/raid1/www/Hosts/bankrupt/TCR_Public/230517.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 17, 2023, Vol. 27, No. 136
Headlines
2524 41ST: Case Summary & Five Unsecured Creditors
2M RESEARCH: Taps Roquemore Skierski as Bankruptcy Counsel
2ND CHANCE: Seeks to Hire Coldwell Banker as Real Estate Broker
4924 S. MARTIN: Taps Bach Law Offices as Bankruptcy Counsel
8233 ROXBURY: Files Amendment to Disclosure Statement
AAD CAPITAL: Enters Settlement Agreement with Arena; Amends Plan
ADINA 74: Unsecureds Owed $138K to be Paid in Full
AEQUOR MGT: Unsecureds' Recovery Unknown in Liquidating Plan
AIG FINANCIAL PRODUCTS: Court Rejects Ex-Execs Bid to Dismiss Case
AKRON REBAR: Court OKs Cash Collateral Access Thru July 31
ALMOSTARANCH HOLDINGS: Taps Faith, Ledyard & Faith as New Counsel
ARIEL LLC: Seeks to Hire Law Offices of Louis S. Robin as Counsel
AT HOME GROUP: Starts Talks With Creditors for Debt Financing
ATLAS SYSTEMS: To Seek Plan Confirmation on June 15
AVINGER INC: Posts $5.9 Million Net Loss in First Quarter
BANDED HORN: Seeks to Hire Molleur Law Office as Bankruptcy Counsel
BAR B QUING: Seeks to Hire James Patterson as Bankruptcy Counsel
BEVERLY COMMUNITY HOSPITAL: Hearing Today on Cash Collateral Use
BITTREX INC: Gets Court Okay to Tap $7-Mil. Bitcoin Loan
BLINK CHARGING: Incurs $29.8 Million Net Loss in First Quarter
BLUE DIAMOND: Seeks to Hire Mullins Law Firm as Counsel
BROOKFIELD WEC: Fitch Alters Outlook on 'B' LongTerm IDR to Stable
BURTS CONSTRUCTION: Court Approves Disclosure Statement
C&L DINERS: Unsecureds to Get 2% to 6% in Plan
CALIFORNIA-NEVADA METHODIST: Court Approves Disclosure Statement
CAMECO TECHNOLOGIES: Court OKs Cash Collateral Access Thru Aug 31
CANO HEALTH: Incurs $60.6 Million Net Loss in First Quarter
CAPSTONE BORROWER: Fitch Assigns First Time B+ IDR, Outlook Stable
CAPSTONE BORROWER: S&P Rates New $500MM Senior Secured Notes 'B-'
CARE NEW: Fitch Affirms LongTerm IDR at BB-, Outlook Negative
CARROLS RESTAURANT: S&P Alters Outlook to Pos., Affirms 'CCC+' ICR
CENTRE DE DISTRIBUTION: Obtains CCAA Initial Stay Order
CHRISTMAS TREE: Will Close 2 Massachusetts Locations
CINEMARK USA: Moody's Rates New $750MM Bank Loans 'Ba2'
CLEANSPARK INC: Incurs $18.5 Million Net Loss in Second Quarter
CLEARPOINT NEURO: Incurs $5.6 Million Net Loss in First Quarter
CLEARY PACKAGING: Updates Unsecured Claims Pay Details; Amends Plan
CODIAK BIOSCIENCES: Seeks to Hire Ordinary Course Professionals
CORE SCIENTIFIC: Equity Committee Taps FTI as Financial Advisor
CORE SCIENTIFIC: Equity Committee Taps Vinson & Elkins as Counsel
CROWN COMMERCIAL: Says Unsecureds Unimpaired in Sale Plan
DET MEDICAL: PCO Taps SilvermanAcampora as Legal Counsel
DIAMOND SPORTS: Bankruptcy Court Blocks Phoenix Suns New TV Deal
DIGITALXMEDIA LLC: Taps Rountree Leitman Klein & Geer as Counsel
DIOCESE OF ALBANY: Creditors Ask Court OK to Restart Pension Suit
DIOCESE OF OAKLAND: Files Chapter 11 Due to Abuse Suits
DIOCESE OF ROCKVILLE CENTRE: Opposes Retirement Home Priority Claim
DUNBAR PARTNERS: Unsecureds Owed $89M Unimpaired in Plan
ELIZA JENNINGS: Fitch Affirms IDR at 'BB+', Outlook Stable
ENVISION HEALTHCARE: Case Summary & 30 Top Unsecured Creditors
ENVIVA INC: S&P Downgrades ICR to 'B' on Operational Hurdles
FARADAY FUTURE: Secures $100M in Unsecured Notes Financing
FRANCHISE GROUP: Moody's Cuts CFR to B2, On Review for Downgrade
FRANKLIN SOUTHERN: Taps Mickler & Mickler as Bankruptcy Counsel
FTX GROUP: IRS Files Nearly $44 Billion Worth of Claims
GALLERIA WEST: Unsecureds Out of Money in Plan
GENESIS GLOBAL: DGC in Talks With Providers to Fund Obligations
GHOST TRAIN: $200,000 DIP Loan from PCI GT Wins Interim OK
GIGA-TRONICS INC: Incurs $18.4 Million Net Loss in 2022
GLOVES BUYER: Moody's Rates New $150MM First Lien Term Loan 'B2'
GLOVES BUYER: S&P Rates $150MM Incremental Term Loan 'B-'
GOLDEN ENTERTAINMENT: Moody's Ups CFR to Ba3 & Rates New Loan Ba3
GOLDEN ENTERTAINMENT: S&P Raises ICR to 'BB-', On Watch Positive
GRAND CANYON: Seeks Approval to Pay Accountant 20% of ERC Funds
H-CYTE INC: Incurs $10.3 Million Net Loss in 2022
HIGHLAND CARGO: Court OKs Cash Collateral Access Thru June 6
HOVA MANAGEMENT: Taps New Code Consulting as Real Estate Expeditor
INNOVATE CORP: S&P Lowers ICR to 'CCC+' on Weakening Liquidity
INTERNAP HOLDING: Seeks Approval of Disclosure Statement
INTERNAP HOLDING: Unsecured Creditors Out of Money in Plan
INTERNAP HOLDINGS: Taps Stretto Inc. as Claims and Noticing Agent
IRIS HOLDING: Moody's Affirms B3 CFR & Alters Outlook to Negative
JANE STREET: Moody's Affirms Ba1 CFR & Alters Outlook to Positive
JLK CONSTRUCTION: Seeks Cash Collateral Access
JUSTICE SAND: Court OKs Cash Collateral Access Thru May 24
KALERA INC: $5MM DIP Loan from Sandton Has Final OK
KCW GROUP: Court OKs Cash Collateral Access Thru July 10
KEW NDBM: Unsecureds Will Get 10% of Claims in Creditor's Plan
KOSSOFF PLLC: Continental Casualty Gets Stay Relief
LANNETT COMPANY: Targets June 8 Hearing on Prepack Plan
LANNETT COMPANY: Unsecureds Owed $20M Unimpaired in Prepack Plan
LATAM AIRLINES: Asks US High Court to Deny Bankr. Interest Claims
LEADING LIFE: Creditors to Get Proceeds From Liquidation
LEGACY CARES: Gets OK to Hire Epiq as Claims and Noticing Agent
LENDINGTREE INC: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
LEXARIA BIOSCIENCE: Six Proposals Passed at Annual Meeting
LIFESIZE INC: Case Summary & 30 Largest Unsecured Creditors
MATTRESS FIRM: Moody's Puts 'B1' CFR Under Review for Upgrade
MILLION DOLLAR SMILE: Unsecureds Owed $1M to Get 13% in Plan
MIRAGE INTERNATIONAL: Taps Steve Landreth, CPA as Accountant
MONEYGRAM INT'L: Moody's Assigns 'B2' CFR, Outlook Stable
MONITRONICS INT'L: Moody's Cuts PDR to D-PD on Bankruptcy Filing
MYOMO INC: Incurs $2.6 Million Net Loss in First Quarter
NATIONAL AMUSEMENTS: S&P Downgrades ICR to 'CCC+', Outlook Neg.
NATIONAL CINEMEDIA: Gets Court Okay to Poll Bankruptcy Plan
NATURE COAST: Disclosures Hearing Delayed for 3 Weeks
NAVARRO PECAN: Proposes June 29 Hearing on Plan
NEPHROS INC: Incurs $306K Net Loss in First Quarter
NEPHROS INC: Robert Banks to Be Named President and CEO
NEXERA MEDICAL: Seeks to Hire Rappaport Osborne as Legal Counsel
NOBILITY MANAGEMENT: Case Summary & Eight Unsecured Creditors
NORTH CHANNEL: Seeks Cash Collateral Access
OLYMPUS WATER: Moody's Lowers Sr. Secured Debt Rating to B3
OLYMPUS WATER: S&P Affirms 'B-' ICR on Merger With Diversey
OPULENT VACATIONS: Case Summary & 20 Largest Unsecured Creditors
OWENS-BROCKWAY GLASS: Moody's Rates New Sr. Unsecured Notes 'B2'
PARAMOUNT REAL ESTATE: Unsecureds Owed $5M to Get 100% in Plan
PEPPERONI GRILL: Unsecureds Will Get 10% Dividend in 60 Months
PG MOTORS: Court OKs Interim Cash Collateral Access
PHOENIX SERVICES: Unsecureds Owed $77M Out of Money in Plan
PLX PHARMA: Seeks to Hire Olshan Frome Wolosky as Legal Counsel
PLX PHARMA: Seeks to Hire Raymond James as Investment Banker
PLX PHARMA: Seeks to Hire Young Conaway Stargatt as Co-Counsel
PLX PHARMA: Seeks to Tap Donlin Recano as Administrative Advisor
PLX PHARMA: Taps Mr. Perkins of SierraConstellation as CRO
POPULUXE LLC: Court OKs Cash Collateral Access Thru June 11
RIOT PLATFORMS: Incurs $55.7 Million Net Loss in First Quarter
RIVERBED TECHNOLOGY: Nears Sale to Vector Capital for $450 Million
ROBERTSHAW US: Moody's Appends 'LD' Designation to Caa3-PD PDR
ROCK RIDGE FARMS: Taps Carolina Homeland as Real Estate Broker
ROOSEVELT INN: Disclosures Hearing Resumes June 14
ROSIE LABS: Case Summary & 20 Largest Unsecured Creditors
SABRE HOLDINGS: Moody's Lowers CFR to B2, Outlook Remains Stable
SALEM MEDIA: S&P Downgrades ICR to 'CCC', Outlook Negative
SHOPS@BIRD & 89: Gets OK to Hire Robert C. Meyer as Legal Counsel
SIO2 MEDICAL: Hires Ernst & Young as Audit Service Provider
SOUTHFIELD VENTURES: Plan & Disclosures Due July 28
SOUTHFIELD VENTURES: Taps Robert Bassel as Bankruptcy Counsel
STONEX GROUP: Moody's Affirms 'Ba3' Issuer & Secured Notes Ratings
SUMMIT SPRINGS: Taps Falcone Law Firm as Bankruptcy Counsel
SYNEOS HEALTH: Moody's Puts 'Ba2' CFR on Review for Downgrade
TELESAT CANADA: S&P Downgrades ICR to 'SD' on Debt Repurchases
TELESAT CORP: Moody's Appends LD Designation to 'Caa2-PD' PDR
TMK HAWK: Moody's Assigns Ca Rating to $20MM Tranche C Term Loan
TOP LINE GRANITE: Trustee Taps Shatz Schwartz and Fentin as Counsel
TTM TECHNOLOGIES: Moody's Rates New $350MM Term Loan B 'Ba1'
ULTRA SEAL: Unsecureds Owed $2.7M to Get 15% in Plan
UNDERGROUND CELLAR: Faces $25Mil. Debt and Fraud Claims Amid Ch. 7
UNITED LAWYERS: Taps Certilman Balin Adler & Hyman as Legal Counsel
UNIVISION COMMUNICATIONS: Moody's Alters Ratings Outlook to Stable
UPTOWN PARTNERS: Seeks Chapter 7 Bankruptcy Protection
VENUE CHURCH: Creditor Says Plan Submitted in Bad Faith
VERGARA LLC: Ordereed to File Plan & Disclosures by June 17
VITAL PHARMA: Asks Court Okay to Correct Super Creatine Claims
VOYAGER DIGITAL: Shares 2 Bankruptcy Plan Options to Customers
VYERA PHARMACEUTICALS: Hits Chapter 11 Bankruptcy Protection
WEWORK INC: Fitch Hikes LongTerm Issuer Default Rating to 'CCC-'
WEWORK INC: Incurs $299 Million Net Loss in First Quarter
WHEELS UP: Founder Resigns Amid Losses, Possible Bankruptcy Looms
WHITTAKER CLARK: May 18 Deadline Set for Panel Questionnaires
WRIGHT EXPERIENCE: Taps Dudley, R.L. Rasmus as Auctioneers
XPO INC: Moody's Rates New $830MM Secured Notes 'Ba1'
YELLOW CORP: Moody's Cuts CFR to Caa1, Outlook Stable
[] Repeat Bankruptcies Pile Up at Fastest Pace Since 2009
*********
2524 41ST: Case Summary & Five Unsecured Creditors
--------------------------------------------------
Debtor: 2524 41st LLC
2524 41st St, NW, Washington, DC 20007
District of Columbia
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: May 16, 2023
Court: United States Bankruptcy Court
District of Delaware
Case No.: 23-10643
Judge: Hon. Thomas M. Horan
Debtor's Counsel: Stephen B. Gerald, Esq.
WHITEFORD, TAYLOR & PRESTON LLC
600 North King Street
Suite 300
Wilmington, DE 19801
Tel: 302-353-4144
Email: sgerald@whitefordlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by James Smith as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's five unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/O77QFMY/2524_41st_LLC__debke-23-10643__0001.0.pdf?mcid=tGE4TAMA
2M RESEARCH: Taps Roquemore Skierski as Bankruptcy Counsel
----------------------------------------------------------
2M Research Services, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Texas to employ Roquemore
Skierski, PLLC to handle its Chapter 11 case.
Roquemore Skierski will be paid at these rates:
Beginning May 1
---------------
Kelvin Roquemore, Partner $475 per hour
Martin Averill, Of Counsel $475 per hour
Adrian S. Baer, Of Counsel $475 per hour
Ashley Burk, Paralegal $175 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Kelvin Roquemore, Esq., a partner at Roquemore Skierski, disclosed
in a court filing that his firm is a "disinterested person"
pursuant to Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Kelvin Roquemore, Esq.
Martin Averill, Esq.
Adrian S. Baer, Esq.
Roquemore Skierski, PLLC
13155 Noel Road, Suite 900
Dallas, TX 75240
Tel: (972) 564-8860
Email: kelvin@roqski.com
martin@roqski.com
ardie@roqski.com
About 2M Research Services
2M Research Services, LLC, a company in Mansfield, Texas, sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Texas Case No. 23-40271) on Jan. 30, 2023. In the petition
signed by Marcus Martin, manager and member, the Debtor disclosed
up to $10 million in both assets and liabilities.
Judge Mark X. Mullin oversees the case.
The Debtor tapped Roquemore Skierski, PLLC and Joyce W. Lindauer
Attorney, PLLC as legal counsels.
2ND CHANCE: Seeks to Hire Coldwell Banker as Real Estate Broker
---------------------------------------------------------------
2ND Chance Investment Group, LLC seeks approval from the U.S.
Bankruptcy Court for the Central District of California to hire
Coldwell Banker and two other licensed real estate brokers.
The brokers have agreed to advertise certain properties, to market
and show the property, to represent the estate in connection with
the sale of the property, and to advise the Debtor in Possession
with respect to obtaining the best offer for the sale of the
property.
The Debtor agrees to pay the total broker's commission of 6 percent
from the sale proceeds.
As disclosed in court filings, the brokers are "disinterested"
within the meaning of Section 101(14) of the Bankruptcy Code.
Coldwell Banker can be reached through:
Ana Matsunaga
Coldwell Banker Realty
1608 Montana Ave
Santa Monica, CA, 90403
Phone: 213-200-2500
About 2ND Chance Investment Group
2ND Chance Investment Group, LLC owns in fee simple title 13 real
properties located in various locations in California and
Washington having an aggregate value of $7.02 million.
2ND Chance Investment Group sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-12142) on
Dec. 21, 2022. In the petition signed by its managing member,
Rayshon A. Foster, the Debtor disclosed $7,221,261 in assets and
$11,002,949 in liabilities.
Judge Scott C. Clarkson oversees the case.
Amanda G. Billyard, Esq., at Financial Relief Law Center, APC and
Grobstein Teeple, LLP serve as the Debtor's legal counsel and
financial advisor, respectively.
The U.S. Trustee for Region 16 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case. The
committee is represented by Goe Forsythe & Hodges, LLP.
4924 S. MARTIN: Taps Bach Law Offices as Bankruptcy Counsel
-----------------------------------------------------------
4924 S. Martin Luther King, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to hire Bach
Law Offices, Inc.
The Debtor requires legal counsel to negotiate with creditors;
prepare a Chapter 11 plan and disclosures statement; examine and
resolve claims filed against the estate; and prepare and prosecute
adversary proceedings.
The hourly rates of the firm's attorneys are as follows:
Paul M. Bach $425
Penelope N. Bach $425
The firm received an initial retainer in the amount of $6,000, plus
the filing fee of $1,738.
Paul Bach, Esq., an attorney at Bach Law Offices, disclosed in a
court filing that his firm is a "disinterested person" pursuant to
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Paul M. Bach, Esq.
Bach Law Offices, Inc.
P.O. Box 1285
Northbrook, IL 60065
Telephone: (847) 564-0808
Facsimile: (847) 564-0985
Email: pnbach@bachoffices.com
About 4924 S. Martin Luther King
4924 S. Martin Luther King, LLC, a company in Chicago, Ill., sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Ill. Case No. 23-04726) on April 10, 2023, with up to $10
million in both assets and liabilities. Faris Faycurry, president,
signed the petition.
Judge Janet S. Baer oversees the case.
Paul M. Bach, Esq., at Bach Law Offices, Inc., represents the
Debtor as legal counsel.
8233 ROXBURY: Files Amendment to Disclosure Statement
-----------------------------------------------------
8233 Roxbury, LLC, submitted a Second Amended Disclosure Statement
describing Chapter 11 Plan of Reorganization dated May 11, 2023.
In this Bankruptcy Case, the Plan is a combination of both a
liquidating and reorganizing plan. The Debtor seeks to pay all
Holders of Claims in full through the Plan by using funds received
from the sale of its real property. The funds from the sale will be
distributed on the Effective Date.
The Effective Date is usually 30 days following the date of entry
of the order confirming the Plan unless a stay of the Confirmation
Order is in effect, in which case the Effective Date will be the
first Business Day after the date on which the stay of the
Confirmation Order has been lifted, provided that the Confirmation
Order has not been vacated. The Debtor seeks to establish the
Effective Date as July 1, 2023.
The Plan provides that allowed claims will be paid as follows: All
Allowed Claims will be paid in full upon the completed sale of the
Subject Property or the refinance of the Subject Property. This is
after the payment of the projected Statutory Fees, Professional Fee
Claims, Capital Gains taxes and Cost of Sale. This projected payout
will pay 100% of the Unsecured Claims.
While this process is pending, the Debtor has been approved for
high end Airbnb rentals which will commence in December 2022. This
will permit the Debtor to generate income in the short run and to
pay its expenses.
If the Subject Property is not sold or refinanced on or near the
projected Effective Date, the Debtor will continue to make the
proposed payments until the end of 2023 at which the Debtor will
have sold and/or refinanced the Subject Property.
Like in the prior iteration of the Plan, total payment of $60.00
will be paid to Class 6 General Unsecured Claims on the Effective
Date.
The Debtor is a limited liability company. Its sole member is
Richard Langley Jr. There are no subsidiaries or parent companies.
The Debtor will distribute the entire amount of the Sales Price and
at least the Listing Price or the refinancing proceeds on the
Effective Date.
A full-text copy of the Second Amended Disclosure Statement dated
May 11, 2023 is available at https://bit.ly/3IjLVJJ from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Stella Havkin, Esq.
David Jacob, Esq.
HAVKIN & SHRAGO ATTORNEYS AT LAW
5950 Canoga Avenue, Suite 400
Woodland Hills, CA 91367
Telephone: (818) 999-1568
Facsimile: (818) 293-2414
E-mail: stella@havkinandshrago.com
About 8233 Roxbury
8233 Roxbury LLC was formed for the purposes of owning, renting and
borrowing against a property located in a desirable part of Los
Angeles County near the Sunset Strip, West Hollywood and the
historic Chateau Marmont, a prime location for tourists and
visitors to Los Angeles. It is also the former residence of famous
singer Barry Manilow.
8233 Roxbury filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
22-14444), with between $1 million and $10 million in both assets
and liabilities. Gregory Kent Jones has been appointed as
Subchapter V trustee.
Judge Julia W. Brand oversees the case.
Stella Havkin, Esq., at Havkin & Shrago, Attorneys at Law, is the
Debtor's counsel.
AAD CAPITAL: Enters Settlement Agreement with Arena; Amends Plan
----------------------------------------------------------------
AAD Capital Partners LLC and Market Street Shreveport LLC submitted
First Amended Disclosure Statement for the First Amended Joint Plan
of Reorganization dated May 11, 2023.
The Debtors and one of their affiliates engaged in a formal
mediation with their largest secured creditor, Arena. As a result
of the mediation session, on April 18, 2023, the Debtors and Arena
entered into the Settlement Agreement and modified the Original
Plan in accordance therewith.
The Debtors believe that the Settlement Agreement is fair and
reasonable and will allow them to provide enhanced treatment to
Arena and other creditors under this amended form of Plan. On April
27, 2023, the Debtors filed a Motion seeking Bankruptcy Court
approval of the terms of the Settlement Agreement.
Although the Debtors have experienced liquidity issues, the
Debtors' assets far exceed the value of their liabilities, and the
Debtors intend to pay all creditors in full through the mechanisms
provided in the Plan.
Class 2(b) consists of Arena-Market Street Secured Claim. Pursuant
to the terms of the Settlement Agreement, the Allowed Amount of the
Arena-Market Street Secured Claim shall be paid in full on the
Effective Date or such other date as mutually may be agreed to by
and between such Holder and the Plan Proponents, either from (i)
the cash proceeds of the sale of the Market Street Property; or
(ii) the transfer of the Market Street Property.
Classes 6(a) and 6(b) consists of General Unsecured Claims. Except
to the extent that the Holder of an Allowed Class 6(a) or 6(b) has
agreed in writing to receive different treatment (which shall not
exceed the Allowed Amount of such Claim) in full satisfaction of
their Allowed Claim, each Holder of an Allowed Class 6(a) or 6(b)
Claim shall be paid in 36 equal and fully amortized installments by
the AAD Reorganized Debtor, the aggregate sum of which shall be
equal to the full amount of the Allowed Claim with interest
accruing on the unpaid portion of such amortized amount over the 36
month payment period at the rate of 5% per annum.
The first installment payment shall be due on the last business day
of the next full month following the later of the Effective Date or
the date on which such Claim becomes an Allowed Claim and payments
shall continue to be due on the last business-day of each
consecutive month for an additional thirty-five months thereafter.
The continuing obligations hereunder to Holders of Allowed Class
6(a) and 6(b) Claims shall be a joint and several obligation of
both Reorganized Debtors. Classes 6(a) or 6(b) are Impaired
Classes.
On the Effective Date, all Interests in the Debtors shall be
transferred to the Reorganized Debtors, providing each Holder with
the same legal, equitable, and contractual rights to which such
Holder had with respect to each Debtor.
All Cash necessary to consummate the Plan shall be obtained from
(a) existing Cash balances, (b) the Reorganized Debtors' operations
on and after the Effective Date, (c) the sale of property of the
Reorganized Debtors (at the Reorganized Debtors' election and in
their sole discretion), and (d) the prosecution of the Retained
Actions pursuant to the Plan.
Notably, the Plan contemplates that the Market Street Property will
be sold and the proceeds will be utilized to satisfy Arena's
Secured Claims and to make other distributions. It is also
contemplated that certain sums may be distributed by the Market
Street Debtor to its parent, the AAD Debtor even though all claims
to creditors have not yet been paid in full.
However, the AAD Reorganized Debtor will be responsible to make any
future and continuing payments to Holders of Allowed Claims to
Market Street's creditors that do not receive cash payments in full
on the Effective Date under the terms of the Plan. This funding
mechanism will provide for AAD to retain its operating business and
assets and for the Debtors to meet all of their obligations to pay
creditors in full, over time, through AAD Reorganized Debtor's
continued operations.
A full-text copy of the First Amended Disclosure Statement dated
May 11, 2023 is available at https://bit.ly/3Bx73se from
PacerMonitor.com at no charge.
Counsel for the Debtors:
Ashley R. Ray, Esq.
Asjley Reynolds Ray, Esq.
SCROGGINS & WILLIAMSON, P.C.
4401 Northside Parkway, Suite 450
Atlanta, GA 30327
Tel: (404) 893-3880
Email: aray@swlawfirm.com
About AAD Capital Partners
AAD Capital Partners LLC, doing business as Peachtree Battle
Business Services, is a domestic limited liability company.
AAD Capital Partners LLC filed a petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-58223) on
Oct. 12, 2022. In the petition filed by Edward Chen, as managing
member and owner, the Debtor reported assets and liabilities
between $10 million and $50 million.
The Debtor is represented by Ashley Reynolds Ray of Scroggins &
Williamson, P.C.
Judge James R. Sacca oversees the case.
Arena Limited SPV, LLC, as secured creditor is represented by Eric
W. Anderson, Esq. at Parker Hudson Rainer & Dobbs, LLP and R.
Joseph Naus, Esq. at Wiener, Weiss & Madison, a Professional
Corporation.
ADINA 74: Unsecureds Owed $138K to be Paid in Full
--------------------------------------------------
Adina 74 Realty Corp. submitted a First Amended Disclosure
Statement.
The Debtor is the owner of the five-story, multi-unit, mixed-use
townhouse located at 6 East 74th Street, New York, New York 10021,
New York County (the "Property"). The Property is located in a
prime location in the Upper East Side between Fifth and Madison
Avenue, just steps from Central Park. The Property interior is made
up of approximately 9,700 square foot over six units, with a
combined 1,600 square foot of private outdoor space including a
garden, two terraces and a rooftop. The Property also has an
elevator that services every floor. Based upon an appraisal dated
June 8, 2018 (the "Appraisal"), the Property was valued at
$22,150,000.
On Oct. 12, 2022, the Property was listed for sale by the Modlin
Group for $26,000,000. This listing price was arrived at by mutual
decision by both the Debtor and the Modlin Group. After
approximately three (3) months on the market, in consideration of
feedback received from parties who attended showings, and in an
attempt to realize a prompt sale, in January 2023, the Debtor and
Broker decided to lower the listing price to $20,000,000.
During the Modlin Group's tenure there were 3 showings in December,
January, and mid-April, respectively. There were also a few broker
showings. However, since the termination of the Modlin Group and
likely because of the contacting and interviewing of new brokers,
coupled with the Debtor's members' own marketing efforts to their
various networks, there has been a flurry of interest. The Debtor
has had 8 showings and a total of 5 offers ranging from $7 Million
Dollars to $18.4 Million Dollars. The Debtor has sent out a
contract of sale on the high "bidder" but continues to market and
Property until such time as it has a signed contract and a deposit
in escrow. It is clear to the Debtor, now more than ever, that with
proper sale efforts, a buyer can be found at a price commensurate
with the true value of the Property.
The Debtor has also negotiated the terms of an auction process with
Sotheby's in the unlikely event that a contract is not in place
before the termination of the Marketing Period.
In the meanwhile, the Debtor is cognizant of the significant
carrying costs of the Property, especially with reduced rental
income. As such, the Debtor is committed to an efficient but
effective sale process and has secured the monetary support needed
to fund the Property and the Plan (in part) in the meantime.
Under the Plan, Class 4 consists of the Allowed Unsecured Claims.
The holders of the Allowed Class 4 General Unsecured Claims shall
be paid up to the full amount of their Allowed Claim, in Cash, upon
the sale of the Property. The Debtor estimates that Class 4 Allowed
Unsecured Claims total approximately $138,000. Class 4 Creditors
are Impaired under this Plan and the holders thereof shall be
entitled to vote to accept or reject the Plan.
The Plan shall be funded by the Plan Contribution in an amount
necessary to fund all Allowed Administrative Claims on the
Effective Date (including the post-Petition Date amounts due to NYC
and SKW as provided for herein) in the estimated amount of
$275,336.56. The Plan shall also be funded with the net proceeds
from the sale of the Property.
The Debtor will continue to market the Property for sale. The
Debtor anticipates acquiring a buyer for the Property for a sale
price sufficient to fund its Plan in full, with a significant
distribution to Interest holders. Although it is impossible to know
for certain exactly when all distributions under the Plan will be
made, the Debtor projects payment to all creditors within
approximately one hundred and eighty (180) days of the filing of
the Plan and Disclosure Statement.
In the event the Debtor does not enter into a contract of sale for
the Property with a purchaser by August 15, 2023, the Alternative
Sale Process will be triggered. In such case, the Debtor shall
engage the services of Sotheby's Concierge and pursue a sale of the
Property by public auction. The auctioneer shall conduct a public
auction of the Property after a marketing period of approximately
60 days with a closing to occur on or about 30 days thereafter. The
Debtor reserves the right to trigger the Alternative Sale Process
at any time during the Marketing Period.
SKW shall have the right to assert a "credit bid" in the amount of
its Allowed Class 2 Claim, plus interest at the default rate
incurred from the Petition Date through the auction date, plus
reasonable attorney's fees (giving credit for all post-Petition
Date payments made).
Attorneys for the Debtor:
Erica R. Aisner, Esq.
Jessica M. Hill, Esq.
KIRBY AISNER & CURLEY LLP
700 Post Road, Suite 237
Scarsdale, NY 10583
Tel: (914) 401-9500
E-mail: eaisner@kacllp.com
jhill@kacllp.com
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/41hbJwK from PacerMonitor.com.
About Adina 74 Realty Corp.
Adina 74 Realty Corp. is a Single Asset Real Estate (as defined in
11 U.S.C. Sec. 101(51B)).
Adina 74 Realty Corp. filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-11458) on Nov.
2, 2022. In the petition filed by Ezra Chammah, as president, the
Debtor reported assets between $10 million and $50 million and
liabilities between $1 million and $10 million.
The Debtor is represented by Dawn Kirby of Kirby Aisner & Curley,
LLP.
AEQUOR MGT: Unsecureds' Recovery Unknown in Liquidating Plan
------------------------------------------------------------
Aequor Mgt, LLC and Aequor Holdings, LLC, submitted a Disclosure
Statement in support of the Debtors' Joint Consolidated Plan of
Liquidation.
The Plan is a plan of liquidation which, if confirmed, will
substantively consolidate the Debtors and their Estates, create the
Creditor Trust, vest the Creditor Trust with property (including
land, physical assets, causes of action, and cash), and enable the
Creditor Trust to attempt to monetize its assets in order to make
distributions to various Creditors. The Debtors will not receive a
discharge. The Debtors believe that this course is preferable to a
liquidation under Chapter 7, provides for a greater potential
recovery to Creditors, and gives the Creditors a greater role in
the Debtors' liquidation.
The Debtors have decided to liquidate. The primary assets of Aequor
Holdings are the Proterra Interests and the Proterra Causes of
Action, while the primary assets of Aequor MGT are the Burro Mine
and the ITX Equipment (consisting of mining equipment in the
possession of ITX) and the Remaining MGT Equipment (consisting of
land and mining equipment). Most of these assets, except the
Proterra Causes of Action, are subject to one or more liens.
In order to effectuate the liquidation, the Plan proposes to
substantially consolidate the Debtors (merge their assets and
liabilities, but subject to liens) and to create the Creditor
Trust, which will be vested with all assets of the Debtors (except
certain assets surrendered for secured debt under the Plan,
consisting of the ITX Equipment and the Proterra Interests), and an
additional $250,000.00 in cash as partial consideration (in
addition to other consideration) for certain releases provided in
the Plan. The identity of the Creditor Trust Trustee is not
presently known, and the Debtors intend to negotiate who that
person will be with Castlelake and the Committee. The Creditor
Trust, under the administration of the Creditor Trust Trustee, will
then seek to liquidate and monetize those assets, first to pay off
or pay down certain Secured Claims (including of Castlelake, the
IRS, and the DIP Lender), and second, to pay Unsecured Claims. The
Debtors believe that the value of these assets will be sufficient
to pay Secured Claims in full, but any recovery to Unsecured
Creditors is less certain because it will depend on unliquidated
Causes of Action.
The Debtors do not receive a discharge under the Plan. However, the
Creditor Trust and the assets transferred to the Creditor Trust are
protected by various injunctions in the Plan, to ensure that the
Creditor Trust Assets are distributed only on account of Allowed
Claims and only as provided for in the Plan.
The Plan contemplates that the Creditor Trust will be governed by
the Plan and the Creditor Trust Agreement, to be negotiated with
the proposed Creditor Trust Trustee and filed as a Plan Supplement.
Additionally, up to three Creditors may serve on a Creditor Trust
oversight board, one of which is Castlelake, if it so chooses to
do. These Creditors will have certain oversight rights over the
Creditor Trust Trustee to help ensure that the Creditor Trust
Trustee is properly administering the Creditor Trust Assets.
Under the Plan, Class 7 Unsecured Claims total $31,200,000 and the
amount to be recovered is unknown. Class 7, Unsecured Claims, may
receive a distribution from the Creditor Trust, prorata, upon the
Creditor Trust's payment of the above-described Claims. The Debtors
cannot estimate what this distribution may be, as it depends
largely on the value of the Proterra Causes of Action, but it may
range from 0% to 100%. Class 7 is impaired.
Attorneys for the Debtors:
Davor Rukavina, Esq.
Thomas D. Berghman, Esq.
MUNSCH HARDT KOPF & HARR, P.C.
3800 Ross Tower
500 N. Akard Street
Dallas, TX 75202-2790
Telephone: (214) 855-7500
Facsimile: (214) 978-4375
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/42wk0Ol from PacerMonitor.com.
About Aequor Mgt
Aequor Mgt, LLC -- https://BurroSand.com/ -- claims to be the
lowest cost producer of 100 Mesh frac sand in the Permian Basin
serving oil and gas producers. The company is based in Tyler,
Texas.
Aequor Mgt and Aequor Holdings, LLC filed petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Lead
Case No. 23-60010) on Jan. 5, 2023. At the time of the filing,
Aequor Mgt reported $1 million to $10 million in assets and $50
million to $100 million in liabilities while Aequor Holdings
reported $10 million to $50 million in both assets and
liabilities.
Judge Joshua P. Searcy oversees the cases.
The Debtors are represented by Davor Rukavina, Esq., at Munsch
Hardt Kopf & Harr, P.C.
The U.S. Trustee for Region 6 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
Porter Hedges, LLP and Dundon Advisers, LLC serve as the
committee's legal counsel and financial advisor, respectively.
AIG FINANCIAL PRODUCTS: Court Rejects Ex-Execs Bid to Dismiss Case
------------------------------------------------------------------
Rick Archer of Law360 reports that a Delaware bankruptcy judge
rejected a request by a group of former executives of an American
International Group investment unit to dismiss its Chapter 11 case,
saying Wednesday, May 10, 2023, the unit is insolvent and has a
chance of reorganizing.
Former employees of AIG Financial Products Corporation who sued it
in Connecticut state court for deferred compensation sought
dismissal of AIGFP's case under Section 1112(b) or Section 305(a)
of the Bankruptcy Code. The Debtor contended that there is no basis
to dismiss its case.
"The Court does not agree with the CT Plaintiffs’ contention that
in determining the Debtor’s solvency, the Court must consider the
financial condition of its parent, AIG. The financial condition of
AIG is irrelevant because it is a separate legal entity from the
Debtor.50 Further, even though AIG guaranteed certain obligations
of the Debtor (those due to the derivative counter-parties), it did
not cover obligations to the CT Plaintiffs which they assert are in
excess of $640 million," Judge Mary F. Walrath said in her
opinion.
"In addition, the Parent Guarantee was in the form of a loan, which
meant that all payments under the Guarantee simply became debts
owed by the Debtor to AIG rather than obligations owed to the
derivative counter-parties. It did not eliminate any debt from the
Debtor’s balance sheet. Finally, AIG is under no obligation to
continue to fund the Debtor indefinitely. Accordingly, the Court
finds that the Debtor is overwhelmingly insolvent because its
remaining assets are a fraction of the $38 billion in debts
allegedly owed to AIG and the CT Plaintiffs."
About AIG Financial Products Corp.
AIG Financial Products Corp. is a wholly-owned, direct subsidiary
of American International Group, Inc. It is a Delaware corporation
founded in 1987 and based in Wilton, Conn., is a financial products
company. It was founded for the purpose of trading in the capital
markets and offering corporate finance, structured finance, and
financial risk management products, including complex derivatives
transactions.
AIG Financial Products filed a petition under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-11309) on Dec. 14,
2022, with $100 million to $500 million in assets and $10 billion
to $50 billion liabilities.
Judge Mary F. Walrath oversees the case.
The Debtor tapped Young Conaway Stargatt & Taylor, LLP, and Latham
& Watkins, LLP, as bankruptcy counsels; Debevoise & Plimpton, LLP
as special litigation counsel; and Alvarez & Marsal North America,
LLC as financial advisor. William C. Kosturos, managing director
at Alvarez & Marsal, serves as the Debtor's chief restructuring
officer. Epiq Corporate Restructuring, LLC, is the claims and
noticing agent.
AKRON REBAR: Court OKs Cash Collateral Access Thru July 31
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Akron Rebar Company and Sentinel Intelligence Group LLC
to use cash collateral on an interim basis in accordance with the
budget, through July 31, 2023.
Akron Rebar was indebted to:
-- SMS Financial Strategic Investments III, LLC in the amount
of $3.3 million for loans taken in 2018;
-- the Stump Trust in the amount of $350,000 for seller
financing; and
-- the U.S. Small Business Administration in the amount of
$499,900 for EIDL loans taken in 2020.
The Debtor also acknowledges tax liens in favor of the U.S. of
America Internal Revenue Service in the amount of $370,979.
The Prepetition Indebtedness owed to SMS, the Stump Trust and the
SBA are secured by a valid and perfected security interest in
substantially all of Akron Rebar's accounts, general intangibles,
chattel paper, documents, inventory, furniture, fixtures and
equipment, and the proceeds of the same. As result, all Akron
Rebar's cash on hand or in deposit accounts is the proceeds of the
Secured Creditors' liens on the Collateral.
As adequate protection, the Secured Creditors are granted
Replacement Liens in property acquired by the Debtors after the
Petition Date that is of the same type as the Collateral against
which each Secured Creditor asserted a lien prior to the filing of
the Debtors' Petitions, to the extent of the diminution of the
value of the Secured Creditors' interest in cash collateral as of
the Petition Date. The Replacement Liens will have the same
validity, priority, and extent (if any) as the liens on Collateral
that existed on the Petition Date. The Replacement Liens granted
are deemed perfected without the necessity for filing or execution
of documents which might otherwise be required under non-bankruptcy
laws for the perfection of security interests.
A final hearing on the matter is set for May 23, 2023 at 2 p.m.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3Mj1T9t from PacerMonitor.com.
The Debtor projects total expenses, on a monthly basis, as
follows:
$291 for May 2023;
$1,147 for June 2023; and
$71,147 for July 2023;
About Akron Rebar Co.
Akron Rebar Co. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ohio Case No. 23-50624) on May 4,
2023. In the petition signed by Michael B. Humphrey, Sr., vice
president and secretary, the Debtor disclosed up to $1 million in
assets and up to $10 million in liabilities.
Judge Alan M. Koschik oversees the case.
Peter G. Tsarnas, Esq., at Gertz & Rosen, Ltd., represents the
Debtor as legal counsel.
ALMOSTARANCH HOLDINGS: Taps Faith, Ledyard & Faith as New Counsel
-----------------------------------------------------------------
Almostaranch Holdings, LLC received approval from the U.S.
Bankruptcy Court for the District of Arizona to employ Faith,
Ledyard & Faith, PLC to substitute for Guidant Law, PLC.
The firm will assist the Debtor with the payment and resolution of
debts owed to Guidant, payment of fees owed to the Subchapter V
trustee and any other matters related to the Debtor's bankruptcy
case.
The firm's hourly rates are as follows:
Attorneys $245 to $495
Legal Assistants $125 to $175
Law Clerks $150 to $175
Faith, Ledyard & Faith is a disinterested party within the meaning
of Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Joseph P. Brown, Esq.
Michael P. Faith, Esq.
Faith, Ledyard & Faith, PLC
919 North Dysart Road, Suite F
Avondale, AZ 85323
Phone: (623) 932-0430
Fax: (623) 932-1610
Email: jbrown@faithlaw.com
Email: mfaith@faithlaw.com
About Almostaranch Holdings
Almostaranch Holdings, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Ariz. Case No.
22-07236) on Oct. 27, 2022, with up to $1 million in both assets
and liabilities. Christopher Simpson has been appointed as
Subchapter V trustee.
Judge Brenda K. Martin oversees the case.
Faith, Ledyard & Faith, PLC serves as the Debtor's legal counsel.
ARIEL LLC: Seeks to Hire Law Offices of Louis S. Robin as Counsel
-----------------------------------------------------------------
Ariel LLC seeks approval from the U.S. Bankruptcy Court for the
District of Massachusetts to hire the Law Offices of Louis S. Robin
to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) drafting the Debtor's motions and orders concerning
necessary pleadings to continue its Chapter 11 case;
(b) assisting the Debtor in the resolution of its financial
problems and the implementation of a plan of reorganization;
(c) providing legal advice with respect to the powers and
duties of the Debtor in the continued operation of its business;
(d) assisting the Debtor in compliance with the requirements
of the Office of the U.S. Trustee;
(e) preparing legal documents; and
(f) performing other related legal services for the Debtor.
The Law Offices of Louis S. Robin will charge $300 per hour for its
services. The firm received $6,000 as a retainer.
As disclosed in court filings, the Law Offices of Louis S. Robin
does not represent any interest adverse to the Debtor or its
estate.
The firm can be reached through:
Louis S. Robin, Esq.
Law Offices of Louis S. Robbin
1200 Converse Street
Longmeadow, MA 01106
Tel: (413) 567-3131
Fax: (413) 565-3131
Email: lous.robin.bankruptcy@gmail.com
About Ariel LLC
Ariel LLC owns family rental and commercial rental properties in
Massachusetts having a total value of $1.2 million.
Ariel LLC filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-40331) on April
27, 2023, with $1,216,000 in assets and $1,940,000 in liabilities.
Miguel B. Aguilo, manager, signed the petition.
Judge Elizabeth D. Katz presides over the case.
Louis S. Robin, Esq., at the Law Offices of Louis S. Robin is the
Debtor's bankruptcy counsel.
AT HOME GROUP: Starts Talks With Creditors for Debt Financing
-------------------------------------------------------------
Reshmi Basu and Reshmi Basu of Bloomberg News reports that some
creditors of At Home Group Inc. are in talks with the company to
explore a potential financing deal as the home decor retailer looks
to shore up its balance sheet, according to people with knowledge
of the situation.
Among the options the Hellman & Friedman-backed company is
considering is a first-in-last-out loan tranche — a type of
financing where funds that are lent out are the last to be repaid
— said the people, who asked not to be identified because the
matter is private.
Representatives with the company and Hellman & Friedman declined to
comment.
About At Home Group
At Home Group Inc. owns and operates home decor stores. The Company
offers furniture, home furnishings, wall decor and decorative
accents, rugs, and housewares.
ATLAS SYSTEMS: To Seek Plan Confirmation on June 15
---------------------------------------------------
Judge Maria L. Oxholm has entered an order that the Plan of
Reorganization and Disclosure Statement of Atlas Systems Inc. is
granted preliminary approval, subject to any timely and proper
objections filed pursuant to this Court's Order Establishing
Deadlines and Procedures, previously entered.
The deadline to return ballots on the plan, as well as to file
objections to final approval of the disclosure statement and
objections to confirmation of the plan, is June 5, 2023.
No later than June 12, 2023, the debtor shall file a verified
summary of the ballot count under Sec. 1126(c) and (d) with a copy
of all original ballots attached.
The hearing on objections to final approval of the disclosure
statement and confirmation of the Plan shall be held on Thursday,
June 15, 2023, at 11:00a.m. in Room 1875, 211 W. Fort Street,
Detroit, Michigan.
Chapter 11 Plan
According to the Disclosure Statement, the Plan provides for the
satisfaction of all Allowed Administrative Claims on the Effective
Date or as soon thereafter as is practicable, unless otherwise
agreed by the Holder of such Claim. As to each Administrative Claim
Allowed thereafter, payment will be made as soon as practicable.
The Plan also provides for the satisfaction of all Allowed Priority
Claims in accordance with section 1129(a)(9) of the Bankruptcy Code
by either payment on the Effective Date or payment over a five-year
period in installments. There are no known Priority Claims other
than Administrative Claim and Priority Claims satisfied pursuant to
the Wages Order.
Under the Plan, Class IV includes Allowed Claims of trade vendors
having Unsecured Claims of less than $25,000 and who agree to
return to ordinary payments terms. Class IV is comprised of
approximately twenty-nine (29) claimants having an aggregate Claim
pool of approximately $34,130. Of those Class IV claimants, all but
two have Claims less than $5,000.
Allowed Class IV Claims shall be paid 100% of their Allowed Class
IV Claims, without interest, at Debtor's or Reorganized Debtor's
option, (i) in accordance with the applicable contractual documents
with the payment terms extended by an equal number of months to any
payments missed or delay on account of the Subchapter V Case, (ii)
in equal monthly payments over a three-month period beginning on
the later of the Effective Date or when Allowed, or (iii) as
otherwise agreed between the Holder of the Class IV Claim and the
Debtor or Reorganized Debtor. Notwithstanding the forgoing, if such
allowed Class IV Claim is less than $5,000.00, the Debtor may, in
its discretion, pay such Allowed Class IV Claim at any time after
the Effective Date.
Class V is comprised of all Unsecured Claims that are not Class IV
Claims.
Class V is comprised of two Creditors having an aggregate Claim
pool of approximately $123,809 as of the Petition Date. The
Reorganized Debtor shall distribute its Projected Disposable Income
to pay each Holder of an Allowed Class V Claim in either, at its
sole election, (i) three equal annual payments, without interest,
beginning on the first Business Day of the first full month
following the first anniversary of the Effective Date and on the
same date each year thereafter for the following two years or (ii)
within sixty (60) days after the Effective Date. In no event shall
the payments made to any Holder of an Allowed Class V Claim be more
than the full amount of such Holder's Allowed Class IV Claim.
The Debtor estimates that Unsecured Creditors are owed $183,643 in
the aggregate pursuant to the Debtor's Schedules (exclusive of any
deficiency claims by any Creditor holding a Secured Claim or
amendments to the schedules). However, this amount may increase or
decrease in the event that executory contracts or unexpired leases
are rejected, amendments are filed reflecting changes in amount of
the Claim, and/or the Court overrules or sustains objections to
Claims that have been or will be made. The Debtor reserves all of
its rights and objections to any non-priority Unsecured Claim.
A listing of the Debtor's Unsecured Creditors is on file with the
Bankruptcy Court.
The Debtor intends to continue in business by reorganizing its
operations and debt structure.
Proposed Counsel for the Debtor:
John J. Stockdale, Jr.
Kim K. Hillary
SCHAFER AND WEINER, PLLC
40950 Woodward Avenue, Suite 100
Bloomfield Hills, MI 48304
Tel: (248) 540-3340
E-mail: Jstockdale@schaferandweiner.com
khillary@schaferandweiner.com
A copy of the Order dated May 5, 2023, is available at
https://bit.ly/3AZGxY2 from PacerMonitor.com.
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/3HNYL2y from PacerMonitor.com.
About Atlas Systems Inc.
Atlas Systems Inc. -- https://www.atlasphones.com -- was
established in 1999 as an independent distributor of new and use
telephones and telephone systems.
Atlas Systems sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-43287) on April 10,
2023, with up to $10 million in both assets and liabilities.
Christopher Klow, vice president of Atlas Systems, signed the
petition.
Judge Maria L. Oxholm oversees the case.
John J. Stockdale, Jr, Esq., at Schafer and Weiner, PLLC, is the
Debtor's legal counsel.
AVINGER INC: Posts $5.9 Million Net Loss in First Quarter
---------------------------------------------------------
Avinger, Inc. has filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss applicable
to common stockholders of $5.86 million on $1.89 million of
revenues for the three months ended March 31, 2023, compared to a
net loss applicable to common stockholders of $11.38 million on
$1.89 million of revenues for the three months ended March 31,
2022.
As of March 31, 2023, the Company had $20.47 million in total
assets, $21.96 million in total liabilities, and a total
stockholders' deficit of $1.49 million.
Avinger said, "The Company can provide no assurance that it will be
successful in raising funds pursuant to additional equity or debt
financings or that such funds will be raised at prices that do not
create substantial dilution for its existing stockholders. Given
the volatility in the Company's stock price, any financing that the
Company may undertake in the next twelve months could cause
substantial dilution to its existing stockholders, and there can be
no assurance that the Company will be successful in acquiring
additional funding at levels sufficient to fund its various
endeavors. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. In addition, the
COVID-19 pandemic and macroeconomic environment have in the past
resulted in and could continue to result in reduced consumer and
investor confidence, instability in the credit and financial
markets, volatile corporate profits, restrictions on elective
medical procedures, and reduced business and consumer spending,
which could increase the cost of capital and/or limit the
availability of capital to the Company.
"If the Company is unable to raise additional capital in sufficient
amounts or on terms acceptable to it, the Company may have to
significantly reduce its operations or delay, scale back or
discontinue the development and sale of one or more of its
products. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. The
Company's ultimate success will largely depend on its continued
development of innovative medical technologies, its ability to
successfully commercialize its products and its ability to raise
significant additional funding."
Management Commentary
"We sustained solid operations in the first quarter, significantly
improving gross margin from the prior year and maintaining our
efficient operating cost model as we moved forward with multiple
product and clinical programs designed to expand and enhance
Avinger's growth opportunities," commented Jeff Soinski, Avinger's
President and CEO.
"Our recent 510(k) clearance for Tigereye ST, the first of two
anticipated this year, supports our market expansion strategy with
new peripheral products that we expect will deepen our case
activity within accounts and enable physicians to treat additional
patients with Avinger's best-in-class Lumivascular approach. We
have initiated limited launch of the Tigereye ST device and
anticipate expanding to full commercial availability in the third
quarter. We also advanced our 510(k) submission for Pantheris LV,
filed in January, and anticipate FDA clearance in the mid-year time
frame. We believe Pantheris LV will be an important growth driver
for our business by streamlining the atherectomy procedure and
expanding our capabilities for the treatment of large vessel
disease. In anticipation of a favorable review outcome, we are
planning for Pantheris LV commercial launch in the second half of
this year.
"We are excited about the progress we are making in the development
of our first coronary product application, targeting a superior
image-guided solution to the complex, expensive and uncertain
procedures currently used to cross chronic total occlusions in the
coronary arteries. We have continued to advance product
development and anticipate completing our first round of animal
studies this quarter as we work towards our goal of filing an IDE
application with the FDA within the next 9-12 months to allow for
initiation of a clinical study in 2024."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001506928/000143774923013660/avgr20230331_10q.htm
About Avinger
Headquartered in Redwood City, California, Avinger, Inc. --
http://www.avinger.com-- is a commercial-stage medical device
company that designs and develops image-guided, catheter-based
system for the diagnosis and treatment of patients with Peripheral
Artery Disease (PAD).
Avinger reported a net loss applicable to common stockholders of
$27.24 million for the year ended Dec. 31, 2022, a net loss
applicable to common stockholders of $21.59 million for the year
ended Dec. 31, 2021, a net loss applicable to common stockholders
of $22.87 million for the year ended Dec. 31, 2020, a net loss
applicable to common stockholders of $23.03 million for the year
ended Dec. 31, 2019, and a net loss applicable to common
stockholders of $35.69 million for the year ended Dec. 31, 2018.
San Francisco, California-based Moss Adams LLP, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated March 15, 2023, citing that the Company's recurring
losses from operations and its need for additional capital raise
substantial doubt about its ability to continue as a going concern.
BANDED HORN: Seeks to Hire Molleur Law Office as Bankruptcy Counsel
-------------------------------------------------------------------
Banded Horn Brewing Company, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Maine to hire Molleur Law
Office as its legal counsel.
The firm's services include:
a. consultations regarding bankruptcy;
b. preparation of bankruptcy schedules and Chapter 11 plan;
c. attendance at the initial debtor interview, status
conference, Section 341 meetings and Rule 2004 examinations;
d. negotiations with creditors regarding the plan;
e. attendance at court hearings for confirmation of the
Debtor's plan; and
f. prosecution and defense of any contested matters, motions
or adversary proceedings in the bankruptcy court necessary for the
successful conclusion of the Debtor's Chapter 11 case.
The firm received $10,000 from the Debtor as a retainer.
As disclosed in court filings, Molleur Law Office is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Tanya Sambatakos, Esq.
Molleur Law Office
190 Main Street, 3rd floor
Saco, ME 04072
Phone: (207) 283-3777
Email: tanya@molleurlaw.com
About Banded Horn Brewing Company
Banded Horn Brewing Company, LLC, a company in Biddeford, Maine,
filed its voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Maine Case No. 23-20091) on May 2, 2023.
At the time of filing, the Debtor estimated $100,001 to $500,000 in
assets and $1,000,001 to $10 million in liabilities.
Judge Peter G Cary presides over the case.
Tanya Sambatakos, Esq., at the Molleur Law Office represents the
Debtor as counsel.
BAR B QUING: Seeks to Hire James Patterson as Bankruptcy Counsel
----------------------------------------------------------------
Bar B Quing With My Honey Restaurant & Bar LLC seeks approval from
the U.S. Bankruptcy Court for the Southern District of Alabama to
hire James Patterson, LLC as its bankruptcy counsel.
The Debtor requires legal counsel to:
a. take appropriate action with respect to secured and
priority creditors;
b. take appropriate action with respect to possible voidable
preferences and transfers;
c. prepare legal papers and try before the court whatever
issues are deemed necessary;
d. investigate the Debtor's accounts and financial
transactions; and
e. perform all other legal services.
The firm will charge an hourly fee of $250, plus expenses.
James Patterson does not represent interests adverse to the Debtor
and its estate, according to court filings.
The firm can be reached through:
James D. Patterson, Esq.
James Patterson, LLC
2153 Airport Boulevard
Mobile, AL 36606
Tel: 251-432-9212
Email: jdp@jamespattersonlaw.com
About Bar B Quing With My Honey
Restaurant & Bar
Bar B Quing With My Honey Restaurant & Bar, LLC sought protection
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Ala. Case No. 23-11005) on May 2, 2023, with up to $50,000 in
assets and $50,001 to $100,000 in liabilities. Judge Henry A.
Callaway oversees the case.
James D. Patterson, Esq., at James Patterson, LLC serves as the
Debtor's counsel.
BEVERLY COMMUNITY HOSPITAL: Hearing Today on Cash Collateral Use
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, authorized Beverly Community Hospital
Association and its debtor-affiliates to use cash collateral on an
interim basis in accordance with its agreement with U.S. Bank
National Association, as indenture trustee pursuant to existing
funded indebtedness facilities.
A final hearing on the matter is set for May 17, 2023 at 9 a.m.
As previously reported by the Troubled Company Reporter, the
California Statewide Communities Development Authority issued
California Statewide Communities Development Authority Revenue
Bonds (Beverly Community Hospital Association), Series 2015 in the
aggregate principal amount of $39.725 million for the benefit of
the Debtors pursuant to a Bond Indenture, dated as of December 1,
2015, between the Authority and U.S. Bank, as trustee thereunder.
The proceeds of the 2015 Bonds were lent by the Authority to the
Debtors pursuant to a Loan Agreement, dated as of December 1,
2015.
The Authority also issued California Statewide Communities
Development Authority Revenue Bonds (Beverly Community Hospital
Association), Series 2017 in the aggregate principal amount of
$19.840 million for the benefit of the Debtors pursuant to a Bond
Indenture, dated as of May 1, 2017, between the Authority and U.S.
Bank, as trustee thereunder. The proceeds of the 2017 Bonds were
lent by the Authority to the Debtors pursuant to a Loan Agreement,
dated as of May 1, 2017.
Each of the two facilities was issued and secured pursuant to a
Master Trust Indenture dated as of December 1, 2015, among the
Debtors and U.S. Bank as Master Trustee.
The collateral granted by the Debtors pursuant to the Indenture
consists of (i) the real property that constitutes the Beverly
Community Hospital; and (ii) "Gross Receivables," is defined in the
Indenture as all of the accounts, chattel paper, instruments;
general intangibles. . . of each Debtor." The Debtors agree that
the Gross Receivables and the proceeds thereof constitute cash
collateral as defined by 11 U.S.C. section 363(a).
The Debtors believe that within the past year or two, U.S. Bank may
have transferred its trust business to U.S. Bank Trust Company,
National Association. If the transfer did occur, the Indenture
Trustee will refer to U.S. Bank Trust Company, National
Association.
The Debtors and the Indenture Trustee are engaging in settlement
discussions that, if successful, would resolve the Motion. They
therefore seek to postpone for a short period the deadlines for
filing any opposition and any reply to the to enable them to
concentrate on settlement.
Moreover, to avoid yet a third interim order re the use of cash
collateral, the Indenture Trustee has agreed to the use of cash
collateral for an additional week to and including May 17, 2023,
under the same terms and conditions as specified in the April 27
Cash Collateral Order.
A copy of the order is available at https://bit.ly/3LXra7G from
PacerMonitor.com.
About Beverly Community Hospital Association
Beverly Community Hospital Association and affiliates operate
general medical and surgical hospitals. The Debtors sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
C.D. Cal. Lead Case No. 23-12359) on April 19, 2023. In the
petition signed by Alice Cheng, its chief executive officer, the
Debtor disclosed up to $10 million in assets and up to $500 million
in liabilities.
Judge Sandra R. Klein oversees the case.
The Debtors tapped Sheppard, Mullin, Richter, and Hampton LLP as
legal counsel.
BITTREX INC: Gets Court Okay to Tap $7-Mil. Bitcoin Loan
--------------------------------------------------------
Dietrich Knauth of Reuters reports that bankrupt cryptocurrency
exchange Bittrex Inc received court permission Wednesday to borrow
$7 million in bitcoin to fund the start of its Chapter 11 case.
Seattle-based Bittrex filed for bankruptcy Monday, May 8, 2023,
saying it intended to return customer funds and wind down its U.S.
operations. The company's international affiliates will continue to
operate crypto exchanges for customers outside of the U.S., but
Bittrex said that the U.S. regulatory environment had become
untenable after the SEC sued the company for allegedly running an
unregistered securities exchange.
Before filing for bankruptcy, Bittrex stopped accepting new
deposits from U.S. customers and told its existing users to
withdraw their crypto from the platform.
Bittrex's U.S. operations made up a minority of its overall users.
Affiliated exchanges based in Liechtenstein and Bermuda accounted
for about 77% of the company's 5.4 million users as of March 27,
according to court filings.
Bittrex believes that it has enough cryptocurrency to fully repay
all remaining customers, and the bankruptcy loan will ensure a
smooth wind-down that protects customer assets, attorney Susheel
Kirpalani told U.S. Bankruptcy Judge Brendan Shannon at a Wednesday
court hearing in Wilmington, Delaware.
Shannon approved the loan on an interim basis, allowing Bittrex to
borrow 250 bitcoin from its parent company Aquila Holdings, which
is not filing for bankruptcy. Bittrex will seek permission to
borrow an additional 450 bitcoin at a hearing in June, and the
total value of its proposed loan is $19.7 million, based on bitcoin
prices when it filed for bankruptcy.
Shannon said he was persuaded to accept a "novel currency" for the
loan because it offered favorable terms compared to other
bankruptcy loans, including a relatively low 4% interest rate and
built-in protections related to bitcoin's price volatility. Bittrex
intends to repay the loan in bitcoin, and it will not be forced to
pay more than 110% of bitcoin's current value if it is later forced
to acquire more bitcoin to make loan repayments, according to court
documents.
Shannon also approved temporary privacy protections allowing
Bittrex to remove customer names from court documents. Bittrex
attorney Patricia Tomasco pointed out that one large accountholder
has more than $14 million in crypto still on Bittrex's platform,
saying that revealing that customer's name would subject them to a
barrage of phishing emails.
"That's a pretty hefty prize for low-tech skullduggery," Tomasco
said.
Shannon said he will revisit the privacy issue at a later hearing.
About Bittrex Inc.
Bittrex is a regulated digital assets exchange platform.
Desolation Holdings and three of its affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del., Lead Case No. 23-10597) on May 8, 2023.
Desolation Holdings' debtor-affiliates are Bittrex, Inc., Bittrex
Malta Holdings Ltd. and Bittrex Malta Ltd.
At the time of filing, the Debtors estimated consolidated assets of
$500 million to $1 billion in assets and $500 million to $1 billion
in liabilities.
The Hon. Brendan Linehan Shannon presides over the cases.
Quinn Emanuel Urquhart & Sullivan, LLP, led by partner Patricia B.
Tomasco, is the Debtors' counsel. Berkeley Research Group, LLC is
the Debtors' restructuring advisor. Omni Agent Solutions is the
claims agent.
BLINK CHARGING: Incurs $29.8 Million Net Loss in First Quarter
--------------------------------------------------------------
Blink Charging Co. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $29.80 million on $21.67 million of total revenues for the three
months ended March 31, 2023, compared to a net loss of $15.14
million on $9.80 million of total revenues for the three months
ended March 31, 2022.
As of March 31, 2023, the Company had $441 million in total assets,
$107.34 million in total liabilities, and $333.66 million in total
stockholders' equity.
Blink Charging said, "We have not yet achieved profitability and
expect to continue to incur cash outflows from operations. It is
expected that our operating expenses will continue to increase and,
as a result, we will eventually need to generate significant
product revenues to achieve profitability. Historically, we have
been able to raise funds to support our business operations,
although there can be no assurance that we will be successful in
raising significant additional funds in the future. We expect that
our cash on hand will fund our operations for at least 12 months
after the issuance date of the financial statements included in
this Quarterly Report.
"Since inception, our operations have primarily been funded through
proceeds received in equity and debt financings. We believe we
have access to capital resources and continue to evaluate
additional financing opportunities. There is no assurance that we
will be able to obtain funds on commercially acceptable terms, if
at all. There is also no assurance that the amount of funds we
might raise will enable us to complete our EV development
initiatives or attain profitable operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1429764/000149315223016159/form10-q.htm
About Blink Charging
Based in Miami Beach, Florida, Blink Charging Co. (OTC: CCGID)
f/k/a Car Charging Group Inc. -- http://www.CarCharging.com-- is
an owner and operator of electric vehicle (EV) charging equipment
and has sold or deployed over 66,000 chargers, many of which are
networked EV charging stations, enabling EV drivers to easily
charge at any of Blink's charging locations worldwide. Blink's
principal line of products and services is its nationwide Blink EV
charging networks and Blink EV charging equipment, also known as
electric vehicle supply equipment ("EVSE"), and other EV related
services, and the products and services of recent acquisitions,
including SemaConnect, EB Charging, Blue Corner and BlueLA.
Blink Charging reported a net loss of $91.56 million in 2022, a net
loss of $55.12 million in 2021, a net loss of $17.85 million in
2020, a net loss of $9.65 million in 2019, and a net loss of $3.42
million in 2018.
BLUE DIAMOND: Seeks to Hire Mullins Law Firm as Counsel
-------------------------------------------------------
Blue Diamond Energy, Inc. and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Mississippi to
hire Mullins Law Firm as counsel.
