/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/230824.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, August 24, 2023, Vol. 27, No. 235 Headlines 125 BERCKMAN: Auction for Property Owner Set for Sept. 28 1ST CAPITAL: Operating Revenue to Fund Plan Payments A&P PINTO: Taps Latham Luna Eden & Beaudine as Bankruptcy Counsel ABC INFANT MILK: Gets OK to Hire Hard Money USA as Mortgage Broker ADVOCATE HEALTH: Court OKs Interim Cash Collateral Access ALPHARETTA LIFEHOPE: Taps KW Commercial as Real Estate Broker AMSTERDAM HOUSE: Deadline to File Claims Set for Oct. 13 AMSTERDAM HOUSE: Seeks to Hire 'Ordinary Course' Professionals ANCHOR GLASS: Moody's Affirms 'Caa1' CFR & Alters Outlook to Stable APOSTOLIC ASSEMBLY: Seeks to Hire Tran Singh as Bankruptcy Counsel AV RESIDENCE: Gets OK to Hire Meyer Law Group as Bankruptcy Counsel B&G PROPERTY: Amends Unsecureds & DJ&M Secured Claims Pay BANQ INC: Further Fine-Tunes Plan Documents BISCAYNE BEACH: Taps Law Office of Frank & De La Guardia as Counsel BLUEKEY CONSTRUCTION: Taps Lamberth as Legal Counsel BOY SCOUTS: Opens Claims Process to Compensate Abuse Survivors BREWSA BREWING: Taps Weinberg Gross & Pergament as Legal Counsel BRITH SHOLOM: Seeks to Tap Flaster/Greenberg as Bankruptcy Counsel BROIT BUILDERS: Taps Accounting & Business Partners as Accountant BUCKHEAD PROPERTY: Taps Atlanta Fine Homes as Real Estate Broker CANO HEALTH: Moody's Cuts CFR to Ca & First Lien Sec. Loans to Caa3 CATHOLIC MEDICAL: Moody's Lowers Rating on Revenue Bond to Ba1 CELSIUS NETWORK: Files Amended Plan; Confirmation Hearing Oct. 2 CHOYDA INC.: Gets Court Approval to Hire Enrolled Agent CHOYDA INC: Gets OK to Hire Hard Money USA Corp. as Mortgage Broker CPI LUXURY: Court OKs Cash Collateral Access Thru Sept 15 CYXTERA DC: S&P Assigns 'B+' Rating on $200MM DIP Term Loan DAWN ACQUISITIONS: S&P Downgrades ICR to 'SD' on First-Lien Debt DELEK LOGISTICS: Fitch Affirms LongTerm IDR at 'BB', Outlook Stable DELEK US: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable DIGITAL AEROLUS: Taps Berkley Research Group as Accountant DIOCESE OF SAN FRANCISCO: Files Chapter 11 to Address Abuse Claims EARTHSTONE ENERGY: Moody's Alters Outlook on 'B1' CFR to Positive EMERALD ELECTRICAL: Court OKs Interim Cash Collateral Access EMERGENT BIOSOLUTIONS: Moody's Cuts CFR to Caa1, Outlook Negative ENCINO TOWERS: Seeks to Hire RHM Law as Bankruptcy Counsel EXELA TECHNOLOGIES: S&P Ups ICR to 'CCC' on Subpar Debt Exchanges FIVE RIVERS: Taps Katten Muchin Rosenman as Litigation Counsel FROGGY FLATS: Gets OK to Hire Deschenes & Associates as Counsel FT MEDICAL: Files Emergency Bid to Use Cash Collateral GACE CONSULTING: Taps Joseph A. Albano as Accountant GACE CONSULTING: Unsecureds Will Get 14.7% of Claims over 3 Years HAWAIIAN ELECTRIC: Fitch Lowers LongTerm IDR to 'B', On Watch Neg. HEART O'GOLD HOME: Taps Anthony J. DeGirolamo as Bankruptcy Counsel HERITAGE SPECIALTY: Gets OK to Hire 'Ordinary Course' Professionals HERTZ CORPORATION: Fitch Affirms LongTerm IDR at B, Outlook Stable INDUS ARCHITECTS: Wins Cash Collateral Access on Final Basis INNOVATION MONTESSORI: Moody's Lowers Rating on 2022 Bonds to Ba3 ITTELLA INTERNATIONAL: Gets OK to Tap Grant Thornton as Accountant ITTELLA INTERNATIONAL: Taps Rutan and Tucker as Special Counsel JADI COMMUNITY: Seeks to Hire Ure Law Firm as Bankruptcy Counsel JOHNSON & JOHNSON: Latest Bankruptcy Attempt Fails K3B ENTERPRISES: Taps RHM Law as Bankruptcy Counsel KAI 786: Seeks Cash Collateral Access KBB INC: Fitch Assigns First Time BB+ LongTerm IDR, Outlook Stable LABRUZZO WOODLANDS: Taps Thompson Law Group as Bankruptcy Counsel LAKEVILLE FARMS: Seeks Cash Collateral Access LUMEN TECHNOLOGIES: Moody's Cuts CFR to Caa1, Outlook Remains Neg. LYLA LEE: Gets OK to Hire Neeleman Law Group as Bankruptcy Counsel LYM DEVELOPMENT: Court OKs Cash Collateral Access Thru Sept 6 MADISON IAQ: S&P Alters Outlook to Positive, Affirms 'B-' ICR MALLINCKRODT PLC: To Return to Chapter 11 With Plan Deal MATEO ENTERPRISE: Taps Law Offices of Leonard K. Welsh as Counsel MONTGOMERY REALTY: Taps Richards Law as Special Counsel MORVATT ENTERPRISES: Case Summary & Four Unsecured Creditors MOUNTAIN EXPRESS: Court OKs Interim Cash Collateral Access NATURAL VITALITY: Unsecureds Will Get 34% of Claims in Plan NB COMMONS: Involuntary Chapter 11 Case Summary NEWELL BRANDS: Moody's Lowers CFR & Senior Unsecured Debt to Ba2 NEXERA MEDICAL: Seeks to Hire Paul B. Kroncke, CPA as Accountant NORTHWOODS PETS: Unsecured Creditors to Get Nothing in Plan NORWICH ROMAN: Gets OK to Hire U.S. Properties as Broker NOVATION COMPANIES: Court OKs $1.77MM DIP Loan from Nighthawks NS FOA: Seeks to Hire Shutts & Bowen as Litigation Counsel OFF-SPEC SOLUTIONS: Amends PACCAR Secured Claim Pay Details OPEN COURT: Seeks to Hire Gray & Brightman CPAS as Accountant OPEN COURT: Seeks to Hire Waldron & Schneider as Legal Counsel PEACE EQUIPMENT: Court OKs Cash Collateral Access Thru Sept 20 PEAK TAHOE LLC: Taps Harris Law Practice as Bankruptcy Counsel PERIMETER ORTHOPAEDICS: Unsecureds to Split $559K in Plan PETES AUTO: May Use $85,000 of Cash Collateral Thru Aug 31 PORTER'S PENINSULA: Gets Approval to Hire Miedema Appraisals PORTUGUESE BEND: Case Summary & 10 Unsecured Creditors PROSPERITAS LEADERSHIP: Court OKs Cash Collateral Access Thru Oct 5 RUTHERFORD ENTERPRISES: Court OKs Cash Collateral Access SAM'S SERVICE: Case Summary & Eight Unsecured Creditors SCFT2 LLC: Gets OK to Hire Law Offices of Gabriel Del Virginia SKINNY & CO: Seeks to Hire Brawley & Associates as Accountant SMB HOLDINGS: Voluntary Chapter 11 Case Summary SMS DIRECT: Gets OK to Tap Bach Law Offices as Bankruptcy Counsel SNOWSHOE MILLWORKS: Taps Shepherd Real Estate as Broker ST. SEBASTIAN: Files Emergency Bid to Use Cash Collateral SUD'S CLUB: Case Summary & Seven Unsecured Creditors TABULA RASA: Wins Interim Cash Collateral Access TOMIA BEAUTY: Lender Seeks to Prohibit Cash Access UNITY ELECTRICAL: Wins Cash Collateral Access on Final Basis VANTAGE TRAVEL: Wins Continued Cash Collateral, Financing Access VAUGHN ENVIRONMENTAL: Court OKs Cash Access on Final Basis VECTOR ESCAPES: Court OKs Cash Collateral Access Thru Sept 13 VECTOR UTILITIES: Seeks to Hire John F. Coggin as Accountant VORNADO REALTY: Fitch Lowers LongTerm IDR to 'BB+', Outlook Stable WINDSOR TERRACE: Case Summary & 20 Largest Unsecured Creditors WOLVERINE WORLD: S&P Downgrades ICR to 'B+', Outlook Negative YELLOW CORP: Court OKs Interim Cash Collateral Access [^] Recent Small-Dollar & Individual Chapter 11 Filings ********* 125 BERCKMAN: Auction for Property Owner Set for Sept. 28 --------------------------------------------------------- Matthew D. Mannion of Mannion Auctions LLC, on behalf of Advantage Capital LLC ("secured party") offers for sale at public auction on Sept. 28, 2023, at 12:00 p.m. (Eastern Time) at the offices of Braunstein Turkish LLP, 7600 Jericho Turnpike, Suite 402, Woodbury, New York 11797, and simultaneously by remote auction via zoom (Meeting Links: https://bit.ly/BrekmanUUC; Meeting ID: 832 7884 6067; Meeting Passcode: 346574; Call-in Number: +1 646 931 3860, in connection with a Uniform Commercial Code sale of 100% of the limited liability company interests in 125 Berkman ST LLC ("borrower"), which entity is the free owner of real property located at (i) 111-13 Summer Avenue, Plainfield, New Jersey 07062; and (ii) 125-27 Berkman Street, Plainfield, New Jersey 07062. The interests are owned by Nayana Patel. All interested parties will be required to provide a minimum deposit of $100,000 with secured party's counsel at 5 days prior to the auction, and all bids must be in US Dollars, and the successful bidder must be prepared to deliver immediately available good funds by wire or bank check to the secured party, within 24 hours after the sale and otherwise comply with the bidding requirements. Interested parties who would like additional information concerning the sale of the interests should contact the secured party's counsel: Braunstein Turkish LLP Attn: Vincent L. Georgetti, Esq. 7600 Jericho Turnpike Suite 402 Woodbury, New York 11787 Tel: (516) 802-0700 x312 Email: vg@braunsteinturkish.com 1ST CAPITAL: Operating Revenue to Fund Plan Payments ---------------------------------------------------- 1st Capital Finance of South Carolina, Inc., filed with the U.S. Bankruptcy Court for the District of South Carolina a Plan of Reorganization for Small Business dated August 15, 2023. Debtor incorporated on June 20, 2005, at that time operating under the name of Checks America Payday Advances, Inc. In 2010, the corporation ceased offering payday loans, and for that reason, the Debtor made a name change to its current business name. Debtor operates out of 5 physical locations in South Carolina, making consumer and title loans exclusively to South Carolina residents. The Plan Proponent's financial projections show that the Debtor anticipates disposable income to pay creditors a total of $25,000 per month until paid in full. The final Plan payment is expected to be paid in three years or less based on claims showing in the liquidation analysis. Non-priority unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at approximately 100% cents on the dollar based on allowed claims. This Plan also provides for the payment of administrative and priority claims. Class 1 consists of non-priority unsecured creditors who have signed settlement agreements with the Debtor. Class 1 claimants will be paid in full the amount of their Settlement Agreement in the amount disclosed on Debtor's Schedule F or as otherwise allowed. Debtor believes these claims total approximately $163,240. Debtor will pay these claimants pro rata a total of $10,000 per month until paid in full, approximately 9 months. Payments will commence on the Effective Date of the Plan. This Class is impaired. Class 2 consists of non-priority unsecured creditors who have claims against the Debtor but who did not sign prepetition settlement agreements with the Debtor. Class 2 claimants are those who can or who have asserted prepetition claims against the Debtor based on violation of a NC state statute. The liquidation analysis attached to the plan shows payments made to Debtor. Debtor will refund to the claimants in this class 2.5 times the payments they paid. Claimants in this Class will be paid pro rata of a total $10,000 per month. Using the liquidation analysis, if no more claims are added, Debtor can pay this Class in full in 3.5 years and perhaps sooner, adding money allocated for Classes 1 and 3 once those claims are paid in full. Payments will begin on the Effective Date. In addition to payments, Debtor will forgive payment on all NC loans made prior to July 1, 2022. Debtor will satisfy any lien on those titles and return such title to the claimants. Debtor has claims pending against certain customers in this class. Debtor will dismiss those suits against holders of allowed claims in this class. It also will satisfy judgments it has against anyone who files an allowed claim in this class. Within 30 days after the allowed claim has been paid and title returned, these claimants must dismiss their law suits with prejudice, if applicable, and if they do not within another 30 days, Debtor may file in state court its notice of payment in compliance with the Plan along with the confirmation order in this case to satisfy the judgment of record. Debtor shall pay new claimants in this class who have not been notified of the bankruptcy in time to file a claim using the same formula upon receiving notice of their late claim unless the 4-year statute of limitations has passed. Payment of the new claims will be paid from money allocated to Class 1 and 3 once those claims have been paid in full. Class 3 consists of non-priority unsecured creditors who are trade creditors. Capital One is owed on a credit card debt and is the only creditor known to fall in this class. This debt shall be paid at $5,000 per month until paid in full. Payment should be made in full within a year. Payments will commence on the Effective Date of the Plan. Although none is known, any prepetition judgments would fall in this class. Class 4 consists of Wesley Harden, the owner of the Debtor. He will not be paid until all other known creditors in classes 1-3 are paid in full. Wesley Harden is the president and 100% owner of the Debtor and will remain such postpetition. Debtor does not anticipate any change to management or operations of the business postpetition. Debtor has filed this bankruptcy in an effort to obtain an orderly payment arrangement with claimants rather than to spend resources defending and litigating claims. Debtor will use its operating revenue to pay claims and when necessary liquidate assets. A full-text copy of the Plan of Reorganization dated August 15, 2023 is available at https://urlcurt.com/u?l=AFPaiU from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Jane H. Downey, Esq. Baker, Donelson, Bearman, Caldwell & Berkowitz, PC 1501 Main St., Ste. 310 Columbia, SC 29201 Telephone: (803) 251-8814 Email: jdowney@bakerdonelson.com About 1st Capital Finance of South Carolina 1st Capital Finance of South Carolina, Inc. offers commercial car title loan, motorcycle title loan, semi-truck title loan and a box truck title loan. It is based in Clover, S.C. The Debtor filed Chapter 11 petition (Bankr. D.S.C. Case No. 23-01938) on June 30, 2023, with $4,025,187 in assets and $131,064 in liabilities. Christine Brimm, Esq., a practicing attorney in Myrtle Beach, S.C., has been appointed as Subchapter V trustee. Judge Helen E. Burris oversees the case. The Debtor tapped Jane H. Downey, Esq., at Baker Donelson as legal counsel, and Tortina Bunton, as accountant. A&P PINTO: Taps Latham Luna Eden & Beaudine as Bankruptcy Counsel ----------------------------------------------------------------- A&P Pinto Truck Express, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to hire Latham, Luna, Eden & Beaudine, LLP as its bankruptcy counsel. The firm's services include: (a) advising the Debtor regarding its rights and duties in this Chapter 11 case; (b) preparing pleadings, including a disclosure statement and plan of reorganization; and (c) taking other necessary actions incident to the proper preservation and administration of the Debtor's estate. The firm will charge $270 to $485 per hour for attorney's services and $105 per hour for paraprofessional services. Justin Luna, Esq., the attorney primarily working on this matter, charges $385 per hour. In addition, the firm will seek reimbursement for its out-of-pocket expenses. The firm received from the Debtor an advance fee of $21,738. Justin Luna, 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: Justin M. Luna, Esq Latham Luna Eden & Beaudine, LLP 201 S. Orange Ave., Suite 1400 Orlando, FL 32801 Tel: (407) 481-5800 Fax: (407) 481-5801 Email: jluna@lathamluna.com About A&P Pinto Truck A&P Pinto Truck Express, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-03044) on July 28, 2023, with $100,001 to $500,000 in assets and liabilities. Jerrett McConnell, Esq., at McConnell Law Group, P.A. has been appointed as Subchapter V trustee. Judge Tiffany P. Geyer oversees the case. Daniel A. Velasquez, Esq., at Latham, Luna, Eden & Beaudine, LLP represents the Debtor as legal counsel. ABC INFANT MILK: Gets OK to Hire Hard Money USA as Mortgage Broker ------------------------------------------------------------------ ABC Infant Milk, Inc. received approval from the U.S. Bankruptcy Court for the Northern District of California to employ Hard Money USA Corp. as mortgage broker. The Debtor requires the services of the firm in connection with the refinancing of its real property located at 7026 Devon Way, Oakland, Calif. The firm will get 2.5 percent of the final principal amount of the loan. As disclosed in court filings, Hard Money USA is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The broker can be reached through: Khalif Brown Hard Money USA Corp. Solon, OH Phone: (323)300-8154 Email: hardmoneyusacorp@gmail.com About ABC Infant Milk ABC Infant Milk, Inc., a company in Byron, Calif., filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 23-40528) on May 8, 2023. In the petition signed by its chief executive officer and shareholder, Peter Choy, the Debtor disclosed $1 million to $10 million in assets and $500,000 to $1 million in liabilities. Judge William J. Lafferty oversees the case. E. Vincent Wood, Esq., at The Law Offices of E. Vincent Wood is the Debtor's counsel. ADVOCATE HEALTH: Court OKs Interim Cash Collateral Access --------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Advocate Health Partners, LLC to use cash collateral on an interim basis in accordance with the budget. Specifically, the Debtor is permitted to use cash collateral to pay: (a) the amounts expressly authorized by the Court, including payments to the Sub V Trustee for its monthly retainer; (b) the current and necessary expenses set forth in the budget, plus 10% for each line item; and (c) the additional amounts as may expressly approved in writing by counsel for secured creditor, Margaret Ehrgott. In July 2019, Debtor borrowed funds in the amount of $600,000 from Margaret Ehrgott. In exchange for the funds, Ms. Ehrgott was granted a lien on substantially all of its assets, which is indicated in its UCC filing dated February 4, 2021. Prior to the petition date, Ms. Ehrgott obtained a final judgment in the amount of $800,000. The Debtor will make payments of $5,518 to Secured Creditor on or before the first day of each month, beginning on September 1, 2023, while the order is in effect. However, this payment will not be a determination of the proper amount of adequate protection due and owing to Secured Creditor and will be without prejudice to Secured Creditor's rights to seek a modification of the same by motion to the Court. Each creditor with a security interest in cash collateral will have a perfected post-petition lien against cash collateral to the same extent and with the same validity and priority as the prepetition lien, without the need to file or execute any document as may otherwise be required under applicable non-bankruptcy law. The Debtor will maintain insurance coverage for its property in accordance with the obligations under the loan and security documents with the Secured Creditor. A continued hearing on the matter is set for October 19, 2023 at 2:30 p.m. A copy of the motion is available at https://urlcurt.com/u?l=5aUWB1 from PacerMonitor.com. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=ZKnoId from PacerMonitor.com. The Debtor projects $73,000 in total income and $71,767 in total expenses. About Advocate Health Partners Advocate Health Partners, LLC is family owned and operates as a health-care service provider in Palm Harbor, Florida. The Debtor filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-03307) on Aug. 1, 2023, with up to $10 million in both assets and liabilities. Judge Catherine Peek McEwen oversees the case. Jake C. Blanchard, Esq., at Blanchard Law, PA serves as the Debtor's counsel. ALPHARETTA LIFEHOPE: Taps KW Commercial as Real Estate Broker ------------------------------------------------------------- Alpharetta Lifehope Land SPE, LLC received approval from the U.S. Bankruptcy Court for the Northern District of Georgia to employ KW Commercial Peachtree Road. The Debtor requires the services of a real estate broker to list and market its real property (26.56 acres of land and improvements) in Alpharetta, Ga. The firm will be paid a commission of 5 percent of the final sales price. Jay Leslie, a partner at KW Commercial Peachtree Road, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jay Leslie KW Commercial Peachtree Road 804 Town Blvd Suite 2040A Atlanta, GA 30319 Tel: (404) 590-1570 About Alpharetta Lifehope Land SPE Alpharetta Lifehope Land SPE, LLC is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)). The company is based in Alpharetta, Ga. Alpharetta Lifehope Land SPE filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-59897) on Dec. 5, 2022. The petition was signed by Scott Honan as manager. At the time of the filing, the Debtor listed up to $50,000 in assets and $10 million to $50 million in liabilities. Judge Paul W. Bonapfel oversees the case. Rountree Leitman Klein & Geer, LLC, represents the Debtor. AMSTERDAM HOUSE: Deadline to File Claims Set for Oct. 13 -------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York set Oct. 13, 2023, at 5:00 p.m. (ET) as the deadline for all persons and entities, and all governmental units to file their proofs of claim against Amsterdam House Continuing Care Retirement Community Inc. dba The Harborside. For more information regarding who must file a proof of claim and the specific requirements regarding the filing of same you may contact (i) the Debtor's attorneys, DLA Piper LLP (US), Attn: Gregory M. Juell, by email at gregory.jeull@us.dlapiper.com or tel: (212) 335-4500, or (ii) visit the case website maintained by the Debtor's noticing and claims agent, Epiq Corporate Restruturing LLC at https://dm.epiq11.com/harborside. Each Proof of Claim, including supporting documentation, must be submitted by: 1) Electronic submission through the claim submission portal maintained by Epiq Corporate Restructuring, LLC: https://dm.epiq11.com/Harborside; or 2) If submitted through non-electronic means, by hand or overnight delivery of the original proof of claim to: a) If by First-Class Mail: Amsterdam House Continuing Care Retirement Community, Inc. dba The Harborside Claims Processing Center c/o Epiq Corporate Restructuring, LLC P.O. Box 4419 Beaverton, OR 97076-441 b) If by Hand Delivery or Overnight Mail: Amsterdam House Continuing Care Retirement Community, Inc. dba The Harborside Claims Processing Center c/o Epiq Corporate Restructuring, LLC 10300 SW Allen Blvd. Beaverton, OR 97005 About Amsterdam House Continuing Care Amsterdam House Continuing Care Retirement Community, Inc., doing business as The Amsterdam at Harborside, operates Nassau County's first and only continuing care retirement community licensed under Article 46 of the New York Public Health Law, which provides residents with independent living units, enriched housing and memory support services, comprehensive licensed skilled nursing care, and related health, social, and quality of life programs and services. Amsterdam House Continuing Care Retirement Community filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-70989) on March 22, 2023. In the petition signed by Brooke Navarre, president and chief executive officer, the Debtor disclosed $100 million to $500 million in both assets and liabilities. Judge Alan S. Trust oversees the cases. The Debtor tapped Gregory M. Juell, Esq., at DLA Piper LLP (US) as bankruptcy counsel; and Ankura Consulting Group, LLC, as restructuring advisor. Michael W. Morton of Ankura Consulting Group is the Debtor's chief restructuring officer. The U.S. Trustee for Region 2 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. Cooley LLP and GlassRatner Advisory & Capital Group, LLC, doing business as B. Riley Advisory Services, serve as the committee's legal counsel and financial advisor, respectively. AMSTERDAM HOUSE: Seeks to Hire 'Ordinary Course' Professionals -------------------------------------------------------------- Amsterdam House Continuing Care Retirement Community, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to retain and compensate certain professionals utilized in the ordinary course of its business. The "ordinary course" professionals include: PKF O’Connor Davies 20 Commerce Drive, Suite 301 Cranford, NJ 07016 Auditors, Form 990 Preparation Monthly Fees: $5,000 Forvis, LLP 910 E. St. Louis Street, Suite 400 Springfield, MO Medicare and Medicaid Cost Reports Monthly Fees: $7,000 Continuing Care Actuaries 415 Main Street Reisterstown, MD 21136 Actuarial Services Monthly Fees: $5,000 GMSC, New York, LLC 225 E. John Carpenter Freeway, Suite 700 Irving, TX 75062 Financial Services Monthly Fees: $25,875 About Amsterdam House Continuing Care Amsterdam House Continuing Care Retirement Community, Inc., doing business as The Amsterdam at Harborside, operates Nassau County's first and only continuing care retirement community licensed under Article 46 of the New York Public Health Law, which provides residents with independent living units, enriched housing and memory support services, comprehensive licensed skilled nursing care, and related health, social, and quality of life programs and services. Amsterdam House Continuing Care Retirement Community filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-70989) on March 22, 2023. In the petition signed by Brooke Navarre, president and chief executive officer, the Debtor disclosed $100 million to $500 million in both assets and liabilities. Judge Alan S. Trust oversees the cases. The Debtor tapped Gregory M. Juell, Esq., at DLA Piper LLP (US) as bankruptcy counsel; and Ankura Consulting Group, LLC as restructuring advisor. Michael W. Morton of Ankura Consulting Group is the Debtor's chief restructuring officer. The U.S. Trustee for Region 2 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. Cooley LLP and GlassRatner Advisory & Capital Group, LLC, doing business as B. Riley Advisory Services, serve as the committee's legal counsel and financial advisor, respectively. ANCHOR GLASS: Moody's Affirms 'Caa1' CFR & Alters Outlook to Stable ------------------------------------------------------------------- Moody's Investors Service affirmed the Caa1 corporate family rating of Anchor Glass Container Corporation. Moody's also upgraded the company's Probability of Default Rating to Caa1-PD from Caa3-PD and removed the limited default designation ("/LD") to the PDR upon the payment of missed interest agreed with its lenders. Further, Moody's rated the company's 1st lien senior secured term loan at Caa1, and its 2nd lien senior secured term loan at Caa3. At the same time, Moody's changed the rating outlook to stable from negative. "The stable outlook reflects the improvement in Anchor Glass' debt capital structure with extended debt maturities and lower leverage after $50 million of equity injection from the sponsor, CVC Capital Partners," says Motoki Yanase, VP-Senior Credit Officer at Moody's. "However, Anchor Glass still faces weak business conditions under the inflationary environment, which restrains consumer's demand and, in turn, the company's sales volume to beverage and food companies," adds Yanase. "Such an environment drives the affirmation of the Caa1 CFR." The upgrade of the PDR, which aligns it to the CFR, reflects normalized default probability with extended debt maturities. The assignment of a Caa3 rating to the 2nd lien senior secured term loan also considers additional time to maturity which places the term loan rating at a normalized position against the CFR, based on Moody's Loss-Given-Default model. The following rating actions were taken: Assignments: Issuer: Anchor Glass Container Corporation Backed Senior Secured 1st Lien Term Loan, Assigned Caa1 Backed Senior Secured 2nd Lien Term Loan, Assigned Caa3 Affirmations: Issuer: Anchor Glass Container Corporation Corporate Family Rating, Affirmed Caa1 Upgrades: Issuer: Anchor Glass Container Corporation Probability of Default Rating, Upgraded to Caa1-PD from Caa3-PD /LD Outlook Actions: Issuer: Anchor Glass Container Corporation Outlook, Changed To Stable From Negative RATINGS RATIONALE Through the amendment of the loan agreements, Anchor Glass extended the maturities of its debt, which provides some time to improve its credit profile during the next 12-18 months. The maturities are extended to December 2025 for the 1st lien term loans and to June 2026 for the 2nd lien term loan, with the company's option to extend them further to June 2026 and December 2026, respectively, with a fee. The company also upsized the asset-based revolver to $112.25 million from $105 million and extended its maturity to March 2026, with springing maturity if the first lien term loans are not extended within 90 days of December 2025 maturity date. The company also reduced total debt by paying down some borrowing under the revolver with a $50 million equity injection from the sponsor. This has improved the company's leverage, by around 0.2x on a pro forma basis from 7.2x for the twelve months ending June 2023 including Moody's standard adjustments. At the end of 2023, Moody's expects the leverage to improve to around 6.6x with EBITDA improvement, a comparable level to that of the company's packaging peers with B3 CFR. Nevertheless, sales volume in the second quarter declined from the previous year due to an idled glass furnace which used to manufacture relatively commoditized products. The company plans to replace the loss in sales volume with new businesses but the recovery could take time under the inflationary environment with generally weaker consumer demand. Anchor Glass recorded negative free cash flow for the first two quarters of 2023, and Moody's expects the free cash flow to remain negative for 2023 and possibly in 2024, depending on the strength of the demand recovery. This poses uncertainty for the company to improve its debt repayment capability within the next 12-18 months. Moody's expects Anchor Glass to have weak liquidity, which reflects Moody's expectation of negative free cash flow generation for the next 12-18 months and the potential that part of its debt could become current within the same time period. If the maturities of the 1st lien and the 2nd lien term loans are not extended further from December 2025 and June 2026, respectively, the asset-based revolver would become due in September 2025. In this case, borrowing under the asset-based revolver could become current as early as September 2024, which is within the next 12-18 months. Anchor Glass' credit weaknesses include customer concentration of sales, smaller scale relative to its competitors, most revenue being generated in the mature, low-growth US glass market, and its limited free cash flow generation. The company's credit strengths include the consolidated US glass packaging industry; long-term relationships with large, well-known customers; and the majority of business being under long-term contract with cost pass-through provisions. Also, the difficulty in shipping fragile glass packaging for a distance provides value to Anchor Glass' facilities and raises switching costs. The stable outlook reflects the improved debt capital structure and a gradual improvement in the company's credit profile that Moody's expects, counterbalanced with uncertainty about the speed of the recovery and limited time until the earliest timing of the next maturity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the ratings if Anchor Glass generates positive free cash flow, with credit metrics within the context of a stable competitive environment and the maintenance of adequate liquidity. An upgrade would also require the company to achieve a longer-term solution to its capital structure and address its next debt maturity. From the metrics stand point, the ratings could be upgraded if free cash flow to debt is above 1.0%, debt to EBITDA is below 6.5x, and/or EBITDA to interest expense is above 1.5x. Moody's could downgrade the ratings if there is any deterioration in credit metrics, liquidity or the competitive environment. Distressed exchanges or capital structure changes that impair creditors could also prompt a downgrade. Specifically, the ratings could be downgraded if free cash flow to debt remains negative, debt to EBITDA is above 7.0x, and/or EBITDA to interest expense is below 1.0x. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is a North American manufacturer of premium glass packaging products. For the 12 months that ended June 2023, Anchor Glass generated about $620 million in revenue. Anchor is a portfolio company of CVC Capital Partners. The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in December 2021. APOSTOLIC ASSEMBLY: Seeks to Hire Tran Singh as Bankruptcy Counsel ------------------------------------------------------------------ The Apostolic Assembly of Love seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Tran Singh, LLP as its legal counsel. The Debtor requires legal counsel to: (a) analyze the financial situation and provide assistance to the Debtor; (b) advise the Debtor with respect to its rights, duties, and powers in its Chapter 11 case; (c) represent the Debtor at all hearings and other proceedings; (d) prepare and file legal papers; (e) represent the Debtor at any meeting of creditors; (f) represent the Debtor in all proceedings before the bankruptcy court and in any other judicial or administrative proceeding where the rights of the Debtor may be litigated or otherwise affected; (g) prepare and file a disclosure statement, if required, and Subchapter V plan of reorganization; (h) assist the Debtor in analyzing the claims of creditors and in negotiating with such creditors; and (i) assist the Debtor in any matters relating to or arising out of the captioned case. The hourly rates of the firm's attorneys are as follows: Susan Tran Adams $500 Brendon Singh $500 Mayur Patel $425 In addition, the firm will seek reimbursement for expenses incurred. The firm received a pre-bankruptcy retainer of $27,000 from the Debtor. Brendon Singh, Esq., an attorney at Tran Singh, 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: Brendon Singh, Esq. Tran Singh, LLP 2502 La Branch Street Houston TX 77004 Telephone: (832) 975-7300 Facsimile: (832) 975-7301 Email: bsingh@ts-llp.com About The Apostolic Assembly The Apostolic Assembly of Love is a tax-exempt religious organization in Houston, Texas. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Case No. 23-32494) on July 3, 2023, with $1 million to $10 million in assets and $500,000 to $1 million in liabilities. Chris Quinn has been appointed as Subchapter V trustee. Judge Eduardo V. Rodriguez oversees the case. Brendon Singh, Esq., at Tran Singh, LLP represents the Debtor as legal counsel. AV RESIDENCE: Gets OK to Hire Meyer Law Group as Bankruptcy Counsel ------------------------------------------------------------------- AV Residence, LLC received approval from the U.S. Bankruptcy Court for the Northern District of California to employ Meyer Law Group, LLP. The Debtor requires legal counsel to assist with the formulation of a Chapter 11 plan; prepare schedules and statement of financial affairs; review monthly operating reports; respond to creditor inquiries; evaluate claims; and provide other necessary legal services. The hourly rates of the firm's attorneys and staff are as follows: Partner (Brent D. Meyer) $400 Paralegals $125 The firm received a pre-bankruptcy retainer of $50,000 from the Debtor. Brent Meyer, Esq., a partner at Meyer Law Group, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brent D. Meyer, Esq. Meyer Law Group, LLP 268 Bush Street #3639 San Francisco, CA 94104 Telephone: (415) 765-1588 Facsimile: (415) 762-5277 Email: brent@meyerllp.com About AV Residence AV Residence, LLC owns real estate located at 2741 Vallejo St., San Francisco, Calif. AV Residence sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Calif. Case No. 23-30392) on June 19, 2023. In the petition filed by its managing member, Hitesh Patel, the Debtor reported total assets of $12,004,605 and total liabilities of $10,159,017. Judge Hannah L. Blumenstiel oversees the case. The Debtor is represented by Brent D. Meyer, Esq., at Meyer Law Group, LLP. B&G PROPERTY: Amends Unsecureds & DJ&M Secured Claims Pay --------------------------------------------------------- B&G Property Investments, LLC, submitted a Second Amended Disclosure Statement describing Third Amended Plan of Reorganization dated August 15, 2023. Debtor is an Oregon limited liability company with its principal place of business located at 724 S. Central Ave., Suite 106, Medford, OR 97501. The members of the Debtor and their respective ownership percentages are: * Keith Y. Boyd - 47.2% (All economic rights were purchased by Allen Thomashefsky at a Sheriff's sale in 2022). Mr. Boyd retains the management and voting rights. * Patrick F. Golden (29%). * L3 Holdings, LLC (Same Morley family members as Launchpad Financial, LLC) (15%). * DEGI II Productions, Development and Design Services, LLC (8.8%). The membership and percentages of ownership have changed over time. Mr. Boyd formed the Debtor in 2009 and was the only member. Dr. Golden was brought in as a member in 2012. L3 Holdings, LLC acquired a 10% interest in 2020 at the time Launchpad Financial, LLC made its loan to the Debtor. It acquired an additional 5% interest in 2021 when Launchpad agreed to extend the due date on its loan. DEGI II acquired its interest in 2020. The Debtor's management and majority ownership includes land use planning and business reorganization attorney Keith Boyd; and neurosurgeon, developer, and general contractor Patrick F. Golden. The Debtor's business plans are supported by its developers under the DFA, DJ&M Development Corporation and DEGI II Productions, Development, and Design Services (DEGI II). DJ&M/DEGI II's principal, Don Grove, has 45 years of experience in real estate operations, finance, development, and risk management having closed the CIG loan in 2020, built an ongoing strong rapport with the city planners, and having developed ongoing contacts to again obtain renewed project funding. The Plan proposes a sequence of benchmarks laying out the successive alternatives and timing for development, sale, or surrender of The Villages, the Debtor's primary asset. DJ&M Development Corporation has agreed to make ongoing attempts to obtain sufficient funding in an aggregate principal amount (up to $850,000, inclusive of fees and costs) sufficient for operational funds to bring The Villages development to a shovel-ready status (the "Interim Facility"). The Interim Facility will be direct funding supplied by DJ&M Development Corporation using its secured claim against The Villages as collateral for a loan or loans with one or more lenders (the "Interim Facility Lender"), with DJ&M Development Corporation as the sole obligor to the Interim Facility Lender, reducing its secured claim in an amount equal to the Interim Facility (up to $850,000), and having no other recourse against the Debtor aside from its Class 2 Claim. The proceeds of the Interim Facility will be held and used by DJ&M Development Corporation. In connection with the Interim Facility, Debtor may offer a purchase option for The Villages to the Interim Facility Lender. Such purchase option shall be for a purchase price of not less than $8.4 million and shall be exercised not earlier than 366 days after the Effective Date and not later than 395 days after the Effective Date. If the Interim Facility is not closed and funded on or before the date that is 365 days after the Effective Date, then a sales agent or agency employed by the Continuing Committee will immediately market and sell The Villages with distributions from such a sale to be made in the same manner and those described in connection with the Exit Facility. Class 2 consists of the Allowed Secured Claim of DJ&M for payment in the amount of $2,978,691.00 secured by a Deed to Secure Debt. Upon the closure of the Exit Facility, or sale of The Villages development, DJ&M's allowed Secured Claim will be paid in full, including accrued interest, fees, and other charges under the applicable loan documents. Provided, however, that any such allowed Secured Claim and resulting distribution shall be reduced by the amount of the Interim Facility and directed to the Interim Facility Lender depending on the terms of the Interim Facility, or as otherwise provided herein or approved by the Bankruptcy Court in connection with the Interim Facility. Class 8 consists of General Unsecured Claims. The terms of all agreements between the Debtor and General Unsecured Creditors shall remain the same, excepting that the maturity date of any note shall be extended to a date not less than 550 days from the Effective Date and that any interim payments prior to such maturity date shall be deferred until the earlier of the maturity date, Exit Facility, or sale of The Villages development. In the event of the Exit Facility, the Creditors within Class 8 shall be collectively paid the amount required to satisfy the Claims of Class 8 Creditors. In the event of the sale of The Villages, Class 8 Creditors will receive, divided pro rata, all funds not otherwise distributed to Creditors holding administrative, priority, or Claims in Classes 1 through 7, up to the amount required to satisfy the Claims of Class 8 Creditors, including interest, as applicable, under Section 726(a)(5). As shown on Funding Analysis, the Debtor projects that in excess of $7 million will be available to pay Class 8 creditors under the Exit Facility, which will result in payment in excess of 80% of the claims of all Class 8 creditors (especially having the benefit of DJ&M's funding efforts under the Plan). Alternatively, in the event of a sale of The Villages after securing the necessary approvals for a 720-unit development in connection with the Interim Facility, the Debtor projects approximately $776,000 would be available to pay Class 8 creditors under the settlement with DJ&M. The payments due under the Plan will be funded by the proceeds of the Exit Facility or the