/raid1/www/Hosts/bankrupt/TCR_Public/230719.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, July 19, 2023, Vol. 27, No. 199
Headlines
100 ORCHARD: Unsecureds Will Get 100% of Claims over 5 Years
105-31 150TH STREET: Unsecureds to be Paid in Full in 6 Months
1325 ATLANTIC: Liquidating Plan Confirmed by Judge
AIJOBORY INVESTMENT: Taps Helm Legal Services as Substitute Counsel
ARSENAL AIC: S&P Assigns 'B+' LT ICR on Arconic Acquisition
ATHENA MEDICAL: Continued Operations to Fund Plan
B AND C BROS: Fine-Tunes Plan Documents
BANGL LLC: Moody's Assigns First Time 'B2' Corporate Family Rating
BESTWALL LLC: 21 US States Challenge Asbestos Bankruptcy Shield
BRAND INDUSTRIAL: Moody's Raises CFR to B3, Outlook Positive
BRAND INDUSTRIAL: S&P Upgrades ICR to 'B-' on Refinancing
CALPINE CONSTRUCTION: S&P Rates New $1BB Term Loan B 'BB+'
CAMECO TECHNOLOGIES: Amends IRS Secured Claims Pay Details
CARNIVAL CORP: Moody's Alters Outlook on 'B2' CFR to Stable
CELSIUS NETWORK: Ex-CEO Mashinsky Charged With Cryptocurrency Fraud
CFN ENTERPRISES: Signs Employment Agreements With Execs
CORAL GARDENS: S&P Raises 2018A Revenue Bond Rating to 'B-'
DEALER PRODUCTS: Trustee Taps Cavazos Hendricks Poirot as Counsel
DEXKO GLOBAL: Moody's Rates $300MM Incremental 1st Lien Loan 'B2'
DEXKO GLOBAL: S&P Rates New $300MM First-Lien Term Loan 'B-'
DIAMOND SPORTS: Taps Quinn Emanuel Urquhart as Special Counsel
DIOCESE OF ROCKVILLE CENTRE: Boy Scouts' Chapter 11 Nixed Claims
ENDO INT'L: Creditors Object to Shortcut $6 Bil. Bankruptcy Sale
ENVISION HEALTHCARE: 94% Markdown for $206,740 Pioneer Fund Loan
ENVISION HEALTHCARE: Bankruptcy Stops Corporate Practice Suit
ESSY QUALITY: Unsecureds Owed $10K+ to Get 38% Dividend in Plan
EXPRESS GRAIN: Liquidating Trustee Taps Craig M. Geno as Counsel
FFP HOLDINGS: S&P Alters Outlook to Negative, Affirms 'B-' ICR
FORD CREDIT: Moody's Raises Rating on Senior Unsecured Debt to Ba1
FORD MOTOR: Moody's Upgrades CFR & Senior Unsecured Rating to Ba1
FREE SPEECH: Jones Ask Court Okay for Book Deals in Chapter 11
FTX TRADING: Files Suit to Recover $323M Spent in Digital Assets
FTX TRADING: Launches Creditors Customer Claims Portal
FUTURE PRESENT: Case Summary & 18 Unsecured Creditors
GALLERIA 2425 OWNER: Seeks Chapter 11 Bankruptcy Protection
GALLERIA 2425: Court OKs Interim Cash Collateral Access
GENESIS HEALTHCARE: Moody's Affirms 'Ba2' Rating on Revenue Bond
GS MORTGAGE 2014-GC20: Moody's Lowers Rating on Cl. C Certs to B2
HARRINGTON ESTATES: Voluntary Chapter 11 Case Summary
HAWKEYE ENTERPRISES: Case Summary & 19 Unsecured Creditors
HERITAGE POWER: Unsecureds Will Get 0.346% of Claims in Plan
HOWARD UNIVERSITY: Moody's Affirms 'Ba1' Issuer Rating
INDIAN CANYON: Taps Dinsmore & Shohl as Special Counsel
INSTANT BRANDS: Court OKs $257MM DIP Loans from BofA, Jefferies
JANUS INTERNATIONAL: Moody's Rates New Secured 7Yr. Term Loan 'B1'
JANUS INTERNATIONAL: S&P Rates $625MM First-Lien Term Loan B 'B+'
KESTRA ADVISOR: Moody's Affirms 'B3' CFR, Outlook Remains Stable
LMBE-MC HOLDCO II: Moody's Hikes Rating on Sr. Secured Loans to Ba3
LTL MANAGEMENT: Faces Call to Weed Out Invalid Cancer Claims
MISEN INC: Case Summary & 20 Largest Unsecured Creditors
NEKTAR THERAPEUTICS: BlackRock Inc. Has 4.5% Stake as of June 30
NEW BEGINNING: Unsecureds to Get $248 per Month for 36 Months
NOVAN INC: Case Summary & 30 Largest Unsecured Creditors
OCEAN POWER: Posts $9.5 Million Net Loss in Fourth Quarter
ONLINE EDUGO: Case Summary & Two Unsecured Creditors
ONTARIO GAMING: Moody's Assigns First Time B2 Corp. Family Rating
ORALE MOTOR: Unsecureds to Get Share of Income for 36 Months
PALMER DRIVES: Court OKs $1.5MM DIP Loan from Goodman Capital
PATAGONIA HOLDCO: Pioneer Fund Marks $1.02M Loan at 18% Off
PBF HOLDING: Moody's Hikes CFR to Ba2 & Alters Outlook to Positive
PEARL INC: Unsecured Creditors Will Get 9% of Claims in Plan
PEER STREET: U.S. Trustee Appoints Creditors' Committee
PENNYMAC FINANCIAL: Moody's Affirms 'Ba2' CFR, Outlook Stable
PENNYMAC MORTGAGE: Moody's Lowers CFR to B1 & Issuer Rating to B3
PONTCHARTRAIN LLC: SARE Files for Chapter 11 Bankruptcy
PROTECH FIRE: Gets OK to Hire German & Cohn as Accountant
PUERTO RICO: PREPA Renews Talks With Creditors to Cut Debt
QUALTEK SERVICES: Successfully Exits Chapter 11 Bankruptcy
R.R. DONNELLEY: Moody's Rates New $250MM Junior Lien Notes 'B3'
R.R. DONNELLEY: S&P Rates New $250MM Sec. Junior-Lien Notes 'B-'
REDSTONE BUYER: Moody's Affirms 'Caa1' CFR, Outlook Stable
REDSTONE BUYER: S&P Affirms 'B-' ICR, Outlook Negative
REEVES FARM: Property Sale Proceeds to Fund Plan Payments
RESORTS WORLD: S&P Assigns 'BB+' Rating on Senior Unsecured Notes
RIBA FOODS: Taps Fuqua & Associates as Legal Counsel
ROCKPORT COMPANY: Affiliate Taps Chipman as Conflicts Counsel
ROCKPORT COMPANY: Gets OK to Hire Epiq as Administrative Advisor
ROCKPORT COMPANY: Taps Miller Buckfire & Co. as Financial Advisor
ROCKPORT COMPANY: Taps Potter Anderson & Corroon as Counsel
RUE21 INC: Works With AlixPartners to Help Earnings Woes
SABERT CORP: Moody's Ups CFR & Sr. Secured Term Loan to B1
SCHNELL MEDICAL: Taps Latham Luna Eden & Beaudine as Legal Counsel
SENSIENCE INC: S&P Downgrades ICR to 'CCC', Outlook Negative
SKILLZ INC: BlackRock No Longer Owns Common Shares
SOUTHEAST ASSOCIATION: Seeks Chapter 11 Bankruptcy
SPEEDWAY MOTORSPORTS: S&P Alters Outlook to Pos., Affirms 'BB' ICR
SQUAW VALLEY: Case Summary & Two Unsecured Creditors
STAGWELL GLOBAL: Moody's Alters Outlook on 'B1' CFR to Positive
STREAM TV: Specialized Equipment Unsecureds to Get 90% of Claim
T. JONES TRUCKING: Unsecureds to Split $7,200 in Consensual Plan
TEAM HEALTH: Pioneer Fund Marks $320,304 Loan at 66% Off
TGL CAPITAL: Case Summary & Nine Unsecured Creditors
TOSCA SERVICES: S&P Downgrades ICR to 'CCC+', Outlook Negative
TRAPP TREE: Business Operations to Fund Plan Payments
TRUGREEN LP: First Trust Marks $5.8M Loan at 32% Off
UPTOWN 240: Gets OK to Hire Hilco as Real Estate Broker
US RENAL: Pioneer Fund Marks $482,500 Loan at 34% Off
VAUGHN ENVIRONMENTAL: Case Summary & 20 Top Unsecured Creditors
VECTOR UTILITIES: Voluntary Chapter 11 Case Summary
VENUS CONCEPT: Amends Stock Purchase Agreement With EW Healthcare
VIDEOTRON LTEE: Moody's Assigns 'Ba1' CFR, Outlook Stable
VIEWRAY INC: Case Summary & 30 Largest Unsecured Creditors
WARRIOR MET: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
WEST 132ND LLC: Case Summary & Four Unsecured Creditors
WOLVERINE WORLD: S&P Alters Outlook to Negative, Affirms 'BB-' ICR
*********
100 ORCHARD: Unsecureds Will Get 100% of Claims over 5 Years
------------------------------------------------------------
100 Orchard St. LLC, d/b/a Blue Moon Hotel, filed with the U.S.
Bankruptcy Court for the Southern District of New York a Disclosure
Statement for Amended Plan of Reorganization dated July 17, 2023.
The Debtor is a New York limited liability company that operates a
22-unit boutique hotel known as the Blue Moon Hotel (the "Hotel")
located in Manhattan's lower east side, at 100 Orchard Street, in a
historical building constructed in 1879.
The Debtor's principal, Randy Settenbrino, purchased the building
in 2002, and redesigned and restored what was a five-story tenement
into a stately eight-story hotel. This was a five-year art
preservation and design project that received an award by National
Geographic, was acknowledged by the New York City's Historic
Districts Council, and written about in 50 major articles.
The Hotel's revenues and net income significantly increased after
the Petition Date, with much higher occupancy rates, as well as
improved average daily rates for the Hotel's rooms.
After the Petition Date, the Debtor continuously made repairs and
improvements throughout the Hotel. Among other things, the Debtor
significantly remodeled and refurbished the common areas of the
Hotel, especially on the ground level, both the front lobby area
and the back area where there is seating for the Sweet Dreams Cafe.
In April of 2023, after extensive negotiations, the Debtor reached
a global settlement with Brick of all claims, disputes, and
controversies relating to the mortgage on the Debtor's property,
Brick's conduct during the Covid-19 pandemic, and other issues
raised by the Debtor's principal. This settlement provides the
foundation for the Plan.
The Reorganized Debtor will have 3 years to pay Brick’s Secured
Claim in a reduced amount, either by refinancing the current
mortgage on the Hotel, selling the Hotel, obtaining an equity
infusion, or a combination of the foregoing. The specific treatment
of the Allowed Brick Secured Claims.
Class 7 consists of the holders of Allowed Unsecured Claims. Three
creditors filed a proof of Claim as unsecured claims, totaling
approximately $103,000, with one of the creditors filing a claim
for $0.00. In addition, the Debtor scheduled 7, undisputed claims
totaling approximately $67,000. Allowed Class 7 Claims shall be
paid 100% of their Allowed Claims without interest over a period of
5 years from the Effective Date, payable $2,833 per month, with the
first payment due 30 days after the Effective Date.
Class 8Interests are held by Settenbrino and he shall retain his
Interest which, presently, is valued at $0.00 because the total
claims against the Debtor to be paid under the Plan are greater
than the value of the Hotel and the other property to be retainer
by the Reorganized Debtor.
The Plan will be funded with (i) funds in the DIP Account, (ii) net
income from the Hotel operations, and (iii) from a refinancing of
the Debtor's mortgage on the Hotel, a sale of the Hotel, an equity
infusion, or a combination of the foregoing.
The Debtor has been operating profitably since the Petition Date.
The Debtor projects that the Reorganized Debtor will continue to
operate the Hotel profitably during the Brick Refinancing Period.
The Debtor expects to have more than $400,000 in reserve in the DIP
Account as of the December 31, 2023. The Reserve shall be
maintained by the Reorganized Debtor and will not be used to
calculate the Brick semiannual payments.
A full-text copy of the Disclosure Statement dated July 17, 2023 is
available at https://urlcurt.com/u?l=9Yr6dL from PacerMonitor.com
at no charge.
Debtor's Counsel: David H. Wander, Esq.
TARTER KRINSKY & DROGIN LLP
1350 Broadway
11th Floor
New York, NY 10018
Tel: (212) 216-8000
Email: dwander@tarterkrinsky.com
About 100 Orchard St. LLC
100 Orchard St. LLC operates a 22-room boutique hotel known as the
"Blue Moon Hotel," located in the lower east side of Manhattan, at
100 Orchard Street. The Hotel is a historical building built in
1879. Beginning in 2002, 100 Orchard redesigned the five-story
tenement and restored the building to function as a stately
eight-story hotel. It was a five-year art preservation and design
project that received an award by National Geographic, acknowledged
by the Historic Districts Council, and written up in 50 major
articles. The Hotel was instrumental in revitalizing commerce south
of Delancey Street.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-10358) on March 23,
2022.
In the petition signed by Randy Settenbrino, president and managing
member, the Debtor disclosed $25,341,713 in assets and $11,166,747
in liabilities.
Judge David S. Jones oversees the case.
Scott S. Markowitz, Esq., at Tarter Krinsky and Drogin, LLP is the
Debtor's counsel.
105-31 150TH STREET: Unsecureds to be Paid in Full in 6 Months
--------------------------------------------------------------
The 105-31 150th Street Realty LLC filed with the U.S. Bankruptcy
Court for the Eastern District of New York a Disclosure Statement
describing Plan of Reorganization dated July 13, 2023.
The Debtor is a New York LLC formed on September 26, 2014. The
Debtor is the current owner in fee of an apartment/storefront
building at 105-31 150th Street Jamaica, NY 11435-5017. (the
"Property").
At all times title to the property was vested in the Debtor. The
debtor took title subject to a first mortgage held by Greenway
Commercial Services Corp.in the approximate amount of $300,000.00.
The Debtor defaulted on the loan and the lender commenced
foreclosure proceedings. Greenway Commercial Services Corp.
scheduled a foreclosure sale for March 17, 2023.
Ultimately, on March 15, 2023, in the face of the pending sale, the
Debtor filed for relief under Chapter 11 of the Bankruptcy Code so
as to afford to it the opportunity to restructure its existing debt
and to protect its investment. This is the first bankruptcy filed
by the Debtor.
As of this date, general unsecured claims have been filed by only
one unsecured creditor Consolidated Edison. It is not anticipated
that any priority unsecured claims shall be filed in this case.
During the first months in Chapter 11, the Debtor has been
marketing the property to fill its storefront vacancy at the
Property, and expects an occupancy rate of 100%. The Debtor is
using essentially all of its cash flow to pay creditors in full and
had a cash balance on hand of approximately $1,200.00 as of May 30,
2023.
Class 2 consists of 2 claims; the secured claim of Greenway
Commercial Services Corp. which is the holder of the first mortgage
of record encumbering Debtor's Property. The outstanding balance on
this obligation as of the petition date was $462,676.67. The
secured claim of Greenway Commercial Services Corp shall be paid in
full with 3% interest to be amortized over 60 months in monthly
payments of $8,314 beginning on the effective date and payable in
full by March 15, 2028. Debtor has been making adequate protection
payments.
Debtor has been making post-petition payments to the NYC Dept of
Finance for real property tax obligations that come due. The
secured tax claim of $23,973.01 to the NYC Dept of Finance shall be
paid in full over the 60-month plan by making payments $500/month
until March 15, 2028, with accrued statutory interest to the date
of payment or the Effective Date of the Plan, whichever is set by
the Bankruptcy Court.
Class 3 shall consist of all allowed general unsecured claims.
Class 3 claimants, whose claims total an amount yet to be
determined, will be paid in full within 6 months of the Effective
Date of plan confirmation. As such, the debtor shall pay the full
amount of the allowed claims, as set by the Court, to Class 3
claimants. Class 3 is not impaired.
The Debtor estimates that $1,000 in cash will be required to
confirm the Plan. The monies needed on confirmation consist of the
professional fees, estimated administrative fees which may be owed
to either the Office of the Unites States Trustee or to the Clerk
of the Court at the time of confirmation, any taxing authority
relating to a post-petition tax obligation, payments to all Class
II and Class III creditors. The Debtor proposes to pay these monies
from the rent proceeds of its Property at 105-31 150th Street
Jamaica, NY 11435-5017.
A full-text copy of the Disclosure Statement dated July 13, 2023 is
available at https://urlcurt.com/u?l=Xahp0W from PacerMonitor.com
at no charge.
Attorneys for Debtor:
Richard F. Artura, Esq.
Phillips, Artura & Cox
165 South Wellwood Avenue
Lindenhurst, NY 11757
Telephone: (631) 226-2100
Email: Rartura@pwqlaw.com
About The 105-31 150th Street Realty
The 105-31 150th Street Realty LLC is the current owner in fee of
an apartment/storefront building at 105-31 150th Street Jamaica, NY
11435-5017.
The Debtor filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
23-40875) on March 15, 2023, listing under $1 million in both
assets and liabilities. Raul Paul Martinez, member, signed the
petition.
Judge Elizabeth S. Stong oversees the case.
Richard F. Artura, Esq., at Phillips, Artura & Cox, serves as the
Debtor's counsel.
1325 ATLANTIC: Liquidating Plan Confirmed by Judge
--------------------------------------------------
Judge Nancy Hershey Lord has entered findings of fact, conclusions
of law and order confirming the First Amended Plan of Liquidation
of 1325 Atlantic Realty LLC.
The Plan provides for the same treatment for each Claim or Interest
in each respective Class unless the holder of a particular Claim or
Interest has agreed to a less favorable treatment of such Claim or
Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy
Code.
Article 5 of the Plan provides adequate and proper means for the
Plan's implementation, including closing of the proposed sale (the
"Sale") of real property located at 1325-1339 Atlantic Ave.,
Brooklyn, New York subject to the Leasehold Interest2 in the same
(the "Property") to Lazar Waldman's designee known as 1325 Atlantic
Owner, LLC ("1325 Owner"). The Debtor is authorized to implement
the Plan in accordance with its terms.
The Debtor has proposed the Plan (including all other documents
necessary to effectuate the Plan) in good faith, to wit, to
maximize the value of the Debtor's estate, and not by any means
forbidden by law, thereby satisfying section 1129(a)(3) of the
Bankruptcy Code.
The feasibility requirement of section 1129(a)(11) of the
Bankruptcy Code is not applicable, because the Plan provides for
the liquidation of the Debtor's estate for the benefit of creditors
that hold Claims and Interests against the Debtor. Therefore,
section 1129(a)(11) of the Bankruptcy Code is satisfied.
The Debtor's proposed Sale of the Property in accordance with the
terms of the Plan and otherwise pursuant to that certain the BHG
Settlement Agreement and attached to the Plan as Exhibit A, by and
among the Debtor, on the one hand, and 1325 Owner on the other, is
integral to the implementation and consummation of the Plan. The
BHG Settlement provides for the transfer of title upon closing to
1325 Owner.
1325 Owner agrees to reasonably cooperate with Debtor by taking
such actions as are reasonably required to effectuate such a Like
Kind Exchange, including but not limited to (i) the execution of
any and all documents, either in customary form used by a qualified
intermediary, or, subject to the reasonable approval of Waldman's
counsel, as are requested in connection therewith; and (ii) the use
of a qualified intermediary.
A copy of the Plan Confirmation Order dated July 16, 2023 is
available at https://urlcurt.com/u?l=6uwKCq from PacerMonitor.com
at no charge.
Counsel to the Debtor:
Tracy L. Klestadt, Esq.
Christopher J. Reilly, Esq.
KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP
200 West 41st Street, 17th Floor
New York, NY 10036
Tel: (212) 972-3000
Fax: (212) 972-2245
About 1325 Atlantic Realty
1325 Atlantic Realty, LLC, a company in Lakewood, N.J., filed its
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 22-40277) on Feb. 16, 2022, with up
to $50 million in assets and up to $10 million in liabilities.
Esther Green, manager, signed the petition.
Judge Nancy Hershey Lord oversees the case.
Klestadt Winters Jureller Southard & Stevens, LLP and Levine &
Associates, P.C. serve as the Debtor's bankruptcy counsel and
special litigation counsel, respectively.
AIJOBORY INVESTMENT: Taps Helm Legal Services as Substitute Counsel
-------------------------------------------------------------------
Aijobory Investment, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Pennsylvania to employ Helm Legal
Services, LLC to substitute for Ronald J. Pressley Associates,
P.C.
The firm's services include:
a. advising the Debtor with respect to its powers and duties
in the continued management and operation of its business and
property;
b. preparing legal documents;
c. appearing at court hearings;
d. taking all necessary actions to protect and preserve the
Debtor's estate during the pendency of its Chapter 11 case,
including prosecution of actions by the Debtor, the defense of any
action commenced against the Debtor, and negotiations concerning
all litigation in which the Debtor is involved;
e. assisting the Debtor in connection with any potential sale
of all or substantially all of its assets;
g. providing legal advice regarding the Debtor's disclosure
statement and Chapter 11 plan; and
h. other necessary legal services.
The firm will be compensated at $300 per hour and will be
reimbursed for out-of-pocket expenses incurred.
Paul A.R. Stewart, Esq., a partner at Helm Legal Services,
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:
Paul A.R. Stewart, Esq.
Helm Legal Services, LLC
333 East Lancaster Avenue Suite 140
Wynnewood, PA 19096
Tel: (610) 864-5600
Fax: (888) 847-2779
About Aijobory Investment
Aijobory Investment, LLC, a company in Lansdowne, Pa., sought
protection under Chapter 11 of the U.S Bankruptcy Code (Bankr. E.D.
Pa. Case No. 22-12008) on Aug. 1, 2022. In the petition filed by
its operations manager, Hatim Mukhef, the Debtor reported assets
between $1 million and $10 million and liabilities between $500,000
and $1 million.
Judge Magdeline D. Coleman oversees the case.
Paul A.R. Stewart, Esq., at Helm Legal Services, LLC is the
Debtor's bankruptcy counsel.
ARSENAL AIC: S&P Assigns 'B+' LT ICR on Arconic Acquisition
-----------------------------------------------------------
S&P Global Ratings assigned its 'B+' long-term issuer credit rating
to Arsenal AIC Parent LLC (Arsenal), which is the entity acquiring
Arconic.
S&P also assigned its 'B+' rating to the proposed $1 billion term
loan B, with a '3' recovery rating, indicating average (50%-70%)
recovery in the event of a default.
Apollo and Irenic Capital Partners are acquiring aluminum rolled
products company Arconic Corp.
The ratings on Arsenal reflect Arconic's good position within the
global aluminum rolled products business and its large debt load
from the leveraged acquisition.
The stable outlook incorporates S&P's expectation of some profit
improvements as operations stabilize in 2023, capacity expands, and
pricing and mix improve.
Arsenal plans to acquire Arconic, a large producer in the globally
concentrated but competitive aluminum rolling industry. S&P Global
Ratings' view of Arconic's fair competitive position is based on
the company's leading positions in aluminum sheet and plate for
aerospace, industrial, and ground transportation, the company's
good position in aluminum building products, and less attractive
position in more fragmented extrusions. The company's market
positions tend to benefit from sticky customer relationships
because of the technical requirements for material in aerospace and
ground transportation, as well as the high capital intensity of
aluminum-rolled products. For example, Arconic historically
provided 100% of Boeing Co.'s commercial metallic wing skins and
polished fuselage sheet. Moreover, the increasing penetration of
aluminum for weight reduction, particularly in ground
transportation, should lead to volume growth that exceeds S&P's
long-term expectations for economic, automotive, or aerospace
growth. Arconic serves well-capitalized and generally higher-rated
customers, which keeps auto and aerospace margins on par with most
close peers. The company has long-standing relationships with its
large customers, supporting good revenue visibility, with
significant aerospace backlogs balancing more cyclical automotive
volumes. The company's asset and sales footprint is global, and its
business mix continues to shift with major trends in its
subsegments. For example, aerospace accounted for only 11% of
revenue in 2022, down from 18% in 2019, because of the protracted
pandemic-related slowdown in commercial aviation and growth in
other end markets. In contrast, strong organic revenue growth for
aluminum packaging had boosted that end market's share of revenue,
although the sale of the packaging-heavy Samara, Russia mill in
2022 trimmed that segment's share of revenue. The largest end
market remains ground transportation at 39% of 2022 revenue,
excluding the divested Russia business.
Arsenal's new capital structure will consume substantial cash for
interest and financial sponsor ownership will exclude cash from
debt calculations. The refinancing of Arconic's debt will highlight
the negative impact of higher interest rates on cash flows. S&P
said, "Most of the company's existing debt was priced in 2020 and
2021, and we estimate a current effective interest cost of about
6.5%. Repricing a larger debt quantum at today's rates could more
than double recent cash interest costs. Our financial risk
assessment incorporates Arsenal's ownership by financial sponsors,
which we believe will use aggressive financial measure to extract
returns. In this case, Arconic's debt leverage might not get
stretched like some leveraged acquisitions. That said, cash flows
are being stretched by a large interest burden, for a company with
volatile cash generation owing to seasonality, commodity
cyclicality, and some earnings instability. Because Arsenal is
owned by a financial sponsor, we do not net cash against debt. The
company's postretirement obligations add to a moderate debt load.
We add $724 million on a tax-adjusted basis to debt for our
leverage calculations, which is down from $1.45 billion in 2020."
Plant disruptions and high costs put a dent in earnings. S&P Global
Ratings-adjusted run-rate EBITDA had held steady around $700
million since mid-2021, but plant disruptions in late 2022 could
cost about $100 million of EBITDA, and operations are on the way
back to steady production in 2023. Should operations resume their
run-rate in the second half of 2023 and small capacity expansions
ramp up in 2024, we believe that last 12-months (LTM) run-rate
EBITDA of $675 million-$700 million could grow toward $800 million
in 2024. A few other tailwinds should help margins sequentially in
2023 and 2024, such as the pass-through of some high-cost inventory
this year and a growing share of higher-margin aerospace revenue. A
range of cash and noncash charges contributed to operating losses
in 2021 and 2022, most of which we've added back to our adjusted
EBITDA. This earnings instability was mostly associated with
strategic pivots, some favorable and some not. The company has
taken charges to annuitize pensions, which froze long-standing
obligations and stopped years of cash funding. The company also
reported a loss from the sale of its Samara, Russia rolling mill in
2022 for $230 million, which was only about 3x estimated EBITDA of
$80 million-$85 million. The proceeds were a fraction of the
company's $561 million of net assets reported as of Nov. 14, 2022,
when it closed the transaction. The company also took a $92 million
impairment charge for assets in its extrusion business to account
for operational changes aimed at boosting profitability.
The company's profitability is consistent with that of peers in
aluminum-rolled products. Arconic and its peers like Novelis Inc.
and Constellium SE generate margins that are above-average for most
global metals processors and distributors, with EBITDA margins of
10%-12% with cyclical pass-through input costs. Arconic has
contractual pass-through of aluminum prices on almost all of its
revenue, but it still experiences margin fluctuations because of
materials price changes, as well as significant working capital
swings to account for volatile aluminum prices. For example, gross
margins were down 200 basis points year over year in 2022 on 20%
higher revenue but run-rate LTM gross-margin dollar contribution is
steady at about $900 million. Control over selling, general, and
administrative (SG&A) costs appears good through 2021 and 2022,
despite elevated employee turnover and the supply-chain constraints
that hit many industrials in the U.S.
The company has good free cash flow despite unsteady working
capital. S&P estimates annualized run-rate free cash flow of $175
million-$225 million before incorporating unpredictable swings in
working capital, which could boost cash flow as aluminum prices
decline from a record high in 2022. Swings in working capital could
move our estimate of free cash flow by $100 million positively or
negatively with normal variations of 5%-10% in London Metal
Exchange (LME) aluminum prices. S&P believes Arconic's capital
expenditures (capex) requirements are modest, but elevated spending
in 2023 and 2024 is aimed at boosting the efficiency of this mature
asset base, and could contribute to negative free cash flow during
2023.
Building materials businesses could be noncore. Arconic in 2022
ceased a sale process for its Kawneer building materials business,
which manufactures aluminum curtain walls, doors, windows, and
siding systems. Arconic's building and construction segment
generated about 30% of the company's segment EBITDA in 2022 and
reported fairly steady EBITDA margins of 13%-15% on about $1
billion of third-party sales the past three years. In 2022, the
company had announced its intention to sell Kawneer, which accounts
for most of its building materials business. Kawneer would be
separate from the business where the liabilities reside for the
fire at Grenfell Tower, which used Arconic's Reynobond PE exterior
building panels. Arconic has agreed to overarching terms to resolve
some claims and recorded a liability of $61 million for its share
and a related receivable of $53 million for costs expected to be
covered by insurance proceeds if settlement is concluded.
Nevertheless, discussions continue in other cases related to the
Grenfell fire. S&P makes no adjustment to debt other than confirmed
liabilities, because potential liabilities are difficult to
estimate.
The stable outlook on Arsenal AIC incorporates S&P's expectation of
fully adjusted debt to EBITDA remaining below 5x in 2023,
potentially improving to 4x in 2024 if the company achieves a
series of proposed profit-enhancing actions, not least of which is
improved operations at key plants like Lancaster and Davenport.
S&P said, "We could lower our rating on Arsenal if debt to EBITDA
rises above 5x in the next year or two. Such a scenario could occur
if the company adds debt to fund shareholder distributions,
unexpected acquisitions, or large investments. This could also
occur if unstable operations reduce EBITDA and cash flow,
especially if that coincides with weaker demand or lower volumes
because of disruptions along the company's supply chain.
"We could raise our rating on Arsenal if we believe the company's
financial-sponsor owner is committed to keeping debt/EBITDA below
4x without risk of releveraging. We believe such a scenario would
incorporate 18-24 months of improving profits irrespective of
market conditions, as well as steady financial policies."
ESG credit indicators: E-2, S-3, G-3
Social factors are a moderately negative consideration in our
credit rating analysis of Arsenal. The company has been aiming to
resolve pressure from courts, investigators, investors, and
politicians because of the Grenfell Tower fire in 2017. Arconic's
French subsidiary manufactured the Reynobond PE exterior building
panels, although production of the panels has been discontinued.
The company reports that it could pay up to $61 million to settle
claims from the fire. Environmental and social considerations
intersect, however, highlighting the importance of advanced
lightweight products that meet increasingly stringent end-user
demands for efficiency and safety. Environmental factors are a
neutral consideration, notwithstanding the attractive position of
aluminum for its light weight in transport and its recycled content
for consumer and other applications. The rolling of aluminum is
energy intensive, and a significant share of the company's output
uses primary aluminum, which itself requires bauxite mining,
natural gas, and electricity for further refining and smelting.
Governance factors are a moderately negative consideration, owing
to the company's ownership by financial sponsors Apollo and Irenic
Capital. The company has been involved in two business spinoffs and
one leveraged buyout in the past seven years, with the attendant
management and governance changes; Arconic first separated from
Alcoa Ltd. in 2016, further splitting Arconic Corp. and Howmet
Aerospace in 2020.
ATHENA MEDICAL: Continued Operations to Fund Plan
-------------------------------------------------
Athena Medical Group, LLC, filed with the U.S. Bankruptcy Court for
the District of Arizona a Plan of Reorganization dated July 13,
2023.
The Debtor is a medical group that provides wound care services to
patients in Arizona, Washington, Texas, and Florida. The Debtor
does business as Athena Specialty Group, which is a trade name
registered with the Arizona Secretary of State.
The Debtor also provides mobile wound care services for patients in
home settings (private homes, group homes, and assisted living).
The Debtor's manager is Yancey Gaither, who has served in that role
since 2018. The Debtor's members are Teresa Gaither and Mischelle
Johnson.
Pursuant to the WCS Agreements, ReNu and Wound Care sold biologic
regenerative products for skin grafting to the Debtor for use in
treating patients in its medical business. On or about July 26,
2022, WCS filed a Complaint against the Debtor in the State Court
Litigation. The Debtor brought a counterclaim for breach of
contract against WCS and ReNu.
The Debtor filed this Bankruptcy Case to preclude serious business
disruption or cessation that would have resulted if a provisional
remedy was granted in the State Court Litigation. Both before and
after the bankruptcy filing, WCS has attempted to interfere with
the Debtor's business, solicit employees or independent
contractors, and has made false statements about the Debtor's
business operations to the Debtor's customers.
Class 2 consists of all Claims that are Priority Claims. In full
and final satisfaction of any Allowed Priority Claim that has not
been satisfied or extinguished as of the Effective Date, the
Reorganized Debtor will pay the holder of such Allowed Priority
Claim the full amount thereof on the applicable Claim Payment Date,
unless otherwise agreed to by the Debtor and the holder of such
Priority Claim. Class 2 Claims are unimpaired.
Class 3 consists of all Claims that are General Unsecured Claims.
In full and final satisfaction of each Allowed General Unsecured
Claim, the holder of such Allowed General Unsecured Claim will be
paid a pro rata amount from the Class 3 Payments, up to the full
amount of each holder's Allowed General Unsecured Claim. Class 3
Claims are impaired.
Class 4 consists of any Interests in the Debtor. The Holders of
Class 4 Interest will retain their Interests in the Reorganized
Debtor. Class 4 Interests are not impaired.
The Reorganized Debtor will continue to be organized under its
prepetition Operating Agreement and other organizational documents.
The Reorganized Debtor's manager will continue to be Yancey
Gaither. The Reorganized Debtor's members will remain the same as
they existed as of the Petition Date, in the same percentage of
ownership.
The Reorganized Debtor will generate income from operating its
business to fund all payments due under the Plan. The Reorganized
Debtor will fund the Plan from its monthly Projected Disposable
Income received by the Debtor for 36 months only and all cash on
hand as of the Effective Date, provided that the Reorganized Debtor
shall not pay in the aggregate more than the 36 month Projected
Disposable Income under the Plan. The Projected Disposable Income
will be generated through business operations.
A full-text copy of the Plan of Reorganization dated July 13, 2023
is available at https://urlcurt.com/u?l=pl8zrr from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Isaac M. Gabriel, Esq.
Alissa Brice Castaneda, Esq.
Michael Galen, Esq.
Dorsey & Whitney, LLP
2325 East Camelback Road, Suite 300
Phoenix, AZ 85016
Phone: (602) 735-2702
Fax: (480) 546-4248
Email: gabriel.isaac@dorsey.com
Dorsey & Whitney, LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402
Telephone: (612) 340-2600
Andrew Holly (admitted pro hac vice)
Email: holly.andrew@dorsey.com
About Athena Medical Group
Athena Medical Group, LLC -- https://athenamedgroup.com/ --
provides primary care, transitional care, chronic care management,
remote patient monitoring, and telehealth services. The company is
based in Phoenix, Ariz.
Athena Medical Group filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
23-01635) on March 16, 2023, with total assets of $3,843,022 and
total liabilities of $12,707,798. James E. Cross has been appointed
as Subchapter V trustee.
Judge Brenda K. Martin oversees the case.
The Debtor tapped the Law Office of Mark J. Giunta as bankruptcy
counsel; and Ball, Santin & McLeran and Simmons & Gottfried, PLLC
as special counsels.
B AND C BROS: Fine-Tunes Plan Documents
---------------------------------------
B and C Bros., LLC, submitted a First Amended Plan of
Reorganization under Subchapter V dated July 13, 2023.
The Debtor shows that it will have enough cash over the life of the
Plan to make the required Plan payments and operate the debtor's
business.
The final Plan payment is expected to be paid in 2028.
This Plan of Reorganization proposes to pay creditors of the Debtor
from cash flow operations.
Valley Bank is the only secured creditor and did not file a Proof
of Claim. Valley Bank will be paid in full through the plan. Non
priority unsecured creditors holding allowed claims will receive
distributions, which the proponent of this Plan has valued at
approximately administrative and priority claims.
Class 3 Non-priority unsecured creditors shall be paid 5% in each
unsecured claim. This Class is impaired.
Class 4 Equity security holders Bill and Chad Davies to retain
their interest in the Reorganized Debtor.
Debtor will fund the Plan from the income from its regular business
operations.
A full-text copy of the First Amended Subchapter V Plan dated July
13, 2023 is available at https://urlcurt.com/u?l=AuzvvQ from
PacerMonitor.com at no charge.
About B and C Bros.
B and C Bros., LLC, is in the business of operating a commercial
plumbing and heating business with its assets in Bucks County,
Pennsylvania.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Pa. Case No. 23-10986-amc) on April
12, 2023. In the petition signed by Bill Davies, managing member,
the Debtor disclosed up to $50,000 in both assets and liabilities.
Attorney for the Debtor:
Maggie S. Soboleski, Esq.
Center City Law Offices, LLC
2705 Bainbridge Street
Philadelphia, PA 19107
BANGL LLC: Moody's Assigns First Time 'B2' Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned first time ratings to BANGL,
LLC, including a B2 Corporate Family Rating, a B2-PD Probability of
Default Rating, a B2 rating to its proposed $350 million senior
secured Term Loan B due 2030, and a Ba2 rating to its proposed $50
million senior secured super priority revolving credit facility.
The rating outlook is positive.
BANGL will use the debt proceeds to pre-fund a portion of the
capital expenditures and costs related to the completion of its NGL
transportation system buildout. The completion of the Gardendale to
Sweeney expansion of BANGL's existing pipeline system will allow
for expanded operating margins due to the elimination of lease
segments and continued access to the growing Sweeny NGL market. In
addition, pump expansions on the BANGL Mainline will increase
throughput capacity.
"BANGL is a growing Permian NGL pipeline system that has strategic
importance to its owners," Said Jake Leiby, Moody's Vice President.
"Moody's expect the prudent funding and completion of the remainder
of its expansion project to lead to improvements in the company's
cash flow scale and financial leverage."
Assignments:
Issuer: BANGL, LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured Term Loan B, Assigned B2
Senior Secured Super Priority Revolving Credit Facility, Assigned
Ba2
Outlook Actions:
Issuer: BANGL, LLC
Outlook, Assigned Positive
RATINGS RATIONALE
BANGL's B2 CFR is supported by its growing scale, long-term
contracts with high-quality counterparties and price escalators,
and strategic alignment with and importance to the operations of
its owners, particularly its operator MPLX LP (MPLX, Baa2 stable).
The rating is constrained by its relatively small current cash
flow, inherent execution risks on expansion projects, additional
funding requirements and potential for additional debt, and some
volume risk even considering the benefits of MVCs on affiliated
assets. Moody's expects the company to remain committed to its
stated conservative financial policies.
The initial equity investment from owners enabled the construction
of BANGL's existing asset base, which provides revenue and cash
flow to support debt during the construction of the Gardendale to
Sweeny extension. MPLX is a seasoned operator of pipelines as one
of the largest midstream companies in the U.S. and WhiteWater has
extensive experience financing and constructing pipelines in Texas
and New Mexico. MPLX has dedicated four existing and all future gas
processing plants in the Delaware Basin to BANGL and WTG has
dedicated three gas processing plants to BANGL.
BANGL's existing footprint in the in the Midland and Delaware
Basins and plant dedications from MPLX and West Texas Gas (WTG)
support its credit profile. BANGL's fee-based contracts mitigate
direct commodity price exposure. Although BANGL is strategically
aligned with the operations of its owners and benefits from the
minimum volume commitments (MVCs) that exist on its owners' assets,
the lack of MVC contracts on BANGL's pipeline still presents
volumetric risk.
The construction of the Gardendale to Sweeny extension is an ~18
month project that entails inherent execution risk, despite the
existing right of way and WhiteWater's experience in pipeline
construction, which could result in an in-service date later than
currently contemplated and/or higher than expected costs. BANGL's
current EBITDA and cash flow is relatively low owing to initially
low contracted rates, but the contracts provide for rate escalators
that will increase operating margins and EBITDA over time. BANGL's
initial leverage (Debt/EBITDA) pro forma for the financing
approaches 6x but Moody's expects it to decline towards to 5x by
the end of 2023 and continue to decline in 2024 with EBITDA growth
from contractual rate increases. BANGL will require additional
external capital in 2024 to fund the completion of the pipeline
extension, and the form and size of financing presents uncertainty
over the company's future financial leverage.
BANGL's proposed Term Loan B is rated B2, the same as the CFR.
BANGL's Term Loan B is secured on a parri passu basis with the
super priority revolving credit facility but is subordinated by the
revolver's first-out repayment priority basis. The small size of
the revolver relative to the term loan does not result in a
notching of the term loan from the CFR. BANGL's proposed super
priority revolving credit facility is rated Ba2, three notches
above the CFR, reflecting its relatively small size and
structurally senior position in the capital structure. BANGL's
proposed super priority revolving credit facility is secured by
substantially all of the company's present and future assets on a
first-out basis.
Moody's expects that BANGL will have adequate liquidity well into
2024, but it will need to raise additional capital in order to
fully fund the Gardendale to Sweeny expansion project. Upon
completion of the Term Loan B issuance, BANGL will have an undrawn
$50 million super priority revolving credit facility due 2028 and
over $300 million of cash on hand. The construction of the
Gardendale to Sweeny expansion and pump expansions on the BANGL
Mainline to increase pipeline capacity will require a level of
capital spending in excess of internal cash flow generation and the
proceeds from the Term Loan B issuance, with that amount funded by
additional debt and/or capital contributions from its owners. The
revolver and term loan are expected to contain financial covenants
requiring BANGL to maintain a debt service coverage ratio of no
less than 1.1x and super priority net leverage ratio of no more
than 1.25x. Moody's expects BANGL to remain in compliance with its
covenants through at least the end of 2024.
The positive outlook reflects Moody's expectation that successful
execution of BANGL's Gardendale to Sweeny extension combined with
prudent funding of additional capital requirements will result in
an increased cash flow scale with declining financial leverage.
Notable terms of the new term loan facilities include the
following: Incremental super priority revolver capacity up to the
greater of $25 million and 25% of LTM Consolidated EBITDA;
Incremental TLB capacity up to the greater of $75 million or 75% of
LTM Consolidated EBITDA; and unlimited amounts subject to 4x first
lien net leverage ratio (calculation excludes the incremental
starter and up to $150 million of incremental term loans used to
fund the expansion of the BANGL pipeline system).
Amounts up to the greater of $50 million and 50% of LTM
Consolidated EBITDA may be incurred with an earlier maturity date
than the initial term loans.
A disposition of less than all of a subsidiary's capital stock will
not result in an automatic guarantee release unless it is a good
faith disposition to a bona fide unaffiliated third party for bona
fide business purposes and after giving effect to such disposition,
such unaffiliated third party will own at least 50% or more of the
capital stock in such person. The credit agreement does not permit
the designation of unrestricted subsidiaries, preventing collateral
"leakage" to unrestricted subsidiaries.
The new term loan facilities provide some limitations on the
up-tiering transactions, including the requirement that each
directly adversely affected lender consents to the subordination of
its lien to any other lien securing any other debt or the grant to
the holders of any other debt of a right to receive proceeds from
collateral in priority to its loans.
The proposed terms and the final terms of the credit agreement may
be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
BANGL's ratings could be upgraded if the company prudently funds
the additional capital required to complete its project and
executes in-line with its forecasts, while sustaining leverage
below 5x. The ratings could be downgraded if leverage exceeds 6x,
potentially due to expansion project delays or overruns, and
potential additional growth projects funded with debt.
BANGL, LLC is a privately owned pipeline system that transports NGL
barrels from the Permian to fractionation and purity markets on the
Gulf Coast. The company is a joint venture between WhiteWater
(45%), MPLX (25%), WTG Midstream (20%), and DiamondBack Energy
(10%). BANGL is an NGL pipeline system that provides transportation
services from the Permian to fractionation and purity markets on
the Gulf Coast. Commercial operations commenced in 2020 and the
company currently benefits from 100+ miles of wholly-owned in-basin
pipe and 320+ miles of mainline pipe through an Undivided Joint
Interest with EPIC Y-Grade Services, LP (Caa1 stable).
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
BESTWALL LLC: 21 US States Challenge Asbestos Bankruptcy Shield
---------------------------------------------------------------
James Nani of Bloomberg Law reports that twenty states and the
District of Columbia have urged a federal appeals court to
reconsider a ruling granting industrial giant Georgia-Pacific LLC
protection from asbestos liability suits through a subsidiary's,
Bestwall LLC, bankruptcy.
The 2-1 decision last month by a panel of the US Court of Appeals
for the Fourth Circuit was the first federal appellate court to
bless a "manipulation of the bankruptcy process," the 20
states—which largely lean Democratic—and the District of
Columbia said in a court filing Wednesday, July 12, 2023. The
states and DC joined a committee of cancer patients in asking the
court to revisit the ruling.
About Bestwall LLC
Bestwall LLC -- http://www.Bestwall.com/-- was created in an
internal corporate restructuring and now holds asbestos
liabilities. Bestwall's asbestos liabilities relate primarily to
joint systems products manufactured by Bestwall Gypsum Company, a
company acquired by Georgia-Pacific in 1965. The former Bestwall
Gypsum entity manufactured joint compounds containing small amounts
of chrysotile asbestos; the manufacture of these
asbestos-containing products ceased in 1977.
Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC
("PlasterCo"), develops, manufactures, sells and distributes gypsum
plaster products, including gypsum floor underlayment, industrial
plaster, metal casting plaster, industrial tooling plaster, dental
plaster, medical plaster, arts and crafts plaster, pottery plaster
and general purpose plaster.
On Nov. 2, 2017, Bestwall sought Chapter 11 protection (Bankr.
W.D.N.C. Case No. 17-31795) in an effort to equitably and
permanently resolve all its current and future asbestos claims.
The Debtor estimated assets and debt of $500 million to $1 billion.
It has no funded indebtedness.
The Hon. Laura T. Beyer is the case judge.
The Debtor tapped Jones Day as bankruptcy counsel; Robinson,
Bradshaw & Hinson, P.A., as local counsel; Schachter Harris, LLP as
special litigation counsel for medicine science issues; King &
Spalding as special counsel for asbestos matters; and Bates White,
LLC, as asbestos consultants. Donlin Recano LLC is the claims and
noticing agent.