The firm will advise the Debtors with respect to their business and
management of their property and perform other legal services.
The firm will charge $325 per hour for the services of Steve Wright
Mullins, Sr., Esq., the firm's attorney primarily responsible for
this case.
Mr. Mullins disclosed in court filings that his firm neither holds
nor represents any interest adverse to the Debtor and its estate.
The firm can be reached through:
Steve Wright Mullins, Sr., Esq.
Mullins Law Firm
1261 Pass Road
Gulfport, MS 39501
Mobile, AL 36689-5566
Tel: 228-218-3534
Email: Jackfish28@gmail.com
About Blue Diamond Energy
Blue Diamond Energy, Inc. and affiliates, Escambia Operating Co.,
LLC and Escambia Asset Company, LLC, filed petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Lead
Case No. 23-50490) on April 3, 2023. In its petition, Blue Diamond
reported $10 million to $50 million in both assets and liabilities.
Thomas Swarek, president of Blue Diamond, signed the petition.
Judge Jamie A. Wilson oversees the case.
The Debtors are represented by Steve Wright Mullins, Sr., Esq., at
Mullins Law Firm.
BROOKFIELD WEC: Fitch Alters Outlook on 'B' LongTerm IDR to Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Brookfield WEC Holdings Inc.'s and
Brookfield WEC Holdings Sub-Aggregator LP's (WEC; operating under
the name Westinghouse Electric Company) Long-Term Issuer Default
Ratings (IDRs) at 'B'. The Rating Outlook has been revised to
Stable from Positive. Fitch has also affirmed WEC's asset-based
lending (ABL) facility at 'BB'/'RR1' and its senior secured
revolving credit facility (RCF) and term loans at 'B+'/'RR3'.
The rating reflects the company's market leading position in
nuclear energy, technological capabilities, recurring
demand-focused offering, solid pre-dividend free cash flow
generation and financial flexibility. The rating is constrained by
the company's financial leverage and end market concentration. The
Outlook revision reflects extended deleveraging horizon and the
near-term impact on EBITDA margins from the company's growth
initiatives. Enhanced visibility from new orders and a growing
backlog leading to a sub-4.5x leverage profile could support
positive rating actions in the future.
KEY RATING DRIVERS
Deleveraging Horizon Lengthened: Fitch expects WEC's leverage to
fall to 4.8x at the end of 2023 from 5.3x at the end of 2022, as
recently acquired BHI Energy (BHI) contributes a full year of
earnings, WEC pays down $150 million on its ABL revolver following
the divestiture of the BHI's Power Delivery business, and nuclear
fuel volumes grow. Fitch expects WEC to continue to deleverage in
the next few years as earnings grow. However, Fitch now expects
EBITDA leverage to fall under its positive rating sensitivity of
4.5x by 2025, compared to its previous expectation of 2023 because
of the impact on profitability from WEC's investments in its
microreactor business and other growth initiatives.
Stabilizing EBITDA Margins: Fitch expects WEC's EBITDA margin to
fall to 17% in 2023 with a full year of contribution from the lower
margin BHI business but to improve to 18% over the forecast period
as WEC continues to realize cost savings associated with synergies
and other cost restructuring actions. The company's investment into
microreactors and Small Module Reactor (SMR) development could
limit possible EBITDA margin expansion in the near-to-medium term.
Improved Growth Prospects: Fitch expects WEC's growth to be driven
by higher nuclear fuel volumes and organic growth in its operating
plants segment and environmental services businesses, which will
more than offset legacy power plant projects rolling off. The
company is making inroads in nuclear fuel, especially VVER fuel, as
Eastern European countries look to reduce their dependency on
Russia. Westinghouse signed a deal in 2022 to supply nuclear fuel
to the Czech Republic's nuclear power plant, Temelin, and another
deal in March 2023 to supply fuel to the country's other nuclear
power plant, Dukovany.
WEC's energy system segment could accelerate growth in the latter
part of Fitch's forecast period. WEC and Poland have signed a deal
to construct three AP1000 reactors that could translate into
billions of dollars over the next decade. The company is also
developing its own SMR design, AP300, and a microreactor design,
eVinci. SMRs are smaller than traditional nuclear reactors and
manufactured at a plant rather than constructed on-site. The
technology promises scalability, lower capital costs, a smaller
footprint, faster deployment and will potentially be safer and
cleaner. Given the long time horizon, limited visibility,
uncertainty on execution and commercial viability of SMR
technology, Fitch has not incorporated the long-term growth
prospects of energy systems into its forecasts.
Improving Nuclear Outlook: Nuclear energy policy has become more
supportive as it is increasingly seen as an energy alternative.
Countries are seeking to balance security of supply while
transitioning away from fossil fuels, and abandoning nuclear would
make the transition more difficult and expensive. The outlook for
nuclear power shifted following the Russian invasion of Ukraine,
which highlighted energy security risk. The International Energy
Agency (IEA) expects nuclear capacity growth to grow more than 40%
from 2020 to 2050 with much of the growth centered in China and the
rest of Asia. The lifetime extension of existing nuclear power
plants, construction of more than 400GW of new plants and restart
of closed plants will more than offset the planned retirement of
existing plants.
Leading Market Position and Technology: WEC has a leading
technology position in the commercial nuclear reactor space, with
approximately half of the world's nuclear reactors running on its
technology. These reactors were either built by WEC or other
companies that licensed its technology. In the U.S. and Europe, the
company has a top one or top two market position in nuclear plant
services, benefiting from intellectual property, technical
expertise, intense regulations, high switching costs and an
extended fuel licensing process. The company also has a presence in
China, where much of the world's upcoming growth in nuclear energy
generation is expected, though there is a risk of increased
competition from local firms.
High Recurring Revenue Base: WEC benefits from a solid recurring
revenue base supported by multiyear contracts and regular
maintenance requirements. Fitch estimates that over two-thirds of
profitability is driven by regularly recurring refueling and
maintenance outages serviced under contracts generally ranging from
10-15 years for fuel and three to five years for outage services.
These refueling cycles drive some volatility in performance yoy,
though the risk is moderated by the regulatory-driven
predictability of these cycles.
Financial Flexibility Remains Strong: WEC's flexibility is
supported by expectations of solid liquidity and pre-dividend FCF
generation. Fitch expects EBITDA interest coverage to be around 3x
in 2023 through the forecast period. WEC's coverage is stronger
than the 'B' rating category midpoint for diversified industrial
firms. In addition, Fitch expects capital deployment plans will
focus on internal growth investments and acquisitions, especially
following the announced ownership change.
Rating Intact Post Ownership Change: In October 2022, Brookfield
Business Partners' (BBU) announced plans to sell its stake in WEC
to a consortium with Brookfield Renewable Partners (BEP,
BBB+/Stable) and its institutional partners owning a 51% stake, and
Cameco Corporation (Cameco), owning the remaining 49%. According to
BEP, this transaction will not trigger a change of control clause
as Brookfield Asset Management Inc. remains the ultimate parent.
Fitch does not expect this ownership change to significantly alter
WEC's credit profile in the near term, and WEC's debt structure
will remain in place.
DERIVATION SUMMARY
WEC's ratings reflect its leading market position servicing the
nuclear reactor market, strong technological capabilities,
recurring demand-focused offering and prospects of improving
profitability. These factors are weighed against its concentration
in the nuclear energy market, execution risks associated with its
growth strategies and concentrated ownership under a private equity
firm. Fitch expects WEC's EBITDA margins to be around 18% after the
BHI acquisition. EBITDA leverage is projected to remain in the
4x-5x range consistent with 'B' rating characteristics.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Revenues to benefit from a full year of contribution from BHI and
higher fuel volume in 2023. Sales growth is expected to moderate to
low-single digit organic growth through the forecast with some
variability largely due to fuel and outage cycles.
- EBITDA margins decline to around 17% in 2023, after considering
the full year impact of BHI, before improving to about 18% as
synergies progress;
- Restructuring and non-recurring deal costs remain elevated over
the next couple of years. Catch-up pension contributions are made
over the next few years;
- WEC's financial policies remain in place, including improving net
leverage below 4.0x. Growth investments are balanced with managing
its leverage profile and shareholder distributions.
- Effective interest rate in the 6.4%-7.5% range through FY2026
RECOVERY ANALYSIS
The recovery analysis for a hypothetical future bankruptcy assumes
that WEC would be considered a going concern (GC) in bankruptcy,
and that the company would be reorganized rather than liquidated.
Fitch has assumed a 10% administrative claim.
The GC EBITDA estimate of $480 million reflects Fitch's view of a
sustainable post-reorganization EBITDA level, upon which the agency
bases the valuation of the company. It includes BHI after the
divestiture of the power delivery business. The GC EBITDA reflects
the secular challenges facing the industry, including a long-term
decline in the nuclear industry without incremental newbuilds, and
the potential for significant liabilities arising from nuclear or
environment incidents. The estimate also reflects Fitch's
assumption that WEC can mitigate adverse conditions with additional
cost reductions.
An enterprise value multiple of 6x is used to calculate a
post-reorganization valuation and reflects several factors. The
recent bankruptcy exit multiple for WEC, based on the $3.8 billion
purchase price by Brookfield (including transaction costs) was 9x
based on fiscal 2017 EBITDA, and 7x based on fiscal 2018 EBITDA. In
addition, the 2018 acquisition of WEC's key competitor, Framatome,
was completed at approximately 8x EBITDA. The acquisition of BHI
was completed at 9.0x EBITDA, before synergies.
The ABL facility and first-lien RCF are assumed to be fully drawn
upon default. The ABL facility is senior to the first-lien RCF and
term loans and was 75% drawn at the end of 2022.
The waterfall results in a 'RR1' Recovery Rating for the ABL
facility of $200 million, representing outstanding recovery
prospects. The waterfall also indicates a 'RR3' for the first-lien
RCF of $200 million and term loan of $3.5 billion, corresponding to
good recovery prospects.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Maintenance of backlogs and contract renewals that supports
earnings and cash flow stability;
- WEC demonstrates sustainably positive organic growth outside of
legacy plant projects;
- WEC adheres to a disciplined financial policy supporting EBITDA
leverage maintained below 4.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Decline in backlogs and contract renewals that erode earnings and
cash flow stability;
- An aggressive financial policy leads to EBITDA leverage
maintained above 5.5x and EBITDA interest coverage is sustained
below 2.5x;
- Heightened liquidity risk as a result of a 50% reduction in
credit line availability.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch considers WEC's liquidity to be
sufficient given the company's cash, revolver availability and
pre-dividend FCF generation. As of Dec. 31, 2022, WEC had liquidity
of $389 million including $139 million of cash and equivalents and
$50 million of availability on its ABL revolver and $200 million
available on its revolver.
Fitch expects WEC to pay down its $150 million outstanding on its
ABL revolver and the company's scheduled amortization in 2023 and
2024 are manageable. The company's First Lien Term Loan of $2.9
billion and incremental term loan of about $550 million are
scheduled to mature in August 2025. The two revolving facilities
mature in June 2026 with a springing trigger to May 2025 on the ABL
revolver.
ISSUER PROFILE
Westinghouse Electric Company provides a variety of engineering
services, nuclear fuel and various components for nuclear power
plants globally. It was acquired out of bankruptcy by Brookfield
Asset Management in 2018.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance for WEC 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
----------- ------ -------- -----
Brookfield WEC
Holdings
Sub-Aggregator LP LT IDR B Affirmed B
Brookfield WEC
Holdings Inc. LT IDR B Affirmed B
senior secured LT BB Affirmed RR1 BB
senior secured LT B+ Affirmed RR3 B+
BURTS CONSTRUCTION: Court Approves Disclosure Statement
-------------------------------------------------------
Judge Christopher Lopez has entered an order approving Burts
Construction, Inc.'s Disclosure Statement, as amended and
supplemented.
June 7, 2023, is fixed as the last day for filing written
acceptances or rejections of the Amended Plan.
August 2, 2023, at 11:00 a.m., in Courtroom No. 401 515 Rusk Ave.,
Houston, Texas 77002 or by video at gotomeet.me/Judge Lopez and
audio at 832/917-1510, code 590153, is fixed for the hearing on
confirmation of the Plan.
June 7, 2023, is fixed as the last day for filing and serving
written objections to confirmation of the Plan.
About Burts Construction
Burts Construction, Inc. is a family-owned general contractor that
offers, among other services, land clearing, demolition, site
preparation, soil stabilization, underground utilities, and paving
services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-31700) on June 20,
2022. In the petition signed by Katherine Burts, president, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge Christopher M. Lopez oversees the case.
Julie M. Koenig, Esq., at Cooper and Scully, PC is the Debtor's
counsel.
Ted L. Walker, Esq., at the Walker Firm, represents Allegiance Bank
as counsel.
C&L DINERS: Unsecureds to Get 2% to 6% in Plan
----------------------------------------------
C & L Diners, LLC, submitted a Modified Plan of Reorganization
under Subchapter V dated May 3, 2023.
The Plan is Filed under Subchapter V of Chapter 11 of the
Bankruptcy Code and proposes to pay Effective Date payments and
holders of allowed claims pursuant to Plan provisions from: (i) the
Employee Retention Tax Credit for the 2021 year in the amount of
$448,815; and (ii) the Debtor's cash flow from future operations.
The Employee Retention Tax Credit was applied for and approved.
The funds have been received from the Internal Revenue Service.
However, during the case, the Debtor has sought approval for
post-petition financing from the managing member, Mr. Li, to be
repaid as an administrative claim pursuant to Section 502 of the
Bankruptcy Code in the amount of $30,000.00. To the extent that a
claim arises from an alleged personal injury cause of action, the
claim holder's recovery, except for self-insured portion which is
up to $25,000.00, should be asserted against applicable insurance
coverage.
Under the Plan, Class 7 General Unsecured Claims in excess of
$10,000 and lease rejection claims total $4,493,409 (based upon an
ADP claim amount of $800,000). Holders of Allowed General
Unsecured Claims will receive distributions as follows:
* Payment frequency: 12 Quarterly payments commencing 30 days
after the Effective Date for a total of 3 years of payments.
* Payment Amount: See Exhibit D with the following link:
https://bit.ly/3LERL9r, individual amounts are pro rata and based
on the amount of each allowed claim.
The holders of Class 7 Allowed General Unsecured Claims are
Impaired, and thus, are entitled to vote to accept or reject the
Plan.
Estimated pro rata distribution is 6% for Class 7 exclusive of
claims subject to objections. Estimated pro rata distribution is
2% for Class 7 inclusive of claims subject to objection.
In addition to distributions of projected disposable income to,
holders of Class 7 General Unsecured Claims, may receive additional
fund from the following: (i) any funds remaining from the
convenience class fund after payment to holders of Class 1
Convenience Claims; and (ii) any funds remaining from the estimated
franchisor mandate improvement funds at the end of the Plan term
that were not expended. Class 7 is impaired.
Counsel for the Debtors:
Ira S. Greene, Esq.
LOCKE LORD LLP
1 Landmark Square, Suite 1650
Stamford, CT 06901
Tel: (203) 353-6880
Fax: (888) 325-9691
E-mail: ira.greene@lockelord.com
- and -
Alan H. Katz, Esq.
Brookfield Place, 200 Vesey Street, 20th Floor
New York, NY 10281
Tel: (212) 415-8905
Fax: (212) 812-8380
- and -
Douglas S. Draper, Esq.
Greta M. Brouphy, Esq.
Michael E. Landis, Esq.
HELLER, DRAPER & HORN, L.L.C.
650 Poydras Street, Suite 2500
New Orleans, LA 70130-6103
Tel: (504) 299-3300
Fax: (504) 299-3399
E-mail: ddraper@hellerdraper.com
gbrouphy@hellerdraper.com
mlandis@hellerdraper.com
A copy of the Disclosure Statement dated May 3, 2023, is available
at https://bit.ly/3AXVbzc from PacerMonitor.com.
About C & L Diners
C & L Diners, LLC, and affiliates sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Conn. Lead Case No.
22-50599) on Nov. 8, 2022. In the petition filed by Herman Li,
operating member, the Debtors disclosed up to $10 million in both
assets and liabilities.
Judge Julie A. Manning oversees the case.
Ira S. Greene, Esq. and Tara L. Trifon, Esq., at Locke Lord LLP,
serve as the Debtors' legal counsel.
CALIFORNIA-NEVADA METHODIST: Court Approves Disclosure Statement
----------------------------------------------------------------
Judge Charles Novack has entered an order approving the First
Amended Disclosure Statement filed by California-Nevada Methodist
Homes, dated April 28, 2023.
All objections to the Disclosure Statement not otherwise withdrawn
or resolved by this Order are overruled.
The ballots are approved.
Based on the foregoing, the Court approves the following schedule
for the solicitation, voting, notice, objection, and confirmation
of the Plan:
The deadline to serve solicitation packets and non-voting class
notices will be on May 19, 2023.
The deadline for creditors to submit ballots to vote on the Plan
will be on June 16, 2023 at 4:00 p.m. Pacific.
The deadline to file and serve objections to the Plan will be on
June 20, 2023 at 4:00 p.m. Pacific.
The deadline to file ballots and ballot tabulations will be on June
27, 2023.
The deadline to file motions or briefs in support of the Plan
and/or in response to objections to the Plan will be on June 27,
2023.
The hearing on Plan confirmation will be on June 30, 2023 at 11:00
a.m. Pacific.
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. Cal. 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.
CAMECO TECHNOLOGIES: Court OKs Cash Collateral Access Thru Aug 31
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota authorized
Cameco Technologies, LLC, d/b/a Cameco Computers, to use cash
collateral on an interim basis through August 31, 2023.
The Debtor is authorized to use cash collateral for operational
expenses. The Debtor's operational expenses for which cash
collateral may be used consists of payroll, the purchase of
supplies, rent, insurance payments, utilities, allowed legal and
professional fees, telephone and internet.
The Debtor is authorized to grant as adequate protection to Fox
Capital Group, Inc., Slate Advance, Spark Funding, LLC d/b/a
Fundamental Capital SPE, LLC and Vivian Capital Group, LLC,
replacement liens on all assets of the Debtor-In-Possession to the
extent of use of cash collateral, which replacement liens will have
the same priority, dignity and effect as the pre-petition liens
held by said creditors. Assets excluded from the replacement liens
are the Debtor's bankruptcy causes of action. The Debtor is also
authorized to pay $500 per month to Fox Capital Group, Inc., Slate
Advance, Spark Funding, LLC d/b/a Fundamental Capital SPE, LLC and
Vivian Capital Group, LLC as additional adequate protection until
August 31, 2023.
The replacement liens granted will be perfected without filing.
A copy of the order is available at https://bit.ly/44Tm8BI from
PacerMonitor.com.
About Cameco Technologies, LLC
Cameco Technologies, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Minn. Case No. 22-31938) on
November 23, 2022. In the petition signed by Serge Ngouambe,
president, the Debtor disclosed up to $500,000 in assets and up to
$1 million in liabilities.
Judge Katherine A. Constantine oversees the case.
Steven B. Nosek, Esq., at Steven B. Nosek, P.A., is the Debtor's
counsel.
CANO HEALTH: Incurs $60.6 Million Net Loss in First Quarter
-----------------------------------------------------------
Cano Health, Inc. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $60.58 million on $866.91 million of total revenue for the three
months ended March 31, 2023, compared to a net loss of $85,000 on
$704.34 million of total revenue for the three months ended March
31, 2022.
As of March 31, 2023, the Company had $1.94 billion in total
assets, $1.44 billion in total liabilities, and $504.4 million in
total stockholders' equity.
Cano Health said, "We believe that our existing cash, cash
equivalents and restricted cash along with our expected cash
generation through operations ... and revolving line of credit will
be sufficient to fund our operating and capital needs for at least
the next 12 months from the date of issuance of the unaudited
condensed consolidated financial statements included in this Form
10-Q."
Management Commentary
"We are pleased to start the year with solid operating and
financial performance that was generally in-line with our
expectations," said Dr. Marlow Hernandez, Cano Health's chief
executive officer. "Over the past six months, our management team
has implemented a range of initiatives to improve our cost
structure, improve operating cash flow, and simplify and optimize
our business model. The first quarter results reflect meaningful
operating efficiencies, and while we recognize there is more work
to be done, as we continue to execute on our action plan, we expect
our earnings trajectory to improve and accelerate, particularly in
the second half of the year."
Dr. Hernandez continued: "Cano Health has established a
differentiated Medicare Advantage focused business model and, based
on the historic performance of our more established medical
centers, we expect to unlock substantial embedded profitability as
our medical centers continue to mature. With a track record of
industry-leading clinical outcomes and patient engagement, we are
uniquely positioned to capture additional share of a compelling
market opportunity, helping more patients live longer and healthier
lives. We expect to continue our disciplined growth trajectory
throughout 2023 and remain squarely focused on near-term execution
to achieve sustainable profitability and build long-term value."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001800682/000180068223000018/cano-20230331.htm
About Cano Health
Cano Health, Inc. (NYSE: CANO) -- canohealth.com -- is a primary
care-centric, technology-powered healthcare delivery and population
health management platform.
Cano Health reported a net loss of $428.39 million in 2022, a net
loss of $116.74 million in 2021, a net loss of $71.06 million in
2020, and a net loss of $19.78 million in 2019.
* * *
This concludes the Troubled Company Reporter's coverage of Cano
Health until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
CAPSTONE BORROWER: Fitch Assigns First Time B+ IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned Capstone Borrower, Inc. (dba Cvent) a
first-time Long-Term Issuer Default Rating (IDR) of 'B+'. Fitch has
also assigned Capstone Borrower's secured $115 million revolver and
$400 million secured term loan a rating of 'BB'/'RR2'. The Rating
Outlook is Stable.
Proceeds from the current debt offering, additional pari passu
senior secured debt, along with preferreds (not rated) and common
equity, will be used for the acquisition of Cvent Holding Corp. by
Blackstone for approximately $4.6 billion. The acquisition was
agreed upon in March 2023 and the deal is expected to close
mid-2023 subject to customary closing conditions and approvals.
The 'B+' IDR for Capstone Borrower reflects Cvent's strong
recurring revenues at 94%, its net dollar retention rate at 115%,
and its FCF generation which should grow over the rating horizon.
The rating also reflects expectations that leverage can fall over
the next several quarters as EBITDA increases. As a private equity
owned company, Fitch does have concerns that the sponsor could
prioritize growth via debt funded acquisitions or shareholder
returns rather than debt reduction.
KEY RATING DRIVERS
Elevated Leverage to Decline: Pro forma for the issuance of total
debt, Fitch calulates that Capstone Borrower's leverage at the end
of 2022 was high at 7.9x. If the company is successful with driving
revenues up and expenses down, leverage could fall to a range of
4.5x to 4.9x by the end of 2024 and to the low 4's by the end of
2025, barring any debt funded acquisitions or dividends to the
sponsor. Fitch expects leverage to decline due to increases in
EBITDA and expects debt reduction to be limited to mandatory debt
amortization payments.
FCF Margins and Capex: Between 2018 and 2022, Capstone Borrower had
capitalized software development costs that averaged 8% of revenues
which is significantly higher than its peers. For this reason,
Fitch also focuses on the company's FCF margins and
(CFO-capex)/debt since the capitalized software development costs
are captured with capex.
FCF margins have been over 10% over the last two years and that is
expected to fall to the mid-single digits in 2023 and 2024. The
ability to increase to double digits is contingent upon Capstone
Borrower's ability to execute its growth and cost savings plan.
(CFO-capex)/debt was very strong at 28.5% in 2021 and 31.8% in
2022, reflecting the company's low debt. With the LBO, Fitch
expects this ratio to fall in the single digits until it rises to
very low double digits in 2025 and 2026, again based on the
company's ability to execute.
Moderate Execution Risk: Capstone Borrower's adjusted EBITDA
margins averaged 21.1% between 2018 and 2022 and ranged from a high
of 25.9% in 2020 and a low of 18% in 2022. With Blackstone as its
new sponsor, it has plans to significantly increase EBITDA margins
beyond 2022 levels. Cost efficiencies are expected to come from a
right sized workforce, offshoring, and improved procurement
practices. Failure to successfully execute on its cost savings plan
will hurt the credit profile. Fitch notes that even if the
company's revenues didn't increase from 2022 but EBITDA margins
grew to 25.9%, pro forma 2022 leverage would be 5.5x.
Large and Diverse Customer Base: Cvent has over 22,000 customers
globally with the majority based in North America which accounted
for 87% of revenues. Approximately 50% of its contracts are
multi-year and the company has a strong net retention rate of 115%
for the LTM ending March 31, 2023. Strong demand for the company's
software solutions have driven a significant increase in the
company's net retention rates which prior to the pandemic were
110%-108% (in 2018 and 2019, respectively) and declined to 89.2% in
2020 and 101% in 2021 due to the pandemic.
Recurring revenues were 94% for the LTM ending March 31, 2023.
Revenues streams are somewhat diverse with the Events cloud segment
accounting for 70% of 2022 revenues. The Hospitality cloud segment
generated 30% of 2022 revenues. This segment includes its Cvent
Supplier Network (CSN) which has over 302,000 hotels and venues.
End Markets Offer Opportunities: Prior to the pandemic, Cvent
offered software solutions for in-person meetings and events. With
the pandemic, it expanded its offerings to suit its customer's
needs and its software solutions fit virtual, in person and hybrid
meetings and events. Cvent is a leader for these flexible SaaS
solutions. Although RFP volume for the company's Cvent Supplier
Network is still below pre-COVID-19 levels yet Cvent Hospitality
Cloud solutions revenues have recovered and are now above
pre-COVID-19 levels. Fitch expects both segments to have growth
over the forecast horizon.
DERIVATION SUMMARY
Capstone Borrower's 'B+' Long-Term IDR reflects its strong market
position as a leader in meeting, events and hospitality cloud
solutions. The company has strong recurring revenues at 94% and net
retention rates of 115% for the LTM ending March 31, 2023. In
addition, it has a large and diversified customer base with no
meaningful customer concentration. Once Cvent is taken private, its
leverage will initially be high. With revenue growth and cost
optimization, leverage is forecasted to decline.
KEY ASSUMPTIONS
- Organic revenues grow in the low to mid-double digits over the
next couple of years followed by high single digits;
- Adjusted EBITDA margins expanding to the mid- to upper-20's over
the forecast horizon;
- To calculate interest expense, Fitch using the following floating
rate assumptions: 4.85% in 2023, 3.5% in 2024, 2.8% in 2025, and
2.7% in 2026;
- Capex and capitalized software development costs remain around 9%
of total revenues, in line with 2022;
- No assumptions are made for dividends to the sponsor;
- Fitch assumes cash builds on the balance sheet until 2026 when
Fitch assumes that a large debt funded acquisition will occur.
Fitch believes that the sponsor is likely to spend on acquisitions
and/or pay itself a dividend rather than direct cash to debt
reduction.
KEY RECOVERY RATING ASSUMPTIONS
Fitch's recovery analysis assumes Capstone Borrower would be
reorganized as a going-concern entity in bankruptcy rather than
liquidated. Fitch has also assumed a 10% administrative claim.
Fitch forecasts that the company's going concern (GC) EBITDA is
$140 million. To arrive at this, Fitch assumes that its smaller
competitors such as Hopin and Bizzabo expand and enhance their
offerings and win over existing Cvent customers. As a result,
operating efficiencies are lost, reducing the company's EBITDA
margins.
An enterprise value (EV) multiple of 7.0x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization EV. The choice of this
multiple considered the historical bankruptcy case study exit
multiples for technology peer companies, which ranged from 2.6x to
10.8x. Of these companies, only three were in the software sector:
Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent,
Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x,
respectively. The highly recurring nature of Cvent's revenue
support the multiple being on the high end of the range.
Fitch arrived at an EV of just under $1 billion and after applying
a 10% administrative claim, an adjusted EV of $882 million is
available for claims by creditors. Fitch assumes a full draw on
Capstone Borrower's proposed revolver. The resulting recovery for
the secured debt is 'RR2' which results in the instrument rating
being notched up two from the IDR to 'BB'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- (CFO - capex)/debt expected to be 10% or higher on a sustained
basis;
- Fitch's expectation of EBITDA leverage sustaining below 4.0x;
- Sufficient financial flexibility for company to pursue strategic
actions without significant deviation in credit metrics.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- (CFO - capex)/debt below 7% on a sustained basis;
- Fitch's expectation of EBITDA leverage sustaining above 5.5x as a
result of weakness in market position or failure to execute on
operational optimization;
- Erosion in revenue retention rates resulting in organic revenue
growth sustaining near or below 0%.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch expects Capstone Borrower to maintain
adequate liquidity over the rating horizon. When the transaction
closes, Capstone Borrower is expected to have approximately $250
million of cash on the balance sheet and a fully undrawn secured
revolver due 2030. Liquidity is further supported by the company's
positive free cash flow.
Debt Structure: Upon closing of the transaction, Capstone Borrower
will have an undrawn secured revolver, a secured term loan and pari
passu secured debt. If the revolver was fully drawn, Fitch assumes
51% of the total debt would be floating rate and 49% would be fixed
rate debt. Fitch assumes the floating rate debt will not be hedged.
To calculate interest expense, Fitch assumes that the average
floating rate in 2023 and each of the following years is as
follows: 4.85%, 3.5%, 2.8%, and 2.7%.
Fitch notes that there will be $1.25 billion of preferred shares
(unrated) held above Capstone Borrower, Inc. at Capstone TopCo,
Inc. Per Fitch's criteria, these instruments are treated as debt at
the HoldCo, Capstone TopCo. The preferreds are not considered debt
of Capstone Borrower per adjustment 7 of Fitch's Corporate Rating
Criteria.
ISSUER PROFILE
Capstone Borrower, Inc. is (dba Cvent) offers meetings, events, and
hospitality software solutions to over 22,000 customers.
Approximately 53% of Fortune 500 companies use Cvent. For its
hospitality offerings, it offers over 302,000 venues for the Cvent
Supplier Network.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
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
----------- ------ --------
Capstone
Borrower, Inc. LT IDR B+ New Rating
senior secured LT BB New Rating RR2
CAPSTONE BORROWER: S&P Rates New $500MM Senior Secured Notes 'B-'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to Capstone Borrower Inc.'s (B-/Stable/--) proposed
$500 million senior secured notes due in 2030. The '3' recovery
rating reflects S&P's expectation for meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a hypothetical default.
Cvent intends to use the proceeds to help finance the Blackstone
leveraged buyout and for general corporate purposes.
All of S&P's other ratings on Cvent are unchanged.
CARE NEW: Fitch Affirms LongTerm IDR at BB-, Outlook Negative
-------------------------------------------------------------
Fitch Ratings has affirmed Care New England's (CNE) Issuer Default
Rating at 'BB-'. Fitch has also affirmed the Long-Term rating at
'BB-' the following series of bonds issued by or on behalf of CNE:
- $114.2 million Rhode Island Health and Educational Building
Corporation hospital financing revenue bonds series 2016B (CNE);
- $21.6 million CNE taxable series 2016C.
The Rating Outlook is Negative.
Entity/Debt Rating Prior
----------- ------ -----
Care New England
(RI) LT IDR BB- Affirmed BB-
Care New
England (RI)
/General
Revenues/1 LT LT BB- Affirmed BB-
The 'BB-' reflects CNE's ongoing operational challenges and thin
liquidity. Fitch's expectation is that performance will remain
pressured for the foreseeable future but that Fiscal 2023 YTD
losses shouldn't worsen given management's financial improvement
plan, which has resulted in YOY improvement through the first six
months of Fiscal 2023, and are expected to continue to translate
into better performance for the remainder of the fiscal year.
Fitch believes that CNE's strengthened relationship with Brown
University and other partnership arrangements could contribute to
stronger performance over the medium term. Additionally, Fitch
views the recent change in leadership favorably and acknowledges
that management's current initiatives are focused on strengthening
the organization as a stand-alone entity which Fitch believes
should provide CNE the opportunity to stabilize performance.
However, the Outlook remains Negative as Fitch remains concerned
about CNE's low cash position, which leaves the organization with
little cushion relative to its Master Trust Indenture covenants,
which include 30 days cash on hand (DCOH) at FYE. As of March 31,
2023, CNE had 43 DCOH.
SECURITY
The bonds are secured by a pledge of gross revenues, a mortgage
interest in certain hospital facilities and the debt service
reserve fund.
KEY RATING DRIVERS
Revenue Defensibility - 'bbb'
Second Largest Market Share; Strength in Core Clinical Lines
The midrange assessment reflects the market strength of OB/GYN at
Women & Infants Hospital (W&I), where CNE has approximately 80% of
the market in these services. CNE is also a main provider of
behavioral health in its service area. CNE's overall market share
in the greater Providence area is approximately 27.4%, which is the
second leading market share behind Lifespan's almost 50% share. CNE
has a teaching affiliation with Brown University. In 2022, CNE
signed an agreement to align their research operations with Brown's
Division of Biology and Medicine, which includes the Warren Alpert
Medical School and the Brown University School of Public Health.
The agreement will help CNE compete for larger funding
opportunities.
CNE has approximately 28% of its gross payor mix composed of
Medicaid and self-pay patients and another 33% from Medicare. Much
of the Medicaid volume originates from neo-natal services at W&I.
The PSA consists of the city of Providence and five other local
communities surrounding the hospital. Population growth in the PSA
and the state has been weak compared to national levels over the
past five years. Fitch expects the service area to continue to have
population growth and median household levels that lag national
levels.
Operating Risk - 'b'
Ongoing Operating Challenges
CNE's operating risk profile assessment is considered 'weak' based
on the systems historically uneven operating performance. Fiscal
2022 showed accelerated losses with CNE reporting $34 million loss
from operations, when excluding $24 million of goodwill charges
related to the closure of Memorial Hospital, in 2017, resulting in
a 0.3% operating EBITDA margin and 0.4%. EBITDA margin. Management
attributes the weaker operating performance to a reduction in CARES
funding, labor shortages, particularly in nursing that put pressure
on the organization's ability to adequately staff all operating
units resulting in lower business volume, elevated labor cost
attributable to use of agency staffing resources, increased length
of stay and other inflationary pressures.
While operating pressures were felt system wide, they were most
pronounced at CNE's largest facility, Kent Hospital which
management attributes to several issues including misclassification
of observations visits, which are reimbursed at much lower rates
than inpatient stays, and an understated case mix index.
Additionally, a new ambulatory care center opened in Kent's market
which led to a decline in some surgical cases. Management reports
that improving operations at Kent is a major piece of the recovery
plan and notes that Kent's operating performance has significantly
improved during CNE's first quarter of fiscal 2023. The CNE system
generated an operating profit in each March and April 2023.
Fitch expects CNE's performance to improve in fiscal 2023, although
operating margins are expected to still be negative. Improvement is
dependent on continued recovery of volume, stabilization of labor
and staffing and successful execution of managements financial
improvement initiatives, which include systemwide cost reductions,
improved vendor partnerships and a heightened focus on individual
operating unit performance.
Fitch views the increased level of accountability favorably and
believes that is in an important factor in the long-term success of
the financial improvement plan. While results are still are still
negative through the first half of fiscal 2023, CNE is ahead of
budget by approximately $2.1 million and over $15 million ahead of
the prior year for the same time period. This improvement is
largely due to solid revenue growth. The fiscal 2023 budget
incorporates a $14 million operating loss, which Fitch believes CNE
can achieve given the momentum of the current improvement plan.
Deferred capital needs continue to grow and the system is not
expected to have excess cash flow available for significant
strategic investments. CNE's age of plant is very elevated at 19.2
years with capital spending over the last five fiscal years
averaging below depreciation at approximately 61%. The low levels
of capital spending have been a major concern in recent rating
reviews as it results in a competitive disadvantage for the system.
The capital budget for fiscal 2023 calls for spend at 111% of
deprecation, however Fitch's believes management will likely spend
below budget due to ongoing cash preservation measures.
Financial Profile - 'bb'
Leverage Metrics Affected by Low Cash Position
CNE's financial profile is weak which primarily reflects its thin
liquidity with $152 million of unrestricted reserves, which
translates into 43.8 DCOH and 63% of adjusted debt at March 31,
2023. Cash-to-adjusted debt included approximately $89.8 million of
lease liabilities. CNE supports multiple defined-benefit plans,
most of which are frozen with the exception of its plan for
unionized workers at Butler. Nevertheless, the plan was funded over
Fitch's 80% threshold and as such is not included in leverage
ratios. Fitch expects CNE's financial profile will remained
strained but steady in the forward look assuming operating losses
do not widen.
CNE's investment allocation is relatively conservative with an even
split, with about half invested in cash and fixed income and the
other half in equities. Fitch views maintenance of liquidity as key
to rating stability.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- DCOH that drop to levels that are close to the 30-day covenant
threshold;
- If operating improvement initiatives do not materialize and CNE
is unable to meet its debt service covenant.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A revision to a Stable Outlook may be considered if CNE is able
to demonstrate continued improvement in operating cash flow with
operating EBITDA margins sustained at or above 3%;
- Stabilization of liquidity with DCOH at or above 50, as
efficiency efforts proceed.
PROFILE
Headquartered in Providence, RI, CNE consists of Women & Infants
Hospital (243 beds), Butler Hospital (psychiatric hospital, 143
beds), Kent Hospital (359 beds), The Providence Center (outpatient
behavioral health), Kent County Visiting Nurses Association (VNA)
and the Integra Community Care Network, an accountable care
organization. In 2017, the 294-bed Memorial Hospital was closed
except for a small ambulatory clinic and removed from the obligated
group. The system employs approximately 300 physicians. CNE had
operating revenues of $1.2 billion in in fiscal 2022. Fitch's
analysis and financial ratios are based on consolidated financial
statements.
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.
CARROLS RESTAURANT: S&P Alters Outlook to Pos., Affirms 'CCC+' ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from negative
and affirmed its 'CCC+' issuer credit rating on U.S.-based
restaurant franchise operator Carrols Restaurant Group Inc. At the
same time, S&P affirmed all issue-level ratings.
The positive outlook reflects the potential for an upgrade within
the next year if Carrols can sustain improvements in its operating
performance, reduce leverage, and generate positive FOCF.
The positive outlook reflects the possibility of an upgrade in the
next year if Carrols' EBITDA, FOCF, and credit metrics continue to
improve. Restaurant sales increased 11.4% during the first fiscal
quarter ended April 2, 2023, driven by menu price increases and
less discounting and promotional activity. Adjusted EBITDA margin
expanded 540 basis points (bps) year-over-year as higher average
checks more than offset ongoing inflationary cost pressures. S&P
Global Ratings-adjusted leverage improved to below 7x and the
company generated breakeven FOCF during the quarter. S&P
anticipates adjusted leverage will improve further this year to the
mid-6x area primarily due to EBITDA growth from higher sales as
well as easing commodity inflation and moderating wage pressures.
Still, Carrols' operating performance has been volatile in recent
years and leverage remains elevated for a primarily single-concept
restaurant franchisee.
Menu price hikes and decreased discounting are lifting sales and
helping offset cost pressures, but customer traffic remains
negative. Carrols' Burger King comparable restaurant sales grew
11.7% in the first quarter, driven by menu price increases of
nearly 10% and a 720 basis point reduction in promotions and
discounts. Customer traffic, however, decreased 1.1%, marking the
seventh consecutive quarter of declining guest counts and
underperforming its closest burger quick-service restaurant (QSR)
peers. The company has raised menu prices aggressively to offset
higher operating costs, with the average check increasing 13%
year-over-year during first-quarter 2023 and up more than 37% on a
three-year basis. In S&P's view, potential additional price
increases combined with reduced promotional activity amid softening
macroeconomic conditions may continue to pressure customer
traffic.
S&P said, "We expect moderating cost pressures combined with
advertising and digital investments from its franchisor, Restaurant
Brands International (RBI), to benefit Carrols' performance this
year. The company's Burger King restaurants experienced 15%
commodity inflation and 9% hourly labor inflation in 2022. We
believe these cost pressures will ease throughout 2023, but will
still remain elevated. Commodity and labor inflation decelerated to
8% and 5.6% during first-quarter 2023, respectively. We forecast
inflation in the mid-single-digit area for fiscal 2023. However,
recent spikes in ground beef prices may result in greater food
costs than we currently contemplate in our base-case scenario."
S&P anticipates Carrols will benefit from Burger King's initiative
to revitalize the brand by remodeling and revamping marketing
initiatives, which includes increasing advertising. Carrols
primarily operates as a single-brand restaurant operator reflecting
limited concept diversity. The company's profitability is
substantially driven by Burger King's brand strength which makes
the company highly dependent on the successful execution of
marketing and operating initiatives developed by Burger King.
Carrols has adequate liquidity with no near-term maturities and
sufficient covenant headroom over the next 12 months. As of April
2, 2023, Carrols reported roughly $5 million of balance sheet cash
and an undrawn balance on its $215 million revolving credit
facility after paying off its outstanding $12.5 million balance in
the first quarter of 2023. S&P said, "We project Carrols will
generate modestly positive FOCF this year, an improvement from its
roughly $20 million cash flow deficit in 2022. We expect the
company will maintain reduced capital expenditure (capex) spending
of roughly $40 million in 2023, prioritizing remodels and in-store
technology upgrades. Carrols has no immediate maturities with its
term loan and revolving credit facility maturing in 2026, and its
$300 million senior unsecured notes maturing in 2029. The majority
of Carrols' outstanding debt is fixed rate, limiting near-term
pressure from the higher interest rate environment. We project cash
interest expense remaining relatively unchanged year-over-year at
just under $30 million, resulting in adjusted EBITDA interest
coverage above 2x. We anticipate current debt levels to remain
relatively unchanged absent a modest level of contractual term loan
amortization."
The positive outlook reflects S&P's expectation for improving
credit metrics and positive FOCF over the next 12 months.
S&P could raise its rating if:
-- Carrols generates sustained positive FOCF while maintaining
adequate liquidity;
-- Carrols grows revenue and expands profitability through
sustained operational improvements; and
-- Credit protection metrics continue to improve and we expect
adjusted leverage will be maintained below 6.5x.
S&P could take a negative rating action if:
-- Operating performance tracks below S&P's expectations, causing
credit protection metrics to remain weak; or
-- Liquidity contracts due to deteriorating performance and cash
flow.
ESG credit indicators: E-2, S-2, G-2
CENTRE DE DISTRIBUTION: Obtains CCAA Initial Stay Order
-------------------------------------------------------
A First Day Initial Order was sought and obtained from the Quebec
Superior Court, district of Quebec under the Companies' Creditors
Arrangement Act ("CCAA") with regard to Centre de distribution
Transrapide Inc., Complexe groupe Transrapide Inc., 9480-5348
Quebec Inc., Entreposage des Riveurs s.e.c. and its general partner
9435-8470 Quebec Inc. ("Debtors") and Deloitte Restructuring Inc.
("Monitor") was appointed monitor.
The Monitor can be reached at:
Deloitte Restructuring Inc.
801, Grande Allee Ouest, Suite 350
Quebec, QC G1S 4Z4
Tel: 418-624-6020
Email: transrapide@deloitte.ca
Copy of the initial order is available at
https://www.insolvencies.deloitte.ca/fr-ca/pages/Centre-de-Distribution-Transrapide-inc-et-al.aspx
Centre de distribution Transrapide Inc. --
https://www.transrapide.com/ -- is a transportation company that
offers warehousing rental and commercial storage services.
CHRISTMAS TREE: Will Close 2 Massachusetts Locations
----------------------------------------------------
Tristan Smith of Mass Live reports that Christmas Tree Shops
officially filed for bankruptcy and now plans to close 10 of its
stores, including two in Massachusetts.
On Friday, May 5, 2023, federal court documents revealed the
discount home goods store filed for Chapter 11 bankruptcy.
Christmas Tree Shops executives stated they plan to close 10 of
their stores, including the Sagamore and Falmouth locations,
bankruptcy documents read.
The Sagamore location is well-known for its large windmill that can
be seen from the Sagamore Bridge. The two Massachusetts locations
— along with eight others in Florida, New York, Georgia,
Pennsylvania, Virginia and Michigan — are expected to close by
June 30, 2023.
Christmas Tree Shops had about 80 stores across the east coast and
15 in Massachusetts. In April 2022, store executives moved their
Holyoke location out of the Holyoke Mall to the Holyoke Crossing
shopping plaza down the street.
The chain's new Holyoke location features the "CTS" rebranding with
the slogan "Every Season, Every Reason" and the name Christmas Tree
Shops in smaller lettering on its signage. The rebranding was
established to help consumers know the store sells more than just
Christmas-themed items.
There have been no details on how Christmas Tree Shops' bankruptcy
filing will affect its Holyoke location.
Bed, Bath & Beyond recently filed for bankruptcy in April. The home
goods retailer purchased Christmas Tree Shops in 2003 before
selling the home goods chain to Handil Holdings for an unknown
amount in 2020.
About Christmas Tree Shops
Christmas Tree Shops is a home-decor retailer that was spun off
from Bed Bath & Beyond in 2020. CTS operates a chain of
brick-and-mortar home goods retail stores that specializes in
year-round seasonal goods at value pricing. CTS stores offer a
variety of products including home decor, bed and bath products,
kitchen and dining products, furniture, food and seasonal
products.
Christmas Tree Shops LLC and four of its affiliates sought Chapter
11 bankruptcy protection (Bankr. D. Del., Lead Case No. 23-10576)
on May 5, 2023. The petitions were signed by Marc Salkovitz as
executive chairman. The Hon. Thomas M. Horan presides over the
Debtors' cases.
Christmas Tree listed $50 million to $100 million in assets and
$100 million to $500 million in liabilities.
Troutman Pepper Hamilton Sanders LLP and Murphy & King, P.C. serves
as bankruptcy counsel to the Debtors. Kurtzman Carson Consultants,
LLC serve as claims and noticing agent to the Debtors.
CINEMARK USA: Moody's Rates New $750MM Bank Loans 'Ba2'
-------------------------------------------------------
Moody's Investors Service assigned Ba2 ratings to Cinemark USA,
Inc.'s ("Cinemark USA") proposed bank credit facilities, comprising
a $100 million 5-year senior secured revolving credit facility
(RCF) and $650 million 7-year senior secured term loan. The B2
Corporate Family Rating, stable outlook and SGL-2 Speculative Grade
Liquidity rating remain unchanged.
Cinemark USA intends to amend the current credit agreement to
refinance and extend the maturities of the existing bank credit
facilities, comprising the $100 million RCF maturing 2024 and $625
million outstanding term loan maturing 2025. The new bank credit
facilities will be issued by the same borrower, secured by the same
collateral package and guaranteed by the same guarantors as the
existing bank credit facilities on a first-lien pari passu basis.
Cinemark USA is a wholly-owned subsidiary of the parent, Cinemark
Holdings, Inc. ("Cinemark" or the "company"), which is the
financial reporting entity and guarantor of Cinemark USA's bank
credit facilities.
Following is a summary of the rating action:
Assignments:
Issuer: Cinemark USA, Inc.
$100 million Gtd Senior Secured Revolving Credit Facility due
2028, Assigned Ba2
$650 million Gtd Senior Secured Term Loan due 2030, Assigned Ba2
The assigned ratings are subject to review of final documentation
and no material change in the size, terms and conditions of the
transaction as advised to Moody's. Upon the full repayment of debt,
Moody's will withdraw the ratings on the existing bank credit
facilities.
RATINGS RATIONALE
The transaction is credit neutral because Cinemark's pro forma
gross debt will remain virtually unchanged at roughly $2.5 billion.
Following this transaction the nearest debt maturity will be the
$150 million outstanding 8.750% senior secured notes due 2025.
Cinemark USA's B2 CFR is supported by the parent's (Cinemark)
position as the third largest movie exhibitor in the US and
meaningful presence in Latin America. The rating reflects improving
operating and financial performance as well recovering credit
protection measures. Moody's expects continued profit improvement,
positive FCF and good liquidity driven by a strong theatrical
release schedule this year, growing moviegoer attendance,
increasing new release volumes, and the expectation that most of
the big studios will adhere to the 45-day theatrical window for
major film releases. There is some uncertainty surrounding
inflationary concerns and recessionary pressures that could dampen
moviegoer demand over the coming quarters.
The ratings also consider Cinemark's high financial leverage,
currently around 5.5x total debt to EBITDA, which Moody's expects
to decrease to the 4.5x-5x range over the rating horizon (all
metrics calculated and adjusted by Moody's). The cinema industry's
structural challenges are similarly captured in the profile,
including: (i) excess screen capacity in North America, which will
eventually require further reduction; (ii) comparatively lower
moviegoer demand as studios simultaneously release some films
online via SVOD/PVOD or potentially release them downstream in a
shortened theatrical window; (iii) lower theatrical release volumes
relative to historical levels due to production bottlenecks; (iv)
reduced show times compared to pre-pandemic periods; and (v) the
impact from some cost-conscious consumers reducing their
out-of-home entertainment and number of trips to the cinema amid
affordable subscription-based VOD movie viewing in an economic
environment with high inflation.
The stable outlook reflects Moody's view that Cinemark will
continue to experience good moviegoer demand, higher average ticket
prices per patron and a greater proportion of higher margin
concessions revenue, which will support organic revenue growth and
expanding EBITDA margins over the course of the year. Moody's
expects Cinemark will continue to effectively manage operating
expenses to improve profitability. However, owing to the measured
cyclical recovery of the box office that is expected to be
approximately 20% below its historical peak this year as well as
concerns that the weakening global economy could moderate
attendance growth, the company's financial leverage will remain
high. While the outlook considers the impact of higher inflation
and potential recessionary pressures, which could slow margin
expansion and moderate revenue growth amid rising operating
expenses and a pullback in consumer spending, the average cost for
a movie ticket remains a relatively inexpensive form of out-of-home
entertainment.
Cinemark USA's SGL-2 rating reflects good liquidity over the next
12-18 months supported by solid cash balances (cash at the parent
totaled $650.1 million at March 31, 2023) and positive FCF
generation. Assuming Cinemark refrains from paying dividends,
Moody's projects FCF will increase to the $100 - $120 million range
in 2023 compared to approximately $11 million in fiscal 2022 (as
calculated and adjusted by Moody's). Though Moody's forecasts
Cinemark's EBITDA will grow this year, it will remain below
pre-pandemic levels. Interest expense will continue to be higher
than prior to the health crisis due to the leveraged balance sheet,
however Moody's expects near-term borrowing costs will stay
relatively flat arising from interest rate swaps and a fixed rate
debt capital structure. Liquidity is further supported by the new
$100 million 5-year RCF, which Moody's expects to remain undrawn.
The new RCF will have a maximum consolidated net senior secured
leverage maintenance covenant of 3.5x (as defined in the bank
credit agreement). As of March 31, 2023, Cinemark USA's bank
defined leverage ratio was 2.2x.
ESG CONSIDERATIONS
Cinemark USA's ESG Credit Impact Score is CIS-4, reflecting the
company's neutral-to-low exposure to environmental risks,
highly-negative exposures to demographic and societal trends, as
well as highly-negative governance risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Cinemark experiences positive growth
in box office attendance, stable-to-improving market share,
positive and expanding EBITDA with margins approaching pre-pandemic
levels and enhanced liquidity; and exhibits prudent financial
policies that translate into an improved credit profile. An upgrade
would also be considered if financial leverage as measured by total
debt to EBITDA approaches the 4x area (Moody's adjusted) and
positive free cash flow as a percentage of total debt exceeds 5%
(Moody's adjusted).
Ratings could be downgraded if there was: (i) an exhaustion of the
company's liquidity or an inability to access additional sources of
liquidity to cover cash outlays; (ii) poor execution on reducing or
managing operating expenses; or (iii) limited prospects for
operating performance recovery in 2023. A downgrade could also be
considered if Moody's expects total debt to EBITDA will remain
above 6.5x (Moody's adjusted) or free cash flow to total debt
decreases to the 2% area or lower on a sustained basis.
Headquartered in Plano, Texas, Cinemark USA, Inc. is a wholly-owned
subsidiary of Cinemark Holdings, Inc., a leading movie exhibitor
that operates 516 theatres and 5,833 screens worldwide with 317
theatres and 4,391 screens in the US across 42 states and 199
theatres and 1,442 screens across 14 countries in Latin America.
Revenue totaled approximately $2.6 billion for the twelve months
ended March 31, 2023.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CLEANSPARK INC: Incurs $18.5 Million Net Loss in Second Quarter
---------------------------------------------------------------
CleanSpark, Inc. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $18.46 million on $42.55 million of net total revenues for the
three months ended March 31, 2023, compared to a net loss of
$171,000 on $37.20 million of net total revenues for the three
months ended March 31, 2022.
For the six months ended March 31, 2023, the Company reported a net
loss of $47.49 million on $70.36 million of net total revenues
compared to net income of $14.31 million on $74.32 million of net
total revenues for the six months ended March 31, 2022.
As of March 31, 2023, the Company had $531.55 million in total
assets, $57.67 million in total liabilities, and $473.88 million in
total stockholders' equity.
CleanSpark said, "We believe our cash and cash equivalents on hand,
together with cash we expect to generate from future operations,
will be sufficient to meet our working capital and capital
expenditure requirements for a period of at least twelve months
from the date of this Quarterly Report on Form 10-Q. We are likely
to require additional capital to respond to technological
advancements, competitive dynamics or technologies, customer
demands, business opportunities, challenges, acquisitions or
unforeseen circumstances and in either the short-term or long-term
may determine to engage in equity or debt financings. If we are
unable to obtain adequate financing or financing on terms
satisfactory to us, when we require it, our ability to continue to
grow or support our business and to respond to business challenges
could be significantly limited. In particular, the widespread
COVID-19 pandemic, including variants, rising inflation and
interest rates, and the conflict between Russia and Ukraine have
resulted in, and may continue to result in, significant disruption
and volatility in the global financial markets, reducing our
ability to access capital. If we are unable to raise additional
funds when or on the terms desired, our business, financial
condition and results of operations could be adversely affected."
Management Commentary
"This has been a quarter of execution as we've made major progress
toward achieving our stated year-end target of 16 EH/s," said Chief
Executive Officer Zach Bradford. "Our planned expansions are
proceeding according to timelines, with Washington expected to be
fully operational next month and with the Sandersville land already
graded and ready to start construction. Importantly, we've
acquired 99% of the machines, either under contract or in transit,
to fill these facilities. The addition of these machines into our
fleet, most of which are Bitmain's XPs, are expected to make us one
of the most efficient miners on the network, positioning us to take
optimal advantage of halving next year."
"The rebound in bitcoin prices translated to greater gross profit
margins and cash flow in the second quarter," said Chief Financial
Officer Gary A. Vecchiarelli. "Our increased gross profit margins
and stable cost structure resulted in 30% adjusted EBITDA margins
and will also help grow our bitcoin balance going forward."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000827876/000095017023020599/clsk-20230331.htm
About CleanSpark
Headquartered in Bountiful, Utah, CleanSpark, Inc. --
www.cleanspark.com -- is a bitcoin mining company incorporated in
Nevada, whose common stock is listed on the Nasdaq Capital Market.
The Company, through itself and its wholly owned subsidiaries, has
operated in the bitcoin mining sector since December 2020. The only
cryptocurrency the Company mine is bitcoin. From March 2014 to
June 30, 2022, the Company provided advanced energy technology
solutions to commercial and residential customers to solve modern
energy challenges in the alternative energy sector.
CleanSpark reported a net loss of $57.33 million for the year ended
Sept. 30, 2022, a net loss of $21.81 million on $39.29 million for
the year ended Sept. 30, 2021, a net loss of $23.35 million for the
year ended Sept. 30, 2020, and a net loss of $26.12 million for the
year ended Sept. 30, 2019. As of Dec. 31, 2022, the Company had
$486.79 million in total assets, $59.75 million in total
liabilities, and $427.03 million in total stockholders' equity.
CLEARPOINT NEURO: Incurs $5.6 Million Net Loss in First Quarter
---------------------------------------------------------------
ClearPoint Neuro, Inc. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $5.61 million on $5.43 million of total revenue for the three
months ended March 31, 2023, compared to a net loss of $3.96
million on $5.03 million of total revenue for the three months
ended March 31, 2022.
As of March 31, 2023, the Company had $50.25 million in total
assets, $17.67 million in total liabilities, and $32.58 million in
total stockholders' equity.
Clearpoint said, "The Company has incurred net losses since its
inception, which has resulted in a cumulative deficit at March 31,
2023 of $156.0 million. In addition, the Company's use of cash
from operations amounted to $5.7 million for the three months ended
March 31, 2023, and $16.2 million for the year ended December 31,
2022. Since its inception, the Company has financed its operations
principally from the sale of equity securities and the issuance of
notes payable, however, there is no assurance such sale of equity
securities and/or issuance of notes payable will be at terms
favorable to the Company or available at all in the future. As
required by generally accepted accounting principles in the U.S.
("GAAP"), the Company has evaluated its ability to continue as a
going concern and has determined that based on current forecasts,
existing cash and cash equivalent balances and short-term
investments at March 31, 2023 are sufficient to support the
Company's operations and meet its obligations for at least the next
twelve months."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001285550/000128555023000046/clpt-20230331.htm
About ClearPoint Neuro
ClearPoint Neuro, Inc. formerly MRI Interventions, Inc. --
http://www.clearpointneuro.com-- is a medical device company that
develops and commercializes innovative platforms for performing
minimally invasive surgical procedures in the brain under direct,
intra-procedural magnetic resonance imaging, or MRI, guidance.
Applications of the Company's current product portfolio include
deep-brain stimulation, laser ablation, biopsy, neuro-aspiration,
and delivery of drugs, biologics, and gene therapy to the brain.
Clearpoint Neuro a net loss of $16.43 million in 2022, a net loss
of $14.41 million in 2021, a net loss of $6.78 million in 2020, a
net loss of $5.54 million in 2019, and a net loss of $6.16 million
in 2018. As of Sept. 30, 2022, the Company had $57.74 million in
total assets, $17.86 million in total liabilities, and $39.88
million in total stockholders' equity.
* * *
This concludes the Troubled Company Reporter's coverage of
ClearPoint until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
CLEARY PACKAGING: Updates Unsecured Claims Pay Details; Amends Plan
-------------------------------------------------------------------
Cleary Packaging, LLC, submitted a Disclosure Statement for Third
Amended Plan of Reorganization dated May 11, 2023.
Since the Petition Date, the Debtor has continued to manage its
property and affairs as a debtor and debtor in possession pursuant
to Sections 1107 and 1108 of the Bankruptcy Code.
As of the Petition Date, the Debtor recorded a total of
approximately $5,389,725.13 in Unsecured Claims. Of this total,
$2,357,882.49 of Cantwell Cleary's Claim has been determined to be
nondischargeable pursuant to the Order Granting, in Part, and
Denying, in Part, Plaintiff's Motion for Summary Judgment and
Denying Defendant's Motion for Summary Judgment, which is on
appeal, and the balance remains subject to determination in
Adversary Proceeding No. 21-00056.
The Debtor has performed a preliminary claims reconciliation of (i)
the Claims listed in the Debtor's Schedules, (ii) the Proofs of
Claims filed, (iii) Proofs of Claim misclassified or duplicates
filed, and (iv) Disputed Claims. Based on this analysis, the total
of Unsecured Claims for the Debtor is $5,112,114.01.
Class 4 consists of Allowed Unsecured Trade Debt Claims. After
payment in full of Allowed Class 1, Class 2 and Class 3 Claims, and
of any Allowed Administrative Expense or Priority Wage or Priority
Tax Claims, the Debtor shall pay the Holders of Allowed Class 4
Claims without interest their pro-rata share of all available
Actual Disposable Income of the Debtor over the sixty months
following the Confirmation Date. The estimated amount of each of
said disbursements to Class 4 will equal approximately less than 1%
of the Actual Disposable Income for the preceding six full calendar
month period. If the Class 4 Claims are not paid in full within 60
months after the Confirmation Date, then any balance remaining will
be discharged.
Class 5 consists of Allowed Unsecured Judgment Claims. After
payment in full of Allowed Class 1 and Class 2 Claims, and of any
Allowed Administrative Expense or Priority Wage or Priority Tax
Claims, the Debtor shall pay the Holders of Allowed Class 5 Claims
without interest its pro rata share of all available Actual
Disposable Income of the Debtor over the sixty months following the
Confirmation Date. The estimated amount of each of said
disbursements shall be equal to approximately 94% of the Actual
Disposable Income for the preceding six full calendar month period.
If the Class 5 Claim is not paid in full within 60 months after the
Confirmation Date, then any balance remaining will be discharged.
Class 6 Claim(s) consist of the Allowed General Unsecured Claims of
the following Claimants: Linda Barstow with a claim of $75,000.00
and Marcus Bonsib, LLC with a claim of $205,377.74. After payment
in full of Allowed Class 1, Class 2 and Class 3 Claims, and of any
Allowed Administrative Expense or Priority Wage or Priority Tax
Claims set forth in this Plan, and in full and complete
satisfaction, discharge and release of the Class 6 Claims, the
Debtor shall pay the Holders of Allowed Class 6 Claims without
interest their pro-rata share of all available Actual Disposable
Income of the Debtor over the sixty months following the
Confirmation Date. The estimated amount of each of said
disbursements shall equal approximately 5.5% of the Actual
Disposable Income for the preceding six full calendar month
period.
During the term of this Plan, the Debtor shall pay all available
Projected Disposable Income necessary for the performance of the
Plan, which Projected Disposable Income is projected as set forth
in the Projections of Net Projected Disposable Income.
In addition, Vincent Cleary, the sole Interest Holder of the
Debtor, has agreed to contribute his right to receive any payments
due to him for unpaid commissions earned prepetition under the Plan
to help facilitate the Plan and to provide unsecured financing as a
revolving loan in a total amount of $35,000.00 at an interest rate
of 3% simple interest during the period of the Plan (the "Loan").
The term of the Plan begins on the Effective Date and ends on the
last day of the 60th full calendar month following June 28, 2023.
A full-text copy of the Disclosure Statement dated May 11, 2023 is
available at https://bit.ly/42RXqQy from PacerMonitor.com at no
charge.
Counsel for Debtor:
Paul Sweeney
YVS Law, LLC
11825 West Market Place, Suite 200
Fulton, Maryland 20759
(443) 569-5972
Email: psweeney@yvslaw.com
About Cleary Packaging
Cleary Packaging, LLC is a wholesale distributor of packaging and
janitorial supplies. The company sought protection under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Md.
Case No. 21-10765) on Feb. 7, 2021.
At the time of the filing, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range. The
Debtor tapped Yumkas, Vidmar, Sweeney & Mulrenin as its legal
counsel and George S. Magas CPA, PC as its accountant.
Scott W. Miller has been appointed as Subchapter V Trustee for the
Debtor.
CODIAK BIOSCIENCES: Seeks to Hire Ordinary Course Professionals
---------------------------------------------------------------
Codiak BioSciences, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Delaware to hire certain professionals
utilized in the ordinary course of business.
The OCP's include:
-- Mintz Securities and Corp.
Governance, Licensing and Intellectual Property Counsel
$75,000
-- Sterne, Kessler, Goldstein & Fox PLLC
Intellectual Property Counsel
$35,000
-- MOR Legal Group
Regulatory and Clinical Compliance Counsel
$15,000
-- Jackson Lewis P.C.