sale of The Villages. A full-text copy of the Second Amended Disclosure Statement dated August 15, 2023 is available at https://urlcurt.com/u?l=M9nzRx from PacerMonitor.com at no charge. Attorneys for the Debtor-in-Possession: Douglas R. Ricks, Esq. Christopher N. Coyle, Esq. VANDEN BOS & CHAPMAN, LLP 319 SW Washington St., Suite 520 Portland, OR 97204 Tel: 503-241-4861 Fax: 503-241-3731 About B&G Property Investments B&G Property Investments, LLC, a company in Medford, Ore., filed its voluntary petition for relief under Chapter 11 of theBankruptcy Code (Bankr. D. Ore. Case No. 22-60998) on July 29, 2022, with $10 million to $50 million in both assets and liabilities. Keith Boyd, manager, signed the petition. Judge Thomas M. Renn presides over the case. Douglas R. Ricks, Esq., at Vanden Bos & Chapman, LLP represents the Debtor. The U.S. Trustee for Region 18 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. The committee is represented by Farleigh Wada Witt. BANQ INC: Further Fine-Tunes Plan Documents ------------------------------------------- Banq Inc. submitted a Second Amended Chapter 11 Plan of Reorganization under Subchapter V dated August 15, 2023. The funding available to the Reorganized Debtor through the New Secured Loan will provide for payment of all Administrative Claims and Priority Claims upon confirmation of the Plan and will provide for payment of the Guaranteed Distribution upon the conclusion of the three-year term of the Plan. All proceeds of any recovery on the Purcell Litigation Claims or other Causes of Action during the three-year term of the Plan shall be applied in the following order of priority: first to payment of all contingency fee amounts due and owing to Litigation Counsel relating to the Purcell Litigation Claims, second to payment of all unreimbursed out-of-pocket expenses incurred by Litigation Counsel relating to the Purcell Litigation Claims, third to payment of all indebtedness owed in connection with the New Secured Loan, fourth to payment of all outstanding business expenses incurred by the Reorganized Debtor during the three-year term of the Plan, and fifth to payment of the Litigation Proceeds Distribution. Any such proceeds remaining after payment of the Litigation Proceeds Distribution shall be available to the Reorganized Debtor to be distributed to Holders of Equity Interests or retained for investment in future business operations of the Reorganized Debtor as the Reorganized Debtor may deem appropriate in accordance with its Articles of Incorporation, Bylaws, and other governing documents. While recovery on the Purcell Litigation Claims is uncertain as to both timing and amount, the Debtor believes that the following projections represent a reasonable estimate of the Reorganized Debtor's projected disposable income during the three-year term of the Plan, assuming that there is a recovery on the Purcell Litigation Claims during such time. The projections assume that the Reorganized Debtor will pursue the Purcell Litigation Claims to the entry of a final judgment during the three-year term of the Plan and will recover an amount close to the full value of such claims. The projections also assume the Reorganized Debtor will be able to reach an agreement with the Secured Lender following confirmation of the Plan, if necessary, to increase the amount of the Secured Loan to pay litigation expenses and other business expenses incurred by the Reorganized Debtor during the three-year term of the Plan. In this scenario, the Projected Disposable Income available to the Reorganized Debtor during the three-year term of the Plan would be sufficient to pay all anticipated Allowed Claims. The Debtor has incurred approximately $11 million in net operating losses that it believes would be available to offset taxes on future income, including any taxable recovery realized on account of the Purcell Litigation Claims. As such, the Debtor has not reduced the Projected Disposable Income shown in the projections to account for any tax liability. In addition to the pursuit of the Purcell Litigation Claims, the Debtor intends to resume regular business operations as soon as doing so is financially feasible. The Debtor does not expect to realize any Disposable Income from regular business operations during the three-year term of the Plan. As such, no Disposable Income from regular business operations is included in the foregoing projections. However, to the extent that the Debtor realizes Disposable Income during the three-year term of the Plan and all Allowed Claims are not otherwise paid through a recovery on the Purcell Litigation Claims, such Disposable Income will be applied towards payment of Allowed Claims as provided for under this Plan. Notwithstanding the projections, it is possible that the Reorganized Debtor will choose to settle and compromise the Purcell Litigation Claims in exchange for payment of a reduced amount prior to the conclusion of such litigation, which would reduce the Disposable Income available to pay Allowed Claims and may result in only partial payment of Allowed Claims. All Plan distributions are expected to be paid on or before October 31, 2026. The Plan is a three-year plan. Like in the prior iteration of the Plan, each Holder of an Allowed Class 3 General Unsecured Claims shall receive on or before the Distribution Date, or as soon thereafter as reasonably practicable, (i) its Pro Rata share of the Litigation Proceeds Distribution or (ii) its Pro Rata Share of the Guaranteed Distribution, whichever may apply , up to an amount that shall not exceed the Allowed amount of each such Class 3 Claim exclusive of all interest, fees, penalties, and other charges that may accrue after the Petition Date. The funds necessary to satisfy the Reorganized Debtor's obligations and to ensure the Reorganized Debtor's continuing performance under the Plan after the Effective Date will be obtained from: (i) cash on hand, if any; (ii) the New Secured Loan; (iii) the net proceeds, if any, recovered by the Reorganized Debtor on account of the Purcell Litigation Claims or other Causes of Action; (iv) the Disposable Income, if any, realized through the Reorganized Debtor's regular business operations, if any, during the three-year term of the Plan; (v) with the consent of the Secured Lender, which shall not be unreasonably withheld, any reserves established by the Debtor; and (vi) other equity contributions or financing, if any, that the Debtor may obtain on or after the Effective Date. A full-text copy of the Second Amended Plan dated August 15, 2023 is available at https://urlcurt.com/u?l=hHUvNY from PacerMonitor.com at no charge. Attorneys for the Debtor: James Patrick Shea, Esq. Bart K. Larsen, Esq. Kyle M. Wyant, Esq. SHEA LARSEN 1731 Village Center Circle, Suite 150 Las Vegas, Nevada 89134 Telephone: (702) 471-7432 Fax: (702) 926-9683 Email: jshea@shea.law blarsen@shea.law kwyant@shea.law About Banq Inc. Banq Inc. is a developer of digital payment, banking and crypto systems. Banq Inc. filed a Chapter 11 petition (Bankr. D. Nev. Case No. 23-12378) on June 13, 2023. In the petition signed by Joshua Sroge, CEO, the Debtor disclosed $17,725,914 in assets and $5,451,447 in liabilities. Bart Larsen, Esq., of SHEA LARSEN PC, is the Debtor's counsel. BISCAYNE BEACH: Taps Law Office of Frank & De La Guardia as Counsel ------------------------------------------------------------------- Biscayne Beach Apartments, LLC received approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ the Law Office of Frank & De La Guardia. The Debtor requires legal counsel to: a. give advice regarding therights, powers and duties of the Debtor; b. prepare legal documents and review all financial reports to be filed in the Debtor's bankruptcy case; c. advise the Debtor concerning, and preparing responses to, legal papers that may be filed and served in its case, including complying with the Office of the U.S. Trustee's operating guidelines and reporting requirements and with the rules of the court; d. assist in the negotiation and documentation of financing agreements, debt and cash collateral orders and related transactions; e. review the nature and validity of any liens asserted against the Debtor's property and advising the Debtor concerning the enforceability of such liens; f. counsel the Debtor in connection with the formulation, negotiation and promulgation of a plan of reorganization and related documents; g. assist the Debtor in connection with any potential property dispositions; h. advise the Debtor concerning executory contract and unexpired lease assumption, assignment and rejection and lease restructuring and recharacterization; i. assist the Debtor in reviewing, estimating and resolving claims asserted against the Debtor's estate; j. commence and conduct litigation necessary or appropriate to assert rights held by the Debtor, protecting assets of the Debtor's Chapter 11 estate or otherwise further the goal of completing the Debtor's successful reorganization; k. provide general corporate, litigation and other non-bankruptcy services as requested by the Debtor; and l. perform all other necessary legal services. The firm will be paid based upon its normal and usual hourly billing rates and will be reimbursed for out-of-pocket expenses incurred. As disclosed in a court filing, the Law Offices of Frank & De La Guardia is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Michael A. Frank, Esq. Law Offices of Frank & De La Guardia 2000 Northwest 89th Place, Suite 201 Doral, FL 33126 Tel: (305) 443-4217 Fax: (305) 443-3219 Email: Pleadings@bkclawmiami.com About Biscayne Beach Apartments Biscayne Beach Apartments, LLC owns an eight-unit apartment building located at 834-842 84 St, Miami Beach, Fla. The property is valued at $1.6 million. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-15904) on July 27, 2023. In the petition signed by Benjamin Shames, manager, the Debtor disclosed $1,600,621 in assets and $1,182,040 in liabilities. Judge Corali Lopez-Castro oversees the case. Michael A. Frank, Esq., at the Law Offices of Frank & De La Guardia represents the Debtor as bankruptcy counsel. BLUEKEY CONSTRUCTION: Taps Lamberth as Legal Counsel ---------------------------------------------------- Bluekey Construction & Claims, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Lamberth, Cifelli, Ellis & Nason, P.A., as attorneys. The Debtor requires legal counsel to: (a) advise, assist and represent Debtor with respect to its rights, powers and duties in the administration of its Chapter 11 case, and the collection, preservation and administration of assets of the Debtor's estate; (b) advise, assist, and represent Debtor with regard to any claims and causes of action which the estate may have against various parties; (c) advise, assist, and represent Debtor with regard to investigation of the desirability and feasibility of the rejection or assumption and potential assignment of any executory contracts or unexpired leases, and to advise, assist, and represent Debtor with regard to liens and encumbrances asserted against property of the estate and potential avoidance actions; (d) advise, assist, and represent Debtor in connection with all applications, motions, or complaints concerning reclamation, sequestration, relief from stays, disposition or other use of assets of the estate, and all other similar matters; (e) advise, assist, and represent Debtor with regard to the preparation, drafting, and negotiation of a plan of reorganization or liquidation or negotiation with other parties presenting a plan of reorganization or liquidation; (f) prepare legal papers; (g) provide support and assistance to the Debtor with regard to the proper receipt, disbursement, and accounting for funds and property of the estate; (h) provide support and assistance to the Debtor with regard to the review of claims against Debtor, the investigation of amounts properly allowable and the appropriate priority or classification of same, and the filing and prosecution of objections to claims as appropriate; and (i) perform other legal services. The firm will be paid at these rates: Attorneys $425 to $525 per hour Paralegals $75 to $225 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. The Debtor paid the firm a pre-bankruptcy retainer in the amount of $25,000, plus $1,738 to pay the filing fee. G. Frank Nason, IV, Esq., a partner at Lamberth, Cifelli, Ellis & Nason, P.A., 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: G. Frank Nason, IV, Esq. Lamberth, Cifelli, Ellis & Nason, P.A. 6000 Lake Forrest Drive, N.W. Suite 435 Atlanta, GA 30328 Tel: (404) 262-7373 Email: fnason@lcenlaw.com About BlueKey Construction & Claims BlueKey Construction & Claims, LLC is a full-service insurance claims and restoration company in Smyrna, Ga. It helps clients navigate through the complex insurance claim and restoration process using technically advanced thermal drone inspections and infrared (IR) mapping. BlueKey sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-57389) on Aug. 2, 2023, with $2,033,030 in assets and $2,012,503 in liabilities. Tamara Miles Ogier, Esq., at Ogier, Rothschild & Rosenfeld, PC, has been appointed as Subchapter V trustee. Judge Lisa Ritchey Craig oversees the case. G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Ellis & Nason, P.A., represents the Debtor as legal counsel. BOY SCOUTS: Opens Claims Process to Compensate Abuse Survivors -------------------------------------------------------------- The Scouting Settlement Trust ("Trust"), the fund established to compensate survivors of sexual abuse while in the Boy Scouts of America ("BSA"), on Aug. 18 disclosed that it is opening its online claims processing portal to all of the estimated 82,000 individuals who filed claims in the BSA bankruptcy cases. The announcement comes 14 days after the Trust first opened its online claims processing portal to approximately 7,000 people who selected the Expedited Distribution (or "quick pay") liquidated payout when they submitted their ballots on the BSA's plan of reorganization. The "quick pay" process gives Claimants a fixed amount of compensation while most other claims will be evaluated and valued against a matrix negotiated by the parties and approved by the Bankruptcy Court. Opening the claims process to the remaining 75,000 survivors is the next step toward delivering compensation in accordance with the trust distribution process outlined in BSA's court-approved plan of reorganization. "Survivors have waited a long time to be heard, recognized, and compensated," said the Hon. Barbara J. Houser (Ret.), the Trustee overseeing administration and distribution of the compensation fund. "Our goal is to provide a measure of justice as expeditiously as possible while treating every Claimant with compassion, respect, and fairness. Each member of the Trust team understands that our mission is to help bring closure and resolution to the claims of thousands of Survivors who have carried the burden of abuse for decades." When the reorganization plan was approved, the Trust's compensation fund was valued at approximately $2.5 billion. Other causes of action against third parties, such as lawsuits against insurers, may increase the size of the fund. As part of the process, claimants or their counsel will be required to fill out a detailed claims questionnaire and provide additional information or documents to support their claim. Although speed is a priority, Houser said the Trust has a duty to treat all abuse claims consistently, with a guarantee of fairness and confidentiality. The Trust was established as part of the BSA's Chapter 11 bankruptcy plan of reorganization, but the Trust's work was delayed by multiple appeals of confirmation of that plan. Following approval of the plan by the Bankruptcy Court and the District Court on appeal, the Trust was authorized to begin its work earlier this year -- which involves maximizing the value of the assets contributed to the Trust by BSA and others, evaluating claims, and delivering compensation to Survivors with valid claims. For more information, visit www.scoutingsettlementtrust.com. About Boy Scouts of America The Boy Scouts of America -- https://www.scouting.org/ -- is a federally chartered non-profit corporation under title 36 of the United States Code. Founded in 1910 and chartered by an act of Congress in 1916, the BSA's mission is to train youth in responsible citizenship, character development, and self-reliance through participation in a wide range of outdoor activities, educational programs, and, at older age levels, career-oriented programs in partnership with community organizations. Its national headquarters is located in Irving, Texas. The Boy Scouts of America and affiliate Delaware BSA, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on Feb. 18, 2020, to deal with sexual abuse claims. Boy Scouts of America was estimated to have $1 billion to $10 billion in assets and at least $500 million in liabilities as of the bankruptcy filing. The Debtors have tapped Sidley Austin LLP as their bankruptcy counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel, and Alvarez & Marsal North America, LLC, as financial advisor. Omni Agent Solutions is the claims agent. The U.S. Trustee for Region 3 appointed a tort claimants' committee and an unsecured creditors' committee on March 5, 2020. The tort claimants' committee is represented by Pachulski Stang Ziehl & Jones, LLP, while the unsecured creditors' committee is represented by Kramer Levin Naftalis & Frankel, LLP. BREWSA BREWING: Taps Weinberg Gross & Pergament as Legal Counsel ---------------------------------------------------------------- BrewSA Brewing Company, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to employ Weinberg, Gross & Pergament, LLP as its legal counsel. The firm's services include: (a) providing legal advice with respect to the powers and duties of the Debtor in the continued management of its business and property; (b) representing the Debtor before the bankruptcy court and at all hearings on matters pertaining to its affairs; (c) advising and assisting the Debtor in the preparation and negotiation of a plan of reorganization with its creditors; and (d) preparing legal papers; (e) other necessary legal services related to the Debtor's Chapter 11 case. Weinberg will be retained under a general retainer. Marc Pergament, Esq., a partner at Weinberg, 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: Marc A. Pergament, Esq. Weinberg Gross & Pergament, LLP 400 Garden City Plaza, Suite 403 Garden City, NY 11530 Tel: (516) 877-2424 Fax: (516) 877-2460 Email: mpergament@wgplaw.com About BrewSA Brewing Company BrewSA Brewing Company, LLC in Freeport, NY, filed its voluntary petition for Chapter 11 protection (Bankr. E.D.N.Y. Case No. 23-72653) on July 20, 2023, with as much as $50,000 in assets and $1 million to $10 million in liabilities. Thomas Limerick, managing member, signed the petition. Judge Alan S. Trust oversees the case. Marc A. Pergament, Esq., at Weinberg Gross & Pergament, LLP serves as the Debtor's legal counsel. BRITH SHOLOM: Seeks to Tap Flaster/Greenberg as Bankruptcy Counsel ------------------------------------------------------------------ Brith Sholom Winit, LP seeks approval from the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to hire Flaster/Greenberg, 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) Take necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on behalf of the Debtor and the defense of any actions commenced against the Debtor; (c) Prepare legal papers; (d) Negotiate and prepare, on the Debtor's behalf, a Chapter 11 plan of reorganization, disclosure statement and all related documents, and take any necessary action to obtain confirmation of such plan; (e) Attend meetings and negotiations with representatives of creditors and other parties involved in the Debtor's Chapter 11 case, and advising and consulting on the conduct of the case; (f) Advise the Debtor with respect to bankruptcy law aspects of any proposed sale or other disposition of assets as well as any efforts to obtain financing; and (g) Perform other necessary legal services. Flaster/Greenberg charges these hourly fees: Shareholders $395 - $940 Associates $295 - $450 Paralegals $165 - $360 In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. Harry Giacometti, Esq., at Flaster/Greenberg, disclosed in a court filing that he and his firm are "disinterested" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Harry J. Giacometti, Esq. Flaster/Greenberg, P.C. 1717 Arch Street, Suite 3300 Philadelphia, PA 19103 Tel: (215) 279-9393 Email: harry.giacometti@flastergreenberg.com About Brith Sholom Winit Brith Sholom Winit, LP is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)). Brith Sholom Winit filed voluntary Chapter 11 petition (Bankr. E.D. Pa. Case No. 23-12309) on Aug. 1, 2023, with as much as $50,000 in assets and $10 million to $50 million in liabilities. Ephraim Diamond, chief restructuring officer, signed the petition. Judge Ashely M. Chan oversees the case. Harry J. Giacometti, Esq., at Flaster/Greenberg, P.C. represents the Debtor as legal counsel. BROIT BUILDERS: Taps Accounting & Business Partners as Accountant ----------------------------------------------------------------- Broit Builders, Inc. seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Accounting & Business Partners, LLC. The Debtor requires an accountant to: a. review Quickbooks for accuracy and YTD completion; b. reconcile previous yearend balance sheet with tax returns to be completed; c. review previous years' tax returns for analysis of revenue and expenses; d. prepare Cash Collateral Budgets based on historical data and YTD figures; e. prepare monthly operating reports; f. attend hearings as requested; g. prepare forecasts and budgets of the Debtor's operations and cash flows, as necessary; h. assist the Debtor's counsel and any other professionals; i. after confirmation, set up recurring payments to creditors and settle administrative claim payments; j. continue monthly bookkeeping and tax services to ensure plan compliance; and k. other accounting related activities. The firm will be paid at these rates: Administration $45 per hour Bookkeeping $75 per hour Payroll and Tax $125 per hour CPA $225 per hour The retainer fee is $5,000. Andrea Bone, a partner at Accounting & Business Partners, disclosed in a court filing that the firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Andrea Bone, CPA Accounting & Business Partners, LLC 10730 102nd Avenue N Seminole, FL 33778 Tel: (727) 828-9945 About Broit Builders Broit Builders, Inc., doing business as, Broit Lifting offers tile transport, storage, and loading services. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-00762) on July 10, 2023, with $4,362,604 in assets and $5,922,297 in liabilities. Amy Denton Mayer has been appointed as Subchapter V trustee. Judge Caryl E. Delano oversees the case. Mike Dal Lago, Esq., at Dal Lago Law represents the Debtor as legal counsel. BUCKHEAD PROPERTY: Taps Atlanta Fine Homes as Real Estate Broker ---------------------------------------------------------------- Buckhead Property Development, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Georgia to employ Atlanta Fine Homes to list and market for sale its commercial real property located at 4362 Wieuca Road, Atlanta. The firm will get a 6 percent commission of the final sales price at closing. Betsy Akers, a partner at Atlanta Fine Homes, disclosed in a court filing that the firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Betsy Akers Atlanta Fine Homes Sotheby's International Realty 3290 Northside Parkway, Suite 200 Atlanta, GA 30327 Tel: (404) 649-5653 Mobile: 404.372.8144 Email: Betsy@AtlantaFineHomes.com About Buckhead Property Development Buckhead Property Development, LLC, a Georgia-based company, filed Chapter 11 petition (Bankr. M.D. Ga. Case No. 23-50755) on June 5, 2023, with $1 million to $10 million in both assets and liabilities. Lloyd Dominick, member, signed the petition. Judge Austin E. Carter oversees the case. The Debtor is represented by William A. Rountree, Esq., at Rountree Leitman Klein & Geer, LLC. CANO HEALTH: Moody's Cuts CFR to Ca & First Lien Sec. Loans to Caa3 ------------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Cano Health, LLC including the Corporate Family Rating to Ca from Caa3, and the Probability of Default Rating to Ca-PD from Caa3-PD. Concurrently, Moody's downgraded the ratings of Cano's First Lien Senior Secured Credit Facilities to Caa3 from Caa2 and the ratings of the Senior Unsecured Notes to C from Ca. The rating outlook remains stable. There was no action to the Speculative Grade Liquidity Rating, which remains SGL-4. The ratings downgrade reflects Moody's view that Cano's capital structure is unsustainable, that the probability of a bankruptcy or major restructuring is high, and that recovery rates for much of the company's debt will be low. The company's ongoing decline in profitability, weak liquidity, and Moody's expectation that operating performance will continue to deteriorate given the higher costs and rising interest rates. The ratings downgrade follows Cano's announcement that the operational challenges anticipated in 2023 and the current liquidity situation is not expected to cover operating, investing, and financing needs for the next 12 months. As such, Cano Health's management has determined that there is significant doubt about the company's ability to continue to operate within one year. Cano has already begun a process to divest its non-core assets, and will continue to do so over the remainder of the year. Moody's forecasts Cano will continue to have negative free cash flow. Governance risk considerations are material to the rating action. Governance risk factors related to financial strategy, risk management, credibility and track record are elevated because financial leverage has been persistently high following Cano's very aggressive debt-funded growth strategy. Additionally, Cano has revised down its Adjusted EBITDA guidance multiple times in 2022 and incurred a large goodwill impairment charge. In August of 2023, Cano removed its public Adjusted EBITDA guidance as Cano continued to evaluate strategic interest, assess the divestiture of non-core assets, and accelerate changes to Cano Health's operating structure. Downgrades: Issuer: Cano Health, LLC Corporate Family Rating, Downgraded to Ca from Caa3 Probability of Default Rating, Downgraded to Ca-PD from Caa3-PD Backed Senior Secured 1st Lien Term Loan, Downgraded to Caa3 from Caa2 Senior Secured 1st Lien Revolving Credit Facility, Downgraded to Caa3 from Caa2 Senior Secured 1st Lien Term Loan, Downgraded to Caa3 from Caa2 Senior Secured 1st Lien Delayed Drawn Term Loan, Downgraded to Caa3 from Caa2 Senior Unsecured Notes, Downgraded to C from Ca Outlook Actions: Issuer: Cano Health, LLC Outlook, Remains Stable RATINGS RATIONALE The Ca CFR is constrained by Cano's very high financial leverage, that will continue to increase with its $150 million PIK loan, moderate scale, and Moody's anticipated cash burn in 2023 and beyond. Cano's leverage is very high over 20 times for the last twelve months ending June 30, 2023. Further, leverage will be impacted by ongoing margin compression related to newer higher acuity patients that require more care at the onset. The CFR is constrained by significant geographic concentration in Florida, as Cano plans to exit California, New Mexico, and Illinois by the fall of 2023 and Puerto Rico by January 1, 2024. An inherent challenge within Cano's business model is that it requires the company to aggressively manage the cost of patient care and other expenses, given that it earns revenues on a capitated basis from Medicare Advantage plan providers. The company's ambitious plans for growth have resulted in new members with higher acuity, which is negatively impacting the company's profitability. The Caa3 rating on the first lien senior secured credit facilities is rated one notch higher than the Ca Corporate Family Rating, because they benefit from the loss absorption provided by the $300 million of senior unsecured notes. The C rating on the senior unsecured notes is one notch below the CFR, reflects their junior position relative to the significant amount of senior secured debt in the capital structure. The stable outlook reflects Moody's view that the default probability is high and appropriately captured at the current rating level. There is no change to Cano's liquidity rating of SGL-4, reflecting Moody's expectation that Cano will continue to burn cash in 2023 and beyond. Higher expenses and rising interest rates will continue to constrain cash. Cano has a maximum first lien net leverage covenant with step-downs over time. Cano has fully drawn on its revolving credit facility, but Moody's expects the company will maintain an adequate cushion. Cano Health's CIS-5 indicates the rating is lower than it would have been if ESG risk exposures did not exist and that the negative impact is more pronounced than for issuers scored CIS-4. This reflects Cano's exposure to social risk considerations (S-5) and governance risk considerations (G-5). Governance risk exposures are influenced by the company's aggressive financial policies and unreliable track record of execution as the company has revised down its EBITDA guidance multiple times and finally eliminated its guidance. Cano has material credit exposure to environmental risks due to the company's high exposure to physical climate risk. Cano has roughly 90% concentration in Florida which makes the company susceptible to hurricanes and other extreme weather conditions. Credit exposure to social risks is significant as Cano is almost entirely reliant on government payors, including Medicare and Medicare Advantage, which may face longer-term budgetary pressures. As a healthcare service provider, Cano is also exposed to labor pressures and human capital constraints. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Cano proactively seeks bankruptcy protection, or if the prospects for recovery further decline. Although unlikely in the near term, a material improvement in Cano's liquidity position would be needed to support an upgrade. Additionally, Cano would need an improvement in its operating performance to support an upgrade. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Cano Health, LLC medical centers and affiliates provide primary care health services to more than 381,000 members across 9 states and Puerto Rico with a focus on Medicare Advantage members. The company has 169 owned medical centers. Cano's LTM June 30, 2023 total revenue was approximately $3.0 billion. Cano is publicly traded on the NYSE under ticker "CANO". ITC Rumba, LLC (InTandem Capital Partners) maintains about 34% equity stake. CATHOLIC MEDICAL: Moody's Lowers Rating on Revenue Bond to Ba1 -------------------------------------------------------------- Moody's Investors Service has downgraded Catholic Medical Center's (CMC) (NH) revenue bond rating to Ba1 from Baa3. The outlook is negative. The system had $165.5 million of debt outstanding at fiscal year-end 2022. RATINGS RATIONALE The downgrade to Ba1 reflects Catholic Medical Center's weakened financial position as persistent operating cash flow losses have resulted in a reduction of liquidity and narrowed headroom to the cash to debt covenant on its bank debt. Operating losses are largely driven by the heavy reliance of contract labor, elevated wages and inflationary cost pressures; reflected in higher exposure to the social risks of human capital management and societal and demographic trends in Moody's ESG framework. While management has identified strategies to systematically cut costs and restore operating performance, the pace of progress remains uncertain due to these ongoing challenges as well as sluggish clinical demand trends. Though management expects CMC to meet their financial covenants at fiscal year-end 2023 (9/30), if cash flow losses continue unabated liquidity will decline and headroom to the covenant, which is measured quarterly, will narrow further. The Ba1 rating favorably incorporates CMC's high cardiology acuity services in a competitive market, and a number of strategic and operational improvement initiatives, already underway, to address operating challenges. Management's strategic initiatives will focus on revenue cycle management, as well as strategic growth focused on service contract renegotiations, physician enterprises and expense reduction. RATING OUTLOOK The negative outlook reflects the likelihood that CMC's liquidity will remain narrow to the covenant given ongoing cashflow losses and could further weaken before performance initiatives gain traction. Failure to sustain liquidity at current levels, demonstrate financial improvement quarter to quarter in fiscal 2024 or an inability to effectively manage financial covenants will pressure the rating further. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -- Material enterprise and market share growth -- Improved and durable cashflow rebuild resulting in substantial strengthening of margins and debt measures FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -- Further narrowing of the cash to debt covenant -- Inability to show quarter to quarter traction to durable margin recovery -- Inability to establish a competitive path forward LEGAL SECURITY Bonds are secured by a pledge of gross revenues of the obligated group, consisting of the hospital only, as well as a mortgage on certain real property including the hospital. Covenants include a debt service ratio of 1.2 times measured annually. Failure to meet this covenant will result in a consultant call-in. If the debt service ratio falls below 1.0 in any subsequent to the consultant call, it would be considered an event of default. Bank covenants include cash to debt covenant of 0.60:1 measured quarterly. PROFILE Catholic Medical Center is a 330-bed acute care hospital in Manchester, NH offering tertiary services and specializing in cardiac care. In addition to CMC, the system includes an employed physician group and part ownership of an ambulatory surgical center. METHODOLOGY The principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018. CELSIUS NETWORK: Files Amended Plan; Confirmation Hearing Oct. 2 ---------------------------------------------------------------- Celsius Network LLC, et al., submitted a Third Revised Disclosure Statement for the Revised Joint Chapter 11 Plan of Reorganization dated August 15, 2023. The Plan provides for an allocation of the entire value of the Debtors' Estates among their creditors and other stakeholders. The Plan includes many compromises that are meant to create the most equitable, efficient, and economical outcome for all creditors and stakeholders. The ultimate goal of these Chapter 11 Cases has always been to find a way to limit the harm to creditors and distribute as much value to creditors as possible. To that end, from day one, the Debtors have been committed to preserving the value of the Cryptocurrency on the Debtors' platform. In the early stages of these Chapter 11 Cases, the Debtors negotiated a security protocol with the Committee that has governed the Debtors' storage and use of Cryptocurrency during these Chapter 11 Cases. The Third Revised Disclosure Statement includes revisions requested by this Court at the August 14, 2023 hearing conditionally approving the Second Revised Disclosure Statement, subject to the revisions set forth in the Third Revised Disclosure Statement: * addition of prominent information about the Voting Deadline on the cover page of the Third Revised Disclosure Statement; * clarification that the Court will determine the appropriate remedy in the event that a Participating Claimant fails to participate in the ADR Procedures in Article III.NNN.8 of the Third Revised Disclosure Statement; * addition of language discussing whether the Debtors' consent orders with the SEC, FTC, and CFTC allow the Debtors, for purposes of Plan Confirmation, to argue that CEL Token and/or Earn Accounts are or not securities to Article III.LLL.2 of the Third Revised Disclosure Statements; * addition of a risk factor related to NewCo's mining business to Article VIII.D.31 of the Third Revised Disclosure Statement; * addition of language regarding management of D&O policies to Article III.DD of the Third Revised Disclosure Statement; and * addition of language stating that the Confirmation Order will provide that Claims proposed to be cancelled without distribution under the Plan are preserved solely to the extent of available insurance to footnote 30. Like in the prior iteration of the Plan, each Holder of an Allowed General Unsecured Claim shall receive a combination of (a) Liquid Cryptocurrency or Cash, (b) Litigation Proceeds, and (c) NewCo Common Stock sufficient to provide a recovery of the same percentage as the Class 5 (General Earn Claim) recovery set forth in this Disclosure Statement. In the event that the Debtors pursue the Orderly Wind Down, each Holder of an Allowed General Unsecured Claim shall receive its Pro Rata share of (a) the Liquid Cryptocurrency Distribution Amount (or an equivalent amount of Cash), (b) the Backup MiningCo Common Stock, (c) the Litigation Proceeds, and (d) the Illiquid Recovery Rights. The Debtors and the Post-Effective Date Debtors, as applicable, shall fund distributions under the Plan with: (1) Cash on hand as of the Effective Date, including from the Plan Sponsor Contribution and net proceeds from the sale of GK8; (2) Liquid Cryptocurrency (in the Liquid Cryptocurrency Distribution Amount); (3) NewCo Common Stock; and (4) Litigation Proceeds. The Voting Deadline is September 20, 2023, at 4:00 p.m. The Plan Objection Deadline is September 20, 2023, at 4:00 p.m. The Confirmation Hearing is scheduled for October 2, 2023, at 2:00 p.m. A copy of the Third Revised Disclosure Statement dated August 15, 2023, is https://urlcurt.com/u?l=C4d8fY from Stretto, the claims agent. Counsel for the Debtors: Joshua A. Sussberg, Esq. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, NY 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 - and - Patrick J. Nash, Jr., Esq. Ross M. Kwasteniet, Esq. Christopher S. Koenig, Esq. Dan Latona, Esq. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 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. CHOYDA INC.: Gets Court Approval to Hire Enrolled Agent ------------------------------------------------------- Choyda, Inc. received approval from the U.S. Bankruptcy Court for the Northern District of California to employ Tony Gu, an enrolled agent at Clement Tax Services. Mr. Gu will assist the Debtor in the preparation of tax returns and, act as tax advisor in discussion with taxing authorities. He will be compensated at $300 per hour. As disclosed in court filings, Mr. Gu is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. Mr. Gu can be reached at: Tony Gu Clement Tax Services 912 Clement St. San Francisco, CA 94118 Telephone: (415) 668-1682 About ChoyDa Inc. ChoyDa, Inc. owns two properties located in Oakland and Fremont, Calif., valued at $8.2 million. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 23-40753) on June 26, 2023, with $8,200,000 in assets and $4,215,549 in liabilities. Christopher Hayes has been appointed as Subchapter V trustee. Judge Charles Novack oversees the case. E. Vincent Wood, Esq., at The Law Offices E. Vincent Wood is the Debtor's counsel. CHOYDA INC: Gets OK to Hire Hard Money USA Corp. as Mortgage Broker ------------------------------------------------------------------- Choyda, Inc. received approval from the U.S. Bankruptcy Court for the Northern District of California to employ Hard Money USA Corp. The Debtor requires the services of a mortgage broker in connection with the refinancing of its real property located at 1860 Arrowhead Drive, Oakland, Calif. The firm will be paid 2.5 percent of the final principal amount of the loan. Khalif Brown, a member of Hard Money USA, 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: Khalif Brown Hard Money USA Corp. 18205 Biscayne Blvd, Suite 2226 Aventura, FL 33160 Tel: (949) 390-9190 Email: hardmoneyusacorp@gmail.com About ChoyDa Inc. ChoyDa, Inc. owns two properties in Oakland and Fremont, Calif., valued at $8.2 million. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 23-40753) on June 26, 2023, with $8,200,000 in assets and $4,215,549 in liabilities. Christopher Hayes has been appointed as Subchapter V trustee. Judge Charles Novack oversees the case. E. Vincent Wood, Esq., at The Law Offices E. Vincent Wood is the Debtor's counsel. CPI LUXURY: Court OKs Cash Collateral Access Thru Sept 15 --------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division, authorized CPI Luxury Group to use cash collateral on an interim basis in accordance with the budget, with a 10% variance, and its stipulation with East West Bank, through September 15, 2023. On June 30, 2016, the Lender and the Debtor executed a Loan and Security Agreement pursuant to which the Lender provided Debtor a secured revolving credit facility. To secure repayment and performance by Debtor of its obligations under the Loan Agreement, the Debtor granted to Lender a security interest in certain described personal property assets. Lender perfected its security interest in the Prepetition Collateral by filing a UCC Financing Statement with the California Secretary of State on June 30, 2016, filing number 167533695580. Events of Default occurred under the terms of the Loan Documents and, as a result, the Debtor executed a Forbearance Agreement dated September 9, 2021, which was amended from time to time, culminating in the execution of an Amended and Restated Forbearance Agreement dated as of May 31, 2022. Continuing Events of Default occurred and on July 3, 2023, the Lender sent and delivered to the Debtor a Notice of Continuation of Events of Default, Day to Day Forbearance and Reservation of Rights letter. On July 24, 2023, the Lender notified the Debtor that the Day to Day Forbearance was terminated, the Indebtedness owed to the Lender was accelerated and immediately due and payable, and Lender would exercise its rights and remedies under the Loan Documents. The Debtor is obligated to Lender for the amounts owing under the Loan Documents. As of the Petition Date, Debtor is indebted to Lender under the Loan Documents for the sum of no less than $14 million plus all additional interest, fees, costs and charges, including attorney's fees, recoverable under the Loan Documents or by law. The parties agreed that the Debtor may use cash collateral during the period commencing on August 14, 2023 and terminating on the earlier of any of the following dates: (i) September 15, 2023, or such further date as agreed to by Lender in writing, or (ii) the date of the occurrence of an Event of Default. These events constitute an "Event of Default": (i) a breach or failure to comply with any term, reporting test, covenant, representation, warranty or requirement of the Stipulation or any other order of the Court; (ii) the Debtor exceeds authorized expenditures or fails to meet projections contained in the Budget by more than the permitted variances, (iii) the granting in favor of any party other than Lender of a security interest in or lien upon any property of the Debtor or the Debtor's estate or a claim against the Debtor having priority senior or pari passu with the security interests, liens or claims in favor of Lender, except to the extent that such party had a security interest in or lien upon property of the Debtor on the Petition Date which had priority senior or pari passu with the security interests, liens or claims of Lender existing on the Petition Date; (iv) entry of an order dismissing or converting the Case to a case under chapter 7 of the Bankruptcy Code; (v) entry of an order appointing a trustee in the Case; (vi) entry of an order granting relief in favor of any other party (including lessors and landlords) that includes enabling such party to exercise state law or contractual rights and remedies with respect to certain asset or assets of the Debtor that could have a material adverse effect on the Debtor, its business and/or other assets, or (vii) any stay, reversal, vacation or rescission of the terms of the Stipulation, or any modification of any terms of the Stipulation that is not reasonably acceptable to Lender. As adequate protection, the Lender is granted a replacement lien in all assets in which and to the extent the Debtor holds an interest. The Postpetition Lien in favor of Lender will be senior in priority to any and all prepetition and postpetition claims, rights, liens and interests, but subject and immediately junior only to any lien or security interest in the Prepetition Collateral that is valid, perfected and senior to the interest of Lender effective as of the Petition Date and not otherwise avoided or subordinated. The Lender will have an allowed super priority administrative claim of the kind and priority, to the extent applicable, under 11 U.S.C. sections 503(b) and 507(b). The Debtor will make monthly cash payments to the Lender in the amount of $35,000 no later than Monday of the week such payment is scheduled under the Budget. A final hearing on the matter is set for September 14 at 1:30 p.m. A copy of the stipulation is available at https://urlcurt.com/u?l=csV8hq from PacerMonitor.com. A copy of the order is available at https://urlcurt.com/u?l=OuWkHv from PacerMonitor.com. About CPI Luxury Group CPI Luxury Group is a producer of cultured pearls. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 23-11059) on July 30, 2023. In the petition signed by Harold Jabarian, chief executive officer, the Debtor disclosed up to $50 million in both assets and liabilities. Judge Victoria S. Kaufman oversees the case. M. Douglas Flahaut, Esq., at Arentfox Schiff LLP, represents the Debtor as legal counsel. CYXTERA DC: S&P Assigns 'B+' Rating on $200MM DIP Term Loan ----------------------------------------------------------- S&P Global Ratings assigned a 'B+' debtor-in-possession (DIP) issue-level rating to the $200 million DIP term loan provided to data center provider Cyxtera DC Holdings Inc. S&P's 'B+' DIP issue-level rating on Cyxtera's DIP term loan reflects its view of the credit risk borne by the DIP lenders. This risk includes: -- The company's ability to meet its financial requirements during bankruptcy through our debtor credit profile (DCP) assessment. -- The prospects for full repayment through the company's reorganization and emergence from Chapter 11 via our capacity for repayment at emergence (CRE) assessment. -- The potential for full repayment in a liquidation scenario via S&P's additional protection in a liquidation scenario (APLS) assessment. S&P said, "Our 'b-' DCP assessment reflects our view of Cyxtera's weak business risk profile and highly leveraged financial risk profile. Our DCP assessment includes our consideration of applicable ratings modifiers including projected liquidity of Cyxtera during bankruptcy. The DIP issue-level rating also incorporates our view of the potential recovery prospects on the DIP term loan, which is reflected in our CRE and APLS assessments. "Our CRE assessment of strong coverage of the DIP term loan in an emergence scenario indicates coverage greater than 250%. Our CRE assessment contemplates a reorganization and addresses whether the company's exit capital structure will be sustainable post-bankruptcy. Our CRE assessment of strong coverage of the term loan (over 5.0x) provides an uplift of two notches over the DCP, resulting in a 'B+' DIP issue-level rating. We assess repayment prospects for purposes of the CRE assessment on the basis that all the DIP facilities are required to be repaid in cash in full upon emergence, consistent with super-priority status under the U.S. Bankruptcy Code. "Our APLS assessment indicates less than 125% total value coverage and does not impact DIP ratings. Our DIP methodology also contemplates the ability to fully repay debt, even in a scenario whereby the debtor is unable to reorganize. Our APLS assessment indicates sufficient coverage of the DIP term loan in a liquidation scenario but less than the 125% threshold for the additional notch up for the APLS modifier. "From a business risk perspective, our DCP assessment reflects the high levels of competition in the markets in which Cyxtera operates. Our weak business risk profile for Cyxtera reflects its presence in highly competitive tier I markets. These markets are desirable customer landing points but also include a variety of competitors including Equinix Inc. (among others). We believe Equinix's scale and interconnected nature of this ecosystem could make it challenging for Cyxtera to win business against such formidable competition. We believe Cyxtera's competitive disadvantage relative to Equinix is reflected in its lower monthly recurring revenue per cabinet and weaker profit margins. These factors are partly offset by strong industry demand and ongoing enterprise information technology (IT) outsourcing that we believe will drive revenue growth for the next two to three years. We also factor in its improving level of interconnections and network diversity, such that we view the company more favorably than peer Dawn Acquisitions LLC (d/b/a Evoque). "From a financial risk perspective, our DCP assessment reflects a substantially reduced debt burden. From a financial risk perspective, our DCP assessment on Cyxtera reflects a substantially reduced debt burden in bankruptcy due to the stay on prepetition debt (approximately $1 billion at the time of filing) and the relatively modest amount of funded DIP debt (around $200 million). Still, the company has more than $1.2 billion of leases that we expect will not be rejected, which we include in our debt calculation. Furthermore, capital spending requirements coupled with lease payments result in negative free operating cash flow (FOCF). This leads to a highly leveraged financial risk profile." DAWN ACQUISITIONS: S&P Downgrades ICR to 'SD' on First-Lien Debt ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based data center operator Dawn Acquisitions LLC to 'SD' (selective default) from 'CCC'. At the same time, S&P lowered its issue-level rating on its first-lien debt to 'D' from 'CCC'. S&P will evaluate the company's updated capital structure and liquidity position, as well as its recent strategic initiatives, over the next several days to determine its default risk. The downgrade follows Dawn's below-par debt purchase. Under the distressed restructuring, Dawn--through an affiliate of its equity owner Brookfield--purchased a significant amount of its $550 million outstanding term loan B at below-par prices. S&P said, "We consider the latest transaction tantamount to a default because the lenders are receiving less than they were originally promised. In addition, we view the transactions as distressed given Dawn's current leverage and liquidity position. In our view, the company's capital structure is unsustainable because we project its S&P Global Ratings-adjusted debt to EBITDA will remain above 14x through 2023 and believe it could exhaust its liquidity in the next 12 months absent an external cash infusion. "We view the purchase by a related party in the same light as if it were completed by the obligor. That the debt remains outstanding, though now held by Brookfield, is irrelevant to our analysis because the investors participating in the transaction received less than they were originally promised. "The recent announcement of debt retirement by Dawn is credit positive. Upon updating our rating on Dawn in the coming days, we will evaluate the recovery prospects pro forma the debt retirement announcement, which could result in a higher recovery rating on the secured debt. However, we note that Dawn is still dependent on Brookfield for ongoing liquidity support to remain operational, which will continue to weigh on the issuer credit rating." DELEK LOGISTICS: Fitch Affirms LongTerm IDR at 'BB', Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Delek Logistics Partners, L.P. (DKL) Long-Term Issuer Default Rating (IDR) at 'BB-' and senior unsecured notes at 'BB-'/'RR4'. The Rating Outlook is Stable. The notes are co-issued by Delek Logistics Finance Corp. DKL's rating is supported by stable cash flows underpinned by minimum volume commitments (MVC) from Delek Holdings. The Delaware Gathering System transaction has enhanced DKL's EBITDA run rate and expanded its operations in the Permian Basin. The rating considers Fitch's expectations for improving leverage from currently elevated levels, moving below 4.0x by the end of 2024. Rating concerns include elevated capital needs, business risk associated with the new assets, modest size and counterparty concentration. The Stable Outlook reflects Fitch's assumption that DKL successfully completes the refinancing of Term Loan A (maturing in October 2024) and 2025 Notes in the near term. Lack of proactive efforts in refinancing or repayment before debt becomes current could lead to adverse rating action. KEY RATING DRIVERS Leverage Trending Lower after Acquisition: Fitch believes leverage is critical to DKL's credit profile due to the partnership's limited counterparty and geographic diversity. DKL has historically maintained modest leverage and good interest coverage relative to midstream peers. YE 2022 leverage was at 5.5x after Delaware Gathering System acquisition and is trending lower due to higher EBITDA. Assuming a modest equity offering for debt repayment, Fitch expects leverage to be approximately 4.0x by YE 2024. Barring any further debt financed acquisitions or increased capital spending, sustained expected post dividend FCF should position DKL to balance steady increase in shareholder distributions while maintaining its financial position during Fitch's forecast. Growth Supported by Location-advantaged Assets: DKL benefits from its location in the Permian Basin, where oil production has remained resilient in different commodity price cycles. The acquired Delaware Gathering System has expanded DKL's asset base in Permian, provided the company with greater scale and diversified customer base, positioning DKL for continued growth in a softening oil price environment. Fitch anticipates the Midland Gathering system and Delaware Gathering system will gain increasing weight in DKL's business portfolio and remain the drive engine for the growth of the company. Counterparty Exposure/Concentration Risk: In 2022, DKL derives approximately 46% of its revenues from its parent, Delek Holdings, down from approximately 60% in 2021 due to Delaware Gathering System acquisition. Fitch expects Delek Holdings to remain the partnership's largest customer as DKL provides Delek Holdings with critical logistics assets that are integrated with the parent's refining operations. Fitch typically views midstream service providers like DKL with significant single-counterparty concentration as having exposure to outsized event risk. Any business, operational or financial issues at Delek Holdings that significantly reduces throughput volumes at DKL facilities could adversely impact cash flows and distributions. While the Delaware Gathering System transaction helps service more third-party customers and provides diverse customer base of both investment grade (IG), non-IG and private operators, the partnership remains exposed to counterparty risk, as it has significant exposure to non-IG and/or unrated counterparties. Cash Flow Assurances: The partnership's current operations are underpinned by long-term contracts with minimum volume commitments from Delek Holdings, currently representing approximately 79% of DKL's gross margins. The services are provided at fixed fee (subject to changes in inflation-based indices). These contracts limit DKL's commodity price sensitivity and provide some volumetric downside protection. Volumetric Risk and Direct Commodity Price Exposure: Revenues from Delaware gathering assets are based on fixed fee but subject to volume risk. Should customer activities fall in response to oil price volatilities and in turn pressure volumes, DKL's throughput on Delaware dedicated acreage may be impacted. DKL is also exposed to volatility in commodity and refined products prices where it takes ownership of the products. The direct commodity price exposure represents nearly 5% of 2022 EBITDA, but is limited primarily to the West Texas wholesale marketing segment and is largely hedged at all times. Limited Geographic Diversity: The partnership's assets and operations are entirely focused in the Petroleum Administration for Defense Districts 3 (PADD 3). Fitch typically views midstream service providers with single-basin (albeit high economic basin) as having exposure to risks should there be any material event or slowdown in the region's refining markets or oil and gas productions. Parent Support: Delek Holdings holds 100% of the general partner's and 78.7% of the limited partnership's interest in DKL. As part of Delek Holdings strategy to grow the midstream business, DKL's growth has been supported with drop down transactions since inception. Given that Delek Holdings directly benefits from the sustainable growth of DKL through its ownership, Fitch believes Delek Holdings will continue to support DKL. However, Fitch also expects the parent to partially sell down a portion of its stake in DKL in line with its stated intention to evaluate monetization of the ownership. Fitch analyzed the parent-subsidiary relationship between DKL and Delek Holdings, and determined that their respective IDRs are the same based on the companies' standalone credit profiles. DERIVATION SUMMARY DKL is rated below Holly Energy Partners L.P (HEP; BB+/Stable). Like DKL, HEP's rating is supported by stable cash flows that are largely MVCs from its investment-grade rated sponsor and largest counterparty, HF Sinclair Corporation (BBB-/Stable). Fitch expects HEP's leverage to be below 3.6x by YE 2023. DKL's smaller scale and weaker counterparty, as well as its higher leverage, account for the two notches difference between the ratings of these two companies. Another peer is NuStar Energy, L.P. (NuStar, BB-/Stable). NuStar is much larger in size with an annual EBITDA of over $700 million in 2022. Roughly one third of its EBITDA are expected to come from contracts where the company will receive payment regardless of whether a product is moved or not. 63% of 2022 revenues are from investment grade customers. NuStar has slightly higher volumetric risk and identical direct commodity price exposure and is more diversified in product mix, customer base and location. NuStar's lower business risk is offset by its higher leverage, which is expected to sustain at 5.5x over the forecast period. Both companies are rated 'BB-'/Stable. KEY ASSUMPTIONS Fitch's Key Assumptions in the Rating Case: - Fitch price deck for West Texas intermediate oil price of $75/bbl in 2023, $70/bbl in 2024, $65/bbl in 2025, $60/bbl in 2026, and $57/bbl thereafter; - Fitch price deck for Henry Hub prices of $3.0/mcf in 2023, $3.5/mcf in 2024, $3.0/mcf in 2025, and $2.75/mcf thereafter; - Fitch Global Economic Outlook interest rate assumptions; - No refinery turnaround in 2023; - Capex and distributions for 2023 largely in line with management guidance; - Successful completion of refinancing of Term Loan A maturing in October 2024 and 2025 Notes due in May 2025; - Equity issuance for debt repayment in 2023; - No significant acquisition assumed, however, if DKL were to pursue a meaningful acquisition, Fitch would expect that transaction to be financed in a balanced manner; - No asset sales, drop downs from Delek Holdings assumed. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Expected EBITDA leverage at DKL is at or below 3.0x and Distribution Coverage above 1.0x on a sustained basis; provided the rating of Delek Holdings is no longer a constraint on DKL's rating. - Favorable rating action at major counterparty, Delek Holdings, may lead to positive rating action for DKL, provided the factors driving the rating change at Delek Holdings have benefits that accrue to the credit profile of DKL; Factors that could, individually or collectively, lead to negative rating action/downgrade: - Lack of proactive efforts in refinancing or repayment before debt becomes current; - Expected leverage above 4.0x and/or Distribution Coverage below 1.0x on a sustained basis; - Increase in capital spending beyond Fitch's expectation and /or debt financed acquisition that have negative consequences on credit profile; - Meaningful deterioration in customer quality or unfavorable rating action at Delek Holdings, so long as Delek Holdings remains its significant counterparty; - Material change to contractual arrangement or operating practices with Delek Holdings that negatively affects DKL's cash flow or earnings profile; - Impairments to liquidity. LIQUIDITY AND DEBT STRUCTURE Limited Liquidity: As of June 30, 2023, DKL had approximately $96.7 million in available liquidity. Cash on balance sheet was $7.7 million. The partnership had $89 million available under its $900 million senior secured revolver, maturing in October 2027. The limited liquidity was partially driven by front-loaded 2023 capital spending. DKL has the ability to increase the credit facility to $1.15 billion, subject to lenders consent. It is secured by first priority liens on substantially all of the partnership's and its subsidiaries assets. The credit facility includes restrictions on total leverage, senior leverage, and interest coverage which must remain below 5.25x (5.50x for certain acquisitions), 3.75x (4.0x for certain acquisitions), and above 2.0x, respectively. As of June 30, 2023, DKL was in compliance with its covenants and Fitch expects them to remain in compliance with their covenants through the forecast period. DKL also has $650 million in outstanding senior unsecured notes, which are co-issued by Delek Logistics Finance Corp. The notes are guaranteed on a senior unsecured basis by all subsidiaries of DKL. Growth projects are the primary driver of external funding needs. Debt Maturity Profile: DKL has a well spread maturity profile. The revolver ($811 million as of June 30, 2023) matures on Oct. 13, 2027 with a springing maturity of Nov. 16, 2024 if the 2025 notes are not refinanced or repaid by then. The bridge loan, Term Loan A ($300 million), matures on Oct. 13, 2024. The unsecured notes are due in May 2025 ($250 million) and June 2028 ($400 million), respectively. ISSUER PROFILE DKL is an MLP formed by Delek Holdings that owns and operates logistics and marketing assets for crude oil, intermediate and refined products primarily in support of the Delek Holdings refineries in Texas, Tennessee and Arkansas. ESG CONSIDERATIONS Delek Logistics Partners, LP has an ESG Relevance Score of '4' for Group Structure due to material related party transactions with its sponsor Delek Holdings, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Delek Logistics Finance Corp. senior unsecured LT BB- Affirmed RR4 BB- Delek Logistics Partners, LP LT IDR BB- Affirmed BB- senior unsecured LT BB- Affirmed RR4 BB- DELEK US: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable ------------------------------------------------------------- Fitch Ratings has affirmed Delek U.S. Holdings, Inc.'s (Delek) Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Rating Outlook. Fitch has also affirmed Delek's senior secured revolving credit facility at 'BB+'/'RR1' and the senior secured term loans at 'BB+'/'RR2'. Delek's ratings reflect its medium size, material diversification into non-refining businesses and resulting integration, location-advantaged assets near the Permian basin and Gulf of Mexico, strong liquidity, and the improved macro environment for refiners. These strengths are tempered by relatively low asset complexity, small scale, geographic concentration within PADD III, moderating leverage, exposure to volatile commodity pricing and crack spreads, and an unfavorable regulatory environment. The Stable Outlook reflects improved performance due to refining sector improvements and an increased demand profile KEY RATING DRIVERS Adequate Liquidity and Moderating Leverage: At 2Q23, Delek exhibited significant liquidity to fund any negative cash flow and capital expenditures with $821.6 million of cash on the balance sheet, and approximately $787.5 million of availability under its revolving credit facilities. Leverage has also improved and is trending lower due to higher EBITDA. The company also benefits from less traditional liquidity levers such as drop downs to Delek Logistics (e.g. 1Q20 Big Spring gathering assets; $100 million cash and 5 million common units) the ability to sell Delek Logistics (DKL) equity in the market, and asset divestitures (2Q20 Bakersfield refinery sale; $40 million cash). Management discontinued common dividends and significantly reduced capex in 2020 to protect liquidity with dividends restarted in 2022. While the revolver may be subject to energy-price-linked redetermination, Fitch expects Delek to maintain sufficient liquidity to fund necessary maintenance and growth capex. Relatively Small, Average Quality Asset Base: With 302 mbbl/d of refining capacity, Delek is notably smaller than peers PBF Holdings (approximately 1,023 mbbl/d), HF Sinclair (approximately 678 mbbl/d) and CVR (207 mbbl/d). Quality is limited by Delek's lower Nelson Complexity Indexed refineries, ranging from 8.7-10.5 compared with more complex peers (PBF: 12.8-15.5, VLO Gulf Coast: 13.0). This lack of complexity is tempered by Delek's flexibility, given their access to low cost Permian crude and regional crudes, which has benefited from stronger differentials. Diversification into Non-Refining Sectors: Fitch views this diversification and integrated platform as a credit positive that helps to stabilize financial performance against the volatility of the refining sector. Delek has continuously grown its logistics and retail segments, which has allowed the company to mitigate volatility in refining. Delek Logistics, an MLP in which the company has an 78.7% limited partner interest, represents the midstream operations of the consolidated entity. The company's strategy is to enhance and grow midstream operations through joint ventures, drop downs and investments to increase existing pipeline capacity, thereby diversifying the earnings stream towards more stable cash flows. Through increasing pipeline infrastructure, Delek will continue to grow its integrated platform enhancing feedstock and end market optionality. Additionally, the company operates 247 retail locations that offer fuel and merchandise offerings (food, tobacco beverages). Retail provides additional cash flow diversification as well as synergistic advantages due to approximately 80% integration with existing downstream operations. Strong Refining Results: Delek's 2022 performance was robust, driven by strong results in its core refining business, with Gulf Coast 5-3-2 and Gulf Coast 3-2-1 crack spreads averaging approximately $23.89/barrel and $31.41/barrel for the year, versus $12.14/barrel and $16.62/barrel the year prior, respectively. YTD 2023, Gulf Coast 5-3-2 and Gulf Coast 3-2-1 crack spreads have moderated averaging $13.22/barrel and $28.32/barrel respectively. Strong results were driven low inventories, market dislocations from Russian sanctions and reductions in U.S. refining capacity. Looking forward, Fitch anticipate refining fundamentals will moderate but remain above midcycle levels in 2023 and 2024. Challenging Regulatory Environment: U.S. refiners face unfavorable regulatory headwinds that will cap long-term demand for refined product in the U.S. These include renewable requirements under the RFS program, higher corporate average fuel economy (CAFE) standards, and regulation of greenhouse gas emissions. Fitch expects these regulations to limit growth in domestic product demand and keep the industry reliant on exports to maintain full utilization. Delek's ethanol and biodiesel production is not sufficient to fully meet its renewable fuel obligations. Historically Delek received EPA small refinery exemptions (SREs) for all four of its facilities however the EPA has denied petitions for these exemptions to continue. Delek is required to purchase RIN's on the open market with pricing being volatile, which adds additional risk compared to peers. This risk could be alleviated with additional renewable projects in the near-term. High Volatility Industry: Refining is one of the most cyclical corporate sectors, subject to periods of boom and bust, with abrupt inflection points in crack spreads and feedstock costs over the commodity cycle. Delek's production slate is geared primarily towards gasoline and diesel/jet fuel. DERIVATION SUMMARY Delek (302,000bpd) operates on a smaller scale than Fitch rated peers such as HF Sinclair Corporation (678,000bpd, BBB-/Stable) and PBF Holding Company (1.02mmbpd, BB/Stable), but has higher nameplate capacity than CVR Energy (206,500bpd, BB-/Stable). Delek benefits from material cash flow diversification from the midstream and retail segments. Similar to other peers, the company has the ability to process discounted regional crudes, with recent benefits from increased crude spreads. Historically Delek received EPA SREs for all four of its facilities however the EPA has denied petitions for these exemptions to continue. Given Delek's ethanol and biodiesel production is not sufficient to fully meet its renewable fuel obligations, it is required to purchase RIN's on the open market with pricing being volatile. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - WTI oil prices of $75/bbl in 2023, $70/bbl in 2024, $65/bbl in 2025 and $60/bbl in 2026; - Crack spreads gradually reduce throughout the rating case from 2022 levels to pre-pandemic, historical averages; - Capex increases in 2023 to $375 million and remains around $350 million through the forecast. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Material increase in size, scale or asset quality as evidenced by an increase in refining capacity and/or asset complexity; - Standalone total EBITDA leverage below 2.5x through the cycle; - Successful track record as operator of acquired assets. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Erosion of liquidity buffers resulting from prolonged negative cash flow and/or material downward borrowing base redetermination; - Regulatory changes that increase costs, including RINs and other federal and state regulations; - Standalone total EBITDA leverage above 3.5x through the cycle; - Change in stated financial policy that prioritizes shareholder returns over sustaining the liquidity profile. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: At 2Q23, Delek had $821.6 million of cash on hand and availability of $787.5 million under their revolving credit facilities. Delek has exhibited sufficient liquidity buffers which Fitch expects the company to be able to cover necessary maintenance and growth capex. Limited Near-Term Maturities: The company's debt structure at 2Q23 consists primarily of a $950 million first lien term loan, $1.1 billion first lien revolver maturing in 2029 and 2027, respectively, with smaller facilities ($25 million Reliant revolver) due in June 2024. Fitch believes that Delek's location-advantaged (albeit small) asset base and midstream/retail diversification inform a robust business model and reduce refinancing risk. ISSUER PROFILE Delek U.S. Holdings, Inc. is a small U.S.-based downstream energy company with petroleum refining assets, logistics and terminaling assets, and convenience store retailing operations mainly in Texas, Arkansas, and Louisiana (all refineries are in the PADD 3 region). ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Delek US Holdings, Inc. LT IDR BB- Affirmed BB- senior secured LT BB+ Affirmed RR1 BB+ senior secured LT BB+ Affirmed RR2 BB+ DIGITAL AEROLUS: Taps Berkley Research Group as Accountant ---------------------------------------------------------- Digital Aerolus, Inc. received approval from the U.S. Bankruptcy Court for the District of Kansas to employ Berkley Research Group, LLC as accountant. The firm will assist the Debtor in the preparation and filing of all current federal and state tax returns as well as future tax returns that need to be filed. The firm will be paid at these rates: Vernon Calder (Managing Director) $440 per hour Leif Larsen (Associate Director) $355 per hour Kellee Calder (Paraprofessional) $145 per hour Leif Larsen, a partner at Berkley Research Group, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Leif M. Larsen Berkley Research Group, LLC 201 Main Street, Suite 450, Salt Lake City, UT 84111 Tel: (385) 212-3237 Email: llarsen@thinkbrg.com About Digital Aerolus Digital Aerolus, Inc., a company in Overland Park, Kan., filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No. 23-20226) on March 10, 2023, with $407,497 in assets and $3,790,513 in liabilities. Sanford Peterson, secretary, signed the petition. Judge Robert D. Berger oversees the case. Jill D. Olsen, Esq., at The Olsen Law Firm, LLC represents the Debtor as counsel. DIOCESE OF SAN FRANCISCO: Files Chapter 11 to Address Abuse Claims ------------------------------------------------------------------ The Roman Catholic Archbishop of San Francisco ("RCASF") on Aug. 21 announced the filing of a voluntary petition for bankruptcy relief under chapter 11 of the U.S. Bankruptcy Code. The filing is necessary to manage and resolve the more than 500 lawsuits alleging child sexual abuse brought against RCASF under California Assembly Bill 218, which allowed decades-old claims to be filed by December 31, 2022, that otherwise were time barred. Chapter 11 is a court-supervised process that allows each claim to be evaluated on its merits, provides transparency into the proceedings and into RCASF's finances, and gives claimants a voice in the outcome. The Chapter 11 filing will halt all legal actions against RCASF while the Archdiocese develops a plan of reorganization that is based on assets and insurance coverage available to be used to settle claims with abuse survivors. This is the second time California has allowed time-barred or expired cases of child sexual abuse to be filed by alleged survivors. In 2003, California created a similar window. Since that time, RCASF has paid more than $70 million to survivors in legal settlements by using insurance funds and selling excess property. The 88 parishes within the Archdiocese are independently managed and self-financed and, along with their parochial schools, are not included in the filing. The Real Property Support Corporation, Capital Asset Support Corporation, high schools, Catholic cemeteries, St Patrick's Seminary & University, and Catholic Charities associated with RCASF also are not included in the filing and will continue to operate as usual. Employees of the Archdiocese will be paid as usual, and their benefit programs will continue uninterrupted. Vendors will be paid for all goods and services delivered after the filing. RCASF will continue to serve the 442,000 Catholics in the counties of San Francisco, San Mateo, and Marin, and its priests and deacons will continue to carry out their missions and ministries within the Archdiocese of San Francisco. The overwhelming majority of the more than 500 claims stem from allegations of sexual abuse that occurred 30 or more years ago involving priests who are no longer active in ministry or are deceased. "The unfortunate reality is that the Archdiocese has neither the financial means nor the practical ability to litigate all of these abuse claims individually, and therefore, after much consideration, concluded that the bankruptcy process was the best solution for providing fair and equitable compensation to the innocent survivors who have been harmed," said The Most Reverend Salvatore J. Cordileone, Archbishop of San Francisco. "It is the best way to bring much-needed resolution to survivors while allowing the Archdiocese to continue its sacred mission to the faithful and those in need. We must seek purification and redemption to heal, especially survivors who have carried the burdens of these sins against them for decades." The Archdiocese of San Francisco has been committed to providing available resources such as counseling and pastoral assistance to survivors of abuse and had established policies and protocols to protect children and address and report incidents of sexual abuse of minors even before the U.S. Bishops adopted the Charter for the Protection of Children and Young People in 2002. The Archdiocese has taken exhaustive steps to satisfy the Charter by immediately removing from active ministry any person with an allegation of sexual childhood abuse, requiring criminal background checks for clergy, employees, and volunteers who work with youth, and implementing educational programs for both children and adults to prevent abuse. The Archdiocese maintains an Independent Review Board (IRB) as an essential step in its internal procedures for handling allegations of sexual abuse. A qualified investigator conducts investigations into allegations and submits a report to the IRB, whose members include an abuse survivor, psychologist, two physicians, a retired police officer, among others. They judge whether there is sufficient evidence to warrant a canonical trial or if an accusation is manifestly unfounded. The recommendations made to the Archbishop are indispensable, as this independent and expert advice directs whether an accused priest should be out of public ministry while canonical procedures are pending or when, in justice, the Archbishop should remediate damage to the reputation of a priest who has been wrongly accused. A list of priests and deacons who are in good standing and have faculties to minister can be found on the Archdiocese website. Priests or deacons who are under investigation for alleged child sexual abuse are prohibited from exercising public ministry and are removed from the list and can only return to ministry or the list if the allegations are found not to be sustained. The Archdiocese also established an Office of Child and Youth Protection to maintain the highest standards for its preventative Safe Environment Program and address allegations of past and current abuse by any clergy, employee, or volunteer, and has two Safe Environment Coordinators to monitor compliance with the Charter. A Victim Assistance Coordinator maintains a hotline for reporting abuse, provides counseling, and offers other support services. The Office is also responsible for coordinating the fingerprinting of employees, volunteers, and clerics who interact with children, as well as facilitating annual compliance audits conducted by independent auditors to review the implementation of policies and procedures for the protection of children. "Today, occurrences of abuse within the Catholic Church are very rare," said Archbishop Cordileone. "Given the educational and preventative measures now in place, I believe the Church has set the standard for other organizations, showing what can and should be done to protect our children." The Roman Catholic Archbishop of San Francisco Chapter 11 case has been filed in the U.S. Bankruptcy Court for the Northern District of California. Additional general information can be found on the Archdiocesan website. EARTHSTONE ENERGY: Moody's Alters Outlook on 'B1' CFR to Positive ----------------------------------------------------------------- Moody's Investors Service changed Earthstone Energy Holdings, LLC's (Earthstone) rating outlook to positive from stable. Concurrently, Moody's affirmed Earthstone's B1 Corporate Family Rating, B1-PD Probability of Default Rating and B3 senior unsecured notes rating. The Speculative Grade Liquidity Rating (SGL) is unchanged at SGL-2. This rating action follows the announcement by Earthstone Energy, Inc. (Earthstone Energy) and Permian Resources Corporation (Permian Resources) that Permian Resources will acquire Earthstone Energy in an all-stock transaction valued at about $4.5 billion, including Earthstone Energy's net debt. [1] Earthstone is a wholly-owned subsidiary of Earthstone Energy. Permian Resources Operating, LLC (B1 positive) is a subsidiary of Permian Resources Corporation. The transaction is expected to close by the end of 2023, subject to regulatory and shareholder approvals. Affirmations: Issuer: Earthstone Energy Holdings, LLC Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Senior Unsecured Regular Bond/Debenture, Affirmed B3 Outlook Actions: Issuer: Earthstone Energy Holdings, LLC Outlook, Changed To Positive From Stable RATINGS RATIONALE Earthstone's positive rating outlook is consistent with Permian Resources Operating, LLC's positive outlook, and reflects the credit enhancing nature of the potential transaction, which should enhance the combined company's position in the Permian Basin, creating synergy opportunities and increased economies of scale. Earthstone's B1 CFR reflects its competitive cost structure, moderate financial leverage and concentrated operations in the Midland and Delaware Basins (subsets of the larger Permian Basin). The company's scale has increased considerably following a series of acquisitions since the beginning of 2021, most recently with the Novo Oil & Gas Holdings, LLC acquisition in the Delaware Basin – its largest acquisition to date. Earthstone's credit profile is challenged by its aggressive acquisition strategy, having undertaken several transactions since December 2020, and geographic concentration. Earthstone's two largest owners, private equity firms EnCap Investments and Post Oak Energy Capital continue to be patient in terms of distributions, enabling the company to utilize free cash flow to repay revolver borrowings following its frequent acquisitions. Earthstone's notes are rated B3, two notches below the B1 CFR. The double notching results from the priority ranking of the relatively large senior secured revolving credit facility. The revolver has a borrowing base of $2 billion with an elected commitment of $1.75 billion. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS As a stand-alone entity with no benefit attributed from the pending acquisition by Permian Resources, the ratings could be upgraded if Earthstone maintains its leveraged full cycle ratio (LFCR) above 1.5x in a mid-cycle commodity price environment, with RCF/debt sustained above 40% and while demonstrating a consistent track record of successfully developing acquired acreage at competitive economics. A downgrade is possible if the company's RCF/debt declines below 25% or if its LFCR falls below 1.0x. Based in The Woodlands, Texas, Earthstone Energy is a publicly traded independent exploration and production company with EnCap Investments and Post Oak Energy Capital as significant owners. The company operates in the Delaware and Midland basins in New Mexico and West Texas. The principal methodology used in these ratings was Independent Exploration and Production published in December 2022. EMERALD ELECTRICAL: Court OKs Interim Cash Collateral Access ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Georgia, Gainesville Division, authorized Emerald Electrical Consultants LLC to use cash collateral on a further interim basis in accordance with the budget. As previously reported by the Troubled Company Reporter, Emerald Electrical and its affiliates are borrowers on certain loans with First US Bank, which asserts security interests in certain of the Debtor's personal property. The revenue from the Debtor's business may constitute cash collateral. The Court said the Lender and any other secured creditor will continue to hold liens as set forth in the First Interim Order, subject to the Carve-Out. As further adequate protection, and as a further condition of the continued use of cash collateral, the Debtor will pay to the Lender a monthly adequate protection payment in an amount equal to the monthly principal and interest due under the various loans made by the Lender to the Debtor, which total amount will be provided by the Lender to the Debtor on or before the first day of each calendar month. Adequate protection payments will be made on or before the sixth day of each consecutive month thereafter during the Interim Period. The Debtor will promptly pay to the Lender $38,260, which includes the past-due adequate protection payments for the periods of July and August 2023 as well as the proceeds of certain asset sales authorized by the Court. To the extent the Debtor has not already done so, it must provide the Lender with access to the vehicles, equipment, and other property which constitute the Lender's collateral at a time and place convenient to the Lender to allow the Lender to inspect the collateral. The "Carve-Out" means (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the U.S. Trustee under 28 U.S.C. section 1930(a); and (ii) additional post-petition retainer funds to be paid to the Debtor's counsel in the amounts set forth in the Budget. The Carve-Out will be senior to all liens and claims and all other forms of adequate protection, liens, security interests, and other claims granted to the Lender or any other party; provided, however, the Lender asserts a perfected, first-priority security interest in all of the Debtor's assets. A final hearing on the matter is set for September 21, 2023 at 10:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=BIULEA from PacerMonitor.com. About Emerald Electrical Consultants LLC Emerald Electrical Consultants LLC specializes in substation construction, related technical services, and consulting across the United States, with a focused presence in the southeastern and central regions of the country. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-20913) on September 15, 2022. In the petition signed by Lindy Truitt, president and CEO, the Debtor disclosed up to $10 million in both assets and liabilities. Judge James R. Sacca oversees the case. Benjamin Keck, Esq., at Keck Legal, LLC, is the Debtor's counsel. EMERGENT BIOSOLUTIONS: Moody's Cuts CFR to Caa1, Outlook Negative ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Emergent BioSolutions Inc. including the Corporate Family Rating to Caa1 from B3, the Probability of Default Rating to Caa1-PD from B3-PD, the senior unsecured rating to Caa3 from Caa2 and the Speculative Grade Liquidity Rating to SGL-4 from SGL-3. Following this action, the outlook remains negative. The downgrades reflect volatility in US government ordering patterns for key Emergent products, creating ongoing earnings pressure and elevated financial leverage. Over the next several quarters, lower anthrax and smallpox sales will more than offset solid Narcan sales and the positive impact of aggressive new cost reduction efforts. Moody's believes that underlying demand from the US government for Emergent's medical countermeasure products is becoming less certain, raising the company's credit risk profile. Despite the benefits of cost reductions, Emergent's earnings are becoming more difficult to predict. Absent a substantial turnaround in financial performance driven by strong underlying demand, Emergent faces potential covenant violations and rising exposure to refinancing risk given the May 2025 expiration of its credit agreement. Social and governance considerations are key drivers of the rating action. Social risk exposures include customer relations, with elevated risk stemming from the volatility in US government ordering patterns and less certain demand. Key governance drivers include management credibility and track record, and financial policy and risk management, highlighted by a recent reductions in 2023 earnings guidance. Downgrades: Issuer: Emergent BioSolutions Inc. Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 from Caa2 Outlook Actions: Issuer: Emergent BioSolutions Inc. Outlook, Remains Negative RATINGS RATIONALE Emergent's Caa1 Corporate Family Rating reflects its niche position supplying products that address public health threats. Notwithstanding quarterly volatility, Moody's expects solid ongoing sales of medical countermeasures to the US Strategic National Stockpile and continuation of high barriers to entry. In addition, the nasal naloxone business will benefit from upcoming expansion into the over-the-counter market, although at a reduced price point. Including nasal naloxone, the company's products business has strong gross margins of around 60%. Tempering these strengths, the timing and underlying demand for medical countermeasure products is becoming less predictable. This exacerbates Emergent's other credit challenges including operating losses in the contract development and manufacturing organization ("CDMO") business and competitive pressure on nasal naloxone including generic exposure. Emergent's CDMO business faces high albeit declining operating costs, and the company recently announced plans to significantly reduce CDMO operations and de-emphasize growth. Until these efforts produce sustained earnings improvement, gross debt/EBITDA will remain elevated. The SGL-4 speculative grade liquidity rating reflects Moody's view that Emergent's liquidity is weak, stemming from a rising likelihood that credit agreement covenant modifications will be required. Financial covenants under the amended credit facilities include minimum LTM EBITDA levels through March 31, 2024 followed by maximum leverage of 4.5x and minimum fixed charge coverage of 2.25x beginning March 31, 2024. The fixed charge covenant steps up to 2.5x at March 31, 2025. The credit agreement also requires Emergent to issue at least $75 million of equity or unsecured debt by April 30, 2024. To date, the company has issued $9 million of at-the-money equity. Emergent reported $89 million of cash on hand as of June 30, 2023 and approximately $50 million of availability under the $300 million revolving credit facility expiring in May 2025. Term loan amortization and maintenance capital expenditures are modest, but cash flow is likely to continue to exhibit significant quarterly volatility. The Caa3 rating on the senior unsecured notes reflects the presence of a material amount of secured debt in Emergent's capital structure. The final rating reflects Moody's estimate for low recovery on the senior unsecured notes in the event of default. Emergent's CIS-5 (previously CIS-4) indicates that the rating is lower than it would have been if ESG risk exposures did not exist and that the negative impact is more pronounced than for issuers scored CIS-4. Emergent's G-5 score (previously G-4) reflects governance challenges including those related to management credibility and track record, and financial strategy and risk management. Social risk exposures reflected in the S-5 score (previously S-4) include customer relations and responsible production exposures related to manufacturing compliance standards. Emergent's largest customer is the US government, and reduced predictability into procurement for the US Strategic National Stockpile is a key credit risk exposure. The outlook is negative, reflecting slowing procurement from the US government, high operating losses in the CDMO business, and weak liquidity. Although aggressive cost reductions will benefit earnings, Moody's does not believe the credit profile has sufficiently stabilized until financial performance more clearly rebounds and cushion under financial covenants improves. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to a downgrade include a deterioration in liquidity including weak cash flow or covenant violations, significant delays in US government procurement, or material pressure on the Narcan Nasal Spray franchise. Factors that could lead to an upgrade include greater consistency in US government procurement patterns, sustained improvement in earnings, and improved liquidity. Headquartered in Gaithersburg, Maryland, Emergent BioSolutions Inc. is a life sciences company that provides pharmaceuticals, vaccines, medical devices and contract manufacturing services related to public health threats affecting civilian and military populations. Revenue for the 12 months ended June 30, 2023 totaled approximately $1.1 billion. The principal methodology used in these ratings was Pharmaceuticals published in November 2021. ENCINO TOWERS: Seeks to Hire RHM Law as Bankruptcy Counsel ---------------------------------------------------------- Encino Towers, LLC seeks approval from the U.S. Bankruptcy Code for the Central District of California to hire RHM Law, LLC as its bankruptcy counsel. The firm's services include: a. legal advice regarding compliance with the requirements of the Office of the U.S. Trustee; b. advice regarding matters of bankruptcy law, including the rights and remedies of the Debtor with respect to its assets and claims of creditors; c. advice regarding cash collateral matters; d. examinations of witnesses, claimants or adverse parties and the preparation of reports, accounts and pleadings; e. advice concerning the requirements of the Bankruptcy Code and applicable rules; f. negotiation, formulation, confirmation and implementation of a Chapter 11 plan of reorganization; and g. court appearances. RHM Law will render services to the Debtor at its regular hourly rates. The Debtor paid the firm an initial retainer of $34,000. Roksana Moradi-Brovia, Esq., a partner at RHM Law, 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: Roksana D. Moradi-Brovia, Esq. Matthew D. Resnik, Esq. RHM Law, LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Tel: (818) 285-0100 Fax: (818) 855-7013 Email: roksana@RHMFirm.com matt@RHMFirm.com About Encino Towers Encino Towers, LLC, a company in Encino, Calif., filed voluntary Chapter 11 petition (Bankr. C.D. Calif. Case No. 23-10965) on July 10, 2023, with $10 million to $50 million in both assets and liabilities. Kaysan Ghasseminejad, managing member, signed the petition. Judge Victoria S. Kaufman oversees the case. RHM LAW, LLP represents the Debtor as bankruptcy counsel. EXELA TECHNOLOGIES: S&P Ups ICR to 'CCC' on Subpar Debt Exchanges ----------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Exela Technologies Inc. to 'CCC' from 'SD' (selective default). The outlook is negative. S&P said, "We assigned our 'CCC' issue-level rating and '4' recovery rating to the company's new 11.5% first-priority senior secured notes due 2026. We also raised our existing senior secured rating to 'CCC' from 'D' on the company's remaining 11.5% notes. The negative outlook reflects our forecast for very limited liquidity cushion after the company's interest payments in January and July 2024." The recent exchange resulted in reduced debt and temporarily reduced cash interest expense. The company exchanged $1,017 million in new notes for $1,271 million of old notes (including notes held by affiliates), a 20% discount to par. Concurrently, the company issued $65 million of additional new notes to affiliates with a small portion exchanged for the remaining 2023 term loans. Roughly $314 million of the new notes are held by affiliates of the company in indirect wholly owned nonguarantor subsidiaries, resulting in the net amount outstanding of $768 million. The debt exchange alleviated near-term refinancing risk because the company no longer has any debt maturities until the notes mature on July 15, 2026. As part of the exchange, noteholders agreed to receive PIK interest for the interest payment due in July 2023. In addition, all interest on the notes held by affiliates will be PIK through January 2025. For the remaining notes, Exela will pay at least 50% of the 2024 interest payments with cash, and will pay the remainder in cash to the extent the cash balance pro forma for the payment is higher than $15 million. Otherwise, the remaining interest will PIK through 2024. Following the exchange, the company had about $33 million of mandatory amortization under the former B. Riley Commercial Capital LLC (BRCC) facilities due over the next 12 months, with monthly installments between $2.5 million and $3.5 million until the debt is repaid. It also has $500,000 per quarter due for its new $40 million term loan due in 2026. S&P said, "Despite improving revenue trends and cost savings, we forecast limited liquidity cushion in January and July of 2024. Exela increased its revenue 2.3% in the second quarter ended June 30, 2023, its first year-over-year quarterly revenue increase since 2019. From the beginning of the year through June, its sales are roughly flat, substantially better than the nearly 10% decline in 2021 and 7.6% decline in 2022. We expect revenue to continue to improve, albeit at a modest pace, given the company's recent contract wins and improved activity from existing clients. Exela's margins are also improving due to the benefits from implemented efficiencies and a reduction of infrastructure costs. By the end of its first-quarter, the company implemented $30 million of its $65 million-$75 million cost-savings plan. Despite our expectations for significant EBITDA growth and improved cash flow, we forecast the company will have very limited liquidity after making its interest payments in January and July of 2024. Specifically, we forecast it will have about $5 million in cash in January 2024 after its interest payment. We expect it to rebuild some cash over the subsequent six months but will trough again in July 2024 when the next payment is due. Although Exela could generate more cash from operations if it performs better than we expect, higher cash balances will result in higher cash interest payments due to the features of the new notes. Therefore, even in an upside case we believe it is unlikely the company will have more than $15 million in cash after paying interest in the first and third quarters of 2024. Since the company does not have a revolver, it has limited other liquidity sources. "Absent a significant improvement in the company's operations, we believe a comprehensive restructuring is likely within the next two years. In January 2025 when all of its interest expense due to external parties becomes mandatory cash pay, its run-rate cash interest expense due to external parties will be about $50 million semiannually or $100 million per year. Total interest expense including amounts due on notes held by affiliates will be about $144 million. At that time, we forecast ongoing high leverage and minimal interest coverage. Since its July 2026 notes also become current in July 2025, we believe the company could engage in another restructuring if it does not significantly improve its operating performance before then." Some of the company's assets are held outside of the borrower group and may not be available for noteholders in the event of a traditional bankruptcy. The issuer of all Exela's rated debt is Exela Intermediate LLC, a wholly owned subsidiary of publicly traded Exela Technologies Inc. (ETI) S&P said, "We believe Exela Intermediate is core to the group, as it constitutes a significant portion of the group and we believe it is highly unlikely to be sold. In addition, ETI has demonstrated a long-term commitment to supporting Exela Intermediate, including selling ETI stock and using the proceeds to repay debt, among other things. However, ETI has material assets that are held at wholly owned subsidiaries outside the borrower group, including the aforementioned affiliate notes, as well as assets held for sale including Project Neon and XBP Europe. A sale process for Project Neon is underway, and noteholders agreed to let the company use proceeds to repay new notes at a discount. XBP Europe is expected to merge with special purpose acquisition company CF Acquisition Corp. VIII (CFFE) within the next few weeks. ETI will retain significant ownership of the merged entity and consolidate its financial results; however, we expect the cash generated by the entity will remain outside the borrower group." The negative outlook reflects S&P's forecast for very limited liquidity cushion after the company's interest payments in January and July 2024. FIVE RIVERS: Taps Katten Muchin Rosenman as Litigation Counsel -------------------------------------------------------------- Five Rivers Land Company, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Katten Muchin Rosenman, LLP as special litigation counsel. The firm will assist the Debtor in prosecuting and defending various litigation proceedings, including the adversary proceeding pending as 01044-TA before the court, and assist in other litigation matters related to the Debtor's Chapter 11 case. The firm will be paid at these rates: Christopher Beatty, Partner $975 per hour Megan McKennon, Associate $935 per hour Kelsey Panizzolo, Associate $930 per hour Jordan Gleeson, Associate $800 per hour Other Associates, as appropriate $595 to 800 per hour Paralegals, as appropriate $450 per hour Christopher Beatty, Esq., a partner at Katten Muchin Rosenman, 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: Christopher D. Beatty, Esq. Katten Muchin Rosenman, LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067 Tel: (310) 788-4400 Fax: (310) 788-4471 Email: chris.beatty@katten.com About Five Rivers Land Company Five Rivers Land Company, LLC is engaged in fruit and tree nut farming in Newport Beach, Calif. Five Rivers Land Company filed Chapter 11 petition (Bankr. C.D. Calif. Case No. 23-11167) on June 6, 2023, with $10 million to $50 million in both assets and liabilities. Judge Theodor Albert oversees the case. The Debtor tapped Garrick A. Hollander, Esq., at Winthrop Golubow Hollander, LLP as bankruptcy counsel and Katten Muchin Rosenman, LLP as special litigation counsel. FROGGY FLATS: Gets OK to Hire Deschenes & Associates as Counsel --------------------------------------------------------------- Froggy Flats, LLC received approval from the U.S. Bankruptcy Court for the District of Montana to hire Deschenes & Associates Law Offices to handle its Chapter 11 case. The firm will charge these hourly fees: Attorneys $400 per hour Paralegals $155 per hour In addition, the firm will seek reimbursement for out-of-pocket expenses incurred. Gary Deschenes, Esq., a partner at Deschenes & Associates Law Offices, disclosed in a court filing that his firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. Deschenes & Associates can be reached at: Gary S. Deschenes, Esq. Deschenes & Associates Law Offices 309 First Avenue North Great Falls, MT 59403-3466 Tel: (406) 761-6112 Fax: (406) 761-6784 Email: gsd@dalawmt.com About Froggy Flats Froggy Flats, LLC filed Chapter 11 petition (Bankr. D. Mont. Case No. 23-40050) on July 18, 2023, with $500,001 to $1 million in both assets and liabilities. Judge Benjamin P. Hursh oversees the case. Gary S. Deschenes, Esq., at Deschenes & Associates Law Offices represents the Debtor as counsel. FT MEDICAL: Files Emergency Bid to Use Cash Collateral ------------------------------------------------------ FT Medical Group, LLC asks the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, for authority to use cash collateral to pay operating expenses. The Debtor generates approximately $250,000 per month in income which is deposited in an account with Wells Fargo Bank, Renasant Bank, and First Citizen Bank and subsequent DIP accounts. The Debtor has accounts receivable of approximately $232,521 ($598,892 less $366,371 which are more than 90 days old and likely uncollectable). McKesson Corp, which is owed approximately $93,000, has a first priority security interest in cash collateral pursuant to its UCC-1 filed on May 5, 2020. NOWAccount Network Corp., which the Debtor believes is owed nothing but has not released the UCC has a second priority security interest in cash collateral pursuant to its UCC-1 filed on September 30, 2020. Renasant Bank which is owed approximately $1.3 million, has a fourth priority security interest in cash collateral pursuant to its UCC-1 filed on August 11, 2022. CT Corp (original creditor unknown at this time and as a result the amount owed is unknown) has a fifth priority security interest in cash collateral pursuant to its UCC-1 filed on September 14, 2022. ASSN Corp (original creditor unknown at this time and as a result the amount owed is unknown) has a sixth priority security interest in cash collateral pursuant to its UCC-1 filed on October 21, 2022. First Corp. Solutions, has a seventh priority security interest in cash collateral pursuant to its UCC-1 filed on November 29, 2022. BSD Capital Inc. dba Lendistry, which is owed approximately $1.325 million, has an eighth priority security interest in cash collateral pursuant to its UCC-1 filed on March 1, 2023. American Choice Capital, LLC, which is owed approximately $93,875, has a ninth priority security interest in cash collateral pursuant to its UCC-1 filed on June 21, 2023. Ultra Funding which is owed approximately $30,080, has an eighth priority security interest in cash collateral pursuant to its UCC-1 filed on March 1, 2023. There is sufficient cash collateral to satisfy the first, second, and third priority security interests of McKesson, Ultra Funding, and Renasant Bank. Accordingly, no other lenders are considered secured by cash collateral. Cash collateral will be used only pursuant to the terms of the Budget during the period following entry of the Interim Order until earlier of: (i) 30 days following entry of the Interim Order; (ii) conversion of the case to Chapter 7 or dismissal of the case; or (iii) the Debtor's material violation of the terms of the Interim Order, including failure to comply with the Budget (plus a ten percent variance per category). As adequate protection for the cash collateral expended, pursuant to the Interim Order, lender will be given replacement liens, to the same extent and validity of those liens that presently exist in the same order of priority as existed pre-petition for the lender which include all assets of the debtor with a fair market value estimated to be no less than $1.167 million. Also, Debtor will make monthly payments to lenders in the amounts as follows:' i. McKesson Corp: 40% of Debtor's actual net profit per month ii. NOWaccount Network Corp: 0% of Debtor's actual net profit per month iii. Ultra Funding: 20% of Debtor's actual net profit per month iv. Renasant Bank: 20% of Debtor's actual net profit per month A copy of the Debtor's motion and budget is available at https://urlcurt.com/u?l=rmo2SW from PacerMonitor.com. The Debtor projects total expenses, on a monthly basis, as follows: $270,829 for September 2023; $270,829 for October 2023; $270,829 for November 2023; $270,829 for December 2023; $270,829 for January 2024; and $270,829 for February 2024. About FT Medical Group LLC FT Medical Group LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-57910) on August 18, 2023. In the petition signed by Darryle Farr, COO, the Debtor disclosed $1,153,142 in total assets and $5,413,254 in total liabilities. Judge Lisa Ritchey Craig oversees the case. Ian Falcone, Esq., at The Falcone Law Firm, PC, represents the Debtor as legal counsel. GACE CONSULTING: Taps Joseph A. Albano as Accountant ---------------------------------------------------- Gace Consulting Engineers, D.P.C. seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Joseph A. Albano, CPA, P.C. The Debtor requires an accountant to prepare monthly operating reports required by the Office of the U.S. Trustee. The firm will be compensated at $250 per hour. As disclosed in court filings, Joseph A. Albano, CPA, P.C. is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Joseph A. Albano Joseph A. Albano, CPA, P.C. 197 Wellington Road Garden City, NY 11590 Tel: (212) 545-7878/(516)741-6991 Email: info@jaa-cpa.com About Gace Consulting Engineers Gace Consulting Engineers DPC is a New York-based structural engineering firm founded in 1979. Gace Consulting Engineers filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D.N.Y Case No. 23-10789) on May 17, 2023, with $2,924,588 in assets and $3,077,184 in liabilities. Samuel Dawidowicz has been appointed as Subchapter V trustee. Judge Lisa G. Beckerman oversees the case. The Debtor tapped Eric J. Snyder, Esq., at Wilk Auslander, LLP as legal counsel and Joseph A. Albano, CPA, P.C. as accountant. GACE CONSULTING: Unsecureds Will Get 14.7% of Claims over 3 Years ----------------------------------------------------------------- Gace Consulting Engineers, D.P.C., filed with the U.S. Bankruptcy Court for the Southern District of New York a Plan of Reorganization under Subchapter V dated August 15, 2023. The Debtor is a Design Professional Corporation formed under New York Business Corporation Law Section 1503 in November 1979. The business is a structural engineering firm focused on residential, commercial and industrial building projects. The Debtor commenced Chapter 11 case to stay the acts of the Debtor's former landlord, A&H Real Estate, Inc. A&R commenced an action (the "Old Lease Action") prior to the petition date seeking money damages from the Debtor resulting from Debtor's breach of its previous lease (the "Old Lease"). The Old Lease Action threatened the Debtor's ability to continue to operate as a going concern. As a result, on May 17, 2023, the Debtor filed a petition for relief under Subchapter V of Chapter 11 the Bankruptcy Code. This Plan provides for a comprehensive reorganization of the Debtor to preserve its going concern value and future business. All general unsecured creditors are classified in Class 3, and upon Class acceptance of the Plan such creditors will receive all the Reorganized Debtor's Disposable Income over a three-year period commencing after the effective date which is expected to result in an approximate 14.7% recovery for Allowed Class 3 Claims. After reviewing Schedule F and the Claims filed prior to the General Unsecured Bar Date, the Debtor believes that there are approximately 12 Claims in Class 3, totaling approximately $3,800,000. The Debtor believes the Claims are generally accurate, except for the Claim of A&R, which the Debtor believes is overstated by $902,000. Class 3 is impaired. All Holders of Interests shall retain their Interests. It is expected that all distributions under this Plan will be funded from the Reorganized Debtor's cash on hand and/or earnings made by the Reorganized Debtor. A full-text copy of the Plan of Reorganization dated August 15, 2023 is available at https://urlcurt.com/u?l=0SD2uw from PacerMonitor.com at no charge. Debtor's Counsel: Eric J. Snyder, Esq. Wilk Auslander, LLP 825 Eight Avenue, 29th Floor New York, NY 10019 Tel: (212) 981-2300 About Gace Consulting Gace Consulting Engineers DPC is a New York-based structural engineering firm founded in 1979. Gace Consulting Engineers filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D.N.Y Case No. 23-10789) on May 17, 2023, with $2,924,588 in assets and $3,077,184 in liabilities. Samuel Dawidowicz has been appointed as Subchapter V trustee. Judge Lisa G. Beckerman oversees the case. Eric J. Snyder, Esq., at Wilk Auslander, LLP, is the Debtor's legal counsel. HAWAIIAN ELECTRIC: Fitch Lowers LongTerm IDR to 'B', On Watch Neg. ------------------------------------------------------------------ Fitch Ratings has downgraded Hawaiian Electric Industries, Inc.'s (HEI) Long-Term Issuer Default Rating (IDR) to 'B' from 'BBB+' and Hawaiian Electric Company, Inc.'s (HECO) Long-Term IDR to 'B' from 'A-'. Fitch has also downgraded both HEI's and HECO's Short-Term IDRs to 'B' from 'F2'. Fitch has downgraded the senior unsecured debt at HECO to 'B+' from 'A' with a Recovery Rating (RR) of 3. Fitch has additionally assigned first-time Long-Term IDRs of 'B' to HECO's wholly owned utility subsidiaries, Maui Electric Company, Limited (MECO) and Hawaii Electric Light Company, Inc. (HELCO). HECO guarantees the senior unsecured debt of both MECO and HELCO. Fitch has downgraded the senior unsecured debt at MECO to 'B+'/'RR3' from 'A' and senior unsecured debt at HELCO to 'BB-'/'RR2' from 'A'. 'RR2' implies superior recovery (71%-90%) and 'RR3' implies good recovery (51%-70%) in the event of default. The ratings of HEI, HECO, MECO and HELCO have been placed on Rating Watch Negative. The rating action reflects potential exposure to large third-party wildfire-related liabilities if utility equipment is determined to have ignited recent wildfires in Maui and the utility is deemed responsible for such claims under applicable negligence standards. Fitch believes HECO and its subsidiary utilities' access to capital at a reasonable cost is uncertain, given the magnitude of the potential liabilities associated with the wildfires. Confirmed deaths resulting from the unfolding disaster exceed 100 and more than 2,200 structures have reportedly destroyed. Fitch believes potential liabilities to the utility could approximate upwards of $3.8 billion representing an existential threat to the company, barring substantial regulatory/legislative support. The rating action also reflect costs to rebuild MECO's damaged electric infrastructure, which could come at a material cost to MECO's customer base of approximately 74,000 customers and adversely affect the financial profile of MECO and HECO in the near-term. KEY RATING DRIVERS Devastating Maui Wildfires: Wildfires ignited Aug. 8, 2023 on the Hawaiian island of Maui are among the deadliest in modern U.S. history. Based on recent reports, the death toll stands at over 100 and more than 2,200 structures have been destroyed. As of Aug. 20, 2023, the utility has restored more than 80% of customers capable of receiving service restoration and remains focused on restoring the remaining 1,800 customers. Third-Party Liabilities: Multiple lawsuits have been filed against HECO and MECO alleging negligence. While the official cause of fires is yet to be determined, several investigations are underway with results from these investigations likely to be disclosed in the coming 6 months-12 months. If the investigations determine that utility equipment sparked the wildfires and the utility is deemed to be negligent in a court of law, Fitch believes HECO and MECO may be subject to large third-party liabilities in a process that would take several years Significant Potential Financial Impact: Fitch estimates utilities' exposure to third-party liabilities of approximately $3.8 billion, recognizing the fluid nature of wildfire risks and exposures and the possibility that higher total liabilities cannot be ruled out. Recent pressure on HEI equity as well as on HEI and subsidiaries' debt instruments underscores concern regarding the companies' access to capital at a reasonable price. HECO had just under $350 million of cash and cash equivalents and borrowing capacity on its RCF as of June 30, 2023, and $100 million of senior notes are scheduled to mature in November 2023. HEI had $170 million of cash and cash equivalents and $129 million of borrowing capacity on its RCF as of June 30, 2023 and no debt maturities in 2023 and 2024. Rebuilding Looms Ahead: The destruction in Maui Electric's service territory will require a multi-year rebuilding effort with material capital costs relative to the size of MECO. As of YE 2022, Maui's rate base was approximately $560 million and it served approximately 74,000 customers. The company has not disclosed its property and liability insurance coverage; the coverage is likely to be modest in Fitch's view given the size of the utility. The rebuild and additional investment to protect the system from future wildfires will likely to be challenging due the overhang of large potential third-party liabilities and a higher cost of capital. Credit Quality of HELCO and MECO: HELCO and MECO are wholly owned subsidiaries of HECO. HECO guarantees all of the outstanding debt of HECO and MECO. HELCO operates a fully regulated electric utility with a relatively small rate base of $573 million catering to around 89,000 customers on the island of Hawaii. MECO operates a fully regulated electric utility with a relatively small rate base of $560 million catering to around 74,000 customers in Maui, Lanai and Molokai. The allowed ROE for both HELCO and MECO is 9.5%, in line with the national average, while their allowed equity ratio of 58% is above the national average. Fitch views the performance-based approach in Hawaii as a relatively stable rate setting framework for these utilities. Both HELCO and MECO meet their liquidity needs through the short-term borrowings at HECO. HELCO had cash of $36 million as of June 30, 2023 and has $20 million of debt maturing in November 2023. MECO had cash of $37 million as of June 30, 2023 and has $30 million of debt maturing in November 2023. Recovery Analysis: Fitch has utilized a bespoke recovery analysis to arrive at debt instrument ratings of HECO and its subsidiaries. In a hypothetical default scenario, where the utility equipment is deemed to have ignited the fire, limited access to capital markets due to threat of significant wildfire liabilities drives HECO and its utility subsidiaries to file for bankruptcy. Fitch utilizes expected 2023 rate base for HECO, MECO and HELCO to determine the going concern enterprise value of these entities. Fitch has assumed $3.8 billion of wildfire-related claims are lodged jointly and severally against HECO and MECO and these claims are expected to be pari passu with their outstanding unsecured obligations. For HELCO, Fitch has assumed a going concern enterprise value of $630 million and 10% administrative claims. The Recovery Rating for HELCO's senior unsecured debt is capped at RR2 in accordance with Fitch's Corporates Recovery Ratings and Instrument Ratings Criteria. Fitch has assumed a going concern enterprise value of $615 million for MECO, which after deducting 10% administrative claims, is applied to the unsecured wildfire liabilities and unsecured debt obligations. The Recovery Ratings for MECO's unsecured debt also reflect the unsecured guarantee from HECO resulting in a 'RR3' rating. For HECO, Fitch has assumed a going concern enterprise value of $3.2 billion, which includes residual equity value from HELCO. After deducting 10% administrative claims, the enterprise value is applied to the remaining unsecured wildfire liabilities, HECO's unsecured debt obligations and remaining MECO's unsecured debt claims, on a pari basis. Please refer to the ESG Considerations section for ESG Relevance factors that are Key Rating Drivers. DERIVATION SUMMARY HEI is primarily comparable to the utility holding company, PG&E Corporation (PCG; BB+/Stable) in terms of exposure to wildfire risks. In addition, both HEI and PCG are utility holding companies operating in a single state with generally supportive rate regulation. Fitch expects that HECO will focus on wildfire mitigation in an effort to prevent future catastrophic wildfires. These efforts notwithstanding, Fitch believes the risk of catastrophic wildfire significantly heightens HECO and its subsidiaries business risk. Similar to HEI and MECO today, PCG's wholly-owned utility subsidiary, Pacific Gas & Electric Company (PG&E), experienced devastating wildfires in 2017-2018. In the case of PCG/PG&E, potential third-party liabilities and financial pressures were accelerated by inverse condemnation resulting in a liquidity crisis that ultimately forced the utility and its parent to file for protection under Chapter 11 of the U.S. Bankruptcy Code. Since inverse condemnation does not apply in Hawaii, the determination and ultimate payment of potential liabilities related to the fires, if any, is expected to take several years. For MECO, there has yet to be a determination that the utility's equipment was involved in ignition of the Maui wildfires. Fitch believes it will take several years for the courts to judge the prudence of the utility's actions, if MECO's equipment is deemed to have caused the wildfires. Nonetheless, the overhang of billions of dollars of potential wildfire liabilities combined with other potential adverse impacts from the wildfires has significantly pressured HECO's access to capital at reasonable rates. The higher cost of capital comes at a time when the need for HECO to invest to rebuild parts of its system and mitigate future wildfire risk is acute and expected to result in significantly higher capex and operating costs. HECO is much smaller than PG&E, which ranks among the largest utilities in the U.S. In its 2019 restructuring, PCG and PG&E utilized an estimated rate base value of approximately $29 billion for 2020 and agreed to pay roughly $25.5 billion of wildfire-related liabilities to fire victims and others. PCG and PG&E emerged from bankruptcy in July 2020. While there has been no determination that utility equipment of MECO ignited the Maui wildfires, nor any ruling regarding the prudence of the utility's actions, actual wildfire liabilities could exceed Fitch's projected $3.8 billion. HECO's consolidated rate base was $3.7 billion at YE 2022. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer Include: - Exposure to third-party and other liabilities of approximately $3.8 billion; - In the absence of any information on the magnitude of financial impact on HEI and HECO, no fresh financial assumptions have been made by Fitch as of now. However, Fitch expect the Maui wildfires will have a very meaningful impact on HEI and HECO's credit metrics. As considered at the time of the last rating action in July 2023 - HECO capex of about $380 million on average over 2023-2024; increasing to a mid-point of $430 million in 2025; - HECO capital structure of about 57% common equity/capital, with debt issuances and equity contributions as needed to maintain regulatory capital structure; - HECO's ROE lag of around 100 bps-110 bps through 2025; - Modest contribution from PIMs in 2023-2025 ($3 million on average annually); - $6.6 million rate refund annual from 2023-2025 based on annual savings per the accelerated Management Audit commitment; - No equity issuance over the forecast period; - To better represent the risk to the consolidated company, Fitch deconsolidates the bank and adds the contributions as recurring dividends to HEI. Assume on average $65 million of annual dividend payment from the bank from 2023-2025. RATING SENSITIVITIES Hawaiian Electric Industries, Inc. Factors that could, individually or collectively, lead to positive rating action/upgrade: - A conclusive determination that utility equipment was not involved in the ignition of recent wildfires in Maui would lead to removal of Rating Watch Negative and meaningful upward revision of ratings. However, ratings are unlikely to be restored at prior levels due to heightened risk arising from increasing wildfire activity in utility subsidiaries' service territory and incremental cost of rebuilding MECO's damaged infrastructure, which is expected to pressure MECO's and consolidated HECO's credit metrics. - Tangible evidence of state regulatory and legislative support to mitigate financial risk for the utility subsidiaries against potential large wildfire related claims and rebuilding costs. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Financial liability arising from state investigations or adverse rulings on the lawsuits without a path to timely recovery of such costs could lead to multi-notch downgrades depending on the involvement of utility equipment igniting the Hawaii fires, if any, and the magnitude of associated liabilities; - Lack of regulatory support and mechanisms for timely recovery of wildfire related asset restoration costs in a credit supportive manner; - Further deterioration in liquidity headroom arising out of tightening access to capital markets; - Inability to upstream required dividends from American Savings Bank, its wholly owned bank subsidiary. Hawaiian Electric Company, Inc. Factors that could, individually or collectively, lead to positive rating action/upgrade: - A conclusive determination that utility equipment was not involved in the ignition of recent wildfires in Maui would lead to removal of Rating Watch Negative and meaningful upward revision of ratings. However, ratings are unlikely to be restored at prior levels due to heightened risk arising from increasing wildfire activity in its service territory and cost of rebuilding the damaged infrastructure from the recent Maui wildfires, which is expected to pressure MECO's and consolidated HECO's credit metrics. - Tangible evidence of state regulatory and legislative support to mitigate financial risk against potential large wildfire related claims and rebuilding costs. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Financial liability arising from the state investigations or adverse rulings on the lawsuits without a path to timely recovery of such costs could lead to multi-notch downgrades depending on the involvement of utility equipment in igniting the Hawaii fires, if any, and the magnitude of associated liabilities; - Lack of regulatory support and mechanisms for timely recovery of wildfire related asset restoration costs in a credit supportive manner; - Further deterioration in liquidity headroom arising out of tightening access to capital markets; - Determination of the magnitude of wildfire related liabilities that exceeds Fitch's current estimates could lead to diminished recovery for unsecured debt obligations leading to negative rating actions. Maui Electric Company, Limited Factors that could, individually or collectively, lead to positive rating action/upgrade: - Positive ratings actions at HECO. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Negative ratings action at HECO; - Determination of the magnitude of wildfire related liabilities that exceeds Fitch's current estimates could lead to diminished recovery for unsecured debt obligations leading to negative rating actions. Hawaii Electric Light Company, Inc. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Positive ratings actions at HECO. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Negative ratings action at HECO. LIQUIDITY AND DEBT STRUCTURE Both HECO and HEI have sufficient near-term liquidity. HEI had available cash of $170 million and a $175 million revolving credit facility with borrowing capacity of $129 million available as of June 30, 2023. HECO had available cash of $144 million and its $200 million revolving credit facility was fully available for borrowings as of June 30, 2023. HEI has no debt maturities in 2023 and 2024 while HECO has a $100 million maturing in 2023 and no debt maturity in 2024. Under the terms of HEI's RCF, if HEI no longer owns HECO it would constitute an event of default. HELCO had cash of $36 million as of June 30, 2023 and has $20 million of debt maturing in November 2023. MECO had cash of $37 million as of June 30, 2023 and has $30 million of debt maturing in November 2023. ISSUER PROFILE HEI is a parent holding company of integrated regulated electric utility HECO and ASB, a bank, and Pacific Current. HECO, MECO and HELCO are engaged in the generation, purchase, transmission, distribution and sale of electric energy in Hawaii. ASB is the third largest bank in Hawaii with $9.6 billion in assets and $8.2 billion in deposits. Pacific Current invests in non-regulated clean energy in Hawaii. ESG CONSIDERATIONS HEI and HECO have an ESG Relevance Score of '5' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the uncertainty on involvement of HECO's equipment in sparking the Maui wildfires and the devastation caused to its customers, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in implicitly lower ratings. HEI and HECO have an ESG Relevance Score of '5' for Exposure to Environmental Impacts due to heightened risk from wildfires and the uncertainty on utility-sparked wildfires, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in implicitly lower ratings. HEI and HECO have an ESG Relevance Score of '5' for Exposure to Social Impacts due to adverse customer and other constituent impacts associated with unusual wildfire activity in Hawaii, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in implicitly lower ratings. MECO and HELCO's ESG scores would be in line with HECO's since HECO is a debt guarantor for MECO and HELCO. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Hawaiian Electric Industries, Inc. LT IDR B Downgrade BBB+ ST IDR B Downgrade F2 senior unsecured ST B Downgrade F2 Hawaiian Electric Company, Inc. LT IDR B Downgrade A- ST IDR B Downgrade F2 senior unsecured LT B+ Downgrade RR3 A senior unsecured ST B Downgrade F2 Hawaii Electric Light Company Inc. LT IDR B New Rating senior unsecured LT BB- Downgrade RR2 A Maui Electric Company Limited LT IDR B New Rating senior unsecured LT B+ Downgrade RR3 A HEART O'GOLD HOME: Taps Anthony J. DeGirolamo as Bankruptcy Counsel ------------------------------------------------------------------- Heart O'Gold Home Care, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Anthony DeGirolamo, Esq., a practicing attorney in Canton, Ohio, to handle its Chapter 11 case. Mr. DeGirolamo will charge $375 per hour for his services and $215 per hour for paralegal services. In addition, the attorney will seek reimbursement for expenses incurred. The attorney received from the Debtor a retainer of $7,895.50. Mr. DeGirolamo disclosed in a court filing that he is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Anthony J. DeGirolamo, Esq. 3930 Fulton Dr., Ste. 100B Canton, OH 44718 Tel: (330) 305-9700 Fax: (330) 305-9713 Email: tony@ajdlaw7-11.com About Heart O'Gold Home Care Heart O'Gold Home Care, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ohio Case No. 23-60917) on Aug. 2, 2023, with as much as $1 million in both assets and liabilities. Frederic Schwieg, Esq., has been appointed as Subchapter V trustee. Judge Tiiara N.A. Patton oversees the case. The Debtor tapped Anthony J. DeGirolamo as its legal counsel and The Phillips Organization as accountant and financial advisor. HERITAGE SPECIALTY: Gets OK to Hire 'Ordinary Course' Professionals ------------------------------------------------------------------- Heritage Specialty Foods, LLC received approval from the U.S. Bankruptcy Court for the District of Oregon to hire and compensate professionals utilized in the ordinary course of business. The "ordinary course" professionals include: Geffen Mesher & Co., P.C. 888 SW Fifth Ave., Ste. 800 Portland, OR 97204 -- tax return preparation Andrew M. Schpak Barran Liebman LLP 601 SW Second Ave., Ste. 2300 Portland, OR 97204 -- employment counsel John Cathcart Rake Larkins Vacura Kayser LLP 121 SW Morrison St., Ste. 700 Portland, OR 97204 -- corporate counsel John Daniel Gragg Seifer Yeats Zwierzynski, et al. 8 N. State St., Suite 301 Lake Oswego, OR 97304 -- real estate counsel The Debtor may pay each OCP 100 percent of its fees and expenses, provided, however, that the fees and expenses for each OCP may not exceed $2,500 per month on average over any three-month period on a rolling basis. About Heritage Specialty Heritage Specialty Foods, LLC filed Chapter 11 petition (Bankr. D. Ore. Case No. 23-31368) on June 23, 2023, with $1 million to $10 million in both assets and liabilities. Amy Mitchell has been appointed as Subchapter V trustee. Judge Peter C. Mckittrick oversees the case. The Debtor tapped Stephen A. Raher, Esq., at Leonard Law Group, LLC as legal counsel and Clyde A. Hamstreet & Associates, LLC as financial advisor. HERTZ CORPORATION: Fitch Affirms LongTerm IDR at B, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of The Hertz Corporation's (Hertz) at 'B'. The Rating Outlook is Stable. Fitch has also affirmed Hertz's senior secured term loan and senior secured revolving credit facility at 'BB'/'RR1' and senior unsecured notes at 'B'/'RR4'. The rating actions have been taken as part of a periodic peer review of North American fleet management companies, which is comprised of five publicly rated firms. KEY RATING DRIVERS The rating affirmation reflects Hertz's established market position and well-recognized global franchise within the car rental industry, sound operating performance of late driven by still favorable industry dynamics, including strong travel demand, still solid used car prices underpinning vehicle disposal gains, improved fleet management practices and an adequate liquidity profile. The ratings are constrained by the business model's sensitivity to global travel volumes, vehicle supply-demand dynamics, and elevated interest rates, which expose the company to heightened residual value (RV) risk. Hertz's ratings are also constrained by expected earnings variability across market cycles which can have a meaningful impact on cash flow leverage metrics, the continued reliance on secured, wholesale funding sources and relatively high funding costs. Hertz is one of the largest global vehicle rental companies with operations in North America, Europe, the Middle East, and Africa. The company is among the top three largest car rental firms in the U.S., with recognized brands such as Hertz, Dollar, and Thrifty. Fitch believes Hertz's established franchise with a global footprint, continued investment in technology and strategic partnerships, and its experienced management team enable the company to compete effectively. As of June 30, 2023, Hertz operated approximately 560,000 rental vehicles in over 11,000 locations globally, with roughly 80% in the Americas segment. Hertz's strategic initiatives include growing the ridesharing business and electric vehicle (EV) fleet, diversifying vehicle disposition channels, and modernizing its fleet management platform via continued technology investments. Although these initiatives could improve the business profile and drive long-term profitable growth over time, Fitch believes Hertz's strategy remains subject to execution risk in the near term against a weakening economic environment. Hertz is exposed to heightened RV risk as over 90% of its fleet was risk vehicles at 2Q23. Fitch believes recent asset performance has been supported by still strong used vehicle prices and the continued efforts to diversify disposition into retail channels, and these factors have significantly reduced fleet costs and resulted in solid gains on vehicle sales. Still, Fitch expects used vehicle prices to decline over the medium term, as elevated interest rates pressure disposable income levels and lead to lower demand for automotive loans and travel-related discretionary spending. Fitch assesses Hertz's profitability on an adjusted corporate EBITDA to total revenue basis. The adjusted corporate EBITDA margin was 16.8% for the trailing twelve months (TTM) ended 2Q23 and averaged 11% between 2019-2022. The four-year average corresponds to the lower end of Fitch's 'bb' category benchmark range of 10%-20%. Despite solid profitability of late, Hertz remains susceptible to earnings variability over time and is expected to face lower vehicle gains and funding cost headwinds in the near term. Fitch expects profitability to decline over the Outlook horizon but should remain higher than the historical averages prior to the pandemic. Fitch calculates Hertz's cash flow leverage based on corporate debt plus operating lease liabilities to adjusted corporate EBITDA. On this basis, Hertz's leverage was 3.7x for the TTM ended 2Q23 (up from 2.1x at YE 2022), which corresponds to Fitch's 'b' category benchmark range of 3.5x-5x. Hertz's corporate leverage, net of cash, was 1.7x over the same period, which is modestly above the company's long-term target of 1.5x. While Fitch recognizes the significant improvement in leverage as compared to before the business restructuring in 2020, leverage has benefited from record EBITDA rather than debt reduction. A sustained increase in Fitch-calculated corporate leverage above 4x could result in negative rating pressure. Interest coverage (adjusted corporate EDITDA/corporate interest expense) was 7.7x for the TTM ended 2Q23, compared with an average of 5.2x between 2019-2022, which corresponds to Fitch's 'bb' category benchmark range of 3x-6x. Interest coverage is expected to weaken as earnings moderate and borrowing costs increase as higher interest rates impact funding costs. As of June 30, 2023, Hertz had approximately $1.4 billion in corporate liquidity, which was comprised of $0.7 billion in unrestricted cash and $0.7 billion in borrowing capacity under its senior secured revolving credit facility. Fitch believes Hertz's liquidity profile is adequate and expects corporate liquidity to improve in the near term as the firm de-fleets in the second half of 2023. The company has no material corporate debt maturities until 2026. Hertz remains heavily reliant on secured, wholesale funding sources, with just 9% of its outstanding debt unsecured as of 2Q23. Fitch would view an increase in the unsecured funding mix favorably as it would enhance the company's financial flexibility, particularly in times of stress. The Stable Outlook reflects Fitch's expectations that Hertz will maintain its competitive position within the car rental market, continue to demonstrate solid residual risk management, sustain Fitch-calculated leverage at-or-below 4x, refinance maturing debt on economical terms, and maintain an adequate liquidity profile. The Stable Outlook incorporates Fitch's expectations for normalization in earnings as used vehicle gains return to historical levels. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sustained increase in Fitch-calculated leverage above 4x; - Inability to maintain sufficient liquidity to meet operational needs and service debt; - Inability to maintain economic access to the capital markets through market cycles; - Failure to maintain corporate interest coverage at-or-above 3x on a sustained basis; - Failure to execute on the stated strategies leading to a significant deterioration of vehicle economics and profitability; and/or - A degradation in the company's competitive position including inability to adapt to changes in the mobility industry, a significant weakening in franchise strength particularly arising from a decline in customer loyalty and/or increased reputational risk associated with legal disputes, among other non-financial risks. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A sustained maintenance in operating performance resulting from disciplined fleet management and continued optimization of vehicle economics; - An ability to sustain Fitch-calculated leverage below 2x; - An ability to maintain corporate interest coverage meaningfully above 6x on a sustained basis; and/or - Maintenance of an adequate liquidity profile to support capital expenditures and debt servicing needs. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The senior secured debt rating is three notches above the Long-Term IDR and reflects Fitch's view of outstanding recovery prospects under a stress scenario given the available collateral. The senior unsecured debt rating is equalized with the Long-Term IDR, reflecting average recovery prospects under a stress scenario, given the structural subordination resulting from the heavily secured funding mix. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The senior secured debt and senior unsecured debt ratings are primarily sensitive to changes in Hertz's Long-Term IDR and, secondarily, to the relative recovery prospects of the instruments. ADJUSTMENTS The Standalone Credit Profile has been assigned below the implied Standalone Credit Profile due to the following adjustment reason(s): Weakest Link - Capitalisation & Leverage (negative), Weakest Link - Funding, Liquidity & Coverage (negative). The Sector Risk Operating Environment score has been assigned below the implied score due to the following adjustment reason(s): Business model (negative), Regulatory and legal framework (negative). The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reason(s): Earnings stability (negative), Historical and future metrics (negative). The Funding, Liquidity & Coverage score has been assigned below the implied score due to the following adjustment reason(s): Historical and future metrics (negative), Funding flexibility (negative). ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Hertz Corporation (The) LT IDR B Affirmed B senior unsecured LT B Affirmed RR4 B senior secured LT BB Affirmed RR1 BB INDUS ARCHITECTS: Wins Cash Collateral Access on Final Basis ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of New York authorized Indus Architects, PLLC to use cash collateral on a final basis in accordance with the budget, with a 10% variance. TD Bank, N.A. holds a validly perfected security interest on all the Debtor's assets. TD Bank provided a line of credit secured by a blanket lien on all of the Debtor's assets. As of Petition Date, the outstanding balance owed to TD Bank is $57,324. JP Morgan Chase Bank, N.A. holds a validly perfected security interest on all the Debtor's assets. Chase provided a line of credit secured by a blanket lien on all of the Debtor's assets. As of Petition Date, the outstanding balance owed to TD Bank is $161,852. As adequate protection, the Prepetition Lenders are granted valid, binding, continuing, enforceable, non-avoidable and fully perfected, first-priority postpetition security interests in and liens on all of the Debtor's rights in tangible and intangible assets. The TD will receive a payment of $1,805 per month. Chase will receive a payment of $3,500 per month, consisting of interest at prime rate plus 1.75% per annum and the balance to be applied to principal. Each additional monthly payment will be made no later the 16th day of each of subsequent month. The Prepetition Liens and Adequate Protection Liens will be subject and subordinate only to: (a) any quarterly or other fees payable to the U.S. Trustee pursuant to, inter alia, 28 U.S.C. section 1930(a) or interest, if any, pursuant to 31 U.S.C. section 3717; and (b) any costs and fees of a chapter 7 trustee should one be appointed if the Chapter 11 Case is converted in an amount not to exceed the amount of $10,000. These events constitute a "Termination Event": (a) Entry of an order by the Bankruptcy Court converting or dismissing the Chapter 11 Case; (b) Entry of an order by the Bankruptcy Court appointing a chapter 11 trustee in the Chapter 11 Case; (c) The failure of the Debtor to perform or comply in any material respect with any term or provision of the Interim Order; (d) Entry of an order that stays, reverses, vacates, amends, or rescinds any of the terms of the Interim Order, or order approving the Interim Order, without the consent of the Prepetition Lender; and (e) The Debtor ceases operations without the prior written consent of the Prepetition Lender, except to the extent contemplated by the Budget. A copy of the order is available at https://urlcurt.com/u?l=ppaK6i from PacerMonitor.com. About Indus Architects, PLLC Indus Architects, PLLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-71961) on June 1, 2023. In the petition signed by Sharon Lobo, managing member, the Debtor disclosed up to $1 million in both assets and liabilities. Judge Robert E. Grossman oversees the case. Heath S. Berger, Esq., at Berger, Fischoff, Shumer, Wexler & Goodman, LLP, represents the Debtor as legal counsel. INNOVATION MONTESSORI: Moody's Lowers Rating on 2022 Bonds to Ba3 ----------------------------------------------------------------- Moody's Investors Service has downgraded the rating on the Florida Development Finance Corporation Educational Facilities Revenue Bonds 2022 (Innovation Montessori Inc. Projects) outstanding revenue bonds to Ba3 from Ba2. Concurrently. the outlook has been revised to negative from stable. RATINGS RATIONALE The downgrade to Ba3 reflects the school's notably weak liquidity, which is likely to decline below the fiscal 2023 covenant requirement of 30 days cash on hand, and is well below prior expectations. While this would not constitute an event of default, it may require, at the request of a majority of bondholders, the school to hire a consultant and follow their recommendations. The covenant increases to 45 days cash on hand at June 30, 2024, and further violation is expected absent a significant change in operating performance. Initial projections, provided in 2022, reflected a substantial cash increase post-issuance, in part due to Elementary and Secondary School Emergency Relief (ESSR) funds. However, management has reported a delay in ESSR funds from the Orange County School (OCS) district (Aa1/Stable), which if had been received, would have enabled the school to meet the liquidity covenant. Additionally, higher than anticipated operating expenses as the school opened its new high school, and also a modest shortfall in high school enrollment in fiscal 2023 which drove narrower margins than anticipated and providing limited headroom to the coverage covenant. Governance is a key credit driver of this rating action, as the school recently replaced its chief executive officer and chief business officer, with prior management having been unable to control expenses and meet budget targets. While the school has a charter contract that extends to 2031, the recent challenges and changes may result in additional scrutiny of school operations and performance. Favorably, enrollment for fiscal 2024 is stronger than budgeted and in line with projections. The waitlist remains solid, especially for elementary grades. Renovations and upgrades to school facilities, while slightly delayed, have been within budget; the high school facility was completed on time last year. The school also benefits, like other charters in Florida, from an increase in local capital outlay funds due to a change in state legislation, which should help to offset growing debt service expenses over the next several years. Likewise, Florida charter schools continue to benefit from a positive state funding environment. However, both capital outlay and operating funds are tied to per pupil enrollment. RATING OUTLOOK The negative outlook for the school indicates the difficulties it will encounter during the next year to enhance profit margins and meet liquidity and coverage covenants by fiscal year 2024, particularly given a rising debt service schedule. Additionally, the outlook takes into account other factors such as the potential risks associated with a new management team, and the ongoing possibility of lower-than-expected enrollment, especially at the high school. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -- Significantly improved liquidity providing greater cushion for operations -- Sustained strengthening of operating performance and debt service coverage -- Achievement of full enrollment of the high school, evidenced by ability to meet enrollment targets with a growing waitlist and improved retention FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -- Any further weakening of liquidity or debt service coverage levels -- Inability to meet enrollment targets or other evidence of deterioration of the school's competitive profile -- Additional debt issuance without strengthened reserves or operating cash flow LEGAL SECURITY The issuer is Florida Development Finance Corporation and the borrower is Innovation Montessori, Inc, an obligated group per the loan agreement. The obligated members, the schools, include Innovation Montessori Inc the parent of Innovation Montessori Ocoee, Innovation Montessori Ocoee High School, Innovation Montessori Ocoee Casa. The schools obligation is joint and several, absolute and unconditional and irrevocable pledge. The schools pledge includes all adjusted revenues. Adjusted revenues include all operating and nonoperating revenues, receipts, fees, rentals, proceeds, non-restricted donations and school board payments. The school board payments including capital outlay funds are the primary source of revenue and are the principal and expected source of repayment of the bonds. The schools receives monthly disbursements from the school board and remits this to the trustee on a monthly basis. Following the flow of funds deposit in debt service reserve fund the schools are paid for ordinary and necessary expenses of operation for the following month. The bonds are additionally secured by a mortgage on, and security interest in the borrowers facilities. As of June 1, 2022 the obligated group agrees to have its books audited with 180 days of fiscal year end. Starting with fiscal year June 1, 2023 bond covenants include a minimum of 1.1x annual debt service coverage disclosed within three weeks of completion of the audited financial statements. The debt service ratio is available revenues of the obligated group divided by annual debt service of the obligated group. Available revenues include adjusted revenues plus gifts, grants, and donations which can be used to pay operating expenses. The liquidity ratio starts on June 30, 2023, at an amount not less than thirty (30) Days Cash on Hand, and on June 30, 2024, not less than forty-five (45) Days Cash on Hand. for Bondholders additionally have a fully funded debt service reserve funded with cash at maximum annual debt service on the bonds. The school has no plans to issue additional debt at this time, though bondholders benefit from an Additional Bonds Test based both on projected coverage and historical coverage. To issue additional bonds the projected net revenue available for debt service in the first fiscal year immediately following completion of the newly financed project must equal at least 1.2x on all debt or the historical net revenue available for debt service in the most recent audited fiscal year must equal at least 1.1x MADS on all debt. PROFILE Innovation Montessori Inc is the parent organization under which three schools operate. The three schools include a private pre-Kindergarten- Innovation Montessori Ocoee- Casa, the charter Innovation Montessori Ocoee serving kindergarten through grade 8, and the charter Innovation Montessori Ocoee High school serving grade 9 through grade 12. The schools served approximately 965 students in fiscal 2023, slightly below initial estimates. Fiscal 2024 is budgeted for 1,018 students and current expected enrollment is 1,039. The schools expect to reach maximum enrollment of 1,088 by fall 2025 as the high school becomes fully enrolled. METHODOLOGY The principal methodology used in this rating was US Charter Schools published in September 2016. ITTELLA INTERNATIONAL: Gets OK to Tap Grant Thornton as Accountant ------------------------------------------------------------------ Ittella International, LLC and affiliates received approval from the U.S. Bankruptcy Court for the Central District of California to hire Grant Thornton, LLP as their accountant. Grant Thornton will prepare the Debtors' tax returns, which include all federal returns and state returns. The hourly billing rates for these professionals are as follows: Alan Herrmann $900 per hour Anthony Bonaguro $900 per hour Mike Caruso $840 per hour Matt Lebs $760 per hour Evan Miller $760 per hour Andy Dunable $540 per hour Koal Artzer $540 per hour Kayli Arii $330 per hour Alan Herrmann, CPA, a tax partner at Grant Thornton, 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: Alan Herrmann, CPA Grant Thornton, LLP 4695 MacArthur Court, Suite 1600 Newport Beach, CA 92660 Phone: +1 949 553 1600 Fax: +1 949 553 0168 Email: alan.herrmann@us.gt.com About Ittella International Ittella International, LLC is a supplier of plant-based products based in Paramount, Calif. Ittella International and seven affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Lead Case No. 23-14154) on July 2, 2023. In the petition signed by its chief executive officer, Salvatore Galletti, Ittella International reported $10 million to $50 million in both assets and liabilities. Judge Sandra R. Klein oversees the cases. The Debtors tapped David L. Neale, Esq., at Levene, Neale, Bender, Yoo and Golubchik, LLP as bankruptcy counsel; Rutan and Tucker, LLP as their special corporate and SEC counsel; SC&H Group, Inc. as investment banker; and Grant Thornton, LLP as accountant. The U.S. Trustee for Region 16 appointed two separate committees to represent unsecured creditors of Ittella International and its affiliate, New Mexico Food Distributors, Inc. ITTELLA INTERNATIONAL: Taps Rutan and Tucker as Special Counsel --------------------------------------------------------------- Ittella International, LLC and affiliates received approval from the U.S. Bankruptcy Court for the Central District of California to hire Rutan and Tucker, LLP as their special corporate and SEC counsel. The Debtors require legal advice on general corporate and tax matters, securities law matters, labor and employment issues, business litigation matters, and financing transactions. The Debtors also need legal assistance in collection actions against certain distributors and others who are indebted to them. The billing rates for these attorneys are as follows: Gregg Amber, Partner $850 per hour Garett Sleichter, Partner $810 per hour Steve Goon, Partner $750 per hour Ellis Wasson, Senior Counsel $800 per hour Richard de Lama, Associate $400 per hour Gregg Amber, Esq., a partner at Rutan & Tucker, disclosed in the court filings that his firm neither holds nor represents any interest materially adverse to the Debtors or their estates. The firm can be reached through: Gregg Amber, Esq. Rutan and Tucker, LLP 18575 Jamboree Road, 9th Floor Irvine, CA 92612 Tel: 714-641-5100 Fax: 714-546-9035 Email: gamber@rutan.com About Ittella International Ittella International, LLC is a supplier of plant-based products based in Paramount, Calif. Ittella International and seven affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Lead Case No. 23-14154) on July 2, 2023. In the petition signed by its chief executive officer, Salvatore Galletti, Ittella International reported $10 million to $50 million in both assets and liabilities. Judge Sandra R. Klein oversees the cases. The Debtors tapped David L. Neale, Esq., at Levene, Neale, Bender, Yoo and Golubchik, LLP as bankruptcy counsel; Rutan and Tucker, LLP as their special corporate and SEC counsel; SC&H Group, Inc. as investment banker; and Grant Thornton, LLP as accountant. The U.S. Trustee for Region 16 appointed two separate committees to represent unsecured creditors of Ittella International and its affiliate, New Mexico Food Distributors, Inc. JADI COMMUNITY: Seeks to Hire Ure Law Firm as Bankruptcy Counsel ---------------------------------------------------------------- Jadi, Community Resource Development, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Ure Law Firm. The Debtor requires legal counsel to: (a) give advice regarding matters of bankruptcy law and concerning the requirement of the Bankruptcy Code, and Bankruptcy Rules relating to the administration of the Debtor's Chapter 11 case, and the operation of the Debtor's estate; (b) represent the Debtor in proceedings and hearings in the court involving matters of bankruptcy law; (c) assist in compliance with the requirements of the Office of the United States Trustee; (d) provide the Debtor with legal advice and assistance with respect to its powers and duties in the continued operation of its business and management of property of the estate; (e) assist the Debtor in the administration of the estate's assets and liabilities; (f) prepare legal documents; (g) assist in the collection of all accounts receivable and other claims that the Debtor may have and resolve claims against the Debtor's estate; (h) provide advice concerning the claims of creditors and the prosecution and defense of all actions; and (i) prepare, negotiate and seek confirmation of a plan of reorganization. The firm will be paid at these rates: Thomas B. Ure $450 per hour Law clerks/Paralegals $195 per hour In addition, Ure Law Firm will receive reimbursement for out-of-pocket expenses incurred. The firm received $9,738 in fees and costs prior to the Debtor's Chapter 11 filing. Thomas Ure, founding partner of Ure Law Firm, disclosed in a court filing that his firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. Ure Law Firm can be reached at: Thomas B. Ure, Esq. Ure Law Firm 800 West 6 Street, Suite 940 Los Angeles, CA 90017 Tel: (213) 202-6070 Fax: (213) 202-6075 Email: tom@urelawfirm.com About Jadi, Community Resource Development Jadi, Community Resource Development, LLC, a company in San Bernardino, Calif., filed its voluntary petition for Chapter 11 protection (Bankr. C.D. Calif. Case No. 23-13225) on July 23, 2023, with $2,257,149 in assets and $1,901,925 in liabilities. A Majadi, managing member, signed the petition. Judge Magdalena Reyes Bordeaux oversees the case. Thomas B. Ure, Esq., at Ure Law Firm serves as the Debtor's bankruptcy counsel. JOHNSON & JOHNSON: Latest Bankruptcy Attempt Fails -------------------------------------------------- Legal-Bay, The Pre Settlement Funding Company, on Aug. 23 disclosed that Johnson & Johnson's efforts to put a hold on the numerous lawsuits they are facing by filing bankruptcy have failed. Judge Kaplan ruled that the filing did not meet the requirements to qualify as a "good-faith" bankruptcy attempt, and was merely a way to seek protections against the billions of dollars the pharmaceutical giant will be expected to pay out in damages. The Johnson & Johnson cases are on track to rank among the largest mass tort settlements in U.S. history. Over 60,000 lawsuits have been brought by plaintiffs who allege that their talc-based baby powder is directly responsible for causing their ovarian cancer and/or mesothelioma, and point out that the company has long been aware of the health risks associated with their product. Several studies dating back to the 1970s concluded that talc particles increase a person's chances of developing serious medical issues, and evidence suggests that J&J has been intentionally concealing the results for decades. However, despite their $8.9 billion settlement offer, J&J continues to stand by the safety of their product. Chris Janish, CEO of Legal-Bay, commented, "The Judge's ruling in respect to the bankruptcy strategy by J&J seems to be fair for the plaintiffs. However, now the parties need to come back to the drawing board to work on a realistic settlement framework. With the quantity of claims and seriousness of the injuries there is likely to be a large gap--which will only drag things well into 2024. We are hopeful that at some point, both sides will come to a reasonable resolution so the people suffering can receive some funds in near future." If you require an immediate cash advance lawsuit loan from your anticipated Johnson & Johnson talc baby powder lawsuit settlement, please visit the company's website HERE or call 877.571.0405 Legal-Bay's sources close to the litigation believe that the parties will try to reach a global agreement by year's end. However, payments could be delayed for another two years due to the sheer number of claims to process. Legal-Bay is one of the few legal funding companies who are providing some financial relief to victims and their families with risk-free, non-recourse cash advance settlement loans. Legal-Bay is one of the best lawsuit loan companies when it comes to these types of litigations, and is currently the #1 talc funding company in the loan settlement industry. Legal-Bay is a leading lawsuit funding provider and is able to offer lawsuit loan funds for all other types of cases including personal injury, slips and falls, car bus or truck accidents, boating accidents, construction site injuries, medical malpractice, dog bites, police brutality, wrongful imprisonment, sexual abuse or assault, discrimination or harassment in the workplace, workers comp, and many more. Their loan for settlement programs are designed to provide immediate cash in advance of a plaintiff's anticipated monetary award. The non-recourse law suit loans -- sometimes referred to as loans for lawsuit or loans on settlement -- are risk-free, as the money doesn't need to be repaid should the recipient lose their case. Therefore, the lawsuit loans aren't really a loan, but rather a cash settlement advance. K3B ENTERPRISES: Taps RHM Law as Bankruptcy Counsel --------------------------------------------------- K3B Enterprises, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ RHM Law LLP as bankruptcy counsel. The firm will provide these services: a. advice and assistance regarding compliance with the requirements of the United States Trustee; b. advice regarding matters of bankruptcy law, including the rights and remedies of the Debtor with respect to its assets and the claims of creditors; c. advice regarding cash collateral matters; d. examinations of witnesses, claimants or adverse parties and the preparation of reports, accounts and pleadings; e. advice concerning the requirements of the Bankruptcy Code and applicable rules; f. negotiation, formulation and implementation of a Chapter 11 plan of reorganization; and g. court appearances. The firm will be paid at these rates: Partners $575 to $650 per hour Associates $400 to $450 per hour Paralegals $135 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. The retainer fee is $16,738. Roksana Moradi-Brovia, Esq., a partner at RHM Law, disclosed in a court filing that the firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Roksana D. Moradi-Brovia, Esq. Matthew D. Resnik, Esq. RHM Law, LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Tel: (818) 285-0100 Fax: (818) 855-7013 Email: roksana@RHMFirm.com matt@RHMFirm.com About K3b Enterprises K3B Enterprises, LLC, a company in Encino, Calif., filed its voluntary petition for Chapter 11 protection (Bankr. C.D. Calif. Case No. 23-10966) on July 10, 2023, with $10 million to $50 million in assets and $1 million to $10 million in liabilities. Kaysan Ghasseminejad, managing member, signed the petition. Judge Victoria S. Kaufman oversees the case. RHM Law, LLP serves as the Debtor's bankruptcy counsel. KAI 786: Seeks Cash Collateral Access ------------------------------------- KAI 786, LLC asks the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the immediate use of the cash collateral to fund operational and administrative expenses. As of the Petition Date, the creditors holding security interests in the assets of the Debtor that constitute cash collateral include: a. Federal Home Loan Mortgage Corporation holding a secured claim in the approximate amount of $2.2 million, plus fees and costs; and b. San Antonio Water System holding a secured claim in the approximate amount of 104,429. The Debtor's other unsecured debt is estimated to be approximately $21,468. The Properties are valued at $3.760 million by the Bexar County Appraisal District. The Debtor believes there is an equity cushion of at least $1 million in the Properties. The Congress chartered the Secured Lender to facilitate the nationwide secondary residential mortgage market. It also chartered the Secured Lender to facilitate the nationwide secondary residential mortgage market. The Debtor's Properties are encumbered by a Mortgage Deed of Trust, Assignment of Rents and Security Agreement and Fixture Filing to secure repayment of a Multifamily Note dated February 13, 2019, in the amount of $2.4 million by the Debtor in favor of the Secured Lender. Prior to the Petition Date, the Note and Deed of Trust, together with all other accompanying loan documents, was assigned to the Secured Lender. On June 12, 2023, the Secured Lender sent the Debtor a letter notifying the Debtor that the maturity date of the Note had been accelerated making all sums secured by the security instrument immediately due and payable as a consequence of the Debtor's default on the Note. The Deed of Trust granted a lien and a security interest in the Debtor's assets. The Debtor requires the use of the cash collateral to continue its business operations uninterrupted, so as to avoid immediate and irreparable harm to the Debtor. The Debtor intends to use the cash collateral to pay the Secured Lender currently due payments of principal, interest, escrowed property taxes, and insurance, if any, to pay service providers to make apartments located on the Real Property ready to rent, and to make "Priority A" repairs and improvements to the Property identified by the Secured Lender its inspection conducted on July 15, 2023. Each of the Secured Creditors will be granted a replacement lien in all post-petition property of the Debtor, of the same nature, to the same extent, and with the same priority as the Secured Creditor's lien existing as of the Petition Date. The Debtor proposes to make the following payments and undertake the following obligations in addition to the operating expenses set forth in the attached Budget: i. will pay to the Secured Lender: a. on or before August [__], 2023, a regularly scheduled payment of $24,050; and b. thereafter will continue paying its regularly scheduled payments due to the Secured Lender or its servicer in the amount of $24,050 as they become due thereafter beginning September 1, 2023, ii. will provide to the Secured Lender proof of payment of, and maintain continuing, uninterrupted coverage in favor of the Secured Lender as required under the Loan Documents, including the following insurance policies or substantially identical policies, and with the same coverage limits as: a. that Commercial General Liability policy evidenced by the Accord Insurance Certificate of Liability Insurance issued 8/4/2023 with respect to Policy Number IMA408028 listing the Secured Lender as Certificate Holder; and b. that Umbrella Liability and Excess Liability policy evidenced by the Accord Insurance Certificate of Liability Insurance issued 3/4/2023 with respect to Policy Number XS23029139 listing the Secured Lender as Certificate Holder; and iii. will pay to SAWS on or before August [__], 2023, or in addition to its next regularly scheduled, due and payable payment to SAWS: a. an additional deposit an adequate assurance (under 11 U.S.C. section 366) deposit in the amount of $250 for the Debtor's SAWS account for the water meter providing service to the parcel of Real Property located at 121 Victor Street; b. an additional deposit an adequate assurance deposit in the amount of $500 for the Debtor's SAWS account for the water meter providing service to the parcel of Real Property located at 208 Victor Street; c. an additional deposit an adequate assurance deposit in the amount of $500 for the Debtor's SAWS account for the water meter providing service to the parcel of Real Property located at 209 Victor Street; and d. will pay all post-petition SAWS invoices in a timely manner as defined by each invoice. A copy of the Debtor's motion and budget is available at https://urlcurt.com/u?l=zxuPRz from PacerMonitor.com. The Debtor projects $89,007 in total sources and $89,007 in total uses. About Kai 786, LLC Kai 786, LLC owns three apartment complexes in San Antonio, TX valued at $3.76 million. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 23-51004) on July 31, 2023. In the petition signed by Saajedul Kaiyom, managing member, the Debtor disclosed $3,787,730 up to total assets and $2,375,156 in total liabilities. Judge Michael M. Parker oversees the case. Paul Steven Hacker, Esq., at Hacker Law Firm, PLLC, represents the Debtor as legal counsel. KBB INC: Fitch Assigns First Time BB+ LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned KBR, Inc. (KBR) a first-time 'BB+' Long-Term Issuer Default Rating (IDR). Fitch has also assigned first-time 'BBB-/'RR1' ratings to KBR's senior secured Revolver, Term Loan A, and Term Loan B, as well as 'BB+'/'RR4' ratings to the senior unsecured bonds and convertible bonds. The Rating Outlook is Stable. KBR's Long-Term IDR is supported by the company's reshaped portfolio, following its exit from the higher-risk energy-based EPC services, resulting in a more stable operating profile more consistent with the 'BBB' category. The company's credit profile is also bolstered by its multi-year backlog, improving FCF margins toward mid-single digits, and exposure to growth areas of the defense budget and sustainability trends. The 'BB+' rating is constrained by KBR's current financial policy and capital deployment strategy, which could include debt-funded M&A as a focus area. Fitch projects EBITDA leverage could fluctuate between 2.5x-4.0x depending upon the pace and magnitude of acquisitions and debt repayment. Risks to the credit profile include poorly executed M&A or M&A that weakens the company's cash flow risk profile, increased shareholder-focused activity, cost overruns on its fixed and hybrid price contracts, contract losses and any major shifts in defense budget priorities and spending in the U.S. and other allied national government customers. KEY RATING DRIVERS Leverage Improving; Fluctuation Expected: Fitch views KBR's long-term leverage metrics to be in line with the 'BB+' rating level. The agency expects leverage to improve toward 2.5x over the forecasted horizon and fluctuate somewhere between 2.5x and 4.0x, depending on the company's pace and magnitude of acquisitions, as well as debt repayment. Fitch assumes the company will refinance all upcoming maturities in the rating case. Improving Profitability: KBR generates EBITDA margins that are in line with Government Services (GS) peers and 'BB' rating category, with FCF margins improving toward GS peer levels. While KBR's profitability metrics are weaker relative to sustainable energy peers, the company's margin profile is anticipated to have greater stability. Fitch believes KBR will operate with high-single-digit to low-double digit EBITDA margins over the next few years, with incremental expansion supported by organic reinvestment, economies of scale, and improved product mix. The agency expects the company's FCF margins to improve toward the low to mid-single-digits over the forecast, as its FCF profile becomes more resilient following restructuring initiatives. Long-Term Contracts; Backlog Support Revenue Visibility: KBR has a higher degree of revenue visibility, which supports the 'BB+' rating. The long-term nature and high quality of KBR's contracts, with approximately 80% of revenues being tied to governments, enhances revenue predictability and the stability of cash flows. The company's revenue visibility is also supported by its low recompete risk and strong backlog ($16.9 billion), as evidenced by book-to-bill ratio of greater than 1.0x for the past few quarters, which is strengthened by the HomeSafe contract that will be implemented in 2024. KBR differentiates itself from competitors due to its higher degree of diversification of products and customers, as well as the greater proportion (>45%) of cost-reimbursable contracts compared to its government services peers. This provides some stability to the company's overall profile, while the potential of some indefinite delivery, indefinite quantity (IDIQ) contracts, such as LOGCAP V, leading to additional upside. Flexible Capital Deployment Strategy: Fitch believes KBR is well-positioned to fund growth and carry out its capital deployment strategy, backed by its FCF profile and financial flexibility. Fitch believes the company will remain opportunistic in their M&A strategy, focusing on complimentary and accretive targets particularly within the Sustainable Technology Solutions (STS) segment. KBR has a track record of successfully integrating acquisitions, which assists in mitigating inherent integration risk associated with M&A. Stabilizing Portfolio Reshaping: Fitch views the company's exit from the higher-risk, energy-based EPC services as a positive shift in its cash flow risk profile over the past few years. KBR's redefined strategic position situates the company well for growth over the long term with increased operational stability and lower cash flow risk. KBR benefits from balancing the stable operating profile of its GS segment, which has a higher degree of cash flow visibility, with the higher margin and higher growth profile of its STS business. Defense Budgets; Industry Tailwinds Aid Growth: KBR is poised to outpace the growth of the U.S. defense budget, as well as other international government budgets. KBR's defense programs include exposure to cyber, defense modernization, space, intelligence, sustainability, and directed energy. On the STS side, KBR offers technology and services in growing areas of sustainability, carbon emission management, plastics recycling, energy transition, and remote performance monitoring. KBR's management has strategically aligned its offerings opposite these programs over the last several years. Technology advancements and digitalization should result in many programs becoming more interconnected, which could afford KBR opportunities and potential for synergies between offerings over time. Favorable Environmental Solutions Orientation: KBR has some technology, products, and solutions that are focused on environmental solutions. Fitch believes this could differentiate the company in the future, though immediate benefits in certain products are unlikely. The increasing emphasis by corporations and governments on new environmental regulations supports the trend of finding and offering greener solutions for such products and services within the STS segment. This would be a positive for KBR, if the company is able to remain at the forefront of these technologies and continue to receive new wins directly related to their environmentally friendly work. DERIVATION SUMMARY KBR's diverse set of offerings serving the government, commercial and industrial end-markets are somewhat unique relative to peers. KBR's closest peers operate mainly in the government IT contracting business and include Science Application International Corporation (SAIC) and Booz Allen Hamilton. Differentiators in KBR's business include its international unit and its STS segment. Total revenue tied to the U.S. government at KBR in 2022 was 61% compared to SAIC (98%), Booz Allen (97%). KBR's STS segment offers energy management, energy transition and consulting services that compete with some of the largest E&C companies in the world, such as AECOM and Fluor. However, KBR's exit from lump sum EPC contracts reduced its risk profile compared to these large E&Cs, making it less susceptible to construction risks, while its STS services provides it with margin upside. KBR, Booz Allen and SAIC are of similar size. KBR's free cash flow margins are currently lower compared to SAIC and Booz Allen, but are expected to improve toward Booz Allen over the forecast horizon. Additionally, leverage is roughly in line with Booz Allen, and slightly lower than SAIC. Operating EBITDA margins are in close proximity to SAIC and slightly below that of Booz Allen. KEY ASSUMPTIONS - Mid-single digit revenue growth in GS segment over the forecast, with incremental growth related to the implementation of the HomeSafe contract in 2024 and onwards; - High-single digit to low-teens revenue growth in STS segment over the forecast, supported by macro trends related to sustainable energy; - EBITDA margins in the high-single digit to low-double digit range over the forecast, supported by the STS segment comprising an increasing portion of earnings; - Elevated capex through 2024, related to the HomeSafe contract, normalizing in 2025 at around 0.3% of revenue; - Fitch believes the company will continue its acquisitive strategy, with acquisitions being largely funded with debt and predominantly focused on the STS business; - No material change in shareholder returns. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Demonstrated commitment to financial policy supporting EBITDA leverage sustained below 3.0x; - Continued execution of M&A strategy that strengthens the operational and cash flow profile; - Maintenance of a strong backlog that supports revenue visibility. Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA leverage sustained above 3.5x; - A shift in the backlog trend, including consolidated book-to-bill approaching 1.0x; - A significant loss on one of its hybrid or fixed price contracts that impact the company's profitability, cash flow generation, or ability to win future contracts; - Government shutdown or budget cuts that impede the company's ability to realize backlog revenue, prospective revenue, or ability to bid or win new contracts. LIQUIDITY AND DEBT STRUCTURE Fitch expects KBR will maintain liquidity in excess of $750 million, which is likely to consists of a revolving credit facility of at least $500 million and cash balances of greater than $250 million. Liquidity and financial flexibility are further bolstered by the company's cash generation. Fitch expects the company to generate post-divided FCF of greater than $200 million per year beginning in 2024. The company's capital structure is comprised of a senior unsecured revolving credit facility, term loan A, term loan B, convertible senior unsecured notes and senior unsecured notes. ISSUER PROFILE KBR, Inc. (KBR) is a science, technology and engineering solutions provider to governments, integrated energy and industrial companies on a global scale. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- KBR, Inc. LT IDR BB+ New Rating senior unsecured LT BB+ New Rating RR4 senior secured LT BBB- New Rating RR1 LABRUZZO WOODLANDS: Taps Thompson Law Group as Bankruptcy Counsel ----------------------------------------------------------------- LaBruzzo Woodlands, LLC seeks approval the U.S. Bankruptcy Court for the Western District of Pennsylvania to hire Thompson Law Group, P.C. to handle its Chapter 11 case. Thompson Law Group will charge $350 per hour for attorney services and $90 per hour for paralegal services. In addition, the firm will seek reimbursement for expenses incurred. Prior to the petition date, the firm received a retainer of $5,000 from the Debtor. Brian Thompson, Esq., an attorney at Thompson Law Group, 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: Brian C. Thompson, Esq. Thompson Law Group, PC 125 Warrendale Bayne Road, Suite 200 Warrendale, PA 15086 Telephone: (724) 799-8404 Facsimile: (724) 799-8409 Email: bthompson@thompsonattorney.com About LaBruzzo Woodlands LaBruzzo Woodlands, LLC is engaged in activities related to real estate. This Meadville, Pa.-based company offers duplexes, tri-plexes apartments and houses as well as commercial spaces. LaBruzzo Woodlands sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Pa. Case No. 23-10389) on July 27, 2023, with up to $50,000 in assets and up to $10 million in liabilities. Joseph LaBruzzo, president, signed the petition. Brian C. Thompson, Esq., at Thompson Law Group, P.C., represents the Debtor as bankruptcy counsel. LAKEVILLE FARMS: Seeks Cash Collateral Access --------------------------------------------- Lakeville Farms LLC asks the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the use of cash collateral to fund debt service and related payments to the Secured Creditors with an interest in cash collateral, and to pay ordinary and necessary costs and expenses of operating the Debtor's business and preserving the value of the collateral and operating the Debtor's collateral in the amounts set forth in the Budget. Use of cash collateral is also needed to pay costs of the Debtor's professionals as may be approved by the Court. During the first three months of the Chapter 11 case, the Debtor projects that it will need to spend $151,500 and in the first 30 days $50,500 to avoid immediate and irreparable harm. Over the past three years, the Debtor embarked on the completion of a manufacturing facility. However, this process took much longer than anticipated which placed the Debtor in a precarious financial position. In order to maintain operations during the construction, the Debtor entered into various merchant capital advance loans, with extremely high interest rates. These financing agreements led to a liquidity crisis. The Debtor's manufacturing facility is complete and with that the profitability of the company is anticipated to dramatically increase. The Debtor has the ability to produce five times as much wood in the new manufacturing process with minimal increase in overhead. In order to drive up sales the Debtor has launched an Amazon Store. The Debtor is indebted to the following secured creditors and are secured by the following. However, the Debtor makes no admission and takes no position at this time regarding the validity, enforceability, priority, or perfection of any of the obligations, security interests, and liens that may be asserted: A. Greenstone Farm Credit Services-Secured lien on all assets of the Debtor. The approximate amount of the debt is $100,000. B. U.S. Small Business Administration- Secured lien on all assets of the Debtor in the approximate amount of $500,000. C. Trans Lease Inc.- Secured lien on 2020 Firewood Kiln valued at $25,000, 2021 Logging Trailer valued at $70,000, and lien on receivables. The approximate amount of the debt is $128,000 D. Secured Lender Solutions-Secured lien on all assets of the Debtor. E. UMB Bank NA-Secured lien on receivables. The approximate amount of the debt is $128,000. F. Northern Great Lakes lnitiatives- Secured lien on all assets. The approximate amount of the debt is $43,000 G. Metro Community Development- Secured lien on all assets. The approximate amount of the debt is $38,000 H. North Mill Credit Trust- Secured lien on 2020 Freightliner and 2014 Caterpillar and Telehandler liftts along with a lien on all cash and receivables. The approximate amount of the debt is $137,000 I. CIT/Citizens Bank- Secured lien on 2023 CAT 289 D3 valued at $115,000 racks, and splitter along with products and proceeds (receivables). The approximate amount of debt is $293,000. J. Forward Financing LLC- Secured lien on receivables. The approximate amount of the debt is $25,759 K. Everest Business Funding LLC- Secured lien on receivables. The approximate amount of the debt is $9,960 The use of cash collateral will be subject to a carve-out for the payment of (1) Unpaid professional fees, expenses, and disbursements in amounts not to exceed the line items allocated to each professional under the Budget. The Carve-Out will be segregated consistent with the Budget line items for professional fees, into a separate Debtor in Possession Account. The Professional Fee Account will The Debtor proposes to grant to Secured Creditors replacement liens and security interests on all further accounts receivable, cash and deposit accounts in the same priority, validity and extent that the Debtor's interest in the cash collateral existed as of the Petition Date. The replacement liens will be liens on the Debtor's assets which are created, acquired, or arise after the Petition- Date,- but limited to only those types and descriptions of collateral in which Secured Creditors held a prepetition lien or security interest. The replacement liens will have the same priority and validity Secured Creditors respective pre-petition security interests and liens. A copy of the motion is available at https://urlcurt.com/u?l=tpEGpL from PacerMonitor.com. About Lakeville Farms, LLC Lakeville Farms, LLC specializes in the manufacture and distribution of kiln dried cooking wood and firewood. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-47202) on August 17, 2023. In the petition signed by Todd Jagiello, member, the Debtor disclosed $538,000 in total assets and $1,893,064. Judge Thomas J. Tucker oversees the case. Aaron J. Scheinfield, Esq., at Goldstein Bershad & Fried PC, represents the Debtor as legal counsel. LUMEN TECHNOLOGIES: Moody's Cuts CFR to Caa1, Outlook Remains Neg. ------------------------------------------------------------------ Moody's Investors Service downgraded Lumen Technologies, Inc.'s corporate family rating to Caa1 from B2 and its probability of default rating to Caa1-PD from B2-PD. Moody's also downgraded the following: (i) Lumen's senior secured rating to Caa2 from B3 and its senior unsecured rating to Caa3 from Caa1, (ii) Level 3 Financing, Inc.'s (Level 3) senior secured rating to B1 from Ba2 and its senior unsecured rating to B3 from B1 and (iii) Qwest Corporation's senior unsecured rating to B3 from B1. The company's speculative grade liquidity rating remains at SGL-3 reflecting adequate liquidity. The rating outlook remains negative. The downgrades reflect the company's increasing financial risks and continued weak operating performance. In early 2025, Lumen will face around $1.8 billion of debt maturities and in 2027, the company will have an additional $9.4 billion of maturing debt. In addition, Lumen faces execution risks with continued operating and margin pressures, high capital intensity and negative free cash flow associated with the fiber buildout of its consumer footprint and renewed efforts to revitalize its enterprise business. Together these risks raise the possibility of distressed debt exchanges, especially given Lumen's weak equity valuation and low debt trading levels. Pro forma for the sale of its EMEA asset, Moody's projects total debt-to-EBITDA to be 4.2x by year end 2023 and 4.4x in 2024. Moody's also notes the recent news of Lumen's potential liabilities resulting from lead sheathed cables and that a significant percentage of its lenders hired financial and legal advisors. Downgrades: Issuer: Lumen Technologies, Inc. Corporate Family Rating, Downgraded to Caa1 from B2 Probability of Default Rating, Downgraded to Caa1-PD from B2-PD Backed Senior Secured Bank Credit Facility, Downgraded to Caa2 from B3 Senior Secured Regular Bond/Debenture, Downgraded to Caa2 from B3 Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 from Caa1 Issuer: Level 3 Financing, Inc. Senior Secured Bank Credit Facility, Downgraded to B1 from Ba2 Backed Senior Secured Regular Bond/Debenture, Downgraded to B1 from Ba2 Backed Senior Unsecured Regular Bond/Debenture, Downgraded to B3 from B1 Issuer: Qwest Corporation Senior Unsecured Regular Bond/Debenture, Downgraded to B3 from B1 Outlook Actions: Issuer: Lumen Technologies, Inc. Outlook, Remains Negative Issuer: Level 3 Financing, Inc. Outlook, Remains Negative Issuer: Qwest Corporation Outlook, Remains Negative RATINGS RATIONALE Lumen's Caa1 CFR reflects the company's elevated leverage, weak operating performance, execution risks and limited pricing power in a highly competitive marketplace. With limited visibility to improving operating and financial trends and high capital intensity to support retail subscriber growth and to upsell services to enterprise customers, Moody's expects Lumen to generate negative free cash flow of $1.1 billion in 2023 (which includes a $1.038 billion one time cash tax payments related to asset sales) and around $250 million in 2024. In addition, Moody's projects leverage to be at 4.2x in 2023 and 4.4x in 2024. Moody's believes that Lumen has a short execution runway to demonstrate its ability to slow the pace of negative operating trends and prove the long-term sustainability of its consumer and enterprise business model. At the same time the ratings take into consideration the possibility that the company can shore up its capital structure by divesting of certain assets, raising private capital and / or successfully refinancing some or all of its capital structure. Lumen has attractive assets for which a sale could generate significant amount of net cash proceeds to either reduce debt or re-invest in the business. The SGL-3 speculative grade liquidity rating reflects Moody's expects that Lumen will have adequate liquidity over the next 12 months, supported by $411 million in cash as of June 30, 2023, $2 billion in availability under the company's $2.2 billion senior secured revolving credit facility expiring in January 2025, and Moody's expectation of around $1.1 billion of negative free cash flow for full year 2023. With respect to the term loan A and term loan A-1 facilities ($1.3 billion outstanding as of December 31, 2022) and the revolver, the credit agreement requires Lumen to maintain a total leverage ratio of not more than 4.75x and a minimum consolidated interest coverage ratio of at least 2.0x. The term loan B facility is not subject to the leverage or interest coverage maintenance covenants. Moody's estimates Lumen will remain in compliance with the total leverage ratio and interest coverage ratio for the next 12 months, although the ratio could tighten in the future which could limit effective availability. The instrument ratings reflect both the probability of default of Lumen, as reflected in the Caa1-PD PDR, an average expected family recovery rate of 50% at default and the loss given default assessment of the debt instruments in the capital structure based on a priority of claims. Lumen's corporate structure includes two layers of debt (secured/unsecured) at the holding company (Lumen Technologies, Inc.) level and two main operating company credit pools (Qwest Corporation and Level 3 Parent, LLC) with multiple classes of debt within each. At the Lumen Technologies, Inc. holding company level, Moody's rates the company's senior secured credit facilities Caa2; these senior secured credit facilities include a revolver, term loan A, term loan A-1 and term loan B. Senior secured notes at this holding company level are also rated Caa2. The Caa2 rating reflects the senior position of these senior secured instruments ahead of Lumen's Caa3 rated unsecured debt. The senior secured credit facilities are guaranteed on a secured basis by Qwest Communications International, Inc., Qwest Services Corp., CenturyTel Holdings, Inc., and CenturyLink Communications, LLC. Qwest Capital Funding, Inc. is an unsecured debt guarantor. Moody's treats these credit facilities as subordinated to the debt of Qwest and Level 3 given the lack of operating subsidiary guarantees. The Caa3 senior unsecured rating reflects its junior position in the capital structure at the holding company level and the significant amount of senior debt, including as of June 30, 2023: $8.7 billion of debt at Lumen, $8.7 billion of debt at Level 3, $2.2 billion of debt at Qwest and $0.2 billion of (unrated) debt at Qwest Capital Funding, Inc. The senior unsecured debt of Qwest is rated B3 based on its structural seniority and the low leverage tolerance of Qwest's business and credit profile (Moody's adjusted debt leverage was 0.7x as of June 30, 2023 -- a financial maintenance covenant allows for 2.85x debt leverage at the entity). The senior unsecured notes of Level 3 are rated B3, reflecting their structural seniority to Level 3 Parent, LLC and junior position relative to Level 3's senior secured bank credit facility and senior secured notes which are rated B1. Leverage within the Level 3 Parent LLC credit pool was 3.8x (Moody's adjusted) as of June 30, 2023 -- a debt incurrence test allows for 5.75x debt leverage at the Level 3 entity. Lumen's CIS-5 Credit Impact Score indicates the rating is lower than it would have been if ESG risk exposures did not exist and the negative impact is more pronounced than issuers scored CIS-4. The score reflects the company's increasingly aggressive financial policy, elevated leverage, and limited financial flexibility as well as changing demographic and societal trends towards the use of wireline connectivity. The negative outlook reflects (i) Lumen's declining revenue and EBITDA trends with limited visibility as to when the corporate turnaround will yield meaningful financial / operating results and (ii) the company's limited financial flexibility with around $1.8 billion in debt maturing beginning in 2025 and an additional $9.4 billion in 2027. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be upgraded if Lumen achieves a long-term solution to its debt refinancing needs, the company's operating performance and liquidity improves, and free cash flow turns positive. The ratings could be downgraded if the company's liquidity position and operating performance or ability to service its debt deteriorates or Moody's view on the likelihood of a default or recovery for debtholders were to be lowered. Headquartered in Monroe, Louisiana, Lumen Technologies, Inc., is an integrated communications company that provides an array of communications services to large enterprise, mid-market enterprise, government and wholesale customers in its larger Business segment. The company's smaller Mass Markets segment primarily provides broadband services to its residential and small business customer base. The principal methodology used in these ratings was Telecommunications Service Providers published in September 2022. LYLA LEE: Gets OK to Hire Neeleman Law Group as Bankruptcy Counsel ------------------------------------------------------------------ Lyla Lee, LLC received approval from the U.S. Bankruptcy Court for the Western District of Washington to hire Neeleman Law Group as its legal counsel. The firm's services include: a. Assisting the Debtor in the investigation of the financial affairs of the estate; b. Providing legal assistance to the Debtor with respect to matters relating to its Chapter 11 case and creditor distribution; c. Preparing pleadings; and d. Other necessary legal services. The firm's hourly rates are as follows: Principals $550 per hour Associate $450 per hour Paralegal $175 per hour Neeleman received a retainer of $1,800, a portion of which was used to pay the filing fee in the amount of $1,738. Jennifer Neeleman, Esq., a principal at Neeleman Law Group, disclosed in a court filing that he is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jennifer L. Neeleman, Esq. Neeleman Law Group, P.C. 1403 8th Street Marysville, WA 98270 Phone: 425.212.4800 Fax: 425.212.4802 Email: courtmail@expresslaw.com About Lyla Lee Lyla Lee, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 23-11126) on June 16, 2023, with as much as $50,000 in assets and $50,001 to $100,000 in liabilities. Judge Timothy W. Dore oversees the case. The Debtor is represented by Thomas D. Neeleman, Esq., at Neeleman Law Group, P.C. LYM DEVELOPMENT: Court OKs Cash Collateral Access Thru Sept 6 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized LYM Development, LLC to use cash collateral on an interim basis in accordance with the budget, through September 6, 2023. The continued use of cash collateral by the Debtor is necessary, essential and appropriate, and is in the best interest of and will benefit the Debtor, its creditors and its Estate, as its implementation will, among other things, provide the Debtor with the necessary liquidity to (a) continue to operate in the ordinary course of business and to successfully reorganize or efficiently liquidate the Debtor's assets, (b) preserve and maximize the value of the Debtor's Estate for the benefit of all the Debtor's creditors, and (c) avoid immediate and irreparable harm to the Debtor, its creditors, its businesses, its employees, and its assets. As previously reported by the Troubled Company Reporter, these entities assert an interest in the Debtor's cash collateral: (a) Parkside Funding Group LLC: inter alia, accounts receivable pursuant to a Merchant Cash Advance Agreement dated September 15, 2022 and UCC filed; (b) Custom Capital USA: inter alia, accounts receivable pursuant to a Merchant Cash Advance Agreement dated April 15, 2022 and UCC filed on July 13, 2022; (c) 3PCG Inc.: inter alia, accounts receivable pursuant to a Merchant Cash Advance Agreement dated July 11, 2022 and UCC filed; on October 20, 2022; (d) FTF Lending, LLC: Construction Reserve pursuant to the respective Mortgages dated in or around March 2021, June 2021 and January 2022 on the Debtor's properties located on Greenwich Street, Gerritt Street, and Cleveland Street, respectively; and (e) ING Properties, LLC: Funds available for disbursement at the sole discretion of the lender pursuant Mortgage dated November 29, 2021 on the Debtor's properties located at 901-911 Emily Street. As adequate protection for the use of cash collateral, these Entities will be granted valid, binding, enforceable and automatically perfected replacement liens on and security interests in the same types and items of the Debtor's property that the Entities held a valid, enforceable, properly perfected lien or Security Interest in prepetition. The Replacement Liens, and any other form of adequate protection provided for under the Order, will be only valid to the extent the Entities has a valid perfected lien against the cash collateral of the Debtor and the Debtor is unable to avoid such lien under Chapter 5 of the Bankruptcy Code or other applicable law. A final hearing on the matter is set for September 13, 2023 at 9:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=dealR6 from PacerMonitor.com. About LYM Development, LLC LYM Development, LLC is engaged in activities related to real estate. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Pa. Case No. 23-11435) on May 17, 2023. In the petition signed by Michaela Hayes, 100 Percent LLC Member/President, the Debtor disclosed $35,700 in assets and $4,447,494 in liabilities. Judge Patricia M. Mayer oversees the case. Holly S. Miller, Esq., at Gellert, Scali, Busenkell and Brown, LLC, represents the Debtor as legal counsel. MADISON IAQ: S&P Alters Outlook to Positive, Affirms 'B-' ICR ------------------------------------------------------------- S&P Global Ratings revised our outlook on Madison IAQ LLC to positive from stable. At the same time, S&P affirmed all ratings, including its 'B-' issuer credit rating. The positive outlook reflects S&P's forecast for continued, albeit decelerating, S&P Global Ratings-adjusted EBITDA growth in the second half of this year, translating to S&P Global Ratings-adjusted leverage improving toward the low- to mid-6x area at year-end and remaining solidly under 7x through 2024. S&P said, "We forecast Madison IAQ's S&P Global Ratings-adjusted leverage will improve to the low- to mid-6x area by the end of 2023, improving further in 2024. Madison IAQ's S&P Global Ratings-adjusted leverage decreased to 6.6x as of June 30, 2023, from 7.6x as of Dec. 31, 2022, as solid EBITDA margin growth in the first half of the year drove higher year-over-year EBITDA despite a 4.9% decline in revenue. This decline was driven largely by volume declines in the company's residential products. While we anticipate year-over-year margin improvement to decelerate through 2023, we forecast the company's S&P Global Ratings-adjusted EBITDA growth will drive S&P Global Ratings-adjusted leverage to the low- to mid-6x area by the end of this year, improving further in 2024. "We believe the risk of large revenue declines has largely abated. Our expectation for revenue and EBITDA partly reflects our updated economic forecast, which calls for a slow growth environment compared with our prior forecast for a shallow recession. Further, we believe the company's current backlog provides some revenue visibility over the next few quarters, and we anticipate Madison IAQ's sales in commercial and nonresidential related end markets (which in total comprise 60%-65% of revenue) will remain at least stable over the next few quarters. We believe tailwinds such as increasing regulations around energy efficiency in buildings, government incentive programs to support improved efficiency, and trends toward increasing investments in indoor air quality will support modest demand growth in the next few years. "Further supporting our view of revenue is our belief that customer destocking in the residential products channel will largely be over by the end of this year. Over the past few quarters, Madison IAQ's revenue has been hurt by volume declines in the company's residential products, due in part to customer destocking, as well as fewer housing starts and slowing home remodel activity. Many distributors in the residential heating, ventilation, and cooling (HVAC) and other residential home products space have been reducing their inventory levels in the past few quarters after they built up inventory in 2021 and 2022 to accommodate good demand, extended manufacturer lead times, and product changes related to minimum efficiency standards. "We anticipate that over the next few quarters, distributor inventory levels will continue to reduce and product sales into the distribution channels will begin to reflect more normalized seasonal patterns given supply chains have largely stabilized and we believe demand will be supported by the large installed base of HVAC equipment in the U.S., a portion of which will need replacing each year. Nevertheless, we anticipate Madison IAQ's residential sales may continue to be down moderately in 2024 given lower housing starts. Further, we believe home remodeling activity will be lower into 2024 as consumers face higher interest rates and because we believe there was a pull forward in home remodeling activity in 2021 into 2022 as people were in their homes more due to COVID-19 restrictions. "We expect Madison IAQ to maintain much of the margin improvement it achieved in the past few quarters. In the first half of 2023, the company's S&P Global Ratings-adjusted margin increased about 600 basis points (bps) year over year, driven by price increases it implemented in 2022, cost cutting actions, and productivity initiatives such as facility footprint optimization and improved materials procurement. The company also benefitted from a general reduction in input costs, particularly steel and freight. "We expect year-over-year margin improvement to decelerate meaningfully in the second half of 2023 since 2022 price increases were already largely reflected in the second half of 2022. Nevertheless, we forecast its full-year 2023 S&P Global Ratings-adjusted EBITDA margin will increase about 350 bps to close to 22% and stay at that level in 2024. "Under our forecast, Madison IAQ will generate good levels of free operating cash flow (FOCF), which will be sufficient to fund modest bolt-on acquisitions without increasing leverage. Notwithstanding relatively high levels of cash interest expense--in part due to Madison IAQ's exposure to floating rate debt and the high interest rate environment--we forecast higher EBITDA and reduced working capital spending will translate to 2023 reported FOCF of $150 million-$170 million compared with $70 million in 2022. We also forecast FOCF will continue to grow to $175 million-$215 million in 2024. We anticipate working capital will be only a modest use of cash this year compared with a use of $123 million in 2022. We expect Madison IAQ's cash flow will benefit this year given the sell down of existing inventory in the first half of the year, and because we do not expect a meaningful inventory or accounts receivable build in the second half of the year given our expectation for revenue to continue to decline through year end. We forecast working capital will be a modest use of cash in 2024 since we assume some incremental investment in inventory and increasing accounts receivables given our forecast for moderate revenue growth. "Under our forecast, FOCF will be sufficient to fund tax-related distributions to Madison IAQ's parent, required term loan amortization, and modest bolt-on acquisitions, although we have not incorporated any into our forecast. "The positive outlook reflects our forecast for continued, albeit decelerating, S&P Global Ratings-adjusted EBITDA growth in the second half of this year, translating to S&P Global Ratings-adjusted leverage improving toward the low- to mid-6x area at year end and remaining solidly under 7x through 2024. "We could revise the outlook to stable if we no longer expect Madison IAQ's S&P Global Ratings-adjusted leverage to remain below 7x. This could occur if its operating performance in the next few quarters is modestly weaker than we expect. "While less likely given our forecast for improving leverage, we could lower the rating if Madison IAQ's FOCF generation declines meaningfully, its EBITDA interest coverage falls towards 1x, or we view its capital structure as unsustainable. We could also lower ratings if the pricing on Madison IAQ's securities weakens to a point that we view a distressed exchange as likely. "We could raise our ratings on Madison IAQ if we expect it to maintain S&P Global Ratings-adjusted leverage toward the low-6x area, a level that would provide a sufficient cushion, relative to our 7x downgrade threshold, to absorb potential modest underperformance or higher acquisition spend or distributions to the company's parent." MALLINCKRODT PLC: To Return to Chapter 11 With Plan Deal -------------------------------------------------------- Mallinckrodt plc (NYSE American: MNK), a global specialty pharmaceutical company, on Aug. 23 disclosed that it has entered into a Restructuring Support Agreement ("RSA") with a substantial majority of each of the Company's first and second lien debtholders and the Opioid Master Disbursement Trust II (the "Trust") on the terms of a comprehensive financial restructuring plan that will reduce the Company's total funded debt by approximately $1.9 billion, increase free cash flow generation, extend maturity runway and better position the business for long-term success. The RSA also provides for, among other consideration, a final payment of $250 million to the Trust, in addition to the $450 million previously paid, to support the Trust's mission to address the U.S. opioid crisis and fund addiction treatment. To implement the financial restructuring plan contemplated by the RSA, the Company intends to initiate voluntary prepackaged Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware in the coming days. Due to the overwhelming support of its key stakeholders, the Company expects to complete the contemplated prepackaged Chapter 11 process in the fourth quarter of 2023. Mallinckrodt is operating normally, supporting patients with high-quality therapies, serving customers and working with its business partners, and it fully expects to continue doing so throughout the contemplated court-supervised process. Additionally, the Company's Specialty Generics business will continue to abide by previously agreed upon compliance and monitoring measures. The Company also fully intends to continue supporting patient groups and patient advocacy programs, including through its Patient Advocacy Advisory Board and patient assistance programs. "After several months of constructive discussions, we are pleased to have reached this agreement with our key stakeholders, which will enable Mallinckrodt to better align our balance sheet with our current business plan," said Siggi Olafsson, President and Chief Executive Officer of Mallinckrodt. "While we have made important progress over the past year, the steps we are taking now will strengthen our ability to navigate the challenges that have affected our business. As we move forward, we remain focused on advancing our business priorities and operational initiatives, including seeking growth opportunities across our portfolio and executing on our recent