On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an
official committee of asbestos claimants in the Debtor's case.
The
Committee retained Montgomery McCracken Walker & Rhoads LLP as its
legal counsel, Hamilton Stephens Steele + Martin, PLLC and JD
Thompson Law as local counsel, FTI Consulting, Inc., as financial
advisor.
On Feb. 22, 2018, the court approved the appointment of Sander L.
Esserman as the future claimants' representative in its case. Mr.
Esserman tapped Young Conaway Stargatt & Taylor, LLP as his legal
counsel; Hull & Chandler, P.A., as local counsel; Ankura
Consulting
Group, LLC as claims evaluation consultant; and FTI Consulting,
Inc., as financial advisor.
BRAND INDUSTRIAL: Moody's Raises CFR to B3, Outlook Positive
------------------------------------------------------------
Moody's Investors Service upgraded Brand Industrial Services,
Inc.'s Corporate Family Rating to B3 from Caa2, Probability of
Default Rating to B3-PD from Caa3-PD and assigned B3 ratings to its
proposed revolving credit facility, new senior secured first lien
term loan B due 2030 and new senior secured first lien notes due
2030. The proceeds from the debt offerings along with $1.1 billion
of equity contributed by Brand's equity sponsors will repay in full
the existing term loan and senior unsecured notes, and partially
reduce revolver borrowings. The rating outlook is positive.
"Brand's injection of substantial equity from its sponsors and
refinancing transactions meaningfully improve its credit profile
and addresses near-term liquidity concerns," stated James Wilkins,
Moody's Vice President. "Moody's expect continued improvement in
operations that will result in free cash flow generation and
stronger credit metrics, supporting the positive outlook."
The following summarizes the ratings activity:
Upgrades:
Issuer: Brand Industrial Services, Inc.
Corporate Family Rating, Upgraded to B3 from Caa2
Probability of Default Rating, Upgraded to B3-PD from Caa3-PD
Assignments:
Issuer: Brand Industrial Services, Inc.
Senior Secured Revolving Credit Facility, Assigned B3
Senior Secured Term Loan B, Assigned B3
Senior Secured Global Notes, Assigned B3
Outlook Actions:
Issuer: Brand Industrial Services, Inc.
Outlook, Changed To Positive From Negative
RATINGS RATIONALE
The upgrade to a B3 CFR reflects the large equity contributions
from the sponsors and related decline in debt, as well as
improvement in credit metrics and liquidity. Equity contributions
will allow the company to reduce its debt by -$1 billion and
leverage (debt / EBITDA) by over 1.5x turns to 6.4x as of March 31,
2023, on a pro forma basis. This results in a sustainable capital
structure. The refinancing addresses the near-term debt maturities
(term loan due in June 2024, revolving credit facility due February
4, 2025, and senior unsecured notes due in July 2025), improving
liquidity. In order to maintain adequate liquidity, Brand will also
be required to extend the maturity of its accounts receivable
facility due in December 2024, which Moody's expects will be done
well before its maturity date. Governance risk considerations are
material to this rating action given the equity contribution from
Brand's equity sponsors and supportive financial policies that
enables the refinancing transactions to be completed.
Brand's B3 CFR reflects still high leverage and uncertainty
regarding the pace of recovery in the company's earnings. Following
the proposed refinancing, the company will continue to have a
meaningful ongoing interest burden, which will benefit from
interest rate caps only through the second quarter 2024 on the term
loan debt. Moody's expects the company's operating results to
continue to recover and free cash flow generation to improve
despite the uncertain macro-economic outlook. The rating also
considers the benefits of company's scale, geographic diversity,
leading market position in a highly fragmented market, diversified
revenue stream, a broad customer base of more than 29,000 customers
and high levels of recurring revenues.
The B3 ratings assigned to the senior secured first lien revolving
credit facility, the senior secured first lien term loan and the
senior secured first lien notes are at the same level as the B3 CFR
and reflect the fact that all of the debt is secured, benefits from
guarantees from the US subsidiaries of the borrowers, and ranks
pari passu.
Notable terms of the new term loan facilities include: Incremental
debt capacity up to the greater of $635 million and 100% of EBITDA,
plus unlimited amounts subject to a 4.3x Consolidated Secured
Leverage Ratio (if pari passu secured). No portion of the
incremental may be incurred with an earlier maturity than the
initial term loans. The agreement allows the company to designate
restricted subsidiaries as unrestricted, if consolidated coverage
ratio or consolidated total leverage tests are met. 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. Only
wholly owned subsidiaries are required to provide a guarantee. A
disposition of less than a majority of a subsidiary's capital stock
in connection with a non-bona fide transaction entered into for the
primary purpose to cause an automatic guarantee release requires
the written consent of the Administrative Agent. The new term loan
facilities provide some limitations on the up-tiering transactions,
including the requirement that each directly and adversely affected
lender consents to contractually subordinating the debt or the
liens granted in respect to any other debt or liens, subject to
certain exceptions subject to exceptions that are to be determined,
unless such adversely affected lender has been afforded an
opportunity to participate ratably in such primary debt. The
proposed terms and the final terms of the credit agreement may be
materially different.
Brand will have adequate liquidity following the debt refinancings
supported by a new revolving credit facility, an accounts
receivable securitization facility and cash flow from operations.
Moody's expects the company to generate positive free cash flow
through year-end 2024. The revolving credit facility that the
company currently relies on for letters of credit will be amended
and extended with $677 million of commitments that mature in 2028,
eliminating the springing maturity date in May 2024. As of June 30,
2023, the existing revolver had $165 million of borrowings
outstanding. The credit facility has a springing maximum Total
Secured Net Leverage ratio financial covenant of 7.0x, which is
triggered if over 35% of the revolver is drawn. The accounts
receivable financing facility due December 2, 2024, under which
$540 million in borrowings were outstanding as of June 30, 2023,
has been used to finance short-term operating cash flow needs.
Moody's expects the company to extend this facility well before the
December 2024 maturity date.
The positive outlook reflects Moody's expectation that Brand's
business will continue to recover and it will generate positive
free cash flow that will allow it to reduce debt and maintain
adequate liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The CFR could be upgraded if: Adjusted Debt-to-EBITDA is below 5.5x
for a sustained period of time; EBITA-to-Interest Expense
approaches 2.0x and the company improves its free cash flow and
maintains adequate liquidity. The rating could be downgraded if:
Adjusted Debt-to-EBITDA is above 6.5x for a sustained period of
time; EBITA-to-Interest expense is below 1.0x; a sizeable debt
financed acquisition is completed; or the liquidity profile
deteriorates.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Atlanta, GA, Brand Industrial Services, Inc. is
the largest provider of scaffolding, insulation, coatings and other
industrial services within the following market segments in North
America: upstream, midstream, and downstream oil & gas, power
generation, industrial and infrastructure. The company is majority
owned by Clayton, Dubilier & Rice and Brookfield Business Partners.
BRAND INDUSTRIAL: S&P Upgrades ICR to 'B-' on Refinancing
---------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
Brand Industrial Services Inc. to 'B-' from 'CCC+'. S&P also
assigned its 'B-' issue-level rating and '3' recovery rating to the
company's $677 million revolving credit facility due in 2028
(reduced from $687 million), $1.335 billion first-lien term loan
due in 2030, and $1.335 billion of senior secured notes due in
2030. The '3' recovery rating indicates its expectation of
meaningful (50%-70%; rounded estimate: 50%) recovery in the event
of a payment default.
S&P said, "The stable outlook reflects our expectation for improved
operating performance and increased profitability, resulting in
positive free operating cash flow (FOCF) in 2024. We also expect
S&P Global Ratings-adjusted debt to EBITDA of below 6x in 2024.
"The recapitalization significantly improves Brand's leverage and
reduces near-term refinancing risk. We expect the equity
contribution from financial sponsors Brookfield and CD&R to
decrease the company's debt by about $1 billion and result in S&P
Global-adjusted leverage in the mid-6x area by the end of 2023,
declining to the high-5x area in 2024. The transaction also reduces
the company's near-term refinancing risk, although its $700 million
securitization facility (which was not extended) matures in
December 2024. That said, the maturity extension on its $677
million revolving credit facility should provide it with sufficient
liquidity over the next 12 to 24 months.
"We expect modestly negative FOCF in 2023 (excluding transaction
fees) improving to above $50 million in 2024. The refinancing
transaction will lower Brand's interest expense by about $100
million, which together with expected margin improvements should
lead to modest FOCF generation in 2024. We expect its capital
spending will remain in line with 2022 levels this year, picking up
slightly in 2024 to support growth. Although working capital has
been pressured over the past few quarters, the company plans to
work with its customers to speed up the collection of its
receivables, and we expect to see some improvement in the latter
half of the year. Therefore, we forecast working capital will be
neutral this year followed by some usage in 2024 to support growth.
Under our base case, we expect adjusted FOCF to debt will be
between 1% and 2% in 2024.
"We lowered our 2023 revenue projection but expect Brand's EBITDA
margin will continue to improve through 2024. Following record
activity in petrochemicals in 2022, we expect a decline in its U.S.
petrochemical activity following the completion of large capital
projects. However, this decline should be offset by higher pricing,
stable demand from other industrial end markets and growth
opportunities in emerging markets such as semiconductors and data
centers, leading to a relatively stable top line this year. For
2024, we expect mid- to high-single digit revenue growth based on
solid demand in its midstream, upstream, and other industrial
markets. Furthermore, we expect that any deferrals of turnaround
work by refiners this year would lead to higher maintenance and
turnaround activity in 2024."
Brand's S&P Global-adjusted last 12-months (LTM) EBITDA margin
improved by 170 basis points during the first quarter of 2023,
compared to the first quarter 2022. Although we anticipate some
margin compression from lower activity in petrochemicals,
cost-input inflation, the completion of large capital projects, and
foreign exchange headwinds, we expect modest improvement in its
EBITDA margin this year due to price increases, cost takeout, and
other planned growth initiatives for its industrial segments. S&P
said, "We forecast its S&P Global Ratings-adjusted EBITDA margin
will improve to about 11% this year from 10.1% in 2022.
Furthermore, we believe its S&P Global Ratings-adjusted EBITDA
margin could approach its pre-COVID level of around 12% by 2024 if
it executes well."
S&P said, "The stable outlook reflects our expectation for
continued improvement in operating performance through price
increases and cost savings to offset inflation and potential volume
declines, resulting in positive FOCF in 2024.
"We could lower the rating if weaker-than-expected operating
performance due to unanticipated delays or additional project costs
hurt Brand's ability to improve earnings and cash flow such that it
cannot sufficiently reduce leverage and generate positive FOCF,
leading us to assess the capital structure as unsustainable.
"We could raise our ratings if the company continues to improve its
operating performance while growing its top line and maintaining
EBITDA margins in the low double-digit percent area with improving
FOCF. An upgrade would require Brand to sustain FOCF to debt to in
the low- to mid-single-digit percent area and sustain leverage
below 6.5x. We would also need to be more certain that financial
policy considerations would not lead to higher leverage in the
future."
ESG credit indicators: E2, S2, G3
S&P said, "Governance is a moderately negative consideration in our
credit rating analysis of Brand Industrial Services Inc., as is the
case for most rated entities owned by private-equity sponsors. We
believe 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
holding periods and a focus on maximizing shareholder returns."
CALPINE CONSTRUCTION: S&P Rates New $1BB Term Loan B 'BB+'
----------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating and '1'
recovery rating to Calpine Construction Finance Co. L.P.'s (CCFC)
proposed $1 billion term loan B (TLB) due 2030. The '1' recovery
rating indicates its expectation for very high (90%-100%; rounded
estimate: 95%) recovery in the event of a payment default.
CCFC is raising a new $1 billion TLB to refinance the $945 million
outstanding under its current term loan B and pay associated fees
and expenses. Therefore, S&P views the transaction as leverage
neutral. Concurrent with this transaction, the company will extend
the maturity of its intercompany tolls to 2030, in-line with the
expected maturity of the loan.
The company is an indirect subsidiary of Calpine Corp. that owns
about 4.4 gigawatts of gas-fired combined cycle generation capacity
in Texas and New England. The assets are operated and commercially
managed by Calpine. All of CCFC's capacity is supported by
intercompany tolling arrangements and third-party power purchase
agreements. Based on S&P's current estimates of its EBITDA, the
company's pro forma leverage is about 3.0x ($225 per kilowatt)
S&P said, "Our issue-level ratings on CCFC reflect our issue-level
ratings on its parent Calpine's senior secured debt because CCFC's
debt is guaranteed by Calpine. The stable outlook on Calpine Corp.
reflects our expectation that its performance in the ERCOT region
will remain strong through 2024. In addition, it incorporates our
expectation for some upside in its resource adequacy payments in
California. The company's financial performance could improve
modestly due to its substantial near-term hedging, which offsets
its merchant risk. However, CCFC still allocates the majority of
its excess cash flow toward shareholder rewards, which will cause
its leverage to remain rangebound. The outlook also incorporates
our expectation that the company's S&P Global Ratings-adjusted debt
to EBITDA will remain between 4.75x and 5.00x through 2025."
CAMECO TECHNOLOGIES: Amends IRS Secured Claims Pay Details
----------------------------------------------------------
Cameco Technologies LLC submitted an Amended Disclosure Statement
describing Plan of Reorganization dated July 13, 2023.
The Debtor is pursuing a plan to continue operation of its business
subsequent to approval of its Plan of Reorganization.
The Debtor has consulted with its accountants and does not believe
that it will suffer any adverse tax consequences as a result of the
Court's approval of the Debtor's Plan or Reorganization.
One of the Debtor's largest assets is a Note Receivable claim
against NG Service, Ltd. in the approximate amount of $170,000.00.
NG Service, Ltd. is an entity owned by Serge Ngouambe and his wife.
It operates a group home. The Real estate is encumbered with a
mortgage. The Debtor anticipates that it will receive payments in
the future to reduce the Note Receivable. There is no payment
schedule in place. The obligation to the Debtor is an unsecured
obligation of NG Service, Ltd.
Class 1 consists of the Secured Claim and Priority Claim of the
Internal Revenue Service in the approximate amount of $32,619.32.
Commencing on the Effective Date, the Debtor will make 53 monthly
payments to the IRS in the approximate amount of $687.21. Interest
will accrue at the rate of 5% per annum.
Like in the prior iteration of the Plan, the Debtor will pay all
unsecured claims 25% of each creditor's claim. The Debtor will make
48 monthly payments in the amount of $2,913.00 each to achieve the
payments due to the Creditors in this Class.
The Membership interests of the Debtor will be retained by Serge
Ngouambe.
A full-text copy of the Amended Disclosure Statement dated July 13,
2023 is available at https://urlcurt.com/u?l=qn4JzQ from
PacerMonitor.com at no charge.
Debtor's Counsel:
Steven B. Nosek, Esq.
Steven B. Nosek, P.A.
2812 Anthony Lane South Suite 200
St. Anthony, MN 55418
Tel: (612) 335-9171
Email: snosek@noseklawfirm.com
About Cameco Technologies
Cameco Technologies, LLC, is a Microsoft Registered refurbished
distributor of computer equipment.
Cameco Technologies sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Minn. Case No. 22-31938) on Nov. 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.
CARNIVAL CORP: Moody's Alters Outlook on 'B2' CFR to Stable
-----------------------------------------------------------
Moody's Investors Service changed the ratings outlooks of Carnival
Corporation and its debt-issuing subsidiaries, Carnival plc and
Carnival Holdings (Bermuda) Limited (together, "Carnival") to
stable from negative. At the same time, Moody's upgraded the
company's senior secured notes and senior secured bank credit
facility ratings to Ba2 from Ba3 and senior secured second lien
notes to Ba3 from B1. Moody's also affirmed Carnival's B2 corporate
family rating, B2-PD probability of default rating, senior priority
guaranteed notes at B2 and senior unsecured notes at B3. The
company's speculative grade liquidity rating was changed to SGL-2
from SGL-3.
"The change of Carnival's outlook to stable reflects the strong
booking and pricing trends in 2023 that will drive earnings towards
2019 levels and debt/EBITDA to about 6x by the end of 2024," said
Moody's Vice President and Senior Analyst, Pete Trombetta. Moody's
forecasts occupancy returning to near historic levels with net
cruise revenue per passenger cruise day exceeding 2019 levels in
2023 and again in 2024. The strong pricing environment and capacity
at about 105% of the 2019 level will drive earnings improvement.
Debt retirement will also contribute to the improvement in
debt/EBITDA that Moody's expects.
The one notch upgrade to the company's senior secured notes and
senior secured bank credit facility ratings to Ba2 and senior
secured second lien notes to Ba3 reflect the improved operating
environment across the cruise industry and greater confidence in
the value of the underlying collateral compared to during the
COVID-19 pandemic.
The change in the speculative grade liquidity rating reflects
Moody's projections for annual operating cash flow expansion
towards $2.8 billion and that the $2.9 billion revolving credit
facility remains undrawn since May 31, 2023.
Upgrades:
Issuer: Carnival Corporation
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Senior Secured Bank Credit Facility, Upgraded to Ba2 from Ba3
Backed Senior Secured 2nd Lien Regular Bond/Debenture, Upgraded to
Ba3 from B1
Backed Senior Secured Regular Bond/Debenture, Upgraded to Ba2 from
Ba3
Issuer: Carnival plc
Backed Senior Secured 1st Lien Regular Bond/Debenture, Upgraded to
Ba2 from Ba3
Issuer: Long Beach (City of) CA
Backed Senior Secured Revenue Bonds, Upgraded to Ba2 from Ba3
Affirmations:
Issuer: Carnival Corporation
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B3
Backed Commercial Paper, Affirmed NP
Issuer: Carnival plc
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B3
Backed Commercial Paper, Affirmed NP
Issuer: Carnival Holdings (Bermuda) Limited
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B2
Outlook Actions:
Issuer: Carnival Corporation
Outlook, Changed To Stable From Negative
Issuer: Carnival plc
Outlook, Changed To Stable From Negative
Issuer: Carnival Holdings (Bermuda) Limited
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Carnival's B2 CFR reflects its high debt/EBITDA – which Moody's
forecasts will remain above 6x through 2024 – and modest free
cash flow after funding committed new ship building programs.
Moody's expects modest reduction of debt over the next 18 months.
Highly seasonal demand and the capital intensity that accompanies
cruise operations will remain continuing risks. Other risks include
customers' alternative vacation options, the cruise industry's
exposure to economic and industry cycles, weather-related incidents
and geopolitical events. Carnival's position as the largest
worldwide cruise line based on revenue, fleet size and number of
passengers boarded and its brand diversification help mitigate the
credit risk inherent in the company's high financial leverage,
supporting the B2 CFR. Carnival will also continue to benefit from
the value proposition of a cruise vacation relative to land-based
destinations and a group of loyal cruise customers that support a
recurring base level of demand.
Carnival's good liquidity is supported by about $4.5 billion of
cash on hand at May 31, 2023 that will comfortably cover its cash
needs over the next 18 months. Carnival's revolver is a committed
multi-currency facility that expires in August 2024. It includes
USD1.6 billion, EUR1.0 billion and GBP150 million lines. There were
no drawings on the revolver at May 31, 2023. Carnival's operating
subsidiary – Carnival Holdings (Bermuda) II Limited – recently
entered into a $2.1 billion multi-currency revolving facility. This
revolver may be utilized beginning on August 6, 2024, and will
replace the existing $2.9 billion revolver upon its maturity in
August 2024. The expiration date of the new revolver is August 6,
2025. This facility's terms provide two, mutual one-year extension
options. The new facility contains an accordion feature, allowing
for additional commitments, up to an aggregate of $2.9 billion.
Carnival's debt facilities require it to comply with certain
maintenance covenants including minimum interest coverage, a debt
to capital ratio and minimum liquidity. Moody's expect the company
will maintain adequate covenant cushion over the next 12 months.
The company's access to alternate sources of liquidity is modest as
the majority of its assets are pledged, although there remains the
potential to sell some ships or a brand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if leverage is maintained below 5.0x with
EBITA/interest expense approaching 2.5x. Ratings could be
downgraded if the company's liquidity weakens or if Moody's expects
that debt/EBITDA will remain above 6.5x beyond 2024.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Carnival Corporation and Carnival plc own the world's largest
passenger cruise fleet operating under multiple brands including
Carnival Cruise Line, Holland America, Princess Cruises, AIDA
Cruises, Costa Cruises and P&O Cruises, among others. Carnival
Corporation and Carnival plc operate as a dual-listed company and
are headquartered in Miami, Florida, US and Southampton, UK. Net
revenue for the 12 months ended May 31, 2023 was approximately $13
billion.
CELSIUS NETWORK: Ex-CEO Mashinsky Charged With Cryptocurrency Fraud
-------------------------------------------------------------------
Ava Benny-Morrison and Allyson Versprille of Bloomberg News report
that former Celsius Network Ltd Chief Executive Officer Alex
Mashinsky was accused by US prosecutors of pumping up the price of
his firm's cryptocurrency to entice customers to the platform --
all so he could line his pockets to the tune of $42 million.
Mashinsky, who was arrested and charged with wire fraud and other
crimes, waged a yearslong scheme to mislead customers before
Celsius collapsed last year with more than $1 billion in debt,
according to prosecutors. He pleaded not guilty at a hearing
Thursday in New York.
Celsius was one of several high-profile crypto firms that imploded
last year. The company gained popularity paying high interest rates
on digital-asset deposits. But following the collapse of the
TerraUSD stablecoin and a downturn in the digital-asset markets the
company was unable to meet an influx of customer withdrawals.
"Over the course of the past year we have worked quickly to get to
the bottom of what led to Celsius's collapse," Damian Williams,the
US Attorney for the Southern District of New York, said at a press
conference. "To understand how a platform that advertised itself
as the 'safest place for your crypto' could have left investors
holding billions of dollars in losses. Today we have the answer."
In a 46-page unsealed indictment, prosecutors alleged Celsius staff
were forced to change rosy public comments Mashinsky made about the
platform's financial health during his weekly question and answer
sessions -- "Ask Mashinsky Anything" -- because the statements were
"false and misleading."
Mashinsky's lawyer Jonathan Ohring said his client vehemently
denied the claims.
"He looks forward to vigorously defending himself in court against
these baseless charges," he said in a statement.
Mashinsky will be released on bail after agreeing to a $40 million
personal recognizance bond, co-signed by his wife and another
person. He handed in his two passports to authorities and his
travel is restricted to New York.
The Securities and Exchange Commission, the Commodity Futures
Trading Commission and the Federal Trade Commission also filed
lawsuits against Mashinsky. The company, however, entered into a
non-prosecution agreement with DOJ and a pending settlement deal
with the FTC.
Celsius's former chief revenue officer, Roni Cohen-Pavon, was also
charged with four counts, including fraud. Williams said
Cohen-Pavon, an Israeli citizen, is "abroad," but wouldn't comment
on whether the government would seek his extradition.
Authorities allege that from 2018 through June 2022, Mashinsky
"orchestrated a scheme to defraud customers of Celsius Network LLC
and its related entities," according to the indictment. Mashinsky
and Cohen-Pavon are also accused of manipulating the price of CEL,
Celsius's native token, prompting customers to purchase it at
inflated prices. When Mashinsky and Cohen-Pavon sold their CEL at a
profit, they allegedly made about $42 million and $3.6 million
respectively.
The price of CEL token issued by Celsius dropped about 6% to around
15 cents, according to data from CoinMarketCap, after the criminal
and regulatory filings against the company and Mashinsky. It had
traded as high as $8 in June 2021.
Mashinsky is the latest crypto industry figure to face charges
after a market downturn exposed shady practices and in some cases,
fraud, across the sector. Mashinsky, who helped start Celsius in
2017, has been under intense scrutiny from multiple government
agencies since his firm filed for bankruptcy a year ago.
The SEC alleged that Mashinsky and his company made misleading
statements to encourage investors to purchase its token, CEL, and
to put money into the firm's Earn Interest Program that promised
returns as high as 17% on users’ crypto deposits.
"We allege they engaged in a elaborate fraud involving hundreds of
thousands of investors and at its peak, over $28 billion in assets
on the company's balance sheet," SEC director of enforcement Gurbir
Grewal said.
The regulator also accused Mashinsky of misrepresenting Celsius's
financial success to make it appear more profitable than it really
was. For instance, the SEC said he falsely claimed the firm made
$50 million from an initial coin offering when in actuality it
raised less than 65% of its goal — something Mashinsky took steps
to hide from the public.
On May 11, 2022, Celsius said on Twitter that the company "abides
by robust risk management frameworks to ensure the safety and
security of assets on our platform. All user funds are safe. We
continue to be open for business as usual."
But in reality, Celsius was "in dire financial shape" and company
executives were communicating about "significant financial losses"
at the time. On May 9, 2023 a Celsius executive had called the
company "a sinking ship," the SEC said.
The CFTC complaint alleged that Celsius "engaged in increasingly
risky investment strategies," including extending millions of
dollars in uncollateralized loans and placing investor assets in
unregulated decentralized finance, or DeFi, projects.
"While this was the first case the agency had brought against a
crypto lending platform, our allegations are all too familiar for
those paying attention," CFTC director of enforcement Ian McGinley
said.
FTC Settlement
The FTC on Thursday announced a settlement with Celsius shortly
after filing its suit under consumer protection laws. The regulator
said Celsius had agreed to a ban on handling consumer assets and a
$4.7 billion fine. That fine will be suspended to allow Celsius
customers to continue seeking recovery through the bankruptcy
process, the regulator said in a statement. The suit against
Mashinsky and other executives will continue.
New York Attorney General Letitia James was first to strike against
Mashinsky and sued him in January for fraud. James accused
Mashinsky of duping New York investors out of billions of dollars
in crypto assets by making false and misleading statements about
the lender's safety.
The actions against Celsius mark the latest in a string of civil
and criminal crypto cases brought by US authorities this year.
Federal prosecutors in New York have charged a slew of industry
actors for alleged misconduct -- most notably FTX co-founder Sam
Bankman-Fried.
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Celsius helps over a million customers worldwide to find the path
towards financial independence through a compounding yield service
and instant low-cost loans accessible via a web and mobile app.
Celsius has a blockchain-based fee-free platform where membership
provides access to curated financial services that are not
available through traditional financial institutions.
The Celsius Wallet claims to be one of the only online crypto
wallets designed to allow members to use coins as collateral to get
a loan in dollars, and in the future, to lend their crypto to earn
interest on deposited coins (when they're lent out).
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network, LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtors estimated assets and liabilities between $1
billion and $10 billion.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankrupty counsels; Fischer (FBC & Co.) as
special counsel; Centerview Partners, LLC as investment banker; and
Alvarez & Marsal North America, LLC as financial advisor. Stretto
is the claims agent and administrative advisor.
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. The committee tapped White & Case, LLP as
its bankruptcy counsel; Elementus Inc. as its blockchain forensics
advisor; M3 Advisory Partners, LP as its financial advisor; and
Perella Weinberg Partners, LP as its investment banker.
Shoba Pillay, Esq., is the examiner appointed in the Debtors'
Chapter 11 cases. Jenner & Block, LLP and Huron Consulting
Services, LLC serve as the examiner's legal counsel and financial
advisor, respectively.
CFN ENTERPRISES: Signs Employment Agreements With Execs
-------------------------------------------------------
CFN Enterprises Inc. entered into employment agreements with Allen
Park, appointing him as chief operating officer, Anness Ziadeh,
appointing him as chief sales and marketing officer, and Rami Abi,
appointing him as chief strategy officer, each effective until Dec.
31, 2026.
Under the Employment Agreements, each officer will be paid an
annual base salary of $300,000, and each is entitled to an annual
raise of three percent and additional annual raises and bonuses at
the discretion of the Company's Board of Directors, such bonuses
not to exceed 200% of each officer's base salary. Each officer is
also entitled to other benefits including reimbursement for
reasonable business expenses and payment towards health insurance
premiums. Each Employment Agreement contains customary
confidentiality and assignment of work product provisions and may
be terminated by the Company without cause upon 30-days prior
written notice. If the Company elects to terminate an Employment
Agreement without cause during the term, such officer shall be
entitled to a severance payment of the greater of the remaining
payments under the Employment Agreement or an annual base salary of
one year. If terminated by the officer or for cause, the officer
is entitled to amounts accrued through the date of termination.
Also on July 1, 2023, the Company entered into amendments of the
employment agreements of Brian Ross, the Company's Chairman of the
Board, president and chief executive officer, and Mario Marsillo
Jr., the Company's chief investment officer, each dated Aug. 25,
2021, to extend the term of each agreement from Dec. 31, 2026 to
Dec. 31, 2029, and increasing Mr. Marsillo's annual base salary
from $265,000 to $300,000.
Allen Park is a seasoned executive with diverse industry
experience. Prior to the acquisition of the assets of RAN CoPacking
Solutions LLC by the Company (as described in the Company's Current
Report on Form 8-K dated July 5, 2023), Mr. Park served as CEO of
RAN CoPacking Solutions since June 2021 and previously held
leadership roles at APACK Agency from 2019 till the middle of 2021.
Mr. Park has also led vape brands and a manufacturing company as
CEO. With a global perspective from his China-based business
specializing in manufacturing, sourcing, and procurement, Mr. Park
possesses expertise in accounting, management, sales, supply chain
management, manufacturing, human resources, business strategy,
finance, and operations. Notably, Mr. Park has successfully
completed multiple government manufacturing and sourcing contracts,
showcasing his project management prowess and track record of
delivering results.
Anness "Ness" Ziadeh, prior to cofounding RAN CoPacking Solutions
in 2021, was the COO at CBDfx, a leading CBD products company,
driving operational excellence and strategic initiatives from 2018
to 2021. Under Mr. Ziadeh's leadership, CBDfx achieved significant
growth and solidified its market leader position. Mr. Ziadeh
previously founded and sold a successful vape website, showcasing
his entrepreneurship and business acumen. With expertise in
scaling businesses, he navigates complex challenges and drives
sustainable growth. His diverse experience spans operations
management, digital marketing, and strategic planning. Prior to
CBD and vape industries, Mr. Ziadeh accumulated over a decade of
experience in financial management, decision-making, and business
operations. Leveraging his experience, Mr. Ziadeh fosters
innovation and operational efficiency in the evolving business
landscape.
Rami Abi is a seasoned professional with a track record of success
in building brands and marketing. With a keen eye for spotting new
opportunities, Mr. Abi has a wealth of experience in business
development and is one of the cofounders of RAN CoPacking Solutions
in 2021. Mr. Abi is known for his expertise in hosting festivals
and events, creating memorable experiences for attendees. With his
diverse skill set and strategic mindset, Mr. Abi has consistently
demonstrated his ability to drive growth and capitalize on emerging
trends.
About CFN Enterprises Inc.
CFN Enterprises Inc. owns and operates CNP Operating, a
cannabidiol, or CBD, manufacturer vertically integrated with a 360
degree approach to the processing of high quality CBD products
designed for growers, pharmaceutical, wellness providers, and
retailers' needs, and a cannabis industry focused sponsored content
and marketing business. The Company's ongoing operations currently
consist primarily of CNP Operating and the CFN Business and it will
continue to pursue strategic transactions and opportunities. The
Company is currently in the process of launching an e-commerce
network focused on the sale of general wellness CBD products.
CFN Enterprises reported a net loss of $9.92 million for the year
ended Dec. 31, 2022, compared to a net loss of $12.20 million for
the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$870,551 in total assets, $10.04 million in total liabilities, and
a total stockholders' deficit of $9.17 million.
New York, NY-based RBSM LLP, the Company's auditor since 2012,
issued a "going concern" qualification in its report dated April
17, 2023, citing that the Company has suffered recurring losses
from operations and will require additional capital to continue as
a going concern. This raises substantial doubt about the Company's
ability to continue as a going concern.
CORAL GARDENS: S&P Raises 2018A Revenue Bond Rating to 'B-'
-----------------------------------------------------------
S&P Global Ratings raised its rating to 'B-' from 'CCC' on Capital
Trust Agency, Fla.'s series 2018A multifamily housing revenue bonds
(Coral Gardens Apartments Project), issued on behalf of the
borrower, NV Homestead Apartments LP. The outlook is positive.
"The upgrade and positive outlook reflect the transaction's
material improvement in debt service coverage to nearly 2.0x in
2022, and improvements to credit fundamentals over the last two
years," said S&P Global Ratings credit analyst Caroline West. Given
these improvements, including renewal of the transaction's Housing
Assistance Payments contract, receipt of low-income housing tax
credits allocation, increased rental revenue, and an improved Real
Estate Assessment Center score, we believe the finances are likely
to continue improving over the next year.
"In our view, there is at least a one-in-three likelihood that we
could raise our rating again by one or more notches over the
one-year outlook period, based on our expectation that finances are
likely to generate another year of positive coverage in 2023, given
current revenue and expense projections."
If net cash flows of the property can support a continuation of the
current trend of S&P Global Ratings-calculated debt service
coverage (DSC), thereby demonstrating prolonged financial
improvement and stability, S&P could upgrade the rating. In
addition to sustained improvement in DSC, an upgrade would require
continued fulfillment of agreed-upon events that result in
additional receipts of capital partner contributions, sustained
strong occupancy, and positive scores in future Department of
Housing and Urban Development property inspections.
S&P said, "We could revise the outlook to stable if the pace of
improvement in the financial position slows down or reverses, for
example if DSC falls back below 1.0x or if there is a draw on the
debt service reserve fund. An unexpected drop in occupancy, severe
damage from a weather event, or missteps by management in the
operations and budgeting of the property could cause the coverage
to be lowered from our current expectations."
DEALER PRODUCTS: Trustee Taps Cavazos Hendricks Poirot as Counsel
-----------------------------------------------------------------
Anne Elizabeth Burns, the Chapter 11 trustee for Dealer Products,
Inc., seeks approval from the U.S. Bankruptcy Court for the
Northern District of Texas to employ Cavazos Hendricks Poirot, P.C.
as her legal counsel.
The firm's services include:
a. assisting the trustee in the operation and disposition of
business and recommendation to the court;
b. advising and consulting with the trustee concerning
questions arising in the administration of the Debtor's estate and
the trustee's rights and remedies with regard to the estate's
assets and the claims of creditors;
c. appear for, prosecute, defend and represent the trustee's
interest in suits arising in or related to the case;
d. assist in the preparation of legal papers; and
e. investigate what means may be necessary to preserve certain
property rights owned by the estate and take actions for the
preservation or liquidation of such assets.
Cavazos will be paid at these rates:
Attorneys $315 to $575 per hour
Paraprofessional $100 to 165 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Charles Hendricks, Esq., a partner at Cavazos, 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:
Charles B. Hendricks, Esq.
Cavazos Hendricks Poirot, P.C.
Suite 570, Founders Square
900 Jackson Street
Dallas, TX 75202
Tel: (214) 573-7322
Fax: (214) 573-7399
Email: chuckh@chfirm.com
About Dealer Products
Dealer Products, Inc. -- https://www.dealpro.com -- is a
distributor of motor vehicle supplies and accessories in Texas.
Dealer Products sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Texas Case No. 22-41970) on Aug. 29,
2022, with between $1 million and $10 million in both assets and
liabilities. Susan H. Fischer, vice president, signed the
petition.
Judge Edward L. Morris oversees the case.
The Debtor tapped M. Jermaine Watson, Esq., at Cantey Hanger, LLP
as legal counsel and Seaton Hill Partners, LP as financial
advisor.
Anne Elizabeth Burns, the Chapter 11 trustee appointed in the
Debtor's case, is represented by Cavazos Hendricks Poirot, P.C.
DEXKO GLOBAL: Moody's Rates $300MM Incremental 1st Lien Loan 'B2'
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to DexKo Global,
Inc.'s $300 million incremental first lien term loan due 2028. The
company's existing ratings, including its B3 corporate family
rating, are unaffected at this time. The outlook is stable.
Proceeds from the $300 million incremental term loan are to be used
to repay a $225 million seller term loan and repay borrowings under
its asset-based revolver (ABL) that were used as part of the
financing of DexKo's acquisition of TexTrail in October 2022.
The transaction is leverage neutral with pro forma debt/LTM EBITDA
at about 6.5x at the end of March 31, 2023 (pro forma for acquired
earnings). Moody's expects leverage to remain around this high
level through 2023 as DexKo captures cost savings and synergies to
support earnings while demand pressures in some of its end-markets
persist.
Liquidity is moderately improved following the transaction with
increased availability on the company's $275 million ABL. Moody's
expects DexKo to maintain adequate liquidity over the next twelve
months supported by consistently strong free cash flow.
Assignments:
Issuer: DexKo Global, Inc.
Senior Secured First Lien Term Loan, Assigned B2
RATINGS RATIONALE
DexKo's ratings reflect the company's high financial leverage,
exposure to cyclical end markets, and a relatively aggressive
acquisition strategy. Demand for DexKo's towing related products
will remain soft through 2023, particularly in its industrial
trailer and recreational vehicle segments. Moody's expects DexKo's
organic revenue will decline in the high-single digit range in 2023
while overall revenues will be slightly up due to the inclusion of
a full year of revenue from the TexTrail acquisition.
DexKo's business model has historically delivered a strong and
steady earnings margin through various business cycles. DexKo
maintains a highly variable cost structure, which it is able to
flex during periods of softer demand. As a result, Moody's expects
DexKo's adjusted EBITA margin to moderately improve to at least 14%
in 2023 as it right sizes its cost structure and benefits from an
expanded presence in the higher-margin aftermarket space.
The stable outlook reflects Moody's view that DexKo's debt/EBITDA
will remain high around 6.5x while the company continues to
generate good free cash flow over the next twelve months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if debt/EBITDA is expected to be
sustained below 6x, inclusive of any further acquisitions. The
ratings could also be upgraded if DexKo maintains good liquidity
with increased availability on its revolving credit facilities and
free cash flow to debt of at least 5%.
The ratings could be downgraded if DexKo's earnings deteriorate
such that debt/EBITDA is expected to be sustained above 7x and
EBITA/interest expense below 1.5x. Further, a material weakening in
free cash flow toward breakeven or increased reliance on the
company's external credit facilities could result in a downgrade.
The principal methodology used in this rating was Manufacturing
published in September 2021.
DexKo Global, Inc. is a global manufacturer and distributor of
engineered components for towable and related applications
primarily in North America and Europe. The company serves a variety
of markets including agriculture, commercial, construction, general
industrial, livestock, landscaping, marine, military, energy,
residential, recreation vehicle and many other specialized end-use
segments. In 2021, Brookfield Business Partners L.P. acquired a
majority equity stake in DexKo. Revenue for the twelve months ended
March 31, 2023 was approximately $2.6 billion.
DEXKO GLOBAL: S&P Rates New $300MM First-Lien Term Loan 'B-'
------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to DexKo Global Inc.'s proposed $300 million
first-lien term loan due 2028. The '3' recovery rating indicates
its expectation for meaningful (50%-70%; rounded estimate: 55%)
recovery for lenders in the event of a default.
The proposed transaction does not affect S&P's 'B-' issuer credit
rating or stable outlook on DexKo because it is largely debt for
debt. The company intends to use the proceeds to refinance its
existing $225 million first-lien seller's note, repay about $64
million in existing asset-based lending (ABL) borrowings, and pay
associated fees and expenses. DexKo used the seller's note and ABL
drawings, in conjunction with a draw on its revolver and a $300
million equity contribution from its sponsor, Brookfield Business
Partners L.P., to fund the $922 million acquisition of TexTrail in
2022. While the seller's note does not mature until 2028, S&P
expects the company's proposed first-lien facility will carry a
lower interest rate margin and believe the repayment of its ABL
borrowings will improve its liquidity position. DexKo has repaid
all of the outstanding borrowings on its $200 million revolving
credit facility that it used to fund the TexTrail acquisition, thus
it had full availability under the facility as of March 31, 2023.
DexKo is a global (about 40% of sales are non-U.S.) designer,
manufacturer, and distributor of axle assemblies, chassis,
aftermarket parts, and other engineered components for trailers,
recreational and commercial vehicles, and other towable
applications. DexKo's products serve various end-markets that S&P
considers to be relatively cyclical, such as agriculture,
construction, recreation, oil and gas, and general industrial. This
weakness is partially offset by its growing aftermarket base (about
20%-25% of sales pro forma for TexTrail). Through its acquired
brand names and diverse customer base, which primarily comprises
original equipment manufacturers and global distributors, DexKo is
able to maintain leading market positions (No. 1 or No. 2) in its
served markets and generated $2.6 billion of revenue during the
12-months ended December 31, 2022.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
DexKo's capital structure comprises the following: a $275 million
secured ABL facility due 2026 (not rated), a $200 million
first-lien revolving credit facility due 2026, an $890.4 million
first-lien term loan due 2028, an EUR888 million first-lien term
loan due 2028, delayed-draw term loans of $170 million and EUR94
million due 2028, and $652 million of senior unsecured notes due in
2029. Its capital structure also includes a $225 million first-lien
seller's note, which we expect it will repay with the proceeds from
its proposed $300 million first-lien term loan. Most of the
company's borrowings are by DexKo Global Inc. and guaranteed by
substantially all of its wholly-owned domestic subsidiaries.
However, the euro delayed-draw term loan (EUR94 million) is
borrowed by a German subsidiary, and a portion (EUR303.8 million)
of the euro term loan is borrowed by DexKo's German subsidiary. The
revolving facility and the ABL facility also allow borrowings by
various U.S., German, or Australian subsidiaries.
The ABL facility has a first lien on the working capital assets of
the borrower and guarantors, with borrowings subject to a borrowing
base formula against the working capital collateral.
Revolving and term loan borrowings in the U.S. benefit from a first
lien on substantially all material domestic non-working capital
assets, a 65% equity pledge in first-tier foreign subsidiaries, as
well as a second lien on the working capital assets. Direct bank
loan borrowings by the foreign subsidiaries benefit from additional
guarantees and collateral. However, a collection allocation
mechanism is used to equalize recovery rates for all bank tranches,
notwithstanding the better guarantor and collateral terms for the
non-U.S. borrowings.
S&P assumes the company will seek covenant amendments on its path
to default--resulting in higher interest costs--and will have drawn
approximately 85% of its $200 million revolving credit facility and
60% of its ABL facility at default.
S&P said, "Our simulated default scenario assumes a default in 2025
following an economic downturn and sustained weakness in the
recreation, construction, and industrial end markets, which leads
to a significant decrease in the company's sales volumes and
profitability. At this point, we assume DexKo's liquidity and
capital resources would be strained to the point that it would be
unable to continue to operate without filing for bankruptcy.
"We value the company on a going-concern basis using a 5.5x
multiple of our projected emergence EBITDA of about $322 million.
"While there are foreign borrowings, we expect that a bankruptcy
restructuring by DexKo would be primarily handled under Chapter 11
of the U.S. Bankruptcy Code, with limited administrative
involvement, if any, by foreign jurisdictions. This assumption
considers that most of the company's debt and operations are based
in the U.S., the governing law of its debt agreements, and that
bankruptcy restructurings by multinational companies with a nexus
in the U.S. are often handled this way."
Simulated default assumptions
-- Simulated year of default: 2025
-- EBITDA multiple: 5.5x
Simplified waterfall
-- Emergence EBITDA: $322 million
-- Multiple: 5.5x
-- Domestic obligors/foreign subsidiaries: 50%/50%
-- Gross enterprise value (EV): $1,771 million
-- Net EV after administrative expenses (5%): $1,682 million
--Net EV – foreign subsidiaries: $841 million
-- Direct credit facility borrowings by German subsidiary borrower
(collateral): $448 million
-- Remaining foreign subsidiary equity value available to domestic
creditors (collateral/unpledged): $393 million ($255 million/$138
million)
-- Net enterprise value from domestic obligor group: $841 million
-- Priority claims (ABL borrowings): $170 million
-- Net collateral value from domestic obligors after priority
claims: $671 million
-- Total collateral value available to first-lien debt from
domestic and foreign subsidiaries: $1,375 million
-- Net value available to first-lien debt from its pro rata share
of unpledged foreign equity value: $90 million
-- Total value available to first-lien debt claims: $1,465
million
-- Estimated first-lien debt claims: $2,651 million*
--Recovery expectations: 50%-70% (rounded estimate 55%)
-- Net value available to unsecured debt from its pro rata share
of unpledged value from foreign nonobligors: $48 million
-- Estimated unsecured debt claims: $682 million
--Recovery expectations: 0%-10% (rounded estimate 5%)
*All debt amounts include six months of prepetition interest that
S&P assumes will be owed at default. Collateral available to the
credit facility reflects a collection allocation mechanism, which
combines the value from direct foreign credit facility borrowings
($448 million), domestic borrowings/collateral ($671 million), and
equity pledges in foreign nonguarantors ($256 million). The
unpledged equity in foreign nonguarantors ($138 million) would be
shared by all unsecured creditors, including the deficiency claims
of the secured creditors.
DIAMOND SPORTS: Taps Quinn Emanuel Urquhart as Special Counsel
--------------------------------------------------------------
Diamond Sports Group, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Texas to employ
Quinn Emanuel Urquhart & Sullivan, LLP as special counsel.
The firm will represent the Debtors in connection with the
investigation and potential commencement of claims against J.P.
Morgan & Co. and its affiliated entities.
The firm will be paid at these rates:
Attorneys $1,415 to $2,250 per hour
Associate $880 to $1,390 per hour
Law Clerks/Legal Assistants $515 to $715 per hour
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Quinn
disclosed the following:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed postpetition, explain the
difference and the reasons for the difference.
Response: Not applicable.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: The firm is working with the Debtors to prepare
budgets and staffing plans.
Deborah Newman, Esq., a partner at Quinn, disclosed in a court
filing that her firm is a "disinterested person" pursuant to
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Deborah Newman, Esq.
Quinn Emanuel Urquhart & Sullivan, LLP
711 Louisiana, Suite 500,
Houston,TX 77002
Telephone: (713) 221-7000
Facsimile: (713) 221-7100
Email: deborahnewman@quinnemanuel.com
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 is an
unconsolidated and independently run subsidiary of Sinclair
Broadcast Group.