Employment Law Counsel
$5,000
-- Ernst & Young, LLP
Preparation of tax returns
$30,000 (total cost)
-- Adams & Adams
Foreign Intellectual Property Counsel
$5,000
-- Carpmaels & Ransford
Foreign Intellectual Property Counsel
$20,000
-- Castillo Laman Tan Pantaleon & San Jose
Foreign Intellectual Property Counsel
$5,000
-- Chung Hyun Patent & Law Firm
Foreign Intellectual Property Counsel
$5,000
-- Dannemann Siemsen
Foreign Intellectual Property Counsel
$5,000
-- Drew & Napier LLC
Foreign Intellectual Property Counsel
$5,000
-- Gowling
Foreign Intellectual Property Counsel
$10,000
-- Ivan, Makarov & Partners
Foreign Intellectual Property Counsel
$10,000
-- Marval, O’Farrell & Marial
Foreign Intellectual Property Counsel
$5,000
-- Mathys & Squire LLP
Foreign Intellectual Property Counsel
$25,000
-- Olartemoure
Foreign Intellectual Property Counsel
$5,000
-- Reinhold Cohn & Partners
Foreign Intellectual Property Counsel
$5,000
-- Remfry & Sagar
Foreign Intellectual Property Counsel
$5,000
-- Shusaku Yamamoto
Foreign Intellectual Property Counsel
$15,000
-- Spruson & Ferguson
Foreign Intellectual Property Counsel
$5,000
-- Sync Technology Group
Foreign Intellectual Property Counsel
$10,000
-- Taiwan International Patent & Law Office
Foreign Intellectual Property Counsel
$5,000
-- Tilleke & Gibbins
Foreign Intellectual Property Counsel
$5,000
-- Uhthoff Gomez Vega & Uhthoff, S.C.
Foreign Intellectual Property Counsel
$5,000
-- Villaseca Abogados
Foreign Intellectual Property Counsel
$5,000
As disclosed in the court filings, the Debtors do not believe that
any of the OCPs represent or hold an interest materially adverse to
the Debtors, their creditors, or other parties in interest with
respect to the matters for which such OCPs are proposed to be
employed.
About Codiak BioSciences
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.
Judge Mary F. Walrath oversees the case.
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.
CORE SCIENTIFIC: Equity Committee Taps FTI as Financial Advisor
---------------------------------------------------------------
The official committee of equity security holders of Core
Scientific, Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ FTI
Consulting, Inc. as its financial advisor.
The firm's services include:
a. assistance with performing valuation analyses;
b. assistance with negotiations and the review and/or
preparation of information and analyses related to determining the
terms for the confirmation of a plan and related disclosure
statement in these Chapter 11 proceedings; and
c. assistance with the review of financial information
prepared by the Debtors and other parties-in-interest, including,
but not limited to, business plans, cash flow projections and
budgets, cash receipts and disbursements, and assets and
liabilities, in order to support the foregoing.
The firm will be paid at these hourly rates:
Senior Managing Directors $1,045 -
$1,495
Directors / Senior Directors / Managing Directors $785 -
$1,055
Consultants/Senior Consultants $435 -
$750
Administrative / Paraprofessionals $175 -
$325
Andrew Scruton, a senior managing director at FTI, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Andrew Scruton
FTI Consulting, Inc.
1166 Avenue of the Americas, 15th Floor
New York, NY 10036
Tel: (646) 717-3123
Email: andrew.scruton@fticonsulting.com
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York. With low
Bitcoin prices depressing mining revenue to a record low, Core
Scientific first warned in October 2022 that it may have to file
for bankruptcy if the company can't find more funding to repay its
debt that amounts to over $1 billion. Core Scientific did not make
payments that came due in late October and early November 2022 with
respect to several of its equipment and other financings, including
its two bridge promissory notes.
Core Scientific and its affiliates filed petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
22-90341) on Dec. 21, 2022. As of Sept. 30, 2022, Core Scientific
had total assets of US$1.4 billion and total liabilities of US$1.3
billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT
Partners, LP as investment banker; and AlixPartners, LLP as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings. Meanwhile, B. Riley
Commercial Capital, LLC, as administrative agent under the
Replacement DIP facility, is represented by Choate, Hall & Stewart,
LLP.
On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the
Debtors'
Chapter 11 cases. The committee tapped Willkie Farr & Gallagher,
LLP as legal counsel and Ducera Partners, LLC as investment
banker.
The U.S. Trustee for Region 7 appointed an official committee of
equity security holders. The equity committee is represented by
Vinson & Elkins, LLP.
CORE SCIENTIFIC: Equity Committee Taps Vinson & Elkins as Counsel
-----------------------------------------------------------------
The official committee of equity security holders of Core
Scientific, Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ
Vinson & Elkins LLP as its counsel.
The firm will render these services:
a. provide legal advice with respect to the Official Equity
Committee's powers and duties as an official committee of the
Debtors' estates in these chapter 11 cases;
b. prepare on behalf of the Official Equity Committee all
necessary motions, answers, orders, reports, and other legal papers
in connection with these chapter 11 cases;
c. take all necessary actions to represent the Official Equity
Committee in its communications and negotiations with the Debtors,
the U.S. Trustee, the UCC, and other stakeholders (including equity
security holders);
d. represent the Official Equity Committee to discharge its
duties in accordance with the OEC Appointment Order (defined
below), the record at the hearing thereon, and/or as otherwise may
be expanded by the approval of the Court;
e. consult with the Debtors, the U.S. Trustee, the UCC, and
all other creditors and parties in interest concerning the
administration of these chapter 11 cases; and
f. provide representation and all other legal services
required by the Official Equity Committee in discharging its duties
as an official committee or otherwise in connection with these
chapter 11 cases.
The firm will bill these rates:
Partners $1,590 - $1,920
Counsel/Of Counsel $1,425
Associates $730 - $1,150
Paraprofessionals $420
The firm will also seek reimbursement for out-of-pocket expenses.
The following is provided in response to the request for additional
information set forth in Paragraph D.1 of the Guidelines:
a. Question: Did V&E agree to any variations from, or
alternatives to, V&E's standard billing arrangements for this
engagement?
Answer: No.
b. Question: Do any of the V&E professionals in this
engagement vary their rate based on the geographic location of
these chapter 11 cases?
Answer: No.
c. Question: If V&E has represented the Official Equity
Committee in the 12 months prepetition, disclose V&E's billing
rates and material financial terms for the prepetition engagement,
including any adjustments during the 12 months prepetition. If
V&E's billing rates and material financial terms have changed
postpetition, explain the difference and the reasons for the
difference.
Answer: V&E has not represented the Official Equity
Committee in the 12 months
prepetition.
d. Question: Has the Official Equity Committee approved V&E's
budget and staffing plan, and, if so, for what budget period?
Answer: Yes, the Official Equity Committee has approved
V&E's prospective budget and staffing plan for the period from
March 30, 2022 through June 7, 2022.
David Meyer, Esq., a partner at Vinson & Elkins, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
David S. Meyer, Esq.
George R. Howard, Esq.
Lauren R. Kanzer, Esq.
Vinson & Elkins LLP
1114 Avenue of the Americas, 32nd Floor
New York, NY 10036
Tel: (212) 237-0000
Fax: (212) 237-0100
Email: dmeyer@velaw.com
ghoward@velaw.com
lkanzer@velaw.com
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York. With low
Bitcoin prices depressing mining revenue to a record low, Core
Scientific first warned in October 2022 that it may have to file
for bankruptcy if the company can't find more funding to repay its
debt that amounts to over $1 billion. Core Scientific did not make
payments that came due in late October and early November 2022 with
respect to several of its equipment and other financings, including
its two bridge promissory notes.
Core Scientific and its affiliates filed petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
22-90341) on Dec. 21, 2022. As of Sept. 30, 2022, Core Scientific
had total assets of US$1.4 billion and total liabilities of US$1.3
billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT
Partners, LP as investment banker; and AlixPartners, LLP as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings. Meanwhile, B. Riley
Commercial Capital, LLC, as administrative agent under the
Replacement DIP facility, is represented by Choate, Hall & Stewart,
LLP.
On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the
Debtors'
Chapter 11 cases. The committee tapped Willkie Farr & Gallagher,
LLP as legal counsel and Ducera Partners, LLC as investment
banker.
The U.S. Trustee for Region 7 appointed an official committee of
equity security holders. The equity committee is represented by
Vinson & Elkins, LLP.
CROWN COMMERCIAL: Says Unsecureds Unimpaired in Sale Plan
---------------------------------------------------------
Crown Commercial Real Estate and Development, LLC, submitted a
First Amended Disclosure Statement dated May 3, 2023.
The Plan of Reorganization proposes and is contingent upon the sale
of substantially all of the Debtor's assets, including without
limitation the Property and Collateral pursuant to an Asset
Purchase Agreement.
This Plan provides for 4 total classes including one class of
secured creditors, one class of non-priority tax claims, one class
of unsecured claims, and one class of equity claims. All
Administrative Expenses and Priority Tax claims, if any, will be
paid in full on the Effective Date of the Plan. Unsecured creditors
holding Allowed Claims would be paid 100% of allowed claims 14 days
following the Effective Date.
The Allowed Secured Claim of the Lender will be paid $20,500,000 at
the Closing of the Sales Transaction less any Earnest Money
Deposits, in full satisfaction of its claim (as settled pursuant to
the Settlement Agreement and the Settlement Order) and the Lender
shall waive and release any unsecured claim for any deficiency
balance under the Loan Documents and release all liens with its
liens attaching to the proceeds of sale up to the settlement
amount. The Closing shall take place within 65 days following the
entry of the Order Confirming Plan or as extended pursuant to the
Settlement Agreement.
Prepetition claims of insiders will not receive a distribution
unless all previous classes are paid in full. Creditors holding
insider claims will not receive a distribution unless all prior
classes of claims are paid in full. The equity interest of the
Debtor will not receive any distribution until all other classes
are paid in full.
Under the Plan, Class 3 General Unsecured Allowed Claims total
$160,396. On the Effective Date, this class will receive 100% of
the Allowed Claims. Class 3 is unimpaired.
Pursuant to the Lender's and Debtor's Settlement Agreement
consistent with the Settlement Order, the Debtor shall sell the
Property free and clear of all liens, claims and interests pursuant
to 1123(a)(5)(D) and 1141(c). The Lender shall receive the amount
of $20,500,000 inclusive of all escrow payments at the closing and
shall in exchange waive and release any unsecured deficiency
balance under the Loan Documents (the "Allowed Secured Claim") and
will not file an unsecured claim for any deficiency balance
according to terms of the Settlement Agreement. Lender shall be
paid the full amount of the Allowed Secured Claim upon closing of
the sale of the Property pursuant to the terms of the Settlement
Agreement within 65 days of the Order Confirming Plan or as
extended pursuant to the Settlement Agreement. In exchange for the
payment of Lender's Allowed Secured Claim, Lender will release its
mortgage lien on the Property, all other security interests on the
Debtor's assets, third-party guarantees of the Lender's claims
under the Loan Documents against the Debtor, and claims against
third parties arising from the Loan to the Debtor. In the event
Lender does not execute a release of mortgage, UCC-3 financing
statement, third party guarantees, and claims against third
parties, the Debtor shall, simultaneously with the delivery of
funds, be empowered to execute such releases as Lender's attorney
in fact.
If the Debtor fails to timely close the Sale Transaction and
satisfy the Debtor's plan funding obligations, then the Debtor
believes that it will negotiate with Lender in good faith to
achieve a resolution so that the Debtor's plan funding obligations
and the Closing of the Sale Transaction may be consummated. If
such resolution is not achieved, Lender may elect to exercise its
rights and remedies, including without limitation, to seek relief
from the automatic stay imposed in the Bankruptcy Case to pursue
its State Court Litigation to foreclose on the Collateral and
Property securing its claims, and/or pursue appointment of a
Chapter 11 trustee in the Bankruptcy Case. Other parties in
interest including the Lender may also pursue dismissal or
conversion of the case to Chapter 7.
The Plan shall be funded from cash on hand and the proceeds of the
Sale Transaction, except as expressly set forth herein. After
payment of the Administrative Expense Claims, Priority Tax Claims,
and the Allowed Secured Claim of Lender, the Debtor shall pay the
remaining claims for Class 2 and 3, with any surplus going to the
Class 4 Equity Interest Holders out of the combination of any
remaining sales proceeds and the cash reserves of the Debtor.
Attorney for the Debtor:
Konstantine T. Sparagis, Esq.
LAW OFFICES OF KONSTANTINE SPARAGIS, P.C.
900 W. Jackson Blvd., Ste. 4E
Chicago, IL 60607
Tel: (312) 753-6956
E-mail: gus@konstantinelaw.com
A copy of the Disclosure Statement dated May 3, 2023, is available
at https://bit.ly/44xtDOx from PacerMonitor.com.
About Crown Commercial
Crown Commercial Real Estate and Development, LLC, operates a
shopping center located at 87th Street and Cottage Grove Avenue,
Chicago, IL 60619. The Property consists of a shopping center
owned and operated for 25 years by Crown Commercial.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ill. Case No. 22-05113) on May 3,
2022. In the petition signed by Musa P. Tadro, manager, the Debtor
disclosed up to $50,000 in assets and up to $50 million in
liabilities.
Judge Janet S. Baer oversees the case.
The Law Offices of Konstantine Sparagis is the Debtor's counsel.
DET MEDICAL: PCO Taps SilvermanAcampora as Legal Counsel
--------------------------------------------------------
Joseph Tomaino, patient care ombudsman for DET Medical P.C., seeks
approval from the U.S. Bankruptcy Court for the Eastern District of
New York to hire SilvermanAcampora LLP as his counsel.
The firm will render these services:
a. prepare all necessary applications, motions, answers,
orders and other legal documents required by the Bankruptcy Code
and Bankruptcy Rules; and
b. perform all other legal services for the PCO.
Ronald Friedman, Esq., a member of SilvermanAcampora, disclosed in
court filings 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:
Ronald J. Friedman, Esq.
Brian Powers, Esq.
Haley L. Trust, Esq.
SilvermanAcampora LLP
100 Jericho Quadrangle, Suite 300
Jericho, NY 11753
Telephone: (516) 479-6300
Email: RFriedman@SilvermanAcampora.com
About DET Medical
DET Medical P.C. filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-40497) on Feb. 14,
2023, with $500,000 to $1 million in both assets and liabilities.
The petition was filed pro se.
Salvatore LaMonica, Esq. has been appointed as Subchapter V
trustee.
Judge Jil Mazer-Marino oversees the case.
DIAMOND SPORTS: Bankruptcy Court Blocks Phoenix Suns New TV Deal
----------------------------------------------------------------
Dietrich Knauth of Reuters reports that a U.S. bankruptcy judge on
Wednesday, May 10, 2023, blocked the NBA's Phoenix Suns from moving
ahead with a television and streaming rights deal for its
basketball games, saying the team violated the rights of its
current broadcast partner, the bankrupt Diamond Sports Group.
The Phoenix Suns last month announced they would broadcast future
games to television and online streaming through a partnership with
Gray Television Inc and video technology startup Kiswe.
U.S. Bankruptcy Judge Christopher Lopez, however, ruled that the
company could not yet move on from its existing contract with
Diamond Sports Group, a bankrupt subsidiary of Sinclair Broadcast
Group that broadcasts games through its Bally Sports TV channels.
U.S. bankruptcy law protects debtors from having their contracts
modified or terminated without their consent, and Lopez ruled that
the Suns' new TV deal was void because it interfered with the
Diamond Sports' contractual right to negotiate contract extension.
Lopez did not award Diamond Sports any monetary damages on
Wednesday, but said that he would consider a request for damages at
a later hearing.
The Suns’ attorneys argued that its TV deal with Diamond expired
with the end of the 2022-2023 regular season, and that the new deal
would not interfere with Diamond's rights under its existing
contract.
Lopez was not persuaded, saying that the Suns' "media blitz" touted
the new contract as a done deal despite "one line in the press
release" about the Diamond Sports bankruptcy.
"The Suns are saying one thing outside the court and another thing
inside it," Lopez said.
A spokesman for the Suns did not immediately respond to a request
for comment.
Financial terms of the Phoenix Suns' contracts with Diamond Sports
and with Gray TV were kept sealed in bankruptcy court.
Diamond televises games for nearly half of all teams in the
National Basketball Association, Major League Baseball (MLB), and
the National Hockey League.
Diamond filed for Chapter 11 protection in March with a proposal to
cut $8 billion in debt.
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.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP
and Porter Hedges, LLP as bankruptcy counsels; Wilmer Cutler
Pickering Hale and Dorr, LLP as special corporate and litigation
counsel; AlixPartners, LLP as financial advisor; Moelis & Company,
LLC and LionTree Advisors, LLC as investment bankers; Deloitte Tax,
LLP as tax advisor; Deloitte Financial Advisory Services, LLP as
accountant; and Deloitte Consulting, LLP as consultant. Kroll
Restructuring Administration, LLC is the claims agent.
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee is represented by Akin Gump Strauss Hauer & Feld,
LLP.
DIGITALXMEDIA LLC: Taps Rountree Leitman Klein & Geer as Counsel
----------------------------------------------------------------
DigitalXmedia, LLC seeks approval from the U.S. Bankruptcy Court
for the Northern District of Georgia to hire Rountree, Leitman,
Klein & Geer, LLC as its legal counsel.
The firm's services include:
a. providing the Debtor with legal advice regarding its powers
and duties in the management of its property;
b. preparing legal papers;
c. assisting in the examination of claims of creditors;
d. assisting in the formulation and preparation of the
disclosure statement and plan of reorganization and in the
confirmation and consummation thereof; and
e. other necessary legal services.
Rountree will be paid at its standard hourly rates:
Attorney:
William A. Rountree $595
Will B. Geer $595
Michael Bargar $535
Hal Leitman $425
David S. Klein $495
Alexandra Dishun $425
Ceci Christy $425
Elizabeth Childers $395
Caitlyn Powers $325
Paralegals:
Elizabeth A. Miller $250
Sharon M. Wenger $225
Megan Winokur $175
Catherine Smith $150
The firm received a pre-bankruptcy retainer of $25,000 and the
filing fee of $1,738.
William Rountree, Esq., a partner at Rountree, disclosed in a court
filing that his firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Will B. Geer, Esq.
Rountree Leitman Klein & Geer, LLC
Century Plaza I
2987 Clairmont Road, Suite 350
Atlanta, GA 30329
Telephone: (404) 584-1238
Facsimile: (404) 704-0246
Email: wgeer@rlkglaw.com
About DigitalXmedia LLC
DigitalXmedia, LLC sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-53526) on April
13, 2023. At the time of filing, the Debtor estimated up to $50,000
in assets and $100,001 to $500,000 in liabilities.
Judge Paul Baisier oversees the case.
Will B. Geer, Esq. at Rountree Leitman Klein & Geer LLC represents
the Debtor as counsel.
DIOCESE OF ALBANY: Creditors Ask Court OK to Restart Pension Suit
-----------------------------------------------------------------
James Nani of Bloomberg Law reports that some creditors of the
Roman Catholic Diocese of Albany asked a court to lift the church's
bankruptcy protection from litigation so that they can continue a
lawsuit to determine how much they're owed in their pensions.
About 1,100 former employees of formerly church-owned, defunct St.
Clare's Hospital claim they received reduced or no pensions because
the diocese failed to fully fund them. They say they're owed about
$70 million.
Lifting the bankruptcy stay would allow the litigation to proceed
in state court, a group of the unsecured creditors said in its
motion filed with the US Bankruptcy Court of the Northern District
of New York.
About The Roman Catholic Diocese of Albany
The Roman Catholic Diocese of Albany is a religious organization in
Albany, N.Y. It 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
on 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 Albany 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.
Judge Robert E. Littlefield, Jr. oversees the case.
The Debtor tapped Nolan Heller Kauffman, LLP as bankruptcy counsel;
Tobin and Dempf, LLP as special litigation counsel; and Keegan
Linscott & Associates, PC as financial advisor. Donlin, Recano &
Company, Inc. is the claims and noticing agent.
On April 17, 2023, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors in this Chapter 11 case.
Lemery Greisler LLC serves as the committee's counsel.
DIOCESE OF OAKLAND: Files Chapter 11 Due to Abuse Suits
-------------------------------------------------------
The Roman Catholic Bishop of Oakland filed a voluntary petition for
bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code. The
filing is necessary in light of the more than 330 lawsuits alleging
child sexual abuse brought against RCBO under a recent California
statute that allowed decades-old claims otherwise time barred and
expired to be filed.
All Catholic schools that operate in the diocese are part of
separate legal entities and therefore not included in the filing.
They will continue to operate as normal. The mission and ministries
of RCBO also will continue during the restructuring process and
beyond. Employees will be paid as usual, and their benefit programs
will continue uninterrupted. Vendors will be paid for all goods and
services delivered after the filing.
RCBO will continue to serve the 550,000 Catholics in the East Bay
and carry out its many works of mercy through its parishes and
pastoral centers.
Most of the claims brought under the most recent California statute
stem from allegations of sexual abuse that occurred in the 1960s,
70s, and 80s by priests who are no longer active in ministry and/or
deceased. Chapter 11 is a court-supervised, transparent process
that allows for the evaluation of the merits of each claim and
gives claimants a say in the outcome and visibility into the
proceedings and RCBO's finances. With the Chapter 11 filing, legal
actions against RCBO will stop, allowing RCBO to develop a plan of
reorganization, based on assets and insurance coverage available to
be used to settle claims with abuse survivors.
"After careful consideration of the various alternatives for
providing just compensation to innocent people who were harmed, we
believe this process is the best way to ensure a fair and equitable
outcome for survivors. It will also allow RCBO to stabilize its
finances and continue the sacred mission entrusted to us by Christ
and the Church," said Bishop Michael C. Barber, SJ. "Given our
current financial resources, RCBO could not shoulder the burden of
litigating 330 cases filed under the recent California Assembly
Bill 218."
"It is important we take responsibility for the damage done so we
can all move beyond this moment and provide survivors with some
measure of peace," he said. "Sadly, for many, the pain caused by
these horrific sins, no matter when they occurred, will never wash
away, which is why we offer support to survivors and pray for their
continued healing."
RCBO has taken exhaustive steps to safeguard children and
vulnerable adults. Ten years before the U.S. bishops approved the
groundbreaking Charter for the Protection of Children and Young
People in 2002, RCBO established what today is known as the Minor
Diocesan Review Board, comprised over the years of such individuals
as prosecutors, educators, social workers, therapists, and
survivors. Its mandate is to assess allegations of sexual abuse
involving children and vulnerable adults brought against a diocesan
cleric. The independent, confidential body also advises the bishop
in determining the suitability for ministry of accused priests or
deacons.
Through the Diocesan Office of Victims Assistance, counseling and
support is provided to survivors of clergy abuse and their
families. To safeguard children and vulnerable adults, all clergy,
volunteers, and employees of the Diocesan entities are required to
participate in training about the nature of child sexual abuse, how
it is perpetrated, how to report it, and strategies for prevention.
To provide additional safeguards, clergy, volunteers, and employees
undergo background checks before they can be of service. RCBO and
affiliated Diocesan entities are the largest employer group to
participate in the Live Scan finger printing program for all
clergy, employees, and volunteers in the East Bay.
The Chapter 11 filing comes at a time when dioceses nationwide face
the challenge of declining participation of Catholics, an aging and
decreasing clergy, and underutilized parish facilities. For
instance, in Oakland, Mass attendance dropped 42% in 2021 from 2019
due to the pandemic and was off 46% from the five-year average. To
align the needs of the ministries, parishioners, and priests with
the financial realities, Bishop Barber in March 2021 appointed a
task force comprised of laity and clergy called the Mission
Alignment Process (MAP) Commission to make recommendations for
addressing these challenges. Their efforts are ongoing and expected
to take several years to implement but have already resulted in a
recent merger of parishes.
This is the second time California has allowed time barred or
expired cases of child sexual abuse to be filed by alleged
survivors. In 2003, California created a similar window. At that
time, RCBO resolved the 52 lawsuits filed against it using
insurance funds, selling property, and securing loans.
The Roman Catholic Bishop of Oakland Chapter 11 case has been filed
in the U.S. Bankruptcy Court for the Northern District of
California. Additional general information can be found on the
Diocesan website at oakdiocese.org and court-related information
can be found at https://www.kccllc.net/RCBO.
About Diocese of Oakland
The Diocese of Oakland is a Latin Church ecclesiastical territory
or diocese of the Catholic Church in Northern California. The
Diocese of Oakland serves two counties in the East Bay region,
Alameda and Contra Costa, and includes approximately 550,000
Catholics in 84 parishes.
Diocese of Oakland sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Cal. Case No. 23-40523) on May 8, 2023
to address more than 330 lawsuits alleging child sexual abuse
brought against it.
In the petition filed by Bishop Michael Charles Barber, as Bishop
of Oakland, the Diocese estimated assets and liabilities between
$100 million and $500 million.
DIOCESE OF ROCKVILLE CENTRE: Opposes Retirement Home Priority Claim
-------------------------------------------------------------------
Grace Dixon of Law360 reports that the Roman Catholic Diocese of
Rockville Centre told a New York bankruptcy judge that a retirement
community operator mischaracterized a lease in order to bump its $4
million claim to the front of the line.
Dominican Village, Inc., founded by the Sisters of St. Dominic of
Amityville, New York, is a not-for-profit Independent and Assisted
Living Community. Prior to the Petition Date, the Debtor and DV
entered into the Lease whereby Debtor leased certain apartments
from DV located at 565 Albany Avenue, Amityville, NY for the
purpose of providing a residence for senior priest and priests who
will be assisting the senior priests in their day-to-day
activities.
In Rockville Centre's Chapter 11 case, Dominican Village filed a
motion seeking over four million dollars from the Debtor as an
administrative expense pursuant to section 365(d)(3) of the
Bankruptcy Code. According to Dominican Village, the Debtor is
obligated to pay this immense sum for ongoing rent and restoration
expenses under a lease signed October 23, 2018 that provided
residences for retired priests of the Debtor.
According to the Debtor, the Lease expired under its terms on
October 31, 2021. The Debtor then vacated the premises, after
timely remitting the rent payments each month through the Lease's
expiration. In filing the Motion, Dominican Village seeks to
forego the traditional claims process, to the detriment of the
Debtor and its creditors, in order to receive millions of dollars
in rent payments for property that the Debtor has not occupied for
over eighteen months.
The Debtor submits that the Motion should be denied for these
reasons:
* First, DV attempts to use section 365(d)(3), which is
explicitly reserved for nonresidential real property leases, to
extract rent payments from the Debtor for what is plainly a
residential lease.
* Second, if the Court were to find that the Lease was
nonresidential in nature, the Lease expired by its terms and the
Diocese had no obligations under section 365(d)(3) with respect to
an expired lease.
* Third, even if the Court finds that the Lease is an unexpired
lease of nonresidential real property and that Section 365(d)(3)
applies, the Lease has been rejected and the allowed administrative
claim would be far less than requested by DV.
About The Roman Catholic Diocese
of Rockville Centre, New York
The Roman Catholic Diocese of Rockville Centre, New York, is the
seat of the Roman Catholic Church on Long Island. The Diocese has
been under the leadership of Bishop John O. Barres since February
2017. The State of New York established the Diocese as a religious
corporation in 1958. The Diocese is one of eight Catholic dioceses
in New York, including the Archdiocese of New York. The Diocese's
total Catholic population is approximately 1.4 million, roughly
half of Long Island's total population of 3.0 million. The Diocese
is the eighth largest diocese in the United States when measured by
the number of baptized Catholics.
The Roman Catholic Diocese of Rockville Centre, New York, filed a
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 20-12345) on Sept.
30, 2020, listing as much as $500 million in both assets and
liabilities. Judge Martin Glenn oversees the case.
The Diocese tapped Jones Day as legal counsel, Alvarez & Marsal
North America, LLC, as restructuring advisor, and Sitrick and
Company, Inc., as communications consultant. Epiq Corporate
Restructuring, LLC is the claims agent.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Diocese's Chapter 11 case. The committee
tapped Pachulski Stang Ziehl & Jones, LLP and Ruskin Moscou
Faltischek, PC as its bankruptcy counsel and special real estate
counsel, respectively.
Robert E. Gerber, the legal representative for future claimants of
the Diocese, is represented by the law firm of Joseph Hage
Aaronson, LLC.
DUNBAR PARTNERS: Unsecureds Owed $89M Unimpaired in Plan
--------------------------------------------------------
Judge Nancy Hershey Lord has entered an order, in accordance with
section 1125 of title 11 of the United States Code and Rule 3017(b)
of the Federal Rules of Bankruptcy Procedure, the Disclosure
Statement of Dunbar Partners BSD LLC is preliminarily approved as
containing adequate information.
A hearing shall be held before the Honorable Nancy Hershey Lord,
United States Bankruptcy Judge, to consider final approval the
Disclosure Statement and confirmation of the Plan on May 16, 2023
at 2:00 p.m., or as soon thereafter as counsel can be heard. The
hearing shall be held using the Zoom platform.
Any objections to final approval of the Disclosure Statement or
confirmation of the Plan must be filed and served on or before May
15, 2023.
Amended Plan
Dunbar Partners BSD LLC submitted an Amended Disclosure Statement
for Amended Plan of Reorganization.
The Debtor is a limited liability company currently under contract
to purchase the real property and improvements thereon located at
2802 Frederick Douglass Boulevard, New York, New York 10039
("Property"). The Property is currently owned by Dunbar Owner LLC
("Dunbar Owner"). The Property is commonly known as the Dunbar
Apartments and includes 12 commercial spaces and approximately 538
residential units.
Under the Plan, Class 1 General Unsecured Claims total $89,834,000
and will recover 100% of claims. Class 1 is unimpaired.
The funds generated by the sale and the Assignment Agreement
constitute the sources for the Plan payments.
The balance of the purchase price under the Contract of Sale and
amounts necessary to fund the Plan will be satisfied from a
combination of (i) cash provided by Assignee; (ii) the three
million ($3,000,000) contract deposit ("Deposit") provided by the
Debtor under the Contract of Sale; and (iii) the assumption by
Assignee of the MF1 Capital LLC (together with its affiliates,
"MF1") mortgage debt (upon payment by Dunbar Owner of the
$3,000,000 Deposit to MF1 in reduction of the existing mortgage
loan and as amended between Assignee and MF1).
The following transactions shall simultaneously occur at the
Closing once the Escrow Agent (pursuant to an Escrow
Agreement/Instruction Letter on terms mutually acceptable to the
parties) receives all applicable fully executed documents and
written confirmation from all applicable parties that the Closing
is approved to occur:
(a) The Assignee under the Assignment Agreement shall pay the
cash portion, if any, of the Sale Proceeds to Dunbar Owners (or as
directed by Dunbar Owner) plus other cash amounts as necessary to
fully fund the Plan in such amount as identified by the Debtor
prior to the Closing
(b) $3,000,000 will be paid to MF1 Capital LLC in reduction of
the existing mortgage loan;
(c) Dunbar Owner will convey the deed to the Property to the
Debtor in exchange for the cash balance, if any, of the Purchase
Price under the Contract of Sale, including all adjustments in its
favor, and the Debtor shall take title to the Property subject to
the existing MF1 Capital LLC mortgage lien on the Property;
(d) the Debtor shall then convey title to the Property to the
Assignee
(e) the Assignee shall assume the MF1 Capital LLC mortgage debt
(as amended between Assignee and MF1) pursuant to terms of an
Assignment and Assumption Agreement acceptable to Dunbar Owner, the
Assignee and MF1.
The above transactions ((a) – (e) collectively ("Closing
Conditions") will be consummated pursuant to an Escrow
Agreement/Instruction Letter, to be negotiated by and between the
Debtor, Dunbar Owner, the Assignee, and MF1. The Closing shall
occur only when all the Closing Conditions are satisfied, and each
of the Closing Conditions have occurred in the order specified
therein.
In the event that on one or more of the Closing Conditions fails to
occur for any reason, all transactions provided for in the Escrow
Agreement/Instruction Letter shall be deemed null and void, and the
parties automatically returned to their respective positions with
all rights and obligations being reinstated as if the transactions
contemplated herein never occurred.
The Debtor and the parties to the Escrow Agreement/ Instruction
Letter shall take all necessary steps, and perform all necessary
acts, to consummate the terms and conditions of the Plan and make
the transfers provided for under the Plan. In summary, at the
conclusion of the transactions contemplated at the Closing, the
parties will be in the following positions:
* Assignee will (i) have funded the cash portion of the Sale
Proceeds and amounts necessary to fully fund the Plan; (ii) assumed
the MF1 Capital LLC mortgage (upon payment by Dunbar Owner of the
Deposit to MF1 Capital LLC in reduction of the existing mortgage
loan and as amended between Assignee and MF1); and (iii) have taken
title to the Property; and
* The Debtor will have received the cash amount it identified as
sufficient to fund payments under the Plan; and
* All amounts due to Dunbar Owner under the Contract of Sale
will have been satisfied, and Dunbar Owner will have conveyed the
Property pursuant to the Plan and be relieved of obligations to
MF1, consistent with the Assumption and Assignment Agreement
between the parties.
Attorneys for the Debtor:
Fred B. Ringel, Esq.
Lori Schwartz, Esq.
Clement Yee, Esq.
LEECH TISHMAN ROBINSON BROG, PLLC
875 Third Avenue
New York, NY 10022
Tel: (212) 603-6300
A copy of the Order dated May 5, 2023, is available at
https://bit.ly/3M3vC66 from PacerMonitor.com.
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/3VC2LsN from PacerMonitor.com.
About Dunbar Partners BSD
Dunbar Partners BSD, LLC, is a Brooklyn-based company engaged in
activities related to real estate.
Dunbar Partners BSD filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
23-40575) on Feb. 21, 2023, with $95,500,000 in assets and
$92,395,000 in liabilities. Judge Nancy Hershey Lord oversees the
case.
Fred R. Ringel, Esq., at Leech Tishman Robinson Brog, PLLC and
Jeffrey Zwick & Associates PC serve as the Debtor's bankruptcy
counsel and special real estate counsel, respectively.
ELIZA JENNINGS: Fitch Affirms IDR at 'BB+', Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed Eliza Jennings Senior Care Network, OH's
(EJSCN) Issuer Default Rating (IDR) at 'BB+' and its rating on
approximately $24.7 million in series 2022A health care facilities
revenue refunding bonds issued by the County of Cuyahoga, Ohio on
behalf of EJSCN at 'BB+'.
The Rating Outlook is Stable.
Entity/Debt Rating Prior
----------- ------ -----
Eliza Jennings
Senior Care
Network (OH) LT IDR BB+ Affirmed BB+
Eliza Jennings
Senior Care
Network (OH)
/General
Revenues/1 LT LT BB+ Affirmed BB+
The 'BB+' rating reflects EJSCN's manageable leverage profile that
is offset by a weak service area and a high exposure to skilled
nursing facility (SNF) operations, particularly those reimbursed by
Medicaid. Though EJSCN has a significant reliance on SNF revenues,
the organization generates approximately 24% of net revenues from
its independent living units (ILU), which have been able to
maintain strong occupancy over the past few years.
The Stable Outlook reflects Fitch's view that EJSCN maintains
sufficient liquidity and core operating profitability to be able to
manage through staffing challenges and related healthcare census
pressures. These pressures are expected to continue over the near
term given the significant healthcare employer competition in the
Greater Cleveland area.
SECURITY
Bondholders are granted a security interest in the gross revenues
of EJSCN, a first mortgage lien on EJSCN's campuses. A fully-funded
debt service reserve fund (DSRF) provides additional security for
the series 2022A bonds.
KEY RATING DRIVERS
Revenue Defensibility - 'bbb'
Strong ILU Occupancy; Weak/Competitive Market Affords Limited
Pricing Flexibility
EJSCN's midrange revenue defensibility assessment reflects Eliza
Jennings Inc.'s (The Renaissance) strong ILU occupancy of 95% in
fiscal 2022 and 94% through nine months of fiscal 2023. The
organization's long-standing reputation, high SNF quality scores
and supportive relationships with hospitals further support the
expectation of consistent demand for services. These positives are
balanced against a weaker market and payor mix that affords very
little price flexibility and inconsistent rate increases.
EJSCN's ILU occupancy has been strong, averaging 95% over the last
four fiscal years. Assisted living unit (ALU) and SNF bed censuses
were softer in fiscal 2022, but still at sufficient four-year
averages of 90% and 91%, respectively. Occupancy showed recovery
through nine months ended in 2023, however, given the significant
competition for nurses in the Cleveland area, Fitch believes that
overall healthcare occupancy will likely remain below 90% over the
near term. The Renaissance, EJSCN's only independent living
community, draws most of its ILU residents from the Cleveland
metropolitan area. The community offers a Type-C entrance fee
contract and competes mainly with a limited number of non-profit
life plan communities that offer a similar range of services. Fitch
believes that the community's entrance fee contract is a major
differentiating factor, as seen in the community's ability to
maintain strong occupancy.
EJSCN's ILU monthly service fee increases have averaged 2.75% over
the past four years. EJSCN did increase ILU monthly rates by 4.75%
in fiscal 2022, but did not increase SNF monthly rates. As a result
of continued staffing and inflationary challenges, EJSCN did make a
rare entrance fee increase of 5% in 2023 along with monthly fee
increase ranging from 6.25% to 6.5% in 2023.
Operating Risk - 'bb'
Solid Core Profitability, High SNF and Medicaid Exposure
Fitch's 'bb' assessment of EJSCN's operating risk incorporates
risks associated with a high exposure to skilled nursing operations
and Medicaid payor mix, especially at The Eliza Jennings Home (EJ
Home), the organization's founding entity, where 83% of its census
over the past four years has been Medicaid residents. The
Renaissance is a single-site Type-C life plan community (LPC) that
provides independent living residents 14 days free each year in the
health center that includes assisted living, memory care and
skilled nursing services. In addition to The Renaissance, EJSCN
provides assisted living and memory support services at Devon Oaks
and skilled nursing services at EJ Home. The assessment also
considers a track record of good cost management, The Renaissance's
Type-C LPC contract and the organization's fee for service
healthcare offerings. EJSCN has a very high 24-year average age of
plant and Fitch expects strategic capital spending over the next
five years to grow revenues and shift the SNF payor mix
concentration away from Medicaid.
Over the last four audited years, EJSCN has averaged a 92.3%
operating ratio, 9.6% net operating margin (NOM), and 16.4%
NOM-adjusted. Like other LPCs and healthcare providers, EJSCN's
104.8% operating ratio, 1.5% NOM, and 12.8% NOM-adjusted over the
fiscal 2023 nine-month interim period are pressured on lower
healthcare occupancy and higher contract labor utilization across
the network. Given the widespread staffing issues, especially for
nurses in the skilled nursing industry, EJSCN's core operating
profitability will likely remain below historical average in fiscal
2023. Even with these operating pressures, Fitch believes EJSCN's
profitability remains sufficient for a midrange assessment of
operating cost flexibility given the historical profitability
metrics, expectation for gradual occupancy improvement as staffing
challenges ease.
EJSCN commenced construction of a new assisted living facility at
The Renaissance in 2021 increasing capital spending to 217.4% of
depreciation. This use of capital is viewed favorably as the new
facility will create efficiencies by consolidating existing
assisted living and memory care offerings and provide for a more
marketable product that is expected to drive higher private pay
rates. The construction has been completed and fill began November
2022. Fitch expects EJSCN to pursue additional opportunities for
growth and margin expansion over time, including a potential ILU
project at The Renaissance (where there are 40+ acres that can be
utilized).
EJSCN's capital-related metrics are favorable as maximum annual
debt service (MADS) represented 7.7% of annualized fiscal 2023
nine-month revenues and debt to net available was 2.5x as of March
31, 2023. Revenue only coverage of MADS has been solid as well,
averaging 1.9x over the last four audited years, indicating a
limited reliance on net entrance fee receipts to cover debt
service.
EJSCN has historically generated over 40% of its net resident
service revenue from SNF operations. Of this amount, an average of
29% of SNF net revenues derived from Medicaid over the past four
fiscal years. Fitch views the high exposure to SNF operations and
Medicaid as an asymmetric additional risk consideration as Medicaid
programs provide the lowest reimbursement rates among all payors
for SNF services. Furthermore, SNF demand/revenues are highly
dependent on external factors including hospital referrals and
local aging and SNF utilization trends, which are a major risk in
the midst of an industry-wide movement to refer more discharges to
home.
Financial Profile - 'bb'
Financial Profile Consistent with Rating Through Moderate Stress
EJSCN has light liquidity and a relatively modest leverage profile,
with Fitch calculated days cash on hand (DCOH) of 215 days and
cash-to-adjusted debt of 48.3% at March 31, 2023. Given EJSCN's
'bbb' revenue defensibility and 'bb' operating risk assessments,
along with Fitch's forward-looking scenario analysis, EJSCN is
expected to maintain key leverage metrics that are in line with the
'BB+' rating through a moderate stress.
Fitch's baseline scenario - a reasonable forward look of financial
performance over the next five years given current economic
expectations - shows EJSCN gradually improving operating and
financial metrics as healthcare census grows, hiring challenges
ease, higher rates and efficiencies are realized at The
Renaissance's new assisted living facility. Capex is expected to be
around depreciation to fund routine needs. However, due to
uncertainty around management's plans for strategic growth, there
is an expectation of some dilution of the balance sheet in the
future, which is considered into the current 'BB+' rating. As part
of the forward look, Fitch assumes an economic stress (to reflect
financial market volatility) that is specific to EJSCN's asset
allocation. As a result of the stress and equity contribution for
the refunding, EJSCN's cash-to-adjusted debt moves up from a low of
39% and debt service coverage recovers to be at or above 2x by year
three of the stress scenario, which supports with the current
rating level.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A decline in unrestricted liquidity and/or a new money debt
issuance, such that cash to adjusted debt falls below 30% and is
not expected to improve;
- Weaker operating performance, such that revenue-only MADS
coverage is expected to be consistently under 1.5x.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Fitch views the potential for positive movement for the rating as
limited given the heavy reliance on SNF operations, EJSCN's
Medicaid SNF payor mix concentration, the organization's light
liquidity and the expectation of strategic capital spending over
the next five years that will affect sustained balance sheet
improvements;
- Longer term, good cash flow leading to growth in unrestricted
liquidity, such that cash to adjusted debt is expected to stabilize
at or above 100%;
- Improved SNF payor mix where Medicaid consistently accounts for
less than 25% of skilled nursing net revenues.
PROFILE
EJSCN is a nonprofit parent company of three healthcare-related
entities: EJ Home, The Renaissance and Devon Oaks Assisted Living
Corporation (Devon Oaks). EJ Home is located in Cleveland, OH and
consists of 126 SNF beds. The Renaissance is located in Olmsted
Township, OH (approximately 20 miles southwest of Cleveland) and
consists of 176 ILUs, 30 ALU, 18 memory care units (MCU) and 90 SNF
beds. Devon Oaks is located in Westlake, OH (approximately 20 miles
west of Cleveland) and consists of 54 ALUs and 12 MCUs.
EJSCN had total operating revenues of $38.1 million in fiscal 2022
(FYE June 30).
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.
ENVISION HEALTHCARE: Case Summary & 30 Top Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Envision Healthcare Corporation
1A Burton Hills Boulevard
Nashville TN 37215
Business Description: Envision Healthcare Corporation is a
national medical group that works in
collaboration with healthcare partners,
payors, and others in the healthcare
industry to ensure the delivery of high-
quality, accessible, and affordable patient
care.
Chapter 11 Petition Date: May 15, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Two hundred seventeen affiliates that concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Envision Healthcare Corporation (Lead Case) 23-90342
AmSurg Palmetto, Inc. 23-90480
Weston NSC, LLC 23-90481
AmSurg Inglewood, Inc. 23-90482
Sheridan ROP Services of Florida, Inc. 23-90483
Sheridan Healthcare of West Virginia, Inc. 23-90484
Sheridan Children's Healthcare Services of KY 23-90485
Provider Account Management, Inc. 23-90486
Wilton NSC, LLC 23-90487
Sunbeam Asset LLC 23-90488
Envision Healthcare Scientific Intelligence, Inc. 23-90489
Sheridan ROP Services of Virginia, Inc. 23-90490
AmSurg KEC, Inc. 23-90491
Sheridan Children's Healthcare Services of LA 23-90492
EmCare of California, Inc. 23-90493
AmSurg Physicians Arizona, LLC 23-90494
SHI II, LLC 23-90495
Tampa Bay NSC, LLC 23-90496
AmSurg Kissimmee FL, Inc. 23-90497
Envision Physician Services, LLC 23-90498
Templeton Readings, LLC 23-90499
AmSurg La Jolla, Inc. 23-90500
AmSurg Physicians HoldCo, LLC 23-90501
Evolution Mobile Imaging, LLC 23-90502
Tennessee Valley Neonatology, Inc. 23-90503
AmSurg Lancaster PA, LLC 23-90504
Flamingo Anesthesia Associates, Inc. 23-90505
AmSurg Pottsville PA, LLC 23-90506
FO Investments III, Inc. 23-90507
Tiva Healthcare, Inc. 23-90508
FM Healthcare Services, Inc. 23-90509
AmSurg Main Line PA, LLC 23-90510
FMO Healthcare Holdings, LLC 23-90511
AmSurg Maryville, Inc. 23-90512
Torrance NSC, LLC 23-90513
AmSurg San Antonio TX, Inc. 23-90514
FO Investments II, Inc. 23-90515
EmCare Physician Providers, Inc. 23-90516
AmSurg Melbourne, Inc. 23-90517
Towson NSC, LLC 23-90518
AmSurg Miami, Inc. 23-90519
FO Investments, Inc. 23-90520
Twin Falls NSC, LLC 23-90521
Valley Anesthesiology Consultants, Inc. 23-90522
EmCare, LLC 23-90523
Fullerton NSC, LLC 23-90524
AmSurg Scranton PA, Inc. 23-90525
Emergency Medical Services LLC 23-90526
Global Surgical Partners, Inc. 23-90527
AmSurg Suncoast, Inc. 23-90528
Emergency Medicine Education Systems, Inc. 23-90529
EMS Management LLC 23-90530
AmSurg Temecula CA, Inc. 23-90531
Greater Florida Anesthesiologists, LLC 23-90532
Gynecologic Oncology Associates, Inc. 23-90533
EmCare Physician Services, Inc. 23-90534
Hawkeye Holdco LLC 23-90535
Healthcare Administrative Services, Inc. 23-90536
Holiday Acquisition Company, Inc. 23-90537
Affilion, Inc. 23-90538
Illinois NSC, Inc. 23-90539
All Women's Healthcare Holdings, Inc. 23-90540
Imaging Advantage LLC 23-90541
All Women's Healthcare of Dade, Inc. 23-90542
All Women's Healthcare of Sawgrass, Inc. 23-90543
All Women's Healthcare of West Broward, Inc. 23-90544
AmSurg San Luis Obispo CA, Inc. 23-90545
ISelect Healthcare LLC 23-90546
All Women's Healthcare Services, Inc. 23-90547
Jacksonville Beaches Anesthesia Associates, Inc. 23-90548
All Women's Healthcare, Inc. 23-90549
AllegiantMD, Inc. 23-90550
Alpha Physician Resources, L.L.C. 23-90551
American Emergency Physicians Management, Inc. 23-90552
AmSurg Abilene Eye, Inc. 23-90553
AmSurg Abilene, Inc. 23-90554
AmSurg Altamonte Springs FL, Inc. 23-90555
AmSurg Anesthesia Management Services, LLC 23-90556
Infinity Healthcare, Inc. 23-90557
Acute Management, LLC 23-90341
AmSurg, LLC 23-90343
Sheridan Children's Healthcare Services of NM 23-90344
AmSurg Temecula II, Inc. 23-90345
QRx Medical Management, LLC 23-90346
Jupiter Anesthesia Associates, L.L.C. 23-90347
AmSurg Arcadia CA, Inc. 23-90348
Boca Anesthesia Service, Inc. 23-90349
Sheridan Children's Healthcare Services of Ohio 23-90350
Northwood Anesthesia Associates, L.L.C. 23-90351
Jupiter Healthcare, LLC 23-90352
AmSurg Torrance, Inc. 23-90353
Radiology Staffing Solutions, Inc. 23-90354
AmSurg Burbank, Inc. 23-90355
NSC Healthcare, Inc. 23-90356
Sheridan Healthcare, LLC 23-90357
Bravo Reimbursement Specialist, L.L.C. 23-90358
Drs. Ellis, Rojas, Ross & Debs, Inc. 23-90359
Sheridan Children's Healthcare Services of VA 23-90360
Kenwood NSC, LLC 23-90361
AmSurg Colton CA, Inc. 23-90362
NSC RBO East, LLC 23-90363
Anesthesiologists of Greater Orlando, Inc. 23-90364
Radstaffing Management Solutions, Inc. 23-90365
Broad Midwest Anesthesia, LLC 23-90366
ED Solutions, LLC 23-90367
KMAC, Inc. 23-90368
AmSurg Crystal River, Inc. 23-90369
NSC West Palm, LLC 23-90370
Sheridan Healthcorp of California, Inc. 23-90371
AmSurg Naples, Inc. 23-90372
Anesthesiology Associates of Tallahassee, Inc. 23-90373
Centennial Emergency Physicians, LLC 23-90374
Reimbursement Technologies, Inc. 23-90375
Sheridan Children's Healthcare Services, Inc. 23-90376
EMSC ServicesCo, LLC 23-90377
AmSurg EC Beaumont, Inc. 23-90378
Long Beach NSC, LLC 23-90379
EDIMS, L.L.C. 23-90380
Apex Acquisition LLC 23-90381
Parity Healthcare, Inc. 23-90382
Chandler Emergency Medical Group, L.L.C. 23-90383
Sheridan Healthcorp, Inc. 23-90384
AmSurg EC Centennial, Inc. 23-90385
AmSurg Glendale, Inc. 23-90386
Rose Radiology, LLC 23-90387
Sheridan Children's Services of Alabama, Inc. 23-90388
EMSC ServicesCo, LLC 23-90389
MedAssociates, LLC 23-90390
AmSurg New Port Richey FL, Inc. 23-90391
EHR Management Co. 23-90392
Partners in Medical Billing, Inc. 23-90393
AmSurg EC Santa Fe, Inc. 23-90394
Children's Anesthesia Associates, Inc. 23-90395
APH Laboratory Services, Inc. 23-90396
Sheridan Healthy Hearing Services, Inc. 23-90397
Medi-Bill of North Florida, Inc 23-90398
Sheridan Emergency Physician Services of Missouri 23-90399
San Antonio NSC, LLC 23-90400
AmSurg EC St. Thomas, Inc. 23-90401
Enterprise Parent Holdings, Inc. 23-90402
Southeast Perinatal Associates, Inc. 23-90403
Clinical Partners Management Company, LLC 23-90404
Phoenix Business Systems, LLC 23-90405
EmCare Anesthesia Providers, Inc. 23-90406
Arizona Perinatal Care Centers, LLC 23-90407
Sheridan Emergency Physician Services of North MO 23-90408
AmSurg EC Topeka, Inc. 23-90409
Sheridan Holdings, Inc. 23-90410
CMORx, LLC 23-90411
Sentinel Healthcare Services, LLC 23-90412
Medical Information Management Solutions, LLC 23-90413
Envision Anesthesia Services of Delaware, Inc. 23-90414
AmSurg Northwest Florida, Inc. 23-90415
AmSurg Glendora CA, Inc. 23-90416
ASDH I, LLC 23-90417
Phoenix Physicians, LLC 23-90418
AmSurg EC Washington, Inc. 23-90419
Sheridan Emergency Physician Services of South Fla. 23-90420
Coastal Anesthesiology Consultants, LLC 23-90421
Sheridan Hospitalist Services of Florida, Inc. 23-90422
Spotlight Holdco LLC 23-90423
Sheridan Anesthesia Services of Alabama, Inc. 23-90424
ASDH II, LLC 23-90425
Envision Anesthesia Services of Sierra Vista, Inc. 23-90426
Millennium Vision Surgical, LLC 23-90427
Coral Springs NSC, LLC 23-90428
AmSurg El Paso, Inc. 23-90429
Sheridan InvestCo, LLC 23-90430
Austin NSC, LLC 23-90431
AmSurg Oakland CA, Inc. 23-90432
AmSurg Hillmont, Inc. 23-90433
Physician Account Management, Inc. 23-90434
Sheridan Emergency Physician Services, Inc. 23-90435
Sheridan Anesthesia Services of Louisiana, Inc. 23-90436
MSO Newco, LLC 23-90437
Davis NSC, LLC 23-90438
AmSurg Escondido CA, Inc. 23-90439
Sheridan Leadership Academy, Inc. 23-90440
St. Lucie Anesthesia Associates, LLC 23-90441
Austin NSC, LP 23-90442
Physician Office Partners, Inc. 23-90443
Sheridan Healthcare of Louisiana, Inc. 23-90444
NAC Properties, LLC 23-90445
AmSurg Finance, Inc. 23-90446
Sheridan Anesthesia Services of Virginia, Inc. 23-90447
EmCare Holdco, LLC 23-90448
Desert Mountain Consultants in Anesthesia, Inc. 23-90449
AmSurg Holdco, LLC 23-90450
Sheridan Radiology Management Services, Inc. 23-90451
Bay Area Anesthesia, L.L.C. 23-90452
Pinnacle Consultants Mid-Atlantic, L.L.C. 23-90453
AmSurg Fresno Endoscopy, Inc. 23-90454
Envision Children's Healthcare Services of North
Mississippi, Inc. 23-90455
AmSurg Ocala, Inc. 23-90456
Sheridan Healthcare of Missouri, Inc. 23-90457
New Generations Babee Bag, Inc. 23-90458
Discovery Clinical Research, Inc. 23-90459
Streamlined Medical Solutions LLC 23-90460
Sheridan CADR Solutions, Inc. 23-90461
Sheridan Radiology Services, Inc. 23-90462
BestPractices, Inc. 23-90463
AmSurg Holdings, LLC 23-90464
Valley Clinical Research, Inc. 23-90465
Practice Account Management Services, LLC 23-90466
Sheridan Healthcare of Vermont, Inc. 23-90467
North Florida Anesthesia Consultants, Inc. 23-90468
Doctors Billing Service, Inc. 23-90469
EmCare Holdings, LLC 23-90470
Envision Healthcare Clinical Research, Inc. 23-90471
Sheridan ROP Services of Alabama, Inc. 23-90472
West Fairview Emergency Physicians, LLC 23-90473
Sheridan Children's Healthcare Services of Arizona 23-90474
Bethesda Anesthesia Associates, Inc. 23-90475
Sun Devil Acquisition LLC 23-90476
Sheridan Healthcare of Virginia, Inc. 23-90477
North Florida Perinatal Associates, Inc. 23-90478
Proven Healthcare Solutions of New Jersey, LLC 23-90479
Judge: Hon. Christopher M. Lopez
Debtors'
Bankruptcy
Counsel: Edward O. Sassower, P.C.
Joshua A. Sussberg, P.C.
Nicole L. Greenblatt, P.C.
Anne G. Wallice
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Tel: (212) 446-4800
Fax: (212) 446-4900
Email: esassower@kirkland.com
jsussberg@kirkland.com
ngreenblatt@kirkland.com
anne.wallice@kirkland.com
- and -
John R. Luze, Esq.
Annie L. Dreisbach, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LL
300 North LaSalle Street
Chicago, Illinois 60654
Tel: (312) 862-2000
Fax: (312) 862-2200
Email: john.luze@kirkland.com
annie.dreisbach@kirkland.com
Debtors'
Local
Bankruptcy
Counsel: Matthew D. Cavenaugh, Esq.
Rebecca Blake Chaikin, Esq.
Vienna Anaya, Esq.
Javier Gonzalez, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Tel: (713) 752-4200
Fax: (713) 752-4221
Email: rchaikin@jw.com
vanaya@jw.com
jgonzalez@jw.com
Debtors'
Investment
Banker: PJT PARTNERS
Debtors'
Restructuring
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
Debtors'
Claims &
Noticing
Agent: KROLL RESTRUCTURING ADMINISTRATION LLC
Debtors'
Tax Advisor: KPMG LLC
Debtors'
Legal
Counsel: KATTEN MUCHIN ROSEMAN, LLP
Estimated Assets
(on a consolidated basis): $1 billion to $10 billion
Estimated Liabilities
(on a consolidated basis): $1 billion to $10 billion
The petitions were signed by Paul Keglevic as chief restructuring
officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/YDMC4RY/Envision_Healthcare_Corporation__txsbke-23-90342__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Wilmington Trust National 8.750% Senior
Association Notes Due 2026 $979,975,831
246 Goose Lane
Suite 1205
Guilford, CT 06437
United States
Envision Healthcare Administrator
Fax: 203‐453‐1183
2. Shyanne Trammel Litigation $4,000,000
and Tel Trammel,
Individually and as
Parents and Next Friends of
Tripp Trammel
10370 Richmond Ave
Suite 1300
Houston, TX 77042
United States
Jack E. McGehee
Plaintiff's Counsel
Phone: 713‐864‐4000
Email: jmcgehee@lawtx.com
3. Salesforce Com Inc. Trade Payable $1,854,910
Salesforce Tower 415
Mission Street, 3rd Floor
San Francisco, CA 94105
United States
Marc Benioff
Chair & Chief Executive Officer
Tel: 800‐720‐0371
Fax: 415‐901‐7040
Email: marc_benioff@salesforce.com
4. Kforce Inc. Trade Payable $1,194,978
1150 Assembly Drive, Suite 500
Tampa, FL 33607
United States
Kye Mitchell
Chief Operating Officer
Phone: 877‐453‐6723
Email: kmitchell@kforce.com
5. Zotec Partners LLC Trade Payable $1,177,072
1 Zotec Way
Carmel, IN 46032
United States
T. Scott Law
Founder & Chief Executive Officer
Phone: 317‐705‐5050
Email: slaw@zotecpartners.com
6. Accolite Digital LLC Trade Payable $755,846
16479 Dallas Parkway
Suite 350
Addision, TX 75001
United States
Leela Kaza
Founder & Chief Executive Officer
Tel: 972‐586‐7778
Fax: 972‐200‐7063
7. Presidio Networked Solutions Trade Payable $718,193
PENN 1
1 Pennsylvania Plaza Suite 2501
New York, NY 10119
United States
Bob Cagnazzi
Chief Executive Officer
Phone: 631‐220‐4395
Email: bcagnazzi@presidio.com
8. Data Core Systems Inc. Trade Payable $581,527
111 Sinclair Rd.
Bristol, PA 19007
United States
Shyamal Choudhury
Chief Executive Officer
Tel: 215‐243‐4838
Fax: 215‐243‐1978
Email: dcs@datacoresystems.com
9. Aidoc Inc. Trade Payable $507,000
142 W. 57th St.
New York, NY 10019
United States
Elad Walach
Chief Executive Officer
Email: elad@aidoc.com
Phone: 212‐203‐0095
10. Softtek Integration Systems Inc. Trade Payable $463,058
15303 Dallas Parkway Suite 200
Addison, TX 75001
United States
Blanca Trevino
President & Chief Executive Officer
Phone: 469‐283‐2506
Email: btrevino@softtek.com
11. Velocity Managed Services Inc. Trade Payable $392,745
6936 Spring Valley Drive
Holland, OH 43528
United States
Mark Walker
President and Chief Operations Officer
Phone: 856‐667‐7817
Email: mwalker@velocity.org
12. Jiyo Inc. Trade Payable $331,260
2821 S Parker Road Suite 111
Aurora, CO 80014
United States
Poonacha Machaiah
Founder
Phone: 650‐963‐0964
Email: poonacha@seva.love
13. CSC Corporation Service Co Trade Payable $312,860
251 Little Falls Drive
Wilmington, DE 19808
United States
Rodman Ward III
President & Chief Executive Officer
Tel: 302‐764‐7100
Fax: 302‐636‐5454
Email: rward@cscinfo.com
14. Baptist Memorial Hospital ‐ Credit Balance
$257,903
North Mississippi Payable
1100 Belk Boulevard
Oxford, MS 38655
United States
William C. Henning
Chief Executive Officer
Tel: 662‐636‐1061
Fax: 662‐636‐1676
Email: bill.henning@bmchcc.org
15. WNS North America Inc. Trade Payable $236,412
15 Exchange Pl suite 310
Jersey City, NJ 07302
United States
Jason Wolfson
Chief Executive Officer
Phone: 847‐267‐7153
Email: wolfsonj@aimspecialtyhealth.com
16. VVC Holding LLC Trade Payable $220,888
311 Arsenal Street
Suite 600
Watertown, MA 02472
United States
Robert E. Segert
Chief Executive Officer
Phone: 978‐952‐0317
Email: bsegert@athenahealth.com
17. IT Convergence Trade Payable $219,298
320 Decker Dr Ste 100
Irvington, TX 75062
United States
Arvind Sharma
Chief Executive Officer
Phone: 415‐675‐7935
Email: asharma@itconvergence.com
18. Trilliant Health Inc. Trade Payable $198,465
2 Maryland Farms, Ste 200
Brentwood, TN 37027
United States
Hal Andrews
President & Chief Executive Officer
Phone: 615‐665‐4288
Email: hal.andrews@trillianthealth.com
19. Trinisys, LLC Trade Payable $189,631
750 Old Hickory Blvd Bldg 1 Ste 268
Brentwood, TN 37027
United States
William Bartholomew
Chief Executive Officer
Phone: 615‐497‐0708
Email: wbartholomew@trinisys.com
20. Individual name on file Severance $171,910
Address on file
21. Michigan Professional Trade Payable $159,878
Insurance Exchange
333 Bridge St NW
Grand Rapids, MI 49504
United States
Katie Peterson
Executive Vice President and Chief Financial
Officer
Tel: 616‐391‐7988
Fax: 616‐741‐1999
Email: kpeterson@mpie.org
22. Iron Mountain Inc. Trade Payable $153,784
1 Federal Street
Boston, MA 02110
United States
Barry Hytinen
Chief Financial Officer and
Executive Vice President
Phone: 859‐227‐0585
Email: barry.hytinen@ironmountain.com
23. Epromos Promotional Trade Payable $152,277
Products LLC
113 5Th Avenue S.
St Cloud, MN 56301
United States
Jason Robbins
Founder & Chief Executive Officer
Phone: 877‐377‐6667
Email: jason.robbins@epromos.com
24. Oracle America Inc. Trade Payable $152,209
2300 Oracle Way
Austin , TX 78741
United States
Safra A. Catz
Chief Executive Officer
Phone: 415‐307‐3469
Email: safra.catz@oracle.com
25. Staff Care Inc. Trade Payable $143,012
8840 Cypress Waters Blvd
Dallas , TX 75019
United States
Cary Grace
President & Chief Executive Officer
Phone: 416‐868‐5500
Email: cary.grace@amnhealthcare.com
26. Icon Medical Network LLC Trade Payable $138,633
8100 Sw Nyberg Street Suite 400
Tualatin, OR 97062
United States
Janet Elkin
President & Chief Executive Officer
Phone: 888‐777‐5973
Email: amy@iconmn.com
27. Individual name on file Severance $134,632
Address on file
28. Staples Inc. Trade Payable $121,832
500 Staples Drive
Framingham, MA 01702
United States
John A. Lederer
Chief Executive Officer
Phone: 508–253–5000
Email: john.lederer@staples.com
29. Harris, Gordon J PhD and Litigation Undetermined
Massachusetts General
Physicians Organization, Inc.
C/O Landay Leblang Stern LLP
156 State Street, 5th Floor
Boston, MA 02109
Dale C. Kerester, Esq.
Plaintiff's Counsel
Email: dale@llslex.com
Tel: 617‐742‐1500 x104
Fax: 617‐507‐8400
30. Rave, Timothy Litigation Undetermined
156 State Street, 5th Floor Boston, MA 02109
933 North Mayfair Road
Suite 311
Milwaukee, WI 53226
United State
Robert J. Welcenbach
Plaintiff's Counsel
Phone: 414‐441‐6766
Email: robert@welcenbachlaw.com
ENVIVA INC: S&P Downgrades ICR to 'B' on Operational Hurdles
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Enviva Inc.
to 'B' from 'B+'. S&P also lowered the issue-level ratings on the
senior unsecured debt to 'B-' from 'B'. The '5' recovery rating is
unchanged.
The negative outlook reflects the execution risk in bringing down
costs and improving operations such that S&P Global
Ratings-adjusted debt to EBITDA will be elevated between 8.5x-9.0x
in 2023 and between 6.0x-6.5x in 2024.
