jhoover@beneschlaw.com
jgentile@beneschlaw.com
About Reverse Mortgage Investment Trust
Reverse Mortgage Investment Trust Inc. is an originator and
servicer of reverse mortgage loans.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-11225) on November
30, 2022.
In the petition signed by Craig Corn, chief executive officer, the
Debtors disclosed up to $50 billion in both assets and
liabilities.
Judge Mary F. Walrath oversees the case.
The Debtors tapped Sidley Austin LLP as general bankruptcy counsel,
Benesch, Friedlander, Coplan, and Aronoff LLO as local bankruptcy
counsel, FTI Consulting Inc. as financial advisor, and Kroll
Restructuring Administration LLC as noticing and claims agent.
Leadenhall Capital Partners LLP, as agent to the postpetition
secured lenders, is advised by Latham & Watkins LLP and Young,
Conaway Stargatt & Taylor LLP, as counsel; BRG, as financial
advisor; and Moelis as investment banker.
Texas Capital Bank has retained Paul, Weiss, Rifkind, Wharton &
Garrison LLP as counsel.
Longbridge Financial, LLC has retained Weil, Gotshal & Manges LLP,
Lowenstein Sandler LLP, and Richards, Layton & Finger as counsel;
and Houlihan Lokey, Inc., as financial advisor.
SERTA SIMMONS: Disclosure Objections Consensually Resolved
----------------------------------------------------------
Serta Simmons Bedding, LLC, et al., said in a court filing that
objections to approval of their Disclosure Statement have been
addressed and resolved.
The Debtors are pleased to be before the Court seeking approval of
the Disclosure Statement, on a consensual basis, for a plan of
reorganization that facilitates a comprehensive financial
restructuring to deleverage the Company's balance sheet to ensure
the long-term viability of the Company's enterprise. Pursuant to
the Plan, the Company's total debt will be reduced from greater
than approximately $1.9 billion3 to approximately $315 million
(including original issue discount, if any)4 upon emergence and
provide for the resolution of certain pending claims against the
Debtors brought by certain of the Non-PTL Term Loan Lenders.
Although the Debtors received two formal objections to the Motion,
they understand those objections have now been consensually
resolved with respect to approval of the Disclosure Statement.
With the support of the Consenting Parties, the Debtors filed a
revised Disclosure Statement for Joint Chapter 11 Plan, and revised
proposed order and solicitation materials, along with blacklines
against the prior versions of these documents.
The issues initially raised by the Committee in its Objection
principally fell into two categories: (i) objections to the
adequacy of the disclosure in the Disclosure Statement with respect
to particular matters, and (ii) objections to the terms of the
Plan. In addition, since filing the initial Plan and Disclosure
Statement, on January 24, 2023, several parties, including the
Office of the United States Trustee for the Southern District of
Texas, have reached out to the Debtors with informal comments. The
Debtors have incorporated comments to the Plan, Disclosure
Statement, and Proposed Solicitation Order from each of these
various parties, and made additional changes to these documents in
response to the feedback received from such parties.
Attorneys for the Debtors:
Gabriel A. Morgan, Esq.
Stephanie N. Morrison, Esq.
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
E-mail: Gabriel.Morgan@weil.com
Stephanie.Morrison@weil.com
- and -
Ray C. Schrock, Esq.
Alexander W. Welch, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
E-mail: Ray.Schrock@weil.com
Alexander.Welch@weil.com
About Serta Simmons Bedding
Serta Simmons Bedding, together with its non-debtor affiliates, are
manufacturers and marketers of bedding products in North America,
operating various bedding manufacturing facilities across the
United States and Canada.
Serta Simmons Bedding, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case
No. 23-90020) on Jan. 23, 2023. The petitions were signed by John
Linker, chief financial officer, treasurer and assistant secretary.
At the time of filing, the Debtors estimated $1 billion to $10
billion in both assets and liabilities.
Gabriel Adam Morgan, Esq. at the Weil, Gotshal & Manges represents
the Debtor as counsel. The Debtor also tapped Evercore Group, LLC
as its investment banker; FTI Consulting, Inc. as its Financial
Advisor; Epiq Corporate Restructuring, LLC as its claims and
noticing agent; and Pricewaterhousecoopers LLP as its tax services
advisor.
SERTA SIMMONS: Ongoing Unsecureds to Get 100% in Plan
-----------------------------------------------------
Serta Simmons Bedding, LLC, et al., submitted a Disclosure
Statement for Joint Chapter 11 Plan.
The Debtors under the Plan include Dawn Intermediate, LLC, SSB, and
certain of its subsidiaries and affiliates that are borrowers and
guarantors under (i) the Super-Priority Term Loan Agreement, dated
as of June 22, 2020, by and among Dawn Intermediate ("Dawn
Intermediate"), as holdings, SSB, as top borrower, National Bedding
Company L.L.C. ("NBC") and SSB Manufacturing Company ("SSB
Manufacturing") as borrowers, UBS AG, Stamford Branch, as
administrative agent (the "PTL Agent"), and the lenders from time
to time party thereto (the "PTL Lenders") (as amended, restated,
amended and restated, supplemented, or otherwise modified from time
to time, the "PTL Credit Agreement" and the credit facility issued
thereunder, the "PTL Facility"); (ii) that certain First Lien Term
Loan Agreement, dated as of November 8, 2016, by and among Dawn
Intermediate, as holdings, SSB, SSB Manufacturing, and NBC, as
borrowers, UBS AG, Stamford Branch, as administrative agent and
collateral agent (the "Non-PTL Term Loan Agent"), and the lenders
from time to time party thereto (the "Non-PTL Term Loan Lenders")
(as amended, restated, amended and restated, supplemented, or
otherwise modified from time to time, the "Non-PTL Term Loan
Agreement" and the credit facility issued thereunder, the "Non-PTL
Term Loan Facility"); and (iii) that certain ABL Credit Agreement,
dated as of November 8, 2016, by and among Dawn Intermediate, as
holdings; SSB, SSB Manufacturing, and NBC, as borrowers, the
lenders from time to time party thereto, and UBS AG, Stamford
Branch, as administrative agent (as amended, restated, amended and
restated, supplemented, or otherwise modified from time to time,
the "Prepetition ABL Agreement" and the credit facility issued
thereunder, the "Prepetition ABL Facility"; the Prepetition ABL
Agreement together with the PTL Credit Agreement and the Non-PTL
Term Loan Agreement, the "Credit Agreements").
The Debtors are commencing solicitation of votes on the Plan to
implement a comprehensive financial restructuring to deleverage the
Company's balance sheet to ensure the long-term viability of the
Company's enterprise. As a result of extensive negotiations with
their secured creditors, the Debtors entered into a restructuring
support agreement, with the Consenting Creditors party thereto, who
hold, in the aggregate, approximately 85% of the outstanding
principal amount of the FLFO Term Loans (as defined below) and 86%
of the outstanding principal amount of FLSO Term Loans the
outstanding indebtedness under the PTL Credit Agreement, and the
Consenting Equity Holders.
Under the terms of the Restructuring Support Agreement, the parties
agreed, subject to the terms and conditions of the Restructuring
Support Agreement, to support a deleveraging transaction to
restructure the Company's balance sheet, to be effectuated
out-of-court or, if necessary, in chapter 11 through the Plan (the
"Restructuring") pursuant to, among other things, the following
agreements:
* the credit agreement (the "New Term Loan Credit Facility
Agreement"), providing for a new term loan facility (the "New Term
Loan") in the aggregate principal amount of $315 million (including
original issue discount, if any), a copy of the term sheet for the
New Term Loan Credit Facility Agreement is attached hereto as
Exhibit C;
* an asset-backed revolving credit facility (the "Exit ABL
Facility"), which will roll up or replace the DIP Facility (as
defined herein) on the Effective Date.
The Restructuring will leave the Company's businesses intact and
substantially deleverage the Debtors' capital structure. The
Company's balance sheet liabilities will be reduced from greater
than approximately $1.9 billion in total debt to approximately $315
million (including original issue discount, if any) in total debt
upon emergence and result in the resolution of certain pending
claims against the Debtors brought by certain of Non-PTL Term Loan
Lenders (as defined herein). This deleveraging will enhance the
Company's long-term growth prospects and competitive position and
allow the Debtors to emerge from the Chapter 11 Cases as a
stronger, reorganized group of entities better able to invest in
the business, drive innovation, deliver value to customers, and
withstand a challenging market environment.
The Restructuring will be effectuated pursuant to the Plan, which
provides for, in relevant part, the following treatment of Claims
and Interests:
* Holders of an Allowed Other Secured Claim and an Allowed
Priority Non-Tax Claim will be unimpaired under the Plan.
* Holders of an Allowed FLFO Claim shall receive, in full and
final satisfaction of such Claim, such holder's Pro Rata share of
New Term Loans equal in amount to the aggregate amount of their
Allowed FLFO Claims.
* Holders of an Allowed FLSO Claim shall receive, in full and
final satisfaction of such Claim, such holder's Pro Rata share of
(i) one hundred percent (100%) of the New Common Interests issued
on the Effective Date, less any New Common Interests distributed to
holders of Class 5 Non-PTL Claims under the Plan and subject to
dilution by the New Common Interests distributed pursuant to a
post-emergence equity-based management incentive plan as described
in Section 5.12 of the Plan (the "Management Incentive Plan"), and
(ii) the aggregate amount of New Term Loans less amounts
distributed on account of Class 3. Receipt of such consideration
shall be effected as described in the Restructuring Transactions
Exhibit.
* Holders of Allowed Non-PTL Term Loan Claims shall receive, in
full and final satisfaction of such Claim, with a carve out from
the collateral (or the value of such collateral) securing the FLSO
Claims:
1. If Class 5 votes to accept the Plan: such holder's Pro Rata
share of 4% of New Common Interests issued on the Effective Date,
subject to dilution by the New Common Interests distributed
pursuant to the Management Incentive Plan.
2. If Class 5 votes to reject the Plan: such holder's Pro Rata
share of 1% of New Common Interests issued on the Effective Date,
subject to dilution by any New Common Interests distributed
pursuant to the Management Incentive Plan.
3. If a holder of a Non-PTL Term Loan Claims vote to accept
the Plan, such holder of a Class 5 NonPTL Claim will receive its
Pro Rata share of 4% of the New Common Interests, subject to
dilution by the New Common Interests distributed pursuant to the
Management Incentive Plan. This potential recovery, which is
greater than the recovery contemplated if Class 5 votes to reject
the Plan, is being provided as a carve out from the collateral (or
the value of such collateral) securing the FLSO Claims to encourage
holders of Non-PTL Term Loan Claims to vote to accept the Plan and
provide the releases as set forth in the Plan, which is fundamental
consideration for the increased recovery to holders of Non-PTL Term
Loan Claims.
* If a holder of an Allowed Ongoing General Unsecured Claim
executes a trade agreement providing for the continuation of goods
or services on the same or better terms as existed as most
favorable terms provided to the Debtors in the six (6) months prior
to the Petition Date, the form of which is attached to the
Disclosure Statement Order as Schedule 9 (a "6A Trade Agreement"),
such holder of an Allowed Ongoing General Unsecured Claim shall
receive, with a carve out from the collateral (or the value of such
collateral) securing the FLSO Claims, no more than four (4) Cash
installments over a period of no more than 365 days from the
Effective Date, which payments shall result in full payment in the
Allowed amount of such Ongoing General Unsecured Claim on no better
terms than payment in the ordinary course of business, in which
case the related Allowed Ongoing General Unsecured Claim will be
paid in full promptly, or otherwise as soon as practicable, upon
the assumption (or assumption and assignment) of the executory
contract or unexpired lease in accordance with the Plan. For the
avoidance of doubt, a holder of Ongoing General Unsecured Claims
that is a counterparty to (i) an executory contract or unexpired
lease assumed pursuant to Article VIII of the Plan or (ii) an
existing trade agreement executed by the Debtors under the Vendor
Order (as defined herein) (a "CV Trade Agreement") (provided that
such CV Trade Agreement is in effect as of the Effective Date)
shall not be required to execute a 6A Trade Agreement to receive a
distribution under Class 6A under the Plan. Additional information
regarding the procedures and requirements for execution of the 6A
Trade Agreement is included in Article II of this Disclosure
Statement.
* Holders of an Allowed Other General Unsecured Claim shall
receive, in full and final satisfaction of such Claim, with a carve
out from the collateral (or the value of such collateral) securing
the FLSO Claims, its Pro Rata Share of the Other General Unsecured
Claims Recovery Pool as set forth in the GUC Recovery Allocation
Table (each as defined in the Plan). The GUC Recovery Allocation
Table is based on the Debtors' current estimate of the Class 6B
Other General Unsecured Claims pool as of the date of this
Disclosure Statement, and is subject to change in consultation with
the Committee (as defined herein).
* Holders of Intermediate Equity Interests shall receive the
treatment afforded in the Restructuring Transactions Exhibit.