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. Diamond said it plans to
restructure its balance sheet while continuing to broadcast local
games on its portfolio of 19 networks under the Bally Sports brand
across the U.S.
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, Dorr, LLP and Quinn Emanuel Urquhart & Sullivan,
LLP as special counsels; 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 tapped Akin Gump Strauss Hauer& Feld LLP as counsel; FTI
Consulting, Inc. as financial advisor; and HoulihanLokey Capital,
Inc. as investment banker.
DIOCESE OF ROCKVILLE CENTRE: Boy Scouts' Chapter 11 Nixed Claims
----------------------------------------------------------------
A New York bankruptcy judge Thursday, July 13, 2023, disallowed
nine sexual abuse claims in the Chapter 11 case of the Roman
Catholic Diocese of Rockville Centre, saying the claims had already
been addressed in the bankruptcy plan of the Boy Scouts of America.
In its eleventh omnibus claims objection, the Roman Catholic
Diocese of Rockville Centre, New York, seeks to disallow nine
proofs of claim, which was released, channeled, and enjoined
pursuant to the Boy Scouts of America's Confirmed Plan.
The Diocese submits that approximately 30 proofs of claim filed in
its chapter 11 case may relate to BSA or BSA-related activities in
some fashion. While the Debtor believes that it has defenses with
respect to each BSA-related proof of claim, the 11th Objection
relates only to a subset of these claims—nine to be exact—that
expressly allege abuse occurring after 1975 in connection with
scouting-related activities. The Debtor states that these qualify
as "Post-1975 Chartered Organization Abuse Claims" under the BSA
Plan.
The Bankruptcy Court concludes that the BSA Plan released the
Disputed Claims; therefore, the Disputed Claims must be disallowed
here.
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.
To deal with sexual abuse claims, 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.
ENDO INT'L: Creditors Object to Shortcut $6 Bil. Bankruptcy Sale
----------------------------------------------------------------
Yun Park of Bloomberg Law reports that Endo International Plc
creditors are objecting to the pharmaceutical maker's proposed $6
billion sale of its assets to a lender group, arguing that the
"shortcut" deal would shut out many who were harmed by its opioid
products.
The credit bid deal would exclude "countless creditors with claims
based on opioid-related harm, including the public schools," the
Rochester City School District and other public school districts
said in a court filing with the US Bankruptcy Court District of
Southern District of New York Friday, July 14, 2023.
"The Debtors here have taken a path very different than the one
followed in Purdue and Mallinckrodt. Intent on dispensing with the
rigors and safeguards of Chapter 11, the Debtors propose a shortcut
sale by which a select group of creditors -- favored to the
exclusion of all others -- would be permitted in essence to swallow
the Debtors whole. All remaining creditors -- representing
billions of dollars in claims -- would be left to compete among
themselves over what little is left behind. Indeed, countless
creditors with claims based on opioid-related harm, including the
public schools, would be left, at best, with nothing but a vague
promise that in exchange for forfeiting all of their rights of
redress against the Debtors, they may conceivably be permitted
access, sometime in the indeterminate future, to compensation funds
administered by third-party entities outside of this Court's
control, subject to disbursement priorities yet to be disclosed,"
the Rochester City School District, together certain public school
districts, said in court filings.
The U.S. Trustee said that the proposed sale not only skips
priority creditors, but also dictates matters that go well beyond
Section 363 and are confirmation issues.
"In a blatant attempt to avoid the Bankruptcy Code’s priority
scheme and other protections provided to creditors through the plan
process, the Debtors seek approval of the Sale, which violates the
Bankruptcy Code's priority scheme and constitutes a sub rosa plan.
Pursuant to the Sale, senior secured creditors settled with opioid
claimants and unsecured creditors and agreed to pay them while
skipping administrative and priority creditors, which is prohibited
by the Code. Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973
(2017). In Jevic the Supreme Court rejected arguments that the
priority rules apply only to chapter 11 plans. Id. at 984. Because
the priority system is fundamental to the Code's operation, any
departure from those rules (whether in a structured dismissal,
sale, settlement or other court-approved agreement) must come from
Congress. See id. Because no such authorization exists for
bankruptcy courts to approve end of the case priority-skipping
distributions, the Sale cannot be approved. To do so would invite
"collusion, i.e., senior secured creditors and general unsecured
creditors teaming up to squeeze out priority unsecured creditors."
Id. at 986-987. Here, the parties admit that they are proposing
this Sale because in a plan process they would need to satisfy the
IRS and other priority creditors prior to making a distribution to
general unsecured creditors. This is precisely the type of abusive
situation the Supreme Court rejected in Jevic," the U.S. Trustee
said.
About Endo International
Endo International plc is a generics and branded pharmaceutical
company. It develops, manufactures, and sells branded and generic
products to customers in a wide range of medical fields, including
endocrinology, orthopedics, urology, oncology, neurology, and other
specialty areas. On the Web: http://www.endo.com/
On Aug. 16, 2022, Endo International and certain of its
subsidiaries initiated voluntary prearranged Chapter 11 proceedings
(Bankr. S.D.N.Y. Lead Case No. 22-22549). The cases are pending
before Judge James L. Garrity, Jr.
The Debtors tapped Skadden, Arps, Slate, Meagher & Flom, LLP as
legal counsel; PJT Partners, LP as investment banker; and Alvarez &
Marsal North America, LLC as financial advisor. Kroll
Restructuring Administration, LLC is the claims agent and
administrative advisor. A Web site dedicated to the restructuring
is at http://www.endotomorrow.com/
Roger Frankel, the legal representative for future claimants in the
Chapter 11 cases, tapped Frankel Wyron LLP and Young Conaway
Stargatt & Taylor, LLP as legal counsels, and Ducera Partners, LLC
as investment banker.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on Sept. 2, 2022. The committee tapped Kramer
Levin Naftalis & Frankel as legal counsel; Lazard Freres & Co. LLC
as investment banker; and Dundon Advisers, LLC and Berkeley
Research Group, LLC as financial advisors.
Meanwhile, the official committee representing the Debtors' opioid
claimants tapped Cooley, LLP as bankruptcy counsel; Akin Gump
Strauss Hauer & Feld, LLP as special counsel; Province, LLC as
financial advisor; and Jefferies, LLC, as investment banker.
David M. Klauder, Esq., the court-appointed fee examiner, is
represented by Bielli & Klauder, LLC.
ENVISION HEALTHCARE: 94% Markdown for $206,740 Pioneer Fund Loan
----------------------------------------------------------------
Pioneer Diversified High Income Fund, Inc has marked its $206,740
loan extended to Envision Healthcare Corp to market at $13,093 or
6% of the outstanding amount, as of April 30, 2023, according to a
disclosure contained in Pioneer Fund's Form N-CSR for the Fiscal
year ended April 30, 2023, filed with the Securities and Exchange
Commission.
Pioneer Fund is a participant in a Third Out Term Loan (Term SOFR +
375 bps) to Envision Healthcare Corp. The loan accrues interest at
8.648% per annum. The loan matures on March 27, 2027. The loan is
in default.
Pioneer Diversified High Income Fund, Inc. is organized as a
Maryland corporation. Prior to April 21, 2021, the Fund was
organized as a Delaware statutory trust. On April 21, 2021, the
Fund redomiciled to a Maryland corporation through a statutory
merger of the predecessor Delaware statutory trust with and into a
newly established Maryland corporation formed for the purpose of
effecting the redomiciling. The Fund was originally organized on
January 30, 2007. Prior to commencing operations on May 30, 2007,
the Fund had no operations other than matters relating to its
organization and registration as a diversified, closed-end
management investment company under the Investment Company Act of
1940, as amended. The investment objective of the Fund is to seek a
high level of current income and the Fund may, as a secondary
objective, also seek capital appreciation to the extent that it is
consistent with its investment objective.
Envision Healthcare Corporation provides health care services. The
Hospital offers surgery, pharmacy, medical imaging, emergency care,
and other related health care services. Envision Healthcare serves
patients in the United States.
ENVISION HEALTHCARE: Bankruptcy Stops Corporate Practice Suit
-------------------------------------------------------------
Amelia Pollard of Bloomberg Law reports that a lawsuit against
Envision Healthcare Corp. filed in California can't proceed in the
state after a bankruptcy judge maintained the automatic stay during
a hearing Thursday, July 13, 2023.
The lawsuit alleges that the KKR & Co.-owned physician staffing
firm operated a corporate practice of medicine, which is barred in
the state, according to court papers.
American Academy of Emergency Medicine Physician Group Inc., a
competing staffing firm, brought the suit in 2021 and alleged the
company engaged in unfair business practices.
"These are certainly strong allegations," US Bankruptcy Judge
Christopher Lopez said during the hearing.
Envision urged the U.S. Bankruptcy Court of the Southern District
of Texas to reject the Group's request to pursue the lawsuit.
Envision argued that it's squarely protected in Chapter 11 against
such litigation, and said that it still needs the breathing room
afforded by the automatic stay in bankruptcy.
About Envision Healthcare Corp
Envision Healthcare Corporation -- http://www.EnvisionHealth.com/
-- is a national medical group that delivers physician and advanced
practice provider services, primarily in the areas of emergency and
hospitalist medicine, anesthesiology, radiology, teleradiology and
neonatology. As a leader in ambulatory surgical care, AMSURG holds
ownership in more than 250 surgery centers in 41 states and the
District of Columbia, with medical specialties ranging from
gastroenterology to ophthalmology and orthopedics. In total, the
medical group offers a differentiated suite of clinical solutions
on a national scale with a local understanding of communities,
creating value for health systems, payers, providers and patients.
On May 15, 2023, Envision and affiliates filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Texas Lead Case No. 23-90342). Envision reported $1 billion to $10
billion in both assets and liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankruptcy counsels; Jackson Walker, LLP, as
conflict counsel and co-counsel with Kirkland & Ellis; Alvarez &
Marsal North America, LLC as restructuring advisor; PJT Partners,
LP as investment banker; and KPMG, LLP as tax consultant. Kroll
Restructuring Administration, LLC is the claims, noticing and
solicitation 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 White & Case, LLP.
ESSY QUALITY: Unsecureds Owed $10K+ to Get 38% Dividend in Plan
---------------------------------------------------------------
Essy Quality Health Care, LLC, filed with the U.S. Bankruptcy Court
for the Western District of Texas a Plan of Reorganization dated
July 13, 2023.
The Debtor hires and pays individuals who provide assistance to
homebound individuals to permit them to remain in their homes. The
Debtor was formed in 2008.
The Debtor's assets are composed of their receivables due from
financial intermediaries and denied claims which they are pursuing
through the financial intermediaries' appeal process. Debtor's
other assets are its office furniture which is worth about
$3000.00. Debtor owns no real property or vehicles.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income between $16,000.00 and
$21,000.00 per month. The final Plan payment is expected to be paid
60 months from the date the first plan payment is made.
This Plan of Reorganization proposes to pay creditors of ESSY
Quality Health Care, LLC from future income.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately $.38 cents on the dollar (38% dividend to
unsecured creditors). This Plan also provides for the payment of
administrative and priority claims.
Class 3 consists of IRS Unsecured Priority Claim. The Allowed
Unsecured Priority Claim of the IRS in the amount of $708,292.50
will be paid $13,044.28 per month which amount includes interest at
4% over the 5-year term of the Plan. This consists of the unsecured
priority claim amount $939,182.92 reduced by $18,758.57 for 2023
estimates which have been paid and reduced by and additional
$212,131.851 for 940/941 taxes due from 2013, 2014, 2015 and 2018.
Class 5 consists of IRS Unsecured Claim. The IRS unsecured claim
will be waived provided the Debtor makes all payments to the IRS
Class 3 Claim. In the event the IRS's Class 2 Secured Claim in the
amount of $238,338.53 is found to be primed by the SBA's security
interest, the amount of the IRS's Class 2 Secured claim will be
treated as a Class 8 General Unsecured Claim.
Class 7 consists of General Unsecured Claims Less Than $10,000.00.
The general unsecured claims in allowed amounts less than
$10,000.00 will be paid in full upon confirmation. This consists of
the claim of Chase Bank in the amount of $2921.44. This Class is
impaired.
Class 8 consists of General Unsecured Claims Greater Than
$10,000.00. This class will be paid pro rata from the disposable
income in excess of the Class 3 plan payment. This class will be
paid quarterly. The estimated dividend to Class 8 creditors is 38%
(assuming the SBA has the first lien). The Class 8 claim will be
equal the amount of the SBA's deficiency claim of $241,465.21 or
$478,496.50. This Class is impaired.
Class 9 consists of Equity interest held by Debtor's
member/managers. The Debtor's member/managers will not retain their
equity interest in the Debtor unless and until all payments are
paid per the terms of the confirmed Plan.
The plan will be funded from the Debtor's operations and the
disposable income generated after monthly expenses are deducted
from monthly income will be distributed to creditors as set forth
in the plan. Dozie Zogut Ony and Esther Ony will operate and manage
the Debtor's operations and make the distributions pursuant to the
confirmed plan.
A full-text copy of the Plan of Reorganization dated July 13, 2023
is available at https://urlcurt.com/u?l=LYYvRA from
PacerMonitor.com at no charge.
About ESSY Quality Health Care
ESSY Quality Health Care, LLC, is a home health care services
provider.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Tex. Case No. 23-50442) on April 17,
2023. In the petition signed by Dozie Zogus Ony, managing member,
the Debtor disclosed up to $50,000 in assets and up to $10 million
in liabilities.
Judge Craig A. Gargotta oversees the case.
Michael J. O'Connor, Esq., at Michael J. O'Connor Law Office, is
the Debtor's legal counsel.
EXPRESS GRAIN: Liquidating Trustee Taps Craig M. Geno as Counsel
----------------------------------------------------------------
Heather Williams, the liquidating trustee for Express Grain
Terminals, LLC, seeks approval from the U.S. Bankruptcy Court for
the Northern District of Mississippi to employ the Law Offices of
Craig M. Geno, PLLC.
The liquidating trustee requires legal counsel to:
a. give advice regarding questions arising from multiple
negotiations and transactions which will occur during the
liquidation of assets, and prepare documents to evidence such
transactions;
b. evaluate and attack claims of various creditors who may
assert various abuses and disturb the continued liquidation;
c. appear, prosecute or defend suits and proceedings;
d. represent the liquidating trustee in court hearing and
assist in the preparation of legal papers;
e. advise and consult with the liquidating trustee regarding
the prosecution of claims and objections;
f. advise and consult with the liquidating trustee regarding
the pursuit of adversary proceedings for officer liability; and
g. perform other necessary legal services.
The firm will be paid at these rates:
Craig M. Ceno $500 per hour
Associates $250 per hour
Paralegal $225 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Craig Ceno, Esq., a partner at the Law Offices of Craig M. Geno,
PLLC, 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:
Craig M. Ceno, Esq.
Law Offices of Craig M. Geno, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39158-3380
Tel: (601) 427-0048
Fax: (601) 427-0050
About Express Grain Terminals
Greenwood, Mississippi-based Express Grain Terminals, LLC, produces
soy products such as oil and biodiesel.
Express Grains Terminals and its affiliates, Express Biodiesel, LLC
and Express Processing, LLC, sought Chapter 11 protection (Bankr.
N.D. Miss. Lead Case No. 21-11832) on Sept. 29, 2021. At the time
of the filing, Express Grains Terminals listed up to $50 million in
assets and up to $100 million in liabilities. Judge Selene D.
Maddox oversees the cases.
The Law Offices of Craig M. Geno, PLLC, is the Debtors' legal
counsel.
UMB Bank, N.A., the Debtors' lender, is represented by Spencer
Fane, LLP.
On March 24, 2023, the court confirmed the Debtor's Chapter 11 plan
of liquidation. Heather Williams was appointed as the liquidating
trustee.
FFP HOLDINGS: S&P Alters Outlook to Negative, Affirms 'B-' ICR
--------------------------------------------------------------
S&P Global Rating revised its outlook to negative from stable and
affirmed its 'B-' issuer credit rating on U.S.-based FFP Holdings
Group Inc. S&P also affirmed its issue-level ratings on the
company's first-lien term loan and second-lien term loan at 'B-'
and 'CCC', respectively.
S&P said, "The recovery rating on the first-lien term loan is '3',
indicating our expectation of meaningful (50%-70%; rounded
estimate: 55%) recovery in the event of a payment default. The
recovery rating on the second-lien term loan is '6', indicating our
expectation of negligible (0%-10%; rounded estimate: 0%) recovery
in the event of a payment default.
"The negative outlook reflects our expectation for roughly flat
top-line performance and significant margin contraction that
results in pressured credit metrics in fiscal 2023. We could lower
our ratings if we deem the capital structure to be unsustainable.
"Diversification into beverage extracts and flavors has only
partially insulated FFP from a recent sharp decline in its legacy
cures business. In the first quarter of 2023, FFP's performance
segment, which constitutes natural cures, vegetable concentrates,
and nutritional powders, contracted 10% year over year, primarily
driven by inventory reduction efforts by customers in its primary
meat and protein-based end markets. Consumer demand for commodity
meats softened considerably in early 2023 due to persistent
inflationary pressures, resulting in broad oversupply of protein
products in the market and industry-wide efforts to shed excess
inventory. Notwithstanding the effects of this headwind on
consolidated results, we believe FFP's efforts to enter new markets
through high EBITDA multiple acquisitions since December 2021
staved off more precipitous consolidated revenue and profit
declines. Satisfactory performance in coffee extracts drove 3.6%
revenue growth in the company's taste division. We expect this
business to be a platform for growth, but with a slightly less
favorable margin profile.
"Pro forma credit metrics will remain highly leveraged due to
aggressive financial policies and weaker legacy performance.
Struggles in the legacy FFP business and mix shift toward
lower-margin beverage extracts and flavors underpins our estimate
for approximately 500 basis points (bps) of gross margin decline
and 460 bps of pro forma S&P Global Ratings-adjusted EBITDA margin
contraction in fiscal 2023. As such, we expect that adjusted
leverage will remain elevated in the high-8x area with EBITDA
interest coverage of 1.2x. We expect flat to minimally positive
free operating cash flow (FOCF) in 2023. Any operational missteps
integrating recent acquisitions or further declines in the legacy
cures business could result in unsustainable credit metrics and a
downgrade.
"Our ratings continue to reflect financial sponsor ownership and
aggressive financial policies. Despite sizable equity contributions
from financial sponsors Ardian and Midocean Partners, FFP has added
roughly $270 million in term debt since December 2021 to fund
recent acquisitions. The company has been unable to achieve any
meaningful deleveraging over that timeframe. We expect integration
and organic business investments will be the company's main
strategic priority over the next year, though additional
acquisitions in the taste segment over the medium term are
possible. We believe the sponsors' very aggressive financial
policies will likely prevent the company from sustaining leverage
below 6x for an extended period.
"The negative outlook reflects our expectation for roughly flat
top-line performance and material margin contraction that results
in pressured credit metrics in fiscal 2023.
"We could lower our ratings if we deem the capital structure to be
unsustainable, including failure to improve EBITDA interest
coverage closer to 1.5x, or FOCF sustained at or below break-even
levels."
This could occur due to:
-- Missteps related to integrating recent acquisitions, including
footprint consolidation or enterprise resource planning (ERP)
system implementation.
-- Sustained weakness in the legacy cures business;
-- Increasing competition which limits growth prospects for newly
acquired taste businesses; or
-- The company loses multiple key customers.
S&P could revise its outlook to stable if the company improves and
sustains EBITDA interest coverage at or above 1.5x with positive
FOCF generation.
This could occur if:
-- The company significantly outperforms our expectations,
possibly driven by a rebound in natural cures or significant new
business wins in the taste division;
-- New product offerings and extensions deliver substantial
incremental revenue and profits; and
-- The company adopts less aggressive financial policies, and
there is a commitment from the sponsors to not pursue debt-financed
dividends or acquisitions that would lead to significant credit
ratio deterioration.
ESG Credit Indicators: E-2, S-2, G-3
FORD CREDIT: Moody's Raises Rating on Senior Unsecured Debt to Ba1
------------------------------------------------------------------
Moody's Investors Service has upgraded Ford Motor Credit Company
LLC's (Ford Credit) and Ford Credit Canada Company's (Ford Credit
Canada) long-term senior unsecured ratings to Ba1 from Ba2. The Not
Prime short-term commercial paper ratings were affirmed. Ford
Credit's senior unsecured shelf and senior unsecured MTN program
ratings were upgraded to (P)Ba1 from (P)Ba2, the subordinate shelf
rating was upgraded to (P)Ba2 from (P)Ba3, and the other short-term
rating was affirmed at (P)Not Prime. Ford Credit Canada's senior
unsecured shelf and senior unsecured MTN program ratings were
upgraded to (P)Ba1 from (P)Ba2. The entities' outlooks are stable.
The rating actions follow similar actions on the ratings of Ford
Credit's parent, Ford Motor Company (Ford, Ba1 corporate family
rating, stable), consistent with Moody's Methodology of Captive
Finance Subsidiaries of Nonfinancial Corporations.
RATINGS RATIONALE
The ratings of Ford Credit and Ford Credit Canada are aligned with
those of Ford based on Ford Credit's strategic significance to its
parent, Moody's expectation that Ford would support Ford Credit if
required, and the explicit support agreement in place between the
two companies. Ford's support of Ford Credit is evidenced by a
support agreement under which Ford Credit can require Ford to
inject capital to restore leverage below an 12.5x debt to equity
threshold, should Ford Credit exceed the threshold.
Ford Credit's ba2 standalone assessment was unchanged and takes
into consideration the company's solid portfolio asset quality,
adequate capital cushion that protects its creditors against
unexpected losses, and adequate liquidity supported by its
operating model. Ford Credit's net charge-offs to loan receivables
ratio of 0.2% as of March 31, 2023 is the lowest among US auto
captives. Ford Credit also has a relatively limited lease portfolio
(17% of total net finance receivables and operating leases as of
March 31, 2023) compared to auto captive peers, making it less
vulnerable to a decline in used car prices. Moody's expects that in
2023 used car prices will be moderately down (3% decline so far
this year). Moody's views the anticipated decline in 2023 (and 13%
decline in 2022) as a price correction from 2021. In 2021, used
vehicle prices experienced an extraordinary increase of
approximately 50%, partially supported by new vehicles production
delays when some buyers switched to used vehicles instead of
waiting for new ones to become available.
Credit challenges for Ford Credit include its exposure to the
performance trends of its parent and its increasing use of
securitization, reducing the company's alternate sources of
liquidity.
Ford Credit's liquidity position is adequate and totaled $25.8
billion as of March 31, 2023, consisting of $7.2 billion of cash
(net of $3.0 billion of cash reserves held for ABS facilities),
$16.5 billion from committed asset backed facilities (excluding
capacity in excess of eligible receivables), and $2.1 billion under
other unsecured credit facilities ($2.5 billion capacity). Ford
Credit's liquidity typically represent approximately 75% of
unsecured maturities over the next 12 months.
The stable outlook on Ford Credit is consistent with the outlook of
its ultimate parent Ford. Ford's stable outlook reflects Moody's
expectation that Ford will be able to sustain the improvement in
earnings and cash flows, notwithstanding developing industry
pricing pressures and cooling macroeconomic conditions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ford Credit's ratings could be upgraded if the ratings of Ford are
upgraded. Ford Credit's standalone assessment could improve if the
company's leverage declines and asset quality remains strong,
consistent with historical levels.
Ford Credit's ratings could be downgraded if Ford's ratings are
downgraded. Ford Credit's standalone assessment could weaken if
there is a material decline in asset quality, profitability or
liquidity, or if leverage increases.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
Ford Credit is an indirect, wholly owned subsidiary of Ford Motor
Company. As of March 31, 2023, Ford Credit had a $123.8 billion
portfolio of finance receivables and operating leases offered
through three segments: operating leases, consumer financing
(retail loans) and non-consumer financing (wholesale financing to
dealers).
FORD MOTOR: Moody's Upgrades CFR & Senior Unsecured Rating to Ba1
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Ford Motor
Company (Ford), including the corporate family rating to Ba1 from
Ba2, the probability of default rating to Ba1-PD from Ba2-PD, and
the senior unsecured rating to Ba1 from Ba2. Moody's also upgraded
the senior unsecured rating of Ford Holdings LLC to Ba1 from Ba2.
The outlook is stable. The speculative grade liquidity rating of
Ford remains SGL-1.
The ratings upgrade reflects Moody's expectation that Ford can
sustain a marked improvement in its automotive EBITA margin and
automotive cash flow. Meaningful improvements in its Ford Blue and
Ford Pro segments underpin a higher EBITA margin, despite
considerable losses at Ford's electric vehicle segment, Model e,
and will allow the company to generate sustained positive free cash
flow.
Execution risk around the transition to electric vehicles continues
to be significant. The global automotive industry remains at an
early stage of a significant long-term transition to reduce carbon
emissions by improving fuel efficiency and shifting to fully
electric vehicles. Key risks for automakers, including Ford,
include loss of market share, inability to earn adequate profits
and returns on electric vehicles, as well as inability to
manufacture vehicles due to potential constraints in the supply of
critical materials.
That said, Ford is accelerating the development and production of
electric vehicles and Moody's believes that Ford has a credible
strategy to navigate the transition. Importantly, Ford's early
successes in its turnaround plan and favorable industry conditions
over the past year have built sufficient financial flexibility to
absorb the adverse impact on earnings from the start-up of its
electric vehicle operations. Importantly, Ford is no longer reliant
on dividends from Ford Motor Credit Company LLC (Ford Credit) to
help fund capital expenditures, even after a considerable step-up
in capital spending in the next several years related to the
company's transition to electric vehicles.
Upgrades:
Issuer: Ford Motor Company
Corporate Family Rating, Upgraded to Ba1 from Ba2
Probability of Default Rating, Upgraded to Ba1-PD from Ba2-PD
Senior Unsecured Bank Credit Facility, Upgraded to Ba1 from Ba2
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 from Ba2
Issuer: Ford Holdings LLC
Backed Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1
from Ba2
Outlook Actions:
Issuer: Ford Motor Company
Outlook, Remains Stable
Issuer: Ford Holdings LLC
Outlook, Remains Stable
RATINGS RATIONALE
The Ba1 rating of Ford reflects the company's competitive position
in the North American market for light vehicles and commercial vans
and trucks. Although improving, Ford's profit margin is modest but
financial leverage is low and the company maintains a significant
level of cash and investments relative to debt. In addition, the
rating incorporates the considerable carbon transition risks that
the auto sector faces, as well the recurring challenges in the
industry, including the cyclical nature of demand for new
vehicles.
Ford is accelerating the development and production of electric
vehicles and is heightening its customer focus after forming three
distinct yet interdependent business units: Ford Model e (electric
vehicles), Ford Blue (internal combustion and hybrid vehicles), and
Ford Pro (commercial customers). Ford's initial EV product line-up
is competitive, but margins on electric vehicles will be weak for
several years.
To help fund the losses at Ford Model e as well as the elevated
investments associated with the transition to electric vehicles,
Ford aims to further improve the profit margin at Ford Blue by
maintaining a focused product offering, increasing the use of
derivatives with substantial parts commonality to the base vehicle,
reducing vehicle complexity, and improving vehicle quality.
Moody's estimates Ford's automotive EBITA margin in 2023 to be 4.7%
on a Moody's adjusted basis, a marked departure from the low
single-digit EBITA margins recorded before 2022. The launch of the
new Super Duty in March will underpin Ford's earnings this year,
benefiting from higher volumes and a net increase in pricing for
this vehicle category. Moody's believes there is upside potential
in Ford's EBITA margin for 2024 if Ford successfully executes its
planned actions at Ford Blue, but Moody's also acknowledges the
challenges in achieving the operational efficiencies that Ford is
planning to realize.
The stable outlook reflects Moody's expectation that Ford will be
able to sustain the improvement in earnings and cash flows,
notwithstanding developing industry pricing pressures and cooling
macroeconomic conditions. Ford's considerable liquidity and modest
leverage also help to contend with possible industry challenges,
including a potential strike at Ford's facilities in connection
with the negotiation of a new labor contract in the second half of
2023.
Moody's expects that liquidity will remain very good (SGL-1), a
core tenet of Ford's financial policy. Cash and marketable
securities totaled $28.6 billion (excluding Ford Credit) as of
March 31, 2023, and the aggregate availability under committed
credit facilities was $17.6 billion (excluding Ford Credit). Ford
has limited debt maturities through 2025, although recurring
funding needs at Ford Credit for the origination of new finance
receivables are considerable. Moody's expects free cash flow to be
$1.4 billion in 2023 (excluding special dividends).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Ford can sustain the automotive
EBITA margin above 5%, if Ford demonstrates it can fund capital
expenditures and regular dividends from cash flow of its automotive
operations, and if FCF/debt is maintained at more than 7%.
Additional considerations for a higher rating are evidence of
commercial success and favorable profitability trends of Ford's
battery electric vehicles.
The ratings could be downgraded if the automotive EBITA margin
falls below 4%, if cash flow from automotive operations is
insufficient to fund capital expenditures, or if debt/EBITDA
exceeds 3 times. Muted traction of battery electric vehicles sales,
especially in the light truck segment, could also lead to a
downgrade, as could an inability to stem losses at Ford Model e
over time.
The methodologies used in these ratings were Automobile
Manufacturers published in May 2021.
Ford Motor Company, headquartered in Dearborn, Michigan, is a
global automotive manufacturer. Revenue in 2022 was $158 billion.
FREE SPEECH: Jones Ask Court Okay for Book Deals in Chapter 11
--------------------------------------------------------------
GBbankrupt right-wing radio conspiracy theorist Alex Jones asked a
Texas bankruptcy judge for approval to assume two book contracts in
his Chapter 11 case, saying continued royalty payments from the
deals would benefit his estate.
On Feb. 4, 2022, Jones entered into a Publishing Agreement with
Skyhorse Publishing Inc. in connection with that certain literary
endeavour entitled, "Reset Wars: The Great Reset Exposed" (the
"2022 Book Contract"). The 2022 Book Contract contains terms for
royalties, publishing, intellectual property rights, and an agency
clause.
On Jan. 23, 2023, the Debtor entered into a Publishing Agreement
with Skyhorse Publishing Inc. in connection with that certain
literary endeavour entitled, "Taking Down the Globalist
Puppetmasters" (as amended on April 24, 2023, the "2023 Book
Contract"). The 2023 Book Contract contains terms for royalties,
publishing, intellectual property rights, and an agency clause.
The Debtor anticipates that assuming the 2022 Book Contract will
benefit the estate in the form of revenues from book sales in
connection with that contract. Rejecting the 2022 Book Contract
would have no benefit and would cause substantial harm to the
estate via breach of contract claims and lost revenue.
In fact, the Debtor's remaining obligations under the 2022 Book
Contract are far outweighed by his rights thereunder. Since the
Petition Date, Debtor has received approximately $179,440.00 under
the 2022 Book Contract and wishes to continue receiving such
royalty payments. In exchange, since the book has been released,
Debtor remains responsible for revisions needed after February 22,
2024. It is in Debtor's business judgment to continue to perform
under the 2022 Book Contract.
with respect to the 2023 Book Contract, the Debtor submits that the
2023 Book Contract is within the ordinary course of his business.
However, out of an abundance of caution, Debtor seeks the Court's
approval of the 2023 Book Contract. Further, the Debtor is not
seeking to use, sell, or lease property of the estate with his
entry into the 2023 Book Contract. The Debtor has, with the
benefit of estate professionals, done the necessary analysis and
determined that the 2023 Book Contract will benefit the estate in
the form of advances and revenues from book sales in connection
with that contract.
The Debtor believes that assuming the 2022 Book Contract and
approving the 2023 Book Contract will benefit the estate because
the increased funds will allow the Debtor to fund additional
administrative expenses and budget for greater plan payments going
forward.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FTX TRADING: Files Suit to Recover $323M Spent in Digital Assets
----------------------------------------------------------------
Jonathan Randles of Bloomberg Law reports that former FTX
executives massively overpaid to acquire a Swiss firm where a close
associate of Sam Bankman-Fried worked, the failed crypto platform
alleged in a lawsuit that seeks to recover at least $323.5 million
from beneficiaries of a deal that expanded the platform in Europe.
FTX Trading Ltd. said in a lawsuit filed July 12, 2023, in Delaware
bankruptcy court that Bankman-Fried and other executives conducted
no due diligence, nor engaged in price negotiations before offering
to purchase financial services firm Digital Assets DA AG, which was
later renamed FTX Europe.
Plaintiffs FTX Trading Ltd. and Maclaurin Investments Ltd. filed a
complaint against Patrick Gruhn, Robin Matzke, Brandon Williams,
and Lorem Ipsum UG. Lorem Ipsum UG, a/k/a Lorem Ipsum RM UG, is a
German holding company controlled by defendant Matzke. Gruhn
co-founded DAAG with Defendant Matzke and incorporated it in
Switzerland in July 2020. Williams was an employee and shareholder
of DAAG prior to its acquisition. Williams is the Managing
Director at Cosima Capital, a digital asset and cryptocurrency
advisory and trading firm.
Digital Assets DA AG ("DAAG") was a Swiss company that purported to
issue structured financial products and related services.
According to the lawsuit, the FTX insiders caused FTX Trading Ltd.
and Alameda to acquire DAAG at nearly a $400 million valuation,
despite knowing that DAAG had limited business and no intellectual
property beyond a "business plan." DAAG would ultimately come to be
known as FTX Europe AG ("FTX Europe"), after the FTX Insiders
caused the FTX Group to acquire it.
The FTX Insiders pursued the DAAG acquisition because they believed
DAAG's founders could provide access to European regulators that
would allow FTX to obtain the necessary licenses for activities in
the European Economic Area, and because they wanted to benefit
Williams and Matzke, who had preexisting relationships with
Bankman-Fried since at least 2018. Access to licenses in the
European Economic Area would have allowed the FTX Group to expand
its customer base, in turn enabling the FTX Insiders to expand
their fraudulent scheme and misappropriation of FTX Group funds.
Without conducting any due diligence, negotiating over the price,
or hiring counsel until the eleventh hour, the FTX Insiders caused
Alameda and FTX Trading to enter into agreements to pay more than
$376 million in consideration to Gruhn, Matzke, Ernest Ukaj, Lorem
Ipsum UG, and Williams -- a close associate of Bankman-Fried—in
connection with the acquisition of DAAG.
The FTX Insiders obtained the funds used to acquire DAAG by
misappropriating them from the FTX Group, to the substantial
detriment of creditors. As part of the acquisition, Gruhn and
Matzke were appointed to executive positions at DAAG.
Accordingly, Plaintiffs bring this adversary proceeding pursuant to
Sections 547, 548, and 550 of Title 11 of the United States Code,
11 U.S.C. Secs. 101 et seq., to avoid and recover from the
Defendants, or from any other person or entity for whose benefit
the transfers were made, all transfers of property of Plaintiffs
and all obligations of Plaintiffs to the Defendants made prior to
the commencement of the Chapter 11 cases. Plaintiffs further bring
claims against Defendants Gruhn and Matzke for breach of fiduciary
duty under Antiguan law.
The case is FTX TRADING LTD. and MACLAURIN INVESTMENTS LTD.,
Plaintiffs, vs. LOREM IPSUM UG, PATRICK GRUHN, ROBIN MATZKE, and
BRANDON WILLIAMS, Defendants, Adv. Pro. No. 23-50437 (Bankr. D.
Del. Case No. 22-11068).
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FTX TRADING: Launches Creditors Customer Claims Portal
------------------------------------------------------
Haseeb Shaheen of Cryptopolitan reports that FTX, the defunct
cryptocurrency trading platform, has announced the launch of a
customer claims portal, providing creditors with the opportunity to
submit their claims. The portal allows individuals who had accounts
with various FTX subsidiaries, including FTX.com, FTX.us,
Blockfolio, FTX EU, FTX JP, and crypto exchange Liquid, to access
their account information and file a petition. The claims submitted
through this portal will be considered as part of FTX's ongoing
Chapter 11 bankruptcy proceedings. In response to a U.S. court
ruling, customers are required to file their claims by September
29. This article explores the details of the customer claims portal
and its significance in FTX's debt resolution efforts.
FTX Introduces Customer Claims Portal
FTX has taken a crucial step towards addressing its financial
obligations by introducing a customer claims portal. This portal
allows affected customers to access their account information and
submit their claims, which will be considered during the Chapter 11
bankruptcy proceedings. By creating this platform, FTX aims to
streamline the claims process and ensure transparency and fairness
for all creditors involved.
Process and Instructions for Filing Claims
The customer claims portal, managed by the Kroll Restructuring
Administration platform, provides a straightforward process for
creditors to submit their claims. Users will first be directed to
verify their account balances as of the Petition Date, which is
currently set as November 11, 2022. This step is crucial in
accurately calculating the claims and determining the extent of the
debts owed to each customer.
Upon confirming their balances, customers will be guided through
the process of submitting electronic proofs of claim, if necessary.
This step allows them to provide any additional documentation or
evidence to support their claim amount. It is imperative for
creditors to carefully review their account information and submit
accurate claims to ensure a fair evaluation of their outstanding
balances.
Deadline and Implications
Creditors and former customers of FTX must be aware of the looming
deadline for filing their claims. In accordance with a U.S. court
ruling, all claims must be submitted by September 29. Missing this
deadline could significantly impact a customer’s ability to
recover their funds. Therefore, it is crucial for affected
individuals to act promptly and utilize the customer claims portal
to ensure their claims are properly registered within the
designated timeframe.
By launching the customer claims portal, FTX aims to streamline the
claims process and facilitate efficient debt resolution. The portal
serves as a centralized platform for creditors to access their
account information, verify balances, and submit their claims
electronically. This approach enhances transparency and provides a
fair opportunity for all customers to participate in the bankruptcy
proceedings.
Conclusion
FTX's introduction of the customer claims portal marks a
significant step in its Chapter 11 bankruptcy proceedings. This
platform enables creditors who held accounts with FTX.com, FTX.us,
Blockfolio, FTX EU, FTX JP, and crypto exchange Liquid to submit
their claims. With the deadline set for September 29, it is crucial
for affected customers to promptly access the portal, review their
account information, and submit accurate claims to secure their
position in the debt resolution process. FTX's commitment to
transparency and fairness through this portal showcases its
dedication to resolving its financial obligations and addressing
the needs of its creditors.
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.
FUTURE PRESENT: Case Summary & 18 Unsecured Creditors
-----------------------------------------------------
Debtor: Future Present Productions, LLC
d/b/a GUM Studios
2-15 Borden Ave
Long Island City, NY 11101
Business Description: GUM Studios is a multi-location film stage &
equipment rental facility with production
capabilities in the New York Metropolitan -
Tri State area. GUM Studios caters to
production companies, advertising agencies,
video-photographers, designers, and large
tv/film productions.
Chapter 11 Petition Date: July 18, 2023
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 23-42510
Judge: Hon. Elizabeth S. Stong
Debtor's Counsel: Lewis W. Siegel, Esq.
LEWIS W. SIEGEL
60 East 42nd Street - Suite 4600
New York, NY 10165
Tel: (212) 286-0010
Fax: (212) 884-9586
Email: LWS@LWSEsq.com
Total Assets: $6,065,879
Total Liabilities: $5,760,994
The petition was signed by Carrie White as CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 18 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/QDWLCUI/Future_Present_Productions_LLC__nyebke-23-42510__0001.0.pdf?mcid=tGE4TAMA
GALLERIA 2425 OWNER: Seeks Chapter 11 Bankruptcy Protection
-----------------------------------------------------------
Galleria 2425 Owner LLC filed for chapter 11 protection in the
Southern District of Texas.
The Debtor's primary asset is a Class A office building located at
2425 West Loop South, Houston, Texas 77027. The Property is fully
covered by commercial property and liability insurance.
As of the Petition Date, the Debtor was allegedly indebted to
National Bank of Kuwait, S.A.K.P., New York Branch ("NBK") pursuant
to a loan made to the Debtor by NBK (the "Loan"). The Loan is
evidenced by, inter alia: (i) a Loan Agreement by and between the
Debtor and NBK dated May 23, 2018; (ii) a Promissory Note dated May
23, 2018 made by the Debtor in
the original principal amount of $60,212,817 in favor of NBK; and
(iii) that certain Deed of Trust, Assignment of Leases and Rents
and Profits, Security Agreement and Fixture Filing dated May 23,
2018, by and between the Debtor and NBK. The Loan is allegedly
secured by various instruments, including a deed of trust and UCC-1
financing
statements, which were allegedly filed of record in appropriate
jurisdictions. Collateral for the Loan includes, inter alia, the
Property and rents received from the operation of the Property.
The Debtor's only source of operating funds is generated by the
operation of the Property, specifically, rental and other income
from tenants at the Property collected by or for the benefit of the
Debtor.
According to court filings, Galleria 2425 Owner estimates between
$50 million and $100 million in debt to 1 to 49 creditors. The
petition states that funds will not be available to unsecured
creditors.
About Galleria 2425 Owner
Galleria 2425 Owner LLC is a Single Asset Real Estate as defined in
11 U.S.C. Section 101(51B).
Galleria 2425 Owner LLC sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-60036) on July 5,
2023. In the petition filed by Dward Darjean, as manager, the
Debtor reports estimated assets between $10 million and $50 million
and estimated liabilities between $50 million and $100 million.
The Honorable Bankruptcy Judge Christopher M. Lopez oversees the
case.
The Debtor is represented by:
Melissa S Hayward, Esq.
Hayward & Associates PLLC
1001 West Loop South 700
Houston, TX 77027
Tel: 214-755-7100
Email: mhayward@haywardfirm.com
GALLERIA 2425: Court OKs Interim Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Victoria Division, authorized Galleria 2425 Owner LLC to use cash
collateral on an interim basis in accordance with the budget, with
a 5% variance.
The Debtor's primary asset is a Class A office building located at
2425 West Loop South, Houston, Texas 77027. The Property is fully
covered by commercial property and liability insurance.
The Debtor requires the use of cash collateral to pay its direct
operating expenses, maintain the Property, and obtain goods and
services.
National Bank of Kuwait, S.A.K.P., New York Branch asserts that the
Debtor was indebted to NBK under a prepetition loan and that the
Debtor's obligations under the Prepetition Loan are evidenced by,
among others, the following loan documents:
i. the Loan Agreement by and among NBK and the Debtor, dated
May 23, 2018;
ii. the Promissory Note executed by the Debtor in favor of NBK,
dated May 23, 2018; and
iii. the Deed of Trust, Assignment of Leases and Rents and
Profits, Security Agreement and Fixture Filing, dated May 23, 2018,
recorded RP2018-235600 in the Real Property Records of Harris
County, Texas covering the Property.
NBK asserts that the Prepetition Loan Documents are secured by
various instruments, assignments, and certificates, including deeds
of trust, which: (a) were filed of record in appropriate
jurisdictions; and (b) granted NBK first-priority, properly
perfected, senior liens and security interests upon and in all of
the Debtor's personal and real property, fixtures, improvements,
and rents and proceeds derived therefrom.
Subject to a Carve-Out, as partial adequate protection and in the
same priority and to the same extent and validity as existed
prepetition, NBK is granted: (a) automatic perfected replacement
liens on all Rental Proceeds, accounts, and receivables related to
the use or occupancy of the Property that are now owned or
hereafter acquired by the Debtor; and (b) superpriority
administrative claims pursuant to 11 U.S.C sections 361(2), 361(3),
503(b)(1), 507(a)(2), and 507(b).
The "Carve-Out" means, in the Order and subject to the entry of a
final order approving the Motion: (a) all fees and expenses
incurred by the Debtor's professionals that are approved by the
Court pursuant to 11 U.S.C. section 330; (b) statutory liens of ad
valorem taxing authorities; and (c) quarterly fees owed to the
Office of the United States Trustee. The Carve-Out may only be used
for the payment of fees and expenses as provided herein and of
estate professionals to the extent approved by order of the Court.
As additional partial adequate protection, the Debtor will maintain
adequate insurance coverage on the Prepetition Collateral and the
Collateral, as required under the Prepetition Loan Documents.
The Debtor is authorized to use cash collateral in accordance with
the Order until the earlier of:
i. Five business days after notice by a creditor with an
interest in cash collateral to the Debtor of any Termination Event,
unless within such five day period the Debtor has cured such
Termination Event or unless waived by such creditor;
ii. The date of the dismissal of Debtor's bankruptcy case or
the conversion of Debtor's bankruptcy case to a case under chapter
7 of the Bankruptcy Code; or
iii. The date of appointment of a trustee in the Debtor's
chapter 11 bankruptcy case.
The Debtor will immediately cease using cash collateral after the
Cure Period upon the occurrence of any of these events:
i. The Debtor violates any terms of the Order;
ii. The failure by Debtor to pay when due operating expenses
incurred after the Petition Date;
iii. The failure by the Debtor to maintain the Insurance;
iv. The occurrence of the effective date or consummation date
of a plan of reorganization for the Debtor;
v. The entry by the Court or any other court of an order
reversing, staying, or vacating this Order or amending,
supplementing, or otherwise modifying in any material manner the
protections granted to Debtor in the Order; or
vi. The entry by the Court of an order granting relief from the
automatic stay imposed by 11 U.S.C. section 362 to any entity other
than Debtor that permits such entity to exercise foreclosure or
disposition rights with respect to the Prepetition Collateral.
A final hearing on the matter is set for August 1, 2023 at 11 a.m.
A copy of the Court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=5vo9ED from PacerMonitor.com.
The Debtor projects $123,086 in total income and $86,244 in total
operating expenses.
About Galleria 2425 Owner LLC
Galleria 2425 Owner LLC is a Single Asset Real Estate as defined in
11 U.S.C. Section 101(51B).
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-60036) on July 5,
2023. In the petition signed by Dward Darjean, manager, the Debtor
disclosed up to $50 million in assets and up to $100 million in
liabilities.
Judge Christopher M. Lopez oversees the case.
Melissa S. Hayward, Esq., at Hayward PLLC, represents the Debtor as
legal counsel.
GENESIS HEALTHCARE: Moody's Affirms 'Ba2' Rating on Revenue Bond
----------------------------------------------------------------
Moody's Investors Service has affirmed Genesis Healthcare System's
(GHS, OH) Ba2 revenue bond rating. The outlook has been revised to
stable from positive. GHS has approximately $286 million of debt
outstanding.