S&P said, "We expect increased production costs across several of
Enviva's plants to weaken credit metrics. Enviva has identified
operational inefficiencies due to poor management and a lack of
oversight, which we expect will lead to increased production costs
that it will be unable to pass through to its customers. Enviva's
take-or-pay contracts typically include a price-escalation feature,
usually tied to inflation, as well as the ability to pass-through
commodity prices or bunker fuel. However, expenses related to plant
operations, which have remained stubbornly high--such as repairs,
maintenance, and labor--do not get passed through to customers. As
a result, we now expect S&P Global Ratings-adjusted EBITDA in 2023
to be between $200 million-$225 million compared to our previous
forecast for EBITDA of about $250-$275 million. We expect S&P
Global Ratings-adjusted EBITDA to be at least $300 million in 2024
due to volume growth as new plants come online, offset by our
expectation of continued elevated expenses due to operating
inefficiencies.
"We now expect S&P Global Ratings-adjusted debt to EBITDA to be
about 8.5x-9.0x in 2023, improving to 6.0x-6.5x in 2024. While we
still expect a meaningful increase in volumes sold in 2023 compared
to 2022, we now expect total volumes sold to be somewhat lower than
our previous expectations as Enviva addresses its operational
challenges. Our revised forecast reflects a slower-than-expected
ramp up of new plants, higher costs associated with production and
operating plant assets, some customer deferrals to later periods,
and lower volumes sold as a result of challenges at certain
facilities. At this time, we continue to expect the regulatory
environment will remain supportive of the company's business model.
Enviva announced they will suspend their dividend in favor of
managing liquidity and leverage. While we view the dividend
suspension as a credit positive event, we continue to forecast the
company will operate at an S&P Global Ratings-adjusted free
operating cash flow (FOCF) deficit of more than $200 million in
2023 and 2024 due to softer earnings expectations and an elevated
capital expenditure (capex) program over the next two years. We now
forecast S&P Global Ratings-adjusted debt to EBITDA to be about
8.5x-9.0x in 2023 and 6.0x-6.5x in 2024 compared to our previous
expectation of 6.50x-6.75x and 5.75x-6.00x, respectively.
Affiliates of Riverstone Holdings LLC own over 40% of the company,
but this ownership by a financial sponsor does not further impact
our view of Enviva's credit quality."
Poor management and governance issues are a material credit
weakness for Enviva. A lack of proper cost control has weakened the
company's results and guidance for the full year 2023. While the
company has begun to remedy some of these issues, risks remain
around how quickly and effectively they will achieve the cost
savings they have outlined. In addition, recent disclosures we
received from management have proven to be inaccurate, including
from their Investor Day in early April, information from which
materially differ from that provided in its first quarter earnings
release. Furthermore, the company has made certain non-routine
adjustments to EBITDA that, if excluded, would have resulted in
meaningfully lower non-GAAP financial results. They have also
failed to identify and disclose the operational issues and their
impact on cash flows. As a result, over the past several quarters
they have continued to miss their stated guidance and regularly
revised down their earnings expectations. Accordingly, S&P lowered
its assessment of management and governance to weak from fair. That
said, the company has disclosed its quarterly guidance for the rest
of the year, which provides some level of transparency.
S&P said, "The negative outlook reflects our expectation that S&P
Global Ratings-adjusted debt to EBITDA will be elevated between
8.5x-9.0x in 2023 and between 6.0x-6.5x in 2024. We believe there
to be execution risks in bringing down costs and improving
operations while the company experiences slower-than-anticipated
ramp-up of facilities and increased production costs across several
plants."
S&P could lower the rating on Enviva if the company fails to meet
our current expectations for EBITDA such that it expects S&P Global
Ratings-adjusted debt to EBITDA will be above 9.0x in 2023 or above
7.0x in 2024. This could occur if:
-- The company encounters continued operational problems or is
unable to cut costs substantially;
-- This could also occur if the company modifies its capital
allocation policies, including reinstating a dividend, executing
share repurchase, or implementing higher-than-expected
debt-financed capex; or
-- If they pursue a transaction we would view as distressed (which
could include below-par repurchases of debt).
S&P could revise the outlook to stable if it expects it will
sustain S&P Global Ratings-adjusted debt to EBITDA below 6.5x in
2024 and beyond. This could occur if:
-- Enviva is able to improve their costs at certain facilities;
and
-- Enviva operations are strong across all facilities
Environmental, Social, And Governance
ESG credit indicators: To E-2, S-2, G-5; From E-2, S-2, G-3
S&P said, "Governance is a very negative credit consideration on
the rating on Enviva. We view the company to have a poor track
record in achieving its previous disclosed guidance. Separately,
the company has historically made certain non-routine adjustments
to its adjusted EBITDA that, if excluded, would have resulted in
meaningfully lower non-GAAP financial results, leading to earnings
volatility. Operationally, lack of effective oversight of
operations have caused material cost increases that affect credit
metrics. In addition, Enviva's largest shareholder, Riverstone
Holdings LLC and its affiliates, who we consider a financial
sponsor, prioritize financial policies that maximize shareholder
returns.
"Environmental factors are a neutral consideration in our credit
rating analysis of Enviva. We believe Enviva's management of
environmental risk is stronger than that of peers because the
company does not transport hydrocarbons, but rather biomass in the
form of wood pellets. Enviva continues to benefit from countries in
Europe and Asia switching to biomass electricity generation to
reach their renewable energy production targets. We also expect
Enviva to procure wood pellets on a sustainable basis."
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Risk management, culture, and oversight
-- Tranparency and reporting
FARADAY FUTURE: Secures $100M in Unsecured Notes Financing
----------------------------------------------------------
Faraday Future Intelligent Electric Inc. announced the signing of
definitive agreements for financing commitments of $100 million in
unsecured convertible notes. The notes are expected to generate
cash for the Company that will be utilized for continued production
ramp up and development of its sales & service system for its
flagship FF 91 vehicle. The transactions contemplated by this
financing are subject to the satisfaction or waiver of certain
conditions and limitations on enforceability.
Major funding investors in these unsecured convertible notes
financing are Metaverse Horizon Limited, an independent investment
fund with investors including FF Global Partners, and V W
Investment Holding Limited, an affiliate of a long-term shareholder
of the Company.
"I am extremely pleased to share with you the news of this
financing round. This is a strong testament to the potential that
investors see in FF's ability to be an industry leader, and
confidence in the changes we have made to our governance structure,
new management team and systems and the strength of the global
partners mechanism," said Xuefeng Chen, Global CEO of Faraday
Future.
FFGP is a partnership of 20 current and former senior executives of
the Company and has committed $80 million to this round of
financing as an anchor investor. The investment shows a continued
commitment to the Company, as well as a show of confidence by a
team of 20 current and former senior executive partners, in Faraday
Future's ability to achieve its mid- and long-term goals.
In this challenging market environment, where the Company believes
it is significantly undervalued by the market, and through multiple
rounds of negotiation in the past two months with several
investors, FFGP and another long-term investor committed to provide
the needed funding commitments to support the Company to continue
its growth and delivery plans.
"I especially thank the global partner team and FFGP who have
supported the Company repeatedly in times of need. This round of
financing commitments is expected to provide the Company with
capital to support our FF 91 delivery milestone, sales and service
system development, as well as support our near-term production
ramp up goals. We are taking a long-term stockholder value
creation approach to running the business and hope this funding
will give more confidence to our investors who have stood by us
over time," said Chen. "We are painfully aware of the challenges
our stockholders have experienced and are working steadfast towards
restoring company value. Our global team is focused on executing
on our delivery plan."
"We are delighted to participate in this round of financing for
FFIE as an anchor investor. We understand the importance of this
funding for FFIE's production capacity ramp-up and the subsequent
delivery plan. FFGP remains committed to doing everything possible
to provide support to FFIE and assist in achieving its strategic
goals, including accelerating a portion of the funding. We are
also very grateful for the participation of another existing
stockholder in this round of investment," said Jerry Wang,
president of FFGP. "We hope this funding will help the Company
transition to more strategic investors and return to conventional
financing to further maximize Company and stockholder value."
KEY TERMS
Per the funding agreements, the initial closing will consist of $15
million within five business days following the satisfaction of the
applicable closing conditions, or waiver of such conditions by the
parties. Such closing conditions include, among others, an
effective registration statement with respect to the underlying
shares, sufficient authorized, unissued and uncommitted Class A
shares of common stock, and the Company meeting certain delivery
milestones. Seven subsequent closings will occur within fifteen
business days of the applicable prior closing date.
FF has received third party beneficiary rights in equity commitment
letters with FFGP and the sole stockholder of V W Investment
Holding Limited to be able to compel the closing or seek damages
subject to the limitations set forth therein. In the event of a
breach by such investors of their obligations under their equity
commitment letters with the Company, the Company may not be able to
recover the damages caused by, or receive the funding due to, such
breach.
The Company also entered into an eighth amendment to the securities
purchase agreement and an amendment to certain secured notes and
warrants that, among other things, waived certain preemptive rights
and full ratchet anti-dilution price protection with respect to the
Company's unsecured notes and warrants and employee stock purchase
program and aligned the conversion price and interest make-whole in
the secured notes with the unsecured notes.
About Faraday Future
Gardena, CA-based Faraday Future (NASDAQ: FFIE) --
http://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.
FRANCHISE GROUP: Moody's Cuts CFR to B2, On Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service downgraded Franchise Group, Inc.'s
ratings, including its corporate family rating to B2 from B1,
probability of default rating to B2-PD from B1-PD, senior secured
first lien term loans to B2 from B1 and senior secured second lien
term loan to Caa1 from B3. At the same time, all ratings were
placed on review for further downgrade. Franchise Group's SGL-3
speculative grade liquidity rating (SGL) is unchanged. The outlook
has changed to ratings under review from negative.
The downgrades reflect Franchise Group's weaker than expected
operating performance and credit metrics resulting from the ongoing
challenges in its home furnishing businesses. Comparable sales at
Buddy's, Badcock and American Freight declined 3.5%, 18.9% and
4.1%, respectively, in the first quarter of 2023. Total revenue
declined 2.7% in the quarter, while consolidated adjusted EBITDA,
as calculated by management, fell to $66 million from $112 million
in the first quarter last year. Free cash flow remained negative in
the quarter because of continued offering of financing options to
Badcock customers, capital spending and dividends; although the
merger agreement does not permit the continued payment of the
common stock dividend nor does its credit agreements because the
company's leverage exceeds specified levels. The company is still
in the process of reviewing different options to transition
Badcock's customer financing program to a third party, and the
timing of this transition remains uncertain. Per Moody's
estimates, when including earnings, interest and debt related to
consumer lending, Moody's adjusted debt/EBITDA rose to over 5.25x
for the twelve month period ended April 1, 2023 and EBITA/interest
declined below 1.0x.
The review for downgrade reflects governance considerations related
to a potential change in ownership of Franchise Group given the
pending acquisition of the company. On May 10, 2023[1], Franchise
Group announced that it agreed to be acquired by a consortium led
by its management group in partnership with B. Riley Financial,
Inc. and Irradiant Partners. Together, the group will acquire the
approximately 64% of Franchise Group common stock not currently
owned or controlled by the management group for $30.00 per share in
cash; representing an estimated total enterprise value of
approximately $2.6 billion, including Franchise Group's net debt
and outstanding preferred stock. The management group has agreed to
rollover their shares of common stock of the company in connection
with, and vote their shares of common stock in favor of, the
proposed merger. The consortium has also received definitive
financing commitments from third party lenders and institutional
investors, including B. Riley Financial Inc. and Irradiant
Partners, to finance a portion of the purchase price. The
transaction is expected to close in the second half of 2023,
subject to customary closing conditions including expiration or
termination of the applicable waiting period and the receipt of
stockholder approvals.
Downgrades:
Issuer: Franchise Group, Inc.
-- Corporate Family Rating, Downgraded to B2 from B1;
Placed Under Review for further Downgrade
-- Probability of Default Rating, Downgraded to B2-PD
from B1-PD; Placed Under Review for further Downgrade
-- Senior Secured 1st Lien Term Loan, Downgraded to B2
from B1; Placed Under Review for further Downgrade
-- Senior Secured 2nd Lien Term Loan, Downgraded to Caa1
from B3; Placed Under Review for further Downgrade
Outlook Actions:
Issuer: Franchise Group, Inc.
Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE
Excluding the ratings review, Franchise Group's B2 CFR incorporates
governance factors including the company's aggressive financial
policies, such as its acquisitive growth strategy, recent use of
cash flow to pay dividends and repurchase shares despite weak free
cash flow, and the recent leverage buyout announcement. Franchise
Group's limited operating history with ownership of the recently
acquired businesses is a key rating consideration. Given that the
company has rapidly grown through many successive acquisitions
since being formed in July 2019, it has yet to prove that its
business strategies and financial policies are sustainable over the
longer term. The December 2021 acquisition of Badcock came on the
heels of the debt-funded Pet Supplies Plus, LLC acquisition in
March 2021 and Sylvan cash acquisition in September 2021. While
having successfully paid down acquisition debt using proceeds from
asset sales, the integration of Badcock remains incomplete because
it has not yet transitioned customer financing to a third party as
planned. The rating is supported by the strategic benefits of
recent acquisitions, including increased scale, industry and
product diversification, and potential synergy realization.
Franchise Group operates in five separate retail segments and one
services segment, with no one segment representing more than 29%
2022 revenue.
The SGL-3 speculative grade liquidity rating reflects Moody's
expectation for adequate liquidity, with balance sheet cash and
ample excess revolver availability expected to support cash flow
needs over the next twelve months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The review for downgrade will focus on Franchise Group's capital
structure and leverage profile post completion of its leveraged
buyout, financial policy under new ownership, as well as its
ability to improve operating performance and transition the Badcock
customer financing business to a third party in the very near term,
and improve liquidity, including a turn to positive free cash
flow.
Franchise Group, Inc. (NASDAQ: FRG), through its subsidiaries,
operates franchised and franchisable businesses including The
Vitamin Shoppe, Pet Supplies Plus, LLC, Badcock Home Furniture &
More, American Freight, Buddy's Home Furnishings and Sylvan
Learning Systems, Inc. Revenue for the twelve month period ended
April 1, 2023 approached $4.4 billion.
The principal methodology used in these ratings was Retail
published in November 2021.
FRANKLIN SOUTHERN: Taps Mickler & Mickler as Bankruptcy Counsel
---------------------------------------------------------------
Franklin Southern Manufacturing, LLC seeks approval from the U.S.
Bankruptcy Court for the Middle District of Florida to hire the Law
Offices of Mickler and Mickler, LLP to handle its Chapter 11 case.
The firm will be paid at hourly rates ranging from $250 to $350 and
will be reimbursed for out-of-pocket expenses incurred.
Bryan Mickler, Esq., at the Law Offices of Mickler & Mickler,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Bryan K. Mickler, Esq.
Law Offices of Mickler & Mickler, LLP
5452 Arlington Expy.
Jacksonville, FL 32211
Tel: (904) 725-0822
Fax: (904) 725-0855
Email: bkmickler@planlaw.com
About Franklin Southern Manufacturing
Franklin Southern Manufacturing, LLC sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No.
23-00938) on April 27, 2023. In the petition signed by Billy
Sermons, president and CEO, the Debtor disclosed $473,665 in total
assets and $6,325,214 in total liabilities.
Bryan K. Mickler, Esq., at the Law Offices of Mickler and Mickler,
LLP, represents the Debtor as legal counsel.
FTX GROUP: IRS Files Nearly $44 Billion Worth of Claims
-------------------------------------------------------
Tracy Wang of Coin Desk reports that the United States Internal
Revenue Service (IRS) has filed claims worth nearly $44 billion
against the estate of bankrupt crypto exchange FTX and its
affiliated entities.
According to bankruptcy filings dated April 27 and 28, 2023, the
IRS put forth 45 claims against FTX companies, which include West
Realm Shires (the legal entity of FTX.US), Ledger Holdings (the
parent company of LedgerX and LedgerPrime) and Blockfolio, among
others.
The largest of the claims includes a $20.4 billion and a $7.9
billion claim against Alameda Research LLC and two claims totaling
$9.5 billion against Alameda Research Holdings Inc.
The claims are filed under the classification "Admin Priority,"
which could allow the IRS’ claims to take precedence over the
claims of other creditors in a bankruptcy case.
Bankruptcy documents detailing the $20.4 billion claim against
Alameda Research LLC reveal the IRS is claiming about $20 billion
in partnership taxes. The remaining amount of the claim includes
millions in withheld income taxes and payroll taxes.
"Federal law prevents the IRS from confirming or denying any
correspondence with regard to any taxpayer case," said a
spokesperson for the IRS.
FTX's bankruptcy attorneys said they had located more than $5
billion in various assets during a hearing in January 2023, and in
initial bankruptcy filings the company said it estimated it had
somewhere between $1 billion and $10 billion in assets overall.
These figures have changed as the company's management has located
additional funds through the last few months.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10, 2022, showing FTX had
$13.86 billion in liabilities and $14.6 billion in assets. However,
only $900 million of those assets were liquid, leading to the cash
crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
GALLERIA WEST: Unsecureds Out of Money in Plan
----------------------------------------------
Galleria West Loop Investments LLC submitted a Chapter 11 Plan of
Reorganization and a Disclosure Statement under 11 U.S.C. Section
1125.
Galleria West Loop Investments LLC is a Texas limited liability
company founded in 2018. The Debtor's primary asset is a parcel of
developed real property located at 50 Briar Hollow Lane, Houston,
TX 77027 with two towers currently built out for office use.
The Plan provides for the payment of all claims against the Debtor
and for the Debtor's Equity to be canceled and reissued based on a
new value contribution by Debtor's current equity interest holders.
The funds to be used for the payment of Allowed Claims or other
Distributions to be made under the Plan will come from (a) the
Debtor's current Cash on hand; (b) rent payments; (c) the net
proceeds of any sale, refinancing or other disposition of the
Debtor's Assets; and/or (d) capital contributions.
Under the Plan, Class 5 General Unsecured Claims are impaired. The
Class 5 Allowed Claims of Unsecured Claimants will receive no
distributions under the plan.
The funds used for the repayment of Claims or other Distributions
to be made under the Plan will come from rent payments that will be
paid to the Debtor plus any available funds or property that the
Reorganized Debtor may otherwise possess on or after the Effective
Date, including, without limitation, any such funds or property
which may be provided through capital contributions, and the
proceeds of any sale, refinancing, or other disposition of the
Debtor's Assets.
Counsel for the Debtor:
Melissa S. Hayward, Esq.
Ron Satija, Esq.
HAYWARD PLLC
10501 North Central Expy., Suite 106
Dallas, TX 75231
Tel: (972) 755-7100
E-mail: MHayward@HaywardFirm.com
RSatija@HaywardFirm.com
A copy of the Disclosure Statement dated May 3, 2023, is available
at https://bit.ly/3LAhG26 from PacerMonitor.com.
About Galleria West Loop Investments
Galleria West Loop Investments, LLC is primarily engaged in renting
and leasing real estate properties. The company is based in Austin,
Texas.
Galleria West Loop Investments sought protection under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Texas Case No. 23-50027) on
Jan. 3, 2023, with $10 million to $50 million in both assets and
liabilities. Judge Craig A. Gargotta oversees the case.
Ron Satija, Esq., at Hayward, PLLC is the Debtor's legal counsel.
GENESIS GLOBAL: DGC in Talks With Providers to Fund Obligations
---------------------------------------------------------------
Leonard Kehnscherper of Bloomberg News reports that Digital
Currency Group says it's in discussions with capital providers for
growth capital and to refinance its outstanding intercompany
obligations with Genesis, according to a series of Tweets.
DCG says it "continues to be engaged with the various stakeholders
in the Genesis Capital restructuring process."
About Digital Currency Group
DCG is the parent company of a conglomerate of digital asset and
blockchain technology companies.
About Genesis Global
Genesis Global Holdco, LLC, through its subsidiaries, and Global
Trading, Inc., provide lending and borrowing, spot trading,
derivatives and custody services for digital assets and fiat
currency.
Genesis Global Capital, LLC (GGC) and Genesis Asia Pacific PTE.
LTD. (GAP) provide lending and borrowing, spot trading, derivatives
and custody services for digital assets and fiat currency. Genesis
Global Holdco, LLC owns 100% of GGC and GAP.
Genesis Global Holdco, LLC, GGC and GAP each filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Lead Case No. 23-10063) on Jan. 19, 2023. The cases are
pending before the Honorable Sean H. Lane.
At the time of the filing, Genesis Holdco reported $100 million to
$500 million in both assets and liabilities.
Genesis Holdco is a sister company of Genesis Global Trading, Inc.
("GGT") and 100% owned by Digital Currency Group, Inc. ("DCG").
GGT, DCG and certain of the Holdco subsidiaries are not included in
the Chapter 11 filings. The non-debtor subsidiaries include Genesis
UK Holdco Limited, Genesis Global Assets, LLC, Genesis Asia (Hong
Kong) Limited, Genesis Bermuda Holdco Limited, Genesis Custody
Limited ("GCL"), GGC International Limited ("GGCI"), GGA
International Limited, Genesis Global Markets Limited, GSB 2022 II
LLC, GSB 2022 III LLC and GSB 2022 I LLC.
The Debtors tapped Cleary Gottlieb Steen & Hamilton, LLP as
bankruptcy counsel; Morrison Cohen, LLP as special counsel; Alvarez
& Marsal Holdings, LLC as financial advisor; and Moelis & Company,
LLC as investment banker. Kroll Restructuring Administration, LLC
is the Debtors' claims and noticing agent and administrative
advisor.
The ad hoc group of creditors is represented by Kirkland & Ellis,
LLP and Kirkland & Ellis International, LLP. The ad hoc group of
Genesis lenders is represented by Proskauer Rose, LLP.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped White & Case, LLP as bankruptcy counsel; Houlihan
Lokey Capital, Inc. as investment banker; Berkeley Research Group,
LLC as financial advisor; and Kroll as information agent.
GHOST TRAIN: $200,000 DIP Loan from PCI GT Wins Interim OK
----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Missouri,
Eastern Division, authorized Ghost Train Brewing Company, Inc. to
use the cash collateral of ServiFirst Bank and obtain postpetition
financing from PCI GT Brewing LLC, on an interim basis.
The postpetition financing is a revolving credit facility whereby
the Lender will lend amounts as the Debtor may request and which
the Lender may accept in its sole and absolute discretion;
provided, however, the total principal amount outstanding at any
time will not exceed $175,000 on an interim basis and $200,000 on a
final basis.
The DIP Loan will terminate on the earliest of (a) May 29, 2023,
unless a final order approving the Motion (in form and substance
acceptable to the Lender in its sole and absolute discretion) has
been entered by such date, in which event the foregoing date will
be extended to July 3, 2023, (b) any non-compliance by the Debtor
with any of the terms or provisions of the Interim Order, (c) the
termination of the Lender's commitment to make advances upon the
occurrence of an Event of Default under the DIP Loan Documents, (d)
the sale of all or substantially all of the assets of the Debtor or
liquidation of Debtor, (e) the termination of the Debtor's APA with
Lender, (f) the Debtor's failure to comply with any provision or
deadline in the Plan Scheduling Order, or (g) the entry of an order
modifying, reversing, revoking, staying, rescinding, vacating, or
amending the Interim Order without theexpress prior written
consent of Lender in its sole discretion.
The events that constitute an "Event of Default" include:
1. The Debtor's payment default;
2. The Debtor's representations or warranties prove to be
untrue or inaccurate;
3. The Debtor's failure to perform covenants in the DIP Loan
Agreement;
4. The Debtor seeks to amend, supplement, stay, vacate, or
modify Financing Order;
5. The Debtor contests to the Lender's Security Interest; and
6. The Debtor objects to the Lender's claim.
The Debtor has an immediate and critical need to obtain funds and
use cash collateral in order to preserve and maintain its business
operations and assets as a going concern.
ServisFirst is provided with the following forms of adequate
protection pursuant to sections solely to the extent of any
diminution in value of its interests in cash collateral resulting
from, and as an inducement to consent to (a) the Debtor's use of
cash collateral, (b) the imposition of the automatic stay, and (c)
to the extent applicable, the subordination to the Carve-Out.
1. Replacement lien in and on the Debtor's assets to the same
extent and priority as ServisFirst’s liens existing as of the
Petition Date; provided, for sake of clarity, as set forth, (x) the
DIP Security Interests granted to the Lender will be senior and
prior to the ServisFirst Replacement Liens with respect to all
"Accounts" and other Collateral that arise from or relate to the
Debtor's business operations on or after the Petition Date; and (y)
ServisFirst will have no lien on claims or causes of action under
11 U.S.C. Sections 544, 547, 548, 549, 550, 553, or the proceeds
thereof.
2. ServisFirst is granted an administrative claim equal to the
amount of accounts receivable paid to the Debtor that arise from
services provided prior to the Petition Date it is determined that
the Debtor received and failed to deliver to ServisFirst
post-petition, less a credit for any post-petition account proceeds
actually delivered to ServisFirst by the Debtor, that will have
priority (except with respect to the Carve-Out and DIP
Super-Priority Claim) under sections 11 U.S.C. 503(b) and 507(b)
over all unsecured claims against the Debtor and its estates, now
existing Bankruptcy Code over an unsecured claims against the
Debtor and its estates; provided, the DIP Super-Priority Claim will
be senior and prior to the ServisFirst Administrative Claim for all
purposes.
A final hearing on the matter is set for May 25, 2023 at 1:30 p.m.
A copy of the order is available at https://bit.ly/42R0qg6 from
PacerMonitor.com.
About Ghost Train Brewing Company, Inc.
Ghost Train Brewing Company, Inc. is engaged in the business of
operating a brewery and taproom in Birmingham, Alabama with
distribution across the states of Alabama, Mississippi and
Florida.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-01225) on May 8,
2023. In the petition signed by David Taylor DeBoer, president, the
Debtor disclosed $1,982,061 in assets and $8,398,094 in
liabilities.
Judge Tamara O. Mitchell oversees the case.
C. Taylor Crockett, Esq., at C. Taylor Crockett, Esq., represents
the Debtor as legal counsel.
GIGA-TRONICS INC: Incurs $18.4 Million Net Loss in 2022
-------------------------------------------------------
Giga-Tronics Incorporated has filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss of $18.42 million on $30.25 million of revenues for the year
ended Dec. 31, 2022, compared to a net loss of $2.86 million on
$25.58 million of revenues for the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $38.95 million in total
assets, $27.61 million in total liabilities, and $11.34 million in
total stockholders' equity.
Giga-Tronics said, "The Company has incurred recurring net losses
and operations have not provided cash flows. In view of these
matters, there is substantial doubt about our ability to continue
as a going concern. The Company intends to finance its future
development activities and its working capital needs largely
through the sale of equity securities with some additional funding
from other sources, including term notes until such time as funds
provided by operations are sufficient to fund working capital
requirements. The consolidated financial statements of the Company
do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and
classifications of liabilities that might be necessary should the
Company be unable to continue as a going concern."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000719274/000095017023021390/giga-20221231.htm
About Giga-tronics Inc.
Headquartered in Dublin, California, Giga-Tronics Inc. is a
publicly held company, traded on the OTCQB Capital Market under the
symbol "GIGA". Giga-tronics -- http://www.gigatronics.com--
manufactures specialized electronic equipment for use in both
military test and airborne operational applications. The Company's
operations consist of two business segments, those of its wholly
owned subsidiary, Microsource Inc., and those of its Giga-tronics
Division. The Company's Microsource segment designs and
manufactures custom microwave products for military airborne
applications while the Giga-tronics Division designs and
manufactures real time solutions for RADAR/EW test applications.
GLOVES BUYER: Moody's Rates New $150MM First Lien Term Loan 'B2'
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Gloves Buyer,
Inc. 's (dba Protective Industrial Products, "PIP") proposed $150
million senior secured first lien term loan. The company's existing
ratings and stable outlook are unaffected.
Proceeds from the proposed new term loan along with rollover and
new equity will be used to finance a potential acquisition. At the
same time, the company plans to upsize its senior secured first
lien revolving credit facility by $15 million, to $90 million. All
ratings are subject to the transactions closing as proposed and
review of final documentation.
Assignments:
Issuer: Gloves Buyer, Inc.
Senior Secured 1st Lien Term Loan, Assigned B2
RATINGS RATIONALE
PIP's B3 corporate family rating is constrained by its small scale,
the competitive and fragmented nature of the personal protective
equipment ("PPE") industry, very high leverage and private equity
ownership. Pro forma for the proposed acquisition and proposed term
loan, Moody's adjusted leverage is a round 6.7x and
EBITA-to-interest coverage is around 1.4x. PIP's credit profile is
also constrained by its narrow product focus with a high
concentration of sales in the hand and arm protection category.
Free cash flow generation in 2022 was negative due to a number of
working capital costs that are not expected to repeat, including a
change of supplier terms which accelerated accounts payable
payments, improved transit times and the quicker receipt of
inventory, investment in disposable gloves which has since
normalized, and an acquisition earnout payment. Moody's expects the
company to return to positive free cash flow in the coming quarters
due to the absence of these costs. PIP is exposed to cyclicality in
some of its end markets but this risk is somewhat mitigated by the
essential nature of workplace safety products and its good end
market diversification. The company has also been very acquisitive
and has largely financed the acquisitions with debt. In addition to
the proposed $150 million term loan, PIP has issued almost $300
million of debt since the LBO for the acquisitions of Paramount
Safety Products, Bisley and Industrial Starter. Future
consolidation in the industry is likely. The credit profile is
supported by PIP's leading position as a provider of hand and arm
protection in North America, the essential nature of its products
benefiting from a focus on workplace safety and its asset-lite
business model which requires a low level of capital investment.
PIP has made several international acquisitions to expand its
footprint internationally.
The stable outlook reflects Moody's expectation for adequate
liquidity, supported by positive free cash flow generation and
revolver availability being maintained or increased. The stable
outlook also reflects Moody's expectation that credit metrics will
be in line with the B3 corporate family rating category while
successfully integrating recent and future acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if the company displays a commitment
to maintaining conservative financial policies and credit metrics.
Specifically, a higher rating would require debt/EBITDA sustained
below 5.75x and good liquidity.
The ratings could be downgraded if there is a deterioration of the
company's overall operating performance or liquidity profile
including a lack of positive free cash flow or increased revolver
utilization. The ratings could also be downgraded if the company's
acquisition strategy becomes more aggressive. Quantitatively, the
ratings could be downgraded if debt/EBITDA is maintained above
6.75x or EBITA/interest expense declines below 1.25 times.
Headquartered in Latham, New York, Gloves Buyer, Inc. is a provider
of hand and arm protection as well as other personal protective
equipment. Revenue for the fiscal year end January 31, 2023 was
approximately $915 million. The company is majority owned by
Odyssey Investment Partners.
The principal methodology used in this rating was Apparel published
in June 2021.
GLOVES BUYER: S&P Rates $150MM Incremental Term Loan 'B-'
---------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating to
protective clothing supplier Gloves Buyer Inc.'s (d/b/a Protective
Industrial Products; PIP) $150 million incremental term loan due
December 2027. The recovery rating is '3', indicating expectations
for meaningful recovery (50%-70%; rounded estimate: 55%) in its
simulated default scenario. PIP intends to use the net proceeds of
the issuance to fund two acquisitions: a German provider of safety
footwear and workwear and a U.K.-based provider of hand and arm
protection and other safety products. S&P views the transaction as
roughly neutral in leverage, currently in the mid-7x area.
Concurrently, the company will increase its revolving credit
facility capacity by $15 million.
The acquisitions align with PIP's strategic goal of expanding its
scale and geographic footprint to establish a cohesive global
supply chain. They will help diversify PIP's revenue stream by
increasing safety offerings and bring cross-sell opportunities.
S&P said, "The 'B-' issuer credit rating and stable outlook
reflects our expectation for improving inventory management and
solid operating performance supported by recurring demand for PIP's
consumable products and cross-selling opportunities. We could lower
our rating if supply chain disruption or poor operating performance
causes us to conclude that the company's liquidity position would
dwindle and that its ability to meet debt obligations would
deteriorate. While unlikely over the next 12 months, we could raise
our rating if better-than-expected operating performance or debt
repayment allows PIP to reduce and maintain its S&P Global
Ratings-adjusted leverage comfortably below 6.5x, sustain free
operating cash flow (FOCF) to debt in the mid-single-digit percent
area, and EBITDA margin in the mid-teens percent area."
GOLDEN ENTERTAINMENT: Moody's Ups CFR to Ba3 & Rates New Loan Ba3
-----------------------------------------------------------------
Moody's Investors Service upgraded Golden Entertainment, Inc.'s
corporate family rating to Ba3 from B1 and Probability of Default
Rating to Ba3-PD from B1-PD. The company's proposed $240 million
senior secured 1st lien revolving credit facility and proposed $400
million senior secured 1st lien term loan B were assigned Ba3
ratings. The company's existing senior unsecured notes due 2026
were upgraded to B2 from B3. The company's Speculative Grade
Liquidity (SGL) rating was upgraded to SGL-1 from SGL-2 and the
outlook is stable.
Proceeds from the company's proposed term loan B along with net
proceeds from the sale of the company's Rocky Gap casino, will be
used to refinance the existing term loan. The company's new term
loan represents a reduction in outstandings of $175 million. The
company's existing Ba3 rated senior secured revolving credit
facility and first lien term loan remain unchanged and are expected
to be withdrawn once the refinancing transaction closes.
The upgrade of Golden's CFR to Ba3 considers the continued strong
operating performance since the company's casinos and taverns
reopened following the 2020 closures. The company's strong positive
free cash flow and very good liquidity, coupled with debt
reduction, have reduced leverage levels significantly. The upgrade
further reflects the expectation that the vast majority of net
proceeds from the sale of Rocky Gap as well as from the sale of the
company's distributed gaming business, expected to close at the end
of 2023, will be utilized to reduce outstanding debt. On a
pro-forma basis for both the refinancing and expected further debt
reduction from net proceeds from asset sales, Moody's expects
debt-to-EBITDA leverage will be in the mid 2x range (incorporating
Moody's adjustments). The assigned Ba3 rating to the company's
proposed bank credit facilities, in line with the CFR, anticipates
the repayment of the company's unsecured notes in 2024, at which
time the revolver and term loan will comprise the vast majority of
debt in the capital structure.
Governance risk considerations are material to the rating action.
Moody's has changed the company's governance financial strategy &
risk management sub-factor score to 3 from 4, given management's
desire to maintain a lower leverage policy. As a consequence,
Moody's has changed the IPS score to G-3 from G-4, reflecting lower
risk. The company's CIS score was changed to CIS-3 from CIS-4.
Golden has continued to reduce funded debt levels and has publicly
stated its intention to manage the business with net leverage below
3x going forward. Moody's also anticipates that the company will
utilize proceeds from the sale of the distributed gaming business
to reduce debt levels further. The company is utilizing net
proceeds from asset sales to reduce funded debt levels supports a
more conservative financial policy.
Upgrades:
Issuer: Golden Entertainment, Inc.
Corporate Family Rating, Upgraded to Ba3 from B1
Probability of Default Rating, Upgraded to Ba3-PD from B1-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Senior Unsecured Regular Bond/Debenture, Upgraded to B2 from B3
Assignments:
Issuer: Golden Entertainment, Inc.
Senior Secured 1st Lien Bank Credit Facility, Assigned Ba3
Outlook Actions:
Issuer: Golden Entertainment, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Golden's Ba3 CFR reflects the company's low leverage and good
market position in multiple casino properties in Nevada and its
Nevada Taverns business. The company has reduced leverage and is
expected to utilize the vast majority of net proceeds from the sale
of Rocky Gap and the sale of its Distributed Gaming business (to
close by year end 2023) to continue reducing debt. Leverage is
expected to be maintained below 3x. The company's very good
liquidity also supports the rating. Like other US gaming companies,
Golden remains exposed to longer-term challenges facing regional
gaming companies related to consumer entertainment preferences that
do not necessarily favor traditional casino-style gaming. The
company is reliant on cyclical discretionary consumer spending, and
reinvestment in facilities and marketing is necessary to maintain
market position.
Golden's speculative-grade liquidity rating of SGL-1 reflects very
good liquidity, with solid cash levels and positive free cash flow
generation. As of the recent quarter ended March 31, 2023, Golden
had cash of approximately $161 million, and an undrawn and fully
available $240 million revolving credit facility. The maturity
profile is good with the proposed revolver and term loan to expire
in 2028 and 2030, respectively, and existing notes due 2026.
Moody's believes Golden will repay its 2026 notes in 2024 with cash
and net proceeds from the sale of the company's Distributed Gaming
business. The proposed revolver has a springing 4.75x net leverage
financial covenant if borrowings under the facility exceed 30% of
the total revolving commitment. However, Moody's does not expect
the revolver to be utilized and thus does not expect the covenant
to be triggered. Golden's net leverage is currently below the
covenant level, with the expectation for increasing cushion as
further debt is repaid. There are no financial maintenance
covenants tied to the term loan. The company has discrete assets
that it can sell to raise cash should the need arise.
The stable outlook considers the consistent operating performance
demonstrated by the company with reduced debt levels. The outlook
also incorporates the company's very good liquidity which includes
over $150 million in cash, an undrawn $240 million revolver, and
for debt-to-EBITDA leverage to be maintained below 3x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if there is a decline in EBITDA
performance from factors such as volume pressures or higher
operating costs, liquidity deteriorates, or the company is unable
to sustain debt-to-EBITDA on an LTM basis below 3.5x.
Ratings could be upgraded if the company generates consistent and
comfortably positive free cash flow, debt-to-EBITDA is sustained
below 2.5x, and the company adheres to financial policies that
maintain low leverage. An increase in size and scale would also be
needed to support a ratings upgrade.
The principal methodology used in these ratings was Gaming
published in June 2021.
Golden Entertainment, Inc. owns and operates a portfolio of 10
casino gaming assets, including 9 casinos throughout Nevada and one
casino in Maryland (to be sold). The company also owns and operates
distributed gaming assets in Nevada and Montana (to be sold). The
company conducts its business through five reportable operating
segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland
Casino Resort, Nevada Taverns and Distributed Gaming. The company
is publicly traded with the Chairman and CEO Blake Sartini holding
a roughly 25% stake. Net revenue for the last twelve month period
ended March 31, 2023 was $1.1 billion.
GOLDEN ENTERTAINMENT: S&P Raises ICR to 'BB-', On Watch Positive
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating to
Nevada-based gaming operator Golden Entertainment Inc.'s senior
secured term loan due in 2030 and revolver due in 2028, which is
one notch higher than the anticipated issuer credit rating. The '2'
recovery rating indicates S&P's expectation for substantial
(70%-90%; rounded estimate: 80%) recovery for lenders in the event
of a default.
S&P said, "We will resolve the CreditWatch, where we placed our
ratings on Golden with positive implications on March 20, 2023,
after the company completes its refinancing. We expect to raise our
issuer credit rating to 'BB-' from 'B+' and our issue-level rating
on the unsecured notes due in 2026 to 'B' from 'B-'."
Golden Entertainment plans to issue a $400 million senior secured
term loan due in 2030 and $240 million revolver due in 2028. The
company intends to use the proceeds to pay down most of its $575
million senior secured term loan, refinance the existing revolver,
and cover transaction expenses. The company further intends to use
the net proceeds from its planned Rocky Gap Casino sale in Maryland
to fully repay the existing term loan.
S&P said, "We placed our ratings on Golden on CreditWatch positive
due to its stated intent to use most of the proceeds from its $260
million Rocky Gap sale, and possibly its distributed gaming sale
later this year, to further reduce its debt.
"Golden expects to receive approximately $620 million of gross
proceeds from these two asset sales, which will allow for
significant debt reduction. We expect the company will use most of
the net proceeds to repay debt. Golden is selling these businesses
at a roughly 9x multiple of their 2022 EBITDA. This follows
Golden's recent track record of reducing debt mostly using free
cash flow. Since the second quarter of 2021, it has repaid $197
million of term loan debt and repurchased $40 million of senior
unsecured notes on the open market. Golden has received approval
from the Maryland Lottery Commission for the sale of the Rocky Gap
operations to Century Casinos Inc. and is waiting for regulatory
approval of the VICI Properties L.P. lease, which we expect it will
receive next month. We anticipate that Rocky Gap will receive full
regulatory approval and Golden will complete the sale in June. The
company's S&P Global Ratings-adjusted leverage will be about 3x pro
forma for the refinancing and debt reduction using the Rocky Gap
proceeds. The distributed gaming sale will likely close at the end
of the year. We anticipate it will use the net proceeds to repay
the senior unsecured notes in early 2024 when the no-call premium
steps down to par. Furthermore, Golden has a publicly stated
financial policy to maintain net leverage of below 3x, which we
believe is aligned with a higher rating. We estimate our
adjustments add roughly 0.5x to Golden's financial policy measure,
primarily because we do not net its cash."
The company's lower leverage will likely offset its reduced scale
and diversity following the asset sales.
S&P said, "Pro forma for the divestures and our expectation for
substantial debt reduction, we forecast S&P Global Ratings-adjusted
leverage in the low-2x area in 2024, which we believe will likely
provide Golden with a sufficient cushion to absorb potentially
increased earnings volatility given its smaller, more-concentrated
EBITDA base solely in Nevada. Rocky Gap Casino and the distributed
gaming business generated about $68 million of EBITDA over the 12
months ended March 31, 2023, which represented about 25% of the
company's total EBITDA. Golden increased its revenue by about 2%
over the same period. This was a remarkably strong period for
regional gaming as the country began to emerge from the COVID-19
pandemic. However, Golden's S&P Global Ratings-adjusted EBITDA
margin declined by about 300 basis points year over year to about
28% due to higher labor costs and cost of goods inflation. Still,
its S&P Global Ratings-adjusted EBITDA margin was about 600 basis
points higher than its 2019 pre-pandemic levels because it
maintained most of its previously realized operating efficiencies.
Pro forma for the sale of Rocky Gap and the much lower-margin
distributed gaming business, we expect the company's 2024 EBITDA
margin could increase to the mid-30% area, which incorporates some
inflationary pressures. We expect Golden's EBITDA margin will
stabilize in 2023 as the upward wage pressure from last year
moderates.
"We will resolve the CreditWatch after the company closes the
proposed debt refinancing. We will likely raise our issuer credit
rating one notch to 'BB-' and our issue-level rating on the
unsecured notes to 'B', in line with the one-notch issuer
upgrade."
ESG credit indicators: E-2, S-3, G-2
Social factors are a moderately negative consideration in S&P's
credit rating analysis of Golden Entertainment. Despite mandated
closures of its casinos for health and safety reasons during the
pandemic, Golden's cash flow recovered quickly following its
reopening as operating and capacity restrictions gradually eased,
vaccinations rolled out, and customers felt increasingly
comfortable venturing into public spaces. The COVID-19 pandemic was
an extreme disruption. Although it is unlikely to recur at the same
magnitude, safety and health scares are an ongoing risk factor.
Golden is also exposed to the social risks of regulation in its
various regions of operation.
GRAND CANYON: Seeks Approval to Pay Accountant 20% of ERC Funds
---------------------------------------------------------------
Grand Canyon Destinations, LLC filed an amended application with
the U.S. Bankruptcy Court for the District of Nevada to hire
Symphony Business Services, LLC.
The application seeks entry of a supplemental or amended order that
includes payment to the accounting firm for services related to
obtaining the federal Employee Retention Credit (ERC), including
the investigation and preparation of documents necessary to obtain
such funds. The application proposes to pay Symphony 20 percent of
any ERC funds received.
As disclosed in court filings, Symphony is a "disinterested person"
within the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Tracy Janssen, EA
Symphony Business Services, LLC
2580 N Buffalo Dr Ste 100
Las Vegas, NV 89128
Phone: +1 702-655-5535
About Grand Canyon Destinations
Grand Canyon Destinations, LLC is a bus and small tour company
offering well-planned and affordable day trips, primarily from Las
Vegas to the Grand Canyon.
Grand Canyon Destinations filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Nev.
Case No. 23-10399) on Feb. 3, 2023, with $1 million to $10 million
in both assets and liabilities. Nathan F. Smith, Esq., has been
appointed as Subchapter V trustee.
Judge Natalie M. Cox oversees the case.
The Debtor tapped Candace C. Carlyon, Esq., at Carlyon Cica, Chtd.
as legal counsel and Symphony Business Services, LLC as accountant.
H-CYTE INC: Incurs $10.3 Million Net Loss in 2022
-------------------------------------------------
H-Cyte, Inc. has filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $10.30
million on $453,460 of revenues for the year ended Dec. 31, 2022,
compared to a net loss of $4.80 million on $1.61 million of
revenues for the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $137,357 in total assets,
$9.49 million in total liabilities, and a total stockholders'
deficit of $9.36 million.
Tampa, Florida-based Frazier & Deeter, LLC, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated May 10, 2023, citing that the Company has negative working
capital, has an accumulated deficit, has a history of significant
operating losses and has a history of negative operating cash flow
that raise substantial doubt about its ability to continue as a
going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1591165/000149315223016145/form10-k.htm
About H-CYTE Inc.
Headquartered in Tampa, Florida, H-CYTE Inc. --
http://www.HCYTE.com-- is a hybrid-biopharmaceutical company
dedicated to developing and delivering new treatments for patients
with chronic respiratory and pulmonary disorders.
HIGHLAND CARGO: Court OKs Cash Collateral Access Thru June 6
------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, authorized Highland Cargo Inc. to use cash
collateral on an interim basis until June 6, 2023.
As adequate protection for the use of cash collateral, the U.S.
Small Business Administration will have: (i) a replacement lien to
the same validity, priority, and extent as its lien existed as of
the petition date, to the extent cash collateral is used; and (ii)
monthly adequate protection payment to SBA in the amount of $1,222
due upon the entry of the Interim Order, and with subsequent
monthly adequate protection payments due by the 1st day of each
month thereafter until further Court order.
As adequate protection for the use of cash collateral, Finwise Bank
will have: (i) a replacement lien to the same validity, priority,
and extent as its lien existed as of the petition date, to the
extent cash collateral is used; and (ii) monthly adequate
protection payment to SBA in the amount of $1,000 due upon the
entry of the Interim Order, and with subsequent monthly adequate
protection payments due by the 1st day of each month thereafter
until further Court order.
A final hearing on the matter is set for June 6 at 11 a.m.
About Highland Cargo Inc.
Highland Cargo, Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Calif. Case No. 23-11773) on March 24,
2023, with as much as $10 million in both assets and liabilities.
Mandeep Singh, president of Highland Cargo, signed the petition.
Judge Vincent P. Zurzolo oversees the case.
Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger,
is the Debtor's legal counsel.
HOVA MANAGEMENT: Taps New Code Consulting as Real Estate Expeditor
------------------------------------------------------------------
Hova Management Group Corp. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ New Code
Consulting, LLC.
The Debtor requires a real estate expeditor to market and sell a
portion of its real property located at 91-14 175 St., Jamaica,
N.Y.
The firm will bill $75 per hour to $500 per hour for its services.
As disclosed in court filings, New Code has no adverse interests to
the Debtor or the bankruptcy estate.
The firm can be reached through:
Eric Hammond
New Code Consulting, LLC
137-44C Queen Blvd., Suite #707
Briarwood, NY 11435
About Hova Management Group
Hova Management Group Corp. is engaged in activities related to
real estate. The Debtor owns four properties in Jamaica, N.Y.
valued at $4.8 million.
Hova Management Group filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-70902) on March
16, 2023, with $5,378,101 in total assets and $3,903,282 in total
liabilities. Esmaeil Hosseinipour, president of Hova Management
Group, signed the petition.
Judge Elizabeth S. Stong oversees the case.
The Law Office of Alan C. Stein PC serves as the Debtor's counsel.
INNOVATE CORP: S&P Lowers ICR to 'CCC+' on Weakening Liquidity
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Innovate
Corp. to 'CCC+' from 'B-'. At the same time, S&P downgraded its
issue rating on the company's senior secured notes to 'B-' from
'B'. The recovery rating remains '2', indicating its expectation
for meaningful (75%) recovery in the event of a default.
The stable outlook reflects S&P's expectation that Innovate will
meet its interest obligations over the next 12 months.
S&P said, "Innovate's cash flow adequacy for 2022 was 0.6x and we
expect it to remain below 1.0x through year-end 2025. While we
expect the company's sources of cash to slightly exceed its uses
for the next 12 months, we believe there is potential for a
shortfall in the next 24 months absent any asset divestitures or
significant changes to the company's capital structure.
"Innovate's portfolio contains exclusively unlisted companies,
which we view as an underlying weakness for an investment holding
company. Currently, the majority of Innovate's portfolio value
consists of its 91% controlling interest in DBM Global Inc. (DBMG).
We believe the company's concentration in unlisted assets could
limit its ability to monetize assets to repay debt or generate
additional liquidity.
"We believe Innovate will remain highly leveraged. We estimate the
company's loan-to-value ratio (based on book values) exceeded 200%
as of March 31, 2023. Potential paths to lowering leverage include
asset divestures and external capital raises, for example."
Innovate has no corporate-level debt due until 2025, but all three
of its subsidiaries have near-term maturities.
The life sciences segment has about $13 million due in 2023 and
Spectrum has $69.7 million due in 2024. The life sciences segment
and Spectrum reported -$25.4 million and $4.5 million in adjusted
EBITDA, respectively, in 2022, which may make it difficult to
refinance these obligations. DBMG has approximately $136.3
milliondue in 2024. Given dividends and tax-sharing agreements from
DBMG help to cover most of Innovate's corporate overhead costs and
interest expenses, any difficulties in refinancing DBMG's 2024
maturities could put immense stress on Innovate.
S&P said, "The stable outlook reflects our expectation that
Innovate will operate with less than adequate liquidity over the
next 12 months, although sources of liquidity will modestly exceed
uses.
"We could lower the ratings over the next 12 months if we believe
Innovate's liquidity is not able to sustain another 12 months of
operations.
"An upgrade is unlikely over the next 12 months. Over the longer
term, we could raise the rating if we see Innovate meaningfully
reduce leverage and sustain a cash flow adequacy ratio above 1.0x.
"We expect Innovate to maintain less than adequate liquidity over
the next 12 months. This reflects our expectation that while the
company has enough liquidity to continue operating for the next 12
months, we believe the cushion is very thin and could quickly
erode. It also reflects the company's lack of a particular core
banking relationship and the highly elevated yield on the company's
senior notes in secondary markets.
"We also believe the company's inability to repurchase DBMG's
puttable preferred shares, instead converting them into unsecured
debt, indicates its weakening liquidity position and the low
likelihood of the company or its subsidiaries being able to absorb
future unexpected adverse events"
Principal liquidity sources:
-- Approximately $3.6 million of cash and cash equivalents at the
corporate level as of March 31, 2023
-- Estimated $7 million of available borrowing capacity on the
company's line of credit as of May 8, 2023.
-- Estimated $40 million to $45 million of dividends and
tax-sharing income from DBMG per year.
Principal liquidity uses:
-- Corporate level overhead of around $15 million per year
-- $30 million to $35 million in interest and dividend payments
per year
Innovate has a liquidity maintenance covenant that requires the
company and its subsidiaries' cash and cash equivalents,
availability under revolving credit facilities and undrawn letters
of credit, as well as dividends payable to the company from its
subsidiaries to be more than the interest obligations on Innovate's
2026 senior secured notes and all other debt including mandatory
cash dividends on preferred stock. S&P does not expect this
covenant to be breached over the next 12 months.
Another covenant requires the fair values of the company's total
investments in subsidiaries to be greater than 1.5x the company's
consolidated secured debt outstanding. S&P does not expect this
covenant to be breached over the next 12 months either.
S&P said, "Our simulated default scenario contemplates a default
due to a severe downturn in Innovate's subsidiaries' markets and
the loss of some of their largest contracts. This would
significantly depress earnings and cash flow--constraining the
company's ability to make interest payments and service its holding
company debt--and significantly weaken the value of its portfolio.
We assume Innovate's senior secured debt covenant will trigger a
default when the collateral coverage ratio reaches 1.5x. At
emergence, we estimate the value of the portfolio would further
decline 40%." This is because the portfolio consists of controlling
interests in private companies, which would likely take a
considerable time to sell and thus are less liquid than
noncontrolling publicly traded equity investments.
-- Simulated year of default: 2024
-- Estimated adjusted gross enterprise value (EV): $297 million
-- Net EV (after 5% administrative costs): $282 million
-- Priority claims: $18 million
-- Total value available to senior claims: $264 million
-- Senior claims: $344 million
--Recovery expectations: 70%-80% (rounded estimate: 75%)
All debt amounts include six months of prepetition interest.
Environmental, Social, And Governance
ESG credit indicators: E-2, S-2, G-2
Environmental, social, and governance (ESG) factors are an overall
neutral consideration in S&P's credit rating analysis of Innovate.
However, Innovate's governance risk is marginally higher compared
with other investment holding companies considering senior
management and board turnover in 2020. The board was reconstituted
in May 2020 following pressure from an activist investor citing
then-CEO Philip Falcone's disproportionate level of control over
nearly all aspects of Innovate's corporate governance. The new
board subsequently removed Mr. Falcone and appointed Wayne Barr
Jr., a director since 2014, as CEO. S&P believes, however, these
legacy board and management disputes have been largely settled.
INTERNAP HOLDING: Seeks Approval of Disclosure Statement
--------------------------------------------------------
Internap Holding LLC ("INAP") and its affiliated debtors and
debtors in possession submit this motion (the "Motion"), for the
entry of an order, approving the disclosure statement, approving
solicitation and voting procedures, including fixing the voting
record date, approving the solicitation packages and procedures for
distribution, approving the forms of ballot and establishing
procedures for voting, and approving procedures for vote
tabulation, (iii) scheduling a confirmation hearing and
establishing notice and objection procedures, and granting related
relief.
A hearing on the Motion is scheduled for June 6, 2023, at 10:00 AM
at US Bankruptcy Court, 824 Market St., 3rd Fl., Courtroom #7,
Wilmington, Delaware. Objections are due by May 31, 2023.
On April 28, 2023, the Debtors filed the Plan, and on May 3, 2023
the Debtors filed the Disclosure Statement. The Plan, which is a
product of a prepetition negotiated Restructuring Support
Agreement, provides for, among other things: (a) a debt for- equity
conversion; (b) exit financing; (c) the cancellation of all Equity
Interests in the Debtors; and (d) releases of certain claims and
causes of action against specified parties. The Plan is supported
by approximately 61% of the Debtors' secured lenders (holding
approximately 67% of the amount of outstanding debt).
The Plan provides for All Allowed Administrative Claims,
Professional Fee Claims and Priority Tax Claims to be paid or
otherwise satisfied in full as required by the Bankruptcy Code and
provided for in the Plan, unless otherwise agreed to by the Holders
of such Claims.
The Plan also provides for distributions to certain Holders of
Allowed Claims, including Allowed Other Secured Claims, Other
Priority Claims, SOTL Claims, and Go-Forward Vendor Claims. Holders
of General Unsecured Claims, Intercompany Claims, Intercompany
Interests and Existing Equity will not receive any distributions.
The Debtors propose these dates and deadlines in connection with
confirmation of the Plan:
* The voting record Date will be on the earlier of (a) June 6,
2023 or (b) the date of entry of the Disclosure Statement Order.
* The solicitation deadline is 3 business days following entry
of the Disclosure Statement Order.
* The deadline to file claim objections for Plan voting purposes
will be on June 16, 2023.
* The deadline to file Plan Supplement, if any at least 7
calendar days prior to the earlier of (i) the deadline to submit
ballots to accept or reject the Plan, or (ii) the confirmation
objection deadline.
* The deadline to file Bankruptcy Rule 3018 Motions for Plan
voting purposes will be on June 26, 2023 at 4:00 p.m. (ET).
* The voting deadline for Plan will be on 28 days after the
solicitation deadline at 4:00 p.m. (ET) (July 7, 2023).
* The objection deadline for Plan will be on 28 days after the
solicitation deadline at 4:00 p.m. (ET) (July 7, 2023).
* The Deadline to file voting tabulation report will be on July
11, 2023 at 4:00 p.m. (ET).
* The deadline to file confirmation brief or declaration in
support of confirmation, and reply to objections, if any will be on
July 12, 2023 at 4:00 p.m. (ET).
* The confirmation hearing (subject to Court availability) will
be on July 17, 2023, at time convenient to the Court.
In the present case, the Debtors assert that the Disclosure
Statement contains adequate information to permit Holders of Claims
in the Voting Classes to make informed decisions about whether to
vote to accept or reject the Plan and to, more generally, provide
parties in interest with sufficient information to be able to
meaningfully evaluate the Plan.
Proposed Counsel to the Debtors:
Mark Minuti, Esq.
Monique B. DiSabatino, Esq.
SAUL EWING LLP
1201 North Market Street, Suite 2300, P.O. Box 1266
Wilmington, DE 19899
Tel: (302) 421-6800
E-mail: mark.minuti@saul.com
monique.disabatino@saul.com
- and -
Catherine Steege, Esq.
Melissa Root, Esq.
Breana Drozd, Esq.
JENNER & BLOCK LLP
353 North Clark Street
Chicago, IL 60654
Tel: (312) 923-2952
E-mail: csteege@jenner.com
mroot@jenner.com
bdrozd@jenner.com
About Internap Holding
Internap Holding LLC and its affiliates provide compute resources
(i.e., an IT industry term referring to the ability to process
data) and storage services on demand via an integrated platform.
Their services include: (a) bare metal which are dedicated,
single-tenant servers utilizing Intel and AMD processors enabling
high-performance compute with rapid deployment, increased control,
enhanced security, and flexible configurations); (b) hosted private
cloud environments; (c) cloud computing backup services; and (d)
managed security to keep customer data secure and in alignment with
compliance requirements.
Internap Holding LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10529) on April 28, 2023. In the petition signed by Michael
T. Sicoli, chief executive officer, the Debtor disclosed up to $500
million in both assets and liabilities.
Judge Craig T. Goldblatt oversees the case.
The Debtors tapped Saul Ewing LLP and Jenner and Block LLP, as
legal counsel, FTI Consulting as financial advisor, and Stretto,
Inc., as claims and noticing agent.
INTERNAP HOLDING: Unsecured Creditors Out of Money in Plan
----------------------------------------------------------
Internap Holding LLC, et al., submitted a Disclosure Statement for
the Joint Chapter 11 Plan on May3, 2023.
The Debtors commenced these Chapter 11 Cases to deleverage their
balance sheet and continue as a going concern. The Plan
contemplates that the holders of Second Out Term Loans (the "SOTL
Loans") will convert all of their SOTL Loans into equity,
eliminating approximately $127.8 million of secured debt from
INAP's balance sheet. In addition, certain of the holders of SOTL
Loans have agreed to provide the Debtors with an exit facility in
an amount up to $30 million on the Effective Date of the Plan.
Holders of approximately 67% of the SOTL Loans in dollar amount and
more than 60% in number (collectively, the "Consenting Lenders")
have executed a Restructuring Support Agreement (as it may be
amended from time to time, the "RSA") in which they have agreed to,
among other things, support the Plan.
In addition to the debt-for-equity exchange with the holders of the
Debtors' SOTL Loans, other key terms of the Plan include full
payment of all administrative and priority claims, if any, and the
claims of certain go-forward critical trade vendors. Other
unsecured creditors will not receive a distribution under the Plan.
The Debtors submit that the proposed Plan meaningfully reduces the
Debtors' aggregate secured debt, maximizes recoveries, ensures the
Debtors will continue as a going-concern preserving jobs for the
Debtors' employees, and best positions the Debtors for future
success.
Under the Plan, Class 5 General Unsecured Claims total $10 million
to $15 million and will receive no distribution under the Plan.
Class 5 is impaired.
On the Effective Date, the applicable Debtors or the Reorganized
Company, as applicable, shall enter into any transaction and shall
take any actions as may be necessary or appropriate to effectuate
the restructuring, including, as applicable, entry into the New
Term Loan Exit Facility, and the issuance of all New Common Stock
(collectively, the "Restructuring Transactions"). The actions to
implement the Restructuring Transactions may include: (1) the
execution and delivery of appropriate instruments of transfer,
assignment, assumption, or delegation of any asset, property,
right, liability, debt, or obligation on terms consistent with the
terms of the Plan and having other terms for which the applicable
Entities agree; (2) the filing of appropriate certificates or
articles of incorporation, reincorporation, formation, merger,
consolidation, conversion, amalgamation, arrangement, continuance,
or dissolution pursuant to applicable state or provincial law; and
(3) all other actions that the applicable Entities determine to be
necessary or appropriate, including making filings or recordings
that may be required by applicable law in connection with the Plan.
The Confirmation Order shall, and shall be deemed to, pursuant to
sections 363 and 1123 of the Bankruptcy Code, authorize, among
other things, all actions as may be necessary to effect any
transaction described in, contemplated by, or necessary to
effectuate the Plan.
The Reorganized Company will fund distributions under the Plan with
Cash held on the Effective Date by or for the benefit of the
Debtors or Reorganized Company, including Cash from operations, the
New Term Loan Exit Facility, proceeds from all Causes of Action not
settled, released, discharged, enjoined, or exculpated under the
Plan or otherwise on or prior to the Effective Date, and the New
Common Stock.
Proposed Counsel to the Debtors:
Catherine Steege, Esq.
Melissa Root, Esq.
Breana Drozd, Esq.
JENNER & BLOCK LLP
353 North Clark Street
Chicago, IL 60654
Tel: (312) 923-2952
E-mail: csteege@jenner.com
mroot@jenner.com
bdrozd@jenner.com
- and -
Mark Minuti, Esq.
Monique B. DiSabatino, Esq.
SAUL EWING LLP
1201 North Market Street, Suite 2300, P.O. Box 1266
Wilmington, DE 19899
Tel: (302) 421-6800
E-mail: mark.minuti@saul.com
monique.disabatino@saul.com
A copy of the Disclosure Statement dated May 3, 2023, is available
at https://bit.ly/3VBKZWx from PacerMonitor.com.
About Internap Holding
Internap Holding LLC and its affiliates provide compute resources
(i.e., an IT industry term referring to the ability to process
data) and storage services on demand via an integrated platform.
Their services include: (a) bare metal which are dedicated,
single-tenant servers utilizing Intel and AMD processors enabling
high-performance compute with rapid deployment, increased control,
enhanced security, and flexible configurations); (b) hosted private
cloud environments; (c) cloud computing backup services; and (d)
managed security to keep customer data secure and in alignment with
compliance requirements.
Internap Holding LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10529) on April 28, 2023. In the petition signed by Michael
T. Sicoli, chief executive officer, the Debtor disclosed up to $500
million in both assets and liabilities.
Judge Craig T. Goldblatt oversees the case.
The Debtors tapped Saul Ewing LLP and Jenner and Block LLP, as
legal counsel, FTI Consulting as financial advisor, and Stretto,
Inc., as claims and noticing agent.
INTERNAP HOLDINGS: Taps Stretto Inc. as Claims and Noticing Agent
-----------------------------------------------------------------
Internap Holdings LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of New York to hire
Stretto, Inc. as claims, noticing, and solicitation agent.
The Debtor requires a claims and noticing agent to serve notices to
creditors, equity security holders and other concerned parties, and
provide computerized claims-related services.
The Debtors provided Stretto a retainer in the amount of $10,000.
Sheryl Betance, a senior managing director at Stretto, disclosed in
a court filing that her firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Telephone: (714) 716-1872
Email: sheryl.betance@stretto.com
About Internap Holdings
Internap Holdings LLC and affiliates provide compute resources
(i.e., an IT industry term referring to the ability to process
data) and storage services on demand via an integrated platform.
The Debtors' services include: (a) bare metal which are dedicated,
single-tenant servers utilizing Intel and AMD processors enabling
high-performance compute with rapid deployment, increased control,
enhanced security, and flexible configurations); (b)hosted private
cloud environments; (c) cloud computing backup services; and (d)
managed security to keep customer data secure and in alignment with
compliance requirements.