The Plan also provides for a global settlement and waiver of the
Consenting Equity Holders' claims or interests. This global
settlement and waiver provides for certain treatment and
consideration in exchange for the Consenting Equity Holders'
support for the Restructuring: if the Restructuring Transactions
Exhibit includes the Redemption (as defined herein), the Debtors
will pay the Consenting Equity Holders Cash in the amount of $1.7
million, including the Consenting Equity Holder Fees and Expenses,
subject to the terms of the Restructuring Support Agreement;
provided, that if the Debtors do not pursue the Redemption, the
Debtors will only be obligated to pay the Consenting Equity Holder
Fees and Expenses subject to the terms of the Restructuring Support
Agreement.
There are five creditor groups whose votes for acceptance of the
Plan are being solicited: (i) holders of FLFO Claims, (ii) holders
of FLSO Claims, (iii) holders of Non-PTL Term Loan Claims, (iv)
holders of Ongoing General Unsecured Claims, and (v) holders of
Other General Unsecured Claims.
Under the Plan, Class 6A Ongoing General Unsecured Claims will
recover 100% of their claims. Class 6B Other General Unsecured
Claims will recover 0% to 3.3% of their claims.
Attorneys for the Debtors:
Gabriel A. Morgan, Esq.
Stephanie N. Morrison, Esq.
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
E-mail: Gabriel.Morgan@weil.com
Stephanie.Morrison@weil.com
- and -
Ray C. Schrock, Esq.
Alexander W. Welch, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
E-mail: Ray.Schrock@weil.com
Alexander.Welch@weil.com
A copy of the Disclosure Statement dated March 22, 2023, is
available at https://bit.ly/3FMiA9F from PacerMonitor.com.
About Serta Simmons Bedding
Serta Simmons Bedding, together with its non-debtor affiliates, are
manufacturers and marketers of bedding products in North America,
operating various bedding manufacturing facilities across the
United States and Canada.
Serta Simmons Bedding, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case
No. 23-90020) on Jan. 23, 2023. The petitions were signed by John
Linker, chief financial officer, treasurer and assistant secretary.
At the time of filing, the Debtors estimated $1 billion to $10
billion in both assets and liabilities.
Gabriel Adam Morgan, Esq. at the Weil, Gotshal & Manges represents
the Debtor as counsel. The Debtor also tapped Evercore Group, LLC
as its investment banker; FTI Consulting, Inc., as its Financial
Advisor; Epiq Corporate Restructuring, LLC as its claims and
noticing agent; and Pricewaterhousecoopers LLP as its tax services
advisor.
SHEFA LLC: Plan Disclosures Deadline Extended to April 10
---------------------------------------------------------
Shefa LLC's case came before the Bankruptcy Court on March 22,
2023, for a telephonic hearing on the motion by the City of
Southfield, Michigan, entitled "Motion of City of Southfield,
Michigan to Convert Case to Chapter 7". At the conclusion of the
hearing, the Court took the Motion under advisement. Confirming
certain action taken during the hearing, and for the reasons stated
by the Court on the record during the hearing, the Court entered an
order, which modifies the scheduling order previously entered in
this case on February 15, 2023.
Judge Thomas J. Tucker has entered an order that the current April
3, 2023 deadline for Shefa, LLC, to file a Combined Plan and
Disclosure Statement is extended, to April 10, 2023.
The Court will set new related deadlines, and a new confirmation
hearing date, in a later order, to be entered after the Debtor
files a combined plan and disclosure statement and when and if the
Court grants preliminary approval of the Disclosure Statement.
About Shefa LLC
Shefa LLC is a Single Asset Real Estate as defined in 11 U.S.C.
Section 101(51B).
Shefa LLC filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-40908) on Feb. 1,
2022. In the petition filed by principal, as manager, the Debtor
reported assets and liabilities between $1 million and $10
million.
The Debtor is represented by:
Robert N. Bassel, Esq.
P.O. Box T
16400 J L Hudson Dr.
Southfield, MI 48075
SIGNIFY HEALTH: Moody's Withdraws B1 CFR Following Debt Repayment
-----------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings for Signify
Health, LLC including the B1 corporate family rating, the B1-PD
probability of default rating, the B1 ratings on the company's
first lien senior secured credit facilities, and the company's
SGL-1 speculative grade liquidity rating. The rating action follows
Signify's full repayment of its previously rated first lien senior
secured debt.
Withdrawals:
Issuer: Signify Health, LLC
Corporate Family Rating, Withdrawn, previously rated B1
Probability of Default Rating, Withdrawn, previously
rated B1-PD
Speculative Grade Liquidity Rating, Withdrawn, previously
rated SGL-1
Senior Secured 1st Lien Bank Credit Facility, Withdrawn,
previously rated B1 (LGD4)
Outlook Actions:
Issuer: Signify Health, LLC
Outlook, Changed To Rating Withdrawn From Rating Under Review
RATINGS RATIONALE
Moody's has withdrawn all of Signify's ratings following the
complete redemption of all its outstanding credit facilities. On
September 5, 2022, the company announced that it had entered into a
definitive agreement to be acquired by the CVS Health Corporation
("CVS"). The acquisition closed on March 29, 2023, and the
company's rated debt was paid in full.
Signify Health, domiciled in both Dallas, TX and Norwalk, CT, is a
leading provider of home-based health risk assessment ("HRA")
services on behalf of Medicare Advantage health plans in the US.
The company was formed by the late-2017 acquisition by New Mountain
Capital of both Censeo Health and Advance Health. In 2019, New
Mountain contributed to the Signify Health entity another of its
portfolio companies, Connecticut-based Remedy Partners, a provider
of software and analytics that facilitate large-scale bundled
payment programs. The company undertook an IPO in February 2021. In
2022 Signify generated approximately $800 million of revenue.
SILVER STATE: Trustee Taps Garman Turner Gordon as Legal Counsel
----------------------------------------------------------------
Michael Carmel, the trustee appointed in the Chapter 11 cases of
Silver State Broadcasting, LLC and its affiliates, seeks approval
from the U.S. Bankruptcy Court for the District of Nevada to employ
Garman Turner Gordon LLP as his counsel.
The firm will render these services:
(a) advise the trustee with respect to his rights, powers, and
duties;
(b) prepare on behalf of the trustee all necessary legal
papers;
(c) advise and assist the trustee with all actions he may take
to collect and recover property for the benefit of the Debtors'
estates;
(d) take all necessary or appropriate actions in connection
with any sale, plan, disclosure statement, and all related
documents;
(e) take all necessary actions to protect and preserve the
Debtors' estates; and
(f) perform all other necessary legal services in connection
with the prosecution and administration of the Debtors' Chapter 11
cases.
The hourly rates of the firm's counsel and staff are as follows:
Partners $500 - $895
Associates $355 - $450
Paraprofessionals $100 - $275
In addition, the firm will seek reimbursement for expenses
incurred.
Talitha Gray Kozlowski, Esq., an attorney at Garman Turner Gordon,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Gregory Garman, Esq.
Talitha Gray Kozlowski, Esq.
Garman Turner Gordon LLP
7251 Amigo Street, Suite 210
Las Vegas, NV 89119
Telephone: (725) 777-3000
Email: ggarman@gtg.legal
tgray@gtg.legal
About Silver State Broadcasting
Las Vegas-based Silver State Broadcasting, LLC and its affiliates
run an independent radio broadcasting company. Three of the radio
stations (KFRH, KREV and KRCK-FM) are the primary assets.
Silver State Broadcasting, Major Market Radio, LLC and Golden State
Broadcasting, LLC filed voluntary petitions for Chapter 11
protection (Bankr. D. Nev. Lead Case No. 21-14978) on Oct. 19,
2021. In its petition, Silver State listed up to $50 million in
assets and up to $1 million in liabilities.
Judge August B. Landis oversees the cases.
Stephen R. Harris, Esq., at Harris Law Practice, LLC and Wood &
Maines, P.C. serve as the Debtors' bankruptcy counsel and special
counsel, respectively.
The Debtors filed their disclosure statement and proposed plan to
exit Chapter 11 protection on May 2, 2022.
Michael Carmel is appointed as trustee in these Chapter 11 cases.
Garman Turner Gordon LLP is tapped as the trustee's counsel.
SIXTH AVE RETAIL: 735 Sixth Avenue Property Auction Set for May 3
-----------------------------------------------------------------
Christopher E. Chang, Esq., referee, will sell at auction to the
highest bidder at the Portico of the New York County Supreme Court,
60 Centre Street, New York, New York 10007, on May 3, 2023, at 2:15
p.m., premises known as 735 Sixth Avenue, New York, NY 10010,
designated on the County lan map as Block 800, Lot 1301, and more
particularly described in the judgment of foreclosure and sale.
The assets to be sold are subject to all terms and conditions in
the judgment and terms of sale. The approximate amount of judgment
is $47.4 million plus interest and costs.
The case is CGCMT 2013-GC15 Sixth Avenue LLC v. Sixth Ave. Retail
LLC (Supreme Court, New York County).
The referee can be reached at (212) 208-1470.
SOURCEWATER INC: Kicks Off Subchapter V Proceeding
--------------------------------------------------
Sourcewater Inc. filed for chapter 11 protection in the Middle
Southern District of Texas. The Debtor elected on its voluntary
petition to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
The Debtor is a Delaware corporation registered as a foreign entity
in Texas and provides software solutions for geospatial energy and
water intelligence for the upstream oil and gas industry. The
Debtor applies artificial intelligence, machine learning and data
fusion to daily satellite, geolocation, regulatory and other big
data to gather, analyze and visualize upstream energy and water
activity earlier, more accurately and more completely than other
sources.
Competitors infringing on the Debtor's intellectual property have
decimated its business lines. The Debtor's most valuable assets
are its patents and significant causes of action against
competitors.
According to court filings, Sourcewater estimates between $1
million to $10 million in debt owed to 1 to 49 creditors. The
petition states that funds will be available to unsecured
creditors.
About Sourcewater
Sourcewater, Inc., gathers, analyzes, and visualizes surface and
subsurface energy and water activity.
Sourcewater sought protection under Subchapter V of Chapter 11 of
the U.S. Bankruptcy Code (Bankr. S. D. Tex. Case No.23-30960) on
March 17, 2023. In the petition signed by Joshua A. Adler, as
chief executive officer, the Debtor disclosed up to $1 million in
assets and up to $10 million in liabilities.
Thomas A Howley has been appointed as Subchapter V trustee.
Jarrod B. Martin, Esq., at Chamberlain, Hrdlicka, White, Williams,
& Aughtry, P.C., is the Debtor's legal counsel.
STARRY GROUP: U.S. Trustee Says Plan Has a "Death Trap"
-------------------------------------------------------
Andrew R. Vara, United States Trustee for Regions 3 and 9, objects
to the Motion of Starry Group Holdings, Inc., et al. for an order
approving the disclosure statement.
The U.S. Trustee points out that the Court should deny the Motion
unless the Debtors change the chapter 11 plan's third-party
releases from opt-out to opt-in, and modify the solicitation
procedures accordingly. Releases by parties who fail to opt out are
not consensual.
The U.S. Trustee further points out that in addition, the plan has
a "death trap:" holders of general unsecured claims who vote to
reject or opt-out of the third-party releases would receive no
distribution. If the Court requires an opt-in mechanism, then any
death trap should be narrowed to apply only to creditors who vote
to reject. Creditors who do not opt-in (for example, by not
returning a ballot) should not forfeit their distributions.
The U.S. Trustee asserts that included among those upon whom the
Debtors seek to impose a nonconsensual third-party release are
public shareholders who are to receive nothing under the Plan and
are deemed to reject. Because the interest holders will receive no
consideration for any release, they should be eliminated entirely
from the parties who will be giving third-party releases.
According to the U.S. Trustee, these issues should be determined
now, so that the ballots can be revised to reflect an opt-in
mechanism, and so that creditors will know at the outset of
solicitation how opting in to or opting out of the third-party
releases will affect their plan distributions.
About Starry Group
Boston-based Starry Group Holdings, Inc. (NYSE: STRY) is a licensed
fixed wireless technology developer and internet service provider.
It is an early-stage growth company.
Starry Group Holdings and 11 affiliates filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 23-10219) on Feb. 20, 2023. As of Sept. 30, 2022,
Starry Group had $270.6 million in total assets against $309.7
million in total liabilities.
The petitions were signed by William J. Lundregan as authorized
officer.
Judge Karen B. Owens oversees the cases.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Latham
& Watkins, LLP as legal counsel; PJT Partners, LP as investment
banker; FTI Consulting, Inc. as financial advisor; and Kurtzman
Carson Consultants, LLC as claims and noticing agent and
administrative advisor.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtors' Chapter
11 cases. The committee is represented by David R. Hurst, Esq.
STS OPERATING: Moody's Ups CFR & Secured 1st Lien Term Loan to B2
-----------------------------------------------------------------
Moody's Investors Service upgraded its ratings for STS Operating,
Inc., including the corporate family rating to B2 from B3 and the
probability of default rating to B2-PD from B3-PD. Concurrently,
Moody's upgraded the senior secured first lien term loan rating to
B2 from B3 and the senior secured second lien term loan rating to
Caa1 from Caa2. The outlook is stable.
The upgrade of the CFR reflects Moody's expectation that solid
demand growth in most of STS Operating's end markets will support
continued strength in the company's performance through 2023.