RATING RATIONALE
Affirmation of the Ba2 reflects GHS's leading market position as a
moderate-sized community hospital in a non-urban market. Volume
recovery will be aided by a new outpatient facility and the
replacement of several departed physicians. The decline in days
cash to moderate levels following investment losses provides less
of an offset to relatively weak OCF margins, key contributors to
the outlook revision to stable from positive. GHS's leverage,
specifically debt to cash flow and cash to debt, will continue to
remain relatively high. Overall exposure to Medicare and Medicaid
is above average (about 70%), while benefits from Ohio's directed
payment program and the federal 340B program also provide risk.
Atypical of smaller hospitals, GHS has explored various value-based
payer models, most recently joining a Medicare ACO with a public
company, which will involve taking downside risk. This could
provide some uncertainty, especially in light of outmigration to
larger Columbus facilities.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that GHS's
performance will improve over the next 12-18 months, with
anticipated lower reliance on contract labor. The outlook is also
supported by maintenance of days cash at approximately current
levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
-- Meaningful, sustained improvement in OCF margins, exceeding
historical 7%+
-- Days cash and cash to debt significantly above current levels
-- Debt to cash flow falls and is sustained below historical 5
times
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
-- Inability to show improvement in OCF margins to the mid-single
digit range by year-end fiscal 2023
-- Further deterioration of days cash or cash to debt
-- Debt to cash flow sustained at current levels (around 7 times)
-- Negative changes to net income from 340B or loss of state
supplemental funding
-- Covenant cushions diminish, increasing likelihood of a breach
LEGAL SECURITY
The Series 2013 Bonds and system's outstanding notes are equally
and ratably secured by mortgages on the Mortgaged Property and a
security in the Gross Revenues of the obligated group. The
obligated group is comprised of Genesis HealthCare System, Genesis
HealthCare Foundation, Good Samaritan Medical Center Foundation,
Bethesda Health Foundation, CareServe, Genesis CareGivers,
CareLife, LLC, Professionals PRN LLC, CareEquip, LLC, Genesis
Medical Group LLC, Genesis Emergency Physicians LLC, Genesis Urgent
Care Physicians LLC, Genesis Primary Care Physicians LLC and
Genesis Surgical Services LLC.
PROFILE
Genesis Healthcare System is a stand-alone community hospital
located in Zanesville, Ohio about 55 miles east of Columbus. In
addition to the acute care hospital, GHS provides patients in the
community access to outpatient care, including primary and
specialty physician clinics, urgent care facilities, an outpatient
surgery center, outpatient therapy and an ambulance service. GHS
operates in a six-county primary service area, comprised of
Muskingum County, Guernsey County, Noble County, Morgan County,
Perry County and Coshocton County.
METHODOLOGY
The principal methodology used in this rating was Not-For-Profit
Healthcare published in December 2018.
GS MORTGAGE 2014-GC20: Moody's Lowers Rating on Cl. C Certs to B2
-----------------------------------------------------------------
Moody's Investors Service has affirmed the ratings on five classes
and downgraded the ratings on four classes in GS Mortgage
Securities Trust 2014-GC20, Commercial Mortgage Pass-Through
Certificates, Series 2014-GC20 as follows:
Cl. A-4, Affirmed Aaa (sf); previously on May 11, 2021 Affirmed Aaa
(sf)
Cl. A-5, Affirmed Aaa (sf); previously on May 11, 2021 Affirmed Aaa
(sf)
Cl. A-AB, Affirmed Aaa (sf); previously on May 11, 2021 Affirmed
Aaa (sf)
Cl. A-S, Affirmed Aaa (sf); previously on May 11, 2021 Affirmed Aaa
(sf)
Cl. B, Downgraded to Baa1 (sf); previously on May 11, 2021
Downgraded to A2 (sf)
Cl. C, Downgraded to B2 (sf); previously on May 11, 2021 Downgraded
to Ba3 (sf)
Cl. PEZ, Downgraded to Ba2 (sf); previously on May 11, 2021
Downgraded to Baa3 (sf)
Cl. X-A*, Affirmed Aaa (sf); previously on May 11, 2021 Affirmed
Aaa (sf)
Cl. X-B*, Downgraded to Baa1 (sf); previously on May 11, 2021
Downgraded to A2 (sf)
* Reflects Interest-Only Classes
RATINGS RATIONALE
The ratings on four principal and interest (P&I) classes were
affirmed because of their significant credit support and the
transaction's key metrics, including Moody's loan-to-value (LTV)
ratio and Moody's stressed debt service coverage ratio (DSCR) are
within acceptable ranges. These classes will also benefit from
principal paydowns and amortization as the remaining loans approach
their maturity dates and defeased loans now represent 31% of the
pool.
The ratings on two P&I classes, Cl. B and Cl. C, were downgraded
due to realized and anticipated losses and the increased risk of
interest shortfalls due to exposure to specially serviced and
troubled loans. One loan, representing 5.5% of the pool, is in
special servicing and four loans, representing 18.3% of the pool,
have been identified as troubled loans due to deterioration in
performance. The largest loan in the pool, Greene Town Center
(12.4% of the pool), is secured by a mixed-use property and the
borrower has requested to transfer the loan to special servicing
for maturity extension. All the remaining loans mature by April
2024 and given the higher interest rate environment and loan
performance, certain loans may be unable to pay off at their
maturity date.
The rating on the IO class X-A was affirmed based on the credit
quality of its referenced classes.
The rating on the IO class X-B was downgraded due to a decline in
the credit quality of its referenced class.
The rating on class PEZ was downgraded due to the decline in the
credit quality of its reference exchangeable classes.
Moody's regard e-commerce competition as a social risk under
Moody's ESG framework. The rise in e-commerce and changing consumer
behavior presents challenges to brick-and-mortar discretionary
retailers.
Moody's rating action reflects a base expected loss of 12.9% of the
current pooled balance, compared to 18.2% at Moody's last review.
Moody's base expected loss plus realized losses is now 12.5% of the
original pooled balance, compared to 11.5% at the last review.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
The performance expectations for a given variable indicate Moody's
forward-looking view of the likely range of performance over the
medium term. Performance that falls outside the given range can
indicate that the collateral's credit quality is stronger or weaker
than Moody's had previously expected. Additionally, significant
changes in the 5-year rolling average of 10-year US Treasury rates
will impact the magnitude of the interest rate adjustment and may
lead to future rating actions.
Factors that could lead to an upgrade of the ratings include a
significant amount of loan paydowns or amortization, an increase in
the pool's share of defeasance or an improvement in pool
performance.
Factors that could lead to a downgrade of the ratings include a
decline in the performance of the pool, loan concentration, an
increase in realized and expected losses from specially serviced
and troubled loans or interest shortfalls.
METHODOLOGY UNDERLYING THE RATING ACTION
The methodologies used in rating all classes except interest-only
classes were "US and Canadian Conduit/Fusion Commercial
Mortgage-Backed Securitizations Methodology" published in July
2022.
DEAL PERFORMANCE
As of the June 12, 2023 distribution date, the transaction's
aggregate certificate balance has decreased by 47.3% to $622.7
million from $1.18 billion at securitization. The certificates are
collateralized by 52 mortgage loans ranging in size from less than
1% to 12.4% of the pool, with the top ten loans (excluding
defeasance) constituting 47.9% of the pool. Twenty two loans,
constituting 30.8% of the pool, have defeased and are secured by US
government securities.
Moody's uses a variation of Herf to measure the diversity of loan
sizes, where a higher number represents greater diversity. Loan
concentration has an important bearing on potential rating
volatility, including the risk of multiple notch downgrades under
adverse circumstances. The credit neutral Herf score is 40. The
pool has a Herf of 15, compared to 18 at Moody's last review.
Five loans, constituting 19.1% of the pool, are on the master
servicer's watchlist. The watchlist includes loans that meet
certain portfolio review guidelines established as part of the CRE
Finance Council (CREFC) monthly reporting package. As part of
Moody's ongoing monitoring of a transaction, the agency reviews the
watchlist to assess which loans have material issues that could
affect performance.
One loan has been liquidated from the pool, resulting in an
aggregate realized loss of $67.1 million (for an average loss
severity of 84%). One loan, constituting 5.5% of the pool, is
currently in special servicing.
The specially serviced loan is the Sheraton Suites Houston Loan
($34.2 million – 5.5% of the pool), which is secured by a
283-room hotel property that was built in 2000 and renovated in
2013, located in the Galleria submarket of Houston, Texas. The loan
transferred to special servicing in May 2020 due to imminent
default as a result of the coronavirus outbreak. The loan
subsequently became REO and was converted to a Tapestry Collection
Hotel, and rebranded as "The Chifley". The special servicer entered
a 15-year franchise agreement with Hilton, Tapestry Collection,
with an itemized property improvement plan (PIP) of $12.2 million.
The rebranded asset is not presently listed for sale on the market.
The most recent appraisal from February 2023 valued the property
18% lower than the value at securitization, though still above the
outstanding loan balance. The loan incurred an appraisal reduction
of $11 million in April 2023. As of June 2023 remittance, the loan
was last paid through July 2020, and has amortized by 16% since
securitization.
Moody's has also assumed a high default probability for four poorly
performing troubled loans, constituting 18.3% of the pool. The
largest troubled loan is the Greene Town Center Loan ($76.9 million
– 12.4% of the pool), which represents a pari-passu portion of a
$117.3 million senior mortgage loan. The loan is secured by a
mixed-use property located in Beavercreek, Ohio, approximately ten
miles southeast of the Dayton, Ohio CBD. The property is also
encumbered by $37.4 million of mezzanine debt. The subject
improvements primarily consist of a lifestyle center situated
around a town square. In total, the property is comprised of
566,634 SF (80% NRA) of retail, 143,343 SF (20% NRA) of office, and
206 Class A multifamily units. Retail anchors include Von Maur (not
part of the collateral), LA Fitness, Forever 21, Old Navy,
Nordstrom Rack, and a 14-screen Cinemark Cinema (not part of the
collateral). Parking is provided via three parking garages and four
surface lots with 4,401 total spaces. The borrower had requested
payment relief in May 2020 in relation to the coronavirus outbreak.
Property performance was stable since securitization but was
impacted by the pandemic. The loan is currently being monitored for
hardship as the borrower has requested a maturity extension and
would like to have the loan moved to special servicing to discuss
the extension. The property was 91% leased as of December 2022
compared to 93% in December 2020, 91% in December 2018 and 89% at
securitization. As of June 2023 remittance, this loan was current
and has amortized by 14.5% since securitization.
The second largest troubled loan is the Oklahoma Hotel Portfolio
Loan ($22.4 million -- 3.62% of the pool), which is secured by a
portfolio of two full-service hotels and one limited-service hotel
totaling 320 keys located in Stillwater, Durant and Norman,
Oklahoma. The loan transferred to special servicing in October 2019
due to franchise defaults at both the Hampton Inn & Suites and
Hilton Garden Inn. The Hampton Inn Durant lost its flag and was
running as an independent hotel, and was subsequently converted to
a Marriott Branded Fairfield Inn & Suites. The loan returned to the
master servicer as a corrected loan in January 2022. The portfolio
is not generating sufficient cash flow to cover debt service. As of
June 2023 remittance, this loan was current and has amortized by
22.6% since securitization.
The remaining troubled loans are secured by two underperforming
neighborhood centers located in Colerain Township, Ohio and
Richmond Texas, which have both experienced sharp declines to NOI
DSCR that have not recovered since the pandemic. Moody's has
estimated an aggregate loss of $69.7 million (a 47% expected loss
on average) from these troubled and specially serviced loans.
The credit risk of loans is determined primarily by two factors: 1)
Moody's assessment of the probability of default, which is largely
driven by each loan's DSCR, and 2) Moody's assessment of the
severity of loss upon a default, which is largely driven by each
loan's loan-to-value ratio, referred to as the Moody's LTV or MLTV.
As described in the CMBS methodology used to rate this
transaction, Moody's make various adjustments to the MLTV. Moody's
adjust the MLTV for each loan using a value that reflects
capitalization (cap) rates that are between Moody's sustainable cap
rates and market cap rates. Moody's also use an adjusted loan
balance that reflects each loan's amortization profile. The MLTV
reported in this publication reflects the MLTV before the
adjustments described in the methodology.
Moody's received full year 2021 operating results for 100% of the
pool and full year 2022 operating results for 99% of the pool
(excluding specially serviced and defeased loans). Moody's weighted
average conduit LTV is 104%, compared to 106% at Moody's last
review. Moody's conduit component excludes loans with structured
credit assessments, defeased and CTL loans, and specially serviced
and troubled loans. Moody's net cash flow (NCF) reflects a weighted
average haircut of 24.6% to the most recently available net
operating income (NOI). Moody's value reflects a weighted average
capitalization rate of 9.6%.
Moody's actual and stressed conduit DSCRs are 1.38X and 1.06X,
respectively, compared to 1.36X and 1.03X at the last review.
Moody's actual DSCR is based on Moody's NCF and the loan's actual
debt service. Moody's stressed DSCR is based on Moody's NCF and a
9.25% stress rate the agency applied to the loan balance.
The top three conduit loans represent 13.6% of the pool balance.
The largest loan is the Greenville Center Loan ($33.7 million –
5.4% of the pool), which is secured by a 134,033 SF mixed use
property that was built in 1974 and renovated in 2012, located in
Greenville, Delaware. The property is comprised of 11 buildings
containing 71,128 SF (52% NRA) of office space and 65,503 SF (48%
NRA) of retail space. The collateral also includes 564 parking
spaces, which equates to a ratio of 4.13 spaces per 1,000 SF of
office and retail space. The property was fully leased as of March
2023 compared to 91% in December 2022, 96% at year-end 2019, 97% in
2018 and 91% at securitization. As of June remittance, the loan was
current and has amortized by 10.1% since securitization. Moody's
LTV and stressed DSCR are 119% and 0.83X, respectively, compared to
112% and 0.88X at Moody's last review.
The second largest conduit loan is the Crossroads Shopping Center
Loan ($26.0 million -- 4.2% of the pool), which is secured by the
borrower's fee simple interest in a grocery anchored community
center located in Fullerton, California. The largest tenants are
Kohls (38.3% of NRA; lease expiration in January 2030), and Ralphs
(24.12%, lease expiration in December 2025). Occupancy was at 100%
in December 2022, compared to 97% in December 2020, and at
securitization. As of June 2023 remittance, the loan was current
and is interest only through the term of the loan. Moody's LTV and
stressed DSCR are 98% and 0.99X, respectively, the same as last
review.
The third largest conduit loan is the Prime Kurtell Medical Office
Building Portfolio Loan ($25.1 million -- 4.0% of the pool), which
is secured by a portfolio of five medical office properties located
throughout Tennessee. The portfolio was 87% occupied in December
2022, compared to the 66% in December 2020, and 90% at
securitization. As of June 2023 remittance, the loan was current
and has amortized by 11.9% since securitization. Moody's LTV and
stressed DSCR are 139% and 0.79X, respectively, compared to 138%
and 0.79X at Moody's last review.
HARRINGTON ESTATES: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Harrington Estates, LLC
830 Harrington Road
Glendale, CA 91207
Business Description: The Debtor is a Single Asset Real Estate (as
defined in 11 U.S.C. Section 101(51B)).
Chapter 11 Petition Date: July 18, 2023
Court: United States Bankruptcy Court
Central District of California
Case No.: 23-14462
Judge: Hon. Julia W. Brand
Debtor's Counsel: Louis J. Esbin, Esq.
LAW OFFICES OF LOUIS J. ESBIN
27451 Tourney Road, Suite 120
Valencia, CA 91355
Tel: 661-254-5050
Fax: 661-254-5252
Email: Louis@Esbinlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Anthony C. Burrell as CEO.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/LZ5MW3I/Harrington_Estates_LLC__cacbke-23-14462__0001.0.pdf?mcid=tGE4TAMA
HAWKEYE ENTERPRISES: Case Summary & 19 Unsecured Creditors
----------------------------------------------------------
Debtor: Hawkeye Enterprises, LLC
853 Bluff Brook Drive
O Fallon, MO 63366
Chapter 11 Petition Date: July 17, 2023
Court: United States Bankruptcy Court
Eastern District of Missouri
Case No.: 23-42494
Judge: Hon. Brian C. Walsh
Debtor's Counsel: Robert E. Eggmann, Esq.
CARMODY MACDONALD P.C.
120 S. Central Ave., Suite 1800
Saint Louis, MO 63105
Tel: 314-854-8600
Fax: 314-854-8660
Email: ree@carmodymacdonald.com
Total Assets: $328,232
Total Liabilities: $1,488,755
The petition was signed by Robert Moellering as owner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 19 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/DUYNXOA/Hawkeye_Enterprises_LLC__moebke-23-42494__0001.0.pdf?mcid=tGE4TAMA
HERITAGE POWER: Unsecureds Will Get 0.346% of Claims in Plan
------------------------------------------------------------
Heritage Power, LLC, and its affiliates filed with the U.S.
Bankruptcy Court for the Southern District of Texas a Disclosure
Statement for Joint Plan of Reorganization dated July 17, 2023.
The Debtors are a power company with a focus on power generation
activities in Pennsylvania, New Jersey and Ohio. The Debtors are a
portfolio company indirectly wholly owned by GenOn Holdings, LLC.
The Debtors' primary sources of revenue are (i) energy margin
(i.e., revenue from wholesale sales of energy produced from the
Plants) (ii) capacity revenue (i.e., revenue from the Debtors'
commitment to provide energy generation capacity for energy in the
future); and (iii) ancillary and other revenues (i.e., functions
that help the grid operators maintain a reliable power system).
The Debtors filed the Chapter 11 Cases to preserve the value of
their estates and to restructure their financial affairs. To such
end, the Debtors have continued to manage their properties and are
operating and managing their businesses as debtors in possession in
accordance with sections 1107 and 1108 of the Bankruptcy Code.
As a result of the headwinds facing the Debtors' business, in 2022,
the Debtors took steps to preserve their liquidity while evaluating
options to address potential future financial difficulties.
Following months of productive discussions, coordination on due
diligence efforts and arm's length, good faith negotiations between
the parties, the Debtors, GenOn, and the Ad Hoc Committee reached
an agreement regarding the Debtors' restructuring, which was
memorialized in the Restructuring Support Agreement.
The Restructuring Support Agreement contemplates a comprehensive
and consensual restructuring transaction that will be implemented
through the Plan, resulting in a substantial deleveraging while
maximizing stakeholder recoveries. If the Plan process is not
successful, the Debtors will instead pursue a sale of all or
substantially all of their assets in accordance with bidding
procedures to be filed with the Court. Pursuant to the
Restructuring Support Agreement, the holders of First Lien Claims
have agreed to establish a vehicle to act as a stalking horse
bidder in any such sale process via the submission of a credit
bid.
The Plan provides for the resolution of Claims against and
Interests in the Debtors and implements a distribution scheme
pursuant to the Bankruptcy Code. Distributions under the Plan shall
be made with: (i) Cash on hand, including Cash from operations;
(ii) the Cash proceeds of the Exit Facility; and (iii) New Equity
Interests.
Class 5 consists of General Unsecured Claims. Except to the extent
that a holder of an Allowed General Unsecured Claim agrees to less
favorable treatment, in full and final satisfaction of such Allowed
General Unsecured Claim, each holder of an Allowed General
Unsecured Claim shall receive its Pro Rata share of the GUC
Distribution, payable on the later of the Effective Date and the
date that is 10 Business Days after the date on which such General
Unsecured Claim becomes an Allowed General Unsecured Claim, in each
case, or as soon as reasonably practicable thereafter. This Class
will receive a distribution of 0.346% of their allowed claims.
On the Effective Date, all Existing Equity Interests shall be,
canceled, released, extinguished, and discharged, and will be of no
further force or effect. The holder of Existing Equity Interests
shall receive no recovery or distribution on account of the
Existing Equity Interests.
During the period from the Confirmation Date through the Effective
Date, the Debtors may continue to operate their businesses as
debtors-in-possession in the ordinary course in a manner consistent
with past practice in all material respects, and as otherwise
necessary to consummate the Plan, in all cases in accordance with
the Restructuring Support Agreement, subject to all applicable
orders of the Bankruptcy Court.
Distributions under the Plan shall be made with: (i) Cash on hand,
including Cash from operations; (ii) the Cash proceeds of the Exit
Facility; and (iii) New Equity Interests.
A full-text copy of the Disclosure Statement dated July 17, 2023 is
available at https://urlcurt.com/u?l=uWB89B from PacerMonitor.com
at no charge.
Counsel for the Debtors:
Charles A. Beckham, Jr., Esq.
Kelli S. Norfleet, Esq.
Arsalan Muhammad, Esq.
Kourtney Lyda, Esq.
David Trausch, Esq.
HAYNES AND BOONE, LLP
1221 McKinney Street, Suite 4000
Houston, Texas 77010
Telephone: (713) 547-2000
Facsimile: (713) 547-2600
Email: charles.beckham@haynesboone.com
Email: kelli.norfleet@haynesboone.com
Email: arsalan.muhammad@haynesboone.com
Email: kourtney.lyda@haynesboone.com
Email: david.trausch@haynesboone.com
Kenric D. Kattner, Esq.
David L. Staab, Esq.
HAYNES AND BOONE, LLP
30 Rockefeller Plaza 26th Floor
New York, New York 10112
Telephone: (212) 659-7300
Facsimile: (212) 918-8989
Email: kenric.kattner@haynesboone.com
Email: david.staab@haynesboone.com
About Heritage Power
Heritage Power, LLC and affiliates are a power company with a focus
on power generation activities in Pennsylvania, New Jersey and
Ohio. The Debtors own or operate sixteen power generation assets
with 13 in Pennsylvania, two in New Jersey and one in Ohio.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 23-90032) on Jan.
24, 2023, with $50 million to $100 million in assets and $500
million to $1 billion in liabilities. David Freysinger, president
of Heritage Power, signed the petitions.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Haynes and Boone, LLP as legal counsel; Alvarez
and Marsal North America, LLC as restructuring and financial
advisor; and Epiq Corporate Restructuring, LLC as notice, claims
and solicitation agent.
The counsel to the ad hoc group of prepetition lenders is Milbank,
LLP. The ad hoc group of prepetition lenders also retained Porter
Hedges, LLP, Ross Aronstam & Moritz, LLP and Ducera Partners, LLC
as advisors.
Jefferies Finance, LLC, as administrative agent, is represented by
Latham & Watkins, LLP.
MUFG, collateral agent, is represented by Thompson Hine, LLP.
J. Aron & Company, LLC, counterparty under an ISDA Master
Agreement, is represented by Cleary Gottlieb Steen & Hamilton, LLP.
HOWARD UNIVERSITY: Moody's Affirms 'Ba1' Issuer Rating
------------------------------------------------------
Moody's Investors Service has revised the Howard University, DC
outlook to positive from stable. At the same time Moody's has
affirmed the Ba1 issuer rating and Ba1 rating on approximately $49
million of Revenue Bonds (The Howard University Issue), Series
2011B (Taxable). The university had roughly $940 million of total
debt as of June 30, 2022.
A list of Affected Credit Ratings is available at
https://urlcurt.com/u?l=UeXCz1
RATINGS RATIONALE
The revision of the outlook to positive incorporates the
university's improving operating performance, enrollment and
tuition revenue growth, and gains in total wealth. It also reflects
increased clarity around the pace of borrowing and capital plans as
it addresses deferred maintenance and facility needs. Further
gains in management credibility including improved operating
performance and risk management under Moody's ESG Governance
factors are a key driver of the rating action.
The Ba1 rating acknowledges the university's improving operating
discipline, more effective enrollment management, as well as
revenue growth including federal funding. Total cash and
investments increased 9% to $963 million in fiscal 2022 over the
prior year, as stronger operating performance combined with donor
and federal support fueled gains. Credit quality is tempered by
continued challenging hospital operations due to the pandemic and
other sector headwinds at the Howard University Hospital.
Management continues to pursue what has been a multi-year strategy
of transferring hospital operations to a joint venture. Deferred
maintenance, expected to be addressed material capital and pro
forma borrowing plans also temper credit quality. In addition to
its own debt, the university has relied on partnerships for capital
projects tied to its strategy, adding complexity to its capital
structure. Pro forma total adjusted debt inclusive of these
arrangements is around a high 1.5x fiscal 2022 operating revenue.
Favorably, Howard has taken several steps to reduce its pension
exposure. Having reached over 100% net funded status, management
aims to transfer the associated assets and liabilities to an
insurer.
The Ba1 rating on the Series 2011B bonds is based on the issuer
rating as well as the unsecured general obligation nature of the
bonds.
RATING OUTLOOK
The positive outlook reflects prospects for additional credit
improvement if the university is able to sustain recent momentum in
improving its strategic position and long-term operating
performance, particularly if it is able to implement a sustainable
solution for risk mitigation related to its healthcare operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Progress in achieving Howard University Hospital operating
sustainability and capital needs funding
-- Continued improvement in brand and strategic positioning,
reflected in ability to meet enrollment, net tuition, and
fundraising goals
-- Evidence of sustained strengthening in operating performance
and revenue growth following ending of pandemic relief funds
-- Demonstrated ability to fund capital plan with reduced reliance
on debt
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Reduction in EBIDA with debt service coverage below 2x,
particularly if accompanied by a decline in liquidity
-- Revenue softness in net student revenue, federal support,
sponsored research or patient care lines
LEGAL SECURITY
The Series 2011B Revenue Bonds are unsecured general obligations,
additionally supported by a debt service reserve fund and other
funds created under the indenture. The debt service reserve fund
held approximately $13 million as of June 30, 2022. There is a rate
covenant of 1.1x and an additional bonds test that requires a
certificate of the university's chief financial officer concluding
that projected debt service coverage will be at least 1.1x upon
issuance and, on a pro forma basis for the following fiscal year.
If the debt service coverage falls below 1.1x, the university will
not be in default as long as it hires a consultant and does not
drop below 1x coverage as defined in the Loan Agreement. In fiscal
year 2022, debt service coverage was 6.0x.
Unlike the Series 2011B bonds, the 2020 and later series of the
university's debt are secured by Pledged Revenues and by the
Restricted Academic Property including much of the real estate of
the main campus. The university has pledged certain rent and lease
income as collateral for its line of credit.
PROFILE
Howard University is a private not-for-profit historically black
college and university in Washington, D.C. with approximately
12,000 full-time equivalent students and $1.1 billion in operating
revenue in fiscal year 2022. The university owns the Howard
University Hospital where medical students do their internships,
residencies, and/or fellowships and where members of its faculty
practice provide clinical services.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education Methodology published in August 2021.
INDIAN CANYON: Taps Dinsmore & Shohl as Special Counsel
-------------------------------------------------------
Indian Canyon & 18th Property Owners Association seeks approval
from the U.S. Bankruptcy Court for the Central District of
California to employ Dinsmore & Shohl, LLP as special counsel.
The Debtor needs the firm's legal assistance in the adversary
proceedings styled as (i) DHSVerde, LLC v. Coachillin Holdings,
LLC, et al., Adversary Case No. 6:22-ap-01078-SY; and (ii) Happy
Hours, LLC, et al. v. Coachillin Holdings, LLC, et al., Adversary
Case No.6:22-ap-01079-SY.
Dinsmore & Shohl will be paid at these rates:
Christopher Celentino, Partner $800 per hour
Joseph S. Leventhal, Partner $675 per hour
Brian Metcalf, Of Counsel $575per hour
Caroline G. Massey, Associate $465per hour
Meredith P. Montrose, Associate $400 per hour
Joseph Leventhal, Esq., a partner at Dinsmore & Shohl, 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:
Joseph S. Leventhal, Esq.
Dinsmore & Shohl, LLP
655 West Broadway, Suite 800
San Diego, CA 92101
Tel: (619) 400-0500
Fax: (619) 400-0501
Email: joseph.leventhal@dinsmore.com
christopher.celentino@dinsmore.com
About Indian Canyon & 18th Property
Owners Association
Indian Canyon & 18th Property Owners Association filed a petition
for relief under Subchapter V of Chapter 11 of the Bankruptcy Code
(C.D. Calif. Case No. 22-13378) on Sept. 6, 2022, with between $1
million and $10 million in assets and between $500,000 and $1
million in liabilities. Arturo Cisneros has been appointed as
Subchapter V trustee.
Judge Scott H. Yun oversees the case.
The Debtor tapped Douglas A. Plazak, Esq., at Reid & Hellyer as
bankruptcy counsel; and Dinsmore & Shohl, LLP and Fiore Racobs &
Powers as special counsels.
INSTANT BRANDS: Court OKs $257MM DIP Loans from BofA, Jefferies
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Instant Brands Holdings Inc. and
Instant Brands Inc., to use cash collateral and obtain senior
secured superpriority post-petition financing, on a final basis.
The Debtors are permitted to enter into:
(i) a senior secured superpriority post-petition asset-based
revolving credit facility -- ABL DIP Facility -- in the initial
aggregate principal amount of up to $125 million, pursuant to the
terms and subject to the conditions of the Interim Order and the
Superpriority Secured Debtor-In-Possession Asset-Based Revolving
Credit Agreement; and
(ii) a senior secured superpriority post-petition multi-draw
term loan facility pursuant to the terms and subject to the
conditions of the Interim Order and the Senior Secured
Superpriority Priming Debtor-In-Possession Credit Agreement, in an
aggregate original principal amount of $132.5 million.
Bank of America, N.A., serves as administrative agent and
collateral agent under the ABL DIP Facility. Jefferies Capital
Services, LLC serves as fronting lender and will provide the funds
under the Term Loan.
The ABL Facility consists of:
(a) an asset-based revolving credit facility with aggregate
initial commitments of $105 million in Tranche A Revolving
Commitments including (i) a $10 million Canadian Borrower Sublimit
made available upon entry of the Interim Order, (ii) a $30 million
letter of credit subfacility made available upon entry of the
Interim Order, and (iii) a $30 million discretionary swingline
subfacility; and
(b) an asset-based revolving credit facility with aggregate
initial commitments of $12 million in Tranche B-1 Revolving
Commitments; and
(c) an asset-based revolving credit facility with aggregate
initial commitments of $8 million in Tranche B-2 Revolving
Commitments.
The Term DIP Commitment consisted of:
(a) up to $110 million which was made available by Jefferies
Capital Services, LLC on an interim basis ($100 million of which
was made available and drawn by the Debtors upon entry of the First
Interim Order, and $10 million of which was made available and
drawn by the Debtors upon entry of the Second Interim Order); and
(b) up to an additional $22.5 million which will be made
available by the Fronting Lender on a final basis upon entry of the
Final Order and satisfaction of the other applicable conditions to
any such final loan.
The DIP facility is due and payable through the earliest to occur
of:
(a) the Scheduled Termination Date with respect to the
applicable Facility;
(b) the Consummation Date;
(c) the consummation of a sale of all or substantially all of
the assets of the Borrower nd the Guarantors under 11 U.S.C.
section 363;
(d) the date the Bankruptcy Court orders the conversion of the
Cases to a Chapter 7 liquidation or the dismissal of the Cases or
the appointment of a trustee or examiner with expanded power in the
Cases;
(e) the acceleration of the Loans and the termination of the
Commitments with respect to the applicable Facility in accordance
with the Agreement;
(f) the date on which either the Final Order, the Interim
Order or any other material Loan Document is revoked, vacated,
suspended, or challenged by any Debtor; and
(g) the Maturity Date under and as defined in the DIP Term
Loan Agreement, and in each case if such day is not a Business Day,
the next succeeding Business Day.
As of the Petition Date, pursuant to the Asset-Based Revolving
Credit Agreement, dated June 30, 2021, between Debtors Instant
Brands Holdings Inc. and Instant Brands Inc. as borrowers, Instant
Brands Acquisition Intermediate Holdings Inc., as Initial Holdings,
the lenders party thereto, Bank of America, N.A. as administrative
agent and collateral agent, the Prepetition ABL Lenders provided a
revolving credit facility to the Debtors. As of the Petition Date,
the Debtors were indebted to the Prepetition ABL Secured Parties,
in the aggregate principal amount of not less than $121.377
million, plus $22.256 million of issued and outstanding letters of
credit.
Before the Petition Date, to secure the Prepetition ABL
Obligations, Instant Brands Acquisition Intermediate Holdings Inc.,
Instant Brands Holdings Inc., Instant Brands Inc., Instant Brands
LLC, EKCO Group, LLC, Corelle Brands (GHC) LLC, EKCO Housewares,
Inc., EKCO Manufacturing of Ohio, Inc., Instant Brands (Canada)
Holding Inc., and Corelle Brands (Canada) Inc. unconditionally
guaranteed that the due and punctual payment and performance, and
satisfaction when due and at all times thereafter, of the
Prepetition ABL Obligations and granted to the Prepetition ABL
Agent, for the benefit of the Prepetition ABL Secured Parties,
valid, binding, properly perfected, and enforceable continuing
liens on and security interests in all of the "Collateral" as
defined in the Prepetition ABL Credit Agreement, subject to the
terms of the Prepetition Intercreditor Agreement.
As of the Petition Date, pursuant to the Senior Secured Credit
Agreement, dated April 12, 2021 and all instruments and documents
executed at any time in connection therewith including all "Loan
Documents" as defined in the Prepetition Term Credit Agreement
between Debtor Instant Brands Holdings Inc., Instant Brands
Acquisition Intermediate Holdings Inc., each of the lenders party
as of the Petition Date, and Wilmington Trust, National
Association, as successor administrative agent and collateral
agent, the Prepetition Term Lenders provided a term loan facility
to the Debtors. As of the Petition Date, the Prepetition Loan
Parties were indebted to the Prepetition Term Secured Parties in
the aggregate principal amount of not less than $390.937 million.
The Prepetition Agents entered into the ABL Intercreditor
Agreement, dated October 9, 2020 for the benefit of the applicable
Prepetition Secured Parties, acknowledged and consented to by the
Prepetition Loan Parties, to govern the respective rights,
interests, obligations, priority, and positions of the Prepetition
ABL Secured Parties and the Prepetition Term Secured Parties.
As adequate protection of the use of cash collateral, the
Prepetition ABL Agent, for the benefit of itself and the
Prepetition ABL Lenders, is granted continuing, valid, binding,
enforceable and automatically perfected postpetition liens on the
applicable DIP Collateral.
The Prepetition ABL Agent, on behalf of itself and the Prepetition
ABL Lenders, is further granted an allowed superpriority
administrative expense claim, which claim will be junior to (i) the
Superpriority DIP Claims, (ii) the Carve Out, and (iii) the Term
Adequate Protection Claims.
The Interim Order also permitted the Debtor to use the DIP loan
proceeds to indefeasibly pay in cash the outstanding obligations
under the Senior Secured Promissory Note, dated January 18, 2023,
held by Cornell Capital Partners LP, in an aggregate principal
amount of $55 million.
A copy of the Court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=7Dk9UU from Epiq Corporate Restructuring,
LLC, the claims agent.
The Debtor projects total disbursements, on a weekly basis, as
follows:
$14.8 million for the week ending July 7, 2023;
$13 million for the week ending July 14, 2023;
$12 million for the week ending July 21, 2023; and
$9.9 million for the week ending July 28, 2023.
About Instant Brands
Instant Brands designs, manufactures and markets a global portfolio
of innovative and iconic consumer lifestyle brands: Instant, Pyrex,
Corelle, Corningware, Snapware, Chicago Cutlery, ZOID and Visions.
Instant Brands Holdings Inc. and Instant Brands Inc., and their
affiliates sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90716) on June
12, 2023. In the petition signed by Adam Hollerbach, chief
restructuring officer, the Debtors disclosed up to $1 billion in
both assets and liabilities.
Judge David R. Jones oversees the case.
Davis Polk & Wardwell LLP's Brian M. Resnick, Steven Z. Szanzer and
Joanna McDonald serve as counsel to the Debtors. The Debtors also
tapped Haynes and Boone, LLP as Texas counsel, Stikeman Elliott LLP
as Canadian counsel, AlixPartners, LLP as financial advisor,
Guggenheim Securities LLC as investment banker, and Epiq Corporate
Restructuring, LLC as claims, noticing, agent, solicitation and
administrative advisor.
DLA Piper LLP (US) serves as counsel to the Official Committee of
Unsecured Creditors.
Ropes & Gray LLP serves as counsel to the DIP Lenders, and Moelis &
Company LLC and Ankura Consulting Group, LLC act as advisors to the
Term DIP Secured Parties.
Skadden, Arps, Slate, Meagher & Flom LLP and Norton Rose Fulbright
and Norton Rose Fulbright Canada LLP serve as counsel and FTI
Consulting as financial advisor to the ABL DIP Secured Parties.
Kramer Levin Naftalis & Frankel LLP serves as counsel to Cornell
Capital.
JANUS INTERNATIONAL: Moody's Rates New Secured 7Yr. Term Loan 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Janus
International Group, LLC's proposed senior secured 7-year term
loan. Proceeds from the new term loan and cash on hand will go
towards paying off the company's existing senior secured term loan
due 2025 and related fees and expenses in a leverage-neutral
transaction. The B1 rating on the existing term loan will be
withdrawn upon full redemption. Janus' B1 corporate family rating
and B1-PD probability of default rating are not affected. The
company's speculative grade liquidity (SGL) rating remains SGL-2.
The outlook is stable.
Moody's views the proposed transaction as credit positive, due to
improved liquidity. Janus is upsizing its revolving credit facility
to $125 million from $80 million. The borrowing base formula due to
seasonality may limit availability. Regardless, Moody's does not
project the company utilizing its revolver except for minimum
letter of credit commitments, since Janus will generate free cash
flow in each quarter. Further, Janus will now have an extended
maturity profile. Upon refinancing the existing asset based
revolving credit facility due 2024, the new 5-year asset based
revolving credit facility will mature in 2028 and be the nearest
maturity.
Assignments:
Issuer: Janus International Group, LLC
Senior Secured Bank Credit Facility, Assigned B1
RATINGS RATIONALE
Janus' B1 CFR reflects current ownership concentration. Mr.
Feliciano, Chairman of Janus' Board of Directors, owns 30.3% of
Janus and will influence business decisions. Further, Janus still
has ongoing material weaknesses in its internal controls. Janus is
a small company in terms of revenue, limiting the amount of
earnings it can generate and resulting cash flow to service its
fixed payments.
Despite moderating US economic activity, robust operating
performance is a credit strength and provides a major offset to the
company's small revenue base. Moody's continues to project Janus'
adjusted EBITDA margin in the run-rate range of 23% - 24%. Debt
leverage will remain low, with adjusted debt-to-EBITDA sustained
below 3x over the next two years. A business with market leadership
operating in a relatively recession-proof environment further
support Janus' credit profile.
Moody's views the self-storage markets for both consumer and
commercial needs as relatively recession-proof, helping to reduce
earnings volatility. Growth in the self-storage end market is
driven by the health of the US economy, whose fundamentals are
moderating. Moody's Global Macro Outlook has US GDP growing by 1.1%
for 2023, with a mild recession in the second half of 2023, but
improving slightly to 0.9% in 2024. Some growth in the domestic
economy will moderately benefit end markets served by Janus.
Janus' SGL-2 Speculative Grade Liquidity Rating reflects Moody's
view that the company will maintain a good liquidity profile over
the next two years, generating free cash flow through 2024. Moody's
continues to forecast that Janus will generate in excess of $75
million in free cash flow in each of the next two years, with
positive cash flow in each quarter. The 56% increase in the
revolving credit facility commitment and Moody's ongoing
expectation that Janus' revolver will remain undrawn also support
the company's good liquidity.
The stable outlook reflects Moody's expectation that Janus will
continue to perform well and maintain at least its good liquidity
profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
An upgrade of Janus' ratings could ensue if end markets remain
supportive of organic growth such that adjusted debt-to-EBITDA is
below 3.5x. Upwards rating movement also requires preservation of
at least good liquidity and remediation of all material weaknesses
and strengthening of internal controls. Reduction in private-equity
ownership and influence would support further a higher rating.
A downgrade could occur if Janus' adjusted debt-to-EBITDA is above
4.5x. Negative ratings pressure may also occur if the company
experiences a weakening of liquidity or adopts aggressive
acquisition or financial policies.
The principal methodology used in this rating was Manufacturing
published in September 2021.
Janus International Group, LLC, headquartered in Temple, Georgia,
is a manufacturer and supplier of turn-key self-storage, commercial
and industrial building solutions, and facility and door automation
technologies.
JANUS INTERNATIONAL: S&P Rates $625MM First-Lien Term Loan B 'B+'
-----------------------------------------------------------------
S&P Global Ratings said that Janus International Group LLC's
proposed refinancing of its first-lien term loan B is neutral to
the company's credit quality and leverage. As a result, S&P
assigned its 'B+' issue-level rating on the company's proposed
seven year $625 million first-lien term loan due August 2030. The
company intends to use these proceeds to repay amounts outstanding
on the company's existing first-lien term loan due February 2025.
At the same time, the company is also upsizing its existing
asset-based lending (ABL) revolving credit facility by $45 million
to $125 million and extending the maturity to August 2028 from
August 2024. Despite the additional interest expense, S&P expects
the company's financial performance to remain aligned with its
expectations.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The proposed capital structure will include a $125 million ABL
credit facility (not rated) due August 2028 and a $625 million term
loan B due August 2030, which S&P will rate 'B+', one notch above
its 'B' issuer credit rating. The recovery rating is '2', which
indicates its expectation of substantial (70%-90%; rounded
estimate: 80%) recovery in the event of a default.
-- S&P's simulated default scenario considers a steep decline in
the construction of self-storage facilities, which drives a large
portion of Janus' sales, as well as a loss of market share due to a
more competitive operating environment. As revenues and margins
decline, the company funds operating losses and debt service with
available cash and, to the extent available, its revolving credit
facility. The company's liquidity and capital resources become
strained to the point of a default in 2026.
-- S&P assesses the company's recovery prospects on a
going-concern value of approximately $627 million.
-- S&P bases its enterprise value on emergence EBITDA of about
$114 million and a 5.5x EBITDA multiple. This multiple is
consistent with its typical 5x-6x multiple range for most building
materials companies.
-- All debt amounts include six months of accrued but unpaid
interest at default.
Simulated default assumptions
-- Year of default: 2026
-- EBITDA at emergence: $114 million
-- Implied enterprise valuation multiple: 5.5x
-- Gross enterprise value: $627 million
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $6596
million
-- Priority claims (asset-based credit facility): $76 million
-- Value available to secured debt: $499 million
-- Estimated first-lien claims (term loan B): $625 million
--Recovery expectations: 70%-90% (rounded estimate: 80%)
Note: The estimated first-lien term loan claim reflects payment of
scheduled amortization of 1% per year through 2030. Estimated claim
amounts include about six months of accrued but unpaid interest.
KESTRA ADVISOR: Moody's Affirms 'B3' CFR, Outlook Remains Stable
----------------------------------------------------------------
Moody's Investors Service has affirmed Kestra Advisor Services
Holdings A, Inc.'s B3 corporate family rating and its B2 backed
senior secured bank credit facility rating. Kestra's outlook
remains stable.
RATINGS RATIONALE
The ratings affirmation reflects the challenges to Kestra's credit
profile associated with its high leverage, low profitability and
weak retained cash flow, offset by Moody's assessment that it will
maintain adequate interest coverage. Kestra's growth strategy has
resulted in a higher debt balance and interest burden associated
with frequent debt issuances, the most recent of which was in
December 2022. On a proforma basis that includes this issuance and
recent acquisitions, Moody's expects its measure of Kestra's
debt/EBITDA to be around 7.5x and its EBITDA/interest expense to be
around 1.3x by December 2023.
Moody's expects Kestra's revenue to continue to benefit from higher
interest rates through the remainder of 2023, because it earns
interest revenue on uninvested client cash balances through its
cash sweep program. However, over the longer-term this benefit may
be less pronounced than some peers because Kestra does not use
fixed rate agreements or interest rate swaps to hedge its exposure
to fluctuations in rates, making this revenue source more
vulnerable to lower rates. Kestra also has a substantial amount of
floating rate debt, which drives increased interest expense in a
higher rate environment.
Kestra's advisor recruiting strategy has generally been prudent and
focused on attracting higher-producing advisors as well as those
serving a significant portion of their client base in an advisory
capacity. Kestra's clients assets under management (AUM) as of
March 31, 2023 was a record high $60.8 billion, with AUM growth
since late-2019 far outpacing market indexes. Moody's expects
Kestra's recurring advisory revenue to rise in the second half of
2023, driven by its higher AUM balances; however, a sustained
decline in financial markets would negatively affect the firm's
financial performance.
Kestra's stable outlook reflects Moody's expectation that it will
maintain interest coverage at around 1.3x and continue to grow
through new recruitments and small acquisitions based on prudent
advisor recruiting policies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Improving profitability, pretax margin and EBITDA growth that would
sustain debt leverage below 6.5x could lead to an upgrade.
Demonstration of a less aggressive financial policy evidenced by a
lower appetite for issuing debt or a commitment to leverage targets
could also lead to an upgrade.
A sustained decline in broad financial market levels leading to
weaker financial performance and a sustained debt leverage ratio
above 7.5x or interest coverage below 1x could lead to a downgrade.
A debt-funded shareholder dividend that would further weaken the
firm's debt leverage could also lead to a downgrade, as could
deteriorating liquidity resulting in the firm being increasingly
reliant on its revolving credit facility. A deterioration in
advisor productivity, significant worsening of advisor retention
rates, or the emergence of significant regulatory compliance issues
could also lead to a downgrade.
The principal methodology used in these ratings was Securities
Industry Service Providers Methodology published in November 2019.
LMBE-MC HOLDCO II: Moody's Hikes Rating on Sr. Secured Loans to Ba3
-------------------------------------------------------------------
Moody's Investors Service upgraded LMBE-MC Holdco II, LLC's
(LMBE-MC Holdco) senior secured credit facilities to Ba3 from B1.
This action concludes the review for possible upgrade that was
initiated on April 26, 2023. The rating outlook is stable.