On March 16, 2020, Internap Technology Solutions Inc. and six
affiliated debtors, including INAP Corporation each filed a
voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-22393).
Internap Corporation, now INAP, and its U.S. subsidiaries
successfully emerged from Chapter 11 bankruptcy protection in May
2020. The court-approved bankruptcy exit plan significantly
strengthened the Company's financial position by reducing debt,
extending maturities and enhancing liquidity substantially.
Internap Holdings LLC and three affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10529) on April 28, 2023. In the petition filed by Michael
T. Sicoli, as chief executive officer, the Debtor reports estimated
assets and liabilities between $100 million and $500 million.
The new cases are overseen by Honorable Bankruptcy Judge Craig T.
Goldblatt.
Internap tapped SAUL EWING LLP as counsel; and FTI CONSULTING as
financial advisor. STRETTO, INC., is the claims agent.
IRIS HOLDING: Moody's Affirms B3 CFR & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service changed Iris Holding, Inc.'s outlook to
negative from stable. At the same time, Moody's has affirmed the
company's B3 corporate family rating, B3-PD probability of default
rating, Ba3 senior secured revolving ABL facility rating, B2 senior
secured first lien term loan rating, and Caa2 senior unsecured
notes rating.
"The negative outlook reflects Moody's expectation that Iris'
financial leverage will remain high through 2024 driven by high
debt levels and limited ability to generate meaningful cash flow to
deleverage below 7x". said Aziz Al Sammarai, Moody's AVP –
Analyst.
The B3 CFR affirmation reflects Iris' favorable maturity profile
with the next significant debt maturity comes in June 2028 when its
$1.5 billion term loan is due and Moody's expectation that Iris
will maintain adequate liquidity as it navigates a challenging
operating environment.
Affirmations:
Issuer: Iris Holding, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Backed Senior Secured 1st Lien Term Loan, Affirmed B2
Backed Senior Secured ABL Revolving Credit Facility, Affirmed Ba3
Senior Unsecured Regular Bond/Debenture, Affirmed Caa2
Outlook Actions:
Issuer: Iris Holding, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Iris's B3 CFR is constrained by Moody's expectation of very high
leverage of about 9x and very weak interest coverage of about 1x at
YE 2023; exposure to evolving macro risks through sales from retail
end market and cyclical trends through sales tied to manufacturing
and construction industries; presence in a fragmented, competitive
landscape with replicable products mitigated by bundling; and
heightened financial policy risks under private equity ownership.
The rating benefits from a strong position in the North American
tape market with a broad, product offering including an array of
industrial and specialty products and packaging systems; good end
market diversification with a solid position in the e-commerce
segment; and a track record of successfully integrating
acquisitions and increasing business through strategic organic
investments.
Iris has adequate liquidity. Sources total about $330 million
compared to about $35 million of liquidity consumption. Sources
consist of cash on hand of about $96 million at December 2022, and
about $237 million available under its $250 million revolving
credit facility (net of LCs and subject to borrowing base) expiring
in June 2027. Uses include annual mandatory debt amortizations
totaling $15 million and Moody's forecast for about $20 million in
free cash flow consumption through Q2 2024. Moody's expects the
company to utilize the revolver to manage seasonal swings in
working capital and potentially fund tuck-in M&A transactions. The
revolver is subject to springing covenants with which Moody's
expects Iris to remain in compliance. The company has limited
sources of alternate liquidity since its assets are encumbered by
the secured credit facilities; however, there is a permitted
reinvestment period of 24 months.
The Ba3 $250 million ABL revolver is rated three notches above the
B3 CFR, reflecting its priority security in working capital assets.
The B2 $1.5 billion senior secured first lien term loan is rated
one notch above the CFR, reflecting its first lien status and
position behind the ABL. Both secured facilities benefit from loss
absorption provided by the company's senior unsecured notes and
$105 million subordinated holdco PIK notes held by Clearlake due
March 2029. The Caa2 rating on the $400 million notes (two notches
below the CFR) reflects their contractual subordination to the
first lien facilities.
The negative outlook reflects Moody's expectation that financial
leverage will remain above 7x through 2024 because Moody's believes
volume recovery will be slow, as well interest coverage will remain
weak as a result of meaningfully higher interest expense. The
higher interest expense and slower recovery will limit free cash
flow generation that can be used to deleverage below 7x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Iris maintains adjusted
debt/EBITDA below 6x and free cash flow to debt is consistently
above 4%.
The ratings could be downgraded if EBITDA/interest is sustained
below 1.5x, adjusted debt/EBITDA remains above 7x, if negative free
cash flow is sustained, or liquidity weakens.
Iris Holding, Inc., headquartered in Sarasota, Florida,
manufactures and sells carton sealing and industrial and specialty
tapes, stretch and shrink films, protective packaging, woven coated
fabrics, and packaging systems.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
JANE STREET: Moody's Affirms Ba1 CFR & Alters Outlook to Positive
-----------------------------------------------------------------
Moody's Investors Service affirmed Jane Street Group, LLC's Ba1
corporate family rating and its Ba2 senior secured notes and bank
credit facility ratings. Moody's also changed Jane Street's outlook
to positive from stable.
RATINGS RATIONALE
Moody's said the rating action reflects the strength of Jane
Street's financial profile that has benefitted from its growing
scale and market share, with favorable balance sheet leverage
supported by substantial retained equity capital.
Moody's said that Jane Street's ratings incorporate the inherently
high level of operational and market risks emanating from the
firm's market-making activities, particularly with respect to
trading in less liquid markets, that could result in severe losses
and a deterioration in liquidity and funding in the event of a
significant risk management failure. However, Moody's said that
Jane Street's strong partnership culture, operational risk
management framework, liquidity buffers and key executives' high
level of involvement in control and management oversight provide an
effective counterbalance to these risks. Jane Street's rating level
also incorporates Moody's consideration that it partially relies on
prime brokers to finance its activities.
Moody's said Jane Street's outlook was changed to positive from
stable to reflect the improvements in the firm's financial profile,
including from its increased capital base relative to its long-term
debt. The positive outlook also reflects Jane Street's strong
partnership culture, operational risk management framework and key
executives' high level of involvement in control and management
oversight through a period of significant growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Jane Street's ratings could be upgraded should it maintain its
strengthened financial profile while preserving risk management and
controls frameworks that reflect the incremental risks associated
with its growth. The rating could also be upgraded should Jane
Street demonstrate a reduced reliance or change to more favorable
terms in key prime brokerage relationships resulting in a more
durable funding profile.
Jane Street's ratings could be downgraded should it increase its
risk appetite or suffer from a risk management or operational
failure; experience adverse changes in corporate culture or
management quality; experience a substantial and sustained decline
in profitability caused by changes in the market or regulatory
environment; increase its capital distributions in a manner that is
not commensurate with its historic trends; or change its funding
mix to a significantly heavier weighting towards long-term debt and
away from equity resulting in an increase in its balance sheet
leverage.
The principal methodology used in these ratings was Securities
Industry Market Makers Methodology published in November 2019.
JLK CONSTRUCTION: Seeks Cash Collateral Access
----------------------------------------------
JLK Construction, LLC asks the U.S. Bankruptcy Court for the
Western District of Missouri for authority to use cash collateral
in accordance with the budget to operate its business and to honor
contracts for work.
Three entities assert interests in the cash collateral: Nodaway
Valley Bank, Newtek Small Business Finance, LLC and M&T Equipment
Finance Corporation. JLK proposes forms of adequate protection
including the continued payment of $6,000 monthly and replacement
liens.
JLK is presently contracted for nine projects with a total contract
value (including change orders) of $3.320 million. Work to be done
on these contracts amounts to $1.9 million.
JLK's present financial circumstances can be traced to a few
difficulties:
* Prior to May 2022, bills and payroll were generally paid on
time though JLK had taken out some hard money loans and was paying
them back.
* JLK was told it had been awarded a $5 million contract in
May 2022. JLK borrowed $5 million from NewTek. JLK bulked up on
machinery, equipment and vehicles in anticipation of this contract.
The contract, however, did not come through and the product has not
yet broken ground.
* To fill the gap of the $5 million job and to keep employees,
JLK took out hard money loans which are difficult to repay. The
loans crimped cash flow. JLK took smaller jobs to keep employees
working but this did not replace the $5 million job. The margins on
these smaller jobs were not as good as the one on the $5 million
job.
* The hard money lenders were demanding payments. JLK could
not pay them.
* The hard money lenders were seizing monies from JLK's
account, impacting the Debtor's cash flow. It was hard to pay
vendors union benefits, equipment payments, etc.
Nodaway likely holds the senior position in cash collateral
followed by Newtek and then M&T. Nodaway's loan is a conventional
loan and the Debtor believes it is fully secured. Newtek's $5
million loan paid off existing obligations for machinery and
equipment. The Debtor is unsure where Newtek's loan is fully
secured. M&T (through a predecessor) financed the purchase of
specific collateral, one of which will be sold by M&T in May, 2023.
The Debtor believes that M&T is fully secured. There are other
entities asserting security interests but they are effectively
unsecured given the value of the Debtor's assets and the size of
the NewTek loan.
The Lender's security interests are protected for at least the
following reasons:
a. The value of the Debtor's assets;
b. JLK will continue to operate the business and maintain its
assets. As the projection reflects, the value of cash collateral
will not decline.
c. Operating the business creates additional revenues;
d. All assets are properly insured;
e. Providing replacements lien to the Lenders to the extent
their prepetition liens attached to property prepetition and with
the same validity, priority, and description. If a defect exists in
a prepetition granted security interest, that defect may be
challenged; and
f. The adequate protection payment of $6,000 in the aggregate
to the Lenders.
A copy of the motion is available at https://bit.ly/3nWftGk from
PacerMonitor.com.
About JLK Construction, LLC
JLK Construction, LLC moves dirt, excavates dirt and does basic
concrete flatwork. It is a union shop.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mo. Case No. 23-50034) on February 13,
2023. In the petition signed by Jesse L. Kagarice, managing member,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Colin N. Gotham, Esq., at Evans and Mullinix, P.A., and Steven R.
Fox, Esq., at The Fox Law Corp., Inc., represent the Debtor as
legal counsel.
JUSTICE SAND: Court OKs Cash Collateral Access Thru May 24
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Galveston Division, authorized Justice Sand Co. to use cash
collateral on an interim basis in accordance with the budget,
through May 24, 2023.
The Debtor requires the use of cash collateral to finance its
operations.
As previously reported by the Troubled Company Reporter, a search
in the Texas Secretary of State shows that allegedly secured
positions in cash collateral are held by:
(1) Community Bank of Texas (aka Stellar Bank);
(2) CT Corporation (Unknown Creditor);
(3) U.S. Small Business Administration;
(4) FinWise Bank; and
(5) Gulf Coast Stabilized Materials.
As adequate protection for the use of cash collateral, the parties
are granted replacement liens on all post-petition cash collateral
and post-petition acquired property to the same extent and priority
they possessed as of the Petition Date. Additionally, the Debtor
must maintain on a daily basis, cash deposits and collectible
receivables that will total not less than $106,210 as adequate
protection to lien holders.
The Court held that, should the Debtor's bank account(s) at Stellar
Bank, successor by merger to Community Bank of Texas, N.A. be
frozen, suspended or subject to garnishment, any legal impediment
to their use by the Debtor is removed and declared void. The bank
is directed to turn over to the Debtor any funds on deposit.
An interim hearing on the matter is set for May 24 at 1:30 a.m.
A copy of the order is available at https://bit.ly/44W7sSw from
PacerMonitor.com.
About Justice Sand Co., Inc.
Justice Sand Co., Inc. is a family-owned and operated company that
manufactures and provides a variety of construction materials and
site work to commercial and residential customers.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-80085) on May 8,
2023. In the petition signed by Rush Claxton, president, the Debtor
disclosed $1,800,713 in assets and $2,975,864 in liabilities.
Judge Jeffrey P. Norman oversees the case.
Robert C. Lane, Esq., at the Lane Law Firm, represents the Debtor
as legal counsel.
KALERA INC: $5MM DIP Loan from Sandton Has Final OK
---------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Kalera, Inc. to use cash collateral
and obtain postpetition secured financing, on a final basis.
The Debtor is permitted to borrow money from Sandton Capital
Solutions Master Fund V, L.P., on a final basis, with additional
borrowing up to an aggregate principal amount not to exceed $5.1
million, plus the roll-up amount, which will be in addition to the
Committed Amount.
These events constitute an "Event of Default" under the DIP
Facility:
a. The failure by the Debtor to comply with any material
provision of the Interim Order, except where the failure would not
materially and adversely affect the DIP Lender;
b. Dismissal of the Chapter 11 Case or conversion of the
Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code;
c. Appointment of a Chapter 11 trustee or examiner with
enlarged powers relating to the operation of the business of the
Debtor or the Debtor will file a motion or other pleading seeking
such appointment;
d. The sale of all or substantially all assets of the Debtor
pursuant to section 363 of the Bankruptcy Code, unless such sale is
conducted in accordance with the Bid Procedures and consented to by
the DIP Lender; and
e. The failure to meet an Interim Milestone, unless extended
or waived pursuant to the prior written consent of the DIP Lender;
provided, however, to the extent the Debtor will fail to meet an
Interim Milestone despite good faith efforts, the DIP Lender will,
in its reasonable discretion, consider extending the Milestone and
amending the Budget accordingly.
The Debtor is required to comply with these Milestones:
a. No later than five business days after the Petition Date,
the Bankruptcy Court will have entered the Interim Order;
b. No later than 10 business days after the Petition Date, the
Debtor will have filed a motion seeking bid procedures for the sale
of its assets and operations under an asset purchase agreement with
the Senior Secured Lender as the stalking horse bidder with
customary stalking horse protections; and
c. No later than 25 calendar days after the Petition Date, the
Bankruptcy Court will have entered the Final Order.
Additionally, the DIP Loan Documents are expected to contain
further milestones, which are not incorporated into the Interim
Order, including:
d. The deadline for the submission of binding bids will be no
later than 60 calendar days after the Petition Date;
e. No later than 65 calendar days after the Petition Date, the
Borrower will commence an auction for the Acquired Assets in
accordance with the bid procedures;
f. No later than 70 calendar days after the Petition Date, the
Bankruptcy Court will have entered an order (which will be in form
and substance acceptable to Lender and the Prepetition Lender)
approving the winning bid resulting from the auction of the
Acquired Assets or, if no auction is held, approving a sale
pursuant to the stalking horse bid(s); and
g. No later than 75 calendar days after the Petition Date, the
Debtor will consummate a sale transaction for the Acquired Assets.
As of the Petition Date, the Debtor was indebted and liable to
Sandton under (a) the Loan and Security Agreement, dated as of
April 14, 2022, in the aggregate principal amount of approximately
$30 million between Sandton, as successor-in-trust to Farm Credit,
and the Debtor and (b) all other agreements, documents, and
instruments executed or delivered with, to or in favor of the
Prepetition Lender.
As adequate protection, the Prepetition Secured Parties are granted
a valid, binding, continuing, enforceable, fully perfected
replacement security interest in and lien on the DIP Collateral.
As additional adequate protection, the Prepetition Secured Parties
are granted an allowed administrative expense claim against the
Debtor on a joint and several basis with priority over all other
administrative claims in the Chapter 11 Case.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/44Vs65c from BMC Group, the claims agent.
The Debtor projects total operating disbursements, on a weekly
basis, as follows:
$155,000 for the week ending May 13, 2023;
$550,000 for the week ending May 20, 2023;
$170,000 for the week ending May 27, 2023; and
$678,000 for the week ending June 3, 2023.
About Kalera Inc.
Kalera Inc. is a vertical farming company in Aurora, Colo. It
utilizes proprietary technology and plant and seed science to
sustainably grow local, delicious, nutrient-rich, pesticide-free,
non-GMO leafy greens year-round.
Kalera sought relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Texas Case No. 23-90290) on April 4, 2023. In the
petition filed by its chief restructuring officer, Mark Shapiro,
the Debtor estimated assets between $1 million and $10 million and
estimated liabilities between $10 million and $50 million.
Judge David R. Jones oversees the case.
The Debtor tapped Baker & Hostetler, LLP as bankruptcy counsel and
BMC Group, Inc. as the claims agent.
KCW GROUP: Court OKs Cash Collateral Access Thru July 10
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized KCW Group, LLC to use cash collateral
on an interim basis in accordance with the budget, with a 10%
variance, through July 10, 2023.
The Debtor is indebted to Texas Capital pursuant to (a) the
Promissory Note, executed by the Debtor, dated July 19, 2018, in
the original principal amount of $1.750 million and (b) the
Promissory note, executed by the Debtor, dated February 20, 2020,
in the original principal amount of $225,000.
Both Note 1 and Note 2 were originally executed in favor of
Allegiance Bank, which assigned Note 1 and Note 2, and all
collateral for the Notes to Texas Capital pursuant to an Assignment
of Note and Liens, dated effective December 27, 2022. The
Assignment was properly recorded in the Real Property Records of
Harris County, Texas under Clerk's File No. RP-2023-7856.
Texas Capital holds a perfected security interest in the Debtor's
personal property and the Debtor's assignment of rents, income,
revenue and profits from the Properties, and all proceeds relating
thereto, which constitute the Collateral of Texas Capital as of the
filing date of March 22, 2023. All of the revenue from the Debtor's
business constitutes Texas Capital's cash collateral.
Texas Capital alleges that the amounts owed under the Notes by the
Debtor as of March 22, 2023, exceeds $1.890 million in principal,
accrued and unpaid interest and late charges.
As partial adequate protection for use by the Debtor of Texas
Capital's cash collateral for the interim period, the Debtor will
pay Texas Capital $4,000 by the fifth day of each month until
further Court order.
As partial adequate protection, Texas Capital is granted
replacement liens and security interests as of the petition date
for such cash collateral as is used by the Debtor.
The replacement liens and security interests granted are valid,
enforceable and fully perfected as of the petition date, and no
filing or recordation or other act in accordance with any
applicable local, state or federal law, rule or regulation is
necessary to create or perfect such liens and security interests.
In addition, the Debtor will maintain insurance on all of their
real and personal property, naming Texas Capital as loss
payees/additional insured, and in the amounts and types required by
the Debtor's loan documents and will provide proof of insurance to
Texas Capital, upon written request.
A final hearing on the matter is set for July 10 at 9:30 a.m.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/451wq2L from PacerMonitor.com.
The Debtor projects $$25,905 in total income and $21,622 in total
expenses for May 2023.
About KCW Group, LLC
KCW Group, LLC owns and operates a large facility for weddings,
quincineras and other events for residents in Houston and the
surrounding areas. The Debtor 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.
Judge Jeffrey P. Norman oversees the case.
Julie M. Koenig, Esq., at Cooper & Scully, P.C., represents the
Debtor as legal counsel.
KEW NDBM: Unsecureds Will Get 10% of Claims in Creditor's Plan
--------------------------------------------------------------
Secured Creditor New York Tower Capital LLC filed with the U.S.
Bankruptcy Court for the Eastern District of New York a Disclosure
Statement for the Chapter 11 Plan of Liquidation for Kew NDBM Hold
2607, LLC dated May 11, 2023.
Kew is a New York limited liability company and its business is the
ownership and management of the Real Property.
The Debtor's exclusive period to file a plan expired on May 4,
2023. While the Debtor has proposed a plan, the Proponent believes
that the plan as proffered by the Debtor is facially
nonconfirmable.
Given the delay and the inability, to date, for the Debtor to
propose a confirmable plan, and the increasing interest
accumulating on the Proponent's Claim, the Proponent determined to
file its own Plan that provides for the liquidation of the Debtor
by auctioning, to the highest and best bidder, the Debtor's real
property and improvements thereon and use the proceeds realized
from the sale of the real property to pay Claims, as more fully set
forth in the Plan.
The real property owned by the Debtor is commonly known as 2022
Strauss Street, Brooklyn, New York (the "Real Property"). The
Proponent intends to use MYC & Associates ("MYC" and/or the
"Auctioneer") to assist with the marketing and sale of the Real
Property. The sale (the "Sale") shall be conducted pursuant to
sections 363 and 1123(a)(5)(D) of the Bankruptcy Code. The Sale
shall be conducted after confirmation of the Plan and subject to
the conditions set forth in the Plan and approved by the Court.
The Plan provides for the liquidation of the Debtor by selling the
Debtor's only material assets, the Real Property, to generate
proceeds to pay all Allowed Claims of the Debtor's estate as more
fully set forth in the Plan. In general, the proceeds of the Sale
of the Real Property shall be distributed to the Debtor's
creditors.
In the event that the Available Cash on the Effective Date is
insufficient to provided creditors of the Debtor's estate with the
distributions required to be made on the Effective Date, any
shortfall shall be funded by the Proponent by either reducing the
distribution to be made on account of its secured claim in Class 1,
or through Cash to be provided by the Proponent with any such
shortfall constituting an administrative claim against the Debtor's
estate payable from Available Cash after the Effective Date.
Upon completion of the Sale, The Kantrow Law Group, PLLC, the
Proponent's Disbursing Agent, shall be authorized to execute any
and all documents necessary to effectuate the conveyance of the
Real Property in accordance with the terms of the Plan, including
without limitation, Bargain and Sale Deed with Covenants, a Bill of
Sale and all required transfer tax returns and ACRIS documents.
Class 4 consists of the General Unsecured Claims. The General
Unsecured Claims are impaired under the Plan. Holders of the
Allowed General Unsecured Claims shall receive on account of such
Claims a pro rata distribution of the Available Cash after payment
in full to Class 1 Claims, Class 2 Claims, payment of Allowed
Administrative Claims, and Statutory Fees, provided, however, that
the Proponent shall guarantee a minimum distribution of not less
than 10% of the Allowed General Unsecured Claims. The allowed
unsecured claims total $20,000.00.
Class 5 consists of all Interests in the Debtor. The Interests are
impaired and will not exist if the Plan is confirmed.
The Plan shall be funded by monies made available from the Sale of
the Real Property, however, the Proponent may advance such funds as
may be necessary in order to make payments required under the Plan
if the Sale proceeds are insufficient to fund all payments required
under the Plan.
A full-text copy of the Secured Creditor's Disclosure Statement
dated May 11, 2023 is available at https://bit.ly/3BxBVsK from
PacerMonitor.com at no charge.
Attorneys for New York Tower:
The Kantrow Law Group, PLLC
Fred S. Kantrow
732 Smithtown Bypass, Suite 101
Smithtown, New York 11787
Phone: 516 703 3672
Email: fkantrow@thekantrowlawgroup.com
About Kew NDBM Hold 2607
KEW NDBM HOLD 2607, LLC, owns a real property located at 2022
Strauss Street, Brooklyn, NY 11212.
To stay an imminent auction of its assets, KEW NDBM HOLD 2607, LLC
filed its voluntary petition for Chapter 11 protection (Bankr.
E.D.N.Y. Case No. 23-40024) on Jan. 4, 2023, with as much as $1
million to $10 million in both assets and liabilities. Sigmund
Freund, sole member of KEW NDBM HOLD, signed the petition.
Judge Jil Mazer-Marino oversees the case.
Leo Jacobs, Esq., at Jacobs P.C., serves as the Debtor's legal
counsel.
KOSSOFF PLLC: Continental Casualty Gets Stay Relief
---------------------------------------------------
Evan Ochsner of Bloomberg Law reports that Continental Casualty Co.
prevailed in its bid to remove Kossoff PLLC's bankruptcy
protections so that the insurer can proceed with a lawsuit against
the law firm to rescind liability coverage.
Lifting the bankruptcy stay -- which allowed Kossoff to halt
litigation-- would benefit all parties by bringing a speedy
resolution to the dispute over the insurance policy, Judge David S.
Jones of the US Bankruptcy Court for the Southern District of New
York said in a ruling Wednesday, May 10, 2023.
Creditors pushed Kossoff into involuntary Chapter 7 bankruptcy when
they learned of the misappropriation of millions of dollars of
funds.
About Kossoff PLLC
Kossoff PLLC is a real estate law firm based in New York City. It
operated as a law firm with offices located at 217 Broadway in New
York City. The firm held itself out as a law firm that provided
full-service real estate legal services specializing in litigation
and transactional matters, including leasing, sale and acquisition
of real property, commercial landlord tenant matters, real estate
litigation, and city, state and federal agency regulatory matters.
Mitchell H. Kossoff, the firm's founder and only known managing
member, is alleged to have failed to and/or refused to return
millions of dollars of client funds when requested by clients.
Kossoff PLLC is subject to an involuntary petition for Chapter 7
bankruptcy (Bankr. S.D.N.Y. Case No. 21-10699) by creditors on
April 13, 2021. The case is handled by Honorable Judge David S.
Jones.
Gran Sabana Corp NV, Louis & Jeanmarie Giordano, and other former
clients of the Debtor signed the involuntary petition. Carter
Ledyard & Milburn LLP, led by Aaron R. Cahn, represents the
petitioners.
Veteran restructuring lawyer Albert Togut of Togut, Segal & Segal
LLP, was named as Chapter 7 Trustee. He tapped his own firm as
counsel in the case.
LANNETT COMPANY: Targets June 8 Hearing on Prepack Plan
-------------------------------------------------------
Lannett Company, Inc., et al., filed a motion of debtors for entry
of an order scheduling a combined disclosure statement approval and
plan confirmation hearing, approving related dates, deadlines,
notices, and procedures, approving the solicitation procedures and
related dates, deadlines, and notices, and conditionally waiving
the requirements that the U.S. trustee convene a meeting of
creditors and the debtors file schedules of assets and liabilities,
statements of financial affairs, and rule 2015.3 financial
reports,
Lannett files prepackaged chapter 11 cases with the broad support
of its secured creditors in order to implement a comprehensive
restructuring within 45 days and emerge from chapter 11 in a
position to continue its 75-plus year legacy as a meaningful
provider in the pharmaceutical industry. Today, Lannett is a
mid-sized developer, manufacturer, marketer, and distributor of
generic versions of brand pharmaceutical medicines that address a
wide range of therapeutic areas.
Given trends in the market over the last several years and
projected revenue, Lannett's current capital structure, including
approximately $657.17 million in aggregate outstanding principal
amount of funded debt obligations, is unsustainable and, under the
burden of that debt, the Company is unable to implement its
go-forward business plan.
Accordingly, the Company engaged in negotiations over the last
several months with an ad hoc group of creditors (collectively, the
"Consenting Stakeholders") holding more than 80 percent of its
First Lien Senior Secured Notes and 100 percent of its Second Lien
Term Loan in search of a solution. As a result of those extensive,
arm's length negotiations, on April 30, 2023, Lannett and the
Consenting Stakeholders entered into a restructuring support
agreement, attached as Exhibit A to the Disclosure Statement filed
in these chapter 11 cases (the "Restructuring Support Agreement,"
and the transactions contemplated thereby, the "Restructuring
Transactions") whereby the Consenting Stakeholders agreed to
equitize over $500 million of secured debt in exchange for owning
100 percent of Reorganized LCI (subject to dilution), as set forth
in the prepackaged chapter 11 plan negotiated in connection with
the Restructuring Support Agreement (the "Plan"). Significantly,
the Plan contemplates that trade and other General Unsecured Claims
(as set forth in the Plan) will "ride through" these chapter 11
cases unimpaired, minimizing disruption to the Debtors' business.
In light of the foregoing, the Debtors expect to continue operating
normally throughout the court-supervised process and remain focused
on serving their customers and working with suppliers on normal
terms.
To implement the Restructuring Transactions in the most efficient
manner possible, the Debtors launched solicitation on the Plan on
May 2, 2023—prior to the filing of these Chapter 11 Cases—and
the Consenting Stakeholders have agreed to support the Plan
pursuant to the Restructuring Support Agreement.
The Restructuring Transactions reflected in the Plan contemplate
the following treatment of claims and interests on the Effective
Date on account of each such stakeholders' respective Allowed
Claims:
* the First Lien Senior Secured Noteholders will receive their
Pro Rata share of 97% of both the New Common Stock and the Takeback
Exit Facility;
* the Second Lien Term Loan Lenders will receive their Pro Rata
share of 3% of both the New Common Stock and the Takeback Exit
Facility, as well as their Pro Rata share of the New Warrants;
* Holders of an Allowed General Unsecured Claim will be either
(a) Reinstated or (b) paid in full in Cash on the later of (i) the
Effective Date and (ii) the date on which such payment would
otherwise be due in the ordinary course of business in accordance
with the terms and conditions of the particular transaction giving
rise to such Allowed General Unsecured Claim;
* Holders of Convertible Notes will receive no distribution;
and
* Holders of existing equity interests, warrants, and section
510(b) claims will receive no distribution.
In light of the foregoing, a prolonged stay in chapter 11 is
unnecessary and would result in unnecessary incremental
administrative costs and business disruption. Furthermore, pursuant
to the milestones in the Restructuring Support Agreement, the
Debtors must obtain confirmation of the Plan within 40 days of the
Petition Date. With the overwhelming support of their lenders, the
Debtors are seeking authority to move through the chapter 11
process on an expedited basis to implement the Restructuring
Transactions.
The Debtors propose that the Court schedule a combined hearing to
consider approval of the adequacy of the Disclosure Statement and
confirmation of the Plan (the "Combined Hearing") on June 8, 2023,
or as soon thereafter as the Court is available. Notably, the
proposed Combined Hearing and the other dates and deadlines
provided in the Confirmation Schedule comport with the required
notice periods under the Bankruptcy Code, the Bankruptcy Rules, and
the Local Rules, while avoiding the potential burdens of a
prolonged stay in chapter 11.
The Debtors submit that the facts and circumstances of these
chapter 11 cases justify and support the proposed Confirmation
Schedule and other relief contemplated by this motion.
The Debtors request that the Court approve the following schedule
of proposed dates (the "Confirmation Schedule"), subject to the
Court's availability:
-- The Voting Deadline will be on May 16, 2023, at 5:00 p.m.
prevailing Eastern Time.
-- The Plan Supplement Deadline will be on May 25, 2023.
-- The Plan Objection Deadline and Opt-Out Deadline will be on
June 1, 2023.
-- The Deadline to File Confirmation Brief and Reply will be on
June 6, 2023.
-- The Combined Hearing will be on June 8, 2023.
Proposed Co-Counsel for the Debtors:
Howard A. Cohen, Esq.
Stephanie J. Slater, Esq.
FOX ROTHSCHILD LLP
919 North Market Street
Wilmington, DE 19899
Telephone: (302) 654-7444
Facsimile: (302) 656-8920
E-mail: hcohen@foxrothschild.com
sslater@foxrothschild.com
Proposed Co-Counsel for the Debtors:
Nicole L. Greenblatt, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
E-mail: nicole.greenblatt@kirkland.com
- and -
Joshua M. Altman, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
300 North LaSalle Street
Chicago, IL 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
E-mail: josh.altman@kirkland.com
About Lannett Co. Inc.
Lannett Company, Inc., founded in 1942, develops, manufactures,
packages, markets and distributes generic pharmaceutical products
for a wide range of medical indications. On the Web:
http://www.lannett.com/
Lannett Co. Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10559) on May 3, 2023.
Lannett disclosed total assets of $334,600,000 and total debt of
$708,940,000 as of March 31, 2023.
The Debtor tapped KIRKLAND & ELLIS INTERNATIONAL LLP as bankruptcy
counsel; FOX ROTHSCHILD LLP as local counsel; FTI CONSULTING, INC.,
as financial advisor; and GUGGENHEIM SECURITIES, INC., as
investment banker. OMNI AGENT SOLUTIONS is the claims agent. C
STREET ADVISORY GROUP is the communications advisor.
The secured creditors are being advised by Sullivan & Cromwell LLP
as legal counsel and Houlihan Lokey Inc. as financial advisor.
LANNETT COMPANY: Unsecureds Owed $20M Unimpaired in Prepack Plan
----------------------------------------------------------------
Lannett Company, Inc., et al., submitted a Joint Prepackaged
Chapter 11 Plan of Reorganization and a Disclosure Statement.
Lannett is a mid-sized developer, manufacturer, marketer, and
distributor of generic versions of brand pharmaceutical products
that address a wide range of therapeutic areas. Headquartered in
Trevose, Pennsylvania, Lannett offers best-in-class products to its
customers. As of the date of this Disclosure Statement, among other
obligations, the Debtors have approximately $657.17 million in
aggregate outstanding principal amount of funded debt obligations,
consisting of approximately:
* $350.00 million in first lien secured notes indebtedness;
* $220.92 million in second lien term loan indebtedness; and
* $86.25 million in convertible notes indebtedness.
In recent years, the generic pharmaceuticals business has faced
challenges resulting from significant concentration of the
purchasing network for pharmaceutical medicines and a trend toward
managed healthcare, which has increased third-party payor
cost-containment pressures. These challenges, in addition to supply
chain disruptions over time and the fallout of the COVID-19
pandemic resulted in a decline of the Company's stock price and
debt trading price.
Lannett has spent significant time over the past several months
working together with its existing lenders to explore strategic
alternatives to best position the Company for success. The Plan
reflects the culmination of those efforts and seeks to implement a
comprehensive recapitalization of the Debtors' balance sheet with
overwhelming creditor support. Specifically, after extensive
diligence and arms' length negotiations with an ad hoc group of
Holders of First Lien Senior Secured Notes Claims and Second Lien
Term Loan Claims (the "Ad Hoc Group" or "Consenting Stakeholders"),
the Debtors reached an agreement with holders of at least 80
percent of the outstanding First Lien Senior Secured Notes Claims
and holders of 100 percent of the Second Lien Term Loan Claims on
the terms of the restructuring transactions set forth in that
certain restructuring support agreement, dated as of April 30,
2023, a copy of which is attached hereto as Exhibit B (the
"Restructuring Support Agreement" or "RSA," and the transactions
contemplated thereby, the "Restructuring Transactions").
Pursuant to the Restructuring Support Agreement, implementation of
the Restructuring Transactions will occur through prepackaged
chapter 11 cases on an expedited timeline. To that end, the Debtors
commenced solicitation of votes to accept or reject the Plan on May
2, 2023, prior to the commencement of any Chapter 11 Cases, and set
a Voting Deadline of May 16, 2023. The RSA contemplates the Debtors
emerging from these Chapter 11 Cases approximately 45 days after
commencement.
The Debtors, with the overwhelming support of the Holders of First
Lien Senior Secured Notes Claims and Second Lien Term Loan Claims,
believe that the deleveraging and liquidity enhancing Restructuring
Transactions embodied in the Restructuring Support Agreement
represent the most value-maximizing path forward. Among other
things, consummation of the Restructuring Transactions will
eliminate approximately $597 million of the Debtors' funded debt
obligations and provide the Debtors will access to a New RCF.
The key terms of the Restructuring Transactions, as reflected in
the Plan, include the following:
* each Holder of an Allowed First Lien Senior Secured Notes
Claim shall receive (i) its Pro Rata share of 97% of the New Common
Stock, subject to dilution on account of the MIP New Common Stock
and the New Warrants and (ii) its Pro Rata share of 97% of the
Takeback Exit Facility;
* each Holder of an Allowed Second Lien Term Loan Claim shall
receive (i) its Pro Rata share of 3% of the New Common Stock,
subject to dilution on account of the MIP New Common Stock and the
New Warrants, (ii) its Pro Rata share of 3% of the Takeback Exit
Facility, and (iii) its Pro Rata share of the New Warrants;
* each Holder of an Allowed General Unsecured Claim shall, at
the option of the applicable Debtor, be either (i) Reinstated or
(ii) paid in full in Cash on the later of (x) the Effective Date
and (y) the date on which such payment would otherwise be due in
the ordinary course of business in accordance with the terms and
conditions of the particular transaction giving rise to such
Allowed General Unsecured Claim;
* on the Effective Date, all Allowed Convertible Notes Claims
shall be cancelled, released, and extinguished, and will be of no
further force or effect, without any distribution to Holders of
Convertible Notes Claims; and
* Existing Interests and Section 510(b) Claims2 will be
cancelled, released, and extinguished without any distribution.
The Plan provides that all General Unsecured Claims, including
trade claims, will be paid in full in the ordinary course of
business and otherwise unimpaired by the process. In light of the
foregoing, the Debtors expect to continue operating normally
throughout the Chapter 11 Cases and remain focused on serving their
customers and working with suppliers on normal terms.
Consummation of the Restructuring Transactions will position the
Debtors to capitalize on their core strengths—including their
diversified product portfolio, mid to longer term pipeline,
extensive experience with productive partnerships, and strong
internal product development capabilities—to achieve long-term
success. Each of the Debtors strongly believes that the Plan is in
the best interests of the Debtors' estates and represents the best
available alternative at this time. The Debtors are confident that
they can implement the Restructuring Transactions to ensure the
Debtors' long-term viability.
Under the Plan, Class 5 General Unsecured Claims total $20.0
million. Each Allowed General Unsecured Claim shall, at the option
of the applicable Debtor, be either (i) Reinstated or (ii) paid in
full in Cash on the later of (x) the Effective Date and (y) the
date on which such payment would otherwise be due in the ordinary
course of business in accordance with the terms and conditions of
the particular transaction giving rise to such Allowed General
Unsecured Claim. Creditors will recover 100% of their claims.
Class 5 is unimpaired.
The Debtors and the Reorganized Debtors, as applicable, shall fund
distributions under the Plan with: (1) Cash on hand, including Cash
from operations; (2) the New Common Stock; (3) the New Warrants;
(4) the Takeback Exit Facility; and (5) the New RCF.
Class 3 and class 4 ballots must be actually received by the
solicitation agent by the voting deadline, which is 5:00 p.m.
(prevailing Eastern Time) on May 16, 2023, as directed on the
ballot or consent form, as applicable.
A copy of the Disclosure Statement dated May 3, 2023, is available
at https://bit.ly/44uPWVe from PacerMonitor.com.
About Lannett Co. Inc.
Lannett Company, Inc., founded in 1942, develops, manufactures,
packages, markets and distributes generic pharmaceutical products
for a wide range of medical indications. On the Web:
http://www.lannett.com/
Lannett Co. Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10559) on May 3, 2023.
Lannett disclosed total assets of $334,600,000 and total debt of
$708,940,000 as of March 31, 2023.
The Debtor tapped KIRKLAND & ELLIS INTERNATIONAL LLP as bankruptcy
counsel; FOX ROTHSCHILD LLP as local counsel; FTI CONSULTING, INC.,
as financial advisor; and GUGGENHEIM SECURITIES, INC., as
investment banker. OMNI AGENT SOLUTIONS is the claims agent. C
STREET ADVISORY GROUP is the communications advisor.
The secured creditors are being advised by Sullivan & Cromwell LLP
as legal counsel and Houlihan Lokey Inc. as financial advisor.
LATAM AIRLINES: Asks US High Court to Deny Bankr. Interest Claims
-----------------------------------------------------------------
Ivan Moreno of Law360 reports that Latam Airlines Group SA asked
the U. S. Supreme Court to leave in place a Second Circuit ruling
that confirmed the Chilean air carrier's Chapter 11 plan over the
objections of bondholders from a Latam affiliate who argue they are
entitled to post-bankruptcy interest on their notes.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is
the committee's Brazilian counsel.
The ad hoc group of LATAM bondholders tapped White & Case, LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
ad hoc committee of shareholders.
LEADING LIFE: Creditors to Get Proceeds From Liquidation
--------------------------------------------------------
Leading Life Senior Living, Inc., filed with the U.S. Bankruptcy
Court for the Northern District of Texas a Disclosure Statement for
the Plan of Liquidation dated May 11, 2023.
The is a not-for-profit Texas corporation that, until recently,
owned two senior living memory-care facilities (each a "Facility"
and together, the "Facilities") in Oklahoma.
The facilities were purchased in 2017 by the Debtor from Edmond
Memory Care LLC and Southwest Oklahoma City LLC. The Edmond
facility was opened in 2014 and has 42 beds. The Oklahoma City
facility was opened in 2015 and has 44 beds.
On December 2, 2022, the Debtor filed its Emergency Motion for an
order approving the sale of substantially all of the Debtor's
assets pursuant to which the Debtor sought to sell by auction
substantially all its Assets. On February 6, 2023, the Debtor held
a live auction for the sale of its assets at the offices of
Ferguson Braswell Fraser Kubasta PC in Plano, Texas. Jasmine Estate
Holdings was declared the successful bidder at the auction with a
bid of $5,400,000 and McFarlin Group was declared the backup
bidder.
On March 19, 2023, the Debtor and Jasmine Estates Holdings closed
on the sale of the Debtor's Assets. As part of the sale
transaction, the DIP Agent and Jasmine Estates Holdings, credited
the outstanding balance of the DIP Loan against the purchase price.
Leading Life's Assets consist primarily of (i) proceeds remaining
from the DIP Loan; (ii) proceeds from the sale of its Assets of
approximately $2,600,000; and (iii) Causes of Action. As of the
closing of the sale of its Assets, the Debtor no longer has any
business operations.
The Debtor scheduled $1,557,196.66 owing on account of General
Unsecured Claims as of the Petition Date, and the total amount of
filed General Unsecured Claims is approximately $251,379.70.
The Debtor seeks to consummate a Liquidation on the Effective Date
of the Plan. The Debtor believes that the value of Leading Life's
Assets can be best maximized through an orderly liquidation as
opposed to liquidating and distribution of the Assets by a Chapter
7 Trustee.
Under the Liquidation, the Plan Administrator shall, among other
things, (i) supervise the orderly liquidation of Leading Life's
Assets; (ii) prosecute objections to Claims on behalf of the Post
Confirmation Debtor and compromise or settle any Claims (disputed
or otherwise); and (iii) commence and pursue Causes of Action.
Subject to Bankruptcy Court approval, the Plan Administrator shall
be B. Riley Advisory Services, and any successor plan administrator
duly appointed.
Class 5 consists of General Unsecured Claims. For the avoidance of
doubt, Holders of the Secured Bond Claims may also receive
treatment for their unsecured deficiency claim as a Class 5 General
Unsecured Claim. Claims in Class 5, if Allowed, in full and final
satisfaction of such Claims, shall be paid in Cash on a Pro-Rata
basis, subject to Plan Expenses, from the Net Proceeds and from any
remaining value of the Assets of the Estate following the
satisfaction of Claims in Classes 1, 2, 3, and 4. To the extent
that Holders of the Secured Bond Claims receive treatment as a
Class 5 General Unsecured Claim, such amounts shall be transferred
to the Indenture Trustee for disbursement in accordance with the
Bond Financing Documents. Class 5 Claims are Impaired.
A full-text copy of the Disclosure Statement dated May 11, 2023 is
available at https://bit.ly/3OaNUE5 from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Rachael L. Smiley, Esq.
Alex Campbell, Esq.
Kevin E. Barnett, Esq.
Ferguson Braswell Fraser Kubasta, P.C.
2500 Dallas Parkway, Suite 600
Plano, TX 75093
Phone: 972-378-9111
Fax: 972-378-9115
Email: rsmiley@fbfk.law
acampbell@fbfk.law
kbarnett@fbfk.law
About Leading Life Senior Living
Leading Life Senior Living, Inc., is a not-for-profit Texas
corporation that owns two memory care facilities in Oklahoma. The
facilities were purchased in 2017 by the Debtor from Edmond Memory
Care, LLC and Southwest Oklahoma City, LLC. The Edmond facility was
opened in 2014 and has 42 beds. The Oklahoma City facility was
opened in 2015 and has 44 beds.
Leading Life Senior Living sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Texas Case No. 22-42784) on
Nov. 18, 2022. In the petition signed by its chief restructuring
officer, Joseph V. Pegnia, the Debtor disclosed $10 million to $50
million in assets and $10 million to $50 million in liabilities.
Judge Mark X. Mullins oversees the case.
Ferguson, Braswell, Fraser, Kubasta, P.C. and GlassRatner Capital &
Advisory Group, LLC, doing business as B. Riley Advisory Services,
mserve as the Debtor's legal counsel and restructuring advisor,
respectively. Joseph V. Pegnia, managing director at GlassRatner,
is the Debtor's chief restructuring officer. Omni Agent Solutions
is the claims agent.
LEGACY CARES: Gets OK to Hire Epiq as Claims and Noticing Agent
---------------------------------------------------------------
Legacy Cares, Inc. received approval from the U.S. Bankruptcy Court
for the District of Arizona to hire Epiq Corporate Restructuring,
LLC as its noticing, claims, and balloting agent.
Epiq 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 hourly rates of Epiq's professionals are as follows:
IT/Programming $65 - $65
Case Managers/Consultants/
Directors/Vice Presidents $65 - $100
Solicitation Consultant $200
Executive Vice President, Solicitation $215
In addition, Epiq will seek reimbursement for expenses incurred.
As of the petition date, Epiq held a retainer in the amount of
$25,000.
Kathryn Mailloux, consulting director at Epiq, disclosed in a court
filing that she is a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kathryn Tran
Epiq Corporate Restructuring, LLC
777 Third Avenue, 12th Floor
New York, NY 10017
Phone: +1 646 282 2532
Email: kmailloux@epiqglobal.com
About Legacy Cares
Legacy Cares, Inc. is a 501c3 non-profit organization dedicated to
providing athletes and non-athletes of all ages, economic
backgrounds and levels of athletic proficiency the opportunity to
participate in sports and e-sports while fostering the enjoyment
and camaraderie of teamwork and perseverance, key components in
athletic competition and lifetime success. The organization is
based in Mesa, Ariz.
Legacy Cares sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ariz. Case No. 23-02832) on May 1, 2023,
with $242,329,104 in assets and $366,719,676 in liabilities.
Douglas Moss, president of Legacy Cares, signed the petition.
Judge Daniel P. Collins oversees the case.
Henk Taylor, Esq., at Warner Angle Hallam Jackson Formanek, PLC
represents the Debtor as legal counsel.
LENDINGTREE INC: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
------------------------------------------------------------------
Moody's Investors Service downgraded LendingTree, Inc.'s Corporate
Family Rating to Caa1 from B3 and the senior secured credit
facility to B3 from B1. The outlook was changed to negative from
stable.
The downgrade of the CFR and negative outlook reflects continuing
weak operating performance as a result of high interest and
inflation rates which has reduced customer demand for LendingTree's
home, insurance, and consumer segments and led to extremely high
leverage levels. LendingTree also has $384 million of convertible
notes due in July 2025 which may be difficult to refinance in a
timely manner due the challenging economic environment.
Moody's expects recent cost savings and a modest improvement in
operating conditions to lead to a decrease in leverage toward the
10x range (excluding Moody's standard lease adjustments and
including the treatment of stock compensation as an expense) by the
end of 2023. The downgrade of the senior secured credit facility
rating by two notches to B3 reflects the likelihood of a greater
proportion of secured debt in the capital structure as the amount
of convertible debt decreases which is subordinate and matures
prior to the secured debt. A lower amount of subordinated debt may
reduce the recovery rate of the secured debt in the event of
default.
LendingTree's has $150 million in cash and an undrawn $200 million
revolving credit facility due 2026 as of Q1 2023, but financial
covenants may reduce full access to the revolver. A significant
portion of the cash balance could be used to further reduce the
convertible notes going forward. In Q1 2023, LendingTree used $156
million of cash to repurchase $191 million of notes at a discount.
Free cash flow (FCF) will decline from current levels ($36 million
LTM Q1 2023), but is likely to remain positive as a result of
modest interest expense on the convertible notes and an improvement
in operating performance in the second half of 2023. However, the
decrease in the liquidity position as well as the difficult
economic and competitive environment increase the risk that the
convertible notes will not be refinanced one year prior to
maturity. As a result, LendingTree's Speculative Grade Liquidity
(SGL) rating was downgraded to SGL-4 from SGL-2.
Downgrades:
Issuer: LendingTree, Inc.
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from
SGL-2
Senior Secured Bank Credit Facility, Downgraded to B3 from B1
Outlook Actions:
Issuer: LendingTree, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
The Caa1 CFR reflects LendingTree's extremely high leverage as well
as Moody's expectation that leverage will improve to the 10x range
due to cost saving actions and modestly improved results during the
2nd half of 2023. High inflation and interest rates and weak
economic growth have pressured LendingTree's consumer, home and
insurance segments. The consumer division has been hurt by
tightening credit standards and weak economic growth while the home
segment has been negatively impacted by the rapid rise in interest
rates which reduced home refinancing and demand for new mortgages.
Performance in the insurance segment has been affected by high
inflation rates and elevated claim levels which has caused
insurance companies to be more conservative in pursuing new
business. Moody's projects the insurance segment will gradually
improve as insurance companies become more aggressive in seeking
new customers later in 2023, while the home and consumer division
will be slower to recover in a high interest rate environment.
LendingTree operates in a highly competitive environment and will
need to continue to adapt to existing and new competitive products
on an ongoing basis. The large stock-based compensation expense
($56 million LTM Q1 2023 which Moody's includes as an expense)
increases leverage significantly, but also supports the company's
operating cash flow. A significant portion of costs are related to
selling and marketing, leading to very low margins. While Moody's
expects margins will improve over time, profitability will likely
remain at very low levels in the near term.
LendingTree benefits from its position in the financial services
marketplace with good brand recognition. The company has a large
and diversified business across 3 segments -- home (mortgage loans,
mortgage refinancing, home equity loans), consumer (credit cards,
personal loans, small business loans and other services) and
insurance (auto, home, health and Medicare). The diversified
offerings increase the potential for performance in one segment to
offset weakness in another division during more typical economic
conditions. While Moody's expects continued growth in financial
technology as consumers perform more traditional financial
transactions online and through mobile devices, the competitive
environment will remain at very high levels.
ESG CONSIDERATIONS
LendingTree's ESG Credit Impact Score is (CIS-4). The company has
pursued an aggressive financial strategy including high leverage
levels, stock buybacks, and acquisitions. LendingTree also has
exposure to customer relations risk due to the maintenance of
private consumer data and human capital risk due to the need to
attract and retain a large high-tech workforce. LendingTree is a
publicly traded company with an independent board of directors,
although the CEO has a significant ownership position.
The negative outlook for LendingTree reflects the challenging
economic environment, which will continue to weigh on operating
performance, and the potential difficulties of refinancing debt
maturities in a timely manner. While Moody's expects leverage to
decrease towards the 10x range by the end of 2023 aided by cost
savings and improved execution, the weak economic and highly
competitive environment has the potential to elevate volatility in
results. Free cash flow is likely to remain positive, although it
will not be enough to substantially reduce the approaching
convertible note maturity.
LendingTree's Speculative Grade Liquidity (SGL) rating of SGL-4
rating reflects the weak liquidity position due to the approaching
maturity of the convertible note in July 2025 and the limited
ability to access the $200 million revolver due 2026 to repay the
convertible notes. The cash balance of $150 million as of Q1 2023
will likely decline as a portion may be used for debt reduction.
Moody's projects FCF as a percentage of debt (6% LTM Q1 2023) to
decrease to the mid to low-single digits over the next year.
Discretionary marketing spend is likely to be limited until the
economic environment improves. Capex decreased to $10 million LTM
Q1 2023 and will likely remain in this range in 2023. Interest
expense will remain low as a result of the 0.5% interest rate on
the convertible notes and the continued reduction in debt.
The term loan is covenant lite and the revolver is subject to a
maximum first lien net leverage covenant of 2.5x when more than $20
million is drawn. Moody's expects the ability to access the
revolver to reduce the convertible notes may be limited as a result
of weak results and the potential reduction in cash on the balance
sheet that is included in the net leverage test (1.35x as of Q1
2023).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
A ratings upgrade could occur if LendingTree's leverage was
expected to decline below 8x with sustained revenue growth and
EBITDA margin expansion. A good liquidity position with FCF as a
percentage of debt in the mid-single digits would also be required.
In addition, all approaching debt maturities would need to be
refinanced well in advance of maturity.
A ratings downgraded could occur if LendingTree is unable to
improve operating performance due to economic conditions or lost
market share as a result of a highly competitive environment that
elevated the potential for a default. A ratings downgrade could
also occur if LendingTree's liquidity positioned declined further
due to negative FCF, or inability to refinance approaching debt
maturities in a timely manner.
LendingTree, Inc., headquartered in Charlotte, North Carolina,
operates a leading online marketplace platform connecting consumers
with financial services, including home, personal, small business
loans, insurance, credit cards as well as other services. Revenue
for the LTM period ended Q1 2023 was approximately $902 million.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
LEXARIA BIOSCIENCE: Six Proposals Passed at Annual Meeting
----------------------------------------------------------
Lexaria Bioscience Corp. held its annual shareholder meeting at
which the shareholders:
(1) elected Chris Bunka, John Docherty, Nicholas Baxter, Ted
McKechnie, Albert Reese, and Dr. Catherine Turkel as directors;
(2) approved the appointment of Malone Bailey LLP as auditors;
(3) approved the Stock Option Repricing;
(4) approved the amendment to the Maximum Number of Shares
Issuable pursuant to the Incentive Equity Plan;
(5) approved the addition of an Evergreen Formula to the
Incentive Equity Plan; and
(6) ratified the lawful actions of the directors for the past
year.
About Lexaria
Lexaria Bioscience Corp. -- http://www.lexariabioscience.com-- is
a biotechnology company developing the enhancement of the
bioavailability of a broad range of fat-soluble active molecules
and active pharmaceutical ingredients using its patented
DehydraTECH drug delivery technology. DehydraTECH combines
lipophilic molecules or APIs with specific long-chain fatty acids
and carrier compounds that improve the way they enter the
bloodstream, increasing their effectiveness and allowing for lower
overall dosing while promoting healthier oral ingestion methods.
Lexaria Bioscience reported a net loss and comprehensive loss of
$7.38 million for the year ended Aug. 31, 2022, a net loss and
comprehensive loss of $4.19 million for the year ended Aug. 31,
2021, a net loss and comprehensive loss of $4.08 million for the
year ended Aug. 31, 2020, and a net loss and comprehensive loss of
$4.16 million for the year ended Aug. 31, 2019. As of Feb. 28,
2023, the Company had $4.85 million in total assets, $223,131 in
total liabilities, and $4.63 million in total stockholders' equity.
LIFESIZE INC: Case Summary & 30 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Lifesize, Inc.
216 West Village Blvd., Suite 102
Laredo, TX 78041
Business Description: Lifesize is a cloud communications company
offering contact center and video meeting
solutions for businesses.
Chapter 11 Petition Date: May 16, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Eight affiliates that concurrently filed voluntary petitions
seeking relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Lifesize, Inc. 23-50038
SL Midco 1, LLC 23-50039
SL Midco 2, LLC 23-50040
Serenova, LLC 23-50041
Telstrat, LLC 23-50042
LO Platform MidCo, Inc. 23-50043
Serenova WFM, Inc. 23-50044
Light Blue Optics, Inc. 23-50045
Judge: Hon. David R. Jones
Debtors' Counsel: Benjamin L. Wallen, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
440 Louisiana Street
Suite 900
Houston, TX 77002
Tel: 713-691-9385
Fax: 713-691-9407
Email: bwallen@pszjlaw.com
Debtors'
Financial
Advisor: FTI CONSULTING, INC.
Debtors'
Claims,
Noticing,
Solicitation
Agent and
Administrative
Advisor: KURTZMAN CARSON CONSULTANTS LLC
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $100 million to $500 million
The petition was signed by Marc Bilba as co-chief restructuring
officer.
Full-text copies of the Debtors' petitions are available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/W35GCKA/Lifesize_Inc__txsbke-23-50038__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/XFF3RDI/SL_Midco_1_LLC__txsbke-23-50039__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/YDIY3II/SL_Midco_2_LLC__txsbke-23-50040__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/YOC2HOI/Serenova_LLC__txsbke-23-50041__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/5O7A37Y/Telstrat_LLC__txsbke-23-50042__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/5K34XJA/LO_Platform_MidCo_Inc__txsbke-23-50043__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/5VHIITQ/Serenova_WFM_Inc__txsbke-23-50044__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/FGI6YCY/Light_Blue_Optics_Inc__txsbke-23-50045__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Logitech International, Debt Claim $8,374,499
S.A.
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
2. Meritech Capital Lifesize LLC Debt Claim $5,425,001
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
3. Redpoint Omega II, LP. Debt Claim $5,415,510
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
4. SH Lifesize, LLC Debt Claim $2,093,625
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
5. Craig Malloy Debt Claim $1,994,519
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
6. Silicon Valley Bank Trade Debt $1,405,297
3003 Tasman Dr.
Santa Clara, CA 95054
Sheila Colson
Tel: 512-431-5874
Email: scolson@svb.com
7. Escalate Capital Partners Debt Claim $1,020,922
SBIC III, LP
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
8. Calabrio, Inc. Trade Debt $899,971
241 5th Ave N
Suite 1200
Minneapolis, MN 55401-7506
Susan Grassel
Tel: 763-795-7830
Email: susan.grassel@calabrio.com
9. Tippet Lifesize, LLC Debt Claim $697,875
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
10. Oracle America, Inc. Trade Debt $612,873
2955 Campus Drive
Suite 100
San Mateo, CA 94403-2511
Gale Head
Tel: 800-959-5936
Email: Customersvc@leaseadmincenter.com
11. Persistent Systems Trade Debt $589,008
Limited
402 E Senapati Bapat Road
Model Colony
Pune, India 411 016
Kuljesh Puri
Tel: +91 (20) 67030000
Email: kuljesh_puri@persistent.com
12. Blue Jeans Network, Inc. Trade Debt $556,980
3098 Olsen Drive
Floor 2
San Jose, CA 95128-2048
Quazi Hossain
Tel: 408-550-2828
Email: ar@bluejeans.com
13. Benchmark Electronics Trade Debt $416,815
(M) SDN BHD
Free Industrial Zone
Phase 1
Bayan Lepas Malaysia
11900
WenYuan Lee
Tel: 604-648-5000
Email: PEN-LifeSizeTeam@bench.com
14. DLA Piper LLP (US) Legal Fees $386,480
P.O. Box 64029
Baltimore, MD 21264-4029
Michael Strapp
Tel: 617-406-6031
Email: Michael.strapp@us.dlapiper.com
15. TWILIO Inc. Trade Debt $350,362
101 Spear Street
Suite 100
San Francisco, CA 94105
Eric Garcia
Tel: 805-807-3347
Email: egarcia@twilio.com
16. Michael Helmbrecht Debt Claim $297,735
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
17. Appsmart Agent Services, Trade Debt $286,602
Inc.
650 California St.
Floor 25
San Francisco, CA 94108
Tori Stowick
Tel: 424-600-9384
Email: tori.stowick@appdirect.com
18. Radianz Americas Inc. Trade Debt $277,830
P.O. Box 6368
Carol Stream, IL 60197-6368
Jaime Newell
Tel: 866-221-8623
Email: usbilling@bt.com
19. Tom Cameron Debt Claim $268,334
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
20. Clayton Reed Debt Claim $230,588
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
21. Focus Services LLC Trade Debt $228,150
4102 S 1900 W
Roy, UT 84067
Bryan Tesch
Tel: 801-710-7200
Email: bryan.tesch@focusservices.com
22. Insightsoftware, LLC Trade Debt $221,603
8529 Six Forks Road
#400
Raleigh, NC 27615
Jean Chambers
Tel: 919-872-7800
Email: accounting@insightsoftware.com
23. BCM Advanced Research Trade Debt $212,860
11 Chrysler
Irvine, CA 92618-2009
Emily Cheng
Tel: 949-470-1888,
#250
Email: Emily_cheng@bcmcom.com
24. Bobby Beckmann Debt Claim $207,762
950 17 th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
25. ValueLabs Inc. Trade Debt $202,736
3235 Satellite Blvd.
Building 400, Suite 300
Duluth, GA 30096
Ravi Volete
Tel: 843-469-5184
Email: ravi.volete@valuelabs.com
26. Enoch Kever PLLC Legal Fees $171,164
7600 N Capital of Texas Hwy
Building B, Suite 200
Austin, TX 78731-1184
Amy Prueger
Tel: 512-615-1224
Email: aprueger@enochkever.com
27. Redpoint Omega Debt Claim $167,490
Associates II, LLC
950 17th Street
Suite 1400
Denver, CO 80202
Shareholders Representative
Services LLC
Tel: 303-648-4085
Email: deals@srsacquiom.com
28. Farnam Street Financial, Inc. Litigation Unknown
5850 Opus Parkway
Suite 240
Minnetonka, MN 55343
David Miller
Tel: 650-468-2428
Email: DMiller@farnamstreet.net
29. Brandywine Realty Trust Litigation Unknown
7700 W. Highway 71
Suite 250
Austin, TX 78735
Karl Seelbach
Tel: 512-960-4891
Email: karl@doyleseelbach.com
30. Amazon Webb Services, Inc. Trade Debt Unknown
P.O. Box 84023.
Seattle, WA 98124-8423
Lara Pryor
Tel: 512-658-5572
Email: larapryo@amazon.com
MATTRESS FIRM: Moody's Puts 'B1' CFR Under Review for Upgrade
-------------------------------------------------------------
Moody's Investors Service placed the ratings of Mattress Firm, Inc.
on review for upgrade following the announcement [1] by Tempur
Sealy International Inc. ("Tempur", Ba1 RUR Down) that it has
agreed to buy Mattress Firm.
The ratings placed under review for upgrade include Mattress Firm's
B1 corporate family rating, its B1-PD probability of default rating
and its B1 senior secured bank credit facility rating. The outlook
has changed to ratings under review from stable.
On May 9, 2023, Tempur announced plans to acquire Mattress Firm for
approximately $4.0 billion. Tempur plans to fund the acquisition
with approximately $2.7 billion in cash and $1.3 billion in Tempur
stock. The transaction is expected to close during the second half
of 2024 and is subject to customary closing conditions including
applicable regulatory approvals.
The review for upgrade reflects governance considerations related
to the change in ownership that will occur given the pending
acquisition by Tempur, a publicly-traded company. It also reflects
the stronger credit profile of Tempur with greater scale as well as
that the outstanding Mattress Firm debt is expected to be repaid
upon closing. Following the repayment of Mattress Firm's debt,
Moody's will withdraw the existing Mattress Firm ratings.
On Review for Upgrade:
Issuer: Mattress Firm, Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
B1
Probability of Default Rating, Placed on Review for Upgrade,
currently B1-PD
Senior Secured Bank Credit Facility, Placed on Review for Upgrade,
currently B1
Outlook Actions:
Issuer: Mattress Firm, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The review for upgrade reflects Moody's expectation that, should
Mattress Firm's acquisition by Tempur be completed, Mattress Firm's
debt will be repaid in full. The review also considers the fact
that Mattress Firm will become part of one of its largest
suppliers, benefitting from greater scale, streamlined operations,
synergies and improved supply chain management. The review will
focus on the outcome of all approvals, including regulatory, which
are required for the deal to close. The review will also consider
the final transaction capital structure, particularly the expected
repayment of Mattress Firm's debt. Lastly, the review for upgrade
will also assess Mattress Firm's financial performance and the
maintenance of acceptable credit metrics and liquidity through
closing.
Excluding the ratings review, Mattress Firm's rating could be
upgraded if the company demonstrates sustained earnings performance
and very good liquidity. An upgrade would also require a commitment
to and maintenance of more conservative financial strategies.
Quantitatively, the ratings could be upgraded if Moody's expect
debt/EBITDA to be sustained below 3.0 times, and EBIT/interest
expense above 3.0 times.
Excluding the ratings review, Mattress Firm's rating could be
downgraded, if liquidity deteriorates or operating performance
declines materially or if financial strategies become more
aggressive. Quantitatively, Moody's-adjusted debt/EBITDA above 4.0
times or EBIT/interest expense below 2.25 times could result in a
downgrade. Should the transaction not close as expected and
Mattress Firm maintains its current level of credit metrics and
liquidity, the ratings would likely be confirmed.
Headquartered in Houston, Texas, Mattress Firm, Inc. is a leading
US mattress retailer offering mattresses and related products
through over 2,300 stores across the US and its website. Revenue
for the twelve months ended December 27, 2022, were around $4.2
billion. The company is owned by its former creditors and Steinhoff
International Holdings N.V.