Furthermore, the company has demonstrated meaningful resilience in
its operations and the ability to generate free cash flow in recent
years, while executing bolt-on acquisitions and achieving organic
growth. This has resulted in debt-to-EBTDA (Moody's adjusted)
declining to 3.6 times as of December 31, 2022.
The instrument rating upgrades reflect Moody's assumption of about
$100 million in ABL revolver debt paydown in 2023, as projected by
management for 2023. The first lien term loan represents most of
the debt in the capital structure. However, it has a second lien on
the collateral behind the ABL that consists of a first priority
claim on the most liquid assets such as accounts receivable and
inventory. Under Moody's loss-given default methodology, without
the ABL reduction, the first lien term loan would face downward
rating pressure.
The stable outlook reflects Moody's expectations of moderate
organic revenue growth and good free cash flow generation over the
next year, supported by flat to modest growth in the company's
industrial and energy end markets. Moody's anticipates that the
company will maintain adequate liquidity and credit metrics that
support the B2 rating, while continuing to make tuck-in
acquisitions.
Moody's took the following actions on STS Operating, Inc.:
Upgrades:
Issuer: STS Operating, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Backed Senior Secured First Lien Term Loan, Upgraded to B2 (LGD4)
from B3 (LGD3)
Backed Senior Secured Term Loan B, Upgraded to B2 (LGD4) from B3
(LGD3)
Backed Senior Secured Second Lien Term Loan, Upgraded to Caa1
(LGD6) from Caa2 (LGD6)
Outlook Actions:
Issuer: STS Operating, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
STS Operating's B2 CFR reflects its position as a leading
distributor and service provider of fluid power and conveyance
products, with good end market diversification. Moody's expects
growth in demand to moderate but remain positive in 2023, aided by
a relatively flexible cost structure and solid demand in most of
the segments it operates in. Financial leverage as measured by
total debt-to-EBITDA (Moody's adjusted) is expected to remain
around 3.5 times in 2023. The rating is constrained by its modest
scale relative to other rated issuers, revenue exposure to highly
cyclical industrial end markets and high regional concentration.
Additionally, Moody's remains concerned that as general economic
conditions slow, recent improvement in margins could reverse. This
will be partly mitigated by STS Operating's revenue backlog, which
as of December 2022 represented the company's largest such backlog
on record. Moody's does not anticipate any material debt financed
acquisitions or dividends although event risk is high with private
equity ownership.
Moody's expects that STS Operating will maintain adequate
liquidity. Moody's estimates STS Operating will have free cash flow
of over $90 million in 2023 and cash between $20 million and $30
million. Liquidity will be further supported by a $300 million ABL
revolver that is used primarily for working capital. As of
December 31, 2022, availability under the revolver was $175
million, net of letters of credit. The company's senior secured
first lien term loan becomes current in December 2023, although
Moody's expects that it will be refinanced well in advance of that
date. Further, free cash flow will support acquisition funding,
lessening the dependence on revolver borrowings for bolt-on
acquisitions.
From a corporate governance perspective, event risk is high with
private equity ownership. The company has exhibited a track record
of aggressive financial policies, given an active pace of debt
funded acquisitions, which also present significant integration
risks. Additional acquisitions are likely and could weaken the
metrics or liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company completes the refinancing
of its term loan due in 2024, while also maintaining a financial
policy that supports the maintenance of lower leverage and good
liquidity. As such, Moody's anticipates that an upgrade would also
likely require debt-to-EBITDA to be sustained below 4.0x, while
achieving positive organic revenue growth.
The ratings could be downgraded if the company were unable to
refinance its first lien term loan in 2023. Additionally, the
company could experience a downgrade if margins deteriorate,
liquidity weakens and/or debt-to-EBITDA is expected to be above
5.5x. Lower free cash flow than Moody's projects or a high
reliance on the revolver for working capital or other needs could
also pressure the ratings. Lastly, debt funded acquisitions or
shareholder returns that permanently increase debt and leverage
could result in a downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
STS Operating, Inc., based in Addison, Illinois, is a leading
independent distributor of fluid power, fluid conveyance, fluid
process and motion control products and provider of related
solutions. The company has over 3,000 employees and over 209
facilities primarily located in the United States and Canada.
Revenue was about $1.9 billion for year end December 31, 2022. The
company is majority-owned by funds affiliated with Clayton Dubilier
& Rice, LLC, a private equity firm that acquired SunSource in
December 2017.
SUPERIOR EMERGENCY: Case Summary & Six Unsecured Creditors
----------------------------------------------------------
Debtor: Superior Emergency Physicians Harris PLLC
2867 Grand Helios Way
Henderson, NV 89052
Case No.: 23-11189
Business Description: The Debtor provides medical emergency
assistance and handle pre-hospital care
for patients who experience an accident,
fall, cardiac arrest or an intense allergic
reaction to prevent permanent injury or
death.
Chapter 11 Petition Date: March 30, 2023
Court: United States Bankruptcy Court
District of Nevada
Debtor's Counsel: Ryan J. Works, Esq.
MCDONALD CARANO LLP
2300 W. Sahara Ave.
Suite 1200
Las Vegas, NV 89102
Tel: (702) 873-4100
Email: rworks@mcdonaldcarano.com
Total Assets as of Jan. 31, 2023: $297,347
Total Liabilities as of Jan. 31, 2023: $2,030,669
The petition was signed by Richard Harris as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's six unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/IAVUWWY/SUPERIOR_EMERGENCY_PHYSICIANS__nvbke-23-11189__0001.0.pdf?mcid=tGE4TAMA
SUREFUNDING LLC: Creditors to Get Proceeds From Liquidation
-----------------------------------------------------------
SureFunding, LLC filed with the U.S. Bankruptcy Court for the
District of Delaware a Combined Disclosure Statement and Plan of
Liquidation dated March 27, 2023.
Surefunding was marketed to investors as a private debt strategy to
achieve fixed income-like returns while generating current yield.
SureFunding invested or participated in small business loans, asset
purchases, trade receivable purchases and advances, and credit
facilities with multiple funding platform partners.
As of March 25, 2023, the Debtor is in possession of $3,045,094.
Some or all of the cash currently in the Debtor's possession may be
subject to a security interest by the Noteholders. All of the cash
in hand on the Effective Date shall be used to pay Allowed
Administrative Expenses.
A total of 48 proofs of claim, totaling $37,287,015.52 were filed
in the Debtor's Chapter 11 case. This amount excludes Claims which
were scheduled, but for which a proof of claim was not filed. In
addition to the filed proofs of claim, the Debtor estimates that,
as of March 25, 2022, the Debtor is liable for administrative
expenses totaling approximately $2,400,000. The majority of such
administrative expenses are subject to allowance by the Bankruptcy
Court, and such amounts may be further reduced by any retainers
received by professionals.
Furthermore, as of March 25, 2023, proofs of claims asserting
unsecured claims of approximately $3,100,000 of unsecured Claims,
and approximately $805,200 of priority Claims. Further, proofs of
claim were filed by Noteholders asserting secured claims
aggregating approximately $33,400,000, of which the majority are
claims of Breaching Noteholders.
The Debtor anticipates that, other than with respect to Sand
Pharmacy Portfolio (which was already fully liquidated), and Music
Royalty Portfolio (which was sold by the receiver), the Estate
could realize sufficient value in the Net Collection Interest
Proceeds to pay all creditors in full. There are, however,
significant issues with respect to the collectability of Net
Collection Interest Proceeds, particularly any collection to be
received on account of the Debtor's largest investment: the
Tradepay Investments. The Net Collection Interest Proceeds may be
subject to a security interest by the Noteholders.
Inasmuch as the Debtor's Assets have principally been liquidated
and the Plan provides for the distribution of all of the Cash
proceeds of the Debtor's Assets to Holders of Claims that are
Allowed as of the Effective Date in accordance with the Plan, for
purposes of this test, Debtor has analyzed the ability of the
Liquidating Trust and the Noteholder Liquidating Trust to meet
their respective obligations under the Plan. Based on the Debtor's
analysis, the Liquidating Trustee and Noteholder Liquidating Trust
will each have sufficient assets to accomplish its tasks under the
Plan. Therefore, the Debtor believes that the liquidation pursuant
to the Plan will meet the feasibility requirements of the
Bankruptcy Code.
This combined plan and disclosure statement contemplates the
establishment of one or more trusts by and through which the
Trustees will liquidate the Debtors' assets, either through
collection, litigation and collection, or both, for distribution to
holders of Allowed Claims.
Class 2 consists of General Unsecured Trade Claims. Each Holder of
an Allowed General Unsecured Trade Claim shall receive in full and
final satisfaction, settlement, and release of and in exchange for
such Allowed Class 2 Claim a pro rata distribution from (i) the
Unsecured Litigation Distribution Fund, and (ii) any remaining
proceeds from the Net Collection Interest Proceeds once Allowed
Claims in Classes 3, 4, and 5 have been paid in full, including
interest. This Class will receive a distribution of 100% of their
allowed claims.
Class 3 consists of Last-In Noteholder Claims. Each Holder of an
Allowed Last-In Noteholder Claims shall receive in full and final
satisfaction, settlement, and release of and in exchange for such
Allowed Class 3 Claim, a pro rata distribution from the Net
Collection Interest Proceeds. Any distribution on account of an
Allowed Last-in Noteholder Claim shall first be subject to set off
against estate claims based upon the Nevada Disgorgement Order, to
the extent applicable.
Class 4 consists of Non-Breaching Noteholder Claim. After payment
of all Allowed Class 3 Last-In Noteholder Claims in full, each
Holder of an Allowed Non-Breaching Noteholder Claim shall receive
in full and final satisfaction, settlement, and release of and in
exchange for its Allowed Class 4 Claim a pro rata share of the
total of (i) the Net Collection Interest Proceeds, and (ii) the net
proceeds from the Noteholder Breach of Contract Claims.
Class 5 consists of Breaching Noteholder Claims. After payment of
all Allowed Non-Breaching Noteholder Claim Claims and Allowed
Non-Breaching Noteholder Claims in full, including interest, each
Holder of an Allowed Breaching Noteholder Claim shall receive in
full and final satisfaction, settlement, and release of and in
exchange for its Allowed Class 5 Claim its pro rata share of the
Net Collection Interest Proceeds.
Class 6 consists of Equity Interests. On or after the Effective
Date, all Equity Interests shall receive all remaining funds after
all Allowed Claims in Classes 1 through 5, including interest, have
been paid in full.
Cash on hand as of the Effective Date, and estate assets that are
not the subject of a security interest shall be the subject of the
Liquidation Trust which shall remit payment on a pro rata basis to
Holders of Allowed Administrative Expenses, first, and then on
account of Allowed Class 1 Claims secondly, and finally on account
of Allowed Class 2 Claims. In the event that Administrative
Expenses, Allowed Class 1 Claims and Allowed Class 2 Claims are
paid in full including interest, the balance of the proceeds of the
Debtor's unencumbered assets shall become vested in the Noteholder
Liquidating Trust for distribution as set forth therein.
On the Effective Date the Debtor will transfer all of its Assets to
either the Liquidation Trust or Noteholder Liquidating Trust, for
Distribution in accordance herewith. The Confirmation Order shall
be deemed to, pursuant to sections 363 and 1123 of the Bankruptcy
Code, authorize, among other things, all actions as may be
necessary or appropriate to effect any transaction described in,
approved by, contemplated by, or necessary to effectuate the Plan.
Following the Effective Date, the Liquidation Trustee shall take
all actions reasonably necessary to dissolve the Debtor under any
applicable laws.
The Debtor will be select the Unsecured Liquidation Trustee, and
the Liquidation Trustee's duties shall commence as of the Effective
Date. The Liquidation Trustee shall administer the Unsecured
Liquidation Trust and shall serve as a representative of the Estate
under section 1123(b) of the Bankruptcy Code for the purpose of
enforcing Causes of Action belonging to the Estate.
A full-text copy of the Combined Disclosure Statement and Plan
dated March 27, 2023 is available at https://bit.ly/3JTLQN2 from
PacerMonitor.com at no charge.
Counsel to the Debtor:
Carl N. Kunz, III, Esq.
Jeffrey R. Waxman, Esq.
Tara C. Pakrouh, Esq.
Morris James, LLP
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Telephone: (302) 888-6800
Facsimile: (302) 571-1750
Email: ckunz@morrisjames.com
jwaxman@morrisjames.com
tpakrouh@morrisjames.com
About SureFunding LLC
Las Vegas-based SureFunding, LLC was founded by Jason and Justin
Abernathy in 2014 as a private investment vehicle. It opened in
2015 to outside investors, many of which were family, friends and
business acquaintances. Its investments are in short-term,
high-yield assets.
SureFunding sought Chapter 11 protection (Bankr. D. Del. Case No.
20-10953) on April 14, 2020, with $10 million to $50 million in
both assets and liabilities. Judge Laurie Selber Silverstein
oversees the case.
The Debtor tapped Carl N. Kunz, III, Esq., and Jeffrey R. Waxman,
Esq., at Morris James, LLP as bankruptcy attorneys; Carlyon Cica
Chtd. as special litigation counsel; and Ted Gavin of
Gavin/Solmonese, LLC as chief restructuring and liquidation
officer.
Bayard, P.A. represents the ad hoc committee of SureFunding
noteholders.