RATINGS RATIONALE
The rating action is driven by the improved credit quality of Talen
Energy Supply, LLC's (Talen: B1 Corporate Family Rating), LMBE-MC
Holdco's indirect owner, who emerged from bankruptcy protection in
May 2023 with a restructured capital structure. The rating action
also considers the approximate $60 million reduction in LMBE-MC
Holdco term loan debt over the past 15 months. This debt reduction,
which represents a 13% debt repayment from the original face
amount, reflects the project's strong cash flow generation during
this time frame and structural features within LMBE-MC Holdco's
financing documents that restrict distributions to the parent,
enabling excess cash flow to be used for debt reduction. LMBE-MC
Holdco's term loan outstanding as of March 31, 2023 was
approximately $294 million compared to $353 million at 2021
year-end and $450 million originally borrowed in 2018. The term
loan is scheduled to mature in December 2025.
LMBE-MC Holdco's rating is constrained at the Ba3 rating level by a
meaningful financial penalty associated with the failure in
December 2022 to meet Capacity Performance requirements set forth
by PJM. Moody's understand that a Talen affiliate has commenced
payment to PJM for the net capacity performance penalties and that
LMBE-MC Holdco will reimburse this intercompany affiliate over a
24-month period beginning July 2023. These payments will impact
the level of future excess cash flow generation and the related
amount of term loan debt reduction at LMBE-MC Holdco over this
period. Moody's also understand that LMBE-MC Holdco and affiliates
have disputed the entire penalty assessed by PJM.
LMBE-MC Holdco's $25 million revolver is due December 2023. The
facility is primarily used to support the issuance of
letters-of-credit, including a 6-month debt service requirement.
It is Moody's understanding that Talen is involved in ongoing
discussions on refinancing options, including extension of the
revolving credit facility. Moody's rating action incorporates an
expectation that the liquidity needs of the project will be
addressed this year.
Importantly, Moody's also understand that ring-fencing measures
that provided LMBE-MC Holdco lenders' credit insulation from
Talen's financial profile during the last several years remain
unchanged and in place.
RATING OUTLOOK
The stable outlook is supported by an expectation that LMBE-MC
Holdco maintains a debt-to-EBITDA ratio at or below 4.0x, debt
service coverage in excess of 2.0x and maintains an adequate
liquidity profile over the next 12-18 month.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
In light of the rating action and the impact to excess cash flow
generation prospects from the financial penalty imposed by PJM,
upward rating action is not anticipated over the next eighteen
months.
LMBE-MC Holdco's rating could be downgraded if its financial
performance deteriorates meaningfully causing debt-to-EBITDA to
increase to more than 6.0x and debt service coverage to decline to
below 1.8x.
LMBE-MC Holdco owns two natural gas-fired electric generating
facilities: the two unit 1,700 megawatt Martins Creek power plant
(Units 3&4) and the 600 megawatt Lower Mt. Bethel power plant.
LMBE-MC Holdco is 100% indirectly owned by Talen.
The principal methodology used in these ratings was Power
Generation Projects published in June 2023.
LTL MANAGEMENT: Faces Call to Weed Out Invalid Cancer Claims
------------------------------------------------------------
The Official Committee of Talc Claimants in LTL Management LLC's
cases filed on July 12, 2023, a motion seeking entry of an order
(I) authorizing the estimation of current talc claims for voting
purposes, (II) appointing Kenneth R. Feinberg as a court-appointed
expert pursuant to Federal Rule of Evidence 706 in connection the
estimation process, and (III) establishing procedures and a
schedule for estimation proceedings.
The Debtor has proposed a fixed pot plan in which the talc
claimants (in the broadest sense of the term) would share in a
fixed sum capped at payments with a present value equal to $8.9
billion. J&J has made it clear that it will not pay more than $8.9
billion under any plan proposed by LTL. The universe of claims
that would share in this $8.9 billion pot (e.g., ovarian cancer,
mesothelioma, government, third-party payor, etc.) vary in value
and nature.
According to the Committee, estimation is necessary for two
reasons: first to ensure the proper eligibility for and weighting
of votes given the different values of the claim types, and second
so that claimants may be adequately informed prior to voting as to
their potential recovery under LTL's plan. For claimants to cast
informed votes and for those votes to be weighted appropriately, an
estimation regarding the volume and value of each present and
future claim type must be first conducted.
In LTL's first bankruptcy case, the Court sua sponte appointed Mr.
Kenneth R. Feinberg to "prepare and file a Rule 706 report . . .
estimating the volume and values of current and future ovarian and
mesothelioma claims for which the Debtor may be liable . . . ."
(the "First 706 Order"). Mr. Feinberg is well qualified to serve
in a similar role in LTL's second bankruptcy case ("LTL 2.0"), and
he has already undertaken significant work in that capacity in LTL
1.0.
LTL has proposed a plan for which estimation is required. According
to LTL, 60,000 claimants whose attorneys have pledged to support
LTL's plan did not appear or otherwise make themselves known in LTL
1.0. If these claimants are permitted to vote and if LTL's plan is
confirmed, all talc claimants will be forced to accept nuisance
value settlements and, at the same time, talc claimants who reject
such awards will be denied the right to pursue J&J in the tort
system and recover the amounts award to them by a jury. If this
Court is inclined to let LTL proceed with its plan, one of the most
significant questions that will need to be determined is who can
vote and with what weighting. See 11 U.S.C. Sec. 1126(c) & 11
U.S.C. Sec. 502(c).
Section 1126(c) of the Bankruptcy Code sets forth the requirements
for acceptance of a plan by a class of claims. A class has accepted
a plan only if (a) at least two thirds in amount, and (b) more than
one half in number of the creditors that voted accepted the plan.
See 11 U.S.C. Sec. 1126(c) (emphasis added). Section 1126(c)'s two
thirds in amount requirement means that the value of current claims
must be taken into consideration when determining whether a class
has accepted a plan. Obtaining the support of 50% or 75% in number,
standing alone, is insufficient.
To have a claim, an individual must have a "right to payment." 11
U.S.C. Sec. 101(5). J&J has made it clear that there is no
scientific connection between non-ovarian gynecological cancers and
J&J's talc products. However, in unveiling LTL 2.0, LTL trumpeted
the purported support of some 60,000 claimants -- who, to this day,
have not been confirmed to have been diagnosed with mesothelioma or
ovarian cancer, which are both ailments scientifically shown to be
linked to the use of J&J's talc products and for which J&J has
paid, or agreed to pay, compensation in the tort system. To the
extent these gynecological cancer claims are neither ovarian cancer
claims nor mesothelioma claims, they should not be permitted to
vote on LTL's plan. At the very least, their claims should be
accorded substantially less value for voting purposes than talc
claims that could survive a Daubert challenge.
Weighing each talc claim equally for voting purposes (regardless of
whether the ailment has a proven causal relationship to talc
exposure) in one massive class comprised of highly variable claims
is unsupported by the facts and circumstances of this case. Doing
so would only advance J&J's scheme of dredging up a mass of
valueless "made for bankruptcy" claims to not only forever rob
ovarian cancer and mesothelioma claimants of their Constitutional
rights to a jury, but also to dilute their votes in an attempt to
irrevocably bind them to capped, less than full and deeply
discounted recoveries.
The Committee points out that the Debtor's motion to establish
solicitation procedures filed on July 11, 2023 reveals that this
is, in fact, the Debtor's game plan. In its motion, the Debtor
asks this Court to estimate all talc claims to be worth $1.00 for
voting purposes -- meaning that talc claims involving ovarian
cancer and mesothelioma would have the same weight as non-ovarian
gynecological claims for voting purposes.
The Court, according to the Committee, should not permit a plan
process to go forward that, in effect, uses claimants with claims
not entitled to compensation under applicable law to stifle
claimants with Daubert-supported claims that have been compensated
in the tort system from ever litigating their claims in the future
against solvent J&J.
Section 502(c) provides a tool for exactly this purpose -- an
estimation of the various claims against the Debtor will ensure
that claimants are informed when they cast their votes and that
such votes carry deserved weight. Mr. Feinberg, having familiarity
with the Debtor, the talc claims (filed and unfiled) against J&J
and the Debtor, and the benefit of more than six months of work in
this area in LTL 1.0, is the obvious and most qualified individual
to perform this analysis in LTL 2.0. Appointing Mr. Feinberg to
this role will facilitate data-driven weights by claim type for
voting purposes that will serve to ensure the integrity and equity
of the plan voting process.
J&J's promise that talc claims will be "paid in full" through LTL's
bankruptcy is a falsehood. By "paid in full," J&J means that all
talc claimants will be forced to accept nuisance value settlement
awards and will be denied the right to seek fair and equitable
compensation from J&J in the tort system. The sole purpose of
LTL's bankruptcy is to permit J&J to dictate what constitutes full
payment and deny any talc claimant who disagrees with J&J's
determination the right to collect the amount awarded by a jury
from J&J. This is not a "paid in full" case; rather, it is an
unlawful use of a manufactured bankruptcy for J&J’s benefit to
silence anyone who would dare stand up to J&J.
Other parties in interest who want to participate in this critical
matter should also have the right to be heard. The TCC is proposing
an estimation process under the facts of this case that affords the
TCC, the FCR, the Debtor, J&J, and other interested parties with
the right to conduct discovery, offer expert reports, and to be
heard in connection with how much weight, if any, should be
assigned to the various categories of talc claims for voting
purposes. The Debtor and J&J have already retained Bates White to
offer an expert report on this issue and have long expected this
battle as part of any confirmation proceeding.
To be clear, the TCC believes that LTL's plan is patently
unconfirmable for many reasons, including the fact that the sole
purpose of LTL 2.0 is to obtain an illegal discharge of J&J's
independent talc liability. If the plan process is to move
forward, it must be consistent with the Bankruptcy Code and the
Bankruptcy Rules. Given the circumstances before the Court and the
danger posed by J&J's plan to the rights of talc claimants to seek
fair and equitable compensation for their injuries, the Committee
asserts that LTL's plan process must begin with an estimation
proceeding under Section 502(c).
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the
time of the filing, the Debtor was estimated to have $1 billion to
$10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S.
Trustee for Regions 3 and 9 reconstituted the talc claimants'
committee and appointed two separate committees: (i) the official
committee of talc claimants I, which represents ovarian cancer
claimants, and (ii) the official committee of talc claimants II,
which represents mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
Re-Filing of Chapter 11 Petition
On Jan. 30, 2023, a panel of the Third Circuit issued an opinion
directing the Court to dismiss the 2021 Chapter 11 Case on the
basis that it was not filed in good faith. Although the Third
Circuit panel recognized that the Debtor "inherited massive
liabilities" and faced "thousands" of future claims, it concluded
that the Debtor was not in financial distress before the filing.
On March 22, 2023, the Third Circuit entered an order denying the
Debtor's petition for rehearing. The Third Circuit entered an
order denying LTL's stay motion on March 31, 2023, and, on the dame
day, issued its mandate directing the Bankruptcy Court to dismiss
the 2021 Chapter 11 Case.
The Bankruptcy Court entered an order dismissing the 2021 Case on
April 4, 2023.
Johnson & Johnson on April 4, 2023, announced that its subsidiary
LTL Management LLC (LTL) has re-filed for voluntary Chapter 11
bankruptcy protection (Bankr. D.N.J. Case No. 23-12825) to obtain
approval of a reorganization plan that will equitably and
efficiently resolve all claims arising from cosmetic talc
litigation against the Company and its affiliates in North
America.
In the new filing, J&J said it has agreed to contribute up to a
present value of $8.9 billion, payable over 25 years, to resolve
all the current and future talc claims, which is an increase of
$6.9 billion over the $2 billion previously committed in connection
with LTL's initial bankruptcy filing in October 2021. LTL also has
secured commitments from over 60,000 current claimants to support
a
global resolution on these terms.
MISEN INC: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Misen Inc.
75 E. Santa Clara Street
San Jose CA 95113
Business Description: Misen Inc. manufactures and sells
cookwares.
Chapter 11 Petition Date: July 17, 2023
Court: United States Bankruptcy Court
Northern District of California
Case No.: 23-50767
Debtor's Counsel: Ori Katz, Esq.
SHEPPARD MULLIN RICHTER & HAMPTON LLP
Four Embarcadero Center, 17th Floor
San Francisco CA 94111
Tel: (415) 774-9100
Email: okatz@sheppardmullin.com
Total Assets as of July 14, 2023: $6,208,000
Total Liabilities as of July 14, 2023: $10,855,000
The petition was signed by Matthew J. Luckett as authorized
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/W3JPTZA/Misen_Inc__canbke-23-50767__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/RJ444ZY/Misen_Inc__canbke-23-50767__0001.0.pdf?mcid=tGE4TAMA
NEKTAR THERAPEUTICS: BlackRock Inc. Has 4.5% Stake as of June 30
----------------------------------------------------------------
BlackRock, Inc. disclosed in a Schedule 13G/A filed with the
Securities and Exchange Commission that as of June 30, 2023, it
beneficially owned 8,604,322 shares of common stock of Nektar
Therapeutics representing 4.5 percent of the shares outstanding.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/906709/000130655023009542/us6402681083_070723.txt
About Nektar Therapeutics
Nektar Therapeutics -- http://www.nektar.com-- is a
biopharmaceutical company with a robust, wholly owned R&D pipeline
of investigational medicines in oncology and immunology as well as
a portfolio of approved partnered medicines. Nektar is
headquartered in San Francisco, California, with additional
operations in Huntsville, Alabama.
Nektar Therapeutics reported a net loss of $368.20 million in 2022,
a net loss of $523.84 million in 2021, a net loss of $444.44
million in 2020, and a net loss of $440.67 million in 2019.
NEW BEGINNING: Unsecureds to Get $248 per Month for 36 Months
-------------------------------------------------------------
New Beginning Missionary Baptist Church, Inc., filed with the U.S.
Bankruptcy Court for the Southern District of Florida a Disclosure
Statement describing Amended Plan of Reorganization dated July 13,
2023.
The Church has of or about 200 congregants at this time including
80 church Elders who provide financial backing for the Church
services and charitable activities.
Since filing this case, the Debtor has continued to operate its
business and manage its financial affairs. The Debtor filed this
current Chapter 11 case to restructure the mortgage and lien
encumbering the Debtor's sole property with a mailing address of
located at 2125 Northwest 155 Street, Miami Gardens, Florida 33054
(the "Property" or "Church") which consists of 3 contiguous
improved parcels.
The Debtor earns monthly revenues through donations by the Church's
Elders and congregants that averages approximately $10,000 per
month. The monthly operating reports for March 2023 through May
2023 showing the Debtor's ability to fund the contemplated Plan
payments after deductions for the carrying costs of the Church.
Class 1 consists of the Allowed Secured Claim of City First
Mortgage Corp. The Debtor estimates that the secured claim for the
first consensual mortgage on the Property that shall be allowed in
the amount of $760,522.94. On the Effective Date, the Debtors shall
commence making equal interest only payments of $4,436.38 per month
for the 36-month Plan term. The modified mortgage shall then mature
on July, 2026, in the principal sum of $760,522.94.
Class 2 consists of the Secured Claim of TBF Financial, LLC in the
reduced sum of $50,000.00 secured by a judgment lien on the
Debtor's seating accommodations, public address system, office
equipment and musical instruments in the sum of $1,388.89 per month
for 36 months. On the Effective Date, the Debtors shall commence
making payments in the sum of $1,388.89 per month for 36 months.
Class 3 consists of the Unsecured Claim of Quigar Electric in the
sum of $8,929.58. On the Effective Date, the Debtors shall commence
making payments in the sum of $248.03 per month for 36 months.
Class 3 is impaired under the Plan.
The Plan payments will be made from the Debtor's disposable income
over the 3-year Plan life as calculated from the Debtor's projected
income and expenses.
A full-text copy of the Disclosure Statement dated July 13, 2023 is
available at https://urlcurt.com/u?l=FBb06E from PacerMonitor.com
at no charge.
Attorney for Debtor:
Peter Spindel, Esq.
Peter Spindel, Esq., PA
5775 Blue Lagoon Dr., Ste. 300
Miami, FL 33126
Telephone: (786) 355-4631
Email: peterspindel@gmail.com
About New Beginning Missionary Baptist Church
New Beginning Missionary Baptist Church, Inc., a religious
organization in Miami Gardens, Fla., sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No.
23-11933) on March 13, 2023. In the petition signed by its chief
executive officer, Eric Readon, the Debtor disclosed up to $10
million in assets and up to $1 million in liabilities.
Judge Robert A. Mark oversees the case.
Peter Spindel, Esq., at Peter Spindel, Esq., PA, serves as the
Debtor's counsel.
NOVAN INC: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Novan, Inc. (Lead Case) 23-10937
4020 Stirrup Creek Dr
Suite 110
Durham NC 27703
EPI Health, LLC 23-10938
276 East Bay Street
Charleston SC 29401
Business Description: Novan is a medical dermatology company
focused on developing and commercializing
innovative therapeutic products for skin
diseases.
Chapter 11 Petition Date: July 17, 2023
Court: United States Bankruptcy Court
District of Delaware
Case No.: 23-10938
Judge: Hon. Laurie Selber Silverstein
Debtors' Counsel: Derek C. Abbott, Esq.
Daniel B. Butz, Esq.
Tamara K. Mann, Esq.
Scott D. Jones, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 Market Street, 16th Floor
Wilmington, Delaware 19801
Tel: (302) 658-9200
Fax: (302) 658-3989
Email: dabbott@morrisnichols.com
dbutz@morrisnichols.com
tmann@morrisnichols.com
sjones@morrisnichols.com
Debtors'
Financial
Advisor: SIERRA CONSTELLATION PARTNERS, LLC
Debtors'
Investment
Banker: RAYMOND JAMES AND ASSOCIATES
Debtors'
Special
Counsel: SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL &
JERNIGAN, L.L.P.
Debtors'
Claims/
Noticing
Agent: KURTZMAN CARSON CONSULTANTS, LLC
Novan's Total Assets as of March 31, 2023: $79,793,000
Novan's Total Debts as of March 31, 2023: $7,922,000
The petitions were signed by Paula Brown Stafford as chief
executive officer.
Full-text copies of the petitions containing, among other items,
lists of the Debtors' 20 largest unsecured creditors are available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/VG7O2DA/Novan_Inc_and_Novan_Inc__debke-23-10937__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/3W3IS3A/EPI_Health_LLC_and_EPI_Health__debke-23-10938__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Truveris, Inc. Trade $5,912,880
2 Park Ave Suite 1500
New York, NY, 10016
Ryan McGrath
Email: rmcgrath@truveris.com
2. CVS Pharmacy, Inc. Trade $5,073,421
One CVS Drive,
Woonsocket, RI, 02895
John Ketdy
Email: John.Ketdy@CVSHealth.com
3. Emisar Pharma Services, LLC Trade $4,670,994
9900 Bren Rd E
Minnetonka, MN, 55343
Heather Klein
Email: heather.klein@optum.com
4. Ascent Health Services LLC Trade $2,325,835
1209 Orange Street,
Wilmington, DE, 19801
Pamela J. Higgins
Email: PJStrong@express-scripts.com
5. Aclaris Therapeutics Inc Trade $1,129,502
640 Lee Road, Suite 200
Wayne, PA, 19087
Meghan Dunsmore
Email: mdunsmore@aclaristx.com
6. Evening Post Group LLC Contractual $1,000,000
174 Meeting Street Suite 200
Charleston, SC 29401
7. Ligand Pharmaceuticals, Inc Contractual $1,000,000
3911 Sorrento Valley Boulevard,
Suite 110 San Diego, CA 92121
Craig Wolfe
Email: craig.wolfe@morganlewis .com
8. MC2 Therapuetics Ltd. Contractual $654,052
James House, Emlyn Lane,
Leatherhead-KT22 7EP, GB
9. Clarkston-Potomac Group, Inc. Professional $410,050
2655 Meridian Parkway, Services
Durham, NC, 27713
Traigh Groover
Phone: 919-484-4400
Email: TGroover@clarkstonconsulting.com
10. CVS Health Corporation Trade $306,349
One CVS Drive, Woonsocket, RI,
02895
Michael Harada
Email: Michael.Harada@CVSHealth.com
11. Dr. Reddy's Laboratories Ltd. Trade $275,770
8-2-337, Banjara Hills, Hyderabad,
500034
Catherine K. Fan
Phone: 609-651-6827
Email: ckejianfan@drreddys.com
12. DPT Laboratories, LTD Trade $262,934
307 E Josephine
San Antonio, TX, 78215
Irene Gomez
Phone: 201-223-3281
Email: Irene.Gomez@viatris.com
13. Syneos Health Commercial Professional $201,164
Services, LLC Services
500 Atrium Drive, Somerset, NJ,
08873
Vandana Singh
Phone: (866) 462-7373
Email: vandana.singh@syneoshealth.com
14. SAP America, Inc. Trade $184,677
PO Box 734595
Chicago, IL, 60673-4595
Juan Ignacio Bide
Phone: (484) 422-3917
Email: juan.bide@sap.com
15. IQVIA, Inc Trade $171,470
PO Box 8500-784290, Philadelphia,
PA, 19178-4290
Lillian Gonzalez
Email: lillian.gonzalez@iqvia.com
16. Ernst & Young US LLP Professional $166,416
P.O. Box 933514, Atlanta, GA, Services
31193-351
Mallory E. Owens
Phone: (919) 981-2912
Email: Mallory.Owens@ey.com
17. BDO USA, LLP Professional $151,840
770 Kenmoor SE, Grand Rapids, Services
MI, 49546
Valerie Bowen
Phone: (919) 754-9370
Email: vbowen@bdo.com
18. Orion Corporation Trade $146,792
Orionintie 1A, Espoo, 02200
K.C. Ramesh
Email: Ramesh.K.c@orion.fi
19. Allergan Sales, LLC Trade $124,670
5 Giralda Farms
Madison, NJ, 07940
Debbie Huang
Email: debbie.huang@allergan.com
20. Doe & Ingalls Trade $199,283
Bank of America Lockbox Services,
College Park, GA, 30349
Christina McClure
Phone: (919) 414-1554
Email: christina.mcclure@thermofisher.com
21. Splice Agency, LLC Professional $108,807
1250 45th Street, Suite #250, Services
Emeryville, CA, 94608
Matt Champagne
Email: mchampagne@fingerpaint.com
22. Commissioning Agents, Inc Trade $95,610
2601 Forturn Circle East, Suite 301B,
Indianapolis, IN, 46241
Phone: (317) 271-6082 Ext. 0000
Email: accountsreceivable.americas@cagents.com
23. Tergus Pharma Trade $95,100
4018 Stirrup Creek Drive, Durham,
NC, 27703
Phone: (919) 549-9700 Ext. 0000
Email: RMorgan@TergusPharma.com
24. Lahlouh, Inc. Professional $92,075
1649 Adrian Road, Burlingame, CA, Services
94010
John Brennan
Phone: 650-692-6600
Email: John.Brennan@lahlouh.com
25. Ashfield Market Trade $90,112
Access, LLC
1100 Virginia Drive,
Fort Washington, PA, 19034
Andrew Keefer
Email: Andrew.Keefer@inizio.health
26. Broadridge ICS Trade $85,256
P.O. Box 416423, Boston, MA,
02241-6423
Phone: (631) 254-7422 Ext. 0000
Email: michelle.nunnelley@broadridge.com
27. PPD Development, L.P. Trade $82,239
26361 Network Place, Chicago, IL,
60673-1263
Jill Melland
Phone: 608-203-3170
Email: Jill.Melland@ppd.com
28. Actalent Services, LLC Trade $81,560
2625 S Plaza Drive, Tempe, AZ,
85282
Ryan Mulrooney
Phone: (480) 426-6338
Email: rmulrooney@actalentservices.com
29. American Brazilian Export Trade $68,468
Resources, Inc
111 Northfield Ave, Suite 312, West
Orange, NJ, 07052
Email: sydney.hirschberg@ambertube.com
30. Barry Wehmiller Design Group Professional $66,560
1121 Situs Court, Suite 290, Services
Raleigh, NC, 27606
Kelly Ives
Phone: (919) 395-1865
Email: Kelly.Ives@BWDesignGroup.com
OCEAN POWER: Posts $9.5 Million Net Loss in Fourth Quarter
----------------------------------------------------------
Ocean Power Technologies, Inc. reported a net loss of $9.54 million
on $980,000 of revenues for the three months ended April 30, 2023,
compared to a net loss of $5.15 million on $756,000 of revenues for
the three months ended April 30, 2022.
For the 12 months ended April 30, 2023, the Company reported a net
loss of $26.33 million on $2.73 million of revenues compared to a
net loss of $18.87 million on $1.76 million of revenues for the 12
months ended April 30, 2022.
As of April 30, 2023, the Company had $53.37 million in total
assets, $9.42 million in total liabilities, and $43.95 million in
total shareholders' equity.
Combined cash, unrestricted cash, cash equivalents and short-term
investments as of April 30, 2023, was $34.7 million, which compares
to $40.9 million as of Jan. 31, 2023, and $57.3 million at the
beginning of the fiscal year.
Dr. Philipp Stratmann, OPT's president and chief executive officer,
commented: "Fiscal 2023 was a milestone year for our Company as we
put our strategy of becoming a leading provider of autonomous
vehicles and Data-as-a-Service for the marine industry in motion.
Highlights include significant progress on MDAS platform and
expanding the government agencies we work with. In addition, we
had our best year of revenue generation since fiscal 2015 and
generated a positive gross margin for the first time since fiscal
2016. Most importantly, as we look to the future, we continue to
grow our order pipeline, which now stands at approximately $68
million, which gives us confidence that we will meet or exceed $15
million of contracted orders in fiscal 2024. I am pleased with our
progress this past year and with the interest that our company is
generating."
A full-text copy of the press release is available for free at:
https://www.sec.gov/Archives/edgar/data/1378140/000149315223024338/ex99-1.htm
About Ocean Power Technologies
Headquartered in Monroe Township, New Jersey, Ocean Power
Technologies, Inc. -- http://www.oceanpowertechnologies.com--
provides intelligent maritime solutions and services that enable
safer, cleaner, and more productive ocean operations for the
defense and security, oil and gas, science and research, and
offshore wind markets. Its PowerBuoy platforms provide clean and
reliable electric power and real-time data communications for
remote maritime and subsea applications. The Company also provides
WAM-V autonomous surface vessels (ASV) and marine robotics services
through its wholly owned subsidiary Marine Advanced Robotics and
strategic consulting services including simulation engineering,
software engineering, concept design and motion analysis through
its wholly owned subsidiary 3Dent.
Ocean Power reported a net loss of $18.87 million for the 12 months
ended April 30, 2022, a net loss of $14.76 million for the 12
months ended April 30, 2021, a net loss of $10.35 million for the
12 months ended April 30, 2020, and a net loss of $12.25 million
for the 12 months ended April 30, 2019. As of Jan. 31, 2023, the
Company had $59.04 million in total assets, $6.10 million in total
liabilities, and $52.94 million in total shareholders' equity.
ONLINE EDUGO: Case Summary & Two Unsecured Creditors
----------------------------------------------------
Debtor: Online Edugo, Inc.
28203 W. 8th Street
Los Angeles, CA 90005
Business Description: Founded in 2014, Online Edugo operates a
testing center in Los Angeles.
Chapter 11 Petition Date: July 17, 2023
Court: United States Bankruptcy Court
Central District of California
Case No.: 23-14459
Judge: Hon. Neil W. Bason
Debtor's Counsel: Kevin Tang, Esq.
TANG & ASSOCIATES
17011 Beach Blvd.
Suite 900
Huntington Beach, CA 92617
Tel: (714) 594-7022
Fax: (714) 594-7024
Email: kevin@tang-associates.com
Total Assets: $2,147,657
Total Liabilities: $1,805,315
The petition was signed by Connie H. Kim as chief executive
officer, secretary, & chief financial officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/WLICI2Q/Online_Edugo_Inc__cacbke-23-14459__0001.0.pdf?mcid=tGE4TAMA
ONTARIO GAMING: Moody's Assigns First Time B2 Corp. Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned ratings to Ontario Gaming GTA
Limited Partnership (aka, One Toronto Gaming (OTG)), consisting of
a B2 corporate family rating, B2-PD probability of default rating,
and a B2 rating on its $800 million (C$1,060 million equivalent)
first lien term loan B due 2030 and its $200 million (C$265
million) revolving credit facility expiring 2028. The outlook is
stable. This is the first time Moody's has assigned ratings to the
company.
OTG will use the proceeds of these loans, together with $400
million (C$530 million) of senior secured debt, to refinance C$1.5
billion in secured debt with the remainder used for general
corporate purposes.
"OTG's credit profile reflects a favorable regulatory framework
that reduces competitive forces as well as the recent completion of
its Toronto casino property." Said Jason Mercer, Vice President.
Assignments:
Issuer: Ontario Gaming GTA Limited Partnership
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Backed Senior Secured 1st Lien Term Loan B, Assigned B2
Backed Senior Secured Revolving Credit Facility, Assigned B2
Outlook Actions:
Issuer: Ontario Gaming GTA Limited Partnership
Outlook, Assigned Stable
RATINGS RATIONALE
OTG's B2 CFR benefits from: (1) sole casino operator within
Canada's largest metropolitan area the Greater Toronto Area (GTA);
(2) a favorable regulatory framework that creates high barriers to
entry within its geographic area as well as other supportive
measures; and (3) improving execution risks associated with
redevelopment of its properties, with the Toronto Resort Casino,
the largest development in the portfolio, which opened in June
2023.
The rating is constrained by: (1) geographic concentration to a
single city within Canada; (2) modest leverage with Moody's
adjusted debt-to-EBITDA remaining above 5x to the end of fiscal
2024 but declining below 5x in fiscal 2025 and with interest
coverage remaining above 2x; (3) financial policy risks associated
with private equity ownership such as debt funded dividends or
acquisitions that increase financial leverage; and (4)
susceptibility to social risks such as a demographic shift away
from gambling.
OTG has good liquidity. Sources total over C$420 million with
expected annual loan repayments of about C$10 million. Pro forma
for the debt transaction liquidity sources consist of cash on hand
of C$290 million (excluding float and holdback cash of about C$115
million), around C$155 million available after letters of credit
under the company's C$265 million revolver expiring 2028, and
negative free cash flow of about C$24 million for the four quarters
ending June 2024. The revolver has a springing covenant which
activates when the revolver is 40% drawn. Moody's expect OTG would
be in compliance with the covenant if tested. OTG has limited
flexibility to generate liquidity from asset sales. The company has
no refinancing risk until 2028 when its revolving credit facility
expires.
OTG's $800 million first lien term loan B and $200 million
revolving facility, are both rated B2, which is at the level of the
corporate family rating (CFR). This is because these liabilities
make up the preponderance of the capital structure and are pari
passu with each other and with the $400 million senior secured
debt.
OTG has exposure to social risks relating to demographic changes
and shifting consumer preferences as younger generations are less
likely to access traditional casino-style gaming (particularly more
profitable slot machines). Potential changes in gaming regulation
to address social issues such as problem gambling and crime
prevention represents additional risks that could also impact
profitability and set precedents for new regulations in Ontario.
Data security and customer privacy risks are also elevated and in
the event of a breach, the company could face higher operational
costs to secure processes and limit reputational damage.
Governance considerations include risks associated with private
equity ownership under Apollo and Brookfield and the potential for
financial strategies and policies that favor shareholders,
including high financial leverage and debt-funded shareholder
distributions.
The stable outlook reflects Moody's expectation that OTG will
maintain financial discipline regarding capital expenditures,
financial leverage and shareholder distributions as well as
maintain good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if adjusted debt to EBITDA is
maintained sustainably below 4x and interest coverage (EBIT to
interest expense) remains above 3x for a sustained period, OTG
maintains conservative financial policies with respect to
re-leveraging transactions such as acquisitions or dividends, and
liquidity remains good with a healthy cash balance and free cash
flow.
The ratings could be downgraded if liquidity weakens, adjusted debt
to EBITDA stays above 5.5x or interest coverage deteriorates
towards 2.0x.
OTG is a joint venture between Great Canadian Gaming Corporation
(B3 stable) and Brookfield Business Partners LP (a subsidiary of
Brookfield Corporation, A3 stable). The company operates four
casinos within the Greater Toronto Area with over 8,000 slot
machines and 300 table games with almost 800 hotel rooms to open by
September 2023. Net revenue for the year ended March 31, 2023 was
C$680 million.
The principal methodology used in these ratings was Gaming
published in June 2021.
ORALE MOTOR: Unsecureds to Get Share of Income for 36 Months
------------------------------------------------------------
Orale Motor Sport, LLC, filed with the U.S. Bankruptcy Court for
the Southern District of Texas a Plan of Reorganization for Small
Business dated July 13, 2023.
Orale is a company that sells motor vehicles. Orale has inventory
on consignment and sells the inventory. Orale receives funds from
the sales of vehicles sold by the Debtor.
Orale has minimal assets. The inventory of vehicles is on
consignment. The assets of the Debtor consist principally of office
equipment which may have a value of less than $7,500.
The Debtor had a judgment entered against it for over $100,000,
which the Debtor was unable to pay.
This Plan of Reorganization proposes to pay Debtor's creditors from
the cash flow generated in the ordinary course of the Debtor's
business after confirmation.
Class 4 consists of Unsecured Creditors. Orale will pay the
projected disposable income for 36 months following the Effective
Date to creditors in this class with allowed claims. Orale may pay
such amounts on the last day of the calendar quarter (March 31,
June 30, September 30 and December 31) starting with the first full
calendar quarter after the Effective Date. The first payment will
be for the period from the Effective Date (partial month will be
prorated until the last day of the month prior to the end of the
applicable calendar quarter.
The monthly accrual amounts are set forth on the Projections and
must be paid at the end of each calendar quarter in the amounts set
forth on the Projections. The claims in this class total
approximately $120,000. The Debtor disputes claims 3 and 5.
The equity holders will retain the interest in the Debtor.
Debtor will retain the property of the bankruptcy estate.
This plan and the projections in this plan incorporate and include
the submission of all or such portion of the future projected
earnings or other future projected income of the debtor to the
supervision and control of the trustee as is necessary for the
execution of the plan so that no further adjustments will be
necessary.
A full-text copy of the Plan of Reorganization dated July 13, 2023
is available at https://urlcurt.com/u?l=eigYkd from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Reese W. Baker, Esq.
Baker & Associates
950 Echo Lane, Ste. 300
Houston, TX 770024
Telephone: (713) 869-9200
Facsimile: (713) 869-9100
Email: courtdocs@bakerassociates.net
About Orale Motor Sport
Orale Motor Sport, LLC, is a company that sells motor vehicles.
Orale Motor Sport sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-31369) on April
14, 2023, with as much as $1 million in both assets and
liabilities. Judge Eduardo V. Rodriguez oversees the case.
Reese W. Baker, Esq., at Baker & Associates, is the Debtor's
counsel.
PALMER DRIVES: Court OKs $1.5MM DIP Loan from Goodman Capital
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado authorized
Palmer Drives Controls & Systems, Inc. to use cash collateral and
continue borrowing under a Factoring Agreement with Goodman Capital
Finance.
As previously reported by the Troubled Company Reporter, on January
26, 2023, the Debtor and Goodman Capital entered into the Factoring
Agreement, which is essentially a line of credit based upon the
Debtor's receivables and inventory. The pertinent terms of the
Factor Agreement are:
a. The Debtor sells to GCF certain of its receivables. GCF, at
its discretion, elects to purchase the receivable through an
advance.
b. GCF places the advance in a reserve account, which is then
advanced to the Debtor as requested by the Debtor, and provided
there is not a default under the lending agreement.
c. The loan is a non-recourse loan.
d. GCF is the holder of security interest in substantially all
of the assets of the Debtor.
e. Paragraph 7(b) of the Factoring Agreement details the
events of default and paragraph 7(c) details the remedies in the
event of a default.
f. GCF advances 85% of any receivable it purchases from the
Debtor and reserves 15%.
g. The interest rate under the Factoring Agreement is prime
plus 1.75%, with a floor of 9.25%.
h. The term of the Factoring Agreement is for 24 months, with
renewal terms of 12 months.
i. The facility maximum is $1.5 million.
j. There are fees associated with Factoring Agreement.
GCF asserts a lien on substantially all of the Debtor's assets,
including cash collateral, pursuant to a UCC-1 financing statement
filed on January 11, 2023.
As of the Petition Date the GCF is owed approximately $759,476.
The U.S. Small Business Administration is asserting it has a
properly perfected first priority security interest in certain of
the Debtor's assets. The SBA and GCF are parties to the
Subordination Agreement in which the SBA subordinated to the
benefit of GCF its lien in the Debtor's accounts receivables, and
invoices, inventory, general intangibles, and proceeds thereof
relating to such accounts receivables. Notwithstanding anything to
the contrary, the lien of the SBA on the Subordinated Collateral is
and will be subordinated to the liens of GCF securing the repayment
of all pre-petition indebtedness and post-indebtedness owed by the
Debtor to GCF pursuant to the Factoring Documents in the maximum
amount of $1.5 million. The Debtor will pay to the SBA $2,472 on a
monthly basis as an adequate protection payment to the SBA.
The Debtor is authorized to immediately borrow and obtain Advances
and to incur indebtedness and other post-petition obligations and
use cash collateral pursuant to the Budget through the date that is
the earlier of the final hearing or an Event of Default, plus
payments to the Subchapter V Trustee and the SBA.
To the extent that any party possesses a properly perfected
security interest in the Debtor's cash collateral, as adequate
protection for the Debtor's use of cash collateral:
a. The Debtor will provide such party with a replacement lien
on all post-petition accounts receivable to the extent that the use
of cash collateral results in a decrease in the value of such
party's interest in the cash collateral pursuant to 11 U.S.C.
section 361(2);
b. The Debtor will maintain adequate insurance coverage on all
personal property assets and adequately insure against any
potential loss;
c. The Debtor will provide to such secured party all periodic
reports and information filed with the Bankruptcy Court, including
debtor-in-possession reports;
d. The Debtor will only expend cash collateral pursuant to the
Budget subject to reasonable fluctuation by no more than 15% for
each expense line item per month;
e. The Debtor is authorized to pay under the Budget all
expenditures budgeted for in July plus any amounts budgeted in
August on a proportional daily basis, plus the full amount of any
payroll obligations, through the date of a final hearing;
f. The Debtor will pay all post-petition taxes; and
g. The Debtor will retain in good repair all collateral in
which such party has an interest.
A final hearing on the matter is set for August 1, 2023 at 2 p.m.
A copy of the order is available at https://urlcurt.com/u?l=HMV0LE
from PacerMonitor.com.
About Palmer Drives Controls and Systems, Inc.
Palmer Drives Controls and Systems, Inc. is a nationally recognized
manufacturer of industrial electrical control equipment, including
magnetic motors starters and industrial controls panels.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Case No. 23-13002) on July 10,
2023. In the petition signed by Lynn Weberg, president, the Debtor
disclosed $3,328,915 in assets and $3,118,969 in liabilities.
Judge Joseph G Rosania, Jr. oversees the case.
Aaron A. Garber, Esq., at Wadsworth Garber Warner Conrardy, P.C.,
represents the Debtor as legal counsel.
PATAGONIA HOLDCO: Pioneer Fund Marks $1.02M Loan at 18% Off
-----------------------------------------------------------
Pioneer Diversified High Income Fund, Inc has marked its $1,019,875
loan extended to Patagonia Holdco LLC to market at $832,473 or 82%
of the outstanding amount, as of April 30, 2023, according to a
disclosure contained in Pioneer Fund's Form N-CSR for the Fiscal
year ended April 30, 2023, filed with the Securities and Exchange
Commission.
Pioneer Fund is a participant in an Initial Loan (Term SOFR + 575
bps) to Patagonia Holdco LLC. The loan accrues interest at 10.473%
per annum. The loan matures on August 1, 2029.
Pioneer Diversified High Income Fund, Inc. is organized as a
Maryland corporation. Prior to April 21, 2021, the Fund was
organized as a Delaware statutory trust. On April 21, 2021, the
Fund redomiciled to a Maryland corporation through a statutory
merger of the predecessor Delaware statutory trust with and into a
newly established Maryland corporation formed for the purpose of
effecting the redomiciling. The Fund was originally organized on
January 30, 2007. Prior to commencing operations on May 30, 2007,
the Fund had no operations other than matters relating to its
organization and registration as a diversified, closed-end
management investment company under the Investment Company Act of
1940, as amended. The investment objective of the Fund is to seek a
high level of current income and the Fund may, as a secondary
objective, also seek capital appreciation to the extent that it is
consistent with its investment objective.
Patagonia Holdco LLC is a holding company fully owned and
established by Stonepeak Partners LP, a private equity firm
specializing in infrastructure and real estate investments, to hold
the Latin American assets acquired from Lumen Technologies, Inc.
PBF HOLDING: Moody's Hikes CFR to Ba2 & Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service upgraded PBF Holding Company LLC's
Corporate Family Rating to Ba2 from Ba3 and senior unsecured notes
ratings to Ba3 from B1. The Speculative Grade Liquidity (SGL)
rating remains unchanged at SGL-1. The outlook was changed to
positive from stable.
"The upgrade of PBF Holding Company's ratings considers recent
actions taken to reduce financial obligations and strengthen its
financial profile in line with the adoption of more conservative
financial policies," said Jonathan Teitel, a Moody's senior
analyst.
Upgrades:
Issuer: PBF Holding Company LLC
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from B1
Outlook Actions:
Issuer: PBF Holding Company LLC
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
The upgrade of PBF's CFR to Ba2 reflects the use of cyclically
strong cash flow and proceeds from its renewable diesel joint
venture to reduce financial obligations and increase financial
flexibility while maintaining strong liquidity. These actions
combined with substantial debt reduction and more conservative
financial policies have resulted in a stronger balance sheet and
improved resilience to the cyclical refining industry. The positive
outlook reflects the potential that if PBF continues to follow
these financial policies and maintains low financial leverage and
strong liquidity with a prudent approach to shareholder returns
then its CFR could be upgraded to Ba1.
PBF's Ba2 CFR reflects Moody's expectation for the company's
profitability and other credit metrics to remain solid through
2024, with support from continued demand for petroleum products,
limited refining capacity, and relatively low inventory levels. PBF
benefits from large scale and geographic diversification within the
US. The company owns six refineries with combined throughput
capacity of about 1 million barrels per day (bpd). Given the
cyclical nature of the refining business, PBF's EBITDA and cash
flows are volatile, leading to swings in leverage. The company has
sizable outstanding liabilities to comply with the federal
Renewable Fuel Standard (RFS) and California's Low Carbon Fuel
Standard (LCFS). PBF has purchased RINs to reduce this liability
and plans to continue to do so over the next several quarters to
continue decreasing the balance to maintain lower exposure to these
obligations. PBF's parent company, PBF Energy Inc., depends on cash
distributions from its subsidiaries – PBF Holding Company LLC and
PBF Logistics LP – to pay quarterly dividends and to support its
share repurchase program. Moody's expects PBF Energy Inc. will
manage cash distributions to its shareholders in a balanced manner
that is not leveraging for PBF and preserves the company's strong
liquidity, including a large cash balance.
In late June 2023, PBF closed on its 50-50 joint venture with Eni
Sustainable Mobility (Eni) in St. Bernard Renewables LLC (SBR), a
bio-refinery co-located with PBF's Chalmette refinery in Louisiana.
The biorefinery started operations in June and produces renewable
diesel. PBF contributed the biorefinery and other related assets
while Eni committed to make capital reimbursements and
contributions totaling $835 million to PBF. Of this amount, Eni
paid $431 million at closing. The remainder will be paid when SBR's
pre-treatment unit (PTU) starts up. The PTU is mechanically
complete and the company expects it to start operations soon.
Another $50 million could be paid by Eni if certain milestones and
performance metrics are achieved. Eni also brings its experience
with two biorefineries in Italy. Production of renewable diesel
will generate RINs which PBF will have the right of first offer to
purchase from SBR. SBR should be able to make distributions to its
owners in the future.
PBF's SGL-1 rating reflects Moody's expectation that PBF will
maintain very good liquidity. As of March 31, 2023, the company had
$1.6 billion of cash on the balance sheet. PBF has an ABL revolver
due January 2025 with $2.85 billion of lender commitments. As of
March 31, 2023, the revolver was undrawn and $275 million in
letters of credit were issued under the facility. The revolver has
a springing minimum fixed charge coverage ratio covenant based on
availability under the facility. The company elected to terminate
its inventory intermediation agreement that supported several of
its refineries at the end of July 2023 and will fund that inventory
for these refineries with cash. PBF has a $300 million uncommitted
receivables purchase facility.
PBF's senior unsecured notes due 2025 and 2028 are rated Ba3. This
is one notch below the Ba2 CFR and reflects effective subordination
to the senior secured revolver with respect to the collateral
securing the facility. PBF's notes are not guaranteed by PBF Energy
Inc. (PBF's parent company) or PBF Logistics LP (another subsidiary
of PBF Energy Inc.). PBF Logistics LP's $525 million of senior
unsecured notes due 2023 were redeemed in February 2023 funded with
PBF cash, which eliminated PBF Logistics debt and therefore
delevered PBF Energy on a consolidated basis.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include PBF management
demonstrating adherence to its stated financial policies and
maintaining low leverage through the cycle with positive free cash
flow and strong liquidity.
Factors that could lead to a downgrade include weakening operating
performance; deterioration of liquidity or negative free cash flow;
or more aggressive financial policies.
PBF Holding Company LLC (PBF), headquartered in Parsippany, NJ, is
a subsidiary of PBF Energy Inc., a publicly traded refining company
in the US with facilities in multiple states. PBF Energy Inc. is
the sole managing member of PBF Energy Company LLC and owns about
99.3% of the economic interests in PBF Energy Company LLC (the
parent company of PBF Holding Company LLC). PBF Energy Inc. also
owns PBF Logistics LP which primarily owns and operates midstream
infrastructure relating to its refineries.
The principal methodology used in these ratings was Refining and
Marketing published in August 2021.
PEARL INC: Unsecured Creditors Will Get 9% of Claims in Plan
------------------------------------------------------------
Pearl Inc. filed with the U.S. Bankruptcy Court for the First Plan
of Reorganization under Subchapter V.