and planned product launches. Delivering therapies that improve outcomes for patients with severe and critical conditions remains at the center of all that we do." Mr. Olafsson continued, "We appreciate the constructive engagement with our creditors in determining the best path forward for the business and our patients, customers, partners and employees. We also recognize the important role of the Trust in helping to address the U.S. opioid crisis and have remained committed to ensuring that we achieved a meaningful resolution for the Trust through this process. We also thank our patients, customers and partners for their continued support, and we are grateful to our employees for their ongoing hard work and commitment to the patients we serve. We expect to complete this process on an expedited basis, well-positioned to continue delivering high-quality therapies." Under the terms of the RSA: -- The Company will deleverage by reducing its first lien debt by approximately $1.2 billion and eliminating all of its approximately $650 million of second lien debt, while transitioning ownership of the Company to its creditors. -- The Trust will receive a one-time, final payment of $250 million prior to a Chapter 11 filing and contingent value rights entitling the Trust to payment in certain circumstances. This payment -- in addition to the $450 million payment and other assets the Company contributed to the Trust last year -- is intended to support the Trust's mission to address the U.S. opioid crisis and fund addiction treatment. -- The Company's Acthar-related settlements will be assumed under the RSA without modification. -- Vendors and suppliers are expected to be paid in the ordinary course, including for any pre-petition amounts owed at the time of the contemplated prepackaged Chapter 11 filing. -- Employees are expected to continue receiving their pay and benefits without interruption. -- All of the Company's outstanding ordinary shares are expected to be extinguished when the financial restructuring plan is consummated at the conclusion of the contemplated Chapter 11 process. In addition, under the terms of the RSA, Mallinckrodt will maintain its robust compliance and monitoring standards and continue operating in accordance with the Specialty Generics operating injunction, existing Acthar-related settlement conditions and Corporate Integrity Agreement. Mallinckrodt has received commitments for $250 million in new financing from certain of its creditors in connection with the RSA and has obtained new borrowing availability from lenders under its asset-based loans, all of which will be subject to court approval. Together with cash on hand and cash generated from ongoing operations, this liquidity is expected to be sufficient to support the Company's continued operations during the contemplated court-supervised process. In connection with the contemplated Chapter 11 filing, Mallinckrodt also intends to make certain filings to commence Examinership Proceedings in Ireland, which are required to implement certain Irish law aspects of the financial restructuring plan and allow for emergence. Additional Information Additional information is available on Mallinckrodt's restructuring website at www.MNKrestructuring.com. Vendors, suppliers and trade partners should direct any inquiries to the Company at +1-908-238-5650 or Supplier.Inquiry@mnk.com. Additional information regarding the RSA can be found in the Current Report on Form 8-K filed on Aug. 23 by the Company with the U.S. Securities and Exchange Commission. Latham & Watkins LLP, Wachtell, Lipton, Rosen & Katz, Arthur Cox LLP, Richards, Layton & Finger, P.A., and Hogan Lovells US LLP are serving as Mallinckrodt's counsel. Guggenheim Securities, LLC is serving as investment banker, and AlixPartners, LLP is serving as restructuring advisor. About Mallinckrodt PLC Mallinckrodt -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray, LLP as litigation counsel; Torys, LLP as CCAA counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors retained Cooley, LLP, as its legal counsel; Robinson & Cole, LLP as co-counsel; and Dundon Advisers, LLC as financial advisor. The official committee of opioid-related claimants tapped Akin Gump Strauss Hauer & Feld, LLP as its lead counsel; Cole Schotz as Delaware co-counsel; Province, Inc. as financial advisor; and Jefferies, LLC as investment banker. * * * Mallinckrodt in mid-June 2022 successfully completed its reorganization process, emerged from Chapter 11 and completed the Irish Examinership proceedings. The company said the restructuring strengthens the Company's balance sheet, reduces its total debt by approximately $1.3 billion and enables it to move forward with more than $250 million in cash and cash equivalents on hand. The Plan and Scheme include key legal settlements that resolve opioid claims brought against the Company and litigation matters involving Acthar Gel, among other claims, and provides for significant equitization of the Company's guaranteed unsecured notes. Mallinckrodt Plc said in a regulatory filing in early June 2023 that it was considering a second bankruptcy filing and other options after its lenders raised concerns over an upcoming $200 million payment related to opioid-related litigation. MATEO ENTERPRISE: Taps Law Offices of Leonard K. Welsh as Counsel ----------------------------------------------------------------- Mateo Enterprise, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of California to employ the Law Offices of Leonard K. Welsh to handle its Chapter 11 case. The firm's services include: a. preparing the documents necessary to administer the Debtor's bankruptcy case; b. advising the Debtor concerning its duties in a Chapter 11 case; c. helping the Debtor formulate a Chapter 11 plan of reorganization, drafting the plan, and prosecuting legal proceedings to obtain confirmation of the plan; and d. preparing and prosecuting pleadings such as complaints to avoid preferential transfers or transfers deemed fraudulent to creditors, objections to claims, and motions for authority to borrow money, sell property or compromise claims. The firm will be paid at these rates: Attorneys $250 to $400 per hour Legal Assistants $125 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. The firm received a pre-bankruptcy retainer of $30,000. Leonard Welsh, Esq., a partner at the Law Offices of Leonard K. Welsh, 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: Leonard K. Welsh, Esq. Law Offices of Leonard K. Welsh 1800 30th Street, Fourth Floor Bakersfield, CA 93301 Tel: (661) 328-5328 Fax: (661) 760-9900 Email: lwelsh@lkwelshlaw.com About Mateo Enterprise Mateo Enterprise, Inc., doing business as El Milagro Market, filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. E.D. Calif. Case No. 23-11623) on July 28, 2023, with $249,375 in assets and $2,857,056 in liabilities. Salvador Carrera, chief executive officer, signed the petition. Judge Jennifer E. Niemann oversees the case. Leonard K. Welsh, Esq., at the Law Office of Leonard K. Welsh represents the Debtor as bankruptcy counsel. MONTGOMERY REALTY: Taps Richards Law as Special Counsel ------------------------------------------------------- Montgomery Realty Group, LLC received approval from the U.S. Bankruptcy Court for the Northern District of California to employ Richards Law as its special counsel. The Debtor requires legal assistance in connection with the eviction of Jack Pot Bins' from its property in Concord, Calif. The Debtor licensed a portion of the property to Jack Pot Bins. Jo Ann's Fabrics, the principal tenant at the property, questioned the transaction, saying it violated the terms of its lease with the Debtor. This dispute was resolved by settlement, which provided that Jo Ann's Fabrics would resume the regular payment of full rent in exchange for the eviction of Jack Pot Bins and the termination of the license. Richards Law will be paid an hourly fee of $350 and a retainer fee of $3,000 for its services. As disclosed in court filings, Richards Law is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: John Richards, Esq. Richards Law 261 Hartz Avenue Danville, CA 94526 Phone: 925-231-8104 Fax: (404) 343-2715 Email: jrichards@richards-legal.com About Montgomery Realty Group Montgomery Realty Group, LLC is the owner of a commercial real property located at 1675 Willow Pass Road, Concord, Calif. Montgomery Realty Group filed Chapter 11 petition (Bankr. N.D. Calif. Case No. 22-41290) on Dec. 20, 2022, with $10 million to $50 million in both assets and liabilities. Raj Maniar, manager, signed the petition. Judge William J. Lafferty oversees the case. Michael St. James, Esq., at St. James Law, P.C. is the Debtor's bankruptcy counsel. Sullivan Blackburn Pratt, Lang Richert & Patch and Richards Law serve as special counsels. MORVATT ENTERPRISES: Case Summary & Four Unsecured Creditors ------------------------------------------------------------ Debtor: Morvatt Enterprises, LLC 1044 N. Forest Oak Henderson, KY 42420 Chapter 11 Petition Date: August 22, 2023 Court: United States Bankruptcy Court Western District of Kentucky Case No.: 23-40488 Debtor's Counsel: Sandra D. Freeburger, Esq. DEITZ SHIELDS & FREEBURGER, LLP 101 First St (42420) PO Box 21 Henderson, KY 42419-0021 Tel: (270) 830-0830 Fax: (270) 827 1492 Email: scain@dsf-atty.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Charles H. Morris, Jr. owner and sole member. 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/M3SMBFA/Morvatt_Enterprises_LLC__kywbke-23-40488__0001.0.pdf?mcid=tGE4TAMA MOUNTAIN EXPRESS: Court OKs Interim Cash Collateral Access ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, authorized Janet S. Northrup, as the Chapter 11 Trustee of Mountain Express Oil Co., to use cash collateral on an interim basis in accordance with her agreement with First Horizon Bank as Administrative Agent. The Trustee requires authority to use cash collateral to preserve the Debtors' estates. The Trustee is only authorized to use cash collateral during the Interim Budget Period in a manner consistent with the Budget. The Trustee is not permitted to use cash collateral for the payment of any professional fees except as may be provided for in the Budget, and shall not pay any professional fees that accrued prior to her appointment. The DIP Agent's superpriority, priming liens will attach to, without limitation, all amounts held by payroll processors that are not paid to employees for earned wages, benefits, and applicable taxes. As previously reported by the Troubled Company Reporter, the Debtor Mountain Express Oil Company is the borrower under a First Amended and Restated Credit Agreement dated as of March 12, 2020 among MEX, the Prepetition Guarantors, certain Lenders, and First Horizon Bank with respect to a secured term loan and revolving credit facility. The Prepetition Credit Agreement provided for loans to the Prepetition Borrower of up to $205 million in aggregate principal amount. As of the Petition Date, the aggregate amount outstanding under the Loan Facility is approximately $176.5 million consisting of: -- $148.3 million in outstanding principal due under the Prepetition Term Loan Facility; -- $28.2 million in outstanding principal due under the Prepetition Revolving A Facility; and -- no amounts in outstanding principal due under the Prepetition Revolving B Facility. Each of the foregoing amounts is exclusive of accrued interest, fees, costs and charges. MEX and certain of the Prepetition Secured Parties were parties to a hedge agreement to hedge interest rate exposure applicable to a portion of the principal amount borrowed under the term loan facility of the Prepetition Loan Agreement. The hedge agreement was terminated as of March 8, 2023, yielding a hedge termination payment for MEX's benefit in the approximate amount of $6.648 million. The court ruled the DIP Agent will continue to have the benefit of its postpetition liens and superpriority claims under the Final DIP Order. The Trustee is authorized to use cash collateral to make postpetition purchases of fuel from the Fuel Suppliers pursuant to the Interim Order and in accordance with the Budget on reasonable business terms and conditions. The liens and claims granted by the provisions of the Interim Order will survive, and will not be modified, impaired or discharged by (i) the entry of an order converting any of these chapter 11 cases to a case under chapter 7 or dismissing such chapter 11 case, or (ii) the entry of an order confirming a chapter 11 plan in these chapter 11 cases. A copy of the Court's order and the Debtor's budget is available at https://urlcurt.com/u?l=ikMKEr from PacerMonitor.com. The Debtor projects $279,000 in operating receipts and $3,625,000 in operating cash flow for the week ended September 1, 2023. About Mountain Express Oil Company Mountain Express Oil Company and its affiliates operate in the fuel distribution and retail convenience industry. As one of the largest fuel distributors in the American South, MEX and its affiliates serve 828 fueling centers and 27 travel centers across 27 states. The Debtors sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90147) on March 18, 2023. In the petition signed by Michael Healy, as chief restructuring officer, the Debtor disclosed up to $500 million in assets and liabilities. Judge David R. Jones oversees the case. Pachulski Stang Ziehl & Jones LLP represents the Debtor as legal counsel. The Debtors also tapped FTI Consulting, Inc. as financial advisor, Raymond James Financial, Inc. as investment banker, and Kurtzman Carson Consultants LLC as claims, noticing, and solicitation agent and administrative advisor. NATURAL VITALITY: Unsecureds Will Get 34% of Claims in Plan ----------------------------------------------------------- Natural Vitality, LLC, filed with the U.S. Bankruptcy Court for the District of Minnesota a Plan of Reorganization for Small Business dated August 15, 2023. The Debtor is a Minnesota limited liability company organized in 2017. The Debtor operates a retail juice bar under the franchised name "Nekter Juice Bar" at 1605 Queens Drive, Suite 10, Woodbury, MN 55125. The Debtor's business was, like many other retail and food service businesses, adversely affected by the Covid 19 pandemic. Debtor's management strongly believes that with the abatement of the pandemic, a return to a more normal economy and buying habits, the Debtor's business has and will continue to recover. The Debtor intends to operate its business in a continuous manner – maintaining its current location and continuing to operate as a Nekter Juice Bar franchise; but with significantly reduced overhead and operating costs. The Plan Proponent's financial projections show that the Debtor will have projected disposable income for the 5-year term of the Plan of approximately $108,000. The final Plan payment is expected to be paid on November 28, 2028. The Debtor proposes to satisfy the claims of the general unsecured creditors by making distributions from future cash-flow. The Plan commits all of the Debtor's projected disposable income to fund Plan payments. The Plan has a 5-year term. Generally, disposable income during the first 2 years of the Plan term will be applied to cure rent arrearages and arrearages in franchise fees. Unsecured creditors will receive payments in years 3-5 of the Plan term. Based on the Debtor's projections unsecured creditors are estimated to receive approximately $108,000, or approximately 34% of the total amount of claims. Class 3 consists of Non-Priority Unsecured Claims. Holders of allowed Class 3 Claims receive prorated distributions quarterly, from the Debtor's disposable income, as disposable income is generated and accumulated. Distributions shall be made on the last day of the month following the end of each calendar quarter. Each holder shall receive distributions based on the ratio of the holder's claim to the total amount of allowed Class 3 Claims. The Debtor anticipates that there will no, or minimal, distributions until the beginning of the third year of the Plan term, after cure payments on executory contracts are completed. The Debtor's income is seasonal and the amount of distributions will likely vary from quarter to quarter. Based on the Debtor's projections the estimated amount of disposable income available to pay general unsecured creditors over the life of the Plan is $108,000 and the anticipated recovery to unsecured creditors is 34%. As of the Effective Date, all assets of the estate including any Net Operating Losses will be revested in the Debtor. The Debtor shall operate its business in the ordinary course. All payments and distributions provided for in the Plan shall be made from the Debtor's disposable income; and the Debtor shall commit all of its disposable income to the payments and distributions provided for in the Plan. The members of the Debtor shall retain their membership interests. The Debtor shall not make any distribution of profit to its members during the term of Plan. A full-text copy of the Plan of Reorganization dated August 15, 2023 is available at https://urlcurt.com/u?l=Pv2Fid from PacerMonitor.com at no charge. About Natural Vitality Natural Vitality, LLC, operates a retail juice bar under the franchised name "Nekter Juice Bar" at 1605 Queens Drive, Suite 10, Woodbury, MN 55125. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Minn. Case No. 23-30983) on May 17, 2023, with as much as $50,000 in assets and $100,001 to $500,000 in liabilities. Steven Nosek, Esq., has been appointed as Subchapter V trustee. Judge Katherine A. Constantine oversees the case. The Debtor is represented by Joseph Dicker, Esq., at Joseph W. Dicker, P.A. NB COMMONS: Involuntary Chapter 11 Case Summary ----------------------------------------------- Alleged Debtor: NB Commons, LLC The Ruckus Student Living 1920 NE Terre View Drive Pullman WA 99163 Business Description: The Ruckus is a housing community in Pullman with an outdoor pool and indoor pool and spa that are open 24/7. Involuntary Chapter 11 Petition Date: August 23, 2023 Court: United states Bankruptcy Court Eastern District of Washington Case No.: 23-01053 Petitioners' Counsel: John D. Munding, Esq. MUNDING, P.S. 309 E. Farwell Rd., Ste 310 Spokane, WA 99218 Tel: (509) 590-3849 Email: John@Mundinglaw.com A full-text copy of the Involuntary Petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/Z3KZTSI/NB_Commons_LLC__waebke-23-01053__0001.0.pdf?mcid=tGE4TAMA Alleged creditors who signed the petition: Petitioner Nature of Claim Claim Amount Tim Sherer Promissory Note $75,000 93 Fredrick Street, Unit A Santa Cruz CA 95062 Dominic Baldini Promissory Note $75,000 155 Bovet Rd #725 San Mateo CA 94902 Wolf Von Falkenburg Promissory Note $120,000 1262 Hitt Lane Goodlettsville TN 37072 NEWELL BRANDS: Moody's Lowers CFR & Senior Unsecured Debt to Ba2 ---------------------------------------------------------------- Moody's Investors Service downgraded Newell Brands Inc.'s ratings including its Corporate Family Rating to Ba2 from Ba1, its Probability of Default Rating to Ba2-PD from Ba1-PD, and its senior unsecured debt instrument ratings to Ba2 from Ba1. The commercial paper rating was affirmed at NP (not prime). The outlook remains negative and the speculative grade liquidity rating ("SGL") remains unchanged at SGL-3. The ratings downgrade reflects continued pressure on Newell's business segments and profitability from weaker consumer demand and inventory destocking, which Moody's anticipates will continue for the remainder of 2023 and into early next year. The company's operating performance continues to be negatively impacted by high cost inflation which has pressured Newell's margins, as well as lower discretionary spending by consumers who have been squeezed by the higher price of most essentials. In addition, reduced purchasing by retailers who are seeking to lower inventory costs due to the diminished demand and some disruption stemming from bankruptcy closings by an important retailer have compounded the challenges. Together these issues have resulted in double digit sales and earnings declines across most of Newell's operating segments. Additionally, the company's ability to take pricing actions to offset lower volume is limited in Moody's view given the discretionary nature of most of the products. The persistent inflationary environment continues to burden consumers who have reduced purchases of discretionary products such as home fragrance, food storage, small appliances, cookware, and recreational goods. Downside risks remain that a prolonged inflationary environment or a recession could put additional pressure on consumers and delay recovery well into mid-2024. Moody's expects some recovery in discretionary consumer purchases starting in the first half of 2024 as inflation moderates and consumer purchasing recovers absent a deep recession. Furthermore Newell's operating performance will start to show stabilization in the second half of 2023 despite persistent weak consumer demand when it cycles through the second half of 2022, which was materially weaker due to retail inventory destocking. Moody's expects sales will end full year 2023 about 13% lower than 2022 while EBIT margins will be weak at around to 6.75%. Moody's expects Newell to generate about $125 million to $225 million of annual free cash flows (after payment of an already 70% reduced dividend) over the next year largely due to a reduction in working capital. Financial leverage as measured by Moody's debt-to-EBITDA will peak at around 6.25x by year end 2023 and then moderate to around 5.0x by the end of 2024. However, prolonged weak demand could curtail the rapid deleveraging needed to maintain the current ratings. The negative outlook reflects elevated risks over the next 12 to 18 months that inflation may persist or a recession could materialize resulting in consumers remaining cautious with discretionary purchases. Given the discretionary nature of some of Newell's products, its operating performance could remain weak for a prolonged period resulting in weaker cash flow and persistent elevated financial leverage. The SGL-3 reflects the company's weaker than usual cash flow generation ability, which will remain below historic levels despite the company having significantly reduced its dividend. This will result in greater reliance on its revolving credit facility to support seasonal working capital needs and a narrower cushion in the company's revolver covenant requirement to maintain an EBITDA to interest expense ratio (bank defined) at above 3.0x over the next three quarters. Newell's adequate liquidity reflects cash on hand of $317 million as of June 30, 2023 of which approximately 84% was held outside the US. The company also had approximately $950 million of unused capacity under its $1.5 billion unsecured revolving credit facility expiring in August 2027 (unrated). The company also has a committed $375 million receivable securitization facility with borrowings of $66 million. However, this facility is set to expire in October 2023. The company's next maturity is $200 million of notes due in December 2024 and $500 million of notes due in June 2025. Downgrades: Issuer: Newell Brands Inc. Corporate Family Rating, Downgraded to Ba2 from Ba1 Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba2 from (P)Ba1 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Ba1 Affirmations: Issuer: Newell Brands Inc. Commercial Paper, Affirmed NP Outlook Actions: Issuer: Newell Brands Inc. Outlook, Remains Negative RATINGS RATIONALE Newell's Ba2 CFR reflects its large scale, well recognized brands, and good product and geographic diversity. The rating is constrained by concerns around the long-term growth prospects of the company's mature product categories such as small appliances and cookware, food storage, and writing that require constant investment and innovation to spur growth and retain market share. The rating also reflects the cyclicality and discretionary nature of some of its products that have been negatively impacted during the current weak environment. The dividend payment somewhat constraints its financial flexibility, especially during economic weakness, because it weakens free cash flow as a time when leverage is increasing. Debt-to-EBITDA leverage of 6.4x as of June 30, 2023 is very weak for the Ba2 rating. Moody's believes that the company's 2.5x net debt-to-EBITDA leverage target indicates management's desire to reduce leverage over the longer term, and the Ba2 rating is based on Moody's view that leverage will decline from this lofty level. ESG CONSIDERATIONS Newell's ESG Credit Impact Score of CIS-3 indicates that ESG factors have a limited impact on the current rating, with greater potential for future negative impact. As with most consumer durables companies, Newell's exposure to environmental risks reflects carbon transition and natural capital associated with manufacturing of its goods. Newell's exposure to social risks reflects some exposure to demographic and social trends, health and safety and responsible production. The company's moderate governance practices in the context of the company's business profile positions it below average. Governance risk is driven primarily by its financial strategy and risk management policies reflected in a history of leveraging acquisitions done by past management, share repurchases and a dividend payout, albeit reduced, despite the substantially elevated leverage and reduced guidance for the year. The company has a reasonably conservative stated net debt to EBITDA target of 2.5x, but it is far away from this target. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Newell delivers good operating execution including sustained organic revenue growth with EBITDA margin recovering at least to the mid-teens percent range while maintaining a financial policy that results in sustained debt to EBITDA leverage comfortably below 4.5x. Newell would also need to improve liquidity and generate solid free cash flow relative to debt, and a demonstrated consistent strategic direction to be considered for an upgrade. Ratings could be downgraded if Newell's revenue or EBITDA margin do not improve materially, liquidity does not improve, or the company is not able to restore strong positive free cash flow. Additionally, the ratings could be downgraded if Newell's debt-to-EBITDA is sustained above 5.0x or retained-cash-flow to net debt remains below 10%. The principal methodology used in these ratings was Consumer Durables published in September 2021. Newell Brands Inc. is a global marketer of consumer and commercial products utilized in the home, office, and commercial segments. Key brands include Rubbermaid, Graco, Oster, Coleman, Sharpie, Mr. Coffee and Yankee Candle. The publicly-traded company generated $8.5 billion of revenue for the 12 months ended June 30, 2023. NEXERA MEDICAL: Seeks to Hire Paul B. Kroncke, CPA as Accountant ---------------------------------------------------------------- NEXERA Medical, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Paul B. Kroncke, CPA. P.A. The Debtor requires an accountant to assist with the preparation and filing of its tax returns for 2021 and 2022. As compensation, the firm will receive a flat fee of $1,500. As disclosed in court filings, Paul B. Kroncke, CPA. P.A. neither holds nor represents any interest adverse to the Debtor and its estate. The accountant can be reached at: Paul B. Kroncke, CPA Paul B. Kroncke, CPA. P.A. 9 Hibiscus Street # 16 Tarpon Springs, FL 34689 Phone: (954) 306-8091 About NEXERA Medical NEXERA Medical, Inc. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-13388) on April 28, 2023, with $155,521 in assets and $1,902,367 in liabilities. Maria Yip has been appointed as Subchapter V trustee. Judge Scott M. Grossman oversees the case. The Debtor tapped Jordan L. Rappaport, Esq., at Rappaport Osborne & Rappaport, PLLC as legal counsel and Paul B. Kroncke, CPA. P.A. as accountant. NORTHWOODS PETS: Unsecured Creditors to Get Nothing in Plan ----------------------------------------------------------- Northwoods Pets, LLC, filed with the U.S. Bankruptcy Court for the Western District of Wisconsin a Plan of Reorganization dated August 15, 2023. The Debtor is a limited liability company organized in the state of Wisconsin under Wis. Stat. ch 183, subchapter II, operating a pet store in Rhinelander, WI. In 2021 and 2022, feeling the cash crunch as business slowed, Northwoods Pets borrowed money from various high interest lenders to fund operations, and before long the large weekly payments on these loans became too difficult to pay as business remained slow and cash flow declined. The business was in a constant state of trying to play catch up and coming up short to cover all expenses as they came due. Northwoods Pets ultimately filed this bankruptcy case in order to reorganize and save the store from liquidation and closure. Since filing, the Debtor has obtained an order authorizing it to pay two critical vendors, Animal Supply Company and General Pet Supply Inc., to maintain its ability to order and receive new inventory to keep its shelves stocked. It has obtained an order authorizing the use of cash collateral and providing adequate protection to the secured creditors Nicolet National Bank and Kapitus. It has also obtained an order valuing its property and determining the amount of the secured claims and has filed a motion which is still pending, seeking assumption of the premises lease as modified, which will allow it to downsize its total leased space and save money prospectively. Post-confirmation, Jennifer Marshall will retain her ownership interest in the Debtor and continue to manage and operate the Debtor, and expects that the employee and contract labor mix will remain approximately the same as it has been. The final Plan payment is expected to be paid on October 31, 2028. This will be a 60-month plan. However, any time after the 36th plan month, upon completion of all payments to the administrative and priority unsecured claims, the Plan will be deemed complete and the Debtor will be entitled to obtain its order of discharge, subject to its continuing obligation to complete payment of all longer-term secured debt obligations. This Plan of Reorganization proposes to pay creditors of the Debtor from future revenue generated by the Debtor through continued operation of the pet store. Non-priority unsecured creditors holding allowed claims will not receive distributions, based on the projected cash flow and the liquidation analysis, which do not provide for any funding to the general unsecured creditors. This Plan provides for full payment of administrative expenses and priority claims. Class 6 consists of nonpriority unsecured creditors. Based on the liquidation analysis, the class 6 claims shall receive $0.00 through the Plan. This Class is impaired. Jennifer Marshall shall retain her equity ownership interest in the Debtor and shall be paid draw amounts on account of her continued management and operation of the Debtor's business, all subject to the terms and conditions of this Plan. The Debtor will implement and fund the Plan by continuing to operate the pet store and generate income. Marshall shall remain as owner and manager, and the Debtor shall make all disbursements called for by the Plan. A full-text copy of the Plan of Reorganization dated August 15, 2023 is available at https://urlcurt.com/u?l=fqXN8e from PacerMonitor.com at no charge. Attorney for the Debtor: John W. Menn, Esq. Steinhilber Swanson, LLP 107 Church Avenue Oshkosh, WI 54901 Telephone: (920) 235-6690 Facsimile: (920) 426-5530 Email: jmenn@steinhilberswanson.com About Northwoods Pets LLC Northwoods Pets, LLC, is a limited liability company operating a pet store in Rhinelander, WI. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Wisc. Case No. 1-23-10800) on May 1, 2023. In the petition signed by Jennifer L. Marshall, sole member, the Debtor disclosed up to $500,000 in both assets and liabilities. Judge Thomas M. Lynch oversees the case. John W. Menn, Esq., at Steinhilber Swanson LLP, represents the Debtor as legal counsel. NORWICH ROMAN: Gets OK to Hire U.S. Properties as Broker -------------------------------------------------------- The Norwich Roman Catholic Diocesan Corporation received approval from the U.S. Bankruptcy Court for the District of Connecticut to employ U.S. Properties Real Estate Services, LLC. The Debtor requires the services of a real estate broker in connection with the sale or lease of its real properties located at (i) 11 Bath St., Norwich, Conn.; (ii) 7 Otis St., Norwich, Conn.; (iii) 17 Otis St., Norwich, Conn.; (iv) 25 Otis St., Norwich, Conn.; and (v) 31 Perkins Ave., Norwich, Conn. U.S. Properties will get a commission of 5 percent of the total sale price of each property upon the closing of a sale. As disclosed in court filings, U.S. Properties is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Constance Howard U.S. Properties Real Estate Services, LLC 5 Shaw's Cove, Suite 200 New London, CT 06320 Tel: (860) 437-0101 Fax: (860) 440-0721 Email: mail@uspropre.com About The Norwich Roman Catholic Diocesan Corporation The Norwich Roman Catholic Diocesan Corporation is a nonprofit corporation that gives endowments to parishes, schools, and other organizations in the Diocese of Norwich, a Latin Church ecclesiastical territory or diocese of the Catholic Church in Connecticut and a small part of New York. The Norwich Roman Catholic Diocesan Corporation sought Chapter 11 protection (Bankr. D. Conn. Case No. 21-20687) on July 15, 2021. The Debtor estimated $10 million to $50 million in assets against liabilities of more than $50 million. Judge James J. Tancredi oversees the case. The Debtor tapped Ice Miller, LLP, Robinson & Cole, LLP and Gellert Scali Busenkell & Brown, LLC as bankruptcy counsel, Connecticut counsel and special counsel, respectively. Epiq Corporate Restructuring, LLC is the claims and noticing agent. On July 29, 2021, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in the Chapter 11 case. The committee tapped Zeisler & Zeisler, PC as its legal counsel. NOVATION COMPANIES: Court OKs $1.77MM DIP Loan from Nighthawks -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Novation Companies, Inc. and affiliates to use cash collateral and obtain postpetition financing, on an interim basis. The Debtor is permitted to obtain senior secured postpetition financing in an aggregate principal amount not to exceed $1.770 million pursuant to the Debtor-In-Possession Loan and Security Agreement by and among the Debtors, certain subsidiaries of the Debtors party thereto, the lenders thereto, and Nighthawks Holdings I, LLC, a Delaware limited liability company, as lender and administrative agent for the benefit of the Lenders. The Debtor is permitted to borrow, on an interim basis, an aggregate principal amount of up to $900,000. The DIP facility is due and payable through the earlier of (a) the date which is 90 days following the Petition Date, (b) the effective date of a plan of reorganization or liquidation in the Cases, (c) the date of filing or support by the Debtors of a plan of reorganization other than the plan contemplated by the Restructuring Agreement, (d) entry of an order by the Bankruptcy Court converting the Cases to a proceeding or proceedings under Chapter 7 of the Bankruptcy Code, (e) entry of a final order by the Bankruptcy Court dismissing the Cases, or (f) the date of termination of the DIP Loan Facility and the acceleration of any outstanding extensions of credit under the Loans in accordance with the terms of the DIP Agreement. The Debtors are required to comply with these milestones: (i) The Debtors must have commenced the chapter 11 cases no later than August 14, 2023; (ii) The Debtors must have filed with the Bankruptcy Court no later than August 14, 2023: (a) schedules and statement of financial affairs; (b) an application to retain a claims agent; (c) a motion for orders approving this Agreement on an interim and final basis; (d) a motion to continue cash management; (e) such other first day papers as may be approved or requested by the Borrower or the Agent; (f) the Plan; (g) the disclosure statement relating to the Plan; (h) a motion seeking entry of an order scheduling and approval for a combined hearing on the Plan and disclosure statement, setting an objection deadline with respect thereto, establishing related confirmation procedures and approving the disclosure statement on an interim basis; (i) a motion seeking the Bankruptcy Court's approval of assumption of the Restructuring Agreement; (j) the NOL Motion; and (k) a motion for approval of bar dates. (iii) The Bankruptcy Court must have entered no later than August 15, 2023, the Interim Financing Order, the Prepack Scheduling Order and the interim order approving the NOL Motion. (iv) The Debtors must have filed with the Bankruptcy Court a motion to retain professionals and an interim compensation motion no later than August 24, 2023. (v) The Bankruptcy Court must have entered an order approving the bar date motion no later than August 29, 2023. (vi) The Bankruptcy Court must have entered no later than September 14, 2023: the Final Financing Order, an order authorizing the Debtors to assume the Restructuring Agreement and the final order approving the NOL Motion. (vii) The Bankruptcy Court must have entered an order establishing the general bar date for filing proofs of claim of no later than October 2, 2023. (viii) The Bankruptcy Court must have entered an order approving the disclosure statement and the Plan no later than October 6, 2023. (ix) The Effective Date of the Plan must have occurred no later than October 13, 2023. As of the Petition Date, the Debtors have secured indebtedness of not less than $97.804 million inclusive of principal and accrued and unpaid interest, fees and expenses owing under the Note Purchase Agreement, dated as of July 27, 2017, by and among Novation Companies, Inc., each of those subsidiaries of NCI identified as a guarantor on the signature page thereto and other subsidiaries of NCI as may from time to time become a party thereto, Taberna Preferred Funding I, Ltd., Taberna Preferred Funding II, Ltd. and Kodiak CDO I, Ltd. and Wilmington Savings Fund Society, FSB as Collateral Agent for the Prepetition Lenders, pursuant to which the Debtors granted liens on all or substantially all of their personal property other than accounts receivable and inventory. An immediate need exists for the Debtors to obtain funds pursuant to borrowings under the Interim DIP Credit Facility and to use cash collateral in order to continue operations, fund payroll and operating expenses, and administer and preserve the value of their estates pending the Final Hearing. As adequate protection, the Prepetition Secured Parties are granted perfected, postpetition security interests and liens in and on all of the DIP Collateral, with a priority subject and subordinate only to (i) the DIP Liens, (ii) prior payment of the Carve-Out, and (iii) any liens senior by operation of law or otherwise permitted under the Prepetition Loan Documents. The events that constitute an "Event of Default" include: (a) Failure to Pay. The Borrower or any other Loan Party will fail to pay (i) the principal amount of the Loans or interest payment on the applicable due date thereunder or (ii) any other payment required under the terms of the DIP Agreement on the date due thereunder, and solely in the case of clause (ii) of the section (a), which failure continues for five days. (b) Covenant Default. The Borrower or any other Loan Party will breach any other covenant contained in the DIP Agreement. (c) Representation or Warranty. Any representation or warranty made by the Borrower or any other Loan Party in the Agreement will be materially incorrect or misleading as of the date such representation or warranty was made. (d) Control Agreements. The Borrower or any other Loan Party will materially breach any covenant or representation contained in any Control Agreement or otherwise violate or terminate any Control Agreement. (e) Default under other Agreements. The Borrower or any other Loan Party will (i) fail to pay, when due, any principal of, or interest, on any indebtedness in excess of $25,000 of such Loan Party, (ii) breach, violate or default under the Restructuring Agreement or (iii) breach, violate or default under any agreement or instrument governing indebtedness in excess of $25,000 of such Loan Party, any securities issued by such Loan Party or any material agreement or contract which such Loan Party is a party thereto, and such failure, breach, violation or default has not been remedied or waived within five days after the earlier of: (i) such Loan Party receiving a written notice from the Agent and (ii) any officer of such Loan Party becoming aware of such failure, breach, violation or default. A final hearing on the matter is set for September 13 at 10 a.m. A copy of the motion is available at https://urlcurt.com/u?l=7nf6Bk from PacerMonitor.com. About Novation Companies, Inc. Novation Companies, Inc. and its subsidiaries, through Healthcare Staffing, Inc., provide outsourced healthcare staffing and related services in the state of Georgia. Novation Companies, Inc. and its subsidiaries sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11153) on August 13, 2023. In the petition signed by Michael Wyse, chief restructuring officer, Novation Companies disclosed up to $50,000 in assets and up to $97,804,338 in liabilities. Judge John T. Dorsey oversees the case. The Debtors tapped Young Conaway Stargatt & Taylor, LLP as legal counsel, Olshan Frome Wolosky LLP as corporate counsel, WALLC as CRO provider, and Stretto, Inc. as noticing, claims, solicitation and balloting agent. Nighthawks Holdings I, LLC, as DIP agent, is represented by lawyers at Loeb & Loeb LLP. Wilmington Savings Fund Society, FSB, as Collateral Agent, is represented by McDermott Will & Emery LLP. NS FOA: Seeks to Hire Shutts & Bowen as Litigation Counsel ---------------------------------------------------------- NS FOA, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Shutts & Bowen, LLP as its special litigation counsel. The Debtor requires legal assistance in connection with its dispute with the landlord, FJV. The firm will charge these hourly fees: Jeffrey S. Elkins, Esq. $475 Meredith S. Delcamp, Esq. $530 Associates $250 to $390 Legal Assistants $200 to $290 As disclosed in court filings, Shutts & Bowen is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Meredith S. Delcamp, Esq. Shutts & Bowen, LLP 4301 West Boy Scout Boulevard, Suite 300 Tampa, FL 33607 Tel. (813) 227-8149 Email: MDelcamp@shutts.com -- and -- Jeffrey S. Elkins, Esq. Shutts & Bowen, LLP 300 South Orange Avenue, Suite 1600 Orlando, FL 3280 Tel: (407) 835-6805 Email: JElkins@shutts.com About NS FOA NS FOA LLC owns the largest covered shrimp farm in the United States, supplying fresh-frozen shrimp year-round. It distributes products, including fresh-frozen ballyhoo (rigged and unrigged), bonita strips and more. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-11183) on Feb. 14, 2023, with $1,180,942 in assets and $931,850 in liabilities. Congwei Xu, managing member, signed the petition. Judge Mindy A. Mora oversees the case. The Debtor tapped Aaron A. Wernick, Esq., at Wernick Law, PLLC as bankruptcy counsel; Shutts & Bowen, LLP as special litigation counsel; and Helen Yin, CPA as accountant. OFF-SPEC SOLUTIONS: Amends PACCAR Secured Claim Pay Details ----------------------------------------------------------- Off-Spec Solutions, LLC, d/b/a Cool Mountain Transport, submitted a Second Amended Subchapter V Plan of Reorganization, as Modified August 15, 2023. This Second Amended Plan of Reorganization under Chapter 11 of the Code proposes to pay the Debtor's creditors from cash flow from Cool Mountain's trucking operations. Non-priority unsecured creditors holding allowed claims will receive pro rata distributions of funds totaling approximately $1,700,000 to the class. This Second Amended Plan also provides for the payment of allowed administrative and priority claims. The Second Amended Plan also provides for payment of allowed lower level non-priority unsecured claims (i.e., tardy unsecured claims), if any. Class 4 consists of the PACCAR Claim. The Debtor has surrendered the 4 tractors securing the PACCAR claim to PACCAR. The amount owed to PACCAR is $273,836 as of May 31, 2023 (the "PACCAR Claim") shall be treated as a secured claim up to the value of the 4 tractors and such secured claim is satisfied by the surrender of the 4 tractors to PACCAR. If the proceeds from PACCAR's sale of the 4 tractors is less than the PACCAR Claim, shall have a general unsecured claim in Class 14 for the amount of the deficiency, subject to the Debtor's reservation of rights to object to the amount of the deficiency claim if there is a dispute as to the value of the deficiency claim. Like in the prior iteration of the Plan, projected disposable income of the Debtor shall be paid during the life of this Second Amended Plan (60 months) to creditors holding allowed claims in Class 14 General Unsecured Claims, and on a pro rata basis, until such allowed claims are paid in full. Depending on the outcome of various claim objection proceedings, the Debtor projects payment of approximately 27% of the allowed claims in this class provided that the disputed claims are disallowed. The Debtor will continue to operate as a trucking company. The income from operating the Debtor's trucking company will be used to fund this Second Amended Plan. Transportation Investors LLC is the sole owner of the Debtor. The Salvadors, who owned approximately .1% on the Petition Date surrendered their ownership interests in the Debtor pursuant to a settlement agreement approved by the Court. After confirmation of this Second Amended Plan, the current owners shall remain as owners of the Debtor. The Debtor shall remain governed by its current Operating Agreement, as amended. Richard Coyle shall remain as President and Chief Executive Officer of the Debtor, who will continue to provide services to the Debtor unless replaced. Mr. Coyle does not own any interest in the Debtor and shall be paid a salary for his services, and an additional $35,000 payment on May 31, 2024. The funding for the Effective Date payments and certain operating expenses will be paid from a loan from Transportation Investors in an amount up to $1.4 million. Pursuant to the Loan Agreement, Transportation Investors has agreed to make up to $840,000 of a Credit Facility available to the Debtor as necessary to pay the Effective Date payments and certain operating expenses pursuant to the Second Amended Plan Budget, but only if the Court enters an order confirming the Second Amended Plan and if the Debtor continues to operate materially consistent with the Second Amended Plan Budget. As set forth in the projections, with these funds from Transportation Investors, the Debtor reasonably expects to be able to make the payments provided for by this Plan. A full-text copy of the Second Amended Plan dated August 15, 2023 is available at https://urlcurt.com/u?l=PWHxpM from PacerMonitor.com at no charge. Attorneys for Debtor: Matthew T. Christensen, Esq. Chad R. Moody, Esq. Johnson May 199 N. Capitol Blvd., Suite 200 Boise, ID 83702 Phone: (208) 384-8588 Fax: (208) 629-2157 Email: mtc@johnsonmaylaw.com crm@johnsonmaylaw.com - and - Jason E. Rios, Esq. Jennifer E. Niemann, Esq. Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP 500 Capitol Mall, Suite 2250 Sacramento, CA 95814 Telephone: (916) 329-7400 Facsimile: (916) 329-7435 Email: jrios@ffwplaw.com jniemann@ffwplaw.com About Off-Spec Solutions Off-Spec Solutions LLC, doing business as Cool Mountain Transport, is a trucking company located in Nampa, Idaho. Off-Spec Solutions filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code on (Bankr. D. Idaho Case No. 22-00346) on Aug. 5, 2022, with between $1 million and $10 million in both assets and liabilities. Matthew W. Grimshaw of Grimshaw Law Group, P.C., has been appointed as Subchapter V trustee. Judge Noah G. Hillen oversees the case. The Debtor tapped Matthew Todd Christensen, Esq., at Johnson May, PLLC, as legal counsel, and CFO Solutions, LLC, doing business as Ampleo, as consultant. OPEN COURT: Seeks to Hire Gray & Brightman CPAS as Accountant ------------------------------------------------------------- Open Court Sports Complex, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Gray & Brightman CPAS, PLLC. The Debtor requires an accountant to: a. Prepare monthly operating reports; b. Prepare financial statements to facilitate discussions with potential debtor-in-possession lenders; c. Facilitate the preparation of tax returns as needed; d. Reconstruct the books and records of the Debtor to the extent necessary to prepare reports and provide accounting advice thereon; and e. Facilitate negotiations on financial restructuring as requested by the Debtor. Brightman will be compensated at $200 per hour. As disclosed in court filings, Brightman is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Pamela Brightman Gray & Brightman CPAs, PLLC 23537 Kingsland Blvd. 123 Katy, TX 77494 About Open Court Sports Complex Open Court Sports Complex, LLC is an indoor basketball, volleyball, pickleball, and floor sports facility in Katy, Texas. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Case No. 23-32826) on July 28, 2023, with $8,281,574 in assets and $6,208,520 in liabilities. Brendon Singh, Esq., at Tran Singh, LLP has been appointed as Subchapter V trustee. Judge Jeffrey P. Norman oversees the case. The Debtor tapped Kimberly A. Bartley, Esq., at Waldron & Schneider, LLP as legal counsel and Gray & Brightman CPAS, PLLC as accountant. OPEN COURT: Seeks to Hire Waldron & Schneider as Legal Counsel -------------------------------------------------------------- Open Court Sports Complex, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Waldron & Schneider, PLLC as its legal counsel. The Debtor requires legal counsel to: a. Give advice with respect to the rights, duties and powers of the Debtor in its Chapter 11 case; b. Advise the Debtor in its consultations relative to the administration of the case; c. Assist the Debtor in analyzing claims of creditors and in negotiating with such creditors; d. Assist the Debtor in the analysis of and negotiations with any third party concerning matters relating to, among other things, the terms of a plan of reorganization; e. Represent the Debtor at all hearings and other proceedings; f. Review and analyze all applications, orders, statements of operations and schedules filed with the court and advise the Debtor as to their propriety; g. Assist the Debtor in preparing pleadings; and h. Perform other necessary legal services. The firm will be paid at these rates: Attorneys $250 - $405 per hour Clerks/Paraprofessionals/ Other timekeepers $175 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. The retainer fee is $30,000. Kimberly Bartley, Esq., a partner at Waldron & Schneider, 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: Kimberly A. Bartley, Esq. Waldron & Schneider, PLLC 15150 Middlebrook Drive Houston, TX 77058 Telephone: (281) 488-4438 Facsimile: (281) 488-4597 Email: kbartley@ws-law.com About Open Court Sports Complex Open Court Sports Complex, LLC is an indoor basketball, volleyball, pickleball, and floor sports facility in Katy, Texas. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Case No. 23-32826) on July 28, 2023, with $8,281,574 in assets and $6,208,520 in liabilities. Brendon Singh, Esq., at Tran Singh, LLP has been appointed as Subchapter V trustee. Judge Jeffrey P. Norman oversees the case. The Debtor tapped Kimberly A. Bartley, Esq., at Waldron & Schneider, LLP as legal counsel and Gray & Brightman CPAS, PLLC as accountant. PEACE EQUIPMENT: Court OKs Cash Collateral Access Thru Sept 20 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, McAllen Division, authorized Peace Equipment LLC to use cash collateral on an interim basis in accordance with the budget, with a 5% variance, through September 20, 2023. Specifically, the Debtor is authorized to use cash collateral to meet the ordinary cash needs of the Debtor (and for such other purposes as may be approved in writing by the Secured Lenders) for the payment of: a. reasonable and necessary operating expenses incurred in the ordinary course of business; b. maintenance and preservation of property of the estate; c. payroll; and d. payment of expenses associated with this Chapter 11 case, including United States Trustee's fees, Subchapter V Trustee’s fees and professional fees and expenses incurred in the administration of the bankruptcy case. Commercial Credit Group, Corporate Service Corp., Pathward Financial, Inc. f/k/a Crestmark TPG, LLC, CT Corporate System, Mulligan Funding (Corporate Service Corp.), Northeast Bank, Vox Funding (Corporate Service Corp), TBK, Paccar Financial, TransLease, Inc., Balboa Capital and BMO Harris Bank, N.A. have UCC-1 financing statements filed against the Debtor. As of the Petition Date, the Debtor owed funds to the Secured Lenders for various loans. The Debtor is directed pay to each of these adequate protection payments: a. TBK Bank, SSB The Debtor will pay to TBK Bank, FSB on or before August 31, 2023, the amount of $4,750 relative to one 2021 Kenworth W990 tractor, one 2021 Kenworth T680 tractor, two 2021 Utility Refrigerated Trailers with Carrier Units and three 2022 Utility Refrigerated Trailers with Carrier Units. b. Commercial Credit Group The Debtor will pay to Commercial Credit Group the amount of $7,595 on or before July 31, 2023, for one 2018 Utility VS2RA refrigerated trailer with Carrier unit; three 2019 Utility VS2RA refrigerated trailers with Carrier units; one 2020 Utility refrigerated trailer with Carrier unit; one 2022 Utility Refrigerated Trailer with Carrier unit; one 2017 Kenworth T660 sleeper tractor; three2019 Kenworth T680 sleeper tractors; one 2020 Kenworth T680 sleeper tractor; and one 2019 Kenworth W900 sleeper tractor. c. Paccar Financial The Debtor will pay to Paccar Financial the amount of $3,495 on or before July 31, 2023, for one Kenworth 2020 T680 tractor, one 2021 Kenworth W990 tractor and for one 2023 Kenworth T680 tractor. d. TransLease The Debtor will pay to TransLease the amount of $1,170 on or before July 31, 2023 for one 2022 Kenworth T680 tractor. e. Acentium The Debtor will pay to Acentium the amount of $3,075 on or before August 31, 2023 for three 2022 Kenworth T680 tractors and one 2022 Kenworth W900. f. BMO Harris Bank The Debtor will pay to BMO Harris Bank the amount of $1,875 on or before August 22, 2023 for one 2020 Kenworth T680 tractor and two 2020 Utility trailers. The Secured Lenders are granted postpetition liens against the same types of property of the Debtor, to the same validity, extent and priority, as existed as of the Petition Date, wherever located, effective nunc pro tunc as of the Petition Date. The liens will be deemed for all purposes to have been properly perfected, without filing, as of the Petition Date. These events constitute an "Event of Default": (i) The Debtor violates or fails to timely satisfy, post-petition, any term or condition of the Agreed Order; (ii) A Chapter 11 trustee or examiner is appointed without the consent of any Secured Creditor (except for the subpart V trustee); (iii) The Debtor sells or encumbers any item of property subject to the Secured Creditors liens (including, without limitation, the cash collateral), without the prior written consent of such Secured Creditors or court authorization, except for those accounts receivable sold to Phoenix; (iv) The Debtor's Chapter 11 proceeding is converted to a Chapter 7 proceeding or dismissed; or (v) Insurance required under the loan agreements is allowed to lapse by the Debtor, or is otherwise terminated. To the extent that the Replacement Liens previously provided to the Secured Lenders under the First Interim Cash Collateral Order and Second Interim Order or hereunder prove inadequate to protect the Secured Lenders from a demonstrated diminution in the value of its collateral from the Petition Date, then the Secured Lenders are hereby granted an administrative expense claim under Code section 503(b) with priority in payment under Code section 507(b) save and except payments for the subpart V Trustee and fees for counsel of the Debtor. A further hearing on the matter is set for September 20, at 9:30 a.m. A copy of the Court's order and the Debtor's budget is available at https://urlcurt.com/u?l=FVeZx4 from PacerMonitor.com. The Debtor projects $457,500 in total revenue and $431,834 in total expenses for 30 days. About Peace Equipment, LLC Peace Equipment, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-70098) on May 24, 2023. In the petition signed by Alejandro G. Mascorro, president, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Eduardo V. Rodriguez oversees the case. Reese W. Baker, Esq., at Baker and Associates, represents the Debtor as legal counsel. PEAK TAHOE LLC: Taps Harris Law Practice as Bankruptcy Counsel -------------------------------------------------------------- Peak Tahoe, LLC seeks approval from the U.S. Bankruptcy Court for the District of Nevada to employ Harris Law Practice, LLC as its bankruptcy counsel. The firm's services include: (a) examining and preparing records and reports as required by the Bankruptcy Code, Federal Rules of Bankruptcy Procedure and Local Bankruptcy Rules; (b) preparing applications and proposed orders to be submitted to the court; (c) identifying and prosecuting claims and causes of action assertable by the Debtor on behalf of the estate; (d) examining proofs of claim anticipated to be filed and the possible prosecution of objections to certain claims; (e) advising the Debtor and preparing documents in connection with the contemplated ongoing operation of the Debtor's business; (f) assisting and advising the Debtor in performing other official functions; and (g) advising and preparing a plan of reorganization and related documents and confirmation of said plan. The firm will be paid at these rates: Stephen R. Harris, Esq. $635 per hour Norma Guariglia, Esq. $475 per hour Paraprofessionals $175 per hour The Debtor paid the firm and advance retainer of $540,000. Stephen Harris, Esq., an attorney at Harris Law Practice, 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: Stephen R. Harris, Esq. Norma Guariglia, Esq. Harris Law Practice, LLC 850 E. Patriot Blvd., Suite F Reno, NV 89511 Telephone: (775) 786-7600 Facsimile: (775) 786-7764 Email: steve@harrislawreno.com norma@harrislawreno.com About Peak Tahoe Peak Tahoe LLC, a company in Stateline, Nev., filed its voluntary petition for Chapter 11 protection (Bankr. D. Nev. Case No. 23-50483) on July 18, 2023, with as much as $10 million to $50 million in both assets and liabilities. Judge Hilary L. Barnes oversees the case. Harris Law Practice, LLC serves as the Debtor's bankruptcy counsel. PERIMETER ORTHOPAEDICS: Unsecureds to Split $559K in Plan --------------------------------------------------------- Perimeter Orthopaedics, P.C., and Perimeter Outpatient Surgical Associates, Inc., filed with the U.S. Bankruptcy Court for the Northern District of Georgia a Joint Plan of Liquidation dated August 15, 2023. Perimeter Orthopaedics, P.C. (the "Practice") is a physician practice that specializes in orthopedics. The Practice began forty years ago in 1983. As founder of the Practice, Dr. Paul Spiegl has grown the Practice over many years, adding patients, physicians, and offices. In 1998, the Practice obtained approval for and began its outpatient surgical center (the "Surgery Center"). The outpatient surgical center is owned through an affiliate of the Practice, Perimeter Outpatient Surgical Associates, Inc. In the following years, the Practice and Surgery Center were able to grow significantly. The Practice and Surgery Center relocated to its current location in 2004. Unfortunately, several factors within recent years have led to a decline in the profitability of the Practice and Surgery Center. First, the Practice and Surgery Center have increasingly been unable to negotiate contracts having high enough reimbursement rates to keep up with growing expenses. Second, the two employed physicians were hired during the initial stages of the COVID19 pandemic at the same time that patient volumes were declining. Third, the Practice experienced significant challenges with those personnel responsible for billing and reimbursement, which problems resulted in claims not being submitted or not being properly submitted. The Debtors intend to sell substantially all of their assets and liquidate their businesses through this Plan. Class 8 shall consist of General Unsecured Claims including any potential deficiency claims. If the Plan is confirmed under Section 1191(a) of the Bankruptcy Code, the Debtors shall pay the General Unsecured Creditors a total of $559,508.98 on the Effective Date. Debtors anticipate and project but do not warrant the Holders of Class 8 Claims and the distributions under Class 8. If the Plan is confirmed under Section 1191(b) of the Bankruptcy Code, Class 8 shall be treated the same as if the Plan was confirmed under Section 1191(a) of the Bankruptcy Code. Notwithstanding anything else in this document to the contrary, any claim shall be reduced by any payment received by the creditor holding such claim from any third party or other obligor and Debtors' obligations hereunder shall be reduced accordingly. The Claims of the Class 8 Creditors are Impaired. The source of funds for the payments pursuant to the Plan is the sale of substantially all of the Debtors' assets. A full-text copy of the Joint Plan dated August 15, 2023 is available at https://urlcurt.com/u?l=0ihodB from PacerMonitor.com at no charge. Attorney for Debtors: William A. Rountree, Esq. Rountree Leitman Klein & Geer, LLC Century Plaza I 2987 Clairmont Road, Suite 350 Atlanta, GA 30329 Telephone: (404) 584-1238 Facsimile: (404) 704-0246 Email: wrountree@rlkglaw.com About Perimeter Orthopaedics Perimeter Orthopaedics, P.C., and Perimeter Outpatient Surgery Associates, Inc. are a physician practice that specializes in orthopedics. The Debtors filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Lead Case No. 23-20554) on May 17,2023. At the time of filing, Perimeter Orthopaedics reported as much as $50,000 in assets and $1 million to $10 million in liabilities. Perimeter Outpatient reported as much as $50,000 in assets and $500,001 to $1 million in liabilities. Judge James R. Sacca oversees the cases. The Debtors tapped William A. Rountree, Esq., at Rountree Leitman Klein & Geer, LLC as bankruptcy counsel and Durrett Firm as special counsel. PETES AUTO: May Use $85,000 of Cash Collateral Thru Aug 31 ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut authorized Petes Auto Sales and Service LLC to use cash collateral on an interim basis in accordance with the budget, through August 31, 2023. The Debtor requires the use of cash collateral to pay ordinary course of business expenses insurance, payroll, rent utilities, costs of goods sold and payments to secured creditors. Prior to the Petition Date, the Debtor was indebted to Shamrock Finance, LLC pursuant to a note and secured collateral pursuant to the Shamrock Note, on all the Debtor's property, real and personal. On the Petition Date, Shamrock Finance asserts the outstanding principal balance was $66,821. Prior to the Petition Date, the Debtor was indebted to Lendora Capital, LLC, and secured collateral pursuant to the Lendora Agreement, on all the Debtor's property, real and personal. On the Petition Date, Lendora asserts the outstanding principal balance was $66,821. As adequate protection, the Secured Creditors are granted a continuing post-petition lien and security interest in all pre-petition property of the Debtor as it existed on the Petition Date, of the same type against which Secured Creditors held validly protected liens and security interests as of the Petition Date and a continuing post-petition lien in all property acquired by the Debtor after the Petition date. The Replacement Liens will maintain the same priority, validity and enforceability as Secured Creditors' liens on the initial Collateral and will be recognized only to the extent of any diminution in the value of the Collateral resulting from the use of cash collateral pursuant to the Order. A further hearing on the matter is set for August 31, 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=8IkQCB from PacerMonitor.com. The Debtor projects $3,902 in total expenses for August 2023. About Petes Auto Sales Petes Auto Sales & Service, LLC, also known as Pete's Auto Sales & Service, LLC, filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Conn. Case No. 23-20344) on May 5, 2023. At the time of the filing, the Debtor reported $100,001 to $500,000 in both assets and liabilities. Judge James J. Tancredi oversees the case. The Debtor is represented by Gregory F. Arcaro, Esq., at Grafstein & Arcaro, LLC. PORTER'S PENINSULA: Gets Approval to Hire Miedema Appraisals ------------------------------------------------------------ Porter's Peninsula Logging, LLC received approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Miedema Appraisals, Inc. The firm has agreed to conduct an appraisal of the Debtor's equipment and machinery for a fee of $1,250, including expenses. As disclosed in court filings, Miedema Appraisals is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Steve Prahl Miedema Appraisals, Inc. 601 Gordon Industrial Court, Byron Center, MI 49315 Tel: (616) 878-3470 Email: info@miedemaappraisals.com About Porter's Peninsula Logging Porter's Peninsula Logging, LLC is a logging company in Atlanta, Mich. Porter's Peninsula Logging filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-20563) on May 19, 2023, with up to $500,000 in assets and up to $10 million in liabilities. Kimberly Ross Clayson, Esq., has been appointed as Subchapter V trustee. Judge Daniel S. Oppermanbaycity oversees the case. Rozanne M. Giunta, Esq., at Warner Norcross + Judd, LLP represents the Debtor as legal counsel. PORTUGUESE BEND: Case Summary & 10 Unsecured Creditors ------------------------------------------------------ Debtor: Portuguese Bend Distilling, LLC 300 The Promenade North Long Beach CA 90802 Business Description: The Debtor is a grain to glass distillery. Chapter 11 Petition Date: August 23, 2023 Court: United States Bankruptcy Court Central District of California Case No.: 23-15416 Debtor's Counsel: Michael S. Kogan, Esq. KOAGN LAW FIRM, APC 11500 W. Olympic Blvd., Suite 400 Los Angeles, CA 90064 Tel: 310-954-1690 Email: mkogan@koganlawfirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Simon Haxton as manager. A full-text copy of the petition containing, among other items, a list of the Debtor's 10 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/6PB6LFQ/Portuguese_Bend_Distilling_LLC__cacbke-23-15416__0001.0.pdf?mcid=tGE4TAMA PROSPERITAS LEADERSHIP: Court OKs Cash Collateral Access Thru Oct 5 ------------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division, authorized Prosperitas Leadership Academy, Inc. to use cash collateral on an interim basis in accordance with the budget, through October 5, 2023. The Debtor is permitted to use cash collateral to pay: (a) the amounts expressly authorized by the Court, including payments to the United States Trustee for quarterly fees; (b) the current and necessary expenses set forth in the budget; and (c) the additional amounts as may be expressly approved in writing by the Creditor. As adequate protection, Black Business Investment Fund will have a perfected post-petition lien against cash collateral to the same extent and with the same validity and priority as its pre-petition lien, without the need to file or execute any documents as may otherwise be required under applicable nonbankruptcy law. The Debtor will maintain insurance coverage for its property in accordance with the obligations under the loan and security documents with the Creditor. A continued preliminary hearing on the matter is set for October 5 at 10:30 a.m. A copy of the Court's order and the Debtor's budget is available at https://urlcurt.com/u?l=3UE0yi from PacerMonitor.com. The Debtor projects total operating expenses, on a monthly basis, as follows: $84,57 for September 2023; $84,57 for October 2023; $84,57 for November 2023; and $84,57 for December 2023. About Prosperitas Leadership Academy, Inc. Prosperitas Leadership Academy, Inc. is a public charter school for residents of Orange County, California. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-02443) on June 21, 2023. In the petition signed by Michael Spence, Board president, the Debtor disclosed $2,009,763 in assets and $2,533,820 in liabilities. Judge Grace E. Robson oversees the case. Jeffrey S. Ainsworth, Esq., at Bransonlaw, PLLC, represents the Debtor as legal counsel. RUTHERFORD ENTERPRISES: Court OKs Cash Collateral Access -------------------------------------------------------- The U.S. Bankruptcy Court for the Norther District of Florida, Tallahassee Division, authorized Rutherford Enterprises 1, LLC d/b/a Marco's Pizza to use cash collateral effective as of the petition date. As previously reported by the Troubled Company Reporter, Customers Bank is the holder of a loan the Debtor obtained in accordance with a U. S. Small Business Administration program, and claims an interest in the cash collateral pursuant to UCC-1 Financing Statement filed on September 28, 2020. Customers Bank has a lien on all assets of the Debtor, including all accounts of the Debtor. Marco's Franchising, LLC may claim an interest in the cash collateral pursuant to a UCC-1 Financing Statement filed on January 2, 2020, but the Debtor does not believe it is indebted to Marco's. Mulligan Funding, LLC may claim an interest in the cash collateral pursuant to a UCC-1 Financing Statement filed on June 6, 2023, however, the Debtor has not yet been able to substantiate that Mulligan Funding, LLC is the entity for which the UCC-1 has been filed, nor would it have priority over Customers Bank. The Debtor believes it owes Customers Bank approximately $450,000, and that Customers Bank has the first position security interest pursuant to the UCC-1 Financing Statement. The court ruled that the Debtor is permitted to use cash collateral to pay ordinary monthly expenses and all fees authorized by the Court. As adequate protection for the Debtor's use of cash collateral, the Secured Creditor will have a first priority post-petition security interest in, and lien upon, all of the Debtor's personal property, to the same extent that Secured Creditor held a properly perfected prepetition security interest or lien in the accounts receivable immediately prior to the filing of the petition commencing the case. The Post-Petition Lien will be deemed, perfected without the need to execute or file any document or instrument that might otherwise be required under applicable non-bankruptcy law to perfect said lien. As additional adequate protection for the Debtor’s use of cash collateral, the Debtor will maintain insurance coverage for its business operations and personal property, if applicable, in accordance with its obligations under the loan and security documents with the Secured Creditor. As additional adequate protection for the Debtor's use of cash collateral, the Debtor will, on or before August 22, 2023, and on the 22nd day of each month thereafter prior to confirmation, deliver to Secured Creditor, monthly payments in the amount of $3,000. A copy of the court's order is available at https://urlcurt.com/u?l=1pJaoQ from PacerMonitor.com. About Rutherford Enterprises 1, LLC Rutherford Enterprises 1, LLC, a company in Tallahassee, Fla., filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Fla. Case No. 23-40217) on June 16, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Charles M Rutherford, Sr., manager, signed the petition. Judge Karen K. Specie oversees the case. Byron W. Wright III, Esq., at Bruner Wright, P.A. is the Debtor's legal counsel. SAM'S SERVICE: Case Summary & Eight Unsecured Creditors ------------------------------------------------------- Debtor: Sam's Service Co d/b/a Sam's Automotive d/b/a Sam's Auto Body d/b/a Sam's Automotive Recon Center 1314 W Oxford Ave Englewood, CO 80150 Business Description: The Debtor offers auto body repair services. Chapter 11 Petition Date: August 23, 2023 Court: United States Bankruptcy Court District of Colorado Case No.: 23-13762 Judge: Hon. Joseph G Rosania Jr. Debtor's Counsel: Aaron A. Garber, Esq. WADSWORTH GARBER WARNER CONRARDY, P.C. 2580 West Main Street Suite 200 Littleton, CO 80120 Tel: 303-296-1999 Fax: 303-296-7600 Email: agarber@wgwc-law.com Total Assets: $13,966,635 Total Liabilities: $3,937,691 The petition was signed by Michael T. Chavez as president. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/DYTLXEY/Sams_Service_Co__cobke-23-13762__0001.0.pdf?mcid=tGE4TAMA List of Debtor's Eight Unsecured Creditors: Entity Nature of Claim Claim Amount 1. Arapahoe County Treasurer $3,092 5334 S Prince St Littleton, CO 80120 2. Blue Vine $59,787 30 Montgomery Street Suite #1400 Jersey City, NJ 07302 Email: support@bluevine.com 3. Elan Financial $20,241 PO Box 790408 Saint Louis, MO 63179 4. Fora Financial A/R $261,137 1385 Broadway 15th Floor New York, NY 10018 5. Grand County Treasurer $567 PO Box 288 Hot Sulphur Springs, CO 80451 6. Karen Wagner $25,000 14582 S Elk Creek Pine, CO 80470 7. Small Business $18,130 Adminstration 409 3rd Street, SW Washington, DC 20416 8. Xcel Energy $21,933 414 Nicollett Mall Minneapolis, MN 55401 SCFT2 LLC: Gets OK to Hire Law Offices of Gabriel Del Virginia -------------------------------------------------------------- SCFT2 LLC received approval from the U.S. Bankruptcy Court for the Southern District of New York to employ the Law Offices of Gabriel Del Virginia to handle its Chapter 11 case. The firm will be paid at these rates: Gabriel Del Virginia, Partner $675 per hour Associate $350 per hour Paralegal $150 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. The retainer fee is $20,800. Gabriel Del Virginia, Esq., a partner at the Law Offices of Gabriel Del Virginia, disclosed in a court filing that the firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Gabriel Del Virginia, Esq. Law Offices of Gabriel Del Virginia 30 Wall Street-12th Floor, New York, NY 10005. Tel: (212) 371-5478 Fax: (212) 371-0460 Email: gabriel.delvirginia@verizon.net About SCFT2 LLC SCFT2, LLC, a New York-based company, filed its voluntary petition for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 23-10904) on June 6, 2023, with as much as $1 million to $10 million in both assets and liabilities. Ron Curtis, manager, signed the petition. Judge Lisa G. Beckerman oversees the case. The Law Offices of Gabriel Del Virginia serves as the Debtor's bankruptcy counsel. SKINNY & CO: Seeks to Hire Brawley & Associates as Accountant ------------------------------------------------------------- Skinny & Co., Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to hire Brawley & Associates, PC to provide historical bookkeeping and tax preparation services. The fees and costs to be charged by Brawley range from $3,000 to $5,000. As disclosed in court filings, Brawley and its partners and associates are "disinterested persons" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Jerry Brawley, CPA Brawley & Associates, PC 102 N Madison Ave Greenwood, IN 46142 Phone: +1 317-731-7655 About Skinny & Co. Skinny & Co. is a skincare company offering chemical-free products for skin, hair, and body. Skinny & Co. filed its voluntary Chapter 11 petition (Bankr. S.D. Ind. Case No. 23-01410) on April 7, 2023, with $390,275 in assets and $2,954,157 in liabilities. Luke Geddie, president, signed the petition. Judge Jeffrey J. Graham presides over the case. The Debtor tapped Wendy Brewer, Esq., at Fultz Maddox Dickens, PLC as legal counsel and Brawley & Associates, PC as accountant. SMB HOLDINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Four affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- SMB Holdings, LLC 23-42478 28615 SE Outer Road Harrisonville, MO 64701 MFAF Holdings, LLC 23-42479 8575 Dolton Way Highlands Ranch, CO 80126 CHIC Holdings LLC 23-42480 9575 Dolton Way Highlands Ranch, CO 80126 Bela Flor Nurseries, Inc. 23-42469 Business Description: The Debtors operate as Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: August 23, 2023 Court: United States Bankruptcy Court Northern District of Texas Judge: Hon. Mark X. Mullin Debtors' Counsel: Buffey E. Klein, Esq. HUSCH BLACKWELL LLP 1900 N. Pearl Street, Suite 1800 Dallas, TX 75201 Tel: 214-999-6152 Email: buffey.klein@huschblackwell.com SMB Holdings' Estimated Assets: $10 million to $50 million SMB Holdings' Estimated Liabilities: $10 million to $50 million MFAF Holdings' Estimated Assets: $10 million to $50 million MFAF Holdings' Estimated Liabilities: $10 million to $50 million CHIC Holdings' Estimated Assets: $1 million to $10 million CHIC Holdings' Estimated Liabilities: $1 million to $10 million The petitions were signed by Mark Shapiro as chief restructuring offier and chief financial officer. The Debtors failed to include in the petitions lists of their 20 largest unsecured creditors. Full-text copies of the petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/2EJWBQA/SMB_Holdings_LLC__txnbke-23-42478__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/2CWTRZI/MFAF_Holdings_LLC__txnbke-23-42479__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/5TNV5UY/CHIC_Holdings_LLC__txnbke-23-42480__0001.0.pdf?mcid=tGE4TAMA SMS DIRECT: Gets OK to Tap Bach Law Offices as Bankruptcy Counsel ----------------------------------------------------------------- SMS Direct, Inc. received approval from the U.S. Bankruptcy Court for the Northern District of Illinois to hire Bach Law Offices, Inc. The Debtor requires legal counsel to negotiate with creditors; prepare a Chapter 11 plan and disclosures statement; examine and resolve claims filed against the estate; and prepare and prosecute adversary proceedings. The hourly rates of the firm's attorneys are as follows: Paul M. Bach $425 Penelope N. Bach $425 The firm received an initial retainer in the amount of $2,000. Paul Bach, Esq., an attorney at Bach Law Offices, disclosed in a court filing that his firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Paul M. Bach, Esq. Bach Law Offices, Inc. P.O. Box 1285 Northbrook, IL 60065 Telephone: (847) 564-0808 Facsimile: (847) 564-0985 Email: pnbach@bachoffices.com About SMS Direct SMS Direct, Inc., a company in Bolingbrook, Ill., filed its voluntary Chapter 11 petition (Bankr. N.D. Ill. Case No. 23-04899) on April 13, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Richard Smith, owner of SMS Direct, signed the petition. Judge David D. Cleary presides over the case. Paul M. Bach, Esq., at Bach Law Offices, Inc. represents the Debtor as counsel. SNOWSHOE MILLWORKS: Taps Shepherd Real Estate as Broker ------------------------------------------------------- Snowshoe Millworks, LLC received approval from the U.S. Bankruptcy Court for the District of Massachusetts to employ Shepherd Real Estate, LLC. The Debtor requires a real estate broker to market and sell its real properties located at 1 Windsor Road and 2 Windsor Road, Nantucket, Mass. The firm will be paid a commission of 5 percent of the selling price. As disclosed in court filings, Shepherd Real Estate is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Susan Shepherd Shepherd Real Estate, LLC Zero Main Street Nantucket, MA 02554 Tel: (508) 228-5668/(508) 221-1433 Email: susan.nantucket@gmail.com About Snowshoe Millworks Snowshoe Milworks, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-10887) on June 5, 2023, with $1 million to $10 million in both assets and liabilities. Sheila Coffin Harshman, sole manager and member, signed the petition. Judge Janet E. Bostwick oversees the case. The Debtor tapped Adam Ruttenberg, Esq., at Beacon Law Group, LLC as bankruptcy counsel and Cheryl L. Dukeman, Esq., at Coast to Coast Closings as special counsel. ST. SEBASTIAN: Files Emergency Bid to Use Cash Collateral --------------------------------------------------------- St. Sebastian Hotels, LLC asks the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, to use cash collateral on an interim basis and provide adequate protection. The Debtor obtained possession of the motel in Alice, Texas, on August 10, 2023, pursuant to an agreed turnover order with Olympia Hospitality, LLC. The Debtor requires preliminary and interim use of its cash collateral to pay its necessary expenses of its business in the ordinary course. The creditors that purport to hold liens or security interests in rents or other cash collateral pursuant to a deed of trust are United Business Bank and Celtic Bank Corporation. The Debtor proposes to adequately protect the interests of the Lenders in the collateral in a number of ways. The Debtor proposes to grant the Lenders post-petition replacement liens in the same assets of the Debtor that such entity had prior to the filing of the chapter 11 bankruptcy case. In addition, the Debtor will provide the Lenders with information relating to projected revenues and expenses, actual revenue and expenses, and variances from the interim budget. A copy of the motion is available at https://urlcurt.com/u?l=GDzbJI from PacerMonitor.com. A copy of the budget is available at https://urlcurt.com/u?l=SkV6hN from PacerMonitor.com. The Debtor projects $14,500 in total income and $14,350 in total expenses for 14 days. About St. Sebastian's Hotels St. Sebastian's Hotels, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Case No. 23-32399) on June 30, 2023, with $500,001 to $1 million in both assets and liabilities. Sylvia Mayer, Esq., at S. Mayer Law, PLLC has been appointed as Subchapter V trustee. Judge Jeffrey P. Norman oversees the case. Reese W. Baker, Esq., at Baker & Associates represents the Debtor as legal counsel. SUD'S CLUB: Case Summary & Seven Unsecured Creditors ---------------------------------------------------- Debtor: SUD'S Club, LLC 673 Old Phoenix Road Eatonton, GA 31024 Business Description: The Debtor is the owner of a commercial property located at 673 Old Phoenix Road Eatonton, Georgia valued at $2.2 million. Chapter 11 Petition Date: August 23, 2023 Court: United States Bankruptcy Court Middle District of Georgia Case No.: 23-51151 Debtor's Counsel: Christopher W. Terry, Esq. BOYER TERRY LLC 348 Cotton Avenue, Suite 200 Macon, GA 31201 Tel: (478) 742-6481 Fax: (770