SURRENDER SOLUTIONS: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------------
Surrender Solutions, Inc. asks the U.S. Bankruptcy Court for the
Central District of California, Santa Ana Division, for authority
to use the cash collateral of its secured creditors, the U.S. Small
Business Administration and Amazon Capital Services, Inc.
The Debtor requires the use of cash collateral to pay the
reasonable expenses it incurs during the ordinary course of its
business.
The SBA has an outstanding balance of approximately $290,291 and
Amazon Capital Services Inc. has an outstanding balance of
approximately $151,817. The SBA is the first position secured
creditor with the UCC Financing Statement filed with the California
Secretary of State on July 20, 2022, Filing No.: U200002536918. The
SBA has a blanket lien against Debtor's assets. Amazon holds the
second position lienholder, with a UCC Financing Statement filed
with the California Secretary of State of December 7, 2021, Filing
No.: U210108367531.
The Debtor does not have any priority unsecured claims, and the
general unsecured creditors include American Express and Kabbage
Funding with an estimated total claim amount of $91,014.
The Debtor is proposing $1,383 monthly adequate protection payments
to the SBA and $1,000 monthly adequate protection payments to
Amazon while it works with its counsel in negotiating plan
treatment stipulations and formulating its reorganization plan.
As additional adequate protection, the Secured Creditors will
receive a replacement lien on all post-petition revenues of the
Debtor to the same extent, priority and validity that each
respective lien attached to the cash collateral. The scope of each
replacement lien is limited to the amount (if any) that cash
collateral diminishes post-petition as a result of the Debtor's
post-petition use of cash collateral.
A copy of the Debtor's motion and budget is available at
https://bit.ly/3TQDvhC from PacerMonitor.com.
The Debtor projects total expenses, on a monthly basis, as
follows:
$65,024 for April 2023;
$65,024 for May 2023;
$65,024 for June 2023;
$67,874 for July 2023;
$77,874 for August 2023; and
$67,874 for September 2023.
About Surrender Solutions, Inc.
Surrender Solutions, Inc. sells a variety of wellness products,
including wellness patches, oils, lotions, ayurvedic/aromatherapy
rollers, candles, lip balms, matches, sleep masks, and other
similar products on Amazon. Debtor buys its products from an
affiliated entity Vici Wellness, Inc., which also filed a chapter
11 bankruptcy as a Subchapter V Debtor on March 24, 2023.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 23-10611) on March 24,
2023. In the petition signed by Kymbirley Brake, chief financial
officer, the Debtor disclosed up to $50,000 in assets and up to $1
million in liabilities.
Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger,
represents the Debtor as legal counsel.
SVB FINANCIAL GROUP: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------------
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of SVB
Financial Group.
The committee members are:
1. Tata Consultancy Services Limited
101 Park Avenue, 26th Floor
New York, NY 10178
Attn: Jason Bartlett, Deputy Head of US Legal
Tel: 646.344.4255
Email: Jason.bartlett@tcs.com
2. U.S. Bank National Association, as Indenture Trustee
60 Livingston Avenue
St. Paul, MN 55107
Attn: Ian R. Bell, Vice President
Tel: 651.466.5860
Email: Ian.bell@usbank.com
3. Wilmington Trust Company, as Indenture Trustee
1100 North Market Street
Wilmington, DE 19890
Attn: Mr. Steven Cimalore
Tel: 302-636-6058
Email: scimalore@wilmingtontrust.com
4. Satagopan Rajagopalan
44324 Navajo Drive
Ashburn, VA 20147
Tel: 703.864.3381
Email: sada.rajagopalan@gmail.com
5. Cousins Fund II Phoenix I, LLC
3344 Peachtree Rd. NE, Ste 1800
Atlanta, GA 30326
Attn: Richard Hickson
Email: rhickson@cousins.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 SVB Financial Group
SVB Financial Group is a financial services company focusing on the
innovation economy, offering financial products and services to
clients across the United States and in key international markets.
Prior to March 10, 2023, SVB Financial Group owned and operated
Silicon Valley Bank, a state-chartered bank. During the week of
March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a
severe "run-on-the-bank." On the morning of March 10, the
California Department of Financial Protection and Innovation seized
SVB and placed it under the receivership of the Federal Deposit
Insurance Corporation. SVB was the nation's 16th largest bank and
the biggest to fail since the 2008 financial meltdown.
On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy
protection (Bankr. S.D.N.Y. Case No. 23-10367). The Hon. Martin
Glenn is the bankruptcy judge.
The Debtor had assets of $19,679,000,000 and liabilities of
$3,675,000,000 as of Dec. 31, 2022.
Centerview Partners LLC is the financial advisor, Sullivan &
Cromwell LLP proposed legal counsel and Alvarez & Marsal proposed
restructuring advisor to SVB Financial Group as
debtor-in-possession. Kroll is the claims agent.
T-ROLL CONSTRUCTION: Seeks Cash Collateral Access
-------------------------------------------------
T-Roll Construction, Inc. asks the U.S. Bankruptcy Court for the
District of Colorado for authority to use cash collateral on an
expedited basis.
The Debtor requires the use of cash collateral to preserve its
assets, maximize the value of the bankruptcy estate and afford the
best opportunity to effectively reorganize up to and through the
confirmation of a plan of reorganization.
The creditors holding validly perfected security interests against
the cash collateral are Commercial Credit Group, Fenix Capital,
Capybara Capital, and Forward Financing. The total estimated
secured claims of these creditors is $1.236 million.
The Debtor has had a long business relationship with Commercial
Credit Group. It appears that creditor has a perfected security
interest in all of the Debtor's assets. CCG's debt of $1.086
million appears to encompass the entire value of all assets, except
perhaps the perfected claims as to specific property. The remaining
perfected creditors are wholly unsecured.
The Debtor will adequately protect against the diminution in the
value of CCG's security interest, as consideration for immediate
and future use of cash collateral, by and through:
a. a replacement lien and security interest against the
Debtor's post-petition assets with the same priority and validity
of CCG's pre-petition security interest to the extent of the
Debtor's post-petition use of the proceeds of the cash collateral;
b. compliance with spending and operational controls
including, but not limited to, maintaining adequate insurance
coverage on personal property and expend cash collateral solely for
ordinary business expenses; and
c. the use of cash collateral in accordance with the Operating
Projections.
A copy of the Debtor's motion and budget is available at
https://bit.ly/3TT8c5K from PacerMonitor.com.
The Debtor projects total expenses, on a monthly basis, as
follows:
$60,499 for April 2023;
$78,239 for May 2023; and
$75,064 for June 2023.
About T-Roll Construction, Inc.
T-Roll Construction, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 23-11154) on March
24, 2023.
In the petition signed by Seth Cvancara, owner and chief executive
officer, the Debtor disclosed up to $10 million in both assets and
liabilities.
Stephen Berken, Esq., at Berken Cloyes, PC, represents the Debtor
as legal counsel.
TENET HEALTHCARE: Fitch Affirms LongTerm IDR at B+, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Tenet Healthcare Corp.'s Long-Term
Issuer Default Rating (IDR) at 'B+'. Fitch has also affirmed the
'BB+'/'RR1' rating of the ABL Revolving Credit Facility, the
'BB-'/'RR3' rating of the senior secured first lien notes, and the
'B+'/'RR4' ratings of the senior secured second lien notes and
senior unsecured notes. The Rating Outlook is Stable.
Tenet's 'B+' IDR reflects its improved competitive position as a
healthcare provider and the durability of its operational and
financial results through the pandemic, with debt leverage
declining meaningfully in recent years, albeit still at high
levels. Fitch expects leverage to remain in the 4.5x-5.5x range
through the rating horizon, as is appropriate for the 'B+' rating,
but notes potential risks to leverage levels should Tenet's capital
allocation decisions prove overly aggressive through large,
debt-funded acquisitions and/or other shareholder-friendly actions
that are detrimental to the credit.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Tenet Healthcare
Corp. LT IDR B+ Affirmed B+
senior
unsecured LT B+ Affirmed RR4 B+
senior secured LT BB+ Affirmed RR1 BB+
senior secured LT BB- Affirmed RR3 BB-
Senior Secured
2nd Lien LT B+ Affirmed RR4 B+
KEY RATING DRIVERS
ASCs Bolster Operating Outlook: Tenet is one of the largest
for-profit operators of general acute care hospitals, contributing
77% of revenue and 57% of EBITDA-NCI and, through ownership of
USPI, one of the largest operators of ambulatory surgery centers
(ASCs), contributing 17% of revenue but 32% of EBITDA-NCI, all as
reported for 2022. ASCs not only diversify Tenet by sites of care
and payor mix, their EBITDA margins are over 2.0x those of its
hospitals.
Fitch sees sustainable, secular ASC tailwinds bolstering Tenet's
volume growth and margin trends over the rating horizon, especially
with their influence on EBITDA likely rising with potential further
hospital divestitures and as ASC growth accelerates with the
maturation of over $2.5 billion of ASC assets acquired from
Surgical Care Development ("SCD") in 2020-21 (and center-level
equity buy-ups ongoing).
Margins Show Stability: Tenet has progressed notably in recent
years in improving hospital operations, rationalizing its acute
care hospital footprint by exiting non-core assets, and in
expanding USPI. With the contribution of its high-margin ASC
business rising, pandemic volumes subsiding, and Tenet executing on
operating efficiencies to manage pandemic-driven labor cost
challenges, EBITDA-NCI declined by only 40 bps to 14.0% in 2022,
outperforming its for-profit peers. This is up materially from
12.5% in 2019 and lower levels prior, despite ASC assets Tenet
acquired at YE 2021 ramping more slowly than expected.
Tenet's hospital operations, like those of its peers, will likely
be pressured in 2023 by pandemic-driven labor inflation and
government rate pressures (including Medicare 340B payment cuts,
expiring COVID add-on payments and a tough Medicaid payment comp).
However, Fitch sees EBITDA-NCI declining only modestly in 2023 (by
about 40 bps), with the pandemic's pernicious effects likely
moderating further and with contributions from its ASCs rising with
organic growth, capital investment and some M&A.
While inflationary pressures on hospital labor costs in particular
are likely to persist well beyond 2023, Fitch expects that Tenet's
improved margins are sustainable and likely still offer some upside
over the rating horizon (about 75 bps above 2022 levels), with
Tenet further focusing on improving employee recruitment and
retention and reducing high-cost temporary staffing use.
Leverage High But Could Trend Lower: Notably improved from years
ago and its 2020 pandemic peak of about 8.0x, Tenet finished 2022
with leverage stable at 5.5x EBITDA-NCI, reflecting its redemption
of $700 million of high-coupon senior secured notes offsetting a 4%
decline in EBITDA-NCI in 2022.
While Tenet bought back about $250 million of its stock in 4Q22 and
Fitch sees Tenet using the $750 million balance of its new
repurchase authorization (its first in many years) in 2023-2024 and
buybacks potentially rising moderately thereafter, Fitch views
these levels as consistent with the 'B+' IDR and Tenet's
much-improved annual FCF, which Fitch sees averaging at $1.0
billion over the ratings horizon.
With leverage still high, Fitch believes that debt reduction is as
much of a priority as share repurchases, and sees potential for up
to a turn of deleveraging over the rating horizon. That said, the
degree to which leverage in fact declines further is likely to
reflect the dynamic industry operating environment and Tenet's
prudence in its capital allocation decisions, most notably its
potential to pursue share repurchases and/or debt-financed ASC
acquisitions on a larger scale than Fitch has forecasted.
Ample Liquidity; Solid Balance Sheet: Tenet completed 2022 with a
solid liquidity position totaling $2.4 billion, including nearly
$0.9 billion of cash on hand and full availability under its $1.5
billion asset-based revolver (due March 2027). Fitch also sees
Tenet benefitting from improving FCF averaging about $1.0 billion
over its forecast through 2026.
While liquidity is thus sufficient to address its nearest debt
maturities, namely $1.35 billion of senior secured notes due July
2024, Tenet has long been proactive in managing its balance sheet.
Fitch expects Tenet is more likely to pursue a refinancing in the
second half of 2023 than take risk on capital market conditions
improving in 2024. Beyond this, Fitch sees Tenet maintaining solid
access to debt capital markets, facilitated by a balance sheet with
well-laddered bond maturities.
Tenet has an ESG Relevance Score of '4' for Exposure to Social
Impact due to societal and regulatory pressures to constrain growth
in healthcare spending in the U.S. This has a negative impact on
the credit profile and is relevant to the rating in conjunction
with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This mean ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature of the way in which they are being
managed by the entity. For more information on Fitch's ESG
Relevance Scores, visit www.fitchratings.com/esg.
DERIVATION SUMMARY
Tenet's 'B+' Long-Term IDR reflects its higher leverage relative to
that of its closest hospital industry peers HCA Healthcare, Inc.
(HCA) and Universal Health Services, Inc. (UHS; BB+/Stable). While
Tenet's operating and FCF margins lag those of HCA and UHS, Tenet
has made progress in closing the gap by reducing costs, divesting
lower-margin hospitals and expanding its higher-margin ASC
business.