Pearl was originally incorporated in 2000 to operate shrimp
processing plants that supplied domestic shrimp for the U.S.
market.
At one point, Pearl owned three plants, all of which were located
in Chauvin, Louisiana. Pearl is owned and operated by Andrew and
Christine Blanchard (collectively referred to as the
"Blanchards").
The mortgage loans on both (i) 5737 Hwy 56 in Chauvin, Louisiana
("Hwy 56 Plant") and (ii) 120 and 125 Dr. Hugh St. Martin Drive in
Chauvin, Louisiana (the "Dr. Hugh Plant") (collectively the
"Plants") were severely in default at the time of the transfer back
to Pearl and as such, Pearl filed this Chapter 11 case to
reorganize those secured debts.
The Liquidation Analysis reveals that in a hypothetical Chapter 7,
unsecured creditors would not receive a distribution. This Plan
proposes to pay unsecured creditors $60,000.00 (9% of claims) so
that the Plan pays more than creditors would receive in Chapter 7.
Under this Plan, the Debtor intends to distribute cash generated
from its operations to holders of Allowed Claims.
Class 3 consists of General Unsecured Creditors. There were no
unsecured creditors that filed proofs of claim in this case.
Therefore, this Class consists of: (i) Claims of $15,455.00 listed
by the Debtor as non-disputed on its Schedules; (ii) the
under-secured claim of the SBA on the St. Hugh Plant of
$674,000.00; and (iii) the unsecured deficiency claim of Acadiana
in the amount of $242,114.00. As such, unsecured claimants in this
Class total $931,569.00.
The General Unsecured Creditor Class shall be paid in two ways.
First, these Claimants will receive a pro rata portion of the
Debtor's monthly disposable income of $500.00 per month over a
period of 36 months. These payments will be made directly by the
Debtor as the disbursement agent (as opposed to the Subchapter V
Trustee). These payments will be made on a quarterly basis,
beginning on the 15th day of the third month following the Plan
Effective Date.
Additionally, the Debtor intends to rehabilitate the Dr. Hugh
Plant, which will generate additional income for the benefit of
this Class. The Debtor estimates that it will take approximately 12
months to rehabilitate the Plant in order to make it cash flow. At
that point, the Debtor anticipates netting an additional $3,000.00
per month. The Debtor shall dedicate 50% of net proceeds received
from the Dr. Hugh Plant to these Claimants for a period of 24
months (which payments will begin the later of 12 months following
the Plan Effective Date or the date that Dr. Hugh begins to earn
income). This is anticipated to generate an additional $42,000.00
in revenue to the Unsecured Creditor Class over the 24- month
period.
Total payout to this Class is anticipated to be $60,000.00, which
is a 9% distribution of claims.
The Debtor will fund its monthly plan payments from its disposable
income earned from the Debtor's operations. Based upon its annual
operations, the Debtor estimates that its monthly disposable net
income will be $8,500.00.
A full-text copy of the First Amended Plan dated July 13, 2023 is
available at https://urlcurt.com/u?l=jfR3DC from PacerMonitor.com
at no charge.
Counsel for Chapter 11 Debtor:
Robin R. De Leo, Esq.
The De Leo Law Firm, LLC
800 Ramon St.
Mandeville, LA 70448
Tel: (985) 727-1664
Fax: (985) 727-4388
Email: lisa@northshoreattorney.com
About Pearl Inc.
Pearl, Inc., a seafood wholesaler in Chauvin, La., filed its
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. La. Case No. 23-10276) on Feb. 28, 2023, with
$262,118 in assets and $1,248,246 in liabilities. Andrew Blanchard,
chief operating officer and president, signed the petition.
Judge Meredith S. Grabill oversees the case.
The Debtor tapped Robin R. De Leo, Esq., at The De Leo Law Firm,
LLC as counsel and Patrick Gros, CPA as accountant.
PEER STREET: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Chapter 11 cases
of Peer Street, Inc. and its affiliates.
The committee members are:
1. Aristides Family Trust (2002)
2. Michael Corbett
3. Fixed Income Fund of the Carolinas, LLC
Attn: Dan Venegoni
9820 Northcross Center Court, Suite 150
Huntersville, NC 28078
Phone: (704) 962-9073
Email: dan@tacticalfixedincome.com
4. Gregory Ricks
5. IBI SBL Investments, LP
Attn: Dor Sagron
9 Ahad ha'am Street
Tel Aviv Shalom Tower, Floor 18
West Side
Phone: +972-54-7553951
Email: dor@ibi.co.il
6. Yi Wang
7. Lihua Zhai
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Peer Street
Headquartered in El Segundo, California, Peer Street, Inc. is a
technology platform that democratizes access to real estate debt
investments. The company's unique technology-driven marketplace
enables investors to diversify their capital in a fixed-income
asset class that had previously been difficult for individuals to
access.
Peer Street, Inc., and 14 affiliated debtors filed voluntary
petitions for relief under Chapter 11 of the United States
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-10815) on June 26,
2023. The cases are pending before the Honorable Judge Laurie
Selber Silverstein. In its petition, Peer Street estimated $50
million to $100 million in both assets and liabilities.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Kramer
Levin Naftalis & Frankel, LLP as legal advisors; and David Dunn of
Province, Inc. as chief restructuring officer. Stretto, Inc., the
claims and noticing agent, maintains the page
https://cases.stretto.com/peerstreet
PENNYMAC FINANCIAL: Moody's Affirms 'Ba2' CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service has affirmed all ratings of PennyMac
Financial Services, Inc. and its subsidiaries (together known as
PFSI). Moody's has affirmed PFSI's Ba2 long-term Corporate Family
Rating and its Ba3 backed senior unsecured debt rating.
Concurrently, Moody's affirmed Private National Mortgage Acceptance
Co, LLC's (Private National) long-term Issuer Rating of Ba3. The
outlooks for PFSI and Private National remain stable.
Affirmations:
Issuer: PennyMac Financial Services, Inc.
Corporate Family Rating, Affirmed Ba2
Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba3
Issuer: Private National Mortgage Acceptance Co, LLC
Issuer Rating, Affirmed Ba3
Outlook Actions:
Issuer: PennyMac Financial Services, Inc.
Outlook, Remains Stable
Issuer: Private National Mortgage Acceptance Co, LLC
Outlook, Remains Stable
RATINGS RATIONALE
The affirmation of PFSI's Ba2 CFR reflects the company's solid
track record of operational performance. Over the last several
years, the company has further strengthened its franchise position,
which continues to support its above average profitability,
particularly during periods of market stress, versus rated non-bank
residential mortgage company peers. In addition, PFSI's
capitalization is strong, and its funding and liquidity profile is
adequate for its current rating level.
In Q1 2023, PFSI was the largest US residential mortgage lender
with a market share of approximately 7.7%. It continues to maintain
its dominance as the largest correspondent mortgage originator with
a current market share of more than 20%. In addition, the company's
market share in the wholesale-broker market channel has risen over
the last several years to 3.4% and the company is now the third
largest lender in this market. While still largely refinance
originations and small in scale, PFSI continues to invest in its
consumer-direct channel, a credit positive as retail originations
are typically more profitable than wholesale originations sourced
through correspondent and broker channels.
Like non-bank mortgage company peers, the increase in interest
rates over the last year has negatively affected PFSI's
profitability as industry origination volumes have plunged and
excess industry capacity has led to low industry gain-on-sale
margins. However, given its strong franchise and solid operating
efficiency, the company has performed far better than rated peers.
For example, while net income to average assets was very modest in
Q1 2023 at 0.7%, the company's profitability was well above the
-1.0% loss for rated peers.
PFSI's capitalization is strong with tangible common equity (TCE)
to adjusted tangible managed assets (TMA) excluding loans eligible
for repurchase averaging over 20% over the last several years,
which compares well with peers. As of March 31, 2023, the company's
TCE to adjusted TMA was 22.2%. Moody's expects PFSI to maintain TCE
to adjusted TMA of around 20% over the next 12-18 months.
Like peers, over the past year, PFSI's funding structure has relied
more heavily on its secured mortgage servicing rights (MSR)
financing facility as the cost to access the unsecured capital
markets has risen sharply due to higher interest rates and market
volatility leading to a steep increase in unsecured bond spreads
over Treasury yields. As a result, PFSI's ratio of secured debt to
total corporate debt rose to 59% as of March 31, 2023 from 42% as
of year-end 2021. The higher proportion of secured debt lowers the
potential recovery for senior unsecured note holders in the event
of a default. Moody's does not expect PFSI's reliance on secured
financing to increase materially further than its currently level.
If Moody's expectation changes, the ratings on the senior unsecured
notes could face downward ratings pressure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if PFSI strengthens its solid
financial performance, whereby Moody's expects that long-term
through-the-cycle profitability as measured by net income to
average assets will average at least 4.0%. In addition, the company
would need to maintain strong capital levels as measured by TCE to
adjusted TMA above 20.0%, continue to strengthen its franchise
positioning, particularly in the direct-to-consumer and broker
origination channels, and improve its funding structure by reducing
its reliance on corporate secured debt.
The ratings could be downgraded if PFSI's financial performance
deteriorates; for example, if net income to managed assets is
expected to remain below 3.0%, or if leverage increases such that
PFSI's TCE to adjusted TMA falls below and is expected to remain
below 17.5%. In addition, PFSI's unsecured bond rating and Private
National's issuer rating could be downgraded if the portion of
secured debt to total corporate debt increases and remains above
65%; under this scenario, Moody's would expect the loss on senior
unsecured obligations in the event of default to be materially
higher.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
PENNYMAC MORTGAGE: Moody's Lowers CFR to B1 & Issuer Rating to B3
-----------------------------------------------------------------
Moody's Investors Service has downgraded PennyMac Mortgage
Investment Trust's (PMT) long-term Corporate Family Rating to B1
from Ba3 and downgraded its long-term issuer rating to B3 from B2.
PMT's outlook was changed to stable from negative.
Downgrades:
Issuer: PennyMac Mortgage Investment Trust
Corporate Family Rating, Downgraded to B1 from Ba3
Issuer Rating, Downgraded to B3 from B2
Outlook Actions:
Issuer: PennyMac Mortgage Investment Trust
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The downgrade of PMT's ratings reflects the deterioration over that
last several years in the company's capitalization and
profitability levels. Partially offsetting the credit weaknesses is
PMT's relationship with PennyMac Financial Services, Inc. (Ba2 CFR,
STA).
PMT's capitalization as measured by tangible common equity (TCE) to
tangible managed assets (TMA) declined to 12.8% in the first
quarter of 2023 from 14.1% as of year-end 2022 and 17.9% as of
year-end 2021. Moody's expects PMT's capitalization to rise
modestly over the next 12-18 months and average around 14%.
PMT's earnings have been volatile with net income of $61 million in
Q1 2023 up from net income of $5 million in Q4 2022. Excluding
non-recurring items and various fair-value marks, Moody's estimates
that PMT's core tax-adjusted first quarter net income was around
$15 million, slightly down from the prior quarter of $16 million.
Like most peers, the increase in interest rates over the last year
has negatively affected profitability, driven by declining industry
origination volumes and excess industry capacity reducing
gain-on-sale margins. Moody's expects PMT's earnings to improve
modestly over the next 12-18 months.
Another credit challenge is PMT's high reliance on secured credit
facilities. However, the company has some modest diversification
among its various secured mortgage servicing rights (MSR) funding
facilities. Additionally, PMT's multi-year term notes provide term
financing for all its funded Credit Risk Transfer (CRT)
investments, a credit positive since term notes do not contain
mark-to-market provisions that could result in margin calls.
Moreover, most of the CRT term notes may be extended by an
additional two years at PMT's discretion, which reduces refinancing
risk for the company.
The stable outlook reflects Moody's expectation that profitability
and capitalization levels will improve modestly over the next 12-18
months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings on PMT could be upgraded if the company demonstrates
solid financial performance, whereby long-term, through-the-cycle
profitability as measured by net income to average assets increases
and remains above 2.5%. In addition, the company's capitalization
levels would need to strengthen such as TCE to TMA increasing and
remaining above 17.5%, while preserving its franchise value and
maintaining its current liquidity and funding profile.
The ratings on PMT could be downgraded if the company's
capitalization as measured by TCE to TMA is expected to remain
below 13.5%. The ratings could also be downgraded if Moody's
expects the company's through-the-cycle net income to average
managed asset ratio to remain below 1.5%, or if its liquidity
position deteriorates materially.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
PONTCHARTRAIN LLC: SARE Files for Chapter 11 Bankruptcy
-------------------------------------------------------
Pontchartrain LLC filed for chapter 11 protection in the District
of Central California.
According to court filings, Pontchartrain LLC estimates between $1
million and $10 million in debt owed to 1 to 49 creditors. The
petition states that funds will be available to unsecured
creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
August 17, 2023 at 11:00 a.m. in Room Telephonically on telephone
conference line: 1-866-816-0394. participant code: 5282999.
About Pontchartrain LLC
Pontchartrain LLC is a Single Asset Real Estate with a principal
place of business at 468 N. Camden Drive, Beverly Hills, CA 90210.
Pontchartrain LLC sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal.Case No. 23-14185) on July 5,
2023. In the petition filed by Marshall F. Dismuke, as managing
member, the Debtor reports estimated assets and liabilities between
$1 million and $10 million each.
The Honorable Bankruptcy Judge Neil W. Bason oversees the case.
The Debtor is represented by:
Rhonda Walker, Esq.
Rhonda Walker
468 N. Camden Drive
Beverly Hills, CA 90210
Tel: 626-577-7322
Email: rwalker_law@yahoo.com
PROTECH FIRE: Gets OK to Hire German & Cohn as Accountant
---------------------------------------------------------
Protech Fire & Security, LLC received approval from the U.S.
Bankruptcy Court for the Southern District of Texas to hire German
& Cohn, PC as its accountant.
The Debtor requires an accountant to:
a. prepare and file the Debtor's 2021 and 2022 federal income
tax returns;
b. assist the Debtor in preparing its monthly operating
reports;
c. work with the Debtor to reconcile its books and records;
and
d. perform all accounting services that are necessary for the
completion of the Debtor's Chapter 11 case.
The accountant will be compensated on a flat fee basis of $3,000
per month.
Mark German, owner of German & Cohn, 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:
Mark German, CPA
German & Cohn, PC
745 Heights Blvd
Houston, TX 77007
Telephone: (713) 622-1098
Fax: (713) 622-1099
Cell: (713) 385-1040
Email: mark@mgermancpa.com
About ProTech Fire & Security
ProTech Fire & Security, LLC installs, monitors and maintains fire
and security alarms, surveillance systems, access control, voice
and data solutions, bi-directional antenna BDA and a host of other
ancillary products and services for general contractors,
architects, property managers and end users in Texas.
ProTech Fire & Security sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 23-31839) on May
19, 2023, with $453,929 in assets and $1,896,142 in liabilities.
Garrett Steiger, president, signed the petition.
Judge Eduardo V. Rodriguez oversees the case.
The Debtor tapped Julie M. Koenig, Esq., at Cooper & Scully, PC as
legal counsel and German & Cohn, PC as accountant.
PUERTO RICO: PREPA Renews Talks With Creditors to Cut Debt
----------------------------------------------------------
Michelle Kaske of Bloomberg News reports that the Puerto Rico
Electric Power Authority and its bondholders are renewing talks on
a deal to slash debt. US District Court Judge Laura Taylor Swainon
Thursday, July 13, 2023, granted a request to delay by two weeks a
Friday deadline for an amended debt-adjustment proposal. The
parties have been "actively negotiating" in the past three weeks
and the progress of the talks is enough to merit the postponement,
according to a court document filed Thursday, July 13, 2023, by the
island's financial oversight board, which is overseeing the
utility's bankruptcy.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son
of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's
PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies -- Employees Retirement System
of the Government of the Commonwealth of Puerto Rico and Puerto
Rico Highways and Transportation Authority (Case Nos. 17-01685 and
17-01686) -- commenced Title III cases.
U.S. Chief Justice John Roberts named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains the case web site
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
QUALTEK SERVICES: Successfully Exits Chapter 11 Bankruptcy
----------------------------------------------------------
QualTek Services Inc., an infrastructure services provider, on July
14, 2023, announced that it has successfully emerged from Chapter
11 in the United States Bankruptcy Court for the Southern District
of Texas following the confirmation of its Plan of Reorganization
on June 30, 2023.
"We are very pleased by our swift and successful emergence, which
represents the confidence of our stakeholders in our long-term
strategy and the future of our Company," said Scott Hisey, Chief
Executive Officer, QualTek. "We are entering into our next chapter
with strong financial footing and the resources necessary to focus
on our core mission of providing quality, world-class
infrastructure services to our client partners across the
telecommunications and utilities industries. I am grateful to our
employees, including our many veterans, customers, and partners for
their support during this process and look forward to QualTek's
bright future."
The Plan was supported by all major credit stakeholders, including
100% of voting Secured Debt Holders and 100% of voting Convertible
Noteholders. Through its financial restructuring, the Company
reduced its debt by approximately $307 million, entered into a $101
million exit ABL facility, and received $25 million of new money
exit term loans.
Following emergence, QualTek will operate as a privately-held
company under the ownership of its prepetition lenders and
management. Equity shares of the pre-emergence Company have been
canceled and are no longer publicly trading. The Company will be
led by the existing management team alongside a newly formed Board
of Directors.
New Board of Directors
The Company on July 14, 2023, also announced a newly constituted
five-member Board of Directors. Chief Executive Officer Scott Hisey
will be joined by Todd Clegg, Daniel Lafond, and Emanuel Pearlman,
who each bring valuable experience and expertise to the Company and
will contribute significantly to QualTek’s strategic direction
and future success. The fifth board member is to be named at a
later date.
Mr. Hisey is a founder and the CEO of QualTek. He has over 35 years
of telecom experience. Mr. Hisey served in the US Navy and is an
Honorably Discharged Disabled Vet. He is active on various boards
and charities supporting Veteran and family initiatives.
Mr. Clegg is a former Managing Director and the former Head of
Financial Services at Onex Corporation, where he worked from 2005
to 2022. Since 2018, Mr. Clegg led or co-led four platform
investments of over $5.2 billion at Onex. Mr. Clegg is a current or
former board member of Wealth Enhancement Group, OneDigital,
Sedgwick, Ryan Specialty Group, Convex Group, York Risk Services,
Carestream Health, USI, Goddard Center, and Stanley Isaacs Center.
Prior to Onex, Mr. Clegg worked as an investment banking analyst at
JP Morgan Chase in the Syndicated & Leveraged Finance Group. Mr.
Clegg received a Bachelor's degree of Science in Economics from the
University of Pennsylvania's Wharton School of Business and
graduated magna cum laude from Wharton's Honors Program.
Mr. Lafond has served as a member of the Board of Directors of
QualTek Services Inc. since March 2022. Mr. Lafond has over two
decades of experience in the telecommunications and technology
industries, having served in various senior leadership roles at
AT&T Inc., Comcast Corporation, and QuadGen Wireless Solutions Inc.
Most recently, Mr. Lafond was a Senior Vice President of National
Sales at Comcast Corporation. In this role, Mr. Lafond led the
transformation strategy for XFINITY sales channels and operations,
and helped drive customer growth by investing in sales channels to
better serve the customer, and by creating a more centralized sales
operations function to help support the employees serving Xfinity's
customers. Mr. Lafond received a Bachelor's degree of Arts in
Accounting from LaSalle University.
Mr. Pearlman has been a member of the Board of Directors of QualTek
Services Inc. since March 2023. Mr. Pearlman has over 30 years of
leadership experience in industries including gaming, hospitality,
leisure, retail, wholesaling, and distribution. Mr. Pearlman is the
founder and CEO of Liberation Investment Group, an investment and
financial consulting firm. Currently, Mr. Pearlman serves on the
boards of MidCap Financial Investment Corp, Diebold Nixdorf, LSC
Communications, and Network-1 Security Solutions. Earlier in his
career, Mr. Pearlman served on the boards of Flexia Payments, Atlas
Crest Investment Corp. II, Redbox Entertainment, Associated
Materials, Empire Resorts, CEVA Logistics, and others. Mr. Pearlman
received a Bachelor’s degree of Arts in Economics from Duke
University and a Master’s degree in Business Administration from
the Harvard Graduate School of Business.
About QualTek Services Inc.
Founded in 2012, QualTek (OTCMKTS: QTEKQ) --
https://www.qualtekservices.com/ -- is a technology-driven provider
of infrastructure services to the 5G wireless, telecom, power grid
modernization and renewable energy sectors across North America.
QualTek has a national footprint with more than 65 operation
centers across the U.S. and a workforce of over 5,000 people.
QualTek has established a nationwide operating network to enable
quick responses to customer demands as well as proprietary
technology infrastructure for advanced reporting and invoicing.
The Company reports within two operating segments:
telecommunications, and Renewables and Recovery and has already
become a leader in providing disaster recovery logistics and
services for electric utilities.
QualTek Services Inc. and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 23-90584) on May 24,
2023. QualTex disclosed $688,927,000 in assets against
$789,647,000 in total debt as of Dec. 31, 2022.
The Hon. Christopher M. Lopez is the case judge.
Kirkland & Ellis LLP and Jackson Walker LLP are serving as legal
counsel, Jefferies is serving as investment banker, and Alvarez &
Marsal is serving as financial advisor to the Company. The Company
has retained C Street Advisory Group to serve as the strategy and
communications advisor. Epiq is the claims agent.
* * *
Qualtek won confirmation of its Plan of Reorganization on June 30,
2023, and exited Chapter 11 bankruptcy in mid-July 2023.
The Plan was supported by an ad hoc group of term lenders
represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP, as
counsel, Houlihan Lokey Capital, Inc., as investment banker, and
Accordion Partners, LLC, as financial advisor. The Plan was also
supported by Fortress Investment Group LLC, the largest holder of
convertible notes, represented by Davis Polk & Wardwell LLP, as
counsel, and Solomon Partners, L.P., as financial advisor.
R.R. DONNELLEY: Moody's Rates New $250MM Junior Lien Notes 'B3'
---------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to R.R. Donnelley &
Sons Company's ("RRD") proposed $250 million secured junior lien
notes due in 2028. Moody's also affirmed the company's B3 corporate
family rating, B3-PD probability of default rating, B1 senior
secured term loan rating, and Caa1 senior unsecured notes ratings.
The outlook remains stable.
RRD plans to use the $250 million planned proceeds from the new
secured junior lien notes to repay about $141 million to the
holders of the 10% Holdco Payment-In-Kind (PIK) notes due 2031 at
RRD Parent, Inc., repay the remaining $41 million of the senior
secured notes due 2026 and reduce the term loan B by $38 million.
The transaction increases RRD's consolidated debt by about $80
million, increasing financial leverage (debt/EBITDA) to 6.8x from
6.6x. The Holdco PIK notes are mainly held by the company's private
equity owners, Chatham Asset Management.
From the $141 million payment to the PIK notes $91 million will be
for repayment and about $50 million will be for the make-whole
premium. RRD made a similar sizeable payment to the PIK notes
holders in early 2023. In 2023, RRD will have used $447 million of
cash to redeem $269 million of PIK notes and pay about $170 million
premiums, which could have otherwise been used for repayment of the
company's higher priority debt.
Moody's believe Chatham will continue to extract cash from the
company through the PIK notes redemptions. Even though Moody's
treat the PIK notes as debt, the cash leakage through the
make-whole premiums and the prioritization of transfer of capital
to junior debt holders results in an aggressive financial policy
that is detrimental to senior debt holders.
Assignments:
Issuer: R.R. Donnelley & Sons Company
Senior Secured Junior Lien Regular Bond/Debenture, Assigned B3
Affirmations:
Issuer: R.R. Donnelley & Sons Company
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Backed Senior Secured 1st Lien Bank Credit Facility, Affirmed B1
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1
Outlook Actions:
Issuer: R.R. Donnelley & Sons Company
Outlook, Remains Stable
RATINGS RATIONALE
R.R. Donnelley & Sons Company's CFR is constrained by: (1) high
leverage of about 6.8x at Q1-2023 (Moody's adjusted Debt/EBITDA
including the $1 billion Holdco Payment-In-Kind (PIK) notes and pro
forma for the notes issuance); (2) high exposure to the secular
decline in commercial printing due to digital substitution
pressuring its revenue and profitability; (3) execution risks as it
transforms itself from a commercial printer focused on manuals,
publications, brochures, and business cards to innovative
businesses such as packaging, labels, direct marketing and digital
print; (4) limited operating track record under the private
ownership by Chatham Asset Management and the potential for more
aggressive financial policies such as shareholder friendly
transactions. However, the company's rating benefits from: (1) good
position in the commercial printing market, large scale and client
diversity; (2) continued cost reduction, which partially mitigates
the pressure on EBITDA; and (3) good liquidity, including its
ability to generate positive free cash flow despite ongoing demand
pressures.
RRD has good liquidity through to mid-2024 pro forma for the notes
issuance, with sources totaling about $505 million versus about $10
million mandatory annual debt amortization. Liquidity is supported
by about $200 million of cash (pro forma for notes issuance and
June exchange) as of March 2023, projected free cash flow of about
$60 million through to June 2024 and Moody's estimate of about $245
million of pro forma availability as of March 2023 under its $650
million ABL facility expiring April 2026 (subject to a borrowing
base and after $62 million of letters of credit). RRD's ABL has a
springing fixed charge coverage covenant of 1x and Term Loan B has
a first priority debt leverage ratio covenant of 4.5x. The company
has substantial cushion on each of the covenants.
RRD has five classes of debt: (1) $650 million ABL facility
expiring April 2026; (2) $1.25 billion secured term loan B due
March 2028 and $450 million ($41 million outstanding prior to this
transaction) secured notes due November 2026, which the company
plans to repay; (3) proposed $250 million secured junior lien
notes; (4) senior unsecured notes and debentures due 2027 through
2031; and (5) $1 billion Holdco PIK subordinated notes due in
October 2031. RRD's ABL facility benefits from a first priority
lien on accounts receivable, inventory, and equipment and a second
priority lien on principal properties. The term loan, which is
rated B1, two notches above the CFR, benefits from first priority
liens on principal properties and second priority liens on accounts
receivable, inventory, and equipment. The proposed junior lien
notes are rated B3 to reflect its junior ranking to the ABL and
term loan. The Caa1 rating on the unsecured notes and debentures is
one notch below the CFR to reflect their junior ranking behind the
ABL facility, term loan and junior lien notes but ahead of the
Holdco PIK notes.
The stable outlook reflects Moody's expectation that RRD will
maintain good liquidity with debt to EBITDA increasing to high-6x
range in the next 12-18 months due to the rising Holdco PIK notes
balance from accrual of 10% interest. The outlook also reflects
Moody's expectation that the company will use asset sale proceeds
to reduce cash interest and will manage its cost structure to
offset the secular decline in its commercial printing segment.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company is not able to
successfully execute its transformation into innovative businesses
leading to revenue and EBITDA declines that result in an untenable
capital structure or higher refinancing risk. The ratings could
also be downgraded if debt to EBITDA moves towards 7x (including
PIK notes), (EBITDA-Capex)/Interest remaining below 1x (including
PIK interest), or weak liquidity.
The ratings could be upgraded if the company generates sustainable
positive organic growth in revenue and EBITDA, and maintains debt
to EBITDA below 5x.
The principal methodology used in these ratings was Media published
in June 2021.
Headquartered in Chicago, Illinois, R.R. Donnelley & Sons Company
is the leader in the North American commercial printing industry.
R.R. DONNELLEY: S&P Rates New $250MM Sec. Junior-Lien Notes 'B-'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '5'
recovery rating to R.R. Donnelley & Sons Co.'s proposed $250
million secured junior-lien notes due 2028. The '5' recovery rating
reflects S&P's expectation of modest (10%-30%, rounded estimate:
20%) recovery in the event of default. S&P expects the company to
use the proceeds to repay the remaining $41 million balance of its
existing 6.125% senior secured notes and $38 million of its
first-lien term-loan both due 2026 and redeem $141 million of its
pay-in-kind (PIK) notes, including a make-whole premium. The
remainder will be used to fund fees and expenses and general
corporate purposes. S&P's issuer credit rating on the company is
unchanged.
S&P said, "Pro forma for this transaction, we expect adjusted
leverage will be about 5.8x–6.0x in 2023. We forecast free
operating cash flow to debt to be about 5% over the next 12 months,
which is within the threshold we had set for the rating."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default
occurring in 2026 stemming from an economic downturn and ongoing
pricing pressure due to overcapacity in the commercial printing
industry.
-- R.R. Donnelley is the borrower under the senior secured
asset-based lending (ABL) facility due 2026, the proposed $250
million secured junior-lien notes due 2028, and the $1.25 billion
senior secured term loan due 2028. It is also the issuer of the
senior notes with maturities from 2027-2031.
-- The company's domestic wholly owned subsidiaries (other than
its immaterial subsidiaries) guarantee the ABL and the $1.25
billion term loan.
-- The term loan has a junior lien on the ABL collateral. The
obligations outstanding under the senior secured term loan are
secured by the guarantors' assets (subject to exclusions) and a 65%
pledge of the capital stock of its first-tier foreign
subsidiaries.
-- The proposed $250 million secured junior-lien notes have a
junior priority lien on the collateral that secures the ABL and the
first-lien term loan on a senior basis.
-- The senior unsecured notes do not benefit from subsidiary
guarantees and limit liens on principal property (generally defined
as U.S. manufacturing facilities with a gross book value over 1% of
consolidated net tangible assets).
-- The $979 million unsecured holdco PIK notes are structurally
subordinated to all of the company's existing debt.
-- In S&P's analysis, it assumes entities that guarantee the
senior secured credit facilities represent about 60% of the
company's net emergence value while its foreign non-guarantor
entities and unpledged assets represent about 40%.
Simulated default assumptions
-- Year of default: 2026
-- EBITDA at emergence: About $242 million
-- Implied enterprise value (EV) multiple: 5x
-- ABL credit facility about 60% drawn at default
Simplified waterfall
-- Net enterprise value (after bankruptcy administrative costs):
About $1.15 billion
-- Value available to ABL facility: $990 million
-- Secured ABL facility claims: About $398 million
--Recovery expectations: 90%-100% (rounded estimate: 95%)
-- Value available to term loan claims: $591 million
-- Senior secured debt claims: About $1 billion
--Recovery expectations: 50%-70% (rounded estimate: 65%)
-- Value available to proposed junior-lien claims: $161 million
-- Junior secured debt claims: About $262.5 billion
--Recovery expectations: 10%-30% (rounded estimate: 20%)
-- Value available to senior unsecured claims: $161 million
-- Senior notes and pari passu deficiency claims: About $781
million
--Recovery expectations: 10%-30% (rounded estimate: 20%)
-- Value available to subordinated debt: $0 million
-- Total subordinated claims: $1.3 billion
--Recovery expectations: 0%-10% (rounded estimate: 0%)
REDSTONE BUYER: Moody's Affirms 'Caa1' CFR, Outlook Stable
----------------------------------------------------------
Moody's Investors Service affirmed Redstone Buyer LLC's ("RSA
Security" or "RSA") ratings including its Caa1 Corporate Family
Rating. The outlook is stable. RSA recently sold its Archer
business and proposed an amendment to permit certain uses of the
proceeds including repaying revolver draws, adding cash to the
balance sheet as well as paying a tax distribution and dividend to
shareholders. Though liquidity will be improved as a result of the
proposal, the significant value leakage due to tax distributions
and dividends leaves uncertainty about debt repayment from future
asset sales.
The affirmation of the Caa1 CFR reflects RSA's still very high
financial leverage, continuing challenges of the remaining
businesses including turning around negative cash flow, as well as
uncertain net asset coverage for the remaining debt. Despite the
sizable proceeds from the sale of Archer, only 51% of the proceeds
are proposed to reduce debt with only 41% used to permanently repay
debt (revolver repayments will be re-drawable). Leverage, pro
forma for the Archer sale, is well over 14x based on April 2023 LTM
results, although closer to 8x excluding transaction, stand-up and
restructuring costs and giving full-year credit for actioned
synergies. Although those costs are winding down, they will
continue into FY 2024 and likely drive negative cash flow over the
next twelve months.
RATINGS RATIONALE
RSA's Caa1 CFR benefits from RSA's leading positions across various
enterprise cybersecurity and risk management software markets and
favorable demand drivers in the security software industry. RSA has
been updating and modernizing its platforms including cloud
security capabilities over the past several years after falling
behind several of its competitors. Though the company has made
significant progress in new product development, the competitive
environment remains challenging and continued investment will
likely be required to grow the business.
Restructuring and stand-alone build out costs (including capital
expenditures) will continue through fiscal 2024 (fiscal year ending
January) although declining. As a result, free cash flow will
likely be negative in fiscal 2024 with potential to be breakeven or
better in fiscal 2025. Despite the challenges, RSA has made
significant progress setting up its different business units to be
separable.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects the progress that RSA has made in
standing up the business units and improving liquidity to fund
ongoing challenges. However, Moody's would consider a downgrade to
RSA's ratings if performance continues to weaken, cash flow does
not show signs of reaching breakeven levels, covenants limit
availability under the revolver or liquidity is otherwise impaired.
The ratings could also face downward pressure if future asset sale
proceeds are not used to permanently pay down debt. Moody's could
upgrade RSA's ratings if the company stabilizes operations and
generates sustained positive free cash flow, while maintaining
ample cushion under its revolver covenants.
Liquidity is adequate based on the proposed use of net proceeds
from the Archer sale resulting in an estimated $120 million of
cash, and an undrawn $175 million revolver. Although separation,
restructuring and stand up costs are winding down, free cash flow
will likely continue to be negative over the 12 months with the
potential to be positive in the fiscal year ending January 2025.
The company must be in compliance with certain financial covenants
if more than $61.25 million of the $175 million revolver is drawn.
The company has proposed using a portion of the Archer proceeds to
repay the revolver. RSA had approximately $75 million drawn as of
fiscal year ended February 3, 2023 prior to any Archer related
repayments.
RSA's CIS-5 ESG credit impact score is primarily driven by very
aggressive financial practices. As a software company, RSA's
exposure to environmental risk is considered low. Social risks are
moderately negative and in-line with the software industry. Social
risks primarily relate to data security, diversity in the work
force and access to highly skilled workers. RSA is owned by a
consortium of private equity funds and does not have an independent
board. Moody's expect RSA will continue to have aggressive
financial practices as demonstrated by the proposed Archer sale
amendment.
Affirmations:
Issuer: Redstone Buyer LLC (RSA Security)
Corporate Family Rating, Affirmed Caa1
Probability of Default Rating, Affirmed Caa1-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B3
Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa3
Outlook Actions:
Issuer: Redstone Buyer LLC (RSA Security)
Outlook, Remains Stable
Redstone Buyer LLC (RSA Security) is an enterprise security
software company with approximately $715 million of revenue for the
fiscal year ended February 3, 2023 (approximately $502 excluding
Archer). RSA was acquired from Dell in September 2020 by a group of
funds led by private equity firm Symphony Technology Group (STG).
After the April 2021 recapitalization, Clearlake Capital Group
(Clearlake) became a controlling shareholder along with STG.
The principal methodology used in these ratings was Software
published in June 2022.
REDSTONE BUYER: S&P Affirms 'B-' ICR, Outlook Negative
------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
Redstone Buyer LLC (doing business as RSA) and its 'B-' issue-level
rating on its first-lien credit facilities. At the same time, S&P
lowered its issue-level rating on its second-lien term loan to
'CCC' from 'CCC+' and revised its recovery rating to '6' from '5'.
The negative outlook reflects risk that the company's FOCF will
remain weak in fiscal year 2025 if it is unable to significantly
accelerate its top-line revenue expansion and improve its EBITDA
margins amid the higher interest rate environment and weakening
corporate information technology (IT) spending.
RSA closed the sale of its Archer assets on June 30, 2023, and S&P
expects it will use $710 million of the proceeds for debt
repayment.
Uncertainties surrounding RSA's operating trends pose risks to its
achievement of stable revenue growth and sustainable cash flow
generation. The company incurred significant costs to stand up its
four independent business units over the last two fiscal years. S&P
said, "While we believe most of these actions are now behind RSA,
and anticipate it will likely start reporting higher-quality
financials without the noise surrounding its
carve-out/restructuring activities, we still expect a modest amount
of restructuring and business-optimization spending in the coming
year, which could continue to limit the improvement in its cash
generation."
S&P said, "Following the sale of Archer, which we viewed as one of
RSA's better-performing and more cash flow generative businesses,
its operations now comprise just SecurID (SID), NetWitness, and
Outseer. Although we continue to view the demand for enterprise IT
security software, particularly in the identity and access
management (IAM) segment, as resilient despite the cautious
corporate spending environment, the company's historical
performance indicates it will likely continue to face a material
weakness in its overall growth prospects and cash flow generation
over the next year." RSA has struggled to expand due to the effects
of various concurrent factors, including organizational disruptions
stemming from its restructuring/business separation activities,
lagging product enhancement and innovation because of its high
leverage and rising interest expense, and the transition to a more
recurring revenue-focused business and away from perpetual license
sales. The pro forma company's revenue declined by about 20% in
fiscal year 2022 and 4% in fiscal year 2023.
NetWitness and Outseer struggled to expand over the same periods
despite a somewhat favorable demand environment. S&P said, "We
believe this was mostly due to disruptions caused by management's
various restructuring and organizational changes following the
company's carve-out from Dell in late 2020, as well as revenue
volatility due to its shift to subscription-based revenue and away
from perpetual licenses. While we expect RSA will improve the
operating margins of these two businesses, given that it has
already substantially completed most of the stand-up activities,
organizational rightsizing, and leadership hiring, their near-term
revenue prospects remain largely uncertain. We believe the company
will likely continue to face headwinds because of the execution
risk stemming from the shift in its product focus and renewed
go-to-market strategies."
S&P said, "We believe RSA's SID business benefits from stronger
growth prospects. During fiscal year 2023, SID expanded its
software-as-a-service (SaaS) revenue by about 69% (albeit from a
low base relative to its overall revenue). While we expect this
business will continue to outperform NetWitness and Outseer, due to
the stronger market tailwinds for IAM software solutions as it
makes progress on building its identity security platform and
modernizing its core product offerings, it will need to invest more
in research and development (R&D; for product innovations and
enhancement) and sales and marketing (S&M) to increase its
revenue." That may lead to additional pressure on its near-term
cash flow generation despite its better long-term growth
trajectory.
The negative outlook reflects risk that the company's FOCF will
remain weak in fiscal year 2025 if it is unable to significantly
accelerate its top-line revenue expansion and improve its EBITDA
margins amid the higher interest rate environment and weakening
corporate IT spending.
S&P could lower its rating on RSA to 'CCC+' if:
-- It fails to accelerate its revenue growth and improve its
EBITDA margins due to continued significant business units stand-up
costs, prolonged restructuring and business optimization
activities, execution missteps during its transition to a
subscription revenue model, increasing competitive pressures, or
weaker customer demand, such that it will likely generate negative
FOCF on a sustained basis;
-- It loses access to its $175 million RCF due to covenant issues;
or
-- Its total liquidity declines to approximately $100 million.
S&P could revise its outlook on RSA to stable if:
-- S&P believes it can reliably generate positive FOCF on a
sustained basis; and
-- It reports consistent revenue growth and substantial and stable
improvements in its EBITDA margin.
ESG credit indicators: E-2, S-2, G-3
Governance factors are a moderately negative consideration in S&P's
credit rating analysis of the company, as is the case for most
rated entities owned by private-equity sponsors.
REEVES FARM: Property Sale Proceeds to Fund Plan Payments
---------------------------------------------------------
Reeves Farm Landco, LLC, filed with the U.S. Bankruptcy Court for
the District of Alabama a Disclosure Statement for Plan of
Liquidation dated July 13, 2023.
The Debtor owns two parcels of land located at 1039 and 1040
Carthage Street in Sanford, North Carolina, which is comprised of
48.94 acres of vacant land (the "Property"). The Debtor will sell
the Property as part of its chapter 11 plan.
The Property is encumbered by a first mortgage in favor of Settoon
Capital, LLC. On the Petition Date, the Debtor owed Settoon
approximately $1,268,000.00. The Property is also encumbered by a
second mortgage in favor of Stevens Wren Group, LLC. On the
Petition Date, the Debtor owed Wren Group approximately
$3,500,000.00.
The Debtor is not aware of any priority unsecured claims or
non-priority unsecured claims.
Since the Petition Date, the Debtor has received interest in the
Property from parties under a variety of potential deal structures.
At present, the Debtor believes the highest and best use of the
Property, and the best return for the estate, involves the Debtor's
sale (the "Sale") of the Property to Caviness and Cates – Home
Builders pursuant to the Contract (the "Contract") and pursuing
transactions with buyers.
Except as otherwise specifically provided in the Plan, the
treatment of, and the consideration to be received by, Holders of
Allowed Claims and Holders of Allowed Equity Interests pursuant to
the Plan will be in full and final satisfaction, settlement,
release, extinguishment, and discharge of their respective Allowed
Claims, of any nature whatsoever and Allowed Equity Interests.
Class 1 consists of the Allowed Secured Claim of Settoon Capital,
LLC. Beginning on the first day of the month following the
Effective Date and thereafter on the first day of the month until
the earlier of: the Closing Date or five years from the Effective
Date, the Debtor shall make monthly payments of principal and
interest at 12% per annum, based on a twenty-year amortization
rate. Upon the earlier of the Closing Date or five years from the
Effective Date, the Debtor shall pay the balance due to Settoon on
its Allowed Secured Claim.
Class 2 consists of the Allowed Secured Claim of Stevens Wren
Group, LLC. The Allowed Secured Claim of the Wren Group shall be
paid from the sale proceeds within 10 days of the Closing Date.
Class 2 is Impaired.
Class 3 comprises any Allowed Unsecured Claims not otherwise
classified under the Plan. Holders of Class 3 Allowed Unsecured
Claims shall receive payment after payment to Settoon and Wren
Group in full, from the proceeds of the Sale. Class 3 is Impaired.
Class 4 comprises all Equity Interests in the Debtor. All Holders
of Equity Interests in the Debtor shall be cancelled on the
Effective Date. Class 4 is Impaired.
The Plan provides for the payment of Allowed Claims from the
proceeds the Reorganized Debtor will receive from the sale or
disposition of the Property. The payments to Settoon of principal
and interest pending the Sale will be paid from a loan by Marion
Uter or an affiliate. Such loan will be interest free and will be
subordinated to payment of any other Creditors.
A full-text copy of the Disclosure Statement dated July 13, 2023 is
available at https://urlcurt.com/u?l=n0kfw8 from PacerMonitor.com
at no charge.
Counsel for Debtor:
Edward J. Peterson, Esq.
Johnson Pope Bokor Ruppel & Burns, LLP
401 E. Jackson Street, Ste. 3100
Tampa, FL 33602
Telephone: (813) 225-2500
Email: epeterson@jpfirm.com
About Reeves Farm Landco
Reeves Farm Landco, LLC is a single asset real estate (as defined
in 11 U.S.C. Section 101(51B)). It is based in Spanish Fort, Ala.
Reeves Farm Landco filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Ala. Case No. 23-10844) on April
14, 2023. In the petition filed by Julius Marion Uter, manager, the
Debtor reported between $1 million and $10 million in both assets
and liabilities.
Judge Jerry C. Oldshue oversees the case.
Edward J. Peterson, Esq., at Johnson Pope Bokor Ruppel & Burns,
LLP, serves as the Debtor's counsel.
RESORTS WORLD: S&P Assigns 'BB+' Rating on Senior Unsecured Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' long-term issue rating to the
US$300 million senior unsecured notes that Resorts World Las Vegas
LLC (RWLV; BB+/Stable/--) proposes to issue. The company plans to
use the proceeds to refinance a US$300 million subordinated
shareholder loan from Genting Assets, Inc. The ratings on the notes
are subject to our review of the final issuance documentation.
The new unsecured notes will rank equally with the existing U$1.35
billion unsecured notes. The '4' recovery rating on the senior
unsecured notes indicates S&P's expectation for average recovery
(30%-50%) in a hypothetical default scenario.
After the issuance, RWLV's capital structure will consist of US$800
million secured facilities and US$1.65 billion unsecured notes.
S&P said, "The 'BB+' issuer credit rating on RWLV reflects its
highly strategic group status, as we believe it will receive strong
support from its parent Genting Bhd. (Genting) under almost all
foreseeable circumstances. The stable outlook mirrors that on the
company's parent. The stable outlook on Genting reflects our
expectation that the company's credit quality has stabilized
following the completion of a major investment cycle, while an
operational recovery takes shape. We expect Genting's ratio of
funds from operations to debt to improve to more than 20% over the
next two years."
Issue Rating--Recovery Analysis
Key analytical factors
-- S&P rates RWLV's US$100 million secured revolving credit
facility and US$700 million secured term loan 'BBB-' with a '1'
recovery rating. The '1' recovery rating indicates its expectation
for a very high recovery (90%-100%; rounded estimate: 95%) for
lenders in case of a payment default.
-- S&P rates RWLV's US$1.65 billion senior unsecured notes 'BB+'
with a '4' recovery rating. The '4' recovery rating indicates its
expectation for an average recovery (30%-50%; rounded estimate:
40%) for unsecured lenders in a payment default.
Simulated default assumptions
-- Simulated year of default: 2028, which is in line with the
five-year default horizon for 'BB+' rated credits.
-- S&P's simulated default scenario contemplates a default in
2028, primarily due to the reduction or cessation of support from
the Genting group. This in turn could be driven by a lack of a
meaningful turnaround in the business operations owing to weaker
co-branding effects to generate sufficient customer traffic than
S&P's expected, and increased competitive pressure from other
casinos in the Las Vegas strip.
-- S&P values RWLV on a going-concern basis and apply a 6.5x
EBITDA multiple to its estimate of its emergence EBITDA. The
applied multiple is in line with the leisure sector.
-- Jurisdiction: U.S.