Tempur Sealy International Inc., headquartered in Lexington,
Kentucky, develops, manufactures, markets, and sells bedding
products, including mattresses, foundations and adjustable bases,
and other products such as pillows and accessories. Tempur's
products are sold worldwide through third party retailers, its own
stores, and online. The company's portfolio of brands includes
Tempur-Pedic, Tempur, Stearns & Foster, and Sealy. Revenue for the
twelve months ending March 31, 2023 was approximately $4.9
billion.
The principal methodology used in these ratings was Retail
published in November 2021.
MILLION DOLLAR SMILE: Unsecureds Owed $1M to Get 13% in Plan
------------------------------------------------------------
Million Dollar Smile, LLC, submitted an Initial Chapter 11 Plan and
a Disclosure Statement
Procedures Implemented to Resolve Financial Problems:
* MDS lowered its costs of goods sold ("COGS") and expenses to
levels that are sustainable and not just short term reductions.
* The Debtor recently changed its Internet marketing companies
for retail sales and reduced its cost for the service.
* MDS has maintained its efforts to provide a quality product.
It has enjoyed a low return rate for its products and this remains
the case.
Under the Plan, Class 3, General unsecured claims total
1,015,692.52 (reconciled claim amount). Total unsecured claims
filed to date amount to $218,611.90. Other Class 3 claims with no
claims filed total $797,080.62 as scheduled by the Debtor. Class
members to be owed $1,765 a month commencing month 3 of the Plan
and continuing through the 60th month of the Plan. Total payments
at $132,298 which includes the three annual payments of $10,000 at
the beginning of years 2, 3 and 4. Though the text above describes
monies owed monthly, payments to class members will be made
quarterly due on the last day of each quarter. As an example,
payments due the 2nd quarter in plan 1 will be due on the last day
of the 2nd quarter for all payments due that quarter.
Percentage payout (of reconciled claims) is estimated to be 13%.
This is an estimate. It is not as a guaranty of a percentage.
Payments to class members may be higher or lower than anticipated.
There may be amended claims with higher claim amounts. There may be
rejection claims. A failure to pay 7.5% to class 3 shall not
constitute a default.
At the beginning of years 2, 3 and 4, the principal (if he acquires
the reorganized debtor's equity) shall infuse $10,000 in each of
these 3 years into the Debtor which in turn shall pay the $10,000
pro rata to members of Class 3.
Creditors Holding De Minimis or Small Claims: Creditors who hold
small claims may elect to receive a one time payment from the
Debtor in the amount of 10% of their claims (but in no event will
any payment under the Plan be more than $400. To receive this
treatment, contact Debtor's counsel before the Effective Date in
writing requesting this treatment. Your payment will be made at the
beginning of month 2 of the Plan.
As to any Class member who asserts or may assert a claim for
attorneys' fee, expenses or other charges under a contract or
applicable law, such member must seek approval of this Court of
such fees, expenses or other charges within 30 days of the date the
order confirming the Plan is entered. The failure to seek such
approval shall constitute a waiver of such fees, expenses and
charges. fees, expenses and/or other charges.
The Plan will be funded by the Debtor's business operation and from
the principal's monetary contribution. The Debtor anticipates
having monies of $40,000 on hand at the Plan's Effective Date from
ongoing operations and $10,000 from Mr. DeSimone's contribution. No
assets will be sold to fund the Plan.
The hearing where the Court will determine whether or not to
confirm the Plan will take place on July 26, 2023, at 10:00 a.m.,
Dept. 1 – Room 218, of the U.S. Bankruptcy Court located at 325
West F Street, San Diego, California 92101.
The deadline for voting for or against the plan will be on July 5,
2023, by 5:00 p.m. prevailing Pacific time.
The objections to the confirmation of the Plan must be filed with
the Court and served upon the Debtor and the U.S. Trustee not later
than July 5, 2023.
The Disclosure Statement hearing will be held on May 25, 2023 in
Courtroom: Dept. 1 – Room 218 at 2:00 p.m. under Judge Margaret
Mann.
Attorney for the Debtor-in-Possession:
Steven R. Fox, Esq.
THE FOX LAW CORPORATION, INC.
17835 Ventura Blvd., Ste 306
Encino, CA 91316
Tel: (818) 774-3545
Fax: (818) 774-3707
E-mail: srfox@foxlaw.com
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/42abmFw from PacerMonitor.com.
About Million Dollar Smile
Million Dollar Smile, LLC, offers oral hygiene and beauty products.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Cal. Case No. 23-00001) on January 2,
2023. In the petition signed by Angelo De Simone, managing member,
the Debtor disclosed up to $500,000 in assets and up to $10 million
in liabilities.
Judge Margaret Mann oversees the case.
Steven R. Fox, Esq., at The Fox Law Corporation, Inc., is the
Debtor's legal counsel.
MIRAGE INTERNATIONAL: Taps Steve Landreth, CPA as Accountant
------------------------------------------------------------
Mirage International, Inc. seeks approval from the U.S. Bankruptcy
Court for the Western District of Oklahoma to employ Steve
Landreth, CPA, PLLC as its accountant.
The Debtor requires an accountant to prepare and file its tax
returns, monthly operating reports and other required financial
reports.
The firm will be paid an hourly fee of $100 for its services and
will receive reimbursement for its out-of-pocket expenses.
Steve Landreth, CPA does not represent interests adverse to the
Debtor and its estate, according to court filings.
The firm can be reached through:
Steve Landreth, CPA
Steve Landreth, CPA, PLLC
209 SW 89th St STE J
Oklahoma City, OK 73139
Phone: +1 405-631-0829
About Mirage International
Mirage International, Inc. sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. W.D. Okla. Case No. 23-10499) on
March 6, 2023, with up to $100,000 in assets and up to $1 million
in liabilities. Charles Michael Laws, president of Mirage
International, signed the petition.
Judge Janice D. Loyd oversees the case.
The Debtor tapped Hammond Law Firm and Blackwood Law Firm, PLLC as
bankruptcy counsels and Steve Landreth, CPA, PLLC as accountant.
MONEYGRAM INT'L: Moody's Assigns 'B2' CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating and
B2-PD Probability of Default Rating to MoneyGram International,
Inc. (New). The company's proposed senior secured credit facilities
were assigned a rating of B2. The rating outlook is stable. The
rating actions follow MoneyGram International, Inc.'s acquisition
by funds controlled by Madison Dearborn Partners, LLC.
Assignments:
Issuer: MoneyGram International, Inc. (New)
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Backed Senior Secured First Lien Term Loan, Assigned B2
Backed Senior Secured First Lien Revolving Credit Facility,
Assigned B2
Outlook Actions:
Issuer: MoneyGram International, Inc. (New)
Outlook, Assigned Stable
RATINGS RATIONALE
MoneyGram's credit profile benefits from its improved competitive
positioning in the growing cross-border money transfer industry,
including strong growth in its digital business. The credit profile
is constrained by reduced financial flexibility related to the
company's LBO capital structure and associated governance risk, as
well as growth headwinds posed by lower-priced digital channels
that continue to gain share and intensify competition.
Moody's pro forma LTM March 31, 2023 adjusted total leverage at
closing is approximately 5.2x including $100 million in
subordinated HoldCo Senior Notes to be issued outside of the credit
group that bear a 6% interest rate of which 4% may be paid in kind
at MoneyGram's sole election. The HoldCo Notes (unrated) mature 1.5
years inside the proposed $500 million First Lien Term Loan and may
be redeemed any time prior to maturity, which Moody's anticipates
could be refinanced within the credit group. Moody's anticipates
the balance of debt financing to be pari passu first lien secured
debt.
Moody's expects revenue trends to continue to improve in 2023
driven by continued strong double digit growth in digital
cross-border cash transfers and a decelerating decline in US-to-US
transfers, resulting in improved operating leverage. Expected
EBITDA growth will drive leverage to mid- to high 4x within a year
of closing, partially offset by capitalized HoldCo PIK interest.
Moody's does not treat the $300 million Perpetual Preferred Equity,
also issued outside the credit group, as debt.
Free cash flow generation is projected to expand in the first full
year following the transaction on improved earnings and lower
working capital uses partially offset by higher interest expense
(and including an assumed dividend to MoneyGram's parent to cover
the 2% non-PIK interest portion of the HoldCo Notes). The company
is not likely to prepay debt in the near term, and may increase
debt to fund acquisitions over time.
MoneyGram's governance risk is a key driver of the ratings,
reflecting controlled ownership by the financial sponsor without an
independent board that may pursue leveraging shareholder return
transactions and debt financed acquisitions.
MoneyGram faces moderate exposure to social risks due to legal and
regulatory exposure to fraud risks, its dependence on highly
skilled technology talent, and digitization impact on cash-based
part of the business offset by growth in the company's digital
business.
The stable outlook reflects Moody's expectation of modest revenue
and EBITDA growth driving adjusted total debt/EBITDA (inclusive of
unrated HoldCo notes) from about 5.2x pro forma to the LTM ended
March 31, 2023 to mid- to high 4x over the next year.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if MoneyGram demonstrates consistent
revenue and EBITDA growth, leverage is reduced below 4x and free
cash flow to debt improves to the high single digits. The ratings
could be downgraded if MoneyGram experiences a sustained EBITDA
decline, if free cash flow weakens, or if total leverage is
sustained above 5x.
Liquidity is good based upon approximately $150 million of cash at
closing and the proposed $150 million Revolving Credit Facility
which is expected to be undrawn at close. Moody's anticipates
one-time cash uses in 2023 related to the LBO transaction to be
covered by available funds. MoneyGram is expected to generate solid
free cash flow in 2024.
The proposed Senior Secured credit facility is rated B2, in line
with the CFR, as it, along with the anticipated first lien secured
debt financing, reflects the preponderance of the debt structure as
well as the risk that the HoldCo Notes may be refinanced within the
credit group.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity of up $230 million or 100% of LTM EBITDA,
whichever is greater, plus reallocated amounts from the general
debt basket, plus unlimited amounts subject to a 4.15x net first
lien leverage ratio (if pari passu secured). Amounts up to the
greater of $230 million and 100% of EBITDA may be incurred with an
earlier maturity date than the initial term loan. The baskets for
employee stock buybacks, general RPs, and ratio-based RPs may be
reallocated to incur debt.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, subject to
protective provisions which only permit guarantee releases if the
primary purpose of such transaction (as reasonably determined by
the company) was not to evade the guarantee requirements, or such
transaction was otherwise permitted subject to carveouts.
The credit agreement does not provide limitations on up-tiering
transactions.
The proposed terms and the final terms of the credit agreement may
be materially different.
MoneyGram International, Inc. (New) is a leading global provider of
consumer money transfer services. The company generated revenues of
approximately $1.3 billion in the LTM ended March 31, 2023. Upon
transaction close, Moneygram will be majority owned and controlled
by Madison Dearborn Partners.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
MONITRONICS INT'L: Moody's Cuts PDR to D-PD on Bankruptcy Filing
----------------------------------------------------------------
Moody's Investors Service downgraded Monitronics International,
Inc.'s ("Monitronics", dba "Brinks Home", "the company")
probability of default rating to D-PD from C-PD due to the
company's May 15, 2023 filing for protection under Chapter 11 of
the US Bankruptcy Code. Moody's also affirmed the corporate family
rating at Ca, the company's senior secured super-priority debt at
B1 and the senior secured term loan at Ca. The outlook is stable.
Shortly following these rating actions, Moody's will withdraw all
of Monitronics' ratings.
Downgrades:
Issuer: Monitronics International, Inc.
Probability of Default Rating, Downgraded to D-PD from C-PD
Affirmations:
Issuer: Monitronics International, Inc.
Corporate Family Rating, Affirmed Ca
Senior Secured Super Priority 1st Lien Term Loan, Affirmed B1
Senior Secured 1st Lien Term Loan, Affirmed Ca
Senior Secured 1st Lien Revolving Credit Facility, Affirmed B1
Outlook Actions:
Issuer: Monitronics International, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The downgrade of the PDR to D-PD from C-PD reflects Monitronics'
bankruptcy filing on May 15, 2023. The Ca CFR, B1 senior secured
super-priority bank credit facility, Ca senior secured term loan
and stable outlook reflect Moody's view on recovery expectations.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Doing business as Brinks Home Security, Monitronics International,
Inc. provides alarm monitoring services to 829,206 subscribers (as
of December 31, 2022), mainly residential customers in the US.
MYOMO INC: Incurs $2.6 Million Net Loss in First Quarter
--------------------------------------------------------
Myomo, Inc. has filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $2.64
million on $3.45 million of revenue for the three months ended
March 31, 2023, compared to a net loss of $2.81 million on $3.87
million of revenue for the three months ended March 31, 2022.
As of March 31, 2023, the Company had $13.74 million in total
assets, $4.10 million in total liabilities, and $9.63 million in
total stockholders' equity.
Myomo said, "We have historically funded our operations through
financing activities, including raising equity and debt capital.
In January 2023, we completed a public equity offering pursuant to
which we sold 13,169,074 shares of common stock and 6,830,926
pre-funded warrants at $0.325 per share or at $0.3249 per warrant,
generating proceeds after fees and expenses of approximately $5.7
million. During the fourth quarter of 2022, we sold 692,914 shares
of common stock under the Purchase Agreement with Keystone at a
weighted average sales price of $0.683 per share, generating
proceeds after fees and expenses of approximately $0.4 million.
Proceeds from these financing activities are helping us to sustain
our operations. Considering our cash balance as of March 31, 2023,
the payment of the remaining initial license fee by the JV Company
in April 2023 ... and our cash used from operations over the last
twelve months and uncertainty of reimbursement, particularly CMS
for Medicare Part B beneficiaries, management believes there is
substantial doubt regarding our ability to continue as a going
concern."
Management Commentary
"Not only did we deliver revenue at the high end of our guided
range, but our execution reflected the positive changes we made to
the front end of our patient acquisition process. As a result, we
had a record number of pipeline additions, all from previous payers
and with a significantly lower cost per pipeline add," stated Paul
R. Gudonis, Myomo's chairman and chief executive officer. "We were
able to maintain our lead generation while spending 33% less on
advertising in the quarter. In addition, our new virtual waiting
room significantly reduced our cycle time from lead generation to
telehealth screening, enabling more patients to enter the process
to obtain a MyoPro than ever before. We accomplished these results
with 12% fewer employees on our clinical, reimbursement and billing
teams, which is a tremendous achievement. I believe we're
positioned for accelerated year-over-year revenue growth in 2023,"
added Gudonis.
"Additionally, we were paid the remainder of the technology license
fee by our Chinese joint venture partner in April, which triggered
the process of transferring the technology and know-how to
establish MyoPro manufacturing in China."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1369290/000095017023020576/myo-20230331.htm
About Myomo
Headquartered in Cambridge, Massachusetts, Myomo, Inc. --
http://www.myomo.com-- is a wearable medical robotics company that
offers expanded mobility for those suffering from
neurologicaldisorders and upper limb paralysis. Myomo develops and
markets the MyoPro product line. MyoPro is a powered upper limb
orthosis designed to support the arm and restore function to the
weakened or paralyzed arms of patients suffering from CVA stroke,
brachial plexus injury, traumatic brain or spinal cord injury, ALS
or other neuromuscular disease or injury.
Myomo reported a net loss of $10.72 million for the year ended Dec.
31, 2022, compared to a net loss of $10.37 million for the year
ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $10.16
million in total assets, $3.80 million in total liabilities, and
$6.36 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
13, 2023, citing that the Company has incurred significant losses
and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
NATIONAL AMUSEMENTS: S&P Downgrades ICR to 'CCC+', Outlook Neg.
---------------------------------------------------------------
S&P Global Ratings lowered the issuer credit rating on National
Amusements Inc. (NAI) to 'CCC+' from 'B'. S&P also lowered its
issue-level rating on the term loan to 'B' from 'BB-'.
The negative outlook reflects the risk that NAI's cash generation
will not be sufficient to cover its debt obligations, leaving the
company reliant on cash balances, revolver availability, asset sale
proceeds, and proceeds from the potential sale of Paramount stock
to avoid a potential default on its debt fixed charges.
NAI's run-rate annual dividend income has dropped to roughly $13
million from over $60 million due to an 80% reduction in Paramount
Global's dividend.
After Paramount cut its dividend NAI's capital structure will be
unsustainable due to negative annual S&P Global Ratings-adjusted
EBITDA and cash flow. Paramount reduced its quarterly dividend to
$0.05 a share from $0.24 to conserve cash as it executes on its
operating strategy. NAI and its operating subsidiary NAIEH hold
most of the Redstone family trust's stake in Paramount through
class A and class B shares. In 2022, NAI benefited from roughly $61
million in annual dividend income through its class A and B shares.
S&P said, "After giving effect to the dividend cut, we estimate
dividend income will be reduced to $39 million in 2023 and $13
million in 2024. As a result, we forecast NAI's S&P Global
Ratings-adjusted EBITDA will be breakeven in 2023 and negative $20
million in 2024 with annual GAAP cash flow from operations in
excess of negative $35 million. We believe this means the company's
capital structure, comprised of a partially drawn $75 million
revolver, and an aggregate $305 million in outstanding term loans,
is currently unsustainable due to roughly $25 million in annual
cash interest payments."
S&P said, "We expect NAI will have less-than-adequate liquidity
without its previous level of dividend income. Without the
substantial dividend income NAI will not be able to generate
positive cash flow. The company will be dependent on available
cash, revolver availability, potential asset sales, and potential
liquidation of Paramount stock to fund its fixed charges. We
estimate the company's current committed liquidity sources include
about $10 million of cash and $50 million of revolver availability
(pro forma for the $50 million 2023 term loan borrowing). These
sources will barely cover the company's cash burn of over $35
million to $45 million and roughly $9 million of maintenance
capital expenditures we forecast over the next 12 months.
Therefore, the company will be reliant on the potential sale of
real estate assets or liquidations in its Paramount stock to raise
funds to help service its fixed charges."
As a result, S&P revised its assessment of liquidity to less than
adequate from adequate.
The company will likely need to pledge additional collateral to
avoid a covenant breach. Under its revolving credit facility
agreement, the company is subject to a 2x minimum interest coverage
covenant, a minimum collateral value covenant, and a minimum
unencumbered liquidity covenant. The company is also subject to
minimum collateral value covenants on its term loans. S&P said, "We
don't expect the company will be in compliance with these covenants
in 2023 given the Paramount dividend cut and the price declines in
class A and class B shares. We expect the company will need to
amend its credit agreements and pledge additional collateral to
avoid a breach of these covenants. In particular, we expect the
company to draw on its revolver to fund liquidity needs and it may
need to pledge additional shares to maintain full access to that
facility."
NAI's operating revenues are recovering with the cinema industry
but it won't be enough to manage its debt burden. S&P said, "We
expect NAI's revenues to improve to roughly 80% of 2019 levels in
2023 and about 90% of 2019 levels in 2024. Revenues will grow in
line with the global box office as movie studios fill out the film
slate and attendance returns to cinemas over the next two years. We
expect NAI's theater venues will broadly benefit from this
improving trend especially for its locations in the Northeast U.S.
and in the U.K. We expect attendance may never fully recover to
2019 levels, but elevated average ticket prices and favorable
concession sales will help revenues return toward 2019 levels
regardless." In addition, the company's operating profitability
will improve with this higher revenue base and favorable operating
leverage. However, NAI's operating assets, the combination of
NAIEH's and NAI holdco's operating assets, are not profitable
enough on a stand-alone basis to generate positive free cash flow
and service its debt burden.
The negative outlook reflects the risk that NAI's cash generation
will not be sufficient to cover its debt obligations, leaving the
company reliant on cash balances, revolver availability, asset sale
proceeds, and proceeds from the potential sale of Paramount stock
in order to avoid a potential default on its debt fixed charges.
S&P could lower its rating on NAI if it expects the company to face
a default scenario over the next 12 months including a missed
interest payment or distressed debt exchange.
S&P could raise the rating on NAI if it expects it will be able to
materially lower its debt burden such that its organic cash flow is
sufficient to service its fixed charges. This is likely to result
from asset sale and paramount stock sale proceeds being used to
substantially lower the company's debt burden.
ESG credit indicators: To E-2, S-3, G-4 from E-2, S-4, G-4
S&P said, "We revised our social risk indicator to 'S-3' from 'S-4'
to reflect our expectations that health and safety social factors
have improved and are now a moderately negative factor in our
credit analysis. We expect theatrical attendance and revenues will
improve in 2023 and 2024 due to a removal of social distancing
practices and movie theater closures brought on by the COVID-19
pandemic. Nevertheless, we expect these social factors will
continue to affect NAI over our forecast period as the theatrical
exhibition industry recovers. Governance factors are a negative
consideration. NAI is majority-owned and fully controlled by the
Redstone family trust. We believe the controlling ownership of the
Redstone family creates a risk that the Redstones could place their
interests above interests of other stakeholders."
NATIONAL CINEMEDIA: Gets Court Okay to Poll Bankruptcy Plan
-----------------------------------------------------------
In-theater advertiser National CineMedia LLC has been allowed to
start polling its creditors on a lender-backed bankruptcy exit plan
that sheds roughly $1 billion in debt,
Jonathan Randles of Bloomberg Law reports that Judge David Jones
said he will conditionally approve NCM's disclosure statement, a
document that's sent to creditors outlining the terms of its
Chapter 11 plan of reorganization, ballots that will be send to
creditors and procedures for voting on the restructuring proposal.
The judge set the combined hearing, at which time the Court will
consider confirmation of the Plan and final approval of the
Disclosure Statement, for June 26, 2023 at 2:00 p.m. (Prevailing
Central Time) in Courtroom 400 of the United States Bankruptcy
Court for the Southern District of Texas, 515 Rusk Street, Houston,
Texas, 77002. June 20, 2023, at 4:00 p.m. (Central Time) is the
voting deadline.
About National CineMedia
National CineMedia, LLC, based in Centennial, Colo., owns the
largest cinema-advertising network in North America. NCM derives
its revenue principally from the sale of advertising to national,
regional, and local businesses, which is displayed on a national
and regional digital network of movie theaters.
National CineMedia, LLC, filed a Chapter 11 petition (Bankr. S.D.
Tex. Case No. 23-90291) on April 11, 2023, listing $500 million to
$1 billion in estimated assets; and $1 billion to $10 billion in
estimated liabilities. The petition was signed by Ronnie Ng, chief
financial officer of National CineMedia, Inc.
The Hon. David R. Jones presides over the case.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, led by Paul M. Basta,
Esq., Kyle J. Kimpler, Esq., Sarah Harnett, Esq., and Shafaq Hasan,
Esq., serves as counsel to the Debtor. John F. Higgins, Esq., at
Porter Hedges LLP, serves as the Debtor's local counsel.
The Debtor tapped Latham & Watkins LLP as special corporate &
litigation counsel; Lazard Freres & Co., as investment banker; FTI
Consulting, Inc., as restructuring advisor; and Omni Agent
Solutions as notice, claims and balloting agent.
NATURE COAST: Disclosures Hearing Delayed for 3 Weeks
-----------------------------------------------------
Nature Coast Development Group, LLC, pursuant to 11 U.S.C. Sec.
105(a), filed its joint motion with Seacoast National Bank for the
entry of an order rescheduling the hearing on Debtor's Amended
Disclosure Statement.
On April 5, 2023, Seacoast filed 4 separate Notices of Rule 2004
Examination Duces Tecum for (1) an authorized Officer or Managing
Member of the Debtor who has knowledge of the Debtor's business
affairs and records; (2) David Padot; (3) Jennifer Padot Collins;
and (4) Marites Padot. U.S. Specialty Insurance Company
cross-noticed each of the Notices.
On May 2, 2023, counsel for the Debtor and counsel for Seacoast had
a good faith conferral regarding the Motion for Protective Order
and reached an agreement resolving the Motion. Debtor agreed to
produce certain documents by May 9, 2023 and reset all respective
depositions for May 18, 2023. As such, the Debtor seeks a
continuance of the Hearing on Debtor's Amended Disclosure Statement
set for May 18, 2023, for a date two or three weeks after May 18,
2023. Likewise, the Debtor seeks to extend the deadline for
interested parties to object to the Amended Disclosure Statement
beyond May 11, 2023. Such extension will allow Seacoast to receive
certain documents and both Seacoast and USSIC to depose the
Debtor's corporate representative, David Padot, Jennifer Padot
Collins, and Marites Padot. In turn, Seacoast and USSIC should have
enough information to assess the adequacy of Debtor's Amended
Disclosure Statement.
The Debtor requested the Court to continue the hearing set for May
18, 2023, for two or three weeks, reset all relevant deadlines
related to the Debtor's Disclosure Statement, including the
objection deadline, and for such further relief as this Court deems
just and proper.
At the behest of the Debtor, the Court ordered that the Hearing on
Debtor's Amended Disclosure Statement scheduled for May 18, 2023 is
CANCELED, and shall be continued to a date not less than three
weeks after May 18, 2023.
Attorneys for the Debtor:
Justin M. Luna, Esq.
Benjamin R. Taylor, Esq.
LATHAM, LUNA, EDEN & BEAUDINE, LLP
201 S. Orange Ave., Suite 1400
Orlando, FL 32801
Telephone: (407) 481-5800
Facsimile: (407) 481-5801
E-mail: jluna@lathamluna.com
btaylor@lathamluna.com
About Nature Coast Development Group
Nature Coast Development Group, LLC, a company in Fanning Springs,
Fla., filed a petition for relief under Subchapter V of Chapter 11
of the Bankruptcy Code (Bankr. N.D. Fla. Case No. 22-10200) on Dec.
14, 2022. In the petition filed by its managing member, Marites
Padot, the Debtor reported assets between $10 million and $50
million and liabilities between $1 million and $10 million. Jodi D.
Dubose has been appointed as Subchapter V trustee.
Judge: Karen K Specie oversees the case.
The Debtor is represented by Latham, Shuker, Eden, & Beaudine, LLP.
NAVARRO PECAN: Proposes June 29 Hearing on Plan
-----------------------------------------------
Navarro Pecan Company, Inc., filed a motion for entry of an order
for conditional approval of a disclosure statement, approval of
solicitation procedures for forms of ballots and notices and
scheduling a joint hearing to consider final approval of the
adequacy of the disclosure statement and confirmation of a proposed
plan and represents as follows:
To maximize value for the Debtor's creditors, including minimizing
costs and expenses to the Debtor relating to the Chapter 11
process, the Debtor proposes to confirm the Plan in a timely and
efficient manner. Specifically, the following schedule proposed by
this Motion (the "Plan Confirmation Schedule") is as follows:
* The Debtor requests that the Court establish May 12, 2023, as
the record date for determining the Holders of Claims that can vote
on the Plan and receive the Solicitation Package (and in the case
of non-voting Classes, for determining the Holders of Claims and
Interests to receive the Solicitation Package).
* The Debtor intends to cause the Solicitation Packages to be
distributed on or before May 22, 2023, which is 28 days prior to
the Voting Deadline and Plan Objection Deadline.
* The Debtor requests that the Court set June 20, 2023, at 4:00
p.m. (Central Time), as the Voting Deadline unless extended
pursuant to the approved procedures.
* The Debtor requests that the Court establish June 20, 2023, at
4:00 p.m. (Central Time), as the deadline that objections to
confirmation of the Plan and approval of the Disclosure Statement
on a final basis, if any, must be filed and served according to the
Confirmation Hearing Notice.
* The Debtor requests that the Confirmation Hearing be scheduled
on June 29, 2023, at 9:30 a.m. (Central Time), which will be the
hearing to confirm the Plan and approve the Disclosure Statement on
a final basis.
In accordance with Section 1125 of the Bankruptcy Code and
Bankruptcy Rule 3016, the Debtor asserts that the Disclosure
Statement provides adequate information to allow Holders of Claims
in the Voting Classes to cast informed votes on the Plan.
Counsel for the Debtor:
Joshua N. Eppich, Esq.
C. Joshua Osborne, Esq.
Bryan C. Assink, Esq.
BONDS ELLIS EPPICH SCHAFER JONES LLP
420 Throckmorton Street, Suite 1000
Fort Worth, TX 76102
Tel: (817) 405-6900
Fax: (817) 405-6902
E-mail: joshua@bondsellis.com
c.joshosborne@bondsellis.com
bryan.assink@bondsellis.com
About Navarro Pecan Company
Founded in 1977, Navarro Pecan Company Inc. is a pecan sheller that
owns a state-of-the-art facility in Corsicana, Texas. Its pecans
are found in a variety of brand-name food products in the ice
cream, confectionery, cereal, snack food and bakery industries.
Navarro Pecan Company filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Texas Case No. 23-40266) on
Jan. 30, 2023. In the petition filed by its chief restructuring
officer, Brad Walker, the Debtor reported $10 million to $50
million in both assets and liabilities.
Judge Edward L. Morris oversees the case.
The Debtor tapped Joshua N. Eppich, Esq., at Bonds Ellis Eppich
Schafer Jones, LLP as bankruptcy counsel and Joann H. Means, Esq.,
a practicing attorney in Fort Worth, Texas, as special counsel.
NEPHROS INC: Incurs $306K Net Loss in First Quarter
---------------------------------------------------
Nephros, Inc. has filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $306,000
on $3.70 million of total net revenues for the three months ended
March 31, 2023, compared to a net loss of $1.97 million on $2.16
million of total net revenues for the three months ended March 31,
2022.
As of March 31, 2023, the Company had $10.93 million in total
assets, $2.03 million in total liabilities, and $8.89 million in
total stockholders' equity.
Nephros said, "The Company has sustained operating losses and
expects such losses to continue over the next several quarters. In
addition, net cash from operations has been mostly negative since
inception, generating an accumulated deficit of $143.1 million as
of March 31, 2023. These operating losses and negative cash flows
raise substantial doubt of the company's ability to continue as a
going concern. However, during the second half of 2022, the
Company took certain actions to mitigate these conditions,
including headcount and other expense reductions, the sale of PDS
assets and discontinuance of PDS operations, the wind down of SRP,
customer price increases, and the recruiting and acquisition of
additional sales staff to grow revenues. The Company believes
these actions, when fully implemented, will alleviate the
substantial doubt as to the Company's ability to continue as a
going concern. Furthermore, based on these actions, as well as the
cash that is available for the Company's operations and projections
of future Company operations, the Company believes that its cash
balances will be sufficient to fund its current operating plan
through at least the next 12 months from the date of issuance of
the accompanying consolidated financial statements. In the event
that operations do not meet expectations, the Company may need to
further reduce discretionary expenditures such as headcount, R&D
projects, and other variable costs, to alleviate any remaining
substantial doubt as to the Company's ability to continue as a
going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001196298/000149315223016161/form10-q.htm
About Nephros
South Orange, New Jersey-based Nephros, Inc. -- www.nephros.com --
provides innovative water filtration products and services, along
with water-quality education, as part of an integrated approach to
water safety.
Nephros Inc. reported a net loss of $7.11 million for the year
ended Dec. 31, 2022, a net loss of $3.87 million for the year ended
Dec. 31, 2021, a net loss of $4.53 million for the year ended Dec.
31, 2020, a net loss of $3.18 million for the year ended Dec. 31,
2019, and a net loss of $3.32 million for the year ended Dec. 31,
2018. As of Dec. 31, 2022, the Company had $11 million in total
assets, $2.12 million in total liabilities, and $8.88 million in
total stockholders' equity.
NEPHROS INC: Robert Banks to Be Named President and CEO
-------------------------------------------------------
Nephros, Inc. announced that Andy Astor, president and chief
executive officer, will retire in the coming months, and that
Robert Banks will be named president and chief executive officer
effective on the first business day after the filing of Nephros'
Form 10-Q for the quarter ended March 31, 2023. Mr. Banks is also
expected to be appointed to the Nephros Board of Directors.
Andy Astor will remain with Nephros as an advisor to Mr. Banks and
as interim chief financial officer, while a search is conducted for
a permanent CFO. As part of the transition, Mr. Astor will step
down from the board of directors.
"I am very pleased to welcome Robert to Nephros," said Andy Astor.
"He brings more than two decades of experience in the water
industry, along with a powerful record of growing sales across
multiple businesses. I am also very pleased to transition into
retirement with Nephros in its strongest position ever, having
achieved cash-flow breakeven earlier than expected, and with 40% in
year-over-year base revenue growth thus far in 2023. It has been
my honor to serve this company, its people, and our customers and
partners over the past six years."
"The board of directors is excited to welcome Robert to lead the
Nephros organization," said Arthur Amron, a Nephros Director and
partner of Wexford Capital LP, the Company's largest shareholder.
"His record of success as a commercial leader gives us the
confidence that he is the right executive to lead Nephros as we
seek to accelerate revenue growth and maintain cash-flow breakeven
in 2023. We also wish Andy all the best in his retirement and
thank him for his leadership in bringing Nephros to this exciting
juncture."
"I am thrilled to join the Nephros team," said Robert Banks. "The
company has a reputation for best-in-class technologies and
extraordinary relationships with its partners and customers. With
the recent preliminary announcement of strong revenue growth and
improved cash flow, I am excited to have the opportunity to build
the company from this point forward."
Mr. Banks has a proven track record of delivering value through
innovation and aligning the strengths of his organizations with
customer needs to drive profitable growth. He spent nearly 20
years at GE, where he held a variety of commercial and engineering
roles with small- and medium-sized business units. After GE, he
was Executive Director of Product Management at ITT Corporation,
where he was responsible for sales and marketing of a leading
commercial pump portfolio. Most recently, Mr. Banks was Vice
President of Global Strategic Accounts at Danfoss Power Solutions.
About Nephros
South Orange, New Jersey-based Nephros, Inc. -- www.nephros.com --
provides innovative water filtration products and services, along
with water-quality education, as part of an integrated approach to
water safety.
Nephros Inc. reported a net loss of $7.11 million for the year
ended Dec. 31, 2022, a net loss of $3.87 million for the year ended
Dec. 31, 2021, a net loss of $4.53 million for the year ended Dec.
31, 2020, a net loss of $3.18 million for the year ended Dec. 31,
2019, and a net loss of $3.32 million for the year ended Dec. 31,
2018. As of Dec. 31, 2022, the Company had $11 million in total
assets, $2.12 million in total liabilities, and $8.88 million in
total stockholders' equity.
NEXERA MEDICAL: Seeks to Hire Rappaport Osborne as Legal Counsel
----------------------------------------------------------------
NEXERA Medical, Inc. seeks approval from the U.S. Bankruptcy Court
for the Southern District of Florida to hire Rappaport Osborne &
Rappaport, PLLC, as its attorney.
The firm will render these services:
(a) give advice to the Debtor with respect to its powers and
duties as a debtor-in-possession;
(b) advise the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare motions, pleadings, orders, applications,
adversary proceedings, and other legal documents necessary in the
administration of the case;
(d) protect the interest of the Debtor in all matters pending
before the court; and
(e) represent the Debtor in negotiation with its creditors in
the preparation of a plan.
Rappaport Osborne will be paid at these hourly rates:
Attorneys $350 to $595
Paralegals $100 to $350
In addition, Rappaport Osborne will be reimbursed for reasonable
out-of-pocket expenses incurred.
Rappaport Osborne will be paid a retainer in the amount of $32,469,
plus filing fees of $1,738.
Jordan L. Rappaport, a partner of Rappaport Osborne, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Rappaport Osborne can be reached at:
Jordan L. Rappaport, Esq.
RAPPAPORT OSBORNE & RAPPAPORT, PLLC
1300 North Federal Highway, Suite 203
Boca Raton, FL 33432
Tel: (561) 368-2200
About NEXERA Medical, Inc.
NEXERA Medical, Inc. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Court (Bankr. S.D. Fla. Case No.
23-13388) on April 28, 2023. The petition was signed by James
Magruder as director. At the time of filing, the Debtor estimated
$155,521 in assets and $1,902,367 in liabilities.
Judge Scott M. Grossman presides over the case.
Jordan L. Rappaport, Esq. at Rappaport Osborne & Rappaport, PLLC
represents the Debtor as counsel.
NOBILITY MANAGEMENT: Case Summary & Eight Unsecured Creditors
-------------------------------------------------------------
Debtor: Nobility Management, LLC
26025 Mureau Rd., Suite 110
Calabasas, CA 91302
Chapter 11 Petition Date: May 15, 2023
Court: United States Bankruptcy Court
Central District of California
Case No.: 23-10657
Judge: Hon. Martin R. Barash
Debtor's Counsel: David B. Golubchick, Esq.
LEVENE, NEALE, BENDER, YOO & GOLUBCHIK L.L.P.
2818 La Cienega Avenue
Los Angeles. CA 90034
Tel: (310) 229-1234
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Mark Rabinowitz as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's eight unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/Q3ASXJY/Nobility_Management_LLC__cacbke-23-10657__0001.0.pdf?mcid=tGE4TAMA
NORTH CHANNEL: Seeks Cash Collateral Access
-------------------------------------------
North Channel Assistance Ministries asks the U.S. Bankruptcy Court
for the Southern District of Texas, Houston Division, to use cash
collateral to pay Goebel Properties, d/b/a Surplus Sales and
Affordable Homes and dismiss its Chapter 11 case.
Prior to the filing, the Debtor owed:
-- Goebel Properties, d/b/a Surplus Sales and Affordable Homes
as Mortgage Holder, $22,155 of which $8,950 is arrearages; and
-- the Texas Work Force Commission $124 in unemployment
taxes.
The Debtor has received a commitment from The Shrimp Connection
LLC, to pay $13,000 at increments of $1,000 a month to the Mortgage
Holder in order for the Debtor to obtain a mortgage lien release.
This offer is conditional upon the Debtor obtaining court authority
to pay from the Debtor's own funds the $8,950 arrearage payment.
The Debtor has such funds available in its Debtor in Possession
Account. The Debtor contends the payment would not unduly
prejudice its obligation to any other creditor.
One of the Debtor's main impediments in obtaining local donor
support has been the inability to require parties to provide proof
of income before any type of assistance was granted. Pursuant to
UADA or EFSP, government funding required the Debtor to distribute
without verifying their income. The Debtor has now implemented a
policy that it will no longer rely on USDA or EFSP funding and
allow distribution to families that have verified an income below
the U.S. poverty guidelines. The result of this change will have
the immediate effect of increasing funding from the Debtor's
traditional donor community which was lost due to the COV1D-19
emergency.
A copy of the motion is available at https://bit.ly/3O5Y74q from
PacerMonitor.com.
About North Channel Assistance Ministries
North Channel Assistance Ministries owns in fee simple title three
buildings located on 1.5 acres of land located at 13837 Bonham St.,
Houston, TX 77015 valued at $750,000.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-31204) on April 3,
2023. In the petition signed by Rodney Reford, president/executive
director, the Debtor disclosed $1,090,675 in assets and $86,155 in
liabilities.
Judge Jack N. Fuerst, Esq., represents the Debtor as legal
counsel.
OLYMPUS WATER: Moody's Lowers Sr. Secured Debt Rating to B3
-----------------------------------------------------------
Moody's Investors Service has affirmed Olympus Water US Holding
Corporation's B3 Corporate Family Rating and B3-PD Probability of
Default Rating, as well as the Caa2 rating on the company's senior
unsecured notes.
At the same time, Moody's has downgraded the company's senior
secured debt instruments to B3 from B2. Moody's has also assigned
B3 ratings to the proposed $2.125 billion senior secured notes and
$750 million senior secured first lien term loan. The ratings
outlook is stable.
The proceeds of the notes and term loan, together with rolled Bain
Capital's equity contribution, will be used to pay for the
acquisition of Diversey by Olympus Water, including related fees
and expenses.
Assignments:
Issuer: Olympus Water US Holding Corporation
Backed Senior Secured First Lien Term Loan, Assigned B3
Backed Senior Secured Regular Bond/Debenture, Assigned B3
Affirmations:
Issuer: Olympus Water US Holding Corporation
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Backed Senior Unsecured Regular Bond/Debenture, Affirmed Caa2
Downgrades:
Issuer: Olympus Water US Holding Corporation
Backed Senior Secured Bank Credit Facility, Downgraded to B3 from
B2
Backed Senior Secured Regular Bond/Debenture, Downgraded to B3
from B2
Outlook Actions:
Issuer: Olympus Water US Holding Corporation
Outlook, Remains Stable
RATINGS RATIONALE
Olympus Water's B3 CFR reflects its high debt leverage and negative
free cash flows expected in the first two years after Diversey
acquisition, and more broadly, the company's aggressive financial
policy under private equity ownership. Moody's estimates the
acquisition of Diversey will keep the company's debt/EBITDA
leverage high at about 6x to 7x due to the $2.9 billion incremental
debt and time needed to generate synergies. Transaction-related
expenses, business restructuring and reinvestment will result in
negative free cash flow for the first two years after acquisition,
delaying the prospect of deleveraging beyond 2024. Execution risk
remains high, as Olympus Water has substantially increased its
sales through several acquisitions including Sigura Water and
Clearon since Platinum became its owner in 2021 and some of the
expected synergies from these acquisitions are still underway.
Completing another big acquisition amid higher interest rates,
weaker market fundamentals and a larger capex budget presents a key
challenge to Olympus Water's credit quality for the next two years.
Moody's expects that the favorable price and cost differentials,
which have supported Olympus Water's peak earnings performance in
the last several quarters, will begin to wane as a result of
destocking and weakening demand from industrial customers and the
pool segment. Olympus Water's capital expenditure will increase in
2023 and 2024 to expand the production capacities of PVAm and Cal
Hypo.
Diversey has a slightly lower EBITDA margin than Olympus Water
given the competitive disinfection and cleanings service end
markets, its labor intensive business and exposure to hotel,
restaurants and workspace affected by the pandemic. Cost inflation
has eroded Diversey's earnings since its listing in 2021.
Customers' lower operating rates versus pre-pandemic levels
continue to impact Diversey's earnings.
Diversey's hygiene, disinfection and cleaning solutions are
adjacent, complementary to but distinct from that of Olympus
Water's water treatment businesses. Business overlaps are confined
to food and beverage markets and pool solutions. It remains to be
seen how much of the $205 million target synergies will be achieved
and retained without passing onto customers given the challenging
operating environment in the next 12 to 24 months. However, Moody's
expects that management's expertise in acquisitions will bode well
for the integration of Diversey into Olympus Water in the long
term. Olympus Water has a proven track record of integrating
acquired businesses and improving earnings above original
expectation, thanks to an increasing share of higher-margin
products, cost savings, as well as favorable price to cost
differentials.
The rating is supported by Olympus Water's leading market positions
in water treatment for pulp and paper companies, industrial
customers, municipalities, residential and commercial pools, as
well as the leaderships in the acquired disinfection businesses.
The critical nature of water treatment and the company's well
established customer relations contribute to good business
visibility and recurring revenues.
The acquisition of Diversey will raise its annual sales to about
$7.3 billion from $4.5 billion, broaden its customer base and
global presence and further diversity its income streams. The
company's business scale and diversification are better than most
of the single-B rated chemical companies and can support a higher
rating should it improve its credit metrics.
The rating downgrade of Olympus Water's secured term loans and
secured notes from B2 to B3, in line with the B3 CFR, reflects the
predominance of secured debt in the debt capital structure, after
the proposed issuance of $2.125 billion secured notes and $750
million secured term loan. The loss absorption cushion provided by
the senior unsecured notes and other unsecured obligations has
become less significant in supporting the expected recovery of
secured debt in times of financial distress. Both the first lien
term loan and secured notes share the first priority lien on
substantially all the fixed assets and second priority lien on all
ABL collateral.
Olympus Water's adequate liquidity is supported by its cash on hand
and availability under the upsized $700 million ABL facility due in
Nov 2026 (unrated). The company plans to draw down about $60
million from the ABL at transaction close, leaving sufficient
availability for seasonal working capital needs and growth capex.
The ABL contains a springing consolidated fixed charge coverage
covenant set at 1.00x. The covenant springs into effect if the ABL
facility's availability is less than the greater of 10% of the line
cap or $25 million. Moody's expects the company to remain compliant
with this covenant.
ESG CONSIDERATIONS
Moody's also included environmental, social and governance factors
in the rating, but they are not a driver of the rating action. The
government regulation and critical nature of water treatment for
pulp and paper, and municipalities are positive for Olympus Water's
chemicals and services, which help customers improve operational
efficiencies and minimize environmental impact. Such benefits
offset some of the potential environmental and social risks
associated with the use of toxic chemicals such as acrylonitrile,
chlorine and caustic soda in the production process and employee
health and safety risks.
The stable outlook reflects the company's adequate liquidity and
the company's recurring business model, which is expected to keep
earnings and credit metrics in line with the assigned rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating with expectations for the company
to improve profitability, reduce adjusted leverage to below 6 times
on a sustained basis, and generate strong free cash flows. Moody's
could downgrade the rating with expectations for declining volumes,
declining profitability, adjusted financial leverage above 8 times,
EBITDA to interest coverage below 1.5x, negative free cash flow or
diminishing liquidity.
Olympus Water US Holding Corporation (which comprises Solenis and
Sigura, and recently announced acquisition of Diversey) produces
chemicals used in the manufacturing process for pulp and paper
products, industrial and municipal water treatment, pool and spa
markets, as well as provides hygiene, disinfection and cleaning
service. Its products and service help customers improve
operational efficiency, enhance product quality and reduce
environmental impact. In November 2021, Platinum Equity Advisors,
LLC acquired Solenis from Clayton, Dublier, and Rice and BASF.
Platinum combined Solenis with its existing portfolio company
Sigura to form Olympus Water. On March 8, 2023, Olympus Water
announced that it has entered into an agreement with Diamond (BC)
B.V. (dba Diversey, B2 under Review) to acquire the latter for an
enterprise value of $4.6 billion. The transaction is expected to
close in the second half of 2023.
The principal methodology used in these ratings was Chemicals
published in June 2022.
OLYMPUS WATER: S&P Affirms 'B-' ICR on Merger With Diversey
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
Olympus Water Holdings IV L.P. (dba Solenis) and removed its
ratings from CreditWatch with developing implications, where they
were placed on March 9, 2023, following the company's announcement
of the proposed acquisition.
S&P said, "In addition, we assigned our 'B-' issue-level ratings to
the company's proposed $750 million senior secured term loan B, and
$1.625 billion and EUR 500 million senior secured first-lien notes.
Our '3' recovery rating indicates our expectation for meaningful
(50-70%; rounded estimate: 50%) recovery in the event of a payment
default.
"We also affirmed all issue-level ratings including our 'CCC+'
issue-level ratings on the company's existing senior unsecured
debt. The recovery rating remains '5', indicating our expectation
for modest (10%-30%; rounded estimate: 15%) recovery in the event
of a payment default.
"The stable outlook reflects our expectation that the transaction
will be leverage-neutral on a pro forma basis, with S&P Global
Ratings-adjusted debt to EBITDA remaining 6x-7x in 2023. Beyond
2023, we anticipate marginal deleveraging from EBITDA expansion as
the company integrates Diversey and realizes modest cost
synergies."
Solenis plans to issue new debt to fund its previously announced
$4.6 billion acquisition of Diversey Holdings Ltd.
S&P said, "Our ratings reflect our view that the transaction will
be essentially leverage-neutral and the complementary nature of
Diversey's portfolio of products and services will marginally
improve the company's business. We anticipate the acquisition will
enhance the combined entity's geographic and business diversity,
improve its size and scale of operations, and bring the potential
for margin improvement from synergy realization, including
personnel-related cost savings, procurement savings from enhanced
purchasing power, and potential asset rationalization."
Diversey provides hygiene and cleaning equipment, solutions, and
services, including infection prevention and personal care
products, to institutional and food and beverage (F&B) customers.
The business's institutional end markets include health care,
education, hospitality, food service, retail, grocery, and building
services, with F&B serving the brewing, beverage, dairy, processed
foods, and pharma industries. While there is only marginal
end-market overlap between legacy Solenis and Diversey, we believe
the acquisition of adjacent and relatively recession-resilient
products and services will improve the market position of the
combined entity. As a combined entity, the company will have the
opportunity to cross-sell products globally, providing potential
customers with a broader suite of products from hygiene and
infection prevention solutions to water treatment solutions.
Partially offsetting these factors is the lower organic growth
prospects in certain segments of the company's pulp and paper
business, such as graphic and specialty paper, which we believe
faces structural challenges. While the company has been relatively
successful at passing on raw material price increases to customers,
the combined entity will continue to be exposed to volatility in
hydrocarbon prices, as Diversey's raw material basket is also
primarily hydrocarbon based.
S&P said, "We view the realization of synergies, net of costs to
achieve, as essential to deleveraging given that we anticipate the
company will primarily allocate free cash flow generation to growth
initiatives and potential bolt-on acquisitions as opposed to debt
repayment.
"Pro forma for the transaction, we expect S&P Global
Ratings-adjusted leverage will remain above 7x in 2023. However,
while leverage does not increase meaningfully post-transaction, we
view the company as highly leveraged while it faces integration
risks, which we believe are inherent in a transformative
acquisition. These factors offset the benefits from a slight
improvement in our assessment of the company's business risk. The
transaction will be funded through $2.875 billion of incremental
debt, $950 million in cash equity provided by the company's
existing sponsor, Platinum Equity, $617 million in rolled equity
from Bain, and $438 million of preferred equity (also held by
Bain). We view the $438 million preferred stock investment (not
rated) as debt-like given the securities' concentrated single
investor ownership, high payment in-kind rate, and the fact that
they are immediately callable.
"The stable outlook reflects our expectation that the transaction
will be leverage-neutral, with metrics remaining in line with the
'B-' rating. We project stable to slightly improving credit metrics
over the next few years as the company integrates Diversey's
operations into its business and realizes modest synergies from the
acquisition. Under our base-case forecast, we assume S&P Global
Ratings-adjusted weighted average debt to EBITDA remains 6x-7x for
the next 12 months. Our outlook also reflects Solenis's average
EBITDA margins, its ability to pass through price increases, and
our forecast for relatively stable demand across its end markets."
S&P could lower its ratings on Solenis over the next year if:
-- Its leverage begins to trend materially higher, or its
liquidity materially weakens. S&P believes such a scenario could
occur if end market demand weakens, reducing volumes, or if the
company faces unexpected challenges integrating Diversey's
business, resulting in a slower-than-anticipated realization of
synergies and cost-reduction measures;
-- The company pursues additional debt-financed acquisitions or
shareholder rewards that increase leverage materially; or
-- Solenis's leverage approaches double digits, we believe there
is an increased likelihood of a covenant breach, or if the
company's liquidity weakens materially.
S&P said, "We could consider raising our rating on Solenis if its
operating performance exceeds our expectations such that on a pro
forma basis, weighted-average S&P Global Ratings-adjusted debt to
EBITDA falls below 6.5x on a sustained basis, and the company
successfully integrates Diversey while realizing anticipated cost
synergies. This could occur if global growth and end-market demand,
particularly in the company's industrial water business, is
stronger than we currently anticipate, or if the company
successfully executes on its cost-reduction measures such that
profitability improves, resulting in debt to EBITDA below 6.5x
along with sustained free cash flow generation.
"We would also expect Solenis's liquidity sources to remain 1.2x
its uses. Key considerations in any potential positive rating
action include our assessment of the company and financial
sponsor's commitment to financial policies and leverage that would
allow it to sustain improved credit measures."
ESG credit indicators: E-2, S-2, G-3
Governance is a moderately negative consideration, as is the case
for most rated entities owned by private-equity sponsors. S&P
believes the company's highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of the controlling owners. This also reflects the generally finite
OPULENT VACATIONS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Opulent Vacations, Inc.
DBA Buckingham Vacation Properties
DBA Buckingham Properties Lake Tahoe
DBA Monarch Luxury Villas in San Diego
FDBA LINKS RESIDENCE CLUB
FDBA LINKS LUXURY RENTALS
FDBA UTOPIAN
FDBA LINKS TOUR CLUB
FDBA LINKS INTERNATIONAL, iNC.
FDBA UTOPIAN LVH, INC.
1960 Sidewinder Drive
Suite 212
Park City, UT 84060
Business Description: Opulent Vacations offerS high-end luxury
vacation homes in scenic destinations like
Park City, Lake Tahoe, Palm Springs, San
Diego, and more.
Chapter 11 Petition Date: May 15, 2023
Court: United States Bankruptcy Court
District of Utah
Case No.: 23-21941
Judge: Hon. Joel T. Marker
Debtor's Counsel: Jeffrey L. Trousdale, Esq.
COHNE KINGHORN, P.C.
111 E. Broadway, 11th Floor
Salt Lake City, UT 84111
Tel: 801-363-4300
Email: jtrousdale@ck.law
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jeff Jenson as chief executive officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/RF4BLUQ/Opulent_Vacations_Inc__utbke-23-21941__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/Q3B3WHQ/
Opulent_Vacations_Inc__utbke-23-21941__0001.0.pdf?mcid=tGE4TAMA
OWENS-BROCKWAY GLASS: Moody's Rates New Sr. Unsecured Notes 'B2'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the proposed
senior unsecured notes issued by OI European Group B.V. and a B2
rating to the proposed senior unsecured notes issued by
Owens-Brockway Glass Container, Inc. The two entities are
subsidiaries of O-I Glass, Inc. ("O-I"). O-I's Ba3 corporate family
rating, Ba3-PD probability of default rating, and all other
ratings, including the Speculative Grade Liquidity rating (SGL) of
SGL-1 are unchanged. The outlook is stable. The proceeds will be
used to refinance the existing senior unsecured notes at OI
European Group B.V. and Owens-Brockway Glass Container, Inc. that
will mature through 2024. Moody's expects the proposed notes to be
pari passu with each subsidiary's existing unsecured notes.
"Moody's expect the subsidiaries to redeem the existing senior
unsecured notes with a corresponding total amount by January 2024,"
said Motoki Yanase, VP - Senior Credit Officer at Moody's.
"This effectively makes the proposed offering a leverage neutral
transaction, albeit with some time lag," added Yanase.
Assignments:
Issuer: OI European Group B.V.
Backed Senior Unsecured Global Notes, Assigned Ba3
Issuer: Owens-Brockway Glass Container, Inc.
Backed Senior Unsecured Global Notes, Assigned B2
RATINGS RATIONALE
The Ba3 rating on the senior unsecured notes at OI European Group
B.V. reflects their position at the European holding company and
guarantees from certain domestic subsidiaries, including
Owens-Brockway Glass Container Inc. and from Owens-Illinois Group
Inc., an intermediate holding company in the group. The notes do
not benefit from upstream guarantees from the European operating
companies.
The B2 rating on the senior unsecured notes at Owens-Brockway Glass
Container Inc. reflects their structural subordination to the
senior unsecured debt at OI European Group B.V. The notes do
benefit from guarantees by Owens-Illinois Group, Inc. and certain
domestic subsidiaries. However, the notes do not benefit from
guarantees from foreign subsidiaries, including O-I European Group
B.V., which generate a significant part of the group's cash flow.
Both senior unsecured ratings are contractually subordinated to the
senior secured credit facilities, including the revolver and the
term loans, which are not rated by Moody's.
O-I's Ba3 CFR reflects the company's (i) leading market position as
the largest glass packaging company in the world (measured by
revenue and volume), (ii) broad manufacturing presence with 69
manufacturing facilities across 19 countries, (iii) high exposure
to defensive end markets (beer, soft drinks, spirits, and food),
and (iv) strategic relationships with blue chip customers. In
addition, the rating is supported by O-I's revenue, EBITDA and
operating free cash flow visibility with about 55% of sales being
under long-term contracts, and which include provisions for raw
material and energy costs pass-through. At the same time, Moody's
rating takes into consideration the company's debt leverage,
European exposure, product concentration risk, low growth, and
elevated capital expenditures for 2023.
The stable outlook reflects Moody's expectation that O-I will grow
revenue organically, improve profitability and generate free cash
flow that can be used to control total debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if adjusted debt-to-EBITDA is below
4.0x, EBITDA-to-interest coverage is above 5.5x, and free
cash-to-debt is above 7.5%.
The ratings could be downgraded if adjusted debt-to-EBITDA is above
4.75x, EBITDA-to-interest coverage is below 4.5x, and free
cash-to-debt is below 5.0%.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
Headquartered in Perrysburg, Ohio, Owens-Illinois Group, Inc. is a
global glass packaging company. For the twelve months that ended in
March 2023, O-I generated about $7 billion in revenues.
PARAMOUNT REAL ESTATE: Unsecureds Owed $5M to Get 100% in Plan
--------------------------------------------------------------
Paramount Real Estate Holdings, LLC, submitted a Disclosure
Statement explaining its Plan.
The Debtor has proposed a Plan of Reorganization, as may be
amended, for the benefit of its creditors. The Plan represents the
culmination of significant efforts by the Debtor to put forth a
confirmable exit strategy to allow the Debtor to satisfy its debts
and creditors.
The Debtor's Plan is to refinance its main secured debt to pay
Lender in full, repair and briefly operate the facilities for a
going-concern sale to make the highest distributions to creditors.
Alternatively, Debtor will sell its real property to pay Lender in
full and make distributions to the creditors from the sale
proceeds.
The Debtor's only asset is the vacant skilled nursing facility
located at 820 and 830 E. Princeton Dr., Princeton, Texas.
Under the Plan, Class 5 Unsecured Claims total $5,255,126 and will
recover 100% of claims.
Counsel for the Debtor:
Mark A. Castillo, Esq.
Robert C. Rowe, Esq.
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.
Bank of America Plaza
901 Main Street, Suite 5500
Dallas, TX 75202
Telephone: (214) 855-000
Facsimile: (214) 855-1333
E-mail: markcastillo@ccsb.com
rrwoe@ccsb.com
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/41eoWXh from PacerMonitor.com.
About Paramount Real Estate Holdings
Paramount Real Estate Holdings, LLC is a single asset real estate
as defined in 11 U.S.C. Sec. 101(51B).
Paramount Real Estate Holdings filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Case No.
23-40020) on Jan. 2, 2023. In the petition filed by its chief
executive officer, Ryan Cole, the Debtor reported $10 million to
$50 million in both assets and liabilities.
Judge Brenda T. Rhoades oversees the case.
The Debtor is represented by Robert C. Rowe, Esq., at Carrington
Coleman Sloman & Blumenthal, LLP.
PEPPERONI GRILL: Unsecureds Will Get 10% Dividend in 60 Months
--------------------------------------------------------------
Pepperoni Grill, LLC filed with the U.S. Bankruptcy Court for the
Southern District of West Virginia a Disclosure Statement
describing Plan of Reorganization dated May 11, 2023.
The Debtor began business in 2016 and located in Kanawha City,
Charleston, West Virginia. Approximately 75% of the business is
represented by carry out and currently there are nine full and part
time employees.
Lisa Wells is the sole member of the business assisted by her
husband, James Wells, and her son.
Since the time of the filing of the case, the Debtor has taken
steps to change its financial structure. The Debtor has
discontinued relationships with internet lenders who charged
exorbitant rates of interest and swept the Debtor's cash flow on a
daily basis. The Debtor has employed Michelle Steele to take over
all accounting functions and be responsible for submission of
post-petition taxes.
Michelle Steele and Debtor's counsel, Joseph Caldwell, have met
with Debtor's management about modifying food purchase contracts
and advertising contracts. The goal is to achieve a positive cash
flow of up to $10,000 per month.
Class U consists of unsecured claims from taxing authorities whose
claims are outside the priority time frame. These claims are
$73,029 and receive a dividend of 10 percent payable over 60 months
at the rate of $122 per month.
Class O is the ownership interest by the sole member, Lisa Wells.
To the extent possible, Lisa Wells and James Wells, her husband,
will contribute additional capital to the entity to meet Plan
payments.
This Chapter 11 case is based upon the Debtor increasing its gross
sales and bringing current unpaid trust fund taxes.
The Debtor will continue to utilize the services of Michelle Steele
to prepare Monthly Operating States and to monitor payment to
creditors, as well as pre-petition tax records.
A full-text copy of the Disclosure Statement dated May 11, 2023 is
available at https://bit.ly/3Ihl3u2 from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Joseph W. Caldwell, Esq.
CALDWELL & RIFFEE, PLLC
P.O. Box 4427
Charleston, WV 25364
Telephone: (304) 925-2100
Email: jcaldwell@caldwellandriffee.com
About Pepperoni Grill
Pepperoni Grill, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. W. Va. Case No.
22-20161) on Oct. 14, 2022, with as much as $1 million in both
assets and liabilities. Jo A. Roderick, sole member, signed the
petition.
Judge B. McKay Mignault oversees the case.
The Debtor tapped Joseph W. Caldwell, Esq., as legal counsel and
Michelle Steele as bookkeeper.
PG MOTORS: Court OKs Interim Cash Collateral Access
---------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, authorized PG Motors, LLC to use cash collateral on an
interim basis, retroactive to January 9, 2023.
The Debtor is permitted to use cash collateral to pay:
(a) amounts expressly authorized by the Court, including
payments to the Subchapter V Trustee fees;
(b) the current and necessary expenses set forth in the
budget, plus an amount not to exceed 10% for each line item
provided that such variances may not, in the aggregate, exceed 5%
of the monthly amount budgeted; and
(c) additional amounts as may be expressly approved in writing
by the Secured Creditors.
As adequate protection, secured creditors will have perfected
post-petition liens against cash collateral to the same extent and
with the same validity and priority as their pre-petition liens,
without the need to file or execute any document as may otherwise
be required under applicable non bankruptcy law. The liens and
security interests granted thereunder will not be limited or
affected by the termination of the Debtor's authorization to use
cash collateral.
As interim adequate protection, the Debtor will pay to Primalend
Capital Partners, LP, a Texas Limited Partnership, and Good Floor
Loans, LLC, a Texas Limited Liability Company $15,000 for the month
of March 2023 and payable on the 1st day of each month thereafter.
The Debtor is also directed to maintain insurance coverage for its
property in accordance with the obligations under the loan and
security documents with the Secured Creditors and as required under
the Bankruptcy Code and Bankruptcy Rules.
A continued hearing on the matter is set for June 8, 2023 at 11
a.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3BkA6PL from PacerMonitor.com.
The Debtor projects $120,000 in income and $114,742 in total
expenses for the period from January to June 2023.
About PG Motors, LLC
PG Motors, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-05081) on December
24, 2022. In the petition signed by Kirk E. Grell,
president/managing member, the Debtor disclosed up to $500,000 in
assets and up to $10 million in liabilities.
Judge Roberta A. Colton oversees the case.
Buddy D. Ford, Esq., at Buddy D. Ford, PA, is the Debtor's legal
counsel.
PHOENIX SERVICES: Unsecureds Owed $77M Out of Money in Plan
-----------------------------------------------------------
Phoenix Services Topco, LLC, et al., filed a Joint Chapter 11 Plan
of Reorganization and a Disclosure Statement.
The Debtors commenced Chapter 11 cases to implement a comprehensive
financial restructuring that, among other things, delevers the
Company's balance sheet and repairs their portfolio of Customer
Contracts (as defined herein).
The Restructuring is expected to leave the Debtors with a delivered
balance sheet and sufficient liquidity, and the Company better
positioned to maintain its market leading position as a service
provider to steel mills domestically.
The Plan contemplates the consummation of a "Restructuring
Transaction" which generally provides for the following treatment
on the Effective Date for holders of Claims and Interests:
* DIP Claims. All Allowed DIP Claims shall, in full
satisfaction, settlement, release, and discharge of the Allowed
DIP Claims, be exchanged, subject in all respects to the terms of
the Acceptable Plan Agreement and pursuant to the Acquisition
Transaction, for (i) on account of the Roll-Up DIP Loans, its Pro
Rata share (based on such holder's proportionate share of all
Allowed DIP Claims on account of the Roll-Up DIP Loans) of 99.0% of
the New Interests that are issued and outstanding on the Effective
Date, subject to dilution by the Management Incentive Plan, the
Participation Premium, and the Backstop Premium; (ii) on account of
the New Money DIP Loans, its Pro Rata share (based on such holder's
proportionate share of all Allowed DIP Claims on account of the New
Money DIP Loans) of the principal amount of the Takeback Debt; and
(iii) on account of the New Money DIP Loans, its Pro Rata share
(based on such holder's proportionate share of all Allowed DIP
Claims on account of the New Money DIP Loans) of the Newco
Participation Contract Right.