Tenet has a stronger operating profile than lower-rated hospital
industry peers Prime Healthcare Services, Inc. (B/Negative) and
Community Health Systems, Inc. (B-/Negative). In contrast to these
peers, but similar to HCA and UHS, Tenet's operations are primarily
located in urban or large suburban markets, which generally have
more favorable organic growth prospects.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Organic revenue growth of 2.0%-3.0% annually, driven primarily by
modest but steady increases in ASC case volume and acute care
hospital pricing and mix;
- EBITDA increasing negligibly in 2023, but further margin
improvement driving growth of 4.0%-5.0% annually thereafter with
the ASC business commanding a rising share of Tenet's EBITDA mix;
- Capex rising gradually within a range of 3.0%-4.0% of revenue and
$0.4-$0.5 billion of acquisitions annually, focused on expanding
the ASC business and offering higher-acuity hospital services;
- Interest payments of about $800 million-$850 million, including
Fitch's assumption that Tenet's near-term debt maturities ($1.35
billion of 4.625s of 2024 and $2.10 billion of 4.875s of 2026) can
be repaid with $200 million in cash on hand and $3.25 billion of
proceeds from issuance of new pari-passu senior secured first lien
notes priced at 7.00%-7.50% (above recent yields on comparable
Tenet bonds).
- Positive FCF rising gradually within a range of 5.0%-6.0% of
revenue and averaging $1.0 billion annually, funding share
repurchases averaging $0.4 billion annually; and
- Leverage sustained within the range of 4.5x-5.5x EBITDA-NCI,
assuming only modest allocation of positive FCF to voluntary debt
repayment.
RATING SENSITIVITIES
Factors that could, individual or collectively, lead to positive
rating action/upgrade:
- Fitch's expectation of leverage sustained below 4.5x EBITDA-NCI;
and
- Fitch's expectation of FCF sustained above 5.0% of revenue.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch's expectation of leverage sustained above 5.5x EBITDA-NCI;
and
- Fitch's expectation of FCF sustained below 2.0% of revenue.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity Profile: As of YE 2022, Tenet's sources of
liquidity included approximately $0.9 billion of cash on hand and
an undrawn, fully-available $1.5 billion ABL revolving credit
facility. Fitch sees FCF rising gradually and exceeding $1.0
billion annually throughout its ratings forecast, with the vast
majority assumed to fund acquisitions and share repurchases at
comparable levels.
Tenet's nearest debt maturities consist of $1.35 billion of senior
secured first lien notes due July 2024. Fitch expects Tenet to
maintain sufficient covenant capacity to refinance this debt by
issuing senior secured first lien notes and expects Tenet is likely
to maintain access to such capital. While liquidity largely
benefits from fixed-rate bonds comprising all funded debt, Fitch's
forecast reflects interest on new senior secured first lien notes
of 7.00%-7.50% (above recent yields on comparable Tenet bonds).
Fitch notes that Tenet's only financial maintenance covenant is a
1.5x fixed-charge coverage requirement that applies only in a
liquidity event to the extent availability under its ABL revolver
declines below $150 million.
Debt Notching Considerations: The 'BB+'/'RR1' and 'BB-'/'RR3'
ratings for Tenet's ABL facility and senior secured first lien
notes, respectively, reflect Fitch's expectation of recoveries for
such debt in the ranges of 91%-100% and 51%-70%, respectively, in a
bankruptcy scenario. In contrast, the 'B+'/ 'RR4' ratings on
Tenet's senior secured second lien notes and senior unsecured notes
reflect Fitch's expectation of a recovery for such debt in the
range of 31%-50%.
Recovery Analysis: Fitch estimates an enterprise value (EV) on a
going-concern basis of $10.4 billion for Tenet after deducting 10%
for administrative claims assumed to accrued in restructuring. The
estimated EV reflects estimated post-reorganization EBITDA-NCI of
$1.6 billion ("GC EBITDA"), reflecting Fitch's view that GC EBITDA
around these levels is likely to trigger a default of restructuring
amid significant refinancing risk from negative FCF and high
leverage.
Fitch's GC EBITDA calculation is based on a scenario in which: (i)
acute care hospital volumes turn negative amid elevated pressure
from adverse secular shifts in the settings in which care is
provided, with declines in acuity mix and pricing further
pressuring revenue and compressing margins amid rising labor costs;
(ii) the ASC business expands at a much slower pace than that
assumed in its ratings case; and (iii) the Conifer business
generates lower revenue growth, further pressuring consolidated
margins.
The $10.4 billion EV further reflects Fitch's use of a 7.25x
EV/EBITDA multiple. This reflects (i) an increasing share of the
valuation attributable to an expanding ASC business (especially as
Fitch expects a default scenario to entail material
underperformance in the acute care hospital business relative to
the ASC business) and (ii) mature ASCs garnering EV multiples well
over 8.0x vs. EV multiples for acute care hospitals in the 6.5x
area, reflecting the latter's lower margins and lower growth
prospects.
In estimating claims, Fitch assumes that Tenet would draw the full
amount available on the $1.5 billion ABL facility in a bankruptcy
scenario, and includes that amount of debt in the claims waterfall
along with $0.2 billion of mortgages. The waterfall analysis also
reflects (i) senior secured claims consisting of $10.4 billion of
senior secured first lien notes and $1.5 billion of senior secured
second lien notes, each collateralized solely by the capital stock
of Tenet's wholly-owned guarantor subsidiaries that own or operate
hospitals, and (ii) $2.9 billion of senior unsecured notes.
Fitch assumes non-guarantor subsidiaries (the Conifer and ASC
businesses) comprise 50% of Tenet's distributable EV (down from 55%
previously, due to recent growth below its previous forecast),
reflecting (i) an increasing share of the EV attributable to an
expanding ASC business garnering a rising share of EBITDA, and (ii)
its view that a default scenario is likely to entail material
underperformance in the hospital business relative to the ASC
business. Fitch thus assumes guarantor subsidiaries comprise the
remaining 50% of the distributable EV (down from 55% previously,
given that noted above).
Fitch assumes that the collateral attributable to the guarantor
subsidiaries is recovered from first by both the ABL and mortgage
claims in full, and thereafter by the senior secured first lien
notes in part due to insufficient remaining value, leaving the
senior secured first lien notes with a deficiency claim of $6.9
billion, and leaving the senior secured second lien notes with no
recovery from the collateral and a full deficiency claim of $1.5
billion.
Fitch assumes these deficiency claims of $8.4 billion and the
senior unsecured note claims of $2.9 billion, together totaling
$11.3 billion in unsecured claims, receive a pro-rata recovery of
the $5.2 billion of distributable EV attributable to the
non-guarantor subsidiaries, with all such unsecured claims thus
recovering in the 31%-50% range. The senior secured first lien
notes, in contrast, recover in the range of 51%-70%, as they
further benefit from a partial recovery from the guarantor
subsidiaries collateral.
Further hospital divestitures and/or continuing ASC investments
could narrow the notching between the senior secured first lien
notes and the senior unsecured notes and/or trigger rating
actions.
ISSUER PROFILE
Tenet Healthcare Corp. is a leading U.S. for-profit health system,
operating 61 acute care and specialty hospitals, 442 ASCs and 24
surgical hospitals across 35 states, and operating Conifer Health
Solutions, which provides revenue cycle management and value-based
care services.
ESG CONSIDERATIONS
Tenet Healthcare Corp. has an ESG Relevance Score of '4' for
Exposure to Social Impacts due to societal and regulatory pressures
to constrain growth in healthcare spending in the U.S., which has a
negative impact on the credit profile, and is relevant to the
rating[s] in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
TGP HOLDINGS III: Moody's Lowers CFR to 'Caa1', Outlook Neg.
------------------------------------------------------------
Moody's Investors Service downgraded TGP Holdings III LLC's
("Traeger") ratings including its Corporate Family Rating to Caa1
from B3, its Probability of Default Rating to Caa1-PD from B3-PD,
and the company's senior secured first lien credit facility rating
to Caa1 from B3. The first lien credit facility consists of a $125
million first lien revolver due 2026, and a $535 million original
principal amount first lien term loan due 2028. Traeger's
Speculative Grade Liquidity Rating (SGL) remains SGL-3, and the
outlook is negative.
"The ratings actions and negative outlook reflects Trager's very
high financial leverage and Moody's expectation that leverage will
remain elevated amid a challenging operating environment over the
next 12 months," stated Moody's AVP-Analyst Oliver Alcantara. "The
grilling season in 2023 will be critical for Traeger as it works to
improve its profitability, but headwinds negatively impacting
consumer demand for outdoor grills will continue in 2023 and will
make it difficult for the company to sustainably and meaningfully
improve earnings and free cash flow generation."
Traeger's debt/EBTIDA leverage (all ratios are Moody's adjusted
unless otherwise specified) increased considerably in fiscal 2022
ending December 31, 2022 at around 15.0x, up from 5.3x as of fiscal
2021. The company reported a year-over-year revenue decline of
16.5% in fiscal 2022, as ongoing inflationary pressures on consumer
spending along with a shift in spending from goods to services such
as travel is negatively impacting retail traffic and consumer
demand for outdoor grills. In addition, elevated inventory level in
the retail channel is negatively impacting replenishment order
activity. The company's decline in profitability was more
pronounced in fiscal 2022 with company-adjusted EBITDA lower by
60.9% versus the prior year, pressure by higher input cost,
particularly inbound freight.
Traeger's expects these demand pressures will persist into 2023 and
anticipates its sales in fiscal 2023 in the $560 - $590 million
range, or a decline of 10%-15%. The company also expects to report
company-adjusted EBITDA of $45 - $55 million in fiscal 2023,
relative to $41.5 million in fiscal 2022. Traeger leaned on
promotions during 4Q-2022, which help reduced channel inventory,
although inventory at retail remains elevated, and the company
implemented costs savings initiatives that it expects will generate
$20 million in annualized cost savings. Traeger also anticipates
its profitability to benefit from a combination of price increases
over the past year and lower input costs, including inbound
freight, which should benefit the gross margin during the second
half of 2023.
Moody's expects the company's financial leverage will improve but
will remain very high at with debt/EBTIDA at around 10x by fiscal
year end 2023. Moody's projects the company will generate positive
free cash flow of over $25 million in fiscal 2023, in part
supported by a reduction of working capital levels. However, given
the very high financial leverage, Traeger will need to sustainably
and meaningfully improve its profitability and cash flows to
sustain debt service and fund business seasonality past fiscal
2023. The weakening macro-economic conditions, including lower
demand, negative housing market trends, and the ongoing shift in
spending from goods to services create uncertainty around the
company's ability to expand EBITDA margin. Execution risks are also
heightened by Traeger's high business and cash flow seasonality.
Consumer demand trends or cost inflation could worsen during
periods of high seasonality increasing economic uncertainty.
Downgrades:
Issuer: TGP Holdings III LLC
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Senior Secured 1st Lien Term Loan, Downgraded to Caa1 (LGD4) from
B3 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
Caa1 (LGD4) from B3 (LGD4)
Outlook Actions:
Issuer: TGP Holdings III LLC
Outlook, Remains Negative
RATINGS RATIONALE
Traeger's Caa1 CFR broadly reflects its very high financial
leverage with debt/EBITDA at around 15.0x as of fiscal year 2022
and Moody's expectations that leverage will remain high at around
10x over the next 12 months. The company's profitability is
materially and negatively impacted by weakening consumer demand for
its grill products. The discretionary nature of outdoor grills and
Traeger's premium priced grills and accessories, exposes the
company to cyclical changes in consumer discretionary spending. The
company has modest relative scale with annual revenue under $800
million, and has a narrow product focus with limited geographic
diversification. The company has high customer concentration, and
its cash flows are highly seasonal, centered around the summer
months.
However, Traeger's rating also reflects its solid market position
within the niche wood pellet grill industry, and its strong brand
image supported by its good track record of product innovation. The
company benefits from the recurring nature of its sizable
consumables segment that is more resilient to cyclical downturns,
and its growing installed base. Traeger also benefits from its
growing direct to consumer and accessories businesses, and
increased distribution in the grocery channel. The company's
Speculative Grade Liquidity Rating of SGL-3 reflects Moody's
expectation of positive free cash flow of at least $25 million over
the next 12 months, supported by a normalization of working capital
and access to a committed receivables factoring facility of up to
$100 million due June 2024, which provides some financial
flexibility to fund seasonal investments in working capital.
Traeger's ESG credit impact score is highly negative (CIS-4),
mainly driven by the highly negative exposure to governance risks
related to its concentrated ownership by financial sponsors, and
its aggressive financial strategy that includes operating with high
leverage. The company is moderately negatively exposed to
environmental and social risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects Traeger's very high financial
leverage and Moody's view that the capital structure would be
unsustainable and default risk could increase if the company is
unable to improve profitability towards historical levels over the
next 12 months. The negative outlook also reflects the uncertainty
around the company's ability to improve its profitability during
the key grilling season period (2Q-3Q 2023) given weaker consumer
demand.
The ratings could be upgraded if the company demonstrates a track
record of improving financial operating results including EBITDA
margin recovering towards historical levels, and generates positive
free cash flows with good levels of reinvestments on an annual
basis, while debt/EBITDA is sustained below 6.5x. A ratings upgrade
would also require the company to maintain at least adequate
liquidity, including lower reliance on revolver borrowings.