Simplified waterfall
-- EBITDA at emergence: about US$230 million
-- EBITDA multiple: 6.5x
-- Gross enterprise value: about US$1.49 billion
-- Net enterprise value after administrative expenses (5%):
US$1.42 billion
-- Estimated value available for senior secured claims: US$1.42
billion
-- Estimated senior secured debt claims: about US$706 million
-- Recovery range: 90%-100% (rounded estimate: 95%)
-- Recovery rating: 1
-- Estimated value available for senior unsecured claims: about
US$711 million
-- Estimated senior unsecured debt claims: about US$1.69 billion
-- Recovery range: 30%-50% (rounded estimate: 40%)
-- Recovery rating: 4
Note: All debt amounts include six months of prepetition interest.
RIBA FOODS: Taps Fuqua & Associates as Legal Counsel
----------------------------------------------------
Riba Foods, Inc. seeks approval from the U.S. Bankruptcy Court for
the Southern District of Texas to employ Fuqua & Associates, P.C.
as its legal counsel.
The Debtor requires legal counsel to:
a. give advice with respect to the powers and duties of the
Debtor in the continued operation of its business and management of
its property;
b. prepare pleadings;
c. negotiate and submit a potential plan of arrangement
satisfactory to the Debtor and its creditors; and
d. perform all other legal services necessary to the Debtor's
Chapter 11 proceedings.
Fuqua & Associates will be paid at these rates:
Richard L. Fuqua, Attorney-in-Charge $750 per hour
Associates $375 per hour
Law Clerks/Legal Assistants $150 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
The firm received a retainer in the amount of $25,000.
Richard Fuqua, Esq., a partner at Fuqua & Associates, 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:
Richard L. Fuqua, Esq.
Fuqua & Associates, P.C.
8558 Katy Freeway, Suite 119
Houston, TX 77024
Telephone: (713) 960-0277
Facsimile: (713) 906-1064
Email: RLFuqua@FuquaLegal.com
About Riba Foods
Riba Foods, Inc. manufactures and markets a variety of salsas, dips
and quesos under the Arriba! Salsa and Texas Pepper Works brand
names. The company is based in Houston, Texas.
Riba Foods filed its voluntary petition for Chapter 11 protection
(Bankr. S.D. Texas Case No. 23-60028) on June 21, 2023, with
$3,665,293 in assets and $9,476,352 in liabilities. Miguel A.
Barrios, chief executive officer, signed the petition.
Judge Christopher M. Lopez oversees the case.
Richard L. Fuqua, Esq., at Fuqua & Associates, P.C. serves as the
Debtor's legal counsel.
ROCKPORT COMPANY: Affiliate Taps Chipman as Conflicts Counsel
-------------------------------------------------------------
CB Footwear Services, LLC, an affiliate of The Rockport Company,
LLC, received approval from the U.S. Bankruptcy Court for the
District of Delaware to employ Chipman Brown Cicero & Cole, LLP as
its special conflicts counsel.
The professional services that Chipman expects to render as special
conflicts counsel to CB Footwear include, but not limited to,
advising with respect to the following where there exists or may
exist a conflict between CB Footwear and its debtor-affiliates:
a. providing legal advice with respect to CB Footwear's powers
and duties as debtor-in-possession in the continued operation of
its businesses and management of its properties;
b. negotiating, drafting, and pursuing all documentation
necessary in CB Footwear's Chapter 11 case;
c. preparing legal papers necessary to the administration of CB
Footwear's estate;
d. appearing in court;
e. assisting with any disposition of CB Footwear's assets by
sale or otherwise;
f. negotiating and taking all necessary or appropriate actions
in connection with a plan of reorganization and all related
transactions contemplated therein;
g. attending meetings and negotiating with representatives of
creditors, the U.S. trustee, and other parties involved in CB
Footwear's Chapter 11 case;
h. providing legal advice regarding bankruptcy law, corporate
law, corporate governance, transactional, litigation and other
issues to CB Footwear in connection with its ongoing business
operations; and
i. other necessary legal services.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
William E. Chipman, Jr. $775 per hour
Adam D. Cole $775 per hour
Mark L. Desgrosseilliers $725 per hour
Robert A. Weber $725 per hour
Mark D. Olivere $525 per hour
Edwin Leon $300 per hour
Renae M. Fusco $275 per hour
Partners $525 to $775 per hour
Associates $300 to $375 per hour
Paralegals $275 per hour
Chipman received a retainer in the amount of $50,000.
Mark Desgrosseilliers, Esq., a partner at Chipman, disclosed in a
court filing that his firm is a "disinterested person" pursuant to
Section 101(14) of the Bankruptcy Code.
Chipman can be reached at:
Mark L. Desgrosseilliers, Esq.
Chipman Brown Cicero & Cole, LLP
1313 North Market Street, Suite 5400
Wilmington, DE 19801
Tel: (302) 295-0192
About Rockport Co. LLC
The Rockport Company, LLC -- https://www.rockport.com/ -- offers a
collection of men's and women's brands that provide comfortable
shoes for every occasion. The company and its
subsidiaries are global designers, distributors and retailers of
comfort footwear in more than 50 markets worldwide.
Rockport Company and its affiliates first sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 18-11145) on
May 14, 2018. The business was taken out of bankruptcy after the
court approved the sale of substantially all of Rockport Company's
assets to an affiliate of Charlesbank Equity Fund IX, LP.
Rockport Company and its affiliates again sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10774) on June 15, 2023. In the petition filed by its chief
restructuring officer, Joseph Marchese, Rockport Company reported
$50 million to $100 million in both assets and liabilities.
In the new Chapter 11 cases, the Debtors tapped Potter Anderson &
Corroon, LLP as legal counsel; Miller Buckfire & Co., LLC as
financial advisor and investment banker; and PKF Clear Thinking as
personnel provider. Epiq Corporate Restructuring, LLC is the claims
and noticing agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee is represented by Cole Schotz, P.C.
ROCKPORT COMPANY: Gets OK to Hire Epiq as Administrative Advisor
----------------------------------------------------------------
The Rockport Company, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Epiq Corporate Restructuring, LLC as administrative advisor.
The Debtors require an administrative advisor to:
a. assist with, among other things, solicitation, balloting
and tabulation of votes, prepare reports in support of confirmation
of a Chapter 11 plan, and process requests for documents;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs, and
gather data in conjunction therewith;
d. provide a confidential data room, if requested;
e. manage and coordinate any distributions pursuant to a
Chapter 11 plan; and
f. provide other administrative services.
Epiq will charge these hourly fees:
Clerical/Administrative Support Waived
IT / Programming $55 to $75
Project Managers/Consultants/Directors $70 to $180
Solicitation Consultant $180
Executive Vice President, Solicitation $95
Executives No Charge
The firm received a retainer in the amount of $25,000.
Kate Mailloux, senior director at Epiq, disclosed in a court filing
that her firm is a "disinterested person" pursuant to Section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Kate Mailloux
Epiq Corporate Restructuring, LLC
777 Third Avenue, 12th Floor
New York, NY 10017
Telephone: +1 646 282 2532
Email: kmailloux@epiqglobal.com
About Rockport Co. LLC
The Rockport Company, LLC -- https://www.rockport.com/ -- offers a
collection of men's and women's brands that provide comfortable
shoes for every occasion. The company and its
subsidiaries are global designers, distributors and retailers of
comfort footwear in more than 50 markets worldwide.
Rockport Company and its affiliates first sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 18-11145) on
May 14, 2018. The business was taken out of bankruptcy after the
court approved the sale of substantially all of Rockport Company's
assets to an affiliate of Charlesbank Equity Fund IX, LP.
Rockport Company and its affiliates again sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10774) on June 15, 2023. In the petition filed by its chief
restructuring officer, Joseph Marchese, Rockport Company reported
$50 million to $100 million in both assets and liabilities.
In the new Chapter 11 cases, the Debtors tapped Potter Anderson &
Corroon, LLP as legal counsel; Miller Buckfire & Co., LLC as
financial advisor and investment banker; and PKF Clear Thinking as
personnel provider. Epiq Corporate Restructuring, LLC is the claims
and noticing agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee is represented by Cole Schotz, P.C.
ROCKPORT COMPANY: Taps Miller Buckfire & Co. as Financial Advisor
-----------------------------------------------------------------
The Rockport Company, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Miller Buckfire & Co., LLC and its affiliate, Stifel, Nicolaus &
Co., Inc. as financial advisor and investment banker.
The firms' services include:
a. familiarizing themselves with the business, operations,
properties, financial condition and prospects of the Debtors, and
assisting the Debtors in structuring and effecting the financial
aspects of any proposed transaction;
b. assisting in developing and seeking approval of any plan of
reorganization;
c. assisting in structuring any new securities to be issued
under a bankruptcy plan;
d. participating or otherwise assisting in negotiations with
entities or groups affected by a bankruptcy plan;
e. participating in hearings before the court in connection with
the firms' other services, including related testimony, in
coordination with the Debtors' counsel; and
f. if the Debtors pursue a sale, the firms will:
(1) advise and assist the Debtors in connection with sale
planning, execution and closing;
(2) perform valuation analyses related to a sale;
(3) identify sale opportunities;
(4) advise the Debtors on sale opportunities whether or not
identified by the firms;
(5) initiate and coordinate discussions with potential
acquirers concerning any sale;
(6) advise the Debtors on sale negotiation strategy;
(7) negotiate with acquirers concerning any sale;
(8) assist the Debtors in managing the due diligence process,
including establishing and managing a virtual data room;
(9) evaluate any indications of interests or offers that
potential acquirers may submit; and
(10) perform other financial advisory and investment banking
services.
The firms will be paid as follows:
a. A monthly fee of $100,000.
b. A transaction fee to be paid as follows:
(1) Upon the later of full consummation of a sale and the
indefeasible payment in cash in full of all senior lien debt:
Greater of (i) 2.5 percent of the first $85 million of the sale,
plus 5 percent on all amounts over $85 million and (ii) $2
million.
(2) Before the conditions in (1) are met, $500,000 upon the
consummation of any sale, fully creditable to any fee later paid
pursuant to (1).
c. Breakup Fee: Lesser of (i) 25 percent of any such termination
or breakup fee received, and (ii) $500,000.
d. Reimbursement of out-of-pocket expenses.
James Doak, managing director at Miller Buckfire & Co., disclosed
in a court filing that his firm is a "disinterested person"
pursuant to Section 101(14) of the Bankruptcy Code.
Miller Buckfire & Co. can be reached at:
James Doak
Miller Buckfire & Co., LLC
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 895-1829/(212) 895-1800
Facsimile: (212) 895-1853
Email: james.doak@millerbuckfire.com
info@millerbuckfire.com
About Rockport Co. LLC
The Rockport Company, LLC -- https://www.rockport.com/ -- offers a
collection of men's and women's brands that provide comfortable
shoes for every occasion. The company and its
subsidiaries are global designers, distributors and retailers of
comfort footwear in more than 50 markets worldwide.
Rockport Company and its affiliates first sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 18-11145) on
May 14, 2018. The business was taken out of bankruptcy after the
court approved the sale of substantially all of Rockport Company's
assets to an affiliate of Charlesbank Equity Fund IX, LP.
Rockport Company and its affiliates again sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10774) on June 15, 2023. In the petition filed by its chief
restructuring officer, Joseph Marchese, Rockport Company reported
$50 million to $100 million in both assets and liabilities.
In the new Chapter 11 cases, the Debtors tapped Potter Anderson &
Corroon, LLP as legal counsel; Miller Buckfire & Co., LLC as
financial advisor and investment banker; and PKF Clear Thinking as
personnel provider. Epiq Corporate Restructuring, LLC is the claims
and noticing agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee is represented by Cole Schotz, P.C.
ROCKPORT COMPANY: Taps Potter Anderson & Corroon as Counsel
-----------------------------------------------------------
The Rockport Company, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Potter Anderson & Corroon, LLP as their legal counsel.
The firm's services include:
a. advising the Debtors of their rights, powers, and duties
under Chapter 11 of the Bankruptcy Code;
b. taking action to protect and preserve the Debtors' estates,
including the prosecution of actions on the Debtors' behalf, the
defense of actions commenced against the Debtors in their Chapter
11 cases, the negotiation of disputes in which the Debtors are
involved, and the preparation of objections to claims filed against
the Debtors;
c. appearing in court and at any meeting required by the U.S.
Trustee and any meeting of creditors;
d. assisting with any disposition of the Debtors' assets by sale
or otherwise;
e. preparing legal papers;
f. preparing a plan of reorganization;
g. preparing disclosure statement and any related documents
necessary to solicit votes on the plan;
h. prosecuting a Chapter 11 plan for the Debtors and seeking
approval of all transactions contemplated therein and, in any
amendments, thereto; and
i. other necessary legal services.
The firm will be paid at these rates:
Partner $675 to $1,345 per hour
Counsel $650 to $705 per hour
Associates $440 to $585 per hour
Paraprofessionals $330 to $350 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Potter Anderson & Corroon received a retainer in the amount of
$500,000 in connection with the planning and preparation of
documents and its post-petition representation of the Debtors. The
firm received $250,000 on June 13 and another $150,000 on June 15
to increase the retainer. As of June 22, the balance of the
retainer is $284,201.47.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Potter
Anderson & Corroon disclosed the following:
a. Potter Anderson & Corroon has not agreed to a variation of
its standard or customary billing arrangement for this engagement.
b. None of Potter Anderson & Corroon's professionals included in
this engagement have varied their rate based on the geographic
location of these Chapter 11 cases.
c. Potter Anderson & Corroon has only represented the Debtors in
connection with this matter. The billing rates and material terms
of the representation prior to the petition date are the same as
the terms and the rates being charged by the firm.
d. The Debtors and Potter Anderson & Corroon expect to develop a
prospective budget and staffing plan for the firm's engagement for
the post-petition period as appropriate. In accordance with the
U.S. Trustee Guidelines, the budget may be amended as necessary to
reflect changed or unanticipated developments.
M. Blake Cleary, Esq., a partner at Potter Anderson & Corroon,
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:
M. Blake Cleary, Esq.
L. Katherine Good, Esq.
Gregory J. Flasser, Esq.
Katelin A. Morales, Esq.
Potter Anderson & Corroon, LLP
1313 North Market Street, 6th Floor
Wilmington, DE 19801
Tel: (302) 984-6000
Fax: (302) 658-1192
Email: bcleary@potteranderson.com
kgood@potteranderson.com
gflasser@potteranderson.com
kmorales@potteranderson.com
About Rockport Co. LLC
The Rockport Company, LLC -- https://www.rockport.com/ -- offers a
collection of men's and women's brands that provide comfortable
shoes for every occasion. The company and its
subsidiaries are global designers, distributors and retailers of
comfort footwear in more than 50 markets worldwide.
Rockport Company and its affiliates first sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 18-11145) on
May 14, 2018. The business was taken out of bankruptcy after the
court approved the sale of substantially all of Rockport Company's
assets to an affiliate of Charlesbank Equity Fund IX, LP.
Rockport Company and its affiliates again sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10774) on June 15, 2023. In the petition filed by its chief
restructuring officer, Joseph Marchese, Rockport Company reported
$50 million to $100 million in both assets and liabilities.
In the new Chapter 11 cases, the Debtors tapped Potter Anderson &
Corroon, LLP as legal counsel; Miller Buckfire & Co., LLC as
financial advisor and investment banker; and PKF Clear Thinking as
personnel provider. Epiq Corporate Restructuring, LLC is the claims
and noticing agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee is represented by Cole Schotz, P.C.
RUE21 INC: Works With AlixPartners to Help Earnings Woes
--------------------------------------------------------
Reshmi Basu of Bloomberg News reports that teen clothing chain
rue21 Inc. is working with AlixPartners LLP for operational help as
the company racks up earnings losses, according to people familiar
with the situation.
Year-to-date, the retailer has posted negative Ebitda, a measure of
earnings, the people said, asking not to be named because the
matter is private.
Messages left with rue21 were not returned, while a representative
with AlixPartners declined to comment.
The chain recently underwent a change in its C-suite, with Josh
Burris taking over as chief executive officer in March 2023.
About rue21 Inc.
rue21 -- http://www.rue21.com/-- is a teen specialty apparel
retailer. For over 37 years, rue21 has been famous for offering the
latest trends at an affordable price point. It has core brands in
girls' apparel (rue21), intimate apparel (true), girls' accessories
(etc!), girls' cosmetics (ruebeaute!), guys' apparel and
accessories (Carbon), girls' plus-size apparel (rue+), and girls'
swimwear (ruebleu). The company is headquartered in Warrendale,
Pennsylvania and have one distribution center located in Weirton,
West Virginia.
Headquartered just north of Pittsburgh, Pennsylvania, rue21 had
1,179 stores in 48 states in shopping malls, outlets and strip
centers, and on its website. In April, Company began the process of
closing approximately 400 underperforming stores in its 1,179 store
fleet in order to streamline operations.
On May 15, 2017, rue21, inc., and affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Pa. Lead Case No. 17-22045). Todd M. Lenhart, the
Company's senior vice president, treasurer, chief financial
officer, and chief accounting officer, signed the petitions.
The Debtors have sought joint administration of the Chapter 11
cases. The Honorable Gregory L. Taddonio is the case judge.
The Debtors tapped Reed Smith LLP as local counsel; Kirkland &
Ellis LLP as bankruptcy counsel; Rothschild Inc., as investment
banker; Berkeley Research Group, LLC, as financial advisor; A&G
Realty Partners, LLC, as real estate advisor and consultant; and
Kurtzman Carson Consultants LLC as claims and notice agent.
rue21 estimated $1 billion to $10 billion in assets and
liabilities.
Counsel to the DIP Term Loan Agent, DIP Term Loan Lenders,
Prepetition Term Loan Agent and Term Loan Steering Committee are
Scott J. Greenberg, Esq., Michael J. Cohen, Esq., and Jeffrey J.
Bresch, Esq., at Jones Day.
Counsel to the DIP ABL Agent and the Prepetition ABL Agent are
Julia Frost-Davies, Esq., and Amelia C. Joiner, Esq., at Morgan
Lewis & Bockius LLP; and James D. Newell, Esq., and Timothy Palmer,
Esq., at Buchanan Ingersoll & Rooney PC.
The Sponsor Lenders are represented by Simpson Thacher & Bartlett's
Elisha D. Graff, Esq.
An Ad Hoc Cross-Holder Group is represented by Milbank, Tweed,
Hadley & McCloy's Gerard Uzzi, Esq., and Eric Stodola, Esq.
Andrew R. Vara, Acting U.S. Trustee for Region 3, on May 23, 2017,
appointed seven creditors to serve on the official committee of
unsecured creditors. The Committee has tapped Cooley LLP as
counsel; and Fox Rothschild LLP as local counsel.
SABERT CORP: Moody's Ups CFR & Sr. Secured Term Loan to B1
----------------------------------------------------------
Moody's Investors Service upgraded Sabert Corporation's corporate
family rating to B1 from B2 and probability of default rating to
B1-PD from B2-PD. At the same time, Moody's also upgraded the
senior secured term loan rating to B1 from B2. The rating outlook
is stable.
"The rating upgrade reflects Moody's expectation that Sabert will
generate ample free cash flow and sustain its leverage below 5x
debt/EBITDA," says Motoki Yanase, VP-Senior Credit Officer at
Moody's.
Sabert has continued to report strong earnings into the first
quarter of 2023, supported by lower costs compared to last year and
improved plant performance. Despite softer demand and customer
destocking impact in the first two months of the year, raw
materials and freight costs were drastically lower than last
year's, which helped the company generate free cash flow. Moody's
expects the company to continue to generate ample free cash flow
through 2024, supported by capital expenditure levels similar to
2022 and 2021, improved margins and working capital improvement.
Sabert is also expected to sustain its leverage below 5x,
reflecting its financial leverage target of 3.0-3.5x debt/EBITDA
(unadjusted) and focus on using free cash flow for debt reduction.
The company has voluntarily prepaid close to $200 million or about
25% of its secured term loan from 2019 to March of 2023 and is
expected to continue to reduce debt further in 2023, which would
reduce the company's leverage to the low to mid 3x by the end of
2023 from 6.7x in 2021.
Upgrades:
Issuer: Sabert Corporation
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Backed Senior Secured Bank Credit Facility, Upgraded to B1 from
B2
Outlook Actions:
Issuer: Sabert Corporation
Outlook, Remains Stable
RATINGS RATIONALE
Sabert's credit quality is supported by its substrate
diversification into paper and plastic packaging and expansion of
its pulp-based packaging to meet increasing demand for alternatives
to plastic packaging. It is also supported by long-term
relationships with customers and some geographic diversification to
Europe and Asia. The company can pass through resin costs through
contracts in most of its business, albeit with time lag.
These credit strengths are counterbalanced with the company's
credit weaknesses, including its relatively small scale, high
customer concentration and exposure to raw materials costs, mostly
plastic resin prices. The company is also exposed to key person
risk related to its founder, Albert Salama, who owns 100% of the
company. Although the company's end markets, including
supermarkets, national casual dining chains, independent
restaurants and quick service restaurants, are considered largely
stable, a more uncertain macroeconomic outlook along with softer
demand could also restrain profit given the inflationary
environment.
Despite the long tenure and operational know-how of Sabert's
management team, it remains to be seen whether the company would
maintain its current financial policy in the event of a change in
ownership from its current owner, Albert Salama. Having a clearer
succession plan with respect to the future control of the company
would reduce the risk of sudden and fundamental change in the
company's financial policy.
Moody's projects the company to have good liquidity for the next
12-18 months, supported by Moody's expectations of positive free
cash flow generation and sufficient availability under its $120
million asset-based revolver due in December 2024. Moody's expect
the company to refinance the revolver in a timely manner.
The stable rating outlook reflects Moody's expectation that the
company will maintain positive free cash flow and adequate
liquidity in the next 12-18 months. The outlook assumes that the
company will not embark in material debt funded acquisitions or
shareholders distributions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely in the near term given the company's size
and exposure to concentrated end-markets. Moody's could consider
upgrading the rating if Sabert increases scale and end-market
diversity, demonstrates further earnings growth and debt reduction
and while maintaining the following credit metrics: debt/EBITDA
below 4.0x, free cash flow/debt above 5%, EBITDA/interest expense
coverage of more than 3.5x, and EBITDA margin close to 20%.
Moody's could downgrade the company's rating if the operating and
competitive environments deteriorate. Specifically, the ratings
could be downgraded if debt/EBITDA remains above 5.0x,
EBITDA/interest is below 3.0x or if the company fails to generate
free cash flow. Moody's could also downgrade the company if there
is evidence of a more aggressive financial policy.
Headquartered in Sayreville, NJ, Sabert Corporation is a
manufacturer of plastic and fiber-based packaging for food and food
service. Sabert is privately owned by its founder Albert Salama.
The company recorded about $1.1 billion of sales in 2022.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
SCHNELL MEDICAL: Taps Latham Luna Eden & Beaudine as Legal Counsel
------------------------------------------------------------------
Schnell Medical, LLC and PortaGyn Inc. received approval from the
U.S. Bankruptcy Court for the Middle District of Florida to employ
The Law Firm of Latham, Luna, Eden & Beaudine, LLP as counsel.
The firm's services include:
a. advising as to the Debtor's rights and duties in this
Chapter 11 case;
b. preparing legal papers, including a disclosure statement
and plan of reorganization; and
c. taking other necessary action incident to the proper
preservation and administration of the Debtor's estate.
The firm will be paid at these rates:
Attorneys $485 per hour
Junior paraprofessionals $105 per hour
In addition, the firm will receive an advance retainer of $11,738
and reimbursement for out-of-pocket expenses incurred.
Daniel Velasquez, Esq., a partner at Latham, 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:
Daniel A. Velasquez, Esq.
Latham, Luna, Eden & Beaudine, LLP
201 S. Orange Ave., Suite 1400
Orlando, FL 32801
Telephone: (407) 481-5800
Facsimile: (407) 481-5801
Email: dvelasquez@lathamluna.com
About Schnell Medical and PortaGyn
Schnell Medical, LLC and PortaGyn Inc. filed Chapter 11 petitions
(Bankr. M.D. Fla. Case Nos. 23-00263 and 23-00264) on Jan. 24,
2023, and elected to proceed with their cases under the provisions
of Subchapter V. At the time of the filing, Schnell Medical
reported as much as $50,000 in assets and $500,001 to $1 million in
liabilities while PortaGyn reported $100,001 to $500,000 in assets
and $100,001 to $500,000 in liabilities.
Judge Tiffany P. Geyer oversees the cases.
The Debtors are represented by Daniel A. Velasquez, Esq., at
Latham, Luna, Eden & Beaudine, LLP.
SENSIENCE INC: S&P Downgrades ICR to 'CCC', Outlook Negative
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Mansfield,
Ohio-based Sensience Inc. to 'CCC' from 'CCC+'. S&P also lowered
its issue-level rating on the company's first-lien term loan to
'CCC' from 'CCC+' and its issue-level rating on its second-lien
term loan to 'CCC-' from 'CCC'.
S&P said, "The negative outlook reflects our expectation that we
could lower our ratings further if, in our view, the likelihood of
a near-term distressed restructuring or payment default increases
over the next year.
"Our downgrade reflects our belief that Sensience's liquidity
position will face heightened pressure in the next few quarters
given our forecast for interest rates to remain higher for longer.
Our most recent U.S. macroeconomic forecast now calls for a
multi-quarter period of subpotential economic growth, under which
monetary policy rates will be higher for longer. All Sensience's
debt is floating rate in nature, and we now expect that over the
next year interest expense will remain at least at current levels,
which is lower than our forecast for S&P Global Ratings-adjusted
EBITDA. We anticipate that to meet its cash fixed charges,
remaining interest expense, working capital uses, capital
expenditures (capex), and term loan amortization payments, the
company will therefore be reliant on revolver and excess cash
availability, sources that we believe may become depleted over the
next few quarters.
"We believe the company is dependent on lower interest rates or
significantly improved business conditions in order to generate
positive cash flow on a consistent basis and avoid a liquidity
shortfall. Therefore, we view the company's capital structure as
unsustainable and believe there is an increasing possibility of a
distressed restructuring.
"We view the possibility of a liquidity shortfall or payment
default as increasingly likely over the next 12 months, and view
Sensience's liquidity as less than adequate. While we forecast
higher cost savings and moderating year-over-year revenue headwinds
in the second half of 2023 as equipment destocking trends ease, we
believe the company's interest burden and maintenance capex needs
will be difficult to offset, particularly given our view that
interest rates will stay elevated. We currently forecast fiscal
2023 revenues to contract about 10%-15% compared to 2022, but for
S&P Global Ratings-adjusted EBITDA to decline around 40% driven by
fixed-cost base absorption, incremental costs associated with
transitioning to a stand-alone company, and restructuring and
severance costs.
"As of the company's second fiscal quarter ended March 31, 2023,
Sensience had $4.9 million in unrestricted cash and about $38
million in revolver availability. We forecast that this may not be
sufficient to fund the company's capex, working capital, and debt
service needs for the next 12 months when combined with our
expectation for cash funds from operations (FFO) deficits.
Furthermore, even in a scenario where demand modestly improves, we
anticipate internally generated cash may not be sufficient to
rebuild liquidity cushion, given likely working capital investment
requirements associated with higher demand.
"The negative outlook reflects our view that high interest rates
and constrained cash flow generation will persist, resulting in an
increased likelihood of a distressed restructuring or payment
default over the next year.
"We could lower our ratings on Sensience within the next six to
twelve months if we see heightened risk of a distressed debt
restructuring or payment default. This could result from higher
cash flow deficits than we expect, driven by weaker demand or
difficulty in achieving significant cost reduction.
"We could raise our ratings on Sensience if we no longer view a
liquidity shortfall or distressed restructuring as a high
probability, which would most likely occur if Sensience
demonstrates a stabilizing liquidity position and an improvement in
cash flow generation, such that we do not anticipate meaningful
deficits."
ESG credit indicators: E-2, S-2, G-3
SKILLZ INC: BlackRock No Longer Owns Common Shares
--------------------------------------------------
BlackRock, Inc. disclosed in a Schedule 13G/A filed with the
Securities and Exchange Commission that as of June 30, 2023, it
beneficially owns zero shares of common stock of Skillz Inc. A
full-text copy of the regulatory filing is available for free at:
https://www.sec.gov/Archives/edgar/data/1801661/000130655023009537/us83067l1098_070723.txt
About Skillz Inc.
Headquartered in San Francisco, California, Skillz Inc. --
www.skillz.com -- is a mobile games platform dedicated to bringing
out the best in everyone through competition. The Skillz platform
helps developers create multi-million dollar franchises by enabling
social competition in their games. Leveraging its patented
technology, Skillz hosts billions of casual eSports tournaments for
millions of mobile players worldwide, with the goal of building the
home of competition for all.
Skillz reported a net loss of $438.87 million in 2022, a net loss
of $187.92 million in 2021, and a net loss of $149.08 million in
2020. As of March 31, 2023, the Company had $612.16 million in
total assets, $357.77 million in total liabilities, and $254.38
million in total stockholders' equity.
* * *
As reported by the TCR on April 28, 2023, Moody's Investors Service
downgraded Skillz Inc.'s corporate family rating to Caa2 from Caa1
following the company's recent repurchase of more than 50% of its
outstanding debt at sizable discount to par, reducing available
liquidity to fund projected cash flow deficits. Moody's said the
Caa2 CFR reflects the increased risk that Skillz's debt capital
structure is unsustainable due to reduced liquidity to fund
projected cash flow deficits.
Also in April 2023, S&P Global Ratings raised its issuer credit
rating to 'CCC+' from 'SD' (selective default). The negative
outlook reflects uncertainty around the company's ability to turn
its substantially negative cash flow positive over the next three
years given ongoing challenges in right-sizing its operations and
its unproven business model.
SOUTHEAST ASSOCIATION: Seeks Chapter 11 Bankruptcy
--------------------------------------------------
Southeast Association of Healthcare Providers Inc. filed for
chapter 11 protection in the Northern District of Florida. The
Debtor elected on its voluntary petition to proceed under
Subchapter V of chapter 11 of the Bankruptcy Code.
The Debtor operates two wellness centers in the Florida panhandle
that provides general medical care, chiropractic therapy, and
physical therapy, among other services.
The Debtor operates in Pensacola and Milton, Florida, and does not
own the real property on which the businesses are located.
The Debtor filed the Chapter 11 case to reorganize its debts.
Prepetition, the Debtor was involved in a state court action due to
an alleged default of payment for some of Debtor's medical
equipment. The Debtor also has two loans with the U.S. Small
Business Administration, one of which is currently in default. Due
to financial issues prior to filing, the Debtor obtained a loan
from a merchant cash advance lender, who began deducting up to
$1,500 per week from the Debtor's bank account. The Debtor hopes to
be able to reorganize its debts in a way that will allow the
business to continue operating and pay some dividend its
creditors.
According to court filings, Southeast Association estimates between
$1 million and $10 million in total debt owed to 1 to 49 creditors.
The petition states that funds will not be available to unsecured
creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
August 14, 2023 at 9:00 a.m. in Room Telephonically on telephone
conference line: (877) 835-0364, Access Code 4662459.
About Southeast Association of Healthcare Providers
Southeast Association of Healthcare Providers Inc. operates two
wellness centers in the Florida panhandle. The Debtor's principal,
Dr. Philip Renfroe, is a chiropractor.
Southeast Association of Healthcare Providers sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Fla.Case No.
23-30455) on July 6, 2023. In the petition filed by Dr. Philip E.
Renfroe as president, the Debtor reported assets between $500,000
and $1 million and estimated liabilities between $1 million and $10
million.
The Debtor is represented by:
Byron Wright, III, Esq.
Bruner Wright, P.A.
1835 W. Nine One Half Mile Rd.
Cantonment, FL 32533
Tel: (850) 385-0342
Fax: (850) 270-2441
Email: twright@brunerwright.com
SPEEDWAY MOTORSPORTS: S&P Alters Outlook to Pos., Affirms 'BB' ICR
------------------------------------------------------------------
S&P Global Ratings revised the outlook on Speedway Motorsports LLC
to positive from stable and affirmed the 'BB' issuer credit
rating.
The positive outlook reflects the potential for a higher rating if
NASCAR extends its TV contract with similar pricing and terms such
that we expect Speedway's leverage will improve and remain below 3x
on a sustained basis.
A higher rating is contingent on the favorable renewal of NASCAR's
media-rights agreement, which currently contributes around 50% of
total revenue. Through NASCAR, Speedway has a 10-year (through the
2024 season) broadcast media rights agreement for three national
touring series with NBC Sports Group and Fox Sports Media Group.
NASCAR distributes 65% of the media rights fees it receives to
Speedway and other promoters. The agreement provides Speedway with
high-margin contractual revenue that benefits from annual price
escalators. S&P said, "We believe NASCAR is well positioned to
negotiate an increase to its media rights contract when it renews
since the audience ratings for its races have increased in recent
years after many years of declining popularity, although its
television ratings are down significantly since its last media
rights contract was awarded in 2013. We believe the broadcast
networks will continue to pay a premium for live sports relative to
other types of content because sports generate higher audience
ratings and face less competition from similar content on streaming
platforms."
S&P said, "We expect the company will continue to use its
discretionary cash flow to repay debt. We believe Speedway plans to
reduce its leverage and maintain it at a lower level. The company
ended 2022 with S&P Global Ratings-adjusted net leverage of 3x,
which we expect it will reduce to the mid-2x area in 2023 and the
low-2x area in 2024. To achieve this, we believe Speedway will
continue to voluntarily repay debt, given its past track record,
although we expect its discretionary cash flow available for debt
repayment will be muted in 2023 (between $10 million-$15
million)--due to elevated capital expenditures (capex)--before
improving to around $60 million in 2024. The controlling Smith
family had operated Speedway with low leverage before its
take-private transaction in 2019 (the company's S&P Global
Ratings-adjusted net leverage was in the 1x-2x range prior to the
take-private transaction). We also believe there are few
large-scale acquisition opportunities available that would
significantly increase its leverage. While Speedway may
occasionally take on debt--including to fund cash distributions to
its Smith family-controlled parent, Sonic Financial Corp.--we
believe it would be motivated to subsequently reduce its
leverage."
Speedway's hosted events are exposed to economic cyclicality and
the spending power of its fans. The company's core fan base
struggled during the economic recovery following the 2008
recession. This contributed to lower event attendance, which was
exacerbated by the retirement of star NASCAR drivers that
previously brought in large fanbases. S&P said, "While we believe
consumer interest in NASCAR has increased in recent years, due to
the emergence of new talent, Speedway's admissions revenue will
continue to be exposed to economic cyclicality. The company's
admissions and event-related revenue is now comfortably above
pre-COVID levels, though we believe broader macroeconomic pressure
could negatively affect the expansion in its admissions and
event-related revenue in 2023. S&P Global Ratings economists expect
slow U.S. GDP growth in 2023 and 2024, with the Federal Reserve
signaling there will be a prolonged period of higher interest
rates. If the economy slows more considerably, we believe that the
declines in Speedway's admissions and event-related revenue would
outpace the contraction in GDP." However, the company demonstrated
in 2020 that it can significantly scale back the costs associated
with these revenue sources and support its profitability and cash
flow with contractual TV revenue in a downturn.
The positive outlook reflects the potential for a higher rating if
NASCAR extends its TV contract with similar pricing and terms such
that S&P expects Speedway's leverage will improve and remain below
3x on a sustained basis.
S&P could raise the rating on Speedway if it expects its leverage
will decline below 3x on a sustained basis. This could occur if:
-- The NASCAR TV contract and related promoter payments are
extended at a price and term similar to the previous contract; and
-- Attendance and viewership remain relatively stable.
S&P could revise the outlook to stable if it expect Speedway's
leverage will remain above 3x on a sustained basis. This could
occur if:
-- The NASCAR TV contract is renewed at a lower annual fee or for
a considerably shorter term;
-- Macroeconomic pressures erode the spending power of fans such
that its admissions and event-related revenue decline sharply; or
-- The company pursues a large debt-funded acquisition or
dividend.
ESG credit indicators: E-2, S-2, G-2
SQUAW VALLEY: Case Summary & Two Unsecured Creditors
----------------------------------------------------
Debtor: Squaw Valley Land LLC
1775 Village Center Circle, Suite 110
Las Vegas, NV 89134
Chapter 11 Petition Date: July 18, 2023
Court: United States Bankruptcy Court
District of Nevada
Case No.: 23-12910
Judge: Hon. August B. Landis
Debtor's Counsel: Brett A. Axelrod, Esq.
FOX ROTHSCHILD LLP
1980 Festival Plaza Drive, Suite 700
Las Vegas, NV 89135
Tel: (702) 262-6899
Email: baxelrod@foxrothschild.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Fredrick Waid as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/2R7ZUJY/SQUAW_VALLEY_LAND_LLC__nvbke-23-12910__0001.0.pdf?mcid=tGE4TAMA
STAGWELL GLOBAL: Moody's Alters Outlook on 'B1' CFR to Positive
---------------------------------------------------------------
Moody's Investors Service changed Stagwell Global LLC's (Stagwell)
outlook to positive from stable. Concurrently, Moody's affirmed
Stagwell's B1 corporate family rating, B1-PD probability of default
rating, and B2 senior unsecured notes rating. The speculative grade
liquidity rating (SGL) remains unchanged at SGL-2. At the same
time, Moody's assigned a B1 CFR, B1-PD PDR, and SGL-2 rating and a
positive outlook to Stagwell Global LLC's parent, Stagwell Inc.
Subsequent to this action, Moody's will withdraw the CFR, PDR and
SGL rating at Stagwell Global LLC. Since Stagwell Global LLC is the
main operating entity but does not file financial statements,
Moody's relies on Stagwell Inc.'s financial statements for the
ratings. Hence the reassignment of the CFR, PDR and SGL to Stagwell
Inc. The instrument ratings will continue to remain at Stagwell
Global LLC because it is the borrower.
"The positive outlook reflects Moody's expectations that growing
scale, improved operating profile and recent cost reduction
measures will support Stagwell in maintaining financial leverage
below 4x at year-end-2023 and through 2024, despite macroeconomic
pressures", said Mikhil Mahore, a Moody's analyst.
Assignments:
Issuer: Stagwell Inc.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Affirmations:
Issuer: Stagwell Global LLC
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B2
Outlook Actions:
Issuer: Stagwell Inc.
Outlook, Assigned Positive
Issuer: Stagwell Global LLC
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Stagwell's B1 CFR benefits from: (1) increasing digital services
exposure, which should drive double digit annual revenue growth
through 2024; (2) Moody's expectation that Debt/EBITDA will
continue to remain below 4x, supported by EBITDA growth and debt
repayment; (3) good client and industry diversity; and (4) good
liquidity, including consistent positive free cash flow generation,
which could be used to repay debt and reduce leverage. The rating
is constrained by: (1) advertising spending shifts to large
technology companies and digital media platforms, which requires
the company to adjust its business accordingly; (2) increasing
competition from consulting firms, which have digital strengths and
are growing their creative offerings with acquisitions; (3) small
scale relative to key industry peers; and (4) controlled ownership
risks that could lead to leveraging transactions.
Moody's has changed the company's financial strategy & risk
management sub-factor score to 3 from 4, given management's
commitment to maintain lower net leverage target. As a consequence,
Moody's has changed the Governance IPS score to G-3 from G-4,
reflecting lower governance risk. The company's CIS score was
changed to CIS-3 from CIS-4. This move reflects significant
deleveraging and improvement in credit metrics achieved by Stagwell
in the last two years. Stagwell has communicated a commitment to
deleveraging by reducing its net leverage target to 2x from 2.5x.
The positive outlook reflects the company's improving operating
profile and Moody's view that despite macroeconomic pressures, the
company will operate such that its financial leverage (debt/EBITDA)
remains below 4x in 2023 and 2024.
Stagwell has good liquidity (SGL-2) over the next 12 months through
to June 2024. Sources approximate $680 million compared to uses of
about $90 million in the form of deferred acquisition consideration
payments over this time frame. Sources consist of cash of $139
million at March 31, 2023, expected annual free cash flow of around
$300 million, and Moody's estimate of $240 million of availability
(after drawings and letters of credit) under its $640 million
revolving credit facility expiring in August 2026. The revolving
credit facility is subject to a total leverage covenant with step
downs and cushion is likely to exceed 20% over the next 12 months.
Stagwell has limited ability to generate liquidity from asset
sales.
Stagwell has two classes of debt: (1) $640 million senior secured
revolving credit facility expiring in 2026; and (2) B2-rated $1.1
billion senior unsecured notes due in 2029. Both instruments are
guaranteed by the same domestic subsidiaries. The unsecured notes
are rated B2, one notch below the CFR, reflecting their junior
ranking below the secured revolver in the capital structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company generates consistent
positive revenue and EBITDA growth, the company maintains its
financial policy consistent with its publicly stated financial
policy target, Debt/EBITDA sustains below 4x, and free cash
flow/Debt sustains above 5%.
The ratings could be downgraded if business fundamentals
deteriorate, evidenced by material decline in revenue and EBITDA,
if Debt/EBITDA is sustained above 5x or if liquidity weakens.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in New York City, Stagwell is a global provider of
marketing, advertising, communications and consulting services
STREAM TV: Specialized Equipment Unsecureds to Get 90% of Claim
---------------------------------------------------------------
Stream TV Networks, Inc., and Technovative Media, Inc., submitted a
Disclosure Statement for Joint Plan of Reorganization dated July
13, 2023.
Stream is a new media company founded in 2009 with a mission to
advance the evolution of display technology from a flat 2D world to
an immersive world of 3D where viewers need not wear special
glasses or goggles.
Technovative, a wholly-owned subsidiary of Stream, is a holding
company that owns directly or indirectly all the remaining entities
in the Stream global group.
Since the filing of the Chapter 11 Cases, the Debtors and their
advisors have engaged the Debtors' key stakeholders and various
financing sources regarding various possible restructuring
alternatives to effectuate a value-maximizing restructuring
transaction and create a sustainable capital structure to position
the Debtors for long-term success.
The Debtors' chapter 11 filing neutralized a long-standing takeover
scheme by a group of shareholders, some of whom held or hold
convertible secured debt ("Voided Takeover Attempt"). The takeover
scheme consisted of a private foreclosure which the Delaware
Supreme Court held was invalid because it was not authorized under
the Debtors' corporate charter as required by long standing
Delaware corporate law. Despite a clear directive by the Supreme
Court to unwind any transactions that were part of the takeover
scheme, the case on remand languished for over a year without even
the basic return of assets.
After extensive negotiations, on July 13, 2023, the Debtors, Visual
Semiconductor Inc., Cystar Limited, Southern Telecom, and Rembrandt
agreed to the terms of the restructuring set forth in the Plan to
support the financing of the Debtors' bankruptcy, the plan
restructuring, the completion of purchase orders totaling
$138,600,000 and plan sponsorship to assist in payment of claims
and exit financing. The relevant purchase orders, term sheet, and
restructuring support agreement (collectively "Restructuring
Agreements").
The Debtors and the Plan Proponents believe that the restructuring
reflected in the Plan is the best available option for the Debtors'
stakeholders, Estates, and go-forward businesses. Through the
restructuring, the Debtors will create a sustainable capital
structure that positions the Company for success in the very
competitive new media industry and to finally realize the
incredible potential of its groundbreaking technology which has
been hampered by litigation and a now voided and illegitimate
attempt to take over the company, the business and its key
intellectual property.
Class III consists of all Unsecured Claims of Specialized
Equipment. On the Effective Date, or as soon as reasonably
practicable thereafter, each Holder of an Allowed Unsecured Claim
of Specialized Equipment shall receive, in full and final
satisfaction, compromise, settlement, release, and discharge of
such Claim, either: (i) payment in Cash of 90% of such Holder's
claim; or (ii) such other treatment determined by the Holder of an
Unsecured Claim of Specialized Equipment. Class III is Unimpaired.
Class IV consists of all Unsecured Claims of Former Employees. On
the Effective Date, or as soon as reasonably practicable
thereafter, each Holder of an Allowed Unsecured Claim of Former
Employees shall receive, in full and final satisfaction,
compromise, settlement, release, and discharge of such Claim,
either (i) payment in Cash of 50% of such Holder's claim, or (ii)
payment in Cash of 80% of such Holder's claim over 36 months from
the Effective Date. Class IV is Impaired.
Class V consists of all Other Unsecured Claims. On the Effective
Date, each Holder of an Allowed Other Unsecured Claim shall
receive, in full and final satisfaction, compromise, settlement,
release, and discharge of such Claim, either (i) payment in Cash of
50% of such Holder's claim, or (ii) receive a pro rata interest up
to a total of 5% of the equity in the Reorganized Debtors pursuant
to the Equity Rights Offering. Class V is Impaired.
Class VI consists of all Equity. Equity Holders shall receive no
recovery or distribution on account of such Interests. On the
Effective Date, all prepetition Equity Interests will be canceled,
released, extinguished, and discharged, and will be of no further
force or effect. Equity Holders shall be able to participate in the
ERO.
The Reorganized Debtors shall fund distributions under the Plan, as
applicable with: (a) the Exit Facilities; (b) the issuance and
distribution of New Common Stock; (c) the Equity Rights Offering;
and (d) Cash on hand.
A full-text copy of the Disclosure Statement dated July 13, 2023 is
available at https://urlcurt.com/u?l=zgPUNI from PacerMonitor.com
at no charge.
Counsel to the Debtors:
Rafael X. Zahralddin-Aravena
LEWIS BRISBOIS BISGAARD & SMITH, LLP
550 E. Swedesford Road, Suite 270
Wayne, PA 19087
Telephone: (302) 985-6004
Facsimile: (302) 985-6001
Email: Rafael.Zahralddin@lewisbrisbois.com
- and -
Vincent F. Alexander
LEWIS BRISBOIS BISGAARD & SMITH, LLP
110 SE 6th Street, Suite 2600
Fort Lauderdale, FL 33301
Telephone: (954) 939-3371
Facsimile: (954) 728-1282
Email: Vincent.Alexander@lewisbrisbois.com
- and -
Bennett G. Fisher
LEWIS BRISBOIS BISGAARD & SMITH, LLP
24 Greenway Plaza #1400
Houston, TX 77046
Telephone: (346) 241-4095
Facsimile: (713) 759-6830
Email: Bennett.Fisher@lewisbrisbois.com
About Stream TV Networks
Stream TV Networks Inc. develops technology intended to display
three-dimensional content without the use of 3D glasses.