* Priority Claims. All Administrative Expense Claims (which
excludes DIP Claims and Intercompany Claims), Priority Tax Claims,
Other Secured Claims, and Allowed Priority Non-Tax Claims are
unimpaired by the Plan.
* Prepetition Lender Claims. All Allowed Prepetition Lender
Claims will be released and extinguished, and each holder of an
Allowed Prepetition Lender Claim shall receive, in full and final
satisfaction of such Allowed Prepetition Lender Claim its Pro Rata
share (based on such holder's proportionate share of all Allowed
Prepetition Lender Claims) of 1.0% of the New Interests that are
issued and outstanding on the Effective Date, subject to dilution
by the Management Incentive Plan, the Participation Premium, and
the Backstop Premium.
* General Unsecured Claims. Each Allowed General Unsecured Claim
will be released and extinguished, and each holder of an Allowed
General Unsecured Claim shall not receive any distribution on
account of its General Unsecured Claim.
General Unsecured Claims consist of any Claim against any of the
Debtors that is (a) not an Administrative Expense Claim, Priority
Tax Claim, Priority Non-Tax Claim, Other Secured Claim, Prepetition
Lender Claim, Intercompany Claim, or any Claim arising under
section 510(b) of the Bankruptcy Code; (b) a Rejection Damages
Claim; or (c) determined by the Bankruptcy Court to be a
prepetition general unsecured claim that is not entitled to
priority or subject to subordination pursuant to the Plan. As of
the date hereof, the Debtors estimate that the aggregate amount of
undisputed General Unsecured Claims outstanding is approximately
$77 million, though additional amounts, including amounts disputed
by the Debtors, may be asserted by potential claimants. Estimated
amounts do not include claims (i) that are expected to be cured
through the assumption of executory contracts and unexpired leases,
or (ii) for which there may be coverage under the Debtors'
insurance policies to cover such claims.
Under the Plan, Class 4 General Unsecured Claims shall not receive
any distribution on account of its General Unsecured Claim. Class
4 is impaired.
On the Effective Date, the Restructuring Transactions will be
implemented as follows, subject to modification as agreed in the
Transaction Steps or otherwise agreed to by the Debtors and the
Required Consenting Lenders:
1. all holders of Allowed Claims will receive the treatment
provided under the Plan, and each of the Debtors will receive a
discharge of all Claims (except for the DIP Claims) pursuant to 11
U.S.C. sec. 1141(d)(1)(A);
2. the DIP Agent shall form Newco Grandparent, which shall in
turn form Newco Parent, which shall in turn form Newco;
3. Newco Grandparent shall contribute its Interests (the New
Interests) to Newco Parent, which shall in turn contribute the New
Interests to Newco;
4. Newco shall acquire 100% of the assets of Reorganized Phoenix
Holdings and/or Reorganized Phoenix Services in exchange for the
consideration to be set forth in the Transaction Steps;
5. the DIP Claims shall be credit bid pursuant to the
Transaction Steps in exchange for the treatment afforded to holders
of DIP Claims under the Plan;
6. Pursuant to the Transaction Steps: (i) holders of the Roll-Up
DIP Loans shall receive their Pro Rata share of 99.0% of the New
Interests (subject to dilution by the Management Incentive Plan,
the Participation Premium, and the Backstop Premium); (ii) holders
of New Money DIP Loans shall receive their Pro Rata amount of
Takeback Debt, which Takeback Debt shall be in the principal amount
of the outstanding amount of the New Money DIP Loans (including all
accrued and unpaid interest, fees, premiums, and all other
obligations on account of the New Money DIP Loans); (iii) holders
of DIP Claims on account of the New Money DIP Loans shall receive a
Newco Participation Contract Right to participate in the New Money
Exit Debt; and (iv) holders of the Prepetition Lender Claims shall
receive their Pro Rata share of 1.0% of the New Interests (subject
to dilution by the Management Incentive Plan, the Participation
Premium, and the Backstop Premium);
7. the New Money Exit Debt Syndication will be conducted with
respect to $45,000,000 of New Money Exit Debt, which will be
included in the principal amount of the First Lien Exit Facility;
and
8. Newco Grandparent shall contribute additional New Interests
(in an amount equal to or equivalent of the Backstop Premium and
Participation Premium) to Newco Parent, which shall in turn
contribute such additional New Interests to Newco, following which
the DIP Lenders participating in the New Money Exit Facility
(pursuant to the Newco Participation Contract Right) will pay cash
in the amount of $45,000,000 to Newco pursuant to the New Money
Exit Debt Syndication in exchange for the New Interests (in an
amount equal to or equivalent to the Backstop Premium and
Participation Premium) and the New Money Exit Debt.
The record date for determining which holders of claims may vote on
the plan is May 4, 2023. The voting deadline to accept or reject
the plan is 5:00 p.m., prevailing eastern time, on June 9, 2023,
unless extended by the debtors.
Attorneys for the Debtors:
Ray C. Schrock, Esq.
Jeffrey D. Saferstein, Esq.
WEIL, GOTSHAL & MANGES LLP
Garrett A. Fail 767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
- and -
Daniel J. DeFranceschi, Esq.
Zachary I. Shapiro, Esq.
Matthew P. Milana, Esq.
Emily R. Mathews, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, DE 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/3VUso8x from Stretto, the claims agent.
About Phoenix Services Topco
Phoenix Services Topco, LLC provides services to global
steel-producing companies, including the removal, handling, and
processing of molten slag at customer sites, and the preparation
and transportation of metal scraps, raw materials, and finished
products.
Phoenix Services Topco and eight affiliates, including Phoenix
Services Holdings Corp., sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10906) on
Sept. 27, 2022. In the petitions signed by its chief financial
officer, Robert A. Richard, Phoenix Services Topco disclosed $500
million to $1 billion in both assets and liabilities.
Judge Mary J. Walrath oversees the cases.
The Debtors tapped Weil, Gotshal, and Manges, LLP and Richards
Layton & Finger, P.A. as legal counsels; AlixPartners, LLP as
financial advisor; PJT Partners, Inc. as investment banker; and
Stretto, Inc. as claims and noticing agent and administrative
advisor.
Barclays Bank PLC, as DIP and First Lien Group lender, is
represented by Gibson, Dunn & Crutcher LLP while Credit Suisse Loan
Funding LLC, as DIP lender, is represented by Pachulski Stang Ziehl
& Jones, LLP.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee of unsecured creditors in the Debtors' Chapter 11 cases
on Oct. 11, 2022. Squire Patton Boggs (US), LLP, Cole Schotz, P.C.
and FTI Consulting, Inc. serve as the committee's lead bankruptcy
counsel, Delaware counsel and financial advisor, respectively.
PLX PHARMA: Seeks to Hire Olshan Frome Wolosky as Legal Counsel
---------------------------------------------------------------
PLx Pharma Inc. and PLx Opco Inc. seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Olshan Frome
Wolosky LLP as their counsel.
The firm will render these services:
(a) advise the Debtors of their rights, powers, and duties as
debtors-in-possession under chapter 11 of the Bankruptcy Code;
(b) prepare, on behalf of the Debtors, all necessary and
appropriate applications, motions, proposed orders, other
pleadings, notices, schedules, and other documents, and review all
financial and other reports to be filed in the Chapter 11 Cases;
(c) advise the Debtors concerning, and prepare responses to,
applications, motions, other pleadings, notices, and other papers
that may be filed and served in the Chapter 11 Cases;
(d) advise the Debtors with respect to, and assist in the
negotiation and documentation of, any financing agreements and
related transactions;
(e) review the nature and validity of any liens asserted
against the Debtors' property and advise the Debtors concerning the
enforceability of such liens;
(f) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit of their
estates;
(g) counsel the Debtors in connection with any sale of assets
and related documents;
(h) counsel the Debtors in connection with any chapter 11 plan
and related documents;
(i) advise and assist the Debtors in connection with any
potential property dispositions;
(j) advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments, and rejections;
(k) assist the Debtors in reviewing, estimating, and resolving
claims asserted against the Debtors' estates;
(l) commence and conduct litigation necessary or appropriate
to assert rights held by the Debtors, protect assets of the
Debtors' estates, or otherwise further the goal of completing the
Debtors' chapter 11 plan;
(m) provide corporate, employee benefit, litigation, tax, and
other general non-bankruptcy services to the Debtors to the extent
requested by the Debtors; and
(n) perform all other necessary or appropriate legal services
in connection with the Chapter 11 Cases for or on behalf of the
Debtors.
The firm's standard hourly rates are:
Partners $770 - $890
Counsel $735 - $845
Associates $515 - $680
Paralegals $245 - $485
Professional Staff $85 - $95
Mr. Finerman disclosed in a court filing that he and his firm are
"disinterested persons" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Adam W. Finerman, Esq.
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
Tel: 212-451-2300
About PLx Pharma
PLx Pharma Inc. and PLx Opco Inc. are a commercial-stage drug
delivery platform technology company, focused on improving how and
where active pharmaceutical ingredients are absorbed in the
gastrointestinal tract, via its clinically-validated and
patent-protected PLxGuard technology.
PLx Pharma Inc. and PLx Opco filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10456) on April 13, 2023. The petitions were signed by
Lawrence Perkins as chief restructuring officer. The Hon. Mary F.
Walrath oversees the cases.
As of Dec. 31, 2022, the company had $21,750,000 in total assets
against $12,285,000 in total liabilities.
Lawyers at Olshan Frome Wolosky LLP and Young Conaway Stargatt &
Taylor LLP serve as counsel to the Debtors; SierraConstellation
Partners serves as CRO Provider; Donlin, Recano & Company serves as
notice, claims, solicitation & balloting agent.
PLX PHARMA: Seeks to Hire Raymond James as Investment Banker
------------------------------------------------------------
PLx Pharma Inc. and PLx Opco Inc. seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Raymond James
& Associates, Inc. as their investment banker.
The firm will render these services:
a. review and analyze the Debtors' business, operations,
properties, financial condition and Interested Parties on a
stand-alone and consolidated basis;
b. evaluate the Debtors' debt capacity, including by advising
the Debtors generally as to available financing and assist in the
determination of an appropriate capital structure;
c. evaluate potential Transaction alternatives and
strategies;
d. prepare documentation within Raymond James's area of
expertise that is required in connection with a Transaction;
e. identify Interested Parties regarding one or more
particular Transactions;
f. contact Interested Parties on behalf of the Debtors and
with prior written consent by the Debtors, which Raymond James,
after consultation with the Debtors' management, believes meet
certain industry, financial, and strategic criteria and assist the
Debtors in negotiating and structuring a Transaction;
g. advise the Debtors as to potential Business Combination
Transactions;
h. advise the Debtors on tactics and strategies for
negotiating with holders of the Debtors' debt or other claims of
the Debtors;
i. advise the Debtors on the timing, nature and terms of any
new securities, other considerations or other inducements to be
offered to their Stakeholders in connection with any Restructuring
Transaction;
j. participate in the Debtors' board of directors meetings as
determined by the Debtors to be appropriate, and, upon request,
provide periodic status reports and advice to the board with
respect to matters falling within the scope of Raymond James's
retention; and
k. assist the Debtors and their advisors with the preparation
of any chapter 11 materials and/or documentation that may relate to
work done by Raymond James per ongoing advisory services, as
requested by the Debtors and mutually agreed by Raymond James.
The firm will be compensated as follows:
a. Monthly Advisory Fee. The Debtors shall pay Raymond James a
nonrefundable cash retainer of $75,000 upon the Debtors' receipt of
Raymond James' invoice for the Advisory Fee following the execution
of the Amended & Restated Engagement Letter Agreement, and $75,000
on the first business day of every month thereafter (beginning
April 1, 2023) during the term of the Amended & Restated Engagement
Letter Agreement.
The first four Advisory Fee payments received by Raymond James
shall be credited against one Transaction Fee, if any, that may be
payable under the Amended & Restated Engagement Letter Agreement.
b. Chapter Preparation Fee. Upon the execution of the Amended
& Restated Engagement Letter Agreement by the Debtors, the Debtors
paid Raymond James a non-refundable cash fee equal to $250,000
which was fully due, earned, and payable on the date thereof.
The Chapter 11 Preparation Fee that has been received by Raymond
James will be credited against one Transaction Fee, if any, that
may be payable under the Amended & Restated Engagement Letter
Agreement.
c. Financing Transaction Fee. If, during the Term or during
the twelve (12) months following any termination of the Amended &
Restated Engagement Letter Agreement (Tail Period), any Financing
Transaction is agreed upon and subsequently closes, regardless of
when such Financing Transaction Closing occurs, whether on a
stand-alone basis or to consummate any other Transaction, the
Debtors shall pay Raymond James immediately and directly out of the
proceeds of the placement, at the Financing Transaction Closing of
each Financing Transaction as a cost of sale of each Financing
Transaction, a nonrefundable cash transaction fee equal to (A)
$1,000,000 for any Financing Transaction other than a
debtor-in-possession financing (a DIP Financing), plus (B) 5
percent of the proceeds of any DIP Financing.
d. Restructuring Transaction Fee. If, during the Term or
during the Tail Period, any Restructuring Transaction is agreed
upon and subsequently closes, or any amendment to or other changes
in the instruments or terms pursuant to which any Existing
Obligations were issued or entered into becomes effective,
regardless of when such Restructuring Transaction Closing occurs,
the Debtors shall pay Raymond James a non-refundable cash
transaction fee of $1,000,000. For the avoidance of doubt, the
Debtors shall pay the Restructuring Transaction Fee, as a cost of
the Restructuring Transaction, to Raymond James upon the earlier of
(i) the closing of each Restructuring Transaction or (ii) the date
on which any amendment to or other changes in the instruments or
terms pursuant to which any Existing Obligations were issued or
entered into became effective. Notwithstanding anything to the
contrary, only one Restructuring Transaction Fee shall be payable
under the terms of the Amended & Restated Engagement Letter
Agreement.
e. Business Combination Transaction Fee. If, during the Term
or during the Tail Period, any Business Combination Transaction is
agreed upon and subsequently closes, regardless of when such
Business Combination Closing occurs, the Debtors shall pay Raymond
James immediately and directly out of the proceeds at the Business
Combination Closing, as a cost of sale of such Business Combination
Transaction, a non-refundable cash transaction fee based upon the
Transaction Value in the Transaction.
The Business Combination Transaction Fee shall be equal to (A)
$1,000,000 plus (B) 3 percent of the incremental Transaction Value
in excess of $20,000,000. Only one Business Combination Transaction
Fee shall be payable under the Amended & Restated Engagement Letter
Agreement. Notwithstanding the foregoing, in the event that a
Business Combination Transaction occurs solely with one or more
liquidators, then the Business Combination Transaction Fee shall be
$700,000.
f. Alternative Transaction. Notwithstanding the foregoing, if
in lieu of a Business Combination Transaction, during the Term or
during the Tail Period, any Alternative Transaction closes or is
agreed upon and subsequently closes (regardless of when such
Alternative Transaction Closing occurs), Raymond James will be paid
a customary advisory fee for transactions of similar size and
nature (but in no event less than $1,000,000), as mutually agreed
upon by the Parties and any reference to a "Business Combination
Transaction" in the Amended & Restated Engagement Letter Agreement
(other than under Section 2(d)(i)) thereof) will be deemed to refer
to such Alternative Transaction. Should one or more Alternative
Transactions be agreed upon or close within the Term or the Tail
Period that, together with the previously agreed-upon or closed
Alternative Transaction, constitutes in the aggregate a Business
Combination Transaction, an additional fee will be payable to the
extent that the Business Combination Transaction Fee is greater
than the previously paid Alternative Transaction Fee, provided,
however, that in no event shall the total Alternative Transaction
Fees be greater than the Business Transaction Fee.
g. Break-Up Amount. Additionally, if the Debtors or their
securityholders enter into a Definitive Agreement regarding a
Business Combination Transaction that is later terminated, and the
Debtors or their securityholders receive a "break-up,"
"termination" or similar fee or payment including, without
limitation, any judgment for damages or amount in settlement of any
dispute as a result of such termination, the Debtors shall pay
Raymond James a cash fee equal to 25 percent of all such amounts
promptly upon receipt by the Debtors or their securityholders.
h. Single Transaction Fee. Notwithstanding anything to the
contrary contained in the Amended & Restated Engagement Letter
Agreement, Raymond James and the Debtors agree that the Debtors
shall be responsible for the payment of only one of either a
Restructuring Transaction Fee, Alternative Transaction Fee, or a
Business Combination Transaction Fee, if any, pursuant to the terms
of the Amended & Restated Engagement Letter Agreement. For further
clarity, once Raymond James has received payment of any one such
Business Combination Transaction Fee, Alternative Transaction Fee,
or Restructuring Transaction Fee, Raymond James will not be
entitled under the Amended & Restated Engagement Letter Agreement
to another Business Combination Transaction Fee or Restructuring
Transaction Fee in respect of any Business Combination Transaction
or Restructuring Transaction subsequently completed by any
successor entity of the Debtors.
Raymond James is a "disinterested person" within the meaning of
section 101(14) of the Bankruptcy Code, as modified by section
1107(b) of the Bankruptcy Code; and does not hold or represent an
interest materially adverse to the Debtors, their creditors, and
shareholders, according to court filing.
The firm can be reached through:
Geoffrey Richards
Raymond James & Associates, Inc.
320 Park Ave, FL 12
New York, NY 10022
Phone: 281-679-3940
Email: geoffrey.richards@raymondjames.com
About PLx Pharma
PLx Pharma Inc. and PLx Opco Inc. are a commercial-stage drug
delivery platform technology company, focused on improving how and
where active pharmaceutical ingredients are absorbed in the
gastrointestinal tract, via its clinically-validated and
patent-protected PLxGuard technology.
PLx Pharma Inc. and PLx Opco filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10456) on April 13, 2023. The petitions were signed by
Lawrence Perkins as chief restructuring officer. The Hon. Mary F.
Walrath oversees the cases.
As of Dec. 31, 2022, the company had $21,750,000 in total assets
against $12,285,000 in total liabilities.
Lawyers at Olshan Frome Wolosky LLP and Young Conaway Stargatt &
Taylor LLP serve as counsel to the Debtors; SierraConstellation
Partners serves as CRO Provider; Donlin, Recano & Company serves as
notice, claims, solicitation & balloting agent.
PLX PHARMA: Seeks to Hire Young Conaway Stargatt as Co-Counsel
--------------------------------------------------------------
PLx Pharma Inc. and PLx Opco Inc. seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Young Conaway
Stargatt & Taylor, LLP as its bankruptcy co-counsel.
The firm's services include:
a. providing legal advice with respect to the Debtors' powers
and duties as debtors in possession in the continued operation of
their business, management of their properties, and sale of their
assets;
b. preparing and pursuing confirmation of any chapter 11 plan
and approval of any related disclosure statement;
c. preparing, on behalf of the Debtors, necessary
applications, motions, answers, orders, reports, and other legal
papers;
d. appearing in Court and protecting the interests of the
Debtors before the Court; and
e. performing all other legal services for the Debtors that
may be necessary and proper in these proceedings.
The firm will be paid at these rates:
Robert F. Poppiti, Jr., Partner $890
Shane M. Reil, Associate $695
Heather P. Smillie, Associate $505
Debbie Laskin, Paralegal $365
Young Conaway is a "disinterested person" as that term is defined
in section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Robert F. Poppiti, Jr., Esq.
Young Conaway Stargatt & Taylor, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19801
Phone: 302-576-3591
Email: rpoppiti@ycst.com
About PLx Pharma
PLx Pharma Inc. and PLx Opco Inc. are a commercial-stage drug
delivery platform technology company, focused on improving how and
where active pharmaceutical ingredients are absorbed in the
gastrointestinal tract, via its clinically-validated and
patent-protected PLxGuard technology.
PLx Pharma Inc. and PLx Opco filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10456) on April 13, 2023. The petitions were signed by
Lawrence Perkins as chief restructuring officer. The Hon. Mary F.
Walrath oversees the cases.
As of Dec. 31, 2022, the company had $21,750,000 in total assets
against $12,285,000 in total liabilities.
Lawyers at Olshan Frome Wolosky LLP and Young Conaway Stargatt &
Taylor LLP serve as counsel to the Debtors; SierraConstellation
Partners serves as CRO Provider; Donlin, Recano & Company serves as
notice, claims, solicitation & balloting agent.
PLX PHARMA: Seeks to Tap Donlin Recano as Administrative Advisor
----------------------------------------------------------------
PLx Pharma Inc. and PLx Opco Inc. seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Donlin,
Recano & Company, Inc. as their administrative advisor.
The Debtors require an administrative advisor to:
a. assisting with, among other things, any required
solicitation, balloting, and tabulation and calculation of votes,
as well as preparing any appropriate reports, as required in
furtherance of confirmation of any chapter 11 plan;
b. generating an official ballot certification and testifying,
if necessary, in support of the ballot tabulation results;
c. In connection with the Balloting Services, handling
requests for documents from parties in interest, including, if
applicable, brokerage firms and bank back-offices and institutional
holders;
d. gathering data in conjunction with the preparation, and
assisting with the preparation, of the Debtors' schedules of assets
and liabilities and statements of financial affairs;
e. providing a confidential data room, if requested;
f. managing and coordinating any distributions pursuant to any
confirmed chapter 11 plan; and
g. providing such other claims processing, noticing,
solicitation, balloting, and administrative services described in
the Services Agreement, but not included in the Section 156(c)
Application, as may be requested by the Debtors from time to time.
The hourly rates of the firm's professionals are as follows:
Executive Management No charge
Senior Bankruptcy Consultant $167 - $203
Case Manager $153 - $167
Consultant/Analyst $126 - $99
Technology/Programming Consultant $86 - $122
Clerical $40 - $50
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the Debtors provided the firm a
retainer in the amount of $10,000.
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 PLx Pharma
PLx Pharma Inc. and PLx Opco Inc. are a commercial-stage drug
delivery platform technology company, focused on improving how and
where active pharmaceutical ingredients are absorbed in the
gastrointestinal tract, via its clinically-validated and
patent-protected PLxGuard technology.
PLx Pharma Inc. and PLx Opco filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10456) on April 13, 2023. The petitions were signed by
Lawrence Perkins as chief restructuring officer. The Hon. Mary F.
Walrath oversees the cases.
As of Dec. 31, 2022, the company had $21,750,000 in total assets
against $12,285,000 in total liabilities.
Lawyers at Olshan Frome Wolosky LLP and Young Conaway Stargatt &
Taylor LLP serve as counsel to the Debtors; SierraConstellation
Partners serves as CRO Provider; Donlin, Recano & Company serves as
notice, claims, solicitation & balloting agent.
PLX PHARMA: Taps Mr. Perkins of SierraConstellation as CRO
----------------------------------------------------------
PLx Pharma Inc. and PLx Opco Inc. seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire
SierraConstellation Partners, LLC to provide Lawrence Perkins as
chief restructuring officer of the Debtors, John Halloran as deputy
chief restructuring officer of the Debtors.
The firm's services include:
a. providing oversight of the Debtors’ investment banker
through an anticipated asset sale process under the Bankruptcy
Code;
b. providing testimony and serving as responsible party for
reporting requirements in the Chapter 11 Cases;
c. providing management support related to the operations and
cash flow management leading up to and during the Chapter 11
Cases;
d. providing oversight and assistance with the preparation of
financial information for distribution to creditors and others,
including, but not limited to, cash flow projections and budgets,
cash receipts and disbursements analysis of various asset and
liability accounts, and analysis of proposed transactions;
e. assisting in the preparation of management reports;
f. assisting with drafting and seeking confirmation of a
chapter 11 plan;
g. evaluating and making recommendations in connection with
strategic alternatives as needed to maximize the value of the
Debtors;
h. evaluating the cash flow generation capabilities of the
Debtors for valuation maximization opportunities;
i. providing management support in evaluating and responding
to parties during interested party negotiations, including
landlords, vendors, potential buyers, and other key constituents;
and
j. performing such other services as requested or directed by
the Debtors.
The firm's current hourly rates are as follows:
Lawrence Perkins as CRO $1,000/hr.
John Halloran as Deputy CRO $460/hr.
Partners $750/hr. to $1,200/hr.
Managing Directors $660/hr. to $750/hr.
Senior Directors $600/hr. to $660/hr.
Directors $455/hr. to $575/hr.
Sr. Associates $360/hr.
Associates $285/hr.
Lawrence Perkins, chief executive officer of SierraConstellation,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Lawrence Perkins
SierraConstellation Partners, LLC
355 S Grand Ave. # 1450
Los Angeles, CA 90071
Tel: (213) 289-9060
Fax: 213 402 3548
Email: info@sierraconstellation.com
About PLx Pharma
PLx Pharma Inc. and PLx Opco Inc. are a commercial-stage drug
delivery platform technology company, focused on improving how and
where active pharmaceutical ingredients are absorbed in the
gastrointestinal tract, via its clinically-validated and
patent-protected PLxGuard technology.
PLx Pharma Inc. and PLx Opco filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10456) on April 13, 2023. The petitions were signed by
Lawrence Perkins as chief restructuring officer. The Hon. Mary F.
Walrath oversees the cases.
As of Dec. 31, 2022, the company had $21,750,000 in total assets
against $12,285,000 in total liabilities.
Lawyers at Olshan Frome Wolosky LLP and Young Conaway Stargatt &
Taylor LLP serve as counsel to the Debtors; SierraConstellation
Partners serves as CRO Provider; Donlin, Recano & Company serves as
notice, claims, solicitation & balloting agent.
POPULUXE LLC: Court OKs Cash Collateral Access Thru June 11
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized Populuxe, LLC to use cash collateral
on an interim basis in accordance with the budget, with a 10%
variance, for the period of May 1 through June 11, 2023.
The Debtor is permitted to use cash collateral to pay amounts
expressly authorized by the Court, including payments to the
Subchapter V Trustee and the current and necessary expenses as set
forth in the Budget and additional amounts as may be expressly
approved in writing by Amazon. Amazon does not consent to the
Debtor's use of any funds in the Amazon Store Seller Account and
the Order does not authorize the Debtor to use the funds until
further Court order or agreement of the parties.
As previously reported by the Troubled Company Reporter, prior to
the Petition Date, the Debtor obtained financing from Amazon which
is purportedly secured by a lien on the Debtor's cash or cash
equivalents. Amazon may assert a first priority security interest
in the Debtor's cash and cash equivalents by virtue of a UCC-1
Financing Statement filed with the State of Florida on April 12,
2018. The outstanding balance owed to Amazon in connection with a
line of credit is approximately $70,000. In addition, the U.S.
Small Business Administration and CHTD Company may assert interest
on the Debtor's cash equivalents, which interests may be inferior
to Amazon.
According to the Court, to satisfy Amazon's right to adequate
protection of its interest in the Debtor's cash collateral for any
diminution in value of its alleged interest in the cash collateral,
pursuant to 11 U.S.C. sections 361, 363, and 552(b), to the extent
the Debtor uses cash collateral, Amazon is granted valid, attached,
choate, enforceable, perfected, and continuing security interests
in, and liens upon, all post-petition assets of the Debtor of the
same character and type, to the same nature, extent, and validity
as the items and encumbrances of Amazon attached to the Debtor's
assets prior to the petition date. Amazon's security interests in,
and liens upon, the PostPetition collateral will have the same
validity as existed between Amazon, the Debtor, and all other
creditors or claimants against the Debtor’s estate on the
Petition Date.
Amazon will hold allowed administrative claims under 11 U.S.C.
sections 507(b) with respect to the adequate protection obligations
of the Debtor to the extent that the replacement liens on
Post-Petition Collateral do not adequately protect the diminution
in value of the interests of Amazon in its pre-petition collateral.
Such administrative claims will be junior and subordinate only to
any superpriority claim of the kind ordered by the Court and
specified in 11 U.S.C. Section 364, and will be subject to Court
approval upon the filing of an application with the Court for the
allowance of an administrative expense claim, which application
will be served on the Debtor and its bankruptcy counsel.
The Debtor will maintain insurance coverage for its property in
accordance with the obligations under all applicable loan and
security documents.
A final hearing on the matter is set for June 8, 2023, at 1:30
p.m.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3M03FuF from PacerMonitor.com.
The Debtor projects total expenses, on a weekly basis, as follows:
$2,000 for the week starting May 14, 2023;
$5,472 for the week starting May 21, 2023;
$2,000 for the week starting May 28, 2023;
$4,600 for the week starting June 4, 2023; and
$2,000 for the week starting June 11, 2023.
About Populuxe LLC
Populuxe, LLC filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-00842) on March
8, 2023, with as much as $1 million in both assets and liabilities.
Aaron R. Cohen has been appointed as Subchapter V trustee.
Judge Grace E. Robson oversees the case.
The Debtor is represented by Daniel A. Velasquez, Esq., at Latham
Luna Eden & Beaudine, LLP.
RIOT PLATFORMS: Incurs $55.7 Million Net Loss in First Quarter
--------------------------------------------------------------
Riot Platforms, Inc. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $55.69 million on $73.24 million of total revenue for the three
months ended March 31, 2023, compared to net income of $36.58
million on $79.78 million of total revenue for the three months
ended March 31, 2022.
As of March 31, 2023, the Company had $1.25 billion in total
assets, $158.17 million in total liabilities, and $1.09 billion in
total stockholders' equity.
"Riot achieved a number of important milestones and records during
the first quarter of 2023," said Jason Les, CEO of Riot. "In spite
of damage to our immersion Buildings F and G during severe winter
storms in Texas in late 2022, we successfully reached new all-time
highs for miner deployment, total hash rate capacity, and monthly
Bitcoin production. Our teams are also nearing completion of the
final buildout and deployment of miners at our Rockdale Facility
and have been working to further enhance operating efficiency.
Riot's vertically integrated strategy has once again positioned us
during this quarter as an industry leader in low-cost, large-scale
Bitcoin mining, and I continue to be excited to work with our team
to achieve Riot's vision of becoming the leading Bitcoin-driven
infrastructure platform."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001167419/000155837023009137/riot-20230331x10q.htm
About Riot Platforms
Headquartered in Castle Rock, Colorado, Riot Platforms (formerly
Riot Blockchain, Inc.) -- www.riotplatforms.com -- is a Bitcoin
mining and digital infrastructure company focused on a vertically
integrated strategy. The Company has Bitcoin mining data center
operations in central Texas, Bitcoin mining operations in central
Texas, and electrical switchgear engineering and fabrication
operations in Denver, Colorado.
Riot Platforms reported a net loss of $509.55 million in 2022, a
net loss of $15.44 million in 2021, a net loss of $12.67 million in
2020, a net loss of $20.30 million in 2019, and a net loss of
$60.21 million in 2018.
RIVERBED TECHNOLOGY: Nears Sale to Vector Capital for $450 Million
------------------------------------------------------------------
Liana Baker and Reshmi Basu of Bloomberg News report that Riverbed
Technology Inc. is in advanced talks to be sold to private equity
firm Vector Capital for about $450 million, including debt,
according to people familiar with the matter.
The closely held software and networking company, which is backed
by Apollo Global Management Inc., is in exclusive talks with Vector
and could announce a deal within weeks, the people said, asking not
to not to be identified because the matter is private.
About Riverbed Technology
Apollo-backed Riverbed Technology Inc. provides application
performance monitoring, cloud migration, network performance
monitoring, and security solutions. Riverbed Technology serves
customers globally.
Riverbed Technology and its affiliates previously sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11503) on Nov. 16,
2021. Riverbed Technology in December 2021, secured bankruptcy
court approval of its reorganization plan that reduces its debt by
$1.1 billion. Just 17 days after the company filed for Chapter 11
protection, U.S. Bankruptcy Judge Craig Goldblatt in Wilmington,
Delaware, signed off on Riverbed's prearranged plan backed by its
senior lenders and owners, private equity fund Thoma Bravo and the
Ontario Teachers' Pension Plan. Under the plan, holders of $799
million in junior debt, including Apollo Capital Management, will
take over the reorganized company for recoveries of 40%. Senior
lenders will see full recoveries in the form of new debt and
equity. The Plan also provides for $100 million in new equity
capital.
In the prior Chapter 11 case, Kirkland & Ellis and Pachulski Stang
Ziehl & Jones, LLP serve as the Debtors' bankruptcy counsel. The
Debtors also tapped Alixpartners, LLC as financial advisor, and GLC
Advisors & Co., LLC and GLCA Securities, LLC as investment bankers.
Stretto is the claims, noticing and administrative agent.
ROBERTSHAW US: Moody's Appends 'LD' Designation to Caa3-PD PDR
--------------------------------------------------------------
Moody's Investors Service says the debt amendment and exchange
offer of Robertshaw US Holding Corp. (NEW) ("Robertshaw", Caa3
negative) is a distressed exchange and has appended a limited
default ("/LD") designation to the company's Caa3-PD probability of
default rating to indicate a limited default. The /LD will be
removed after a few business days. Robertshaw's other ratings and
negative outlook remain unchanged at this time.
This follows Robertshaw's announcement that it has come to an
agreement with its majority lenders to amend and extend its first
lien and second lien credit agreements as part of exchange offer
intended to improve liquidity and address near-term refinancing
needs. This arrangement will dissolve the existing priority
waterfall and subordinate non-participating lenders under the
existing structure to exchanging lenders. Moody's will assess the
impact to the capital structure and relevant instrument ratings
when the results of the exchange are known. However, following the
transaction, Moody's believes the risk of default will remain high
unless Robertshaw demonstrates a material improvement in operating
results, which are likely to remain weak amid challenging
macroeconomic conditions and subdued demand in the company's
appliance end markets. Moody's also expects free cash flow to be
negative in 2023. These factors, along with a PIK toggle option on
a new first-out facility, will make it challenging for Robertshaw
to de-lever meaningfully over the next year.
The transaction was initiated with a new $95 million first-out
(super-priority) facility from certain key lenders and an offer to
all existing first and second lien lenders to exchange their debt
pro rata at different layers of priority of claim. Per the offer
terms, existing first lien lenders would exchange 10% of first lien
holdings into a second-out facility, 25% into a third-out facility
and 65% into a fourth-out facility. Existing second lien lenders
would exchange 100% of their holdings into a fifth-out facility.
The new maturity under the amend and exchange offer is February
2027, extended from February 2025 and February 2026 on the existing
first lien and second lien term loans, respectively. To the extent
there is over $12.5 million of debt outstanding each on the
existing first lien and second lien for non-participating lenders,
the new February 2027 maturity would be accelerated to one month
ahead of the existing maturities. The offer period will conclude on
May 18, 2023.
LD Appended:
Issuer: Robertshaw US Holding Corp. (NEW)
Probability of Default Rating, Changed to Caa3-PD /LD (/LD
appended) from Caa3-PD
RATINGS RATIONALE
Robertshaw's Caa3 CFR continues to reflect its very high leverage,
limited scale with a niche focus and exposure to cyclical consumer
spending on appliances. The company is also vulnerable to customer
price concessions. The rating also reflects Robertshaw's leading
positions in its niche appliance control markets and longstanding
relationships with blue chip customers. An aging installed base of
residential appliances and commercial HVAC systems, contributing to
pent up demand, support longer-term growth prospects.
In terms of liquidity, while the aforementioned transaction extends
Robertshaw's debt maturities to 2027, it will result in higher
interest costs, considering the new facilities will have an average
all-in coupon of about 11% compared to about 6% currently on the
existing debt. Robertshaw plans to use the proceeds of the new $95
million facility to pay off its unrated Euro term loan due in
December 2023 (roughly $33 million outstanding), although rather
modest relative to the total debt of about $657 million. The
company also plans to extinguish its ABL revolver balance of about
$20 million. Moody's notes Robertshaw relies on its $50 million
ABL for working capital needs.
The methodology used in this rating was Manufacturing published in
September 2021.
Robertshaw US Holding Corp. designs and manufactures
electro-mechanical solutions, mechanical combustion systems, and
electrical controls primarily for use in residential and commercial
appliances, HVAC and transportation applications. Revenue for the
twelve-month period ended December 31, 2022 (unaudited) was
approximately $539 million.
ROCK RIDGE FARMS: Taps Carolina Homeland as Real Estate Broker
--------------------------------------------------------------
Rock Ridge Farms Partnership seeks approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to hire
Carolina Homeland Partners as its real estate broker.
Carolina Homeland will to list for sale and market multiple real
property parcels in Wilson County, North Carolina, owned by the
Debtor.
The broker has agreed to act as agent in consideration of a
commission in the amount of 6 percent of the gross sales price of
the property.
CHP does not hold or represent interests adverse to the estate and
is disinterested within the meaning of Section 327(a) of the
Bankruptcy Code, as disclosed in the court filings.
The firm can be reached through:
Tammy Eickhoff
Carolina Homeland Partners
9121 Anson Way Suite 200
Raleigh, NC 27615
Phone: 919-980-9426
About Rock Ridge Farms Partnership
Rock Ridge Farms Partnership is in the business of farming sweet
potatoes, soybeans, corn, and peanuts in and around Wilson County,
N.C.
Rock Ridge Farms sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-00291) on Feb. 2,
2023, with up to $10 million in both assets and liabilities. Robert
C. Boyette, partner at Rock Ridge Farms, signed the petition.
Judge Joseph N. Callaway oversees the case.
David F. Mills, Esq., at Narron Wenzel, P.A., represents the Debtor
as legal counsel.
ROOSEVELT INN: Disclosures Hearing Resumes June 14
--------------------------------------------------
Upon consideration of the Motion for Entry of an Order Approving
the Disclosure Statement filed by Roosevelt Inn, LLC and Roosevelt
Motor Inn, Inc., Judge Ashely M. Chan has entered an order that the
Debtors must file a Second Amended Disclosure Statement and Second
Amended Plan on or before May 10, 2023 along with a redlined
compare version of each document to reflect the changes made.
Any objections to the Debtors' Second Amended Disclosure Statement
must be filed and served on or before May 31, 2023.
A hearing to consider approval of the Motion is scheduled to be
held on June 14, 2023 at 3:00 p.m. in Courtroom No. 4, United
States Bankruptcy Court, 900 Market Street, Philadelphia, PA
19107.
A copy of the Second Amended Disclosure STatement filed May 10,
2023, is available at
https://www.pacermonitor.com/view/RBCQDDA/Roosevelt_Inn_LLC__paebke-21-11697__0438.0.pdf?mcid=tGE4TAMA
About Roosevelt Inn
Roosevelt Inn, LLC is a Philadelphia-based company that operates in
the traveler accommodation industry.
Roosevelt Inn and its affiliate, Roosevelt Motor Inn, Inc., filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Pa. Lead Case No. 21-11697) on June 16, 2021,
listing as much as $10 million in both assets and liabilities.
Anthony Uzzo, manager, signed the petitions.
Judge Ashely M. Chan presides over the cases.
The Debtors tapped Karalis, PC as bankruptcy counsel; Asterion,
Inc. as financial advisor; A. Uzzo & Company, CPA's PC as
bookkeeper; and Blank Rome, LLP and Reed Smith, LLP as special
counsel.
ROSIE LABS: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Rosie Labs LLC
25 East 10th Street, 10D
New York, NY 10014
Business Description: Rosie Labs is an international collective of
start up mavens, rebels with a cause, and
risk takers hailing from the corporate
world. Its goal is to efficiently deliver
big ideas and unprecedented results in an
agile environment
Chapter 11 Petition Date: May 15, 2023
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 23-10780
Judge: Hon. Martin Glenn
Debtor's Counsel: Dawn Kirby, Esq.
KIRBY AISNER & CURLEY LLP
700 Post Road
Suite 237
Scarsdale, NY 10583
Tel: (914) 401-9500
Email: dkirby@kacllp.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by David Song as CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/LDXSAEY/Rosie_Labs_LLC__nysbke-23-10780__0001.0.pdf?mcid=tGE4TAMA
SABRE HOLDINGS: Moody's Lowers CFR to B2, Outlook Remains Stable
----------------------------------------------------------------
Moody's Investors Service downgraded all of Sabre Holdings
Corporation's (Sabre) credit ratings two notches including the
Corporate Family Rating to B2 from Ba3, the Probability of Default
Rating to B2-PD from Ba3-PD, and the senior secured credit
facilities and senior secured notes at Sabre's wholly-owned
subsidiary, Sabre GLBL Inc., to B2 from Ba3. The Speculative Grade
Liquidity Rating (SGL) remains unchanged at SGL-2. The outlook is
stable.
The rating action reflects materially weaker performance than
Moody's previously expected and Moody's expectation for a slow
recovery in profitability which will cause Sabre's credit metrics
to remain very weak for an extended period relative to 2019.
Despite various cost cutting and growth initiatives, the company's
direct and significant exposure to the airline industry has slowed
its recovery relative to most online travel agency peers. Sabre's
performance has been constrained by the long duration of COVID-era
restrictions in the Asia Pacific region (only recently lifted), the
high mix of slower-to-recover higher-margin corporate and long-haul
international travel, lower than normal airline capacity which will
take time to resolve, the permanent loss of a significant customer
in North America (Expedia Group, Inc., Baa3 Positive), and losses
due to travel restrictions caused by the Russia / Ukraine military
conflict. Though Moody's expects revenues and profitability to
gradually improve, Moody's expect leverage to remain well above 7x
through the end of 2024.
Downgrades:
Issuer: Sabre Holdings Corporation
Corporate Family Rating, Downgraded to B2 from Ba3
Probability of Default Rating, Downgraded to B2-PD from Ba3-PD
Issuer: Sabre GLBL Inc.
Senior Secured Bank Credit Facility, Downgraded to B2 from Ba3
Backed Senior Secured Regular Bond/Debenture, Downgraded to B2
from Ba3
Outlook Actions:
Issuer: Sabre Holdings Corporation
Outlook, Remains Stable
Issuer: Sabre GLBL Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Sabre's B2 CFR reflects the company's strong and established market
position as the number two provider of Global Distribution System
(GDS) services globally, long operating history, and moderate scale
($2.5 billion revenue). The Company's financial policy is an
important credit support, with a public commitment to return credit
metrics to pre-pandemic levels, including net leverage (management
adjusted debt to EBITDA) targeted at between 2.5x-3.5x, albeit over
an extended time frame. The asset-lite business model requires
limited capital intensity and produces good profitability, with
EBITDA margins that should return to at least the low 20% range on
a normalized basis. Liquidity is also good.
The credit profile is, however, constrained by an extraordinarily
long period of weak revenue and profitability relative to
pre-pandemic levels, with revenues near 64% of 2019 levels. As a
result of the pandemic, the Company continues to face a range of
significant challenges, including some that could be more permanent
structural constraints including the ultimate recovery of corporate
travel which was nearly 50% of its revenue mix pre-pandemic.
Leverage is very high, projected to be 7.6x at the end of 2024, and
EBITDA and free cash flows are negative on an LTM basis.
Competition in travel services is also high and rising with a wide
range of companies angling for more market share, requiring
significant ongoing technology costs (about 43% of revenue in
2022), as well as sales and marketing expenditures. These costs
will remain a drag on profitability.
Liquidity is good (SGL-2) reflecting a large cash balance of
approximately $795 million at the end of 2022 which is more than
sufficient to cover all basic obligations over the next 12 months.
The company pays limited preferred stock dividends, has suspended
share repurchases, and its nearest debt maturities are in 2025.
Moody's expects negative free cash flows in 2023, which will erode
the cash balance. The company is not subject to maintenance
covenants and has no revolving credit facility. Alternate liquidity
is limited given the largely secured capital structure (about
93%).
The secured loans and senior secured notes are rated B2, equal to
Sabre's Corporate Family Rating given the mostly single-class
capital structure and reflects the B2-PD Probability of Default
rating and Moody's expectation for an average family recovery in a
default scenario. Sabre GLBL Inc., Sabre Holdings Corporation's
wholly owned direct subsidiary, is the borrower on the senior
secured credit facilities as well as the issuer of the senior
secured notes which are guaranteed by Sabre Holdings Corporation
and each of Sabre GLBL's existing and future subsidiaries that are
borrowers or guarantors of the senior secured credit facilities.
Senior secured indebtedness is collateralized by substantially all
of Sabre's assets.
The stable outlook reflects Moody's expectation that travel demand
will continue to recover, driving above normal growth in bookings
producing revenue near $3.3 - $3.4 billion by the end of 2024.
EBITDA margins will approach 20%, generating close to $600 million
of EBITDA. Free cash flows, net of borrowing costs (over $400
million or 6.5% of debt) and capital expenditures (3.5% of
revenue), will rise to $100 million by 2024 (from about -$250
million in 2023). Free cash flow in 2023 could be improved if
management executes on a working capital optimization plan to
realize up to $100 million of cash benefit. Leverage will fall to
the mid 7x range and retained cash flow to debt will rise to at
least the low-single digit percent.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if debt to EBITDA (Moody's adjusted) is
sustained below 5.0x (Moody's adjusted) and free cash flow to debt
is sustained above 5%. A positive rating action could also be
conditional on better liquidity, continued recovery in travel
demand / volumes, and no material unfavorable changes in the
company's market position, scale, diversity, or operating
performance including organic growth and profitability.
Ratings could be downgraded if the recovery in revenue and
profitability is slower than expected and Moody's expects debt to
EBITDA to be sustained above 6.0x, or free cash flow to debt to be
sustained in the low single digit percent range. A negative rating
action could also be considered if liquidity declines, the 2025
debt maturities are not refinanced at least one year in advance,
travel demand volumes slow materiality or decline, or there are
material unfavorable and sustained changes in the company's market
position, scale, diversity, or operating performance including
organic growth and profitability.
Based in Southlake, TX, Sabre Holdings Corporation's business is
organized in two segments. The Travel Solutions segment includes
revenues from Global Distribution System (GDS) services (a
software-based passenger reservation system) as well as from
commercial and operations offerings to the airline industry. The
Hospitality Solutions segment includes distribution, operations,
and marketing offerings for the hotel industry. Revenue in 2022
were approximately $2.5 billion.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
SALEM MEDIA: S&P Downgrades ICR to 'CCC', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Salem Media
Group Inc. to 'CCC' from 'B-'.
The negative outlook reflects the potential for a default or debt
restructuring over the next 12 months.
Salem faces near-term refinancing risk.
S&P said, "Its ABL comes due on March 1, 2024. As of March 31,
2023, the company had about $18 million drawn on the facility, and
we expect it will need to further borrow on the ABL to fund an
estimated cash burn of about $1 million-$3 million over the
remainder of the year. Salem's cash balance is negligible.
Therefore, absent an ABL extension, we believe the company will
likely need alternative financing to meet its financial
obligations. We believe it is unclear whether Salem can refinance
and extend its debt maturity profile because of challenging capital
market conditions, elevated financial leverage (S&P Global
Ratings-adjusted debt to EBITDA was 5.7x for the last 12 months
ended Dec. 31, 2022), and both economic and secular challenges
facing broadcast radio. Management has noted it is exploring asset
sales, particularly real estate, although the timing and proceeds
are uncertain.
"We expect Salem's leverage to increase in 2023 and decline in
2024.
"S&P Global Ratings economists expect a shallow recession in the
middle of 2023, with a slow recovery thereafter. We estimate that
broadcast radio industry revenues will decline about 10% in 2023 as
advertisers pull back on spending. Salem generates over 75% of its
revenue from broadcast radio advertising. We expect S&P Global
Ratings-adjusted gross leverage will increase to the high-6x area
in 2023 from 5.7x in 2022, although visibility into radio
advertising remains limited given short lead times. The industry
lost significant portions of its advertising base in previous
downturns, failing to recover, and we believe it would face further
losses in a recession. We expect Salem's leverage will decline to
about 6x in 2024 as economic conditions improve."
The negative outlook reflects the refinancing risk around the
company's ABL maturing in March 2024. Salem depends on its ABL for
liquidity given its negligible cash balance and expected FOCF
deficit over the next 12 months.
S&P could lower its rating if it believes a default is likely in
the next six months. This could occur if the company does not:
-- Extend the maturity of its ABL facility; or
-- Obtain an alternative financing solution.
S&P could raise our rating one notch if Salem:
-- Extends its ABL maturity; or
-- Secures alternative financing that provides liquidity
visibility beyond 12 months.
S&P could raise the rating two notches if, in addition to the
above:
-- S&P believes the risk of an economic recession has passed such
that the company sustains revenue and EBITDA growth;
-- Leverage approaches 6x; and
-- S&P expects the company to sustain FOCF to debt of at least
3%.
ESG credit indicators: E-2, S-2, G-2
SHOPS@BIRD & 89: Gets OK to Hire Robert C. Meyer as Legal Counsel
-----------------------------------------------------------------
Shops@Bird & 89, LLC received approval from the U.S. Bankruptcy
Court for the Southern District of Florida to employ Robert C.
Meyer, P.A. as its legal counsel.
The firm's services include:
(a) advising the Debtor with respect to its powers and duties
and the continued management of its business operations;
(b) advising the Debtor with respect to its responsibilities
in complying with the U.S. trustee's operating guidelines and
reporting requirements and with the rules of the court;
(c) preparing legal documents;
(d) protecting the interest of the Debtor in all matters
pending before the court; and
(e) representing the Debtor in negotiation with its creditors
in the preparation of a Chapter 11 plan.
Robert Meyer, Esq., a partner at Robert C. Meyer, P.A., disclosed
in a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Robert C. Meyer, Esq.
Robert C. Meyer, P.A.
2223 Coral Way
Miami, FL 33145
Telephone: (305)285.8838
Facsimile: (305)285.8919
Email: meyerrobertc@cs.com
About Shops@Bird & 89
Shops@Bird & 89, LLC, a Miami-based company, filed a petition under
Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Fla.
Case No. 23 13358) on April 28, 2023, with $10,093,000 in assets
and $5,577,772 in liabilities. Tarek Kiem has been appointed as
Subchapter V trustee.
Judge Robert A. Mark oversees the case.
Robert C. Meyer, Esq., at Robert C. Meyer, P.A. is the Debtor's
legal counsel.
SIO2 MEDICAL: Hires Ernst & Young as Audit Service Provider
-----------------------------------------------------------
SiO2 Medical Products, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Ernst & Young LLP as their audit service provider.
EY LLP will audit the financial statements of the Company for the
year ended Dec. 31, 2022, and the related notes. In conjunction
with the audit services, the firm may also conduct certain
nonrecurring and non-core audit services.
EY LLP estimates that their fees for the 2022 Audit Services will
be $482,500, plus expenses.
Nonrecurring and non-core audit services will be billed with the
following hourly rates:
Partner $950
Executive Director $650
Senior Manager $600
Manager $450
Senior $350
Staff $250
Carter Posner, a partner at Ernst & Young, disclosed in a court
filing that his firm is a "disinterested person" within the meaning
of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Carter Posner
Ernst & Young LLP
55 Ivan Allen Jr. Blvd, Suite 1000
Atlanta, GA 30308
Direct: +1 404 874 8300
Fax: +1 404 817 4301
About SiO2 Medical Products
SiO2 Medical Products, Inc. is a material life sciences company
that is at the precipice of mass-commercialization of its
breakthrough materials science technology that is poised to
revolutionize the pharmaceutical industry. Major pharmaceutical
players are testing the company's vials, syringes, tubes, and other
offerings, and the Company anticipates large-scale adoption in the
relative near term.
SiO2 Medical Products and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10366) on March 29, 2023. In the petition signed by its
chief executive officer, Yves Steffen, SiO2 Medical Products
disclosed $100 million to $500 million in assets and $500 million
to $1 billion in liabilities.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Kirkland Ellis, LLP and Kirkland & Ellis
International, LLP as general bankruptcy counsels; Cole Schotz
P.C.
as local bankruptcy counsel; Alvarez & Marshal North America, LLC
as financial and restructuring advisor; and Lazard as investment
banker. Donlin, Recano and Co., Inc. is the claims, noticing,
solicitation and administrative agent.
SOUTHFIELD VENTURES: Plan & Disclosures Due July 28
---------------------------------------------------
Judge Thomas J. Tucker has entered an order establishing deadlines
and procedures for Southfield Ventures, LLC, as follows:
* The deadline for the Debtor to file motions is June 28, 2023.
This is also the deadline to file all unfiled overdue tax returns.
The case will not be delayed due to unfiled tax returns.
* The deadline for parties to request the Debtor to include any
information in the disclosure statement is June 28, 2023.
* The deadline for the Debtor to file a combined plan and
disclosure statement is July 28, 2023.
* Unless the Court later orders otherwise, the deadline to
return ballots on the plan, as well as to file objections to final
approval of the disclosure statement and objections to confirmation
of the plan, is September 1, 2023. The completed ballot form must
be returned by mail to the Debtor's attorney: Robert N. Bassel,
P.O. Box T, Clinton, MI 49236.
* Unless the Court later orders otherwise, no later September 8,
2023, the Debtor must file a signed ballot summary indicating the
ballot count under 11 U.S.C. Sections 1126(c) and 1126(d).
* Unless the Court later orders otherwise, the hearing on
objections to final approval of the disclosure statement and
confirmation of the plan will be held on Wednesday, September 13,
2023 at 11:00 a.m.
* The deadline for all professionals to file final fee
applications is 30 days after the confirmation order is entered.
* The deadline to file objections to this order is 21 days after
the date this order is entered.
* The deadline to file a motion to extend the deadline to file a
plan is June 28, 2023.
* The deadline to file a motion to extend the time to file a
motion to assume or reject a lease under 11 U.S.C. section
365(d)(4) is June 28, 2023. Counsel for the Debtor must consult
with the courtroom deputy to assure that such a motion is set for
hearing on or before July 28, 2023.
About Southfield Ventures
Southfield Ventures LLC is a Single Asset Real Estate (as defined
in 11 U.S.C. Sec. 101(51B)).
Southfield Ventures LLC filed a petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-42948) on
March 31, 2023. In the petition filed by Ernest Charles Barreca, as
principal, the Debtor reported assets and liabilities between $1
million and $10 million each.
The case is overseen by Honorable Bankruptcy Judge Thomas J
Tucker.
The Debtor is represented by:
Robert N. Bassel, Esq.
P.O. Box T
28100 Franklin Road
Southfield, MI 48034
SOUTHFIELD VENTURES: Taps Robert Bassel as Bankruptcy Counsel
-------------------------------------------------------------
Southfield Ventures, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to hire Robert Bassel,
Esq., a practicing attorney in Clinton, Mich., to handle its
Chapter 11 case.
Mr. Basel received a retainer of $9,238, including the filing fee
of $1,738.
In court papers, Mr. Basel disclosed that he is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Mr. Basel can be reached at:
Robert Bassel, Esq.
P.O. Box T
Clinton, MI 49236
Phone: (248) 677-1234
Email: bbassel@gmail.com
About Southfield Ventures
Southfield Ventures, LLC is a single asset real estate (as defined
in 11 U.S.C. Sec. 101(51B)). The company is based in Southfield,
Mich.
Southfield Ventures filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-42948) on March
31, 2023, with $1 million to $10 million in both assets and
liabilities. Ernest Charles Barreca, principal at Southfield
Ventures, signed the petition.
Judge Thomas J. Tucker oversees the case.
The Debtor is represented by Robert N. Bassel, Esq., a practicing
attorney in Clinton, Mich.
STONEX GROUP: Moody's Affirms 'Ba3' Issuer & Secured Notes Ratings
------------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 long-term issuer and
senior secured notes ratings of StoneX Group Inc. StoneX's outlook
remains stable.
RATINGS RATIONALE
The ratings affirmation reflects StoneX's strengths in a range of
specialized financial services functions, including commercial
hedging and risk management advisory, commodities trading, clearing
and execution, securities market making and global payments. The
firm's credit profile benefits from a strongly diversified business
mix, consistent earnings generation, and favorable regulatory and
market trends.
StoneX takes principal risk in its activities, but these risks are
mitigated by relatively short hold times and the extensive use of
hedging to operate on a matched principal basis. Nevertheless, the
volume of StoneX's transactions exposes it to an elevated level of
operational and counterparty risks that could result in losses in
the event of a risk management failure.
Moody's said that StoneX has historically taken advantage of
well-timed acquisitions (such as its acquisition of GAIN Capital
Holdings, Inc. in 2020) which have expanded its franchise and
customer base and that have been successfully integrated. Moody's
expect the firm's profitability to exhibit periodic volatility
driven by its emphasis on growth, M&A activity, and challenges with
overseeing a global and growing capital markets operation.
These risks are partially mitigated by two factors: firstly, StoneX
has a flexible expense base whereby a sizable portion of costs vary
with customer activity and a large component of compensation is
variable; and secondly, the company maintains a conservative
financial policy and does not currently pay a dividend.
StoneX delivered credit-neutral results in its second fiscal
quarter ended March 31, 2023. StoneX reported $57.5 million in
pretax income for the quarter, down 34% from $87.4 million one year
ago. The firm absorbed $14.6 million of pre-tax costs related to
retirement and reorganization costs in a move intended to lower
future variable compensation costs, and it expects to recoup these
restructuring costs over the next two years. Improved income
within StoneX's commercial and institutional segments helped offset
declines in the Retail and Global Payments segment.
The Ba3 rating on StoneX's senior secured notes is aligned with
StoneX's Ba3 issuer rating. The difference in expected loss between
StoneX's senior secured notes (which have a second lien claim on
StoneX's assets and the assets of a few of its smaller
subsidiaries) and any senior unsecured debt and debt like
obligations is not of sufficient magnitude to warrant a difference
in these ratings levels, said Moody's.
StoneX's outlook is stable, based on Moody's expectation that
StoneX will continue to generate strong and diversified operating
revenue while maintaining strong liquidity and a conservative
approach to risk management.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
123456789012345678901234567890123456789012345678901234567890123456
WHAT COULD MOVE THE RATING - UP
-- Increasing profitability and scale resulting in significantly
improved pretax earnings and related margins
-- Demonstration of a sound evolution in management oversight,
controls, and risk management commensurate with the firm's
growth
-- A substantial reduction in holding company double leverage.
WHAT COULD MOVE THE RATING - DOWN
-- A decline in liquidity or in the durability of the firm's
capital structure.
-- Entry into higher-risk business activities or evidence that
management oversight, controls and risk management are not
keeping pace with growth
-- Change in financial policy towards shareholder interests
via significant ongoing dividend payments and share
repurchases
The principal methodology used in these ratings was Securities
Industry Market Makers Methodology published in November 2019.
SUMMIT SPRINGS: Taps Falcone Law Firm as Bankruptcy Counsel
-----------------------------------------------------------
Summit Springs Holdings, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Georgia to hire The
Falcone Law Firm, P.C. as its counsel.
The firm's services include:
a. advising the Debtor regarding its rights, powers and duties
in the administration of its Chapter 11 case and assets of the
bankruptcy estate;
b. assisting the Debtor in connection with the analysis of its
assets, liabilities, financial condition and other matters related
to its business;
c. assisting in the preparation, negotiation and
implementation of a plan of reorganization;
d. advising the Debtor with regards to objections to or
subordination of claims and other litigation matters;
e. representing the Debtor in the investigation of the
desirability and feasibility of the rejection and potential
assignment of any executory contracts or unexpired leases;
f. advising the Debtor with regard to all applications,
motions or complaints concerning reclamation, adequate protection,
sequestration, relief from stays, use of cash collateral,
disposition or other use of assets of the estate and other similar
matters;
g. assisting the Debtor in the sale or disposition of assets
of its bankruptcy estate;
h. preparing legal papers and conducting examinations;
i. providing assistance to the Debtor with regard to the
proper receipt, disbursement and accounting of funds and property
of the estate; and
j. other legal services related to the Debtor's Chapter 11
case.
The firm will be paid at these rates:
Senior Attorneys $400 per hour
Associates $250 per hour
Paralegals $175 per hour
Staffs $75 per hour
In addition, the firm will seek reimbursement for out-of-pocket
expenses incurred.
Ian Falcone, Esq., a partner at Falcone Law Firm, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Ian M. Falcone, Esq.
Falcone Law Firm, P.C.
363 Lawrence Street
Marietta, GA 30060
Tel: (770) 426-9359
Email: Imffalconefirm.com
Summit Springs Holdings
Summit Springs Holdings, LLC owns six acres of to-be-developed 21
townhome units located at 208 Sandy Springs Place, Sandy Springs,
Ga., The properties are valued at $4.4 million.
Summit Springs Holdings filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
23-54043) on May 1, 2023, with $4,470,000 in assets and $2,623,041
in liabilities. Eric McConaghy, manager, signed the petition.
Ian M. Falcone, Esq., at The Falcone Law Firm, P.C. represents the
Debtor as counsel.
SYNEOS HEALTH: Moody's Puts 'Ba2' CFR on Review for Downgrade
-------------------------------------------------------------
Moody's Investors Service placed Syneos Health, Inc.'s ratings on
review for downgrade. This follows an announcement that Syneos will
be acquired by an investment consortium, comprising of Elliott
Investment Management, Patient Square Capital and Veritas Capital.
The ratings placed on review for downgrade include the Ba2
corporate family rating, Ba2-PD probability of default rating, the
Ba2 senior secured first lien bank credit facility rating and the
B1 senior unsecured note rating. The outlook was revised to Ratings
Under Review from negative.
On May 10, 2023, Syneos announced that it was being acquired for a
total purchase price of $7.1 billion, including its existing debt.
Syneos is currently a public company. The deal is expected to close
in the second half of 2023.
The review for downgrade will focus on (1) the amount of
incremental debt to be incurred as part of the transaction and its
impact on financial leverage (2) final capital structure
composition (3) Syneos management's financial policy under new
ownership (4) recent operating performance.
Moody's took the following action on Syneos Health, Inc.:
On Review for Downgrade:
Issuer: Syneos Health, Inc.
- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
- Probability of Default Rating, Placed on Review for Downgrade,
currently Ba2-PD
- Senior Secured 1st Lien Term Loan A, Placed on Review for
Downgrade, currently Ba2
- Senior Secured 1st Lien Revolving Credit Facility, Placed on
Review for Downgrade, currently Ba2
- Senior Unsecured Notes, Placed on Review for Downgrade,
currently B1
Outlook Actions:
Issuer: Syneos Health, Inc.
- Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Excluding the ratings review, Syneos' Ba2 corporate family rating
reflects the company's considerable size, geographic footprint, and
established market positions as both a pharmaceutical contract
research organization (CRO) and provider of commercialization
services. The ratings are also supported by the company's very good
liquidity, including meaningful free cash flows. The ratings
reflect Syneos' moderate financial leverage with adjusted
debt/EBITDA of 3.7x, as of December 31, 2022. However, Moody's
expects headwinds in operational performance will result in
weakening of company's credit metrics, over the next twelve months.
Syneos' credit profile also encompasses the risks inherent in the
pharmaceutical services industry, including project delays and
cancellations.
Syneos' CIS-3 indicates that ESG considerations have a limited
impact on the credit rating with potential for greater negative
impact over time. Social risk considerations relate to
pharmaceutical drug pricing, which could have both positive and
negative effects for Syneos. Drug pricing pressure in the US may
spur the need for Syneos' customers to invest more heavily in R&D,
which would be a benefit. However, legislation that reduce drug
prices such as the recently passed US Inflation Reduction Act could
also have a negative impact on Syneos if pharmaceutical customers
look to trim expenses or reduce the scope of existing projects.
Additionally, large mergers could result in customer
consolidation/pricing pressure. Governance risk considerations
include Syneos' appetite for share repurchases and debt-financed
acquisitions including those that bring execution risk. This is
partly mitigated by progress to date at deleveraging, partially
through voluntary repayment of debt
The SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that Syneos will maintain very good liquidity over the
next 12 months. Liquidity is supported by cash of approximately
$111 million as of March 31, 2023, as well as Moody's expectation
that Syneos will generate meaningful free cash flow of over $200
million over the next 12 months. Syneos' liquidity is further
supported by roughly $865 million of availability under the
company's upsized $1.0 billion revolving credit facility expiring
in November 2027. The credit agreement contains a 4.5x maximum
first lien leverage ratio. Moody's anticipates that Syneos will
maintain ample cushion under the covenant.