Ratings could be downgraded if the company's operating performance
including the EBITDA margin does not improve, or free cash flow
remains negative. The ratings could also be downgraded if liquidity
deteriorates for any reason including limited availability on the
revolver facility, or if the risk of an event of default increases
including a distress exchange.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
Headquartered in Salt Lake City, Utah, TGP Holdings III LLC
("Traeger") is a designer and distributor of wood pellet grills,
grill accessories and related consumables. Traeger reported revenue
of $656 million for the fiscal year period ending December 31,
2022, and its largest market is North America (91.3% of fiscal 2022
sales). Following the July 2021 initial public offering (IPO) of
Traeger, Inc., funds affiliated with AEA Investors, Ontario
Teachers' Pension Plan Board, and Trilantic Capital Partners
maintain a controlling interest of over 60% in the company.
Traeger, Inc. is the indirect parent of TGP Holdings III LLC, and
its common stock is listed under the ticker symbol "COOK".
TIMBERSTONE 4038T: Taps Law Offices of Stuppi & Stuppi as Counsel
-----------------------------------------------------------------
Timberstone 4038T, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of California to employ the Law
Offices of Stuppi & Stuppi as its bankruptcy counsel.
The firm will render these services:
(a) prepare the bankruptcy petition and related statement of
financial affairs and schedule of assets and liabilities;
(b) advise and assist the Debtor with respect to compliance
with the requirements of the Office of the United States Trustee;
(c) advise the Debtor regarding matters of bankruptcy law;
(d) represent the Debtor in any proceedings or hearings in the
Bankruptcy Court or any other Court action in any other court where
its rights under the Bankruptcy Code may be litigated or affected;
(e) conduct examinations of witnesses, claimants, or adverse
parties and to prepare and assist in the preparation of reports,
accounts and pleadings related to the Chapter 11 case;
(f) advise the Debtor concerning the requirements of the
Bankruptcy Code and applicable rules as the same may affect it in
this case;
(g) assist the Debtor in the formulation, negotiation,
confirmation and implementation of a Chapter 11 plan of
reorganization and any sale or auction of the assets; and
(h) perform such other actions and services as the Debtor may
require in connection with the Chapter 11 case.
Sarah Stuppi, Esq., the attorney responsible for this case, will be
paid at an hourly rate of $450.
The firm was paid the net sum of $6,328, which includes the $1,738
filing fee, prior to the petition date and currently has the sum of
$15,410 on hand in its client trust account.
Ms. Stuppi disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Sarah M. Stuppi, Esq.
Law Offices of Stuppi & Stuppi
1630 North Main Street, Suite 332
Walnut Creek, CA 94596
Telephone: (415) 786-4365
Facsimile: (925) 287-8113
Email: Sarah@stuppilaw.com
About Timberstone 4038T
Timberstone 4038T LLC is a Single Asset Real Estate (as defined in
11 U.S.C. Section 101(51B)).
Timberstone 4038T LLC filed a petition for relief under Subchapter
V of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Calif. Case No.
23-30109) on February 28, 2023. In the petition filed by Marshall
Rothman, managing member, the Debtor reported between $1 million
and $10 million in both assets and liabilities.
Judge Hannah L. Blumenstiel oversees the case.
The Law Offices of Stuppi & Stuppi serves as the Debtor's
bankruptcy counsel.
TKEES INC: Flip Flops Maker Hits Chapter 11 Bankruptcy
------------------------------------------------------
TKEES Inc. filed for chapter 11 protection in the Southern District
of Florida.
The Debtor is Florida corporation whose principal place of business
is in Toronto, Canada. The Debtor was co-founded in 2009 by a
husband-and-wife duo, Carly and Jesse Burnett, and creates and
sells flip flops and other footwear.
As of the Petition Date, the Debtor believes that four creditors
assert secured claims against the estate: Hilldun Corporation
($300,000 claim), Shopify Capital, Inc. ($290,536 claim), Windsor
Private Capital ($5,832,118 claim), and Power One Capital Corp.
($369,221 claim).
According to court filings, TKEES Inc. estimates between $1 million
to $10 million in debt owed to 1 to 49 creditors. The petition
states that funds will be available to unsecured creditors.
A telephonic meeting of creditors under 11 U.S.C. Section 341(a) is
slated for April 14, 2023 at 1:00 p.m.
About TKEES, Inc.
TKEES, Inc. is a manufacturer and seller of sandals and flip flops
for women. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-12126) on March
20, 2023. In the petition signed by Jesse Burnett, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Scott M. Grossman oversees the case.
Bradley S. Shraiberg, Esq., at Shaiberg Page PA, is the Debtor's
legal counsel.
TKEES INC: Seeks to Hire Shraiberg Page as Bankruptcy Counsel
-------------------------------------------------------------
TKEES, Inc. seeks approval from the U.S. Bankruptcy Court for the
Southern District of Florida to employ Shraiberg Page PA as its
bankruptcy counsel.
The firm will render these services:
(a) advise the Debtor generally regarding matters of
bankruptcy law in connection with this case;
(b) advise the Debtor of the requirements of the Bankruptcy
Code, the Federal Rules of Bankruptcy Procedure, applicable
bankruptcy rules;
(c) represent the Debtor in all proceedings before this
court;
(d) prepare and review legal documents arising in this case;
(e) negotiate with creditors, prepare, and seek confirmation
of a plan of reorganization and related documents, and assist the
Debtor with implementation of any plan; and
(f) perform all other legal services for the Debtor, which may
be necessary herein.
The hourly rates of the firm's counsel and staff are as follows:
Bradley Shraiberg, Esq. $600
Other Attorneys $350 - $600
Legal Assistants $275
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the firm received a retainer of $45,000
from the Debtor.
Bradley Shraiberg, Esq., a partner at Shraiberg Page, disclosed in
a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Bradley Shraiberg, Esq.
Patrick Dorsey, Esq.
Shraiberg Page PA
2385 NW Executive Center Drive, #300
Boca Raton, FL 33431
Telephone: (561) 443-0800
Facsimile: (561) 998-0047
Email: bss@slp.law
pdorsey@slp.law
About TKEES Inc.
TKEES, Inc. is a manufacturer and seller of sandals and flip flops
for women. TKEES, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-12126) on March
20, 2023. In the petition signed by Jesse Burnett, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Scott M. Grossman oversees the case.
Bradley S. Shraiberg, Esq., at Shaiberg Page PA, represents the
Debtor as legal counsel.
TPC GROUP: Appoints New Executives After Emerging from Bankruptcy
-----------------------------------------------------------------
Chandler France of Houston Business Journal reports that TPC
promoted Dan Valenzuela to vice president and CFO, replacing Bart
de Jong, who will retire on April 30, 2023 after serving as CFO
since 2017. Valenzuela most recently served as vice president of
financial planning and analysis and corporate development with TPC.
In his new role, Valenzuela will oversee finance, accounting,
treasury, investor relations and internal audit functions for the
company
TPC also promoted Patrick Hurt to vice president and general
counsel. Hurt, who had served as deputy general counsel for the
company since 2014, will oversee legal, compliance and corporate
governance. Hurt replaces Marilyn Moore Basso, who has served as
senior vice president and general counsel since 2014 and is leaving
the company on March 31 to move to Argentina.
Additionally, Adrian Jacobsen has been appointed vice president of
corporate development, fuels and strategic raw materials, and Dona
Burke was named vice president of supply chains. Jacobsen and Burke
both held various roles with TPC prior to their recent
appointments. All four of the newly promoted executives will serve
on TPC’s senior leadership team.
The appointments follow TPC's emergence from Chapter 11 bankruptcy
in December 2022. At the time, the company announced a
reorganization plan to eliminate more than $950 million of its $1.3
billion in secured funded debt and other litigation liabilities,
which stemmed from an explosion at the company’s chemical
facility in Port Neches, Texas, in November 2019.
The explosion didn't result in any deaths, but three plant workers
were taken to the hospital for injuries and subsequently released,
and five residents were treated for minor injuries. Following the
explosion, TPC cut about 100 jobs at the plant in February 2020.
The company said at the time it planned to stop chemical production
at the site for three to five years, though the plant would still
serve as a terminal and distribution point.
About TPC Group
TPC Group, headquartered in Houston, is a producer of value-added
products derived from petrochemical raw materials such as C4
hydrocarbons, and provider of critical infrastructure and logistics
services along the Gulf Coast. The Company sells its products into
a wide range of performance, specialty and intermediate markets,
including synthetic rubber, fuels, lubricant additives, plastics
and surfactants. With an operating history of more than 75 years,
TPC Group has a manufacturing facility in the industrial corridor
adjacent to the Houston Ship Channel and operates product terminals
in Port Neches, Texas and Lake Charles, Louisiana.
TPC Group Inc. and its subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 22-10493) on June 1, 2022. TPC Group
estimated assets and debt of $1 billion to $10 billion to $10
billion.
The Hon. Craig T. Goldblatt is the case judge.
Baker Botts L.L.P. is the Debtors' counsel; Morris, Nichols, Arshtn
& Tunnell LLP is the co-counsel; Moelis & Company LLC is the
investment banker; and FTI Consulting is the financial advisor.
Simpson Thacher & Bartlett LLP is the special finance counsel.
Kroll Restructuring Administration is the claims agent. Eclipse
Business Capital LLC is advised by Goldberg Kohn Ltd.
Paul Hastings LLP, and Stroock & Stroock & Lavan LLP are serving as
counsel to the Ad Hoc Noteholder Group that supports the Debtors'
restructuring. Evercore Group L.L.C., is the Group's financial
advisor. Young Conaway Stargatt & Taylor, LLP is local counsel to
the Ad Hoc Noteholder Group. The Supporting Noteholders are funds
controlled by FIG LLC and Fortress Capital Finance III(A) LLC,
Monarch Alternative Capital LP., PGIM Inc., Redwood Capital
Management LLC, and Strategic Value Partners LLC.
Pachulski Stang Ziehl & Jones LLP, Proskauer Rose LLP, and Selendy
Gay Elsberg PLLC are serving as counsel to an Ad Hoc Group of
Non-Consenting Noteholders, led by Bayside Capital, Inc., and
Cerberus Capital Management, L.P. Milbank LLP previously served as
the group's counsel but was later replaced by Pachulski and SGE.
* * *
TPC Group Inc. emerged from bankruptcy protection on Dec. 16, 2022.
The company's plan of reorganization was confirmed by the Court on
Dec. 1, 2022. The reorganization plan eliminates more than $950
million of TPC's $1.3 billion in secured funded debt and other
litigation liabilities stemming from an explosion at the company's
chemical facility in Port Neches, Texas, in November 2019, TPC
Group said Dec. 16, 2022. TPC Group also said the reorganization
plan gives the petrochemical company new capital as it emerges from
restructuring, including $350 million in exit notes and $165
million through an equity rights offering.
UKG INC: Moody's Affirms 'B2' CFR, Outlook Remains Negative
-----------------------------------------------------------
Moody's Investors Service affirmed UKG Inc.'s existing ratings,
including its B2 Corporate Family Rating and the B1 and Caa1
ratings for its 1st lien and 2nd lien credit facilities,
respectively. The ratings outlook is negative.
Affirmations:
Issuer: UKG Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Backed Senior Secured First Lien Bank Credit
Facility, Affirmed B1 (LGD3)
Backed Senior Secured Second Lien Bank Credit
Facility, Affirmed Caa1 (LGD6)
Outlook Actions:
Issuer: UKG Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The affirmation of the B2 CFR reflects UKG's strong business
profile resulting from its large operating scale, high proportion
of recurring revenues, strong growth prospects, and Moody's
expectations for growing profitability. The rating remains
constrained by UKG's very high financial leverage and only adequate
liquidity. The negative ratings outlook reflects Moody's
expectation for UKG financial profile to remain weak over the next
12 months amid an uncertain macro environment. Although UKG
reported strong subscription bookings growth in the quarter ended
December 2022 (F1Q '23), growing macroeconomic uncertainties and
slowing economic growth in the US increase the risk of slowing
demand for new software sales in the near term. At the same time,
Moody's recognizes that UKG's large scale provides it the
flexibility to adjust its operating expenses and discretionary
spending if demand were to weaken.
UKG is a large provider of Human Capital Management (HCM) software
with strong market positions in the Workforce Management (WFM),
Human Resources software, and Payroll processing categories of the
HCM software market. The HCM software market is large and growing
with the increasing adoption of technology to drive efficiencies
and automation. If economic conditions remain favorable, Moody's
expects UKG's organic revenue growth in mid-teens percentages over
the next 2 to 3 years, and its EBITDA growth to outpace its revenue
growth over this period from operating leverage. The company's $3.5
billion of annualized recurring software revenues provide high
revenue visibility over the next 12 to 18 months.