Stream TV Networks sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Penn. Case No. 23-10763) on March 15,
2023. In the petition filed by Mathu Rajan, as director, the Debtor
reported assets between $500 million and $1 billion and estimated
liabilities between $10 million and $50 million.
The case is overseen by Honorable Bankruptcy Judge Magdeline D.
Coleman.
The Debtor is represented by:
Rafael X. Zahralddin-Aravena, Esq.
LEWIS BRISBOIS BISGAARD & SMITH
550 E. Swedesford Road, Suite 270
Wayne, PA 19087
Tel: (302) 985-6004
Email: Rafael.Zahralddin@lewisbrisbois.com
T. JONES TRUCKING: Unsecureds to Split $7,200 in Consensual Plan
----------------------------------------------------------------
T. Jones Trucking, LLC, filed with the U.S. Bankruptcy Court for
the Middle District of Florida a Plan of Reorganization dated July
13, 2023.
The Debtor is a top intermodal freight service transporting goods
efficiently and safely across the United States of America. The
Debtor's principal place of business is located at 2522 Lake Debra
Drive, Apt. 21103, Orlando, Florida 32835.
Class 1 consists of the Secured Claim of Triumph Business Capital.
This Claim is secured by liens on the Triumph Collateral. The Class
1 Secured Claim is approximately $305.00. This Class is Impaired.
To the extent that the claim is allowed as a secured claim, then
the holder will: (i) retain the liens securing the claim to the
extent of the allowed amount of the secured claim; and (ii) receive
on account of such claim deferred cash payments totaling at least
the allowed amount of the claim, of a value, as of the Effective
Date of at least the value of the claimant's interest in the
estate's interest in the property securing the claim.
On July 5, 2023, the Debtor filed a Motion to Determine Secures
Status of Claim Held by Triumph Business Capital, seeking to value
the Triumph Collateral and seeking the entry of an order
determining the amount of Triumph's secured claim to be $305.00,
with the balance treated as an unsecured claim. Triumph has not
responded to said Motion, and the Debtor expects the Court enter an
order granting same. Accordingly, the Reorganized Debtor shall make
twelve equal monthly payments of $26.53, which payment amount is
calculated based upon amortizing the amount of the Allowed Secured
Claim over a one-year period at the Secured Rate. This claim shall
be paid directly by the Debtor.
Class 2 consists of the HEC Lease Cure. The Class 2 Lease Cure
Claim is approximately $16,930.00. This Class is Impaired. In full
satisfaction of the Allowed Class 2 Claim, holders of such claim
shall be paid as follows: the Debtor shall pay twelve equal monthly
payments of $890.83.
Class 3 consists of the Allowed Unsecured Claims against the
Debtor. This Class is Impaired.
Consensual Plan Treatment:
* The liquidation value or amount that unsecured creditors
would receive in a hypothetical chapter 7 case is approximately
$0.00. Accordingly, the Debtor proposes to pay unsecured creditors
a pro rata portion of $7,200.00. Payments will be made in equal
quarterly payments of $600.00. Payments shall commence on the
fifteenth day of the month, on the first month that begins more
than fourteen days after the Effective Date and shall continue
quarterly for eleven additional quarters. The value to be
distributed to unsecured creditors is greater than the Debtor's
projected disposable income to be received in the 3-year period
beginning on the date that the first payment is due under the plan.
Holders of class 3 claims shall be paid directly by the Debtor.
* If the Debtor defaults in making a quarterly payment and
fails to cure the payment default before the following quarter's
payment is due, then the Debtor shall liquidate nonexempt assets to
pay the holders of allowed unsecured claims.
Nonconsensual Plan Treatment:
* The liquidation value or amount that unsecured creditors
would receive in a hypothetical chapter 7 case is approximately
$0.00. Accordingly, the Debtor proposes to pay unsecured creditors
a pro rata portion of its Disposable Income. If the Debtor remains
in possession, plan payments shall include the Subchapter V
Trustee's administrative fee which will be billed hourly at the
Subchapter V Trustee’s then current allowable blended rate. Plan
Payments shall commence on the fifteenth day of the month, on the
first month that is ninety days after the Effective Date and shall
continue quarterly for eleven additional quarters. The initial
estimated quarterly payment shall be $0.00; however, the Debtor may
have disposable income during the life of the Plan depending on
future business. Holders of class 3 claims shall be paid directly
by the Debtor.
* If the Debtor defaults in making a quarterly payment and
fails to cure the payment default before the following quarter's
payment is due, then the Debtor shall liquidate nonexempt assets to
pay the holders of allowed unsecured claims.
The Plan contemplates that the Reorganized Debtor will continue to
operate the Debtor's business.
Except as explicitly set forth in this Plan, all cash in excess of
operating expenses generated from operation until the Effective
Date will be used for Plan Payments or Plan implementation, cash on
hand as of Confirmation shall be available for Administrative
Expenses.
A full-text copy of the Plan of Reorganization dated July 13, 2023
is available at https://urlcurt.com/u?l=DlUAq4 from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Jeffrey S. Ainsworth, Esq.
Jacob D. Flentke, Esq.
BransonLaw, PLLC
1501 E. Concord St.
Orlando, FL 32803
Tel: (407) 894-6834
Fax: (407) 894-8559
Email: jeff@bransonlaw.com
jacob@bransonlaw.com
About T. Jones Trucking
T. Jones Trucking, LLC, is a top intermodal freight service
transporting goods efficiently and safely across the United States
of America.
T. Jones Trucking filed a Chapter 11 bankruptcy petition (Bankr.
M.D. Fla. Case No. 23-01392) on April 14, 2023, with as much as $1
million in both assets and liabilities.
Judge Tiffany P. Geyer oversees the case.
The Debtor is represented by BransonLaw, PLLC.
TEAM HEALTH: Pioneer Fund Marks $320,304 Loan at 66% Off
--------------------------------------------------------
Pioneer Diversified High Income Fund, Inc has marked its $320,304
loan extended to Team Health Holdings, Inc to market at $210,600 or
34% of the outstanding amount, as of April 30, 2023, according to a
disclosure contained in Pioneer Fund's Form N-CSR for the Fiscal
year ended April 30, 2023, filed with the Securities and Exchange
Commission.
Pioneer Fund is a participant in an Extended Term Loan (Term SOFR +
525 bps) to Team Health Holdings, Inc. The loan accrues interest at
10.232% per annum. The loan matures on March 2, 2027.
Pioneer Diversified High Income Fund, Inc. is organized as a
Maryland corporation. Prior to April 21, 2021, the Fund was
organized as a Delaware statutory trust. On April 21, 2021, the
Fund redomiciled to a Maryland corporation through a statutory
merger of the predecessor Delaware statutory trust with and into a
newly established Maryland corporation formed for the purpose of
effecting the redomiciling. The Fund was originally organized on
January 30, 2007. Prior to commencing operations on May 30, 2007,
the Fund had no operations other than matters relating to its
organization and registration as a diversified, closed-end
management investment company under the Investment Company Act of
1940, as amended. The investment objective of the Fund is to seek a
high level of current income and the Fund may, as a secondary
objective, also seek capital appreciation to the extent that it is
consistent with its investment objective.
Team Health Holdings, Inc. is a provider of physician staffing and
administrative services to hospitals and other healthcare providers
in the U.S.
TGL CAPITAL: Case Summary & Nine Unsecured Creditors
----------------------------------------------------
Debtor: TGL Capital Holdings LLC
6907 Latrobe Ave
Skokie, IL 60077-3417
Business Description: TGL Capital is the fee simple owner of a
condominium apartment building located at
2212 W Lawrence Avenue Chicago, IL, valued
at $6.7 million.
Chapter 11 Petition Date: July 18, 2023
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 23-09284
Judge: Hon. Jacqueline P. Cox
Debtor's Counsel: David P Leibowitz, Esq.
LAW OFFICES OF DAVID P. LEIBOWITZ, LLC
3478 N Broadway St Unit 234
Chicago, IL 60657-6968
Tel: (312) 662-5750
Email: dleibowitz@lakelaw.com
Total Assets: $6,701,000
Total Liabilities: $5,789,339
The petition was signed by Joe Zivkovic as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's nine unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/SMGJPNQ/TGL_Capital_Holdings_LLC__ilnbke-23-09284__0001.0.pdf?mcid=tGE4TAMA
TOSCA SERVICES: S&P Downgrades ICR to 'CCC+', Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit ratings on Tosca
Services LLC to 'CCC+' from 'B-'. At the same time, S&P lowered its
rating on the company's first-lien term loan to 'CCC+' from 'B-'.
The recovery rating remains '3', reflecting its expectation of
meaningful (50%-70%; rounded estimate: 50%) recovery in the event
of a default.
The negative outlook reflects S&P's expectation that Tosca's cash
flow deficits will continue over the next 12 months, which could
pressure liquidity. Although the company has no near-term debt
maturities, sustained negative FOCF could increase the possibility
of a distressed restructuring over the longer term.
High levels of growth capex the past two years have not translated
into higher EBITDA. Tosca operates with a high level of capex to
support its new business wins. These investments are used to buy
reusable plastic containers (RPCs) for new contracts, help expand
its existing relationships with retailers and suppliers, and
establish wash centers close to its customers. The company spends
growth capex after it enters contracts with new customers. While
investment in growth capex for new business wins should translate
into higher earnings and EBITDA margins for Tosca, actual operating
results have been weaker than expected. S&P said, "Specifically,
the company has only had modest revenue growth over the past 12
months while sustaining EBITDA margins in the low-20% area, which
we view as low relative to companies with similar business models.
While we acknowledge there is a delay from when growth capex is
spent to when earnings flow into the business, we believe return on
the company's investments has been lower than anticipated, and
increases the risk around its continued investments and its impact
on the financial performance of the business, in our view. Although
we forecast revenues will grow in the mid-single-digit range this
year, and that price increases and selling, general, and
administrative (SG&A) savings will translate into higher earnings,
we do not expect operating cash flow to outpace continued growth
investments over the next 12-18 months."
Tosca continues to operate with a cash flow deficit and moderately
high leverage driven by elevated capex. Tosca's total capex was
elevated at $97.8 million, or 21% of sales, in 2022. The company
significantly reduced its capex spend in the first quarter of 2023,
spending $12.9 million (10% of sales), relative to $18.4 million in
the same period a year ago. Tosca attributes 64% of the spend to
new contracts, with the balance comprising maintenance spending.
S&P said, "Although we expect the company will reduce its capex
this year, we believe new business wins could result in sustained
high requirements. Furthermore, higher interest rates could offset
the reduced capex. As a result, we do not expect the company to
generate positive cash flow until at least 2025."
S&P said, "Additionally, the consistently negative FOCF has
contributed to increased reliance on the company's asset-based
revolving credit facility (ABL; not rated), which has been upsized
twice, resulting in higher leverage than we originally anticipated.
We forecast Tosca's leverage in the 6x-7x area in 2023. Although
this level of leverage is modestly lower compared with similarly
rated peers, we view the capital structure as unsustainable due to
the high level of capex and persistent negative FOCF.
"The negative outlook reflects our expectation that Tosca's cash
flow deficits will continue over the next 12 months, which could
pressure liquidity. Although the company's ABL and term loan do not
mature until 2026 and 2027, respectively, we believe that continued
negative FOCF over the next few years could increase refinancing
risk, and/or the likelihood that the company could pursue a
restructuring that we view as distressed."
S&P could lower its rating on Tosca if:
Liquidity deteriorates materially due to persistent negative FOCF,
resulting in a default, distressed exchange, or restructuring
becoming more likely over the next 12 months. For instance, if the
company's capex remains elevated without a meaningful return on
investment or if the company loses material customer contracts.
S&P could revise its outlook on Tosca to stable or upgrade the
rating if:
-- Tosca's operating performance improves to the point where the
company demonstrates a track record of sustaining neutral to
positive FOCF, leading us to view the capital structure as
sustainable over the long term.
ESG credit indicators: E-2, S-2, G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Tosca, as is the
case for most rated entities owned by private-equity sponsors. We
believe 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
holding periods and a focus on maximizing shareholder returns.
Environmental factors are an overall neutral consideration in our
credit rating analysis. Although Tosca's products are primarily
made of plastic, the reusable nature of its plastic packaging
containers somewhat offset environmental risks associated with the
material."
TRAPP TREE: Business Operations to Fund Plan Payments
-----------------------------------------------------
Trapp Tree Service LLC filed with the U.S. Bankruptcy Court for the
District of South Carolina a Plan of Reorganization for Small
Business.
The Debtor is a limited liability company which provides tree
removal, log hauling, landscaping and land clearing services.
Upon filing, Debtor projected $35,000 in monthly net income, and
$30,011.00 in monthly expenses, yielding a net revenue of
$4,989.00. Though early 2023 net income is more conservative than
the pre-petition projections, Debtor anticipates upcoming
projections to exceed figures of the spring season, as July to
November is usually the busiest and most lucrative time for Trapp
Tree Service LLC.
This Plan of Reorganization proposes to pay creditors of the Debtor
from cash flow from business operations.
Class 1 consists of a claim filed by Richland County Treasurer for
$2,486.72 and will be paid at $69 monthly for 36 months. This class
is unimpaired.
Class 2 consists of the impaired claim filed by Commercial Credit
Group, Inc. February 8, 2023 in the amount of $76,676.21 However,
per CCG, outstanding interest and fees have continually accrued
resulting in a balance of $90,879.66 as of April 2023. This class
will be paid $1515 monthly for 6 months, then resume payment of
$2906 for the remaining 54 months.
Class 3 consists of Non-priority unsecured creditors. This class
includes the allowed claims from Small Business Administration
believed to be unsecured. First Horizon loan in the amount of
$41,666 has been forgiven, to the best of Debtor's knowledge. The
remaining EIDL loan in the $148,300 has been arranged for monthly
payments of $76.30 for 6 months. After 6 months, the account will
be reviewed for alternative affordable payment options.
The Debtor will make all payments on the effective date of the
Plan, or as soon as practicable thereafter or as otherwise called
for by the Plan, and the Debtor will further execute and deliver
all documentation to the Bankruptcy Court, and to the Trustee, or
any other parties in interest that are entitled to receive the same
as required by the terms of this Plan and the Bankruptcy Code.
A full-text copy of the Plan of Reorganization dated July 13, 2023
is available at https://urlcurt.com/u?l=qhLS3c from
PacerMonitor.com at no charge.
Attorney for the Plan Proponent:
William J. Barr, Esq.
Barr Law LLC
108 North Academy Street
Kingstree, SC 29556
Phone: 843-355-5444
Email: barrlaw@ftc-i.net
About Trapp Tree Service
Trapp Tree Service LLC provides tree removal, log hauling,
landscaping and land clearing services.
Trapp Tree Service sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. D.S.C. Case No. 22-03307) in Dec. 2,
2022, listing up to $50,000 in assets and $100,001 to $500,000 in
liabilities. William Joseph Barr, Esq. at the Barr Law LLC
represents the Debtor.
TRUGREEN LP: First Trust Marks $5.8M Loan at 32% Off
----------------------------------------------------
First Trust High Income Long/Short Fund has marked its $5,800,000
loan extended to TruGreen Limited Partnership to market at
$3,915,000 or 68% of the outstanding amount, as of April 30, 2023,
according to a disclosure contained in First Trust's Form N-CSR for
the Fiscal year ended April 30, 2023, filed with the Securities and
Exchange Commission.
First Trust is a participant in a Second Lien Initial Term Loan (1
Mo. LIBOR + 8.50%, 0.75% Floor) to TruGreen. The loan accrues
interest at 13.33% per annum. The loan matures on February 11,
2028.
First Trust High Income Long/Short Fund is a diversified,
closed-end management investment company organized as a
Massachusetts business trust on June 18, 2010, and is registered
with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940, as amended. The Fund trades under
the ticker symbol FSD on the New York Stock Exchange (NYSE).
TruGreen provides lawn care services. The Company offers healthy
lawn analysis, fertilization, tree and shrub care, weed control,
insect control, and other related services.
UPTOWN 240: Gets OK to Hire Hilco as Real Estate Broker
-------------------------------------------------------
Uptown 240, LLC received approval from the U.S. Bankruptcy Court
for the District of Colorado to employ Hilco Real Estate, LLC.
The Debtor requires the services of a real estate broker in
connection with the sale of its real property located at 240 Lake
Dillon Drive, Dillon, Colo.
Hilco will get a commission of 4 percent of the gross sale
proceeds.
Jeff Azuse, a partner at Hilco, 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:
Jeff Azuse
Hilco Real Estate, LLC
5 Revere Dr #410,
Northbrook, IL 60062
Tel: (855) 755-2300
About Uptown 240
Uptown 240, LLC owns and operates a condominium complex in Dillon,
Colo. The residences are an exclusive collection of 80-luxury
mountain and lakeview condominiums.
Uptown 240 filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. D. Colo. Case No. 23-10617) on Feb.
23, 2023, with $10 million to $50 million in both assets and
liabilities. Danilo A. Ottoborgo, president of Uptown 240, signed
the petition.
Judge Thomas B. Mcnamara presides over the case.
The Debtor tapped Keri L. Riley, Esq., at Kutner Brinen Dickey
Riley, PC as legal counsel and Eide Bailly, LLP as accountant.
On April 21, 2023, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors in this Chapter 11 case.
Onsager Fletcher Johnson Palmer, LLC serves as the committee's
counsel.
US RENAL: Pioneer Fund Marks $482,500 Loan at 34% Off
-----------------------------------------------------
Pioneer Diversified High Income Fund, Inc has marked its $482,500
loan extended to US Renal Care, Inc to market at $319,154 or 66% of
the outstanding amount, as of April 30, 2023, according to a
disclosure contained in Pioneer Fund's Form N-CSR for the Fiscal
year ended April 30, 2023, filed with the Securities and Exchange
Commission.
Pioneer Fund is a participant in an Initial Term Loan (LIBOR + 500
bps) to US Renal Care, Inc. The loan accrues interest at 9.84% per
annum. The loan matures on June 26, 2026.
Pioneer Diversified High Income Fund, Inc. is organized as a
Maryland corporation. Prior to April 21, 2021, the Fund was
organized as a Delaware statutory trust. On April 21, 2021, the
Fund redomiciled to a Maryland corporation through a statutory
merger of the predecessor Delaware statutory trust with and into a
newly established Maryland corporation formed for the purpose of
effecting the redomiciling. The Fund was originally organized on
January 30, 2007. Prior to commencing operations on May 30, 2007,
the Fund had no operations other than matters relating to its
organization and registration as a diversified, closed-end
management investment company under the Investment Company Act of
1940, as amended. The investment objective of the Fund is to seek a
high level of current income and the Fund may, as a secondary
objective, also seek capital appreciation to the extent that it is
consistent with its investment objective.
U.S. Renal Care is a dialysis provider available for people living
with chronic and acute renal disease.
VAUGHN ENVIRONMENTAL: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Vaughn Environmental, Inc.
23440 NE Old Yamhill Rd.
Newberg, OR 97132
Chapter 11 Petition Date: July 17, 2023
Court: United States Bankruptcy Court
District of Oregon
Case No.: 23-31549
Judge: Hon. Peter C Mckittrick
Debtor's Counsel: Ted A. Troutman, Esq.
TROUTMAN LAW FIRM P.C.
5075 SW Griffith Dr.
Ste 220
Beaverton, OR 97005
Tel: 503-292-6788
Fax: 503-596-2371
Email: tedtroutman@sbcglobal.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Raegan Vaughn as president.
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/3PQ3FNI/Vaughn_Environmental_Inc__orbke-23-31549__0001.0.pdf?mcid=tGE4TAMA
VECTOR UTILITIES: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Vector Utilities
8501 San Gabriel Drive
Laredo TX 78045
Chapter 11 Petition Date: July 16, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 23-60040
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Margaret M. McClure, Esq.
LAW OFFICE OF MARGARET M. MCCLURE
25420 Kuykendahl Road, Suite B300-1043
The Woodlands TX 77375
Tel: 713-659-1333
Email: margaret@mmmcclurelaw.com
Total Assets: $2,767,265
Total Liabilities: $3,765,955
The petition was signed by Griselda C. Gaytan as managing member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZZT7SNQ/Vector_Utilities__txsbke-23-60040__0001.0.pdf?mcid=tGE4TAMA
VENUS CONCEPT: Amends Stock Purchase Agreement With EW Healthcare
-----------------------------------------------------------------
Venus Concept Inc., EW Healthcare Partners, L.P., and EW Healthcare
Partners-A, L.P entered into an amendment to the Stock Purchase
Agreement, which (i) clarifies the appropriate date pursuant to
which the purchase price for each share of Senior Preferred Stock
to be sold in the Private Placement is determined (such that the
purchase price shall be equal to the "Minimum Price" as set forth
in Nasdaq Stock Market LLC Rule 5635(d)) and (ii) permits the
Company to specify a desired closing date (subject to approval by
the Investors) for each sale in the Private Placement.
On May 15, 2023, Venus Concept and the Investors entered into a
Stock Purchase Agreement under which the Company may issue and sell
to the Investors up to $9,000,000 in shares of newly-created senior
convertible preferred stock, par value $0.0001 per share, in
multiple tranches from time to time until Dec. 31, 2025, subject to
a minimum aggregate purchase amount of $500,000 in each tranche.
Sales of Senior Preferred Stock in the Private Placement are purely
discretionary and must be approved by both the Company and the
Investors. The initial sale in the Private Placement occurred on
May 15, 2023, under which the Company sold to the Investors an
aggregate of 280,899 shares of Senior Preferred Stock for an
aggregate purchase price of $2,000,000.
Second Placement of Senior Preferred Stock
On July 12, 2023, the Company and the Investors consummated the
second sale in the Private Placement, under which the Company sold
the Investors an aggregate of 500,000 shares of Senior Preferred
Stock for an aggregate purchase price of $2,000,000. The Second
Placement was consummated in reliance on the private placement
exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933, as amended, and Rule 506 of Registration D,
promulgated by the Securities and Exchange Commission, as well as
similar exemptions under applicable state laws. The Company
expects to use the proceeds of the Second Placement, after the
payment of transaction expenses, for general working capital
purposes.
About Venus Concept
Toronto, Ontario-based Venus Concept Inc. is an innovative global
medical technology company that Develops, commercializes, and
delivers minimally invasive and non-invasive medical aesthetic and
hair restoration technologies and related practice enhancement
services. The Company's aesthetic systems have been designed on a
cost-effective, proprietary and flexible platform that enables the
Company to expand beyond the aesthetic industry's traditional
markets of dermatology and plastic surgery, and into
non-traditional markets, including family and general practitioners
and aesthetic medical spas.
Venus Concept reported a net loss of $43.58 million in 2022
compared to a net loss of $22.14 million in 2021. As of Dec. 31,
2022, the Company had $125.38 million in total assets, $116.64
million in total liabilities, and $8.74 million in stockholders'
equity.
Toronto, Canada-based MNP LLP, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated March
27, 2023, citing that the Company has reported recurring net losses
and negative cash flows from operations, that raise substantial
doubt about its ability to continue as a going concern.
VIDEOTRON LTEE: Moody's Assigns 'Ba1' CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service assigned a Ba1 corporate family rating, a
Ba1-PD probability of default rating and an SGL-2 speculative grade
liquidity rating to Videotron Ltee, a wholly-owned operating
subsidiary of Quebecor Media, Inc. (QMI), and affirmed the Ba2
ratings on Videotron's senior unsecured notes. The outlook at
Videotron is stable.
At the same time Moody's withdrew QMI's Ba1 CFR, Ba1-PD PDR, SGL-1
speculative grade liquidity rating and stable outlook. QMI has
terminated its obligation to file financial statements as it has
fully repaid debt that was subject to the filing requirement. Hence
the assignment of the corporate ratings at Videotron and the
withdrawal of QMI's ratings.
Assignments:
Issuer: Videotron Ltee
Corporate Family Rating, Assigned Ba1
Probability of Default Rating, Assigned Ba1-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Affirmations:
Issuer: Videotron Ltee
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2
Withdrawals:
Issuer: Quebecor Media, Inc.
Corporate Family Rating, Withdrawn, previously rated Ba1
Probability of Default Rating, Withdrawn, previously rated Ba1-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-1
Outlook Actions:
Issuer: Videotron Ltee
Outlook, Remains Stable
Issuer: Quebecor Media, Inc.
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Videotron's Ba1 CFR benefits from: (1) its position as Canada's
fourth largest telecommunications service provider together with
enhanced diversity of its wireless footprint with the Freedom
acquisition; (2) a strong track record of execution, including
competing well with larger peers; (3) rational, oligopolistic
competition, supported by a regulatory framework that favors
facilities-based competition, provides the company with favorable
bidding conditions for spectrum auctions, and restricts foreign
ownership; and (4) Moody's expectation for positive revenue growth
through 2024 despite slowing macroeconomic conditions. The rating
is constrained by: (1) Debt/EBITDA that has increased to 3.9x from
3.2x at LTM Q1/2023, and potentially declining towards 3.25x in the
next 24 months after closing the Freedom acquisition; (2) risks
associated with integrating large acquisitions; (3) smaller scale
relative to peers; and (4) execution risks of managing ongoing
pressure in its wireline/cable business while simultaneously
expanding wireless capabilities; and (5) governance concerns around
family control.
Videotron has two classes of debt: (1) unrated secured revolving
credit facility and unrated secured term loans; and (2) Ba2-rated
unsecured notes. The unsecured notes are rated one notch below the
CFR to reflect the increased level of secured debt that rank ahead
of them in the capital structure following the Freedom
acquisition.
Videotron has good liquidity (SGL-2) in the next 12 months to June
30, 2024, with sources approximating C$1.9 billion while the
company has about C$660 million of unsecured notes (net of swaps)
maturing in this time frame. Sources of liquidity include C$1
million of cash at March 31, 2023 and about C$1.2 billion of
availability under its C$2 billion secured revolving credit
facility that expires in July 2026 after closing the Freedom
acquisition while Moody's expects about C$700 million of free cash
flow through the next twelve months. Moody's expects more than 15%
cushion with financial covenants under the revolving credit
facility over the next twelve months. Videotron has limited ability
to generate liquidity from asset sales and has refinancing risk as
there are debt maturities every year between 2024 and 2031.
The outlook is stable because Moody's expects the company to manage
pressures in its wireline business well and continue to expand its
wireless business, including good execution on the Freedom assets,
while bringing financial leverage towards 3.25x within two years
after closing the acquisition.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Videotron commits to an investment
grade rating through a publicly stated capital structure target
while sustaining Debt/EBITDA below 3.25x and free cash flow to debt
in the high single digits.
The ratings could be downgraded if Videotron faces challenges
integrating the Freedom acquisition, if cable/wireline revenue
decline accelerates or if it sustains Debt/EBITDA above 4x and free
cash flow to debt below 0%.
The principal methodology used in these ratings was
Telecommunications Service Providers published in September 2022.
Videotron Ltee, headquartered in Montreal, Quebec, is Canada's four
largest telecommunications service provider.
VIEWRAY INC: Case Summary & 30 Largest Unsecured Creditors
----------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
ViewRay, Inc. (Lead Case) 23-10935
f/k/a Mirax Corp.
1099 18th Street
Suite 3000
Denver CO 80202
ViewRay Technologies, Inc. 23-10936
Business Description: ViewRay, Inc. designs, manufactures, and
markets the MRIdian MRI-guided Radiation
Therapy System. MRIdian is built upon a
proprietary high-definition magnetic
resonance imaging system designed from the
ground up to address the unique challenges
and clinical workflow for advanced radiation
oncology. The MRIdian MRI-guided Radiation
Therapy System integrates diagnostic-quality
MR imaging with radiation therapy delivery
to enable on-table adaptive treatments with
real-time tissue tracking and automatic beam
gating.
Chapter 11 Petition Date: July 16, 2023
Court: United States Bankruptcy Court
District of Delaware
Judge: TBA
Debtors' Counsel: Ian J. Bambrick, Esq.
Patrick A. Jackson, Esq.
FAEGRE DRINKER BIDDLE & REATH LLP
222 Delaware Avenue, Suite 1410
Wilmington DE 19801
Tel: (302) 467-4200
Email: ian.bambrick@faegredrinker.com
patrick.jackson@faegredrinker.com
Debtors'
Special
Corporate
Counsel: CRAVATH, SWAINE & MOORE LLP
Debtors'
Restructuring
Advisor: BERKELEY RESEARCH GROUP, LLC
Debtors'
Investment
Banker: B. RILEY SECURITIES, INC.
Debtors'
Notice,
Claims,
Solicitation,
Balloting and
Administrative
Aget: STRETTO, INC.
Total Assets as of March 31, 2023: $233,159,000
Total Debts as of March 31, 2023: $75,000,000
The petitions were signed by Paul Ziegler as president and chief
executive officer.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OZOMWEY/ViewRay_Inc__debke-23-10935__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/MJGTL5Q/ViewRay_Technologies_Inc__debke-23-10936__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Siemens AG Imaging Therapy Trade Claim $6,342,456
Division
H IM MR SCM SP
Allee am Roethelheimpark 2
Erlangen, 91052
Germany
Attn: Andreas Koenigsreuther
Tel: (+49) 913-184-3920
2. PEKO Precision Products Trade Claim $2,771,554
1400 Emerson St
Rochester, NY 14606
Attn: Jeff Lake
Phone: (585) 647-3010 X3014
Email: jlake@pekoprecision.com
3. Transgroup Trade Claim $2,215,396
219 Shaw Rd
San Francisco, CA 94080
Attn: Lars Pormose
Phone: (650) 219-3759
Email: lars.pormose@transgroup.com
info@transgroup.com
4. Jastec Inc. Trade Claim $2,012,631
5-9-12 Kitashinagawa
shinagawa-ku
Tokyo, 141-8688
Japan
Attn: Kaori Tasaki
Tel: (+81) 357-395-210
Fax: (+81) 357-395-211
Email: kaori.tasaki@jastec.co.jp
info@jastec.co.jp
5. MC Electronics Trade Claim $1,083,921
1891 Airway Dr
Hollister, CA 95032
Attn: Erika Guerrero
Phone: (915) 704-2673
Email: erika.guerrero@mcelectronics.com
info@mcelectronicsrepair.com
6. Tesla Engineering, Ltd. Trade Claim $1,066,226
Water Lane
Sotrrington
Sussex, RH20 3EA
United Kingdom
Attn: Russell Fellows
Phone: (+44) 190-374-3941 ext 261
Email: fellows@tesla.co.uk
7. GMI Solutions, Inc Trade Claim $954,679
10202 North Enterprise Dr
Mequon, WI 53092
Attn: Angie Becker
Phone: (414) 573-7984
Email: abecker@gmiweb.com
contact@gmisolutions.com
8. Mass Precision Inc. Trade Claim $776,712
2110 Oakland Rd
San Jose, CA 95131
Attn: David Tye
Phone: (408) 786-0381
Email: david@massprecision.com
9. PDC Trade Claim $711,393
700 Walnut Ridge Dr
Hartland, WI 53029
ttn: Shenelle Jardine
Phone: (262) 369-1926
Email: sjardine@pdcbiz.com
10. Arrow Electronics, Inc Trade Claim $677,631
1955 E Sky Harbor CIR NO
Phoenix, AZ 8503
Attn: Christopher Adams
Phone: (317) 340-1299
Email: dtaylor@arrow.com
complaince@arrow.com
11. MRS Magnetics Limited Trade Claim $629,946
Unit 6 Blacklands Way
Abingdon
Oxfordshire, OX14 1DY
United Kingdom
Attn: David Taylor
Phone: (+44) 01483532146
12. Everbrite, LLC Trade Claim $607,303
401 Koopman LN
Elkhorn, WI 53121
Attn: Rachel Penning
Phone: (262) 741-1335
Email: rpenning@everbrite.com
13. Quality Electrodynamics Trade Claim $538,683
700 Beta DR
Suite 100
Mayfield Village, OH 44143
Attn: Dr. Hiroyuki Fujita
Phone: (440) 646-9815
14. Teledyne e2v Trade Claim $484,372
700 Chestnut Ridge Rd
Chestnut Ridge, NY 10977
Attn: Betty Ledesma
Phone: (845) 578-6140
Email: ledesma@teledyne-e2v.com
15. Valley Services Electronics Trade Claim $476,284
6190 San Ignacio Avenue
San Jose CA 95119
Attn: Beth Kendrick
Phone: (408) 284-7700
Email: info@www.vse.com
16. Azel Enterprise, Inc. Trade Claim $476,140
625 Wool Creek Dr
Suite G
San Jose, CA 95112
Attn: Sang Tran
Phone: (510) 209-2196
Email: info@azelent.com
17. Deloitte & Touche LLP Profesional $400,230
1601 Wewatta Street Services
Suite 400 Claim
Denver, CO 80202
Attn: Cory Vann
Phone: (303) 725-6604
Email: cvann@deloitte.com
18. LAP Sued GmbH (Euromechanics) Trade Claim $398,345
BahnhofstraBe 4
Schwarzenbruck, 90592
Germany
Attn: Thomas Simmerer
Tel: +49 9128 9111 190
Fax: +49 9128 9111 199
Email: info@lap-laser.com
19. Paramount Electronics Ltd Trade Claim $362,777
Little Balmer
Buckingham, MK18 1TF
United Kingdom
Attn: Daniel Andrew
Tel: +44 1296 399984
Fax: +44 1280 814140
Email: sales@paramountelectronics.co.uk
dandrew@paramountelectronics.co.uk
20. Stangenes Trade Claim $337,485
1052 East Meadow Circle
Palo Alto, CA 94303
Attn: Lill Runge
Phone: (650) 493-0814
Email: info@stangenes.com
hr@stangenes.com
21. Expedite Precision Works Inc. Trade Claim $332,179
931 Berryessa Rd
San Jose, CA 95133
Attn: Almiro Furtado
Tel: (408) 573-9600
Fax: (408) 573-9700
Email: epwi@expediteprecision.com
22. Katie Couric Media LLC Trade Claim $320,833
100 Crosby St
Suite 301
New York, NY 10012
Attn: Katie Couric
Phone: (212) 297-0707
Email: jkeller@keygroup.tv
23. Marx Digital Manufacturing Trade Claim $309,153
3551 Victor ST
Santa Clara, CA 95054
Attn: Shane Johnson
Phone: (408) 748-1783
Email: s.johnson@marxdigital.com
24. Designworks/USA, Inc. Trade Claim $287,500
1601 Olympic Blvd
Santa Monica, CA 90404
Attn: Holger Hampf
Tel: (310) 460-3300
25. Klinikum der Trade Claim $274,434
Universitat Munchen
Marchioninistr. 15
München, 81377
Germany
Attn: Monika Ruger
Tel: +49 89 4400 72149
Fax: +49 89 4400 54630
Email: dagmar.schob@med.uni-muenchen.de
26. RK Logistics Group, Inc. Trade Claim $273,432
41707 Christy Street
Fremont, CA 94538
Attn: Joe MacLean
Tel: (800) 821-7770
Fax: (408) 942-9226
Email: info@rklogisticsgroup.com
27. Thermo Fisher Scientific Inc. Trade Claim $257,850
4951 Langdon Road
Dallas, TX 75241
Attn: Marc Casper
Tel: (781) 622-1000
28. NAMSA - USA Trade Claim $255,365
400 Highway 169 South
Suite 500
Minneapolis, MN 55426
Attn: Ellen Roers
Phone: (832) 871-8777
Email: communications@namsa.com
eroers@namsa.com
29. Helix Linear Technologies, Inc. Trade Claim $250,040
23200 Commerce PK
Beachwood, OH 44122
Attn: Christopher Nook
Tel: (216) 470-1083
Fax: 855-444-7543
Email: sales@helixlinear.com;
cnook@helixlinear.com
30. Altitude Exhibits LLC Trade Claim $246,495
3395 Carder Ct
Unit 100
Highlands Ranch, CO 80129
Attn: Jeremy Luther
Phone: (303) 801-3590
Email: jeremy.luther@altitudeexhibits.com
WARRIOR MET: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on
Warrior Met Coal Inc. (Warrior) and the 'BB' issue-level rating on
the senior secured notes. The '1' recovery rating on the senior
secured debt is unchanged.
The stable outlook reflects S&P's expectation for softer but robust
earnings with cushion in credit metrics to absorb market volatility
as the company undertakes a hefty capital project.
S&P said, "We expect improved production and sales volumes
following the cessation of the labor union strike. In February
2023, the labor union representing some of the company's employees
announced an end to its nearly two-year-long strike. The
return-to-work process is substantially complete with about 250
workers going through the necessary procedures required for full
engagement. As a result, Warrior revised its 2023 sales volumes
guidance upward to 7.1 million to 7.7 million short tons, compared
to 6.6 million to 7.2 million previously. We believe sales volumes
could hit 8 million short tons in 2024 as the company will have the
full year's benefit of the returned workers. The strike cessation
comes at an opportune time as we expect the increased volumes will
partly offset our assumption of lower met coal pricing in 2023 and
2024. Additionally, we expect the addition to the workforce will
save the company about $20 million annually in business
interruption costs as production fully ramps up at both operating
mines. That said, Warrior is still short of its optimum labor
requirements, more so with the Blue Creek development ongoing. We
expect the company will continue to hire more employees which
should positively reflect on production levels over the next 12 to
24 months, all other things equal.
"Warrior has historically maintained low leverage and we expect it
to remain so even as met coal prices moderate. Warrior has
generally maintained leverage close to 1x over the past six years,
benefiting from its low-cost producing assets and conservative
financial policies. The only exception was 2020 when the
pandemic-induced downturn caused leverage to spike significantly to
5x. Since then, Warrior has generated robust earnings, including a
company record of about $1 billion of EBITDA in 2022. We expect
Warrior will maintain leverage below 1x over the next 12 to 24
months, even with the assumption of lower met coal prices (although
higher than historical norms). We believe the company's credit
metrics have some cushion to absorb market volatility, especially
given the export-based nature of its business. We expect this
cushion could be amplified further as the company continues to
opportunistically redeem its 2028 senior secured notes in the open
market while it funds the Blue Creek project, initially estimated
at $650 million to $700 million, with cash on hand. Warrior has
redeemed about $48 million of the notes over the past 18 months
with $302 million outstanding as of March 31, 2023.
"We expect Warrior will maintain its financial discipline as it
undertakes the Blue Creek development. In February 2023, Warrior
increased its regular dividend by 17% to $0.07/common stock, from
$0.06. As per the company's publicly declared capital allocation
policy, the board may consider returning some or all excess cash
beyond the current business needs to shareholders through special
dividends. We believe such a policy supports management's
commitment to fund the Blue Creek project with cash on hand rather
than additional debt. Despite generating record earnings and cash
flows last year, Warrior has only declared and paid about $50
million in special dividends ($0.88 per common stock) in 2023. As
of March 31, 2023, Warrior's total liquidity was $985.8 million,
consisting of cash of $862.5 million and $123.3 million
availability under its asset-based lending (ABL) facility. Despite
the heavy capex investment expectations of $420 million to $450
million in 2023, we expect Warrior will generate free operating
cash flow (FOCF) of $100 million to $150 million.
"Given its history of low leverage, we believe Warrior will
continue to exercise financial discipline and maintain ample
sources of liquidity to see the Blue Creek project through. Once
developed, Blue Creek will increase Warrior's overall coal
production by about 60% with one long wall mine, with capacity for
further increases with a second mine at the site. Nevertheless, the
Blue Creek development still presents significant project and
execution risks for Warrior, especially with the inherent
volatility associated with the coal business.
"The stable outlook reflects our expectation that Warrior will
continue to maintain low leverage, driven by robust but softer
earnings as met coal prices moderate. We expect Warrior will remain
FOCF positive, despite the heavy capex investment associated with
the Blue Creek project. As a result, we forecast S&P Global
Ratings-adjusted debt to EBITDA below 1x over the next 12 to 24
months.
"We could lower our ratings on Warrior over the next 12 months if
the company deviates from its conservative financial policy,
initiates higher shareholder returns, and takes on additional debt
to fund the Blue Creek development. We could also lower our rating
if the company's earnings declined significantly due to
weaker-than-expected market conditions. In such scenarios we would
expect S&P Global Ratings-adjusted debt to EBITDA approaching 4x.
"We consider an upgrade unlikely given the narrow asset base (two
operating mines), lower scale compared to its peers, and project
risk associated with the Blue Creek development. However, as Blue
Creek approaches completion, we could upgrade Warrior if we expect
it can sustain leverage comfortably below 2x with enough cushion in
its metrics to absorb market volatility. In our assessment, we
would evaluate the company's financial policy including clarity
around its long-term leverage targets."
ESG credit indicators: E-4, S-3, G-2
WEST 132ND LLC: Case Summary & Four Unsecured Creditors
-------------------------------------------------------
Debtor: West 132nd LLC (De)
c/o Crosby Capital
1688 Meridian Ave - 6th floor
Miami Beach, FL 33139
Chapter 11 Petition Date: July 18, 2023
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 23-15587
Judge: Hon. Corali Lopez-Castro
Debtor's Counsel: Joel Aresty, Esq.
JOEL M. ARESTY PA
309 1st Ave. S.
Tierra Verde, FL 33715
Tel: (305) 904-1903
Email: aresty@icloud.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Joseph DeRuscio as CRO mgr.
A full-text copy of the petition containing, among other items, a
list of the Debtor's four unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/KV7HLTI/West_132nd_LLC_De__flsbke-23-15587__0001.0.pdf?mcid=tGE4TAMA
WOLVERINE WORLD: S&P Alters Outlook to Negative, Affirms 'BB-' ICR
------------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable on
U.S–based footwear company Wolverine World Wide Inc. to reflect
the potential for a lower rating if S&P Global Ratings-adjusted
leverage is sustained above 5x. S&P affirmed all its ratings on the
company, including the 'BB-' issuer credit rating, 'BB' issue-level
rating on the senior secured credit facilities, and 'B+'
issue-level rating on the senior unsecured notes.
The negative outlook reflects that S&P could lower our ratings in
the next few quarters if the company's operating performance does
not improve, and it does not see a clear path to deleveraging below
5x.
The outlook revision to negative reflects the company's
underperformance and our revised expectation for S&P Global
Ratings-adjusted leverage to be above 5x by the end of 2023 before
improving to the high-4x area in 2024.
Wolverine recently amended its credit agreement to temporarily
increase its maximum leverage covenant ratio to 4.875x from 4.5x
for the next three quarters till the end of 2023.
S&P said, "Wolverine's operating performance continues to track
below our prior expectations due to tough macroeconomic conditions,
softness in the wholesale channel, and continued underperformance
in its lifestyle group. S&P Global Ratings-adjusted leverage for
the last twelve months ended April 1, 2023, was in the low-6x area
and free operating cash flow (FOCF) was negative. We expect ongoing
demand pressures and continued softness in the wholesale channel
for the balance of 2023 due to retailers continued caution in order
patterns after the destocking in 2022. Therefore, we revised down
our revenue and EBITDA forecast for 2023 and now expect revenue to
decline by low-single-digit percentage in 2023, excluding Keds,
which was sold, and Wolverine Leathers, which is subject of a sale
process. We expect EBITDA margins will continue to be under
pressure in the first half of the year due to the sale of
end-of-life inventory at low price points. However, we expect
margins will gradually improve in the second half of the year. We
believe lead time is improving but still has not come back to the
pre-pandemic levels yet. We expect S&P Global Ratings-adjusted
leverage will peak in the second quarter and improve in the second
half of 2023 as Wolverine's inventory levels normalize."
In addition, the company recently amended its credit agreement to
temporarily increase its maximum leverage covenant ratio to 4.875x
from 4.5x till the end of 2023. The financial covenant threshold
will revert to 4.5x starting the first quarter of 2024. S&P
believes the covenant cushion would have been tight, around 10%, if
the company had not amended its covenant. The amendment gives the
company more flexibility to manage through the back half of the
year and we estimate cushion will be 30% for 2023 and 2024.
S&P anticipates positive FOCF in excess of $100 million in 2023 due
to improvement in the company's working capital position.
Wolverine's inventory peaked in the third quarter last year around
$880 million. At the end of the first quarter, net inventory for
the ongoing business declined nearly $20 million sequentially from
end of 2022. S&P expects the company's increased focus on inventory
management to lead to positive FOCF generation of around $120
million in 2023, most of which it expects the company to direct
towards debt repayment. Wolverine's maintenance of a sizable
dividend of about $33 million while credit metrics are elevated
leaves less room for underperformance at the current rating.
Furthermore, the company does not have a stated financial policy
target and has used debt to fund share repurchases in the past.
The company is exploring strategic alternatives for Sperry, which
could potentially help improve its credit metrics.
As part of the company's strategy to reduce organizational
complexity and prioritize brands with better growth and
profitability prospects, it is exploring strategic alternatives for
Sperry, which could include a sale, joint venture, or licensing
opportunity. If the company is able to sell the business, S&P
expects the company to use the proceeds to pay down debt, which
could help it deleverage faster. However, current market conditions
may be tough for the company to get the right valuation. Sperry's
revenue declined by low-teens percentage year-over-year in the
first quarter, and S&P expects revenue in Lifestyle group, which
includes Sperry and Hush Puppies, to decline by high-single-digit
percentage in 2023.
The negative outlook reflects that S&P could lower its ratings in
the next few quarters.
S&P could lower its ratings if the company is unable to improve its
operating performance and S&P Global Ratings-adjusted leverage is
sustained above 5x. This could occur if the company:
-- Is unable to improve profitability and realize cost savings as
planned due to a continued challenging macroeconomic environment.
Is unable to sell assets for attractive prices or does not apply
the proceeds toward debt reduction; or
-- Prioritizes shareholder returns over restoring its credit
metrics;
-- S&P could revise the outlook to stable over the next 12 months
if the company improves its operating performance by successfully
growing its brands and focusing on profit improvement such that S&P
Global Ratings-adjusted leverage falls to and is sustained below 5x
and FOCF is positive.
This could occur if:
-- The company stabilizes its lifestyle group and improves profit
through its margin improvement and cost saving initiatives; and
-- The company prioritizes debt repayment from asset sale proceeds
and from free cash flow generation.
ESG credit indicators: E-3, S-2, G-2
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2023. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***