The review for downgrade will focus on (1) the amount of
incremental debt to be incurred as part of the transaction and its
impact on financial leverage (2) final capital structure
composition (3) Syneos management's financial policy under new
ownership (4) recent operating performance.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Syneos Health, Inc., headquartered in Morrisville, North Carolina,
is a leading global fully integrated biopharmaceutical solutions
organization providing outsourced clinical development, medical
affairs and commercial services for pharmaceutical and
biotechnology companies. Syneos Health, Inc.'s main area of focus
is late-stage clinical trials. The company reported revenues of
approximately $5.4 billion for the fiscal year ended March 31,
2023.
TELESAT CANADA: S&P Downgrades ICR to 'SD' on Debt Repurchases
--------------------------------------------------------------
S&P Global Ratings lowered our issuer credit rating on Telesat
Canada to 'SD' (selective default) from 'CCC+'. At the same time,
S&P lowered its issue-level rating on its senior secured notes to
'D' from 'CCC+' and our issue-level rating on its senior unsecured
notes to 'D' from 'CCC-'.
From April 2023 to May 10, 2023, Ottawa-based Telesat Canada
repurchased $48.2 million, $37.2 million, and $17.7 million in par
value of its $400 million senior secured notes due June 2027, $500
million senior secured notes due December 2026, and $550 million
senior unsecured notes due October 2027, respectively, in open
market purchases for an aggregate cost of $56.0 million, which
includes accrued interest expense. S&P said, "We view the
repurchase of these notes as distressed because the noteholders
received materially less value (about 54 cents per dollar on
average) than originally promised. In its fourth-quarter 2022
earnings call, Telesat stated that its board has authorized up to
$200 million in cash to repurchase debt. Therefore, we expect it
will make further debt repurchases through open market and
privately negotiated transactions."
S&P said, "We view the transaction as distressed and tantamount to
a default under our criteria because the participating lenders
received less value than they were initially promised under the
original securities. Although the debt repurchase modestly reduced
its interest expense and balance sheet debt, we still believe
Telesat's existing capital structure remains unsustainable.
Moreover, the limited growth opportunities from its legacy
geosynchronous earth orbit (GEO) operations and increased costs and
delays in launching its next-generation low-earth orbit (LEO)
satellite network (Lightspeed) have increased the risk that its
cash flow will remain weak through its 2026 and 2027 debt
maturities.
"We will reassess our issuer credit rating on Telesat in the near
term when we believe that the likelihood of further below-par
repurchases is remote."
TELESAT CORP: Moody's Appends LD Designation to 'Caa2-PD' PDR
-------------------------------------------------------------
Moody's Investors Service appended an "/LD" designation to Telesat
Corporation's Caa2-PD probability of default rating to reflect a
limited default resulting from its cumulative discounted debt
repurchases. Telesat announced on May 11, 2023 that it repurchased
debt with a face value of $103 million for $56 million between
March 31 and May 10 [1]. This is in addition to the $160 million of
debt it repurchased for $77 million in 2022. While the debt
repurchases slightly improves the company's capital structure,
Moody's views the cumulative amount as a distressed exchange, which
is an event of default under its definition of default. The LD
designation will be removed within three business days.
The company's Caa1 corporate family rating, Caa2-PD probability of
default rating, B3 senior secured credit facilities and senior
secured notes ratings, Caa3 senior unsecured notes rating, and
SGL-1 speculative grade liquidity rating remain unchanged with the
debt repurchases as does the negative outlook for both the company
and its main operating entity, Telesat Canada. Telesat Canada is
the borrower of the senior secured credit facilities and is the
issuer of the senior secured and senior unsecured notes.
Moody's considers Telesat's capital structure to be unsustainable
with Debt/EBITDA expected to be maintained above 8x compared to 5x
for 2020 due to continued EBITDA decline in its geosynchronous
(GEO) satellite business. Also, the planned low earth orbit (LEO)
satellite constellation that will guarantee the company's long-term
survival is delayed for more than two years due to lack of full
funding. The long delay puts the project at risk in Moody's view.
Telesat Corporation, headquartered in Ottawa, Ontario, Canada, is a
fixed satellite services company.
TMK HAWK: Moody's Assigns Ca Rating to $20MM Tranche C Term Loan
----------------------------------------------------------------
Moody's Investors Service assigned a Ca rating to TMK Hawk Parent
Corp's (dba TriMark) $20 million super priority Tranche C term loan
(TLC) that matures in November 2024. All other ratings are
unchanged including TriMark's Caa3 Corporate Family Rating, Ca-PD
Probability of Default Rating, the B3 rating of the Tranche A first
out term loan, the Caa3 rating of the Tranche B second out term
loan, and the C rating on the senior secured second lien term loan.
The ratings outlook is negative.
Assignments:
Issuer: TMK Hawk Parent, Corp.
Senior Secured Term Loan C, Assigned Ca
RATINGS RATIONALE
TriMark's Caa3 CFR reflects Moody's view that TriMark's capital
structure is unsustainable given its very high financial leverage
with debt/EBITDA expected to be around 10x and over $30 million
negative free cash flow in 2023 despite a meaningful projected
earnings rebound. The negative free cash flow is in part due to
higher capital spending and working capital to support business
growth, in addition to the high cash interest burden. TriMark has
end market concentration in the foodservice/restaurant sector and
the majority of its revenue relates to equipment sales. The rating
is supported by the company's strong market position in the
foodservice equipment and supplies distribution industry, its
relatively recurring revenue stream from supply replenishment and
equipment replacement, and modest capital expenditure requirement.
Moody's anticipates the company will have weak liquidity in the
next 12 months because of the maturity of the bulk of its debt in
May-August 2024 and that the company is heavily reliant on revolver
borrowings.
The Ca rating of the company's $20 million Tranche C super priority
term loan, one notch below the Caa3 CFR, reflects the term loan's
pari passu lien but subordinated position with respect to
collateral proceeds behind the ABL and super priority first out
(Tranche A) and second out (Tranche B) term loans in the company's
capital structure. The Tranche C priority term loan has a priority
lien on the collateral relative to the second lien term loan.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The negative outlook reflects Moody's view that TriMark's capital
structure is unsustainable owing to high leverage and significant
negative free cash flow, that the likelihood of a restructuring is
high in the next year, and that recovery values could weaken if
earnings do not improve meaningfully.
The ratings could be upgraded if leverage materially declines
driven by continued improvement in operating results and less
reliance on external sources of liquidity. The company would also
need to improve liquidity including interest coverage, cash
generation and the maturity profile to be upgraded.
The ratings could be downgraded if there is a deterioration in
liquidity, highlighted by increasing revolver reliance, the
probability of a debt restructuring or event of default increases
for any reason, or recovery prospects decline.
The principal methodology used in this rating was Distribution and
Supply Chain Services published in February 2023.
TMK Hawk Parent, Corp. (TriMark) is a distributor of foodservice
equipment and supplies in North America, providing all non-food
products used by restaurants and other foodservice operators. In
addition, the company offers value-added services, which include
design, procurement, and installation of commercial kitchens for
foodservice operations. TriMark was acquired by Centerbridge
Partners, L.P. in 2017. The company is private and does not
publicly disclose its financials. The company generated
approximately $2.2 billion of revenue for the twelve months ended
December 31, 2022.
TOP LINE GRANITE: Trustee Taps Shatz Schwartz and Fentin as Counsel
-------------------------------------------------------------------
Steven Weiss, Subchapter V trustee for Top Line Granite Design
Inc., seeks approval from the U.S. Bankruptcy Court for the
District of Massachusetts to tap his own firm, Shatz, Schwartz and
Fentin, P.C., in connection with Top Line's bankruptcy case.
The trustee requires legal counsel to:
a. undertake appropriate action for sale of assets of the
estate and commence other legal actions required in connection
therewith;
b. prepare and execute all legal instruments required to
effect sales of certain estate assets;
c. undertake legal action to determine the perfection or
priority of secured claims in and to the assets or proceeds of the
Debtor's property;
d. undertake legal action to investigate and recover voidable
preferences and fraudulent conveyances;
e. review the validity and priority of claims filed against
property of the estate and, if appropriate, object to claims;
f. take legal action as may be required to recover transfers,
which may have been made by the Debtor in derogation of the
Bankruptcy Code;
g. commence legal action to collect outstanding accounts
receivable;
h. conduct examinations of the Debtor (or its officers and
employees) and various witnesses as to the actions, conduct and
property of the Debtor;
i. prepare numerous applications for the trustee to hire
professionals and seek allowance of compensation of such
professionals;
j. object to the Debtors' discharges, if appropriate;
k. provide other necessary legal services.
Steven Weiss, Esq., a partner at Shatz Schwartz and Fentin,
disclosed in a court filing that his firm is a "disinterested
person" pursuant to Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Steven Weiss, Esq.
Shatz Schwartz and Fentin, P.C.
1441 Main Street
Springfield, MA 01103
Tel: (413) 737-1131
Fax: (413) 736 0375
Email: sweiss@ssfpc.com
About Top Line Granite Design
Top Line Granite Design Inc., a manufacturer of cut stone and stone
products in Tyngsboro, Mass., filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Mass. Case No.
22-40216) on March 25, 2022, with up to $10 million in assets and
up to $50 million in liabilities.
Judge Elizabeth D. Katz oversees the case.
Alan L. Braunstein, Esq., at Riemer and Braunstein, LLP is the
Debtor's legal counsel.
Steven Weiss, the Subchapter V trustee appointed in the Debtor's
case, is represented by Shatz Schwartz and Fentin, P.C.
TTM TECHNOLOGIES: Moody's Rates New $350MM Term Loan B 'Ba1'
------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating to TTM
Technologies, Inc. proposed $350 million Term Loan B due 2030.
Existing ratings, including the Ba2 corporate family rating, Ba2-PD
Probability of Default Rating, Ba1 senior secured credit facility
rating, Ba3 senior unsecured rating, and SGL-1 Speculative Grade
Liquidity rating, as well as the stable outlook remain unchanged.
The net proceeds from the offering will be used to redeem the
existing Term Loan B due 2024 and add cash for general corporate
purposes. The existing Ba1 senior secured credit facility rating
will be withdrawn upon the debt's full repayment.
Assignments:
Issuer: TTM Technologies, Inc.
Senior Secured 1st Lien Bank Credit Facility, Assigned Ba1
RATINGS RATIONALE
TTM's credit profile benefits from predictable revenues from the
aerospace and defense (A&D) market and diversified end market
exposures, which limit top line revenue volatility. The predictable
revenues and low capital intensity yields variable, though
consistent free cash flow (FCF). TTM maintains a conservative
financial leverage profile and a large cash balance, which together
provide the company with financial flexibility for internal growth
initiatives and acquisitions. TTM's differentiated product
portfolio addresses several secular growth drivers, which supports
revenue and profitability growth over time.
Like many other companies in the electronics ecosystem, TTM is
facing a weak global macroeconomic environment that will weigh on
revenue growth and profitability over the near term. Given the
limited pool of potential large OEMs, TTM has customer revenue
concentrations. The large manufacturing footprint and demand
volatility within end market segments entail challenges to
maintaining production capacity utilization, which can negatively
affect profitability.
The stable outlook reflects Moody's expectation that TTM's revenue
and earnings will be challenged in 2023 as a result of
macroeconomic pressures and weaker demand in commercial end
markets. Moody's anticipates TTM's debt to EBITDA leverage will
approach 3.5x in 2023. The outlook also reflects Moody's
expectation for low-to-mid single digit percentage annual revenue
growth beyond 2023 driven by positive secular trends in printed
circuit board (PCB) and radio frequency (RF) components, supported
by a strong backlog in A&D.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if TTM increases its business scale
meaningfully and continues to diversify, generates consistent
revenue growth and expands EBITDA margins, and maintains total
leverage below 2.5x (Moody's adjusted). The ratings could be
downgraded if TTM experiences a sustained revenue or margin
decline, or if adjusted total leverage is sustained above 4.0x and
liquidity meaningfully weakens.
The principal methodology used in this rating was Manufacturing
published in September 2021.
TTM is a leading global provider of complex multi-layer printed
circuit boards (PCB), radio frequency (RF) and electromechanical
solutions. The company's products are used for applications across
a broad range of end markets including aerospace & defense (A&D),
automotive, information technology, networking & communications,
medical, and industrial markets.
ULTRA SEAL: Unsecureds Owed $2.7M to Get 15% in Plan
----------------------------------------------------
Ultra Seal Corporation submitted a Plan and a Disclosure
Statement.
The Plan is based on the Debtor's belief that the estimated current
forced liquidation value of its assets is so small as to offer the
potential of little recovery to its general unsecured creditors,
and that such cash liquidation would be an economic waste to
itself, its creditors and the community in which it is located.
Under the Plan, Class 3 Allowed claims of all other creditors of
the Debtor, including pre-petition unsecured creditors, subject to
an allowance of their claims by the Court, will be paid in cash, an
amount equal to 15% of the allowed amount of such creditors' claim
payable as follows: Cash payment upon the effective date (totaling
3%) and quarterly cash payments thereafter (totaling 3% per year)
for four years, with the first quarterly payment being made one
year after the Effective Date and continuing for 16 quarters
thereafter. The initial payment, upon the Effective Date of the
Plan, shall be in the approximate amount of $82,265.10. The claims
in this class total approximately $2,742,170.00. This class is
impaired and its vote will be solicited.
The funds necessary for the satisfaction of creditors' claims shall
be generated from revenues received in the ordinary course of the
Debtor's business operations. In addition, the Debtor has filed an
Application to liquidate its whole life insurance policy with
Prudential, along with Prudential stocks.
Distributions necessary to creditors in Class 3 shall require a
monthly reserve of approximately $6,855.00 over the life of the
Plan.
The maximum amount of cash that will be necessary to confirm the
Plan is expected to be approximately $485,000 as and for the
initial payments to the creditors set forth in Classes 1 through 3.
Said funds shall be available from the revenue generated from the
ongoing business operations of the debtor together with the
proceeds from the liquidation of the debtor's Prudential property.
Upon confirmation, the reorganized Debtor shall be entitled to
manage its affairs without further Order of this Court. However,
the Court will retain jurisdiction for the purposes described in
Article V of the Plan until it has been fully consummated.
Attorneys for the Debtor:
Andrea B. Malin, Esq.
Michelle L. Trier, Esq.
GENOVA, MALIN & TRIER, LLP
Hampton Business Center, 1136 Route 9
Wappingers Falls, NY 12590
Tel: (845) 298-1600
A copy of the Disclosure Statement dated May 5, 2023, is available
at https://bit.ly/3HKvtlz from PacerMonitor.com.
About Ultra Seal Corporation
Ultra Seal Corporation is a privately owned and operated contract
packager of pharmaceutical products, nutritional supplements and
personal care products located in the heart of New York's Hudson
Valley. Affiliate, Ultra-Tab Laboratories, Inc., is a bulk
manufacturer of those products. Both are regulated by the U.S. Food
and Drug Administration.
Ultra Seal and Ultra-Tab sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-35630) on
Oct. 6, 2022. At the time of the filing, Ultra Seal listed
$8,861,955 in assets and $5,757,027 in liabilities while Ultra-Tab
listed up to $10 million in both assets and liabilities.
Judge Cecelia G. Morris oversees the cases.
The Debtors tapped Michelle L. Trier, Esq., at Genova, Malin &
Trier, LLP as legal counsel; RBT CPAs, LLP as accountant; and
Timothy Stewart at T.S. Essential Consulting as consultant.
UNDERGROUND CELLAR: Faces $25Mil. Debt and Fraud Claims Amid Ch. 7
------------------------------------------------------------------
Nicolette Baker of VinePair reports that wine reseller Underground
Cellar is facing controversy amid its recent filing for
bankruptcy.
The San Francisco start-up, founded by Jeffrey Shaw in 2013, filed
for Chapter 7 bankruptcy in the District of Delaware on May 1, 2023
according to the San Francisco Chronicle. The bankruptcy filings
state that the company owes over $25 million dollars in debt and
37,000 unsecured claims — mostly for wine that customers
apparently never received.
A majority of these claims have to do with the company's
"CloudCellar" service, which allowed customers to purchase wine
bottles and have them stored in Underground Cellar's
climate-controlled facility until they chose to receive them. Now,
many of these customers allegedly cannot access the wine they
purchased, with some claiming that they are "feeling robbed."
"People built up these vast collections and they don't know what
they're going to do. It's a tremendous loss for them," Gregg
Thatcher, a customer owed some $1,000 in merchandise, tells the
Chronicle. Other Underground Cellar clients spent upwards of $3,000
on wine that never arrived.
In a statement on its website, the brand cites market changes as
reason for its late April 2023 shutdown.
"The decision to file for bankruptcy was not an easy one, but it
became necessary due to recent market headwinds, and an inability
to secure follow-on financing or an acquisition in what has become
an increasingly challenging capital market," the company says.
Frustration appears to be building among customers, especially
within the Underground Cellar Customers Facebook group, which
currently has over 90,000 members. The group's administrators say
that they intend to help organize customers for legal action.
Underground Cellar reports an estimated $11 million in wine
inventory and $25 million in unsecured claims. The filing also
lists an inventory discrepancy of $2.7 million in online orders
that apparently never arrived at Underground Cellar's warehouse.
Reportedly, some customers doubt that the sold inventory even
existed at all.
About Underground Cellar
Underground Enterprises, Inc., doing business as Underground
Cellar, is a San Francisco start-up founded by Jeffrey Shaw in
2013.
Underground Enterprises sought relief under Chapter 7 of the
Bankruptcy Code (Bankr. D. Del. Case No. 23-10553) on May 1, 2023.
In its petition, the Debtor reported over $25 million in debt and
$11 million in wine inventory.
The Debtor's counsel:
Eric M. Sutty
Armstrong Teasdale LLP
302-416-9671
esutty@atllp.com
UNITED LAWYERS: Taps Certilman Balin Adler & Hyman as Legal Counsel
-------------------------------------------------------------------
United Lawyers Service, Inc. seeks approval from the U.S.
Bankruptcy Court for the Southern District of New York to hire
Certilman Balin Adler & Hyman, LLP. as its legal counsel.
Certilman will advise Debtor of its powers and duties under the
Bankruptcy Code and will provide other legal services in connection
with its Chapter 11 case.
The firm will be paid at these rates:
Richard McCord, Esq. Partner $575 per hour
Jaspreet Mayall, Esq. Partner $575 per hour
Robert Nosek, Esq. Associate $485 per hour
Paraprofessionals $150 per hour
The firm received a initial retainer in the amount of $25,000.
Certilman is "disinterested" within the meaning of Section 101(14)
of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Richard J. McCord, Esq.
Certilman Balin Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, NY 11554
Tel: (516) 296-7000
Email: rmccord@certilmanbalin.com
About United Lawyers Service
United provides complete clerical and court services in New York
State, and local trial and Appellate courts in the five boroughs of
New York City, Nassau, Suffolk, Westchester, Rockland, Putnam,
Orange, and Dutchess Counties, as well as all County Clerk offices,
Surrogate courts, and Federal District, Bankruptcy, and Appellate
courts in the Southern and Eastern Districts of New York and the
Second Circuit.
United Lawyers Service, Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y.
Case No. 22-11424) on Oct. 21, 2022. The petition was signed by
Mark A. Plumer as president. At the time of filing, the Debtor
estimated $100,000 to $500,000 in assets and $1 million to $10
million in liabilities.
Judge Martin Glenn presides over the case.
Richard J. McCord, Esq. at Certilman Balin Adler & Hyman, LLP
represents the Debtor as its counsel.
UNIVISION COMMUNICATIONS: Moody's Alters Ratings Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service affirmed Univision Communications Inc's
B1 Corporate Family Rating, B2-PD Probability of Default Rating,
and B1 rating on the company's senior secured credit facilities and
senior secured notes. The outlook was changed to stable from
positive.
The change in outlook to stable reflects Moody's expectation that
Univision's leverage (Moody's adjusted on a two-year basis) will
remain above 5.5x in 2023 as EBITDA growth is challenged by
macroeconomic concerns and further investments in ViX, leading to
prolonged losses at the streaming platform.
Affirmations:
Issuer: Univision Communications Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B2-PD
Senior Secured Bank Credit Facility, Affirmed B1
Senior Secured Regular Bond/Debenture, Affirmed B1
Outlook Actions:
Issuer: Univision Communications Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Univision's B1 CFR reflects the company's elevated leverage, with
Moody's adjusted leverage (on a two year basis) expected around
5.9x in 2023. The rating also reflects the company's high exposure
(more than 50% of revenue) to advertising in the context of a
volatile macroeconomic environment although Moody's notes
Univision's audience share and demographics offer strong mitigants
compared to the overall market.
The B1 rating continues to reflect the company's significant scale
and its strong position in the Spanish language media sector as
well as the vertically integrated operations with owned production
studios feeding the content pipeline of the rest of the group. The
rating also reflects Moody's expectation that Univision will
continue to focus on deleveraging through both EBITDA growth and
debt reduction in the long term. The launch of a streaming
platform, ViX, which capitalizes on Univision's positioning in the
Hispanic media landscape improves the company's business profile.
With access to the US, the number one Spanish speaking population
by GDP and Mexico, the number one Spanish speaking country by
population, Univision can capitalize on its strong audience share
to grow advertising revenue. This is particularly true in the US
where Hispanic targeted advertising is under-indexed. This has
allowed the company to outperform general TV advertising market
trends. Univision also believes that it has a significant pricing
opportunity in bridging the pricing paid by advertisers to place
ads on Spanish programming vs English language programming. This
said, the macroeconomic landscape in the US, with pressures on
consumer spending and expectations of low GDP growth, are likely to
continue to affect overall advertising demand in 2023.
In 2022, Univision launched ViX, its streaming platform which
operates both a free ad-backed model (AVOD) and a paying
subscription (SVOD) tier. Moody's believes that Univision's access
to the Mexican and US Hispanic populations should allow the company
to grow its subscriber base in a rapid way and at lower acquisition
costs than pure OTT players. The costs of building out the
streaming platform – marketing, additional content spending etc
– will lead to losses in 2023 and the first half of 2024
dampening EBITDA growth and leading to leverage staying elevated
through mid-2024.
Moody's also notes that while ViX benefits from direct marketing
access to a loyal base of customers, there exist many OTT
competitors with established market presence. Most have so far
focused on English language programming, but their spending power
is multiples that of Univision and a shift towards Mexican focused
programming could disrupt ViX's growth plans and require further
investments.
Univision's liquidity is adequate, supported by a cash balance of
$364 million at the end of Q1 2023. Moody's expects the company to
generate negative free cash flow, mostly as a result of further
streaming investments. The company retains access to the full
amount under its $610 million revolving credit facility ($88
million of which matures in 2025, and $522 in 2027) but it has $361
million outstanding under its March 2024 term loan, which Moody's
net off the revolver's availability for the purposes of Moody's
liquidity analysis. The revolver is subject to a first lien net
leverage maintenance financial covenant set at 7.5x, stepping down
to 7x at December 31, 2023 and 6.75x at December 31, 2025. Moody's
expects adequate headroom relative to the covenant over the next
year. The company also retains an A/R facility of $400 million,
$247 million of which was available at year end, the A/R facility
matures in 2026.
The B1 ratings on the company's senior secured bank loans and
senior secured notes reflect the probability of default of the
company, as reflected in the B2-PD probability of default rating
(PDR) and an average expected family recovery rate of 65% given the
secured debt structure with a financial maintenance covenant.
The stable outlook reflects Moody's expectations that Univision's
Moody's adjusted leverage will be around 5.9x in 2023 with material
deleveraging not expected before the second half of 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Univision's ratings could be upgraded should the company's Moody's
adjusted leverage improve to below 5x on a sustainable basis, and
Moody's adjusted free cash flow to debt increase above 5%.
Ratings could be downgraded should the company's Moody's adjusted
leverage increase above 6x on a sustained basis or should the
company's liquidity weaken.
Univision Communications Inc., headquartered in New York, is a
leading Spanish-language media company in the U.S. operating in two
segments, Advertising and Subscriber & Licensing. Univision's
revenues are supported by their media networks which includes
television operations with 59 owned or operated broadcast stations;
two leading broadcast networks (Univision Network and UniMas); 10
cable networks (including Galavision, TUDN-- previously Univision
Deportes Network - and Univision telenovelas), and digital
operations (including their streaming offering, Vix, which is home
to a variety of TV shows, films and sports programming). The
company also has rights to the substantial majority of LIGA MX
teams and certain UEFA properties. Univision Radio includes the
company's 57 owned or operated radio stations. Pro-forma for the
Televisa acquisition, the combined group had about $4.7 billion in
revenue and $1.69 billion in EBITDA in 2022.
The principal methodology used in these ratings was Media published
in June 2021.
UPTOWN PARTNERS: Seeks Chapter 7 Bankruptcy Protection
------------------------------------------------------
Ivey DeJesus of Penn Live reports that the owners of the Residences
at Governor's Square, one of Harrisburg's largest affordable
housing complexes, have filed for bankruptcy and have informed the
more than 200 tenants.
Baltimore-based Uptown Partners filed for Chapter 7 bankruptcy in
the U.S. Middle District Court of Pennsylvania. The filing imposes
an automatic stay on most collection activities.
The sprawling 222-unit apartment/townhouse development has been
plagued with myriad problems, including dilapidated units that have
been condemned. Residents have for years voiced growing grievances
and concerns about conditions in the complex as well as safety
issues.
Most recently, residents received water shut-off notices, although
the residential management informed PennLive that the situation had
been addressed and no residents would have their water supply shut
off.
PennLive obtained a notice that Landex Management, which manages
the property for Uptown Partners, was sending out to residents of
Governor's Square Monday afternoon.
The notice, in part reads:
"The owner of Governor's Square, Uptown Partners, LP, has filed for
bankruptcy in U.S. District Court. This means Uptown Partners is
asking the court to resolve the property's financial problems and
to identify a new owner."
"We recognize and appreciate that you are anxious and concerned.
Please know that this filing does not affect your lease here. All
residents of Governor's Square can remain in their homes."
"Our staff will continue to do their best to operate the property
in a safe, responsible way with the limited financial resources
available to us."
Landex indicated the agency's hope that the court filing marks the
beginning of a court-directed process for resolving the property's
financial issues and bringing some relief to meet the community's
maintenance and repair needs.
The future of the housing complex in the Camp Curtin neighborhood
has for months been in flux.
In February 2023, a lone prospective buyer that had for months
attempted to acquire the property walked away from negotiations.
Stephen Schuback failed to secure approval for his purchase offer,
even after months of investing his own money and sweat equity in
rehabbing some of the units.
Schuback had offered $12 million as part of a package to address
the extensive repairs that are needed. But the City of Harrisburg
and the Harrisburg Redevelopment Authority stood by their decision
that the right offer to acquire Governor's Square is at least $22
million - the amount officials say is needed to make all the
necessary repairs and refurbishment.
Matt Maisel, a city spokesman, this May 2023 told PennLive that the
city has little jurisdiction over Governor's Square other than
enforcing code violations. The property has thousands of code
violations.
The property is owned by Uptown Partners, an urban redevelopment
corporation, and is under the auspices of the Harrisburg
Redevelopment Authority, a state agency and conduit to a $9 million
federal grant provided to the owners of Governor's Square by the
U.S. Department of Housing and Urban Development.
HUD must approve any purchase and renovation plans, including the
terms of the loan repayment. It is not clear how bankruptcy would
work out in this equation.
In a written statement to PennLive, Ed Cafasso, a spokesman for
Landex Management, said:
"We recognize and appreciate that residents of the community are
anxious and concerned. This filing does not affect their leases at
the property. All residents of Governor's Square can remain in
their homes."
He added that as the third-party property management agent for
Governor's Square, Landex will continue to do its "best to operate
the property in a safe, responsible way with the limited financial
resources available to us."
PennLive reached out to Harrisburg officials as well as the
Harrisburg Redevelopment Authority and the attorney representing
Uptown Partners, but did not immediately hear back from anyone.
About Uptown Partners
Harrisburg, Pennsylvania-based Uptown Partners is the owner of
Harrisburg housing complex Governor's Square.
Uptown Partners, LP, sought relief under Chapter 7 of the U.S.
Bankruptcy Code (Bankr. M.D. Pa. Case No. 23-00988) on May 2,
2023.
The Debtor's counsel:
Robert E Chernicoff
Cunningham And Chernicoff PC
717-238-6570
rec@cclawpc.com
VENUE CHURCH: Creditor Says Plan Submitted in Bad Faith
-------------------------------------------------------
Creditor Danielle Smith objects to Venue Church, Inc.'s Disclosure
Statement and Plan.
According to the Creditor, the Plan is submitted in bad faith.
Danielle Smith filed a timely proof of claim, and there has been no
objection to the claim, but the debtor has brought an adversary
proceeding against Danielle Smith without good basis.
Danielle Smith is in the process of settling the adversary
proceeding, but is filing this timely objection to preserve it.
Danielle Smith also incorporates the arguments made by the United
States Trustee in his objection to the Disclosure Statement and
Plan.
Counsel for Creditor:
Steven P. Lammers, Esq.
MANDEL RAUCH & LAMMERS, P.C.
704 Adams Street, Suite F
Carmel, IN 46032
Tel: (317) 581-7440
E-mail: slammers@mhmrlaw.com
About Venue Church Inc.
Venue Church Inc., a megachurch in Tennessee, sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Tenn.
Case No. 22-11829) on Aug. 23, 2022. In its petition, it listed
assets of less than $5 million and more than $3 million in
mortgage, auto loan, and credit card debt.
The case is overseen by Judge Shelley D. Rucker.
The Debtor is represented by Law Office of W. Thomas Bible, Jr.
VERGARA LLC: Ordereed to File Plan & Disclosures by June 17
-----------------------------------------------------------
Judge Kathryn C. Ferguson has entered an order that Vergara LLC
must file a Plan and Disclosure Statement by June 17, 2023.
If the Plan and Disclosure Statement are not filed by June 17, 2023
the case will automatically be converted without further notice.
The Debtor must comply with the Operating Guidelines for Chapter 11
Debtors issued by the Office of the United States Trustee
particularly as they apply to the filing of the operating reports
and payment of the required quarterly fees to the United States
Trustee pursuant to 28 U.S.C. Sec. 1930.
Vergara LLC filed a Chapter 11 petition (Bankr. D.N.J. Case No.
22-19789) on Dec. 12, 2022. The LAW FIRM OF ANDRE L. KYDALA is the
Debtor's counsel.
VITAL PHARMA: Asks Court Okay to Correct Super Creatine Claims
--------------------------------------------------------------
James Nani of Bloomberg Law reports that Vital Pharmaceuticals, the
bankrupt creator of Bang Energy that's fighting with its former CEO
over the control of company-tied social media platforms, is seeking
court permission to post a product disclaimer on the disputed
accounts.
The "corrective statement" would claim that the drink doesn't
contain "super creatine," Vital said in a request filed on
Wednesday at the US Bankruptcy Court for the Southern District of
Florida.
Vital Pharmaceuticals acknowledged in the filing that both the
company and its former CEO, Jack Owoc, have previously claimed that
the drink contains creatine or super creatine.
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Haynes and Boone,
LLP and Faulkner ADR Law, PLLC as special counsels; Huron
Consulting Group, Inc., as CTO services provider; and Rothschild &
Co US, Inc., as investment banker. Stretto, Inc., is the notice,
claims and solicitation agent.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Nov. 1, 2022. The committee tapped
Lowenstein Sandler, LLP as general bankruptcy counsel; Sequor Law,
P.A. as local counsel; and Lincoln Partners Advisors, LLC as
financial advisor.
VOYAGER DIGITAL: Shares 2 Bankruptcy Plan Options to Customers
--------------------------------------------------------------
Michael Cohen of Benzinga Crypto reports that cryptocurrency
exchange Voyager Digital is sharing its initial recovery plan with
customers after filing for Chapter 11 bankruptcy.
In an email sent to customers on Tuesday, May 9, 2023, the company
detailed the procedures it intends to execute for the company's
Chapter 11 plan and how initial recoveries in crypto or cash would
be provided to customers through the Voyager app.
According to the email, Voyager's estate has $1.334 billion in
assets, which equates to 75.68% of the aggregate value of customer
claims against the company. However, customers will receive an
initial recovery estimated to be 35.72% of their claim amount due
to certain holdbacks. The actual recovery percentage may materially
differ.
The company is also involved in the resolution of the FTX/Alameda
preference claim dispute and any additional claims brought by the
Voyager Plan Administrator against third parties, as well as any
recovery by the Voyager estate as a creditor in the Three Arrows
Capital liquidation. Successful outcomes in these matters could
result in customers receiving additional recoveries in the future.
Customers will have two options for receiving their initial
recovery: either in crypto through the Voyager platform or in U.S.
dollars after the 30-day crypto withdrawal period has ended. To
receive the initial recovery in crypto, customers will have to log
in to the Voyager app once it is made available and transfer
supported crypto from their Voyager account to a designated wallet
address within 30 days.
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Voyager's supported coins include Bitcoin (BTC), Ethereum (ETH),
Litecoin (LTC), Bitcoin Cash (BCH), Chainlink (LINK), Polkadot
(DOT), Cardano (ADA), and many others. However, holders of certain
unsupported crypto coins and Voyager Token (VGX) will receive a pro
rata amount of USD Coin (USDC) in lieu of those specific coins.
Customers who prefer to receive their initial recovery solely in
U.S. dollars do not need to take any action during the 30-day
window. Then, accounts will be liquidated, and they will receive
U.S. dollars by either check or possibly ACH withdrawal.
Voyager is also pursuing its claims against Three Arrows Capital
(3AC), and if the company receives a recovery on account of claims
against 3AC, customers may receive additional recoveries in cash or
crypto in the future.
The Voyager app and website will be operational for a period of 30
days, during which time customers will be able to transfer their
initial crypto recoveries off the platform to a designated wallet
address. If customers do not log in during this time to transfer
their initial crypto recoveries off the platform, it will be
converted to U.S. dollars and provided after the 30-day crypto
withdrawal window closes.
As part of the agreement, Binance.US, which was initially involved
in the asset purchase agreement with Voyager, is required to
destroy all customer information it has received and permanently
close and remove any accounts established with Voyager customer
information, as the transaction with Binance.US did not close.
About Voyager Digital Holdings
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through
its subsidiary Coinify ApS, Voyager provides crypto payment
solutions for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, chief executive officer, the Debtors estimated
assets and liabilities between $1 billion and $10 billion.
Judge Michael E. Wiles oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy
counsel; Berkeley Research Group, LLC as financial advisor; Moelis
& Company as investment banker; Consello Group as strategic
financial advisor; Deloitte Tax, LLP as tax services provider; and
Deloitte & Touche, LLP as accounting advisor. Stretto, Inc., is
the claims agent.
On July 19, 2022, the U.S. Trustee for Region 2 appointed an
official committee of unsecured creditors in the Chapter 11 cases.
The committee tapped McDermott Will & Emery, LLP as bankruptcy
counsel; FTI Consulting, Inc. as financial advisor; Cassels Brock &
Blackwell, LLP as Canadian counsel; and Epiq Corporate
Restructuring, LLC as noticing and information agent.
The committee also tapped the services of Harney Westwood &
Riegels, LP, in connection with Three Arrows Capital Ltd.'s
liquidation proceedings in British Virgin Islands.
On July 6, 2022, the Debtors filed a joint Chapter 11 plan of
reorganization.
* * *
Following an auction process, the Debtors in September 2022
selected the bid submitted by FTX US' West Realm Shires Inc. as the
winning bid for the assets. But after a series of events, FTX
collapsed in November 2022, before the sale could be completed.
After reopening bidding, Voyager Digital selected the offer from
U.S. exchange BAM Trading Services Inc. (doing business as
"Binance.US") as the highest and best bid for its assets. Binance's
bid is valued at $1.022 billion.
In April 2023, Binance.US called off its deal to buy assets of
bankrupt crypto lender Voyager Digital, citing a "hostile and
uncertain regulatory climate."
VYERA PHARMACEUTICALS: Hits Chapter 11 Bankruptcy Protection
------------------------------------------------------------
John Block of Seeking Alpha reports that Vyera Pharmaceuticals,
which was started by convicted felon Martin Shkreli under the name
Turing Pharmaceuticals, has filed for Chapter 11 bankruptcy
protection.
A separate filing in a Delaware bankruptcy court indicates that the
company's Swiss parent, Phoenixus, has done the same.
Vyera's filing says it has estimated between 100-199 creditors. The
Company has estimated assets between $10 million and $50 million
while estimated liabilities between $1 million and $10 million.
Turing was founded by Shkreli in 2015 after he departed Retrophin,
which he founded in 2011. Shkreli became a household name after
Turing acquired the drug Daraprim (pyrimethamine), which was
approved by the FDA in 1950s from another company.
Shkreli then raised the price of Daraprim from $13.50 per pill to
$750 per pill. He was able to do so because even though patents on
Daraprim has expired, no generic was available.
In 2017, Shkreli was convicted of securities fraud and conspiracy,
and given a seven-year sentence.
About Vyera Pharmaceuticals
Vyera Pharmaceuticals, LLC operates as a biopharmaceutical company.
The Company focuses on developing and commercializing innovative
treatments for patients with unmet medical needs. Vyera
Pharmaceuticals serves patients in the United States.
Vyera Pharmaceuticals and its affiliates sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10605) on May 9, 2023.
In its petition, Vyera reported assets between $10 million and $50
million and liabilities between $1 million and $10 million.
The Debtors tapped DLA PIPER LLP as bankruptcy counsel; SIERRA
CONSTELLATION PARTNERS LLC as financial advisor; and ALVAREZ &
MARSAL SECURITIES, LLC as investment banker. EPIQ CORPORATE
RESTRUCTURING, LLC, is the claims agent.
WEWORK INC: Fitch Hikes LongTerm Issuer Default Rating to 'CCC-'
----------------------------------------------------------------
Fitch Ratings has downgraded WeWork Companies, LLC and WeWork
Inc.'s (collectively WeWork) Long-Term Issuer Default Rating (IDR)
to 'Restricted Default' (RD) from 'C', following the company's
completed exchange offers, which Fitch classifies as a distressed
debt exchange. Fitch has subsequently upgraded the IDR to 'CCC-',
reflecting WeWork's post-restructuring credit profile. Fitch has
assigned a first-time rating of 'CCC'/RR3 to its new first-lien
bonds and a first-time rating of 'C'/RR6 to its new second-lien
bonds. Fitch has downgraded the unsecured bonds to 'RD' and
subsequently upgraded them to 'C'/RR6. The ratings impact
approximately $1.4 billion of WeWork's debt.
KEY RATING DRIVERS
Liquidity and Funding Plan: WeWork's recent restructuring provided
adequate liquidity for the near term. As of March 31, 2023, the
company reports $422 million of cash on the balance sheet and a new
first-lien delayed draw facility of $475 million, which is undrawn.
Fitch expects this liquidity to be sufficient for the next 12
months, but this depends on WeWork's continued improvement on
operating performance.
Operating Performance: WeWork released projections in 2021 and 2022
for growth and cost reductions that would at least lead to
breakeven results, but its operating performance has been
consistently worse than the projections. Cost savings from SG&A and
from exiting certain leases are trending in the right direction,
and management has reported that this will continue in 2023 as
reduced headcount and lease terminations take effect. However, the
company is still burning cash. Fitch expects the cashflow burn to
persist through 2023, and it is uncertain when the company can
become cash flow positive.
Flexible Workspace Demand: WeWork's occupancy rate has continued to
improve from 46% at the end of 2020 to 73% at the end of Q1 2023.
Physical memberships reached 664K, which was a slight dip
vis-à-vis Q4 2022. All Access Memberships are also at the highest
reported number over the past two years at 75K. Companies continue
to evaluate their real estate footprints in light of hybrid
workplaces as an ongoing result of the pandemic. Brokers such as
JLL continue to project that flexible office space use will grow,
and this likely increases WeWork's addressable market. WeWork is
targeting a return to pre-pandemic occupancy levels of low- to
mid-80% range, but achieving this goal in 2023 will be
challenging.
DERIVATION SUMMARY
Fitch considers WeWork's profile to be most aligned with business
services companies, given the nature of its value proposition as a
services platform targeted at businesses of all sizes. WeWork's
rating reflects a combined consideration of business and financial
profile rating factors (consistent with the factors associated with
Fitch's Business Services Ratings Navigator), both on a current and
prospective basis given its relatively early stage of development
as a company.
On the business profile side, Fitch sees WeWork's now potentially
diminished market position and scale, diversification, execution
and expertise as consistent with the 'BB' ratings category or lower
rated business services peers. WeWork compares somewhat favorably
on several dimensions within these factors including its global
brand, market position among shared workspace providers, scale, and
moderately diversified range of services with the opportunity to
expand along with a diverse spectrum of end-markets both from
business size, industry vertical and increasing geography basis.
Fitch sees WeWork's contracted income and renewal risk as
consistent with the 'B' rating category due to its membership
agreements being short term, and the potential for sustained work
from home across both small, medium and large enterprises. Indeed,
WeWork is exposed to meaningful insourcing risk due to a permanent
change in workplace habits, particularly, although enterprise
clients may seek additional flexibility for their real estate, to
the extent enterprise customers do not perceive significant
continuity risk in WeWork.
With regards to WeWork's financial profile, Fitch sees WeWork's
near-term profitability and financial structure as consistent with
the 'CCC' rating category peers, reflecting a worsening over time.
Fitch's prior expectation that WeWork's specific credit metrics are
subject to greater uncertainty over the ratings horizon, exposing
the company to greater risk in the event of structurally lower
office demand. WeWork's lack of profitability of its existing
business and, by extension financial structure are correlated with
weakly rated peers. The company has undertaken significant
restructurings to substantially reduce its overhead expense which
had materially weakened the company's credit protection metrics. On
the financial flexibility category, Fitch sees WeWork's profile as
consistent with a 'B' to 'CCC' ratings category peers given its
improved, but continued, FCF deficit albeit offset by funding from
SoftBank and now other outside investors. However, this funding may
not be sufficient in a stress scenario.
Fitch considers factors for highly speculative issuers in a
relative fashion. WeWork's business model appears viable exiting
the coronavirus pandemic having right sized its footprint and cost
structure. Questions remain over the viability of WeWork's open
work spaces with high density particularly in a world impacted by
the coronavirus. FCF has remained consistently negative but has
improved over the past year, and the company's FCF outlook is
subject to risks and uncertainties, particularly to the extent
office demand is structurally weak over the medium term. WeWork's
financial policy while supportive of providing needed liquidity may
not be sufficient in the medium term to protect creditors. Fitch
expects that WeWork will need to draw on its committed, delayed
draw facility in the latter half of 2023 unless operating
performance improves dramatically. Fitch believes WeWork's
available liquidity is sufficient for the near term only.
KEY ASSUMPTIONS
Revenue: Fitch assumes challenging macro conditions will lead to
2023 revenue being flat and growth of only 2% in 2024. An important
driver of this will be WeWork's pricing power, which Fitch expects
to be an ongoing challenge especially if the broader economy
contracts.
EBITDA: With limited growth, Fitch believes WeWork will not be
EBITDA positive in the next 12 to 18 months, although the trend
continues to improve.
KEY RECOVERY RATING ASSUMPTIONS
- The recovery analysis assumes that WeWork would be reorganized as
a going-concern (GC) in bankruptcy rather than liquidated;
- Fitch has assumed a 10% administrative claim.
Going Concern Approach
- The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
valuation of the company;
- Fitch estimates WeWork's going concern EBITDA by assuming a
substantially smaller footprint of continuing operations in line
with the assumptions regarding rejected leases. Fitch assumes 60%
of current domestic revenue and 40% of non-domestic revenue,
resulting in approximately $1.5 billion. Using a normalized 33%
location gross margin and an estimate of restructured overhead
expense of approximately $200 million results in an EBITDA margin
of approximately 20% or $315 million.
EV Multiple Approach
An EV multiple of 5x is used to calculate a post-reorganization
valuation. The estimate considered the following factors:
- The historical bankruptcy exit multiple for companies WeWork's
sector ranged from 4x-7x, with a median reorganization multiple of
6x;
- Current EV multiples of public companies in the Business Services
sector trade well above the historical reorganization range. The
median forward EV multiple for this sector is about 10x. Historical
multiples ranged from 6x-12x;
- WeWork does have unique characteristics that would allow for a
higher multiple in its unique brand and stake in JVs;
- However, uncertainty surrounding WeWork's business model and the
high degree of strategy and execution risk leads Fitch to utilize a
recovery multiple that is below the sector median.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- FCF margin expected to be sustained neutral;
- Interest coverage sustained above 1.0x;
- Confidence in flexible office demand environment sustainability;
- Operational metrics including occupancy, ARPPM and desk adds that
show evidence of consistency with Fitch's base case scenario.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Accelerating negative FCF margin;
- (CFO-capex)/total debt with equity credit expected to be
sustained negative;
- Worsening of office demand environment, potentially
structurally.
ISSUER PROFILE
WeWork provides space and amenities for today's hybrid and flexible
workforces. The company also markets technology for managing
workspace that can be used by landlords or tenants. WeWork has more
than 700 locations in 39 countries, which members access either on
an all-access basis or by a physical location.
ESG CONSIDERATIONS
WeWork has an ESG Relevance Score of '4' for Management Strategy
due to ongoing challenges to implement a strategy to achieve
sustainable profitability, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
WeWork has an ESG Relevance Score of '4' for Governance Structure
due to SoftBank ownership concentration, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
WeWork has an ESG Relevance Score of '4' for Group Structure due to
the complexity of its structure and related-party transactions with
SoftBank, 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
----------- ------ -------- -----
WeWork Inc. LT IDR RD Downgrade C
LT IDR CCC- Upgrade RD
WeWork
Companies LLC LT IDR RD Downgrade C
LT IDR CCC- Upgrade RD
senior secured LT CCC New Rating RR3
senior
unsecured LT C Upgrade RR6 RD
senior
unsecured LT RD Downgrade C
Senior Secured
2nd Lien LT C New Rating RR6
WEWORK INC: Incurs $299 Million Net Loss in First Quarter
---------------------------------------------------------
Wework Inc. has filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $299
million on $849 million of revenue for the three months ended March
31, 2023, compared to a net loss of $504 million on $765 million of
revenue for the three months ended March 31, 2022.
As of March 31, 2023, the Company had $16.95 billion in total
assets, $20.73 billion in total liabilities, and a total deficit of
$3.76 billion.
"Over the past quarter we've continued to improve the fundamentals
of our business while working to meet the needs of current and
future members who seek turnkey, cost-efficient solutions for their
office needs," said Sandeep Mathrani, CEO and Chairman of WeWork.
"The slight decline in memberships was a function of known
enterprise client churn, the closure of some of our locations and
the franchising of our South Africa business. April saw a reversal
in enterprise demand resulting in USC's first positive net sales
month in twelve months."
"Critically, following our debt restructuring, we now have a
strengthened balance sheet and liquidity position that gives us the
runway to deliver against our plan," continued Mathrani. "Our debt
restructuring was backed by a large majority of bondholders and
investors, demonstrating their conviction in the WeWork business
model and our future."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1813756/000181375623000040/we-20230331.htm
About WeWork
New York, NY-based WeWork Inc. (NYSE: WE) -- wework.com -- is a
global flexible workspace provider, serving a membership base of
businesses large and small through its network of 779 Systemwide
Locations, including 622 Consolidated Locations as of December
2022.
WeWork reported a net loss of $2.29 billion for the year ended Dec.
31, 2022, a net loss of $4.63 billion for the year ended Dec. 31,
2021, a net loss of $3.83 billion in 2020, and a net loss of $3.77
billion in 2019. As of Dec. 31, 2022, the Company had $17.86
billion in total assets, $21.31 billion in total liabilities, and a
total deficit of $3.43 billion.
WHEELS UP: Founder Resigns Amid Losses, Possible Bankruptcy Looms
-----------------------------------------------------------------
Robert Frank of CNBC reports that private jet company Wheels Up
announced Tuesday, May 9, 2023, its founder and CEO, Kenny Dichter,
is stepping down from his post immediately as the company faces
mounting losses and the potential for bankruptcy.
Board member Ravi Thakran will become executive chairman, while
Chief Financial Officer Todd Smith will serve as interim CEO, the
company said in a statement. Wheels Up didn't give a reason for the
executive changes, but thanked Dichter for his "vision and work" in
growing revenue to over $1.5 billion a year and membership to over
12,000 customers.
Dichter's departure caps a dramatic fall for one of the private jet
industry’s most high-profile startups. Wheels Up once promised
to become the Uber or Airbnb of private jets. Dichter, who founded
Marquis Jets in 2001 and later sold it to NetJets, launched Wheels
Up in 2013 aiming to "democratize" private jets and make them more
affordable and easier to book.
The company's flashy marketing campaigns, featuring sports
celebrities such as Tom Brady and Serena Williams as brand
ambassadors and investors, as well as lavish events, helped the
company grow membership quickly.
But its stock price, which traded over $10 a share after it went
public via SPAC in 2021, is now trading at about 40 cents after a
20% decline Tuesday. Its valuation, once over $2 billion, has
dwindled to about $100 million.
Potential for bankruptcy
Like many private jet startups, Wheels Up was dogged by high costs
and operating issues.
The company reported losses of $555 million last 2022, even as
revenue and memberships increased. The company said it hoped to be
profitable in 2024, but in its first-quarter earnings report
released Tuesday, Wheels Up reported a loss of $101 million, about
$12 million wider than its reported loss a year ago.
Wheels Up has been consulting with bankruptcy advisors and
attorneys about possible capital raises or a restructuring, people
familiar with the company's dealings told CNBC.
Wheels Up said in its earnings release Tuesday it is changing its
pricing plan and product offering to better serve customers and
become more efficient. For instance, it's moving away from less
profitable markets in the West to focus more on the Northeast and
other more active routes.
A traditional individual Wheels Up membership has an initiation fee
of $17,500 and annual dues of $8,500, with passengers paying
additional hourly costs depending on the type of aircraft.
Industry experts say turning around Wheels Up will be difficult.
"It's the right move, they had to get out of unprofitable flights"
said the Doug Gollan, founder and editor of Private Jet Card
Comparisons. "But it's going to be a big challenge."
There may also be questions about Dichter's generous pay package.
According to an SEC filing, Dichter will receive his base salary of
$79,167 a month, or $950,000 a year, for two years. He will also
receive $3 million as a lump sum "in lieu of a bonus" in addition
to flight hours on Wheels Up planes.
In the event of a bankruptcy, Wheels Up's members may wonder what
happens to their jet cards. Members and customers have purchased
about $1 billion in flight hours on cards, some of which have not
been used. Industry experts say it’s unclear how or whether those
members would be paid back in any bankruptcy, but they would likely
become junior creditors.
Warren Buffett, whose Berkshire Hathaway owns competitor NetJets,
said this weekend Wheels Up "has 12,600 people who have given them
over a billion dollars on prepaid cards ... and I think there's a
good chance some people are going to be disappointed later on."
About Wheels Up
Wheels Up is a private jet company that aimed to to become the Uber
or Airbnb of private jets. Kenny Dichter, who founded Marquis Jets
in 2001 and later sold it to NetJets, launched Wheels Up in 2013
aiming to "democratize" private jets and make them more affordable
and easier to book.
WHITTAKER CLARK: May 18 Deadline Set for Panel Questionnaires
-------------------------------------------------------------
The United States Trustee is soliciting members for committee of
unsecured creditors in the bankruptcy case of Whittaker, Clark &
Daniels, Inc., et al.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a questionnaire
available at https://bit.ly/3Br5Anb and return by email it to Tina
L Oppelt -- Tina.L.Oppelt@usdoj.gov -- and Neidy Fuentes --
Neidy.Fuentes@usdoj.gov -- at the Office of the United States
Trustee so that it is received no later than 1:00 p.m., on May 18,
2023.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About Whittaker Clark
Whittaker, Clark & Daniels, Inc., et al., were engaged in
nonmetallic mineral mining and quarrying.
Whittaker, Clark & Daniels, Inc., and affiliates Brilliant National
Services, Inc., Soco West, Inc., and L.A. Terminals, Inc., sought
Chapter 11 protection (Bankr. D.N.J. Lead Case No. 23-13575) on
April 26, 2023. The Hon. Michael B. Kaplan is the case judge.
The Debtors estimated $100 million to $500 million in assets
against $1 billion to $10 billion in liabilities as of the
bankruptcy filing.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Cole Schotz P.C. as co-bankruptcy counsel; and M3 Partners
LLC as financial advisor. Stretto, Inc, is the claims agent.
WRIGHT EXPERIENCE: Taps Dudley, R.L. Rasmus as Auctioneers
----------------------------------------------------------
The Wright Experience, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Virginia to employ R.L. Rasmus
Auctioneers, Inc. and Dudley Auctions, Inc.
The Debtor requires an auctioneer in connection with the sale of
its leases for Hangar 55 in Lee Magisterial District, Fauquier
County, Va.; and Hangar 76 in Cedar Run Magisterial District,
Warrington Fauquier Airport Pad Site 4, Fauquier County, Va.
The auctioneer's fee will include a bidder's fee of 10 percent if
the high bid is for more than $250,000. In such event, the
auctioneer's fee will not be paid from the Debtor's estate. In case
the high bid for the leases is less than $250,000, the issue of the
auctioneers' fee will be resolved as follows: the auctioneers will
receive no compensation from the auction of the leases and will
receive the commission of 20 percent from the Debtor's proceeds
from the sale of personal property, and an additional 15 percent
buyer premium to be paid from any buyer purchasing personal
property.
The firms can be reached through:
Tim Dudley
Dudley Auctions, Inc.
9601 Gayton Road, Suite 207
Henrico, VA 23238
Phone: (804) 709-1954
Email: tdudley@dudleyresources.com
-- and --
Patrick Rasmus
R.L. Rasmus Auctioneers, Inc.
Phone: (703) 768 – 9000
Email: info@rasmus.com
About The Wright Experience
The Wright Experience, Inc., a company in Warrenton, Va., filed a
petition under Chapter 11, Subchapter V of the Bankruptcy Code
(Bankr. E.D. Va. Case No. 22-11257) on Sept. 21, 2022, with as much
as $1 million to $10 million in both assets and liabilities. Marc
E. Albert serves as Subchapter V trustee.
Judge Klinette H. Kindred oversees the case.
The Law Office of Henry McLaughlin, P.C. serves as the Debtor's
legal counsel.
XPO INC: Moody's Rates New $830MM Secured Notes 'Ba1'
-----------------------------------------------------
Moody's Investors Service rated XPO, Inc.'s proposed $830 million
senior secured notes Ba1 and $450 million senior unsecured notes
Ba3. Concurrently, Moody's assigned a Ba1 rating to the company's
amended and extended $700 million senior secured term loan B.
Moody's also affirmed the Ba2 corporate family rating and Ba2-PD
probability of default rating. The outlook remains positive.
Proceeds from the new notes issuance along with approximately $75
million in cash will be used to repay $1.3 billion of senior
secured term loan B as well as related fees, expenses and accrued
interest. Amounts remaining outstanding on the existing term loan
will have the maturity date extended by three years. This amended
and extended term loan is rated Ba1 reflecting the increase in loss
absorption provided within the capital structure by the issuance of
additional unsecured notes. The rating on the existing term loan
maturing in February 2025 is unchanged and will be withdrawn upon
full repayment of the term loan.
Assignments:
Issuer: XPO, Inc.
Senior Secured Term Loan B, Assigned Ba1
Senior Secured Regular Bond/Debenture, Assigned Ba1
Senior Unsecured Regular Bond/Debenture, Assigned Ba3
Affirmations:
Issuer: XPO, Inc.
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3
Outlook Actions:
Issuer: XPO, Inc.
Outlook, Remains Positive
RATINGS RATIONALE
The ratings reflect XPO's exposure to the cyclicality of the
transportation sector and end markets facing meaningfully lower
freight volumes amidst declines in industrial production and
consumer purchases. Moody's expects freight market conditions to
remain challenging amid a slowing economy and rising inflationary
costs that will pressure margins in 2023. Furthermore, XPO is
exposed to manufacturing, e-commerce/retail, and consumer goods end
markets, which can be sensitive to periods of economic weakness.
The company benefits from its leading market position as a
significant player among less-than-truckload (LTL) transportation
operators in North America. In the near term, Moody's expects XPO
to continue to achieve organic revenue growth by capturing business
from smaller carriers unable to meet capital requirements on fleet
maintenance and a more disciplined pricing environment among the
larger LTL carriers. Lastly, given the sizeable debt reduction from
proceeds of spinning off both GXO Logistics, Inc. (Ba1 stable) and
RXO, Inc. (Baa3 stable) businesses that greatly reduced the
company's leverage over the past 18 months, Moody's anticipates
that adjusted debt-to-EBITDA will fall to under 3.0x within the
next 12 to 18 months. Leverage is expected to decline as proceeds
from a future sale of the company's European operations are
anticipated to be used for debt reduction.
The positive outlook reflects the company's commitment to a
conservative financial policy, including net leverage below 2.0x.
Modest leverage positions the company well to operate in the
slowing and volatile trucking sector while continuing its growth
strategy through organic revenue expansion.
Moody's expects XPO's liquidity will be good, as reflected in the
SGL-2 speculative grade liquidity rating. The company had a
sizeable cash balance of about $309 million at March 31, 2023. In
addition, the company has a $600 million ABL with about $502
million available and a $200 million letters of credit facility
with $46 million available. Moody's expects free cash flow to be
modest in 2023 due to elevated capital expenditures associated with
upgrading and adding to its truck fleet, before returning to over
$150 million in subsequent years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if XPO continues to practice
conservative financial policies, including further debt repayment
from proceeds generated by the sale of its European business.
Improving operating margin, sustained debt-to-EBITDA of less than
3.0x, and free cash flow to debt of greater than 6% could also
result in an upgrade of the ratings.
The ratings could be downgraded if the company experiences end
market weakness resulting in revenue and operating margin declines
or adopts a more aggressive financial policy, including large debt
financed acquisitions or shareholder distributions. More
specifically, the ratings could be downgraded if adjusted
debt-to-EBITDA approaches 4.0x, free cash flow to debt approaches
3% or EBITDA margin is less than 7%.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in December 2021.
XPO Logistics, Inc., headquartered in Greenwich, CT, is a leading
less-than-truckload carrier to a broad set of customers across
multiple industries including industrial/manufacturing, retail &
e-commerce, consumer goods, and food & beverage. Revenue for the
twelve months ended March 31, 2023 was approximately $7.7 billion.
YELLOW CORP: Moody's Cuts CFR to Caa1, Outlook Stable
-----------------------------------------------------
Moody's Investors Service downgraded Yellow Corporation's corporate
family rating to Caa1 from B3, probability of default rating to
Caa1-PD from B3-PD and senior secured rating to B2 from B1. The
outlook is stable. Moody's also downgraded the company's
speculative grade liquidity rating to SGL-4 from SGL-3.
The downgrade of Yellow's ratings reflects Moody's expectations
that delays in implementing the next phase of the company's "One
Yellow" strategic plan and weaker sector fundamentals will slow
expected improvements in operating results, limit liquidity and
increase uncertainty regarding the company's ability to
successfully address its 2024 debt maturities.
Yellow is engaged in discussions with union representation, which
has pushed back on implementation of the next phase of Yellow's
operating strategy. However, timing on when discussions may be
resolved remains undetermined. Moody's believes progress on
integrating and transforming its network under its "One Yellow"
strategy is critical to improving the company's operating
performance, especially during a challenging freight environment in
2023. Yellow has already successfully implemented network changes
within its smaller western US network, which should serve as a
blueprint to execute the broader initiative across the eastern US.
The downgrade of the speculative grade liquidity rating primarily
reflects the need for Yellow to address upcoming maturities, which
include a $567 million senior secured term loan due June 2024 and
approximately $730 million in US Treasury term loans due September
2024 (unrated), in order to restore liquidity.
Moody's also revised the company's governance issuer profile score
(IPS) to G-5 from G-4 and credit impact score to CIS-5 from CIS-4.
This reflects the impact on the rating action to the increased
financial strategy risk around Yellow's near-term debt maturities
and pending union negotiations.
Downgrades:
Issuer: Yellow Corporation
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from
SGL-3
Senior Secured First Lien Term Loan, Downgraded to B2 from B1
Outlook Actions:
Issuer: Yellow Corporation
Outlook, Remains Stable
RATINGS RATIONALE
The Caa1 CFR reflects Yellow's significant refinancing risk with
2024 debt maturities, thin operating margins, weak interest
coverage, and moderately high financial leverage. The rating also
reflects a history of negative free cash flow given the high
capital intensity of the business. Further, the rating incorporates
certain ESG risks, including those relating to increasingly
stringent emission regulations for diesel engines, Yellow's mostly
unionized workforce, and financial policy risks.
The rating is supported by Yellow's position as one of the largest
less-than-truckload truck carriers in North America offering
longer-haul shipments as well as regional, next-day and
time-sensitive services. Using $400 million of CARES Act funding,
Yellow refreshed its fleet with newer tractors and trailers, which
should yield cost savings through better fuel economy and lower
maintenance and repair expenses.
The stable outlook reflects Moody's expectation that a delayed but
successful implementation of the company's "One Yellow" strategy
would result in improved operating margin through more efficient
utilization of its network. In addition, Moody's expects Yellow
will sell excess terminals from its network transformation efforts
and use the asset sale proceeds to pay down debt over the next
twelve months. As a result, Moody's expects Yellow's debt/EBITDA to
stay moderately high at about 4x by end of 2023, declining from
4.8x at March 31, 2023.
The SGL-4 Speculative Grade Liquidity Rating reflects Yellow's weak
liquidity, predominately driven by its sizeable debt maturities in
2024. The company's cash balance at end of March 31, 2023 remains
adequate at about $155 million, but has declined due to debt
repayments and ongoing cash burn. Yellow maintains a $500 million
ABL revolving credit facility with no direct borrowings, but very
limited availability due to a high amount of letters of credits.
The ABL facility expires January 2026, but has a springing maturity
30 days ahead of any term loan due in 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Yellow successfully addresses its
2024 debt maturities and is able to successfully implement
operational improvements within its network. An operating margin
sustained above 4% and restoration of liquidity through
consistently positive free cash flow or increased revolver
availability would also be necessary for an upgrade.
The ratings could be downgraded if Moody's believes uncertainty
around Yellow's ability to refinance increases. In addition, an
inability to improve operating results or liquidity would lead to a
downgrade.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in December 2021.
Yellow Corporation is a provider of over-the-road transportation
services and has one of the largest less-than-truckload ("LTL")
transportation networks in North America. The company offers
longer-haul LTL shipments as well as regional, next-day and
time-sensitive services, with a total fleet of approximately 12,700
owned and leased tractors. Revenue in the last 12 months ended
March 31, 2023 was approximately $5.1 billion.
[] Repeat Bankruptcies Pile Up at Fastest Pace Since 2009
---------------------------------------------------------
Jeremy Hill and Jonathan Randles of Bloomberg Law report that
repeat bankruptcies are piling at the fastest rate since 2009.
In October 2020, Akorn Operating Company LLC announced its
emergence from Chapter 11 bankruptcy as the beginning of "an
exciting new chapter."
Less than three years later, the generic US drugmaker ran out of
money and laid everyone off. Akorn is back in bankruptcy court —
this time to be sold for parts.
It's one of 12 firms this 2023 to seek bankruptcy protection for a
second or even third time after initial attempts at
court-supervised rehabilitation failed.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
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insolvent balance sheets whose shares trade higher than $3 per
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than a balance sheet solvency test.
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liabilities delivered to nation's bankruptcy courts. The list
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then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
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