Moody's expects UKG's strong growth in operating EBITDA (as
reported by the company) to be largely offset by the large increase
in interest expense, and free cash flow to be pressured by the
expenses related to the integration of back office operations of
Kronos and Ultimate Software and other business transformation
initiatives. Moody's expects UKG's free cash flow to fall short of
covering potential outlays for employee stock compensation
liability and mandatory term loan amortization in FY '23. The
impact on UKG's business from the cybersecurity incident in
December 2021 has largely waned, although it eroded profitability
and liquidity in FY '22. The company's strong bookings growth from
new customers and conversions of its legacy software customers to
higher-value subscription services, and its high revenue retention
rates demonstrate the strength of its product offerings. If debt
does not increase, Moody's expects free cash flow (after RSU
settlements) to increase to mid-single digit percentages of total
adjusted debt in FY '24, and total debt to EBITDA (Moody's
adjusted, and after adding back stock-based compensation expense)
to decline from about 9.5x at F1Q '23, to below 6x by the end of FY
'24. UKG's large stock-based compensation liability weighs on its
credit profile. The company has discretion in redeeming the
restricted stock awards but stock-based compensation is a key
component of employee incentives in a highly competitive market.
Moody's views the company's liquidity as adequate, primarily
consisting of $95 million of cash balances and $365 million of
availability under its revolving credit facility. Moody's notes
that UKG invests in marketable securities a portion of customer
funds generated from its payroll and tax withholding services. It
could face losses on investments, which if realized, could
incrementally pressure its liquidity.
ESG considerations have a highly negative impact (CIS-4) on UKG's
credit profile. The company has neutral-to-low exposure to social
and environment risks but its high financial risk tolerance under
the ownership of financial sponsors and history of debt-funded
dividends and acquisitions constrain its credit profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given UKG's very high leverage, a rating upgrade is not expected in
the intermediate term. Over time, the ratings could be upgraded if
the company commits to and demonstrates a track record of more
conservative financial policies and sustains free cash flow in the
high single digit percentages of adjusted debt. Conversely, the
ratings could be downgraded if organic revenue growth decelerates
to below high single digits, liquidity weakens, or Moody's expects
free cash flow to remain below 2% of total adjusted debt as a
result of an increase in debt, execution challenges or elevated
investments.
UKG was formerly known as The Ultimate Software Group, Inc. The
company is a leading provider of workforce management, human
resources and payroll software applications. Affiliates of Hellman
& Friedman have controlling equity interest in the company. Funds
affiliated with Blackstone, GIC, Canada Pension Plan Investment
Board, and JMI Equity own minority interests in UKG.
The principal methodology used in these ratings was Software
published in June 2022.
UNITED FURNITURE: Trustee Taps NC Eminent Domain as Special Counsel
-------------------------------------------------------------------
Derek Henderson, the trustee appointed in the Chapter 11 case of
United Furniture Industries, Inc., seeks approval from the U.S.
Bankruptcy Court for the Northern District of Mississippi to employ
NC Eminent Domain Law Firm as special counsel.
The trustee needs a special counsel to represent the Debtor in an
eminent domain proceeding filed in the General Court of Justice of
Forsyth County, North Carolina styled as Department of
Transportation v. United Furniture Industries NC, LLC, et al., Case
No. 22-cvs-1521.
The firm will be paid a fee of 33.3 percent of recovery plus
expenses. Fees and expenses shall not exceed 50 percent of the
recovery in excess of original offer.
Jason Campbell, Esq., an attorney at NC Eminent Domain Law Firm,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jason T. Campbell, Esq.
NC Eminent Domain Law Firm
555 South Mangum Street, Suite 800
Durham, NC 27701
Telephone: (877) 393-4990
Facsimile: (800) 716-7881
About United Furniture Industries
United Furniture Industries, Inc. manufactures and sells
upholstery. It offers bonded leather and upholstery fabric
recliners, reclining sofas and loveseats, sectionals, and sofa
sleepers, as well as stationary sofas, loveseats, chairs, and
ottomans.
United Furniture Industries was subject to an involuntary Chapter 7
bankruptcy petition (Bankr. N.D. Miss. Case No. 22-13422) filed on
Dec. 30, 2022. The petition was signed by alleged creditors Wells
Fargo Bank, National Association, Security Associates of
Mississippi Alabama LLC, and V & B International, Inc. On Jan. 18,
2023, the court entered the order for relief, thereby, converting
the case to one under Chapter 11.
On Jan. 31, 2023, eight affiliates of United Furniture Industries
filed for Chapter 11 protection in the U.S. Bankruptcy Court for
the Northern District of Mississippi. The affiliates are LS
Logistics, LLC, Furniture Wood, Inc., UFI Transportation, LLC,
United Wood Products, Inc., Associated Bunk Bed Company, FW
Acquisition, LLC, UFI Royal Development, LLC, and UFI Exporter,
Inc. Their Chapter 11 cases are jointly administered under Case No.
22-13422.
Judge Selene D. Maddox oversees the cases.
Wells Fargo is represented by R. Spencer Clift, III, Esq., while
Security Associates is represented by Andrew C. Allen, Esq., at The
Law Offices of Andrew C. Allen.
Derek Henderson is the trustee appointed in the Debtors' Chapter 11
cases. The trustee hired McCraney, Montagnet, Quin, Noble, PLLC as
bankruptcy counsel; King & Spencer, PLLC and NC Eminent Domain Law
Firm as special counsel; Harper Rains Knight & Company as financial
advisor; and B. Riley Real Estate, LLC as real estate advisor.
USA ROOFING: Disposable Income to Fund Plan
-------------------------------------------
USA Roofing Partners, LLC filed with the U.S. Bankruptcy Court for
the Southern District of Texas a Disclosure Statement describing
Plan of Reorganization dated March 27, 2023.
USA Roofing is a company that provides materials and installs roofs
principally on commercial buildings. USA Roofing has been in
existence since 2020.
The Debtor entered into an agreement styled as a factoring
agreement with Ruth Lake Investment Group, Inc. on or about
December 6, 2021. In early 2022, the Debtor was approached by Triad
Retail Construction, Inc. for assistance in obtaining roofing
materials for projects in Michigan. Unfortunately, even though the
Debtor obtained the materials on a timely basis, Triad failed to
pay.
By October of 2022, Ruth Lake filed a lawsuit in the district court
in Montgomery County, Texas, for unpaid amounts. After the
bankruptcy was filed, Ruth Lake severed the Debtor from the state
court lawsuit. Ruth Lake has proceeded in the state court lawsuit
against Kevin Jones and Culley Howard. The lawsuit filing by Ruth
Lake in state court was the basis for the filing of this case.
The Debtor receives income from the work provided to install roofs,
generally on commercial projects. The Debtor has no other regular
source of income. The income from the installation of roofs should
be more than sufficient to fund the reorganization plan.
The Debtor intends to reorganize by a plan of reorganization to pay
its disposable income to creditors over a period of 5 years. The
Debtor has been able to increase its business each year of
operations and believes that it will be able to increase its
business to fully pay administrative expenses and the payments
proposed under this plan. The Debtor has had good relationships
with its clients and vendors.
Class 1 consists of the allowed secured claim of Ruth Lake
Investments Group, LLC. The secured claim amount is listed on the
claim as $644,684. The unsecured amount of $230,284.70 will be paid
as an unsecured claim in Class 2. USA Roofing will pay the secured
amount of the allowed claim in Class 1 of $644,684 as set forth in
its claim at 7% interest per annum over 5 years. The claim was
filed in the amount of $874,968.79. The remaining amount of
$230,284.79 will be treated as an unsecured claim and paid in Class
2. The Debtor may object to the claim.
Class 2 consists of the non-priority unsecured claims allowed under
§ 502 of the Code. The Debtor believes the aggregate amount of
Class 2 claims is approximately $1,070,300. USA Roofing will pay
the allowed claims in Class 2 as set forth in the projections. The
claims in this class may be up to the amount of approximately
$1,070,300. The Debtor may object to claims in Class 2.
Class 3 consists of the equity security holders of the Debtor. The
equity security holders will retain their interest in the Debtor.
The Debtor has provided with its plan a projection of disposable
income. The plan is based on the projected disposable income.
A full-text copy of the Disclosure Statement dated March 27, 2023
is available at https://bit.ly/42V0D2r from PacerMonitor.com at no
charge.
Attorney for the Debtor:
Reese W. Baker
Baker & Associates
950 Echo Lane, Ste 300
Houston, TX 77024
Phone: (713) 979-2279
Email: courtdocs@bakerassociates.net
About USA Roofing Partners
USA Roofing Partners, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 22-33691) on Dec.
9, 2022, with up to $500,000 in assets and up to $10 million in
liabilities. Kevin Jones, a partner at USA Roofing Partners, signed
the petition.
Judge Jeffrey P. Norman oversees the case.
The Debtor tapped Reese W. Baker, Esq., at Baker & Associates, as
legal counsel and Norris & Associates as accountant.
VEREGY CONSOLIDATED: Blackstone Fund Marks $20.8M Loan at 18% Off
-----------------------------------------------------------------
Blackstone Secured Lending Fund has marked its $20,886,000 loan
extended to Veregy Consolidated, Inc. to market at $17,126,000 or
82% of the outstanding amount, as of December 31, 2022, according
to a disclosure contained in Blackstone Secured Lending's Form 10-Q
for the quarterly period ended December 31, 2022, filed with the
Securities and Exchange Commission.
Blackstone Secured Lending is a participant in a First Lien Debt to
Veregy Consolidated, Inc. The loan accrues interest at a rate of
10.41% (L +6%) per annum. The loan matures on November 2, 2027.
Blackstone Secured Lending is a Delaware statutory trust formed on
March 26, 2018, and structured as an externally managed,
non-diversified closed-end management investment company. On
October 26, 2018, the Company elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, the Company elected to be treated for U.S.
federal income tax purposes, and intends to qualify annually, as a
regulated investment company, under Subchapter M of the Internal
Revenue Code of 1986, as amended. The Company is externally managed
by Blackstone Credit BDC Advisors LLC.
Headquartered in Phoenix, Arizona, Veregy provides energy
efficiency design and implementation services primarily for
municipalities, universities, K-12 schools, and hospitals. The
Company is privately held by Court Square Capital Partners.
WALKER EDISON: Owl Rock III Marks $25.5M Loan at 49% Off
--------------------------------------------------------
Owl Rock Capital Corporation III has marked its $25,561,000 loan
extended to Walker Edison Furniture Company LLC to market at
$13,036,000 or 51% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Owl Rock III's Form
10-K for the fiscal year ended December 31, 2022, filed with the
Securities and Exchange Commission.
Owl Rock Capital III is a participant in a First lien senior
secured loan to Walker Edison Furniture Company LLC. The loan has a
reference rate and spread of L+8.75% (incl. 3% Payment In Kind) per
annum. The loan matures on March 31, 2027. The loan was on
non-accrual status as of December 31, 2022.
Owl Rock Capital III is a Maryland corporation formed on January
27, 2020. The Company was formed primarily to originate and make
loans to, and make debt and equity investments in middle-market
companies based primarily in the United States. The Company invests
in senior secured or unsecured loans, subordinated loans or
mezzanine loans and, to a lesser extent, equity and equity-related
securities including warrants, preferred stock and similar forms of
senior equity, which may or may not be convertible into a portfolio
company's common equity.
Walker Edison Furniture Company LLC sells furniture online. The
Company offers coffee desks, side tables, bunk and metal beds, home
decor, seating, and other related products.
WBS CAPITAL: Owner of $35-Mil. NY Property Seeks Chapter 11
-----------------------------------------------------------
WBS Capital Inc. filed for chapter 11 protection in the Eastern
District of New York.
The Debtor says its property at 1405 - 1447 Saint Paul Street,
Rochester, NY 14621 is valued at $35 million. Stronghill Capital,
LLC, is owed $10 million on a mortgage of the property.
According to court filings, WBS Capital has $11,259,653 in debt
owed to 1 to 49 creditors. The petition states that funds will be
available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
April 24, 2023, at 11:00 a.m.
About WBS Capital Inc.
WBS Capital Inc. is the fee simple owner of a property located at
1405 - 1447 Saint Paul Street, Rochester, NY 14621 valued at $35
million.
WBS Capital Inc. filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-40939) on March
22, 2023. In the petition filed by Xiaomei Lu, as president, the
Debtor reported total assets of $37,002,023 and total liabilities
of $11,259,653.
The Debtor is represented by:
Scott Markowitz, Esq.
Tarter Krinsky & Drogin LLP
13620 38th Avenue
New York, NY 11354
Tel: (212) 216-8000
Email: smarkowitz@tarterkrinsky.com
WESTBANK HOLDINGS: Sole Member Submits Chapter 11 Plan
------------------------------------------------------
Joshua L. Bruno, sole member of debtor Westbank Holdings, LLC,
proposes a Plan for the Reorganization of the Debtor and the
treatment and resolution of all Claims and Equity Interests in and
to the Debtor pursuant to Section 1121(a) of title 11 of the United
States Code.
The Plan provides for payments in the following priority:
(1) Payment in full of Allowed Administrative Claims
(2) Payment in full of Allowed Priority Tax Claims
(3) Payment of the Plan Agent Cash (aggregate of $100,000) to the
Plan Agent
(4) Holders or Allowed Tenant Deposit Claims shall retain their
legal, equitable, and contractual rights to which they may be
entitled under state law
(5) Payment in full of the Fannie Mae Secured Claim
(6) Payment in full of the SBA Secured Claim
(7) Payment of 90% to Holders of Allowed General Unsecured
Convenience Class Claims
(8) Payment of Pro Rata Share of a minimum of $1,000,000 to
Holders of Allowed General Unsecured Trade Claims, Allowed Utility
Provider Claims, and Allowed General Unsecured Claims
(9) Payment of the Proceeds of the Retained Avoidance Actions to
Holders of General Unsecured Trade Claims, Utility Provider Claims
and Allowed General Unsecured Claims, Pro Rata Share.
Under the Plan, Class 4 General Unsecured Convenience Class,
holders of General Unsecured Claims of $4,500 or less will be a
member of this class. Allowed Class 4 Claims will be paid 90% of
the Claim on the Effective Date in full satisfaction of its claim.
Holders of General Unsecured Claims with claims in excess of $4,500
can elect to reduce their claim to $4,500 and receive 90% of the
claim on the Effective Date in full satisfaction of its claim.
Class 4 is impaired.
Class 5 General Unsecured Trade Claims will each receive a pro rata
share (shared along with Holders of Class 6 and 7 Claims) of
$1,000,000, paid quarterly via 11 equal installments in the amount
of $65,000, and one (1) final balloon installment due in the amount
of the remaining balance of $285,000. Quarterly payments will
commence on the 15th day of the second calendar quarter after the
Effective Date, with payments continuing the 15th day of each
successive calendar quarter. Holders of Allowed Class 5 Claims
shall also receive proceeds of Retained Avoidance Actions, Pro Rata
Share with Holders of Allowed Class 6 and 7 Claims. If Class 5
votes to accept the Plan, to the extent that Cash Flow for any
given calendar year (2023 - 2027) exceeds $100,000, 25% of the
excess will be paid to Holders of Allowed Class 5 Claims, to be
shared Pro Rata with Holders of Class 6 and 7 Claims to the extent
such Class(es) vote to accept the Plan. Cash Flow is defined as
GAAP net income less estimated required tax distributions to owners
and principal payments on all debt obligations of the Reorganized
Debtor. Class 5 is impaired.
Class 7(A) General Unsecured Claims will each receive such holder's
Pro Rata share (shared along with Holders of Class 5 and 6 Claims)
of $1,000,000, paid over a period of three years without interest.
Quarterly payments will commence on the 15th day of the second
calendar quarter after the Effective Date, with payments continuing
the fifteenth (15th) day of each successive calendar quarter.
Holders of Allowed Class 7(A) Claims shall also receive proceeds of
Retained Avoidance Actions, Pro Rata Share with Holders of Allowed
Class 5 and 6 Claims. If Class 7(A) votes to accept the Plan, to
the extent that Cash Flow for any given calendar year (2023 - 2027)
exceeds $100,000, 25% of the excess will be paid to Holders of
Allowed Class 7(A) Claims, to be shared Pro Rata with Holders of
Class 5 and 6 Claims to the extent such Class(es) vote to accept
the Plan. lass 7(A) is impaired.
Class 7(B) Tenant Unsecured Claims consists of Allowed Unsecured
Claims held by current or former tenants at any of the multifamily
housing properties owned by the Debtors. The allowance of Claims
held by tenants will be determined based on whether the tenant
elects the $1,250 payment option (the "$1,250 Option") or elects to
opt-out of the $1,250payment option and to have its claim
administered in the pool for Pro Rata Share with Allowed Class 5
and 6 Claims (the "Opt-Out Option"):
1. $1,250 Option. If a tenant timely filed a proof of claim, and
such tenant does not submit a Subclass 7B Opt-Out Form (sample of
which is attached as Exhibit B to this Plan), such tenant's claim
shall be allowed in the amount listed in the Debtor's Schedule or
the tenant's proof of claim. Each such holder of a Subclass 7B
Claim who does not submit a Subclass 7B Opt-Out Form shall receive
$1,250 in full satisfaction of such Claim. Distributions shall be
made within 30 days of the Effective Date.
2. If a tenant completes and timely submits a Subclass 7B
Opt-Out Form, the tenant's claim shall retain its rights to seek
allowance of its Claim in full, all objections preserved, and such
Claim shall be included in Subclass 7(A).
Class 7(B) is impaired.
Counsel to the Debtors:
THE CONGENI LAW FIRM, LLC
650 Poydras Street, Suite 2750
New Orleans, LA 70130
E-mail: leo@congenilawfirm.com
A copy of the Plan for the Reorganization dated March 22, 2023, is
available at https://bit.ly/3FRcZyC from PacerMonitor.com.
About Westbank Holdings
Westbank Holdings, LLC, is a New Orleans, La.-based company
primarily engaged in renting and leasing real estate properties.
Westbank Holdings and its affiliates filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La.
Lead Case No. 22-10082) on Jan. 27, 2022. In its petition, Westbank
Holdings listed as much as $50 million in both assets and
liabilities. Joshua Bruno, manager, signed the petition.
Judge Meredith S. Grabill oversees the cases.
Frederick L. Bunol, Esq., at The Derbes Law Firm, LLC, Alvendia
Kelly & Demarest, LLC and G Rowland CPA & Associates, serve as the
Debtors' bankruptcy counsel, special counsel and accountant,
respectively. Richard W. Cryar, a partner at F M Reed Company, is
the Debtors' chief restructuring officer.
Dwayne M. Murray, the Chapter 11 trustee appointed in the Debtors'
cases, tapped Fishman Haygood, LLP as legal counsel and Patrick J.
Gros, CPA, as accountant.
WICHITA HOOPS: Seeks Cash Collateral Access
-------------------------------------------
Wichita Hoops, LLC asks the U.S. Bankruptcy Court for the District
of Kansas for authority to use cash collateral and for payment of
adequate protection to its senior secured creditor, the United
States Small Business Administration.
The Debtor requires the use of cash collateral to continue paying
its ongoing expenses, vendors, leases, labor, utilities,
maintenance and repairs, professionals, and other ordinary
operational costs.
The SBA holds a properly perfected first-priority security interest
in the cash collateral, as well as all other equipment, furniture,
and personal property of the Debtor. There are no other creditors
with a perfected security interest in the Debtor's assets. As of
the Petition Date, the SBA's claim exceeded $410,000. The Debtor
believes that the current fair market value of its assets securing
the SBA's claim, inclusive of the personal property temporarily
affixed to the Debtor's leased premises (basketball floor, hoops,
volleyball equipment, scoreboards, etc.) is not less than $500,000.
The SBA's claim is over secured and there is likely an equity
cushion to serve as adequate protection.
As adequate protection, the Debtor will grant a replacement lien
and post-petition lien on post-petition assets to the SBA. Such
replacement lien and continuing lien will be in proportion to and
to the extent that the cash collateral is used by the Debtor on a
post-petition basis, and in the same order and priority as such
liens existed on the Petition Date. The SBA will not receive an
improvement in position as a result of the liens granted
thereunder.
The Debtor seeks interim authority to use cash collateral only
until a final hearing can be held. Thereafter, and subject to the
Debtor's right to request additional cash collateral authority for
further periods on proper notice, the Debtor seeks authority to use
Cash Collateral through September 30, 2023, at 11:59 p.m.
These events constitute an "Event of Default":
1) The entry of an order by the Court granting relief from or
modifying the automatic stay of 11 U.S.C. section 362 (i) to allow
any creditor to execute upon or enforce a lien on or security
interest in any of the Collateral;
2) Dismissal of the case or conversion of the case to Chapter
7 case;
3) The sale after the Petition Date of any portion of any of
the Debtor's assets outside the ordinary course of dealing and
without approval by the Court under 11 U.S.C. section 363;
4) The failure by the Debtor to perform, after notice from the
SBA, in any respect, any of the material terms, provisions,
conditions, covenants, or obligations under the Order granting the
Motion or under the requirements of the underlying loan documents
between the Debtor and the SBA, to the extent such requirements
materially affect the Collateral and are not otherwise inconsistent
with the terms of the Order or bankruptcy law.
The "Carve Out" means the following amounts:
1) Fees payable to the Subchapter V trustee, in an amount not
to exceed $5,000;
2) The allowed professional fees and disbursements for the
Debtor's accountant in the case, in an amount not to exceed
$5,000; and;
3) The allowed professional fees and disbursements for the
Debtor's counsel in the case, in an amount not to exceed $40,000;
and
4) Any costs of sale associated with the sale of the
Collateral, including broker commissions, marketing fees, property
taxes, escrow fees, recording costs, and similar expenses, to the
extent authorized by any section 363 order approving of such
sales.
A copy of the motion is available at https://bit.ly/3G2dYMR from
PacerMonitor.com.
About Wichita Hoops, LLC
Wichita Hoops, LLC operates an athletic facility. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Kan. Case No. 23-10255) on March 27, 2023. In the petition signed
by Evan McCorry, member manager, the Debtor disclosed up to $50,000
in assets and up to $10 million in liabilities.
Judge Mitchell L. Herren oversees the case.
David Prelle Eron, Esq., at Prelle Eron and Bailey, PC., represents
the Debtor as legal counsel.
YIELD10 BIOSCIENCE: Registers 247,210 Shares Under 2018 Plan
------------------------------------------------------------
Yield10 Bioscience, Inc. filed a Form S-8 registration statement
with the Securities and Exchange Commission to register an
additional 247,210 shares of common stock, par value $0.01 per
share, of the Company reserved under the Company's Amended and
Restated 2018 Stock Option and Incentive Plan, as a result of the
operation of an automatic annual increase provision.
The Registration Statement registers additional securities of the
same class as other securities for which a registration statement
filed on Form S-8 of the Registrant relating to an employee benefit
plan is effective (SEC File Nos. 333-226731, 333-231474,
333-235858, 333-238764, 333-254826, 333-256849 and 333-264737).
A full-text copy of the prospectus is available for free at:
https://www.sec.gov/Archives/edgar/data/1121702/000112170223000015/yten-20230324sx8evergreen.htm
About Yield10
Yield10 Bioscience, Inc. -- http://www.yield10bio.com-- is an
agricultural bioscience company that is using its differentiated
trait gene discovery platform, the "Trait Factory", to develop
improved Camelina varieties for the production of proprietary seed
products, and to discover high value genetic traits for the
agriculture and food industries.
Yield10 Bioscience reported a net loss of $13.57 million for the
year ended Dec. 31, 2022, compared to a net loss of $11.03 million
for the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company
had $8.08 million in total assets, $3.68 million in total
liabilities, and $4.40 million in total stockholders' equity.
Boston, Massachusetts-based RSM US LLP, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
March 14, 2023, citing that the Company has suffered recurring
losses from operations and does not have sufficient liquidity to
meet forecasted costs. This raises substantial doubt about the
Company's ability to continue as a going concern.
[^] BOOK REVIEW: PANIC ON WALL STREET
-------------------------------------
A History of America's Financial Disasters
Author: Robert Sobel
Publisher: Beard Books
Softcover: 469 Pages
List Price: $34.95
Review by: Gail Owens Hoelscher
http://www.beardbooks.com/beardbooks/panic_on_wall_street.html
"Mere anarchy is loosed upon the world, the blood-dimmed tide is
loosed, and everywhere the ceremony of innocence is drowned; the
best lack all conviction, while the worst are full of passionate
intensity."
What a terrific quote to find at the beginning of a book on a
financial catastrophe! First published in 1968. Panic on Wall
Street covers 12 of the most painful episodes in American financial
history between 1768 and 1962. Author Robert Sobel chose these
particular cases, among a dozen or so others, to demonstrate the
complexity and array of settings that have led to financial panics,
and to show that we can only make; the vaguest generalizations"
about financial panic as a phenomenon. In his view, these 12 all
had a great impact on Americans of the time, "they were dramatic,
and drama is present in most important events in history." They had
been neglected by other financial historians. They are:
William Duer Panic, 1792
Crisis of Jacksonian Fiannces, 1837
Western Blizzard, 1857
Post-Civil War Panic, 1865-69
Crisis of the Gilded Age, 1873
Grant's Last Panic, 1884
Grover Cleveland and the Ordeal of 183-95
Northern Pacific Corner, 1901
The Knickerbocker Trust Panic, 1907
Europe Goes to War, 1914
Great Crash, 1929
Kennedy Slide, 1962
Sobel tells us there is no universally accepted definition if
financial panic. He quotes William Graham Sumner, who died long
before the Great Crash of 1929, describing a panic as "a wave of
emotion, apprehension, alarm. It is more or less irrational. It is
superinduced upon a crisis, which is real and inevitable, but it
exaggerates, conjures up possibilities, take away courage and
energy."
Sobel could find no "law of panics" which might allow us to predict
them, but notes their common characteristics. Most occur during
periods of optimism ("irrational exuberance?"). Most arise as
"moments of truth," after periods of self-deception, when players
not only suddenly recognize the magnitude of their problems, but
are also stunned at their inability to solve them. He also notes
that strong financial leaders may prove a mitigating factor, citing
Vanderbilt and J.P. Morgan.
Sobel concludes by saying that although financial panics have
proven as devastating in some ways as war, and while much research
has been carried out on war and its causes, little research has
been done on financial panics. Panics on Wall Street stands as a
solid foundation for later research on the topic.
*********
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then-ending.
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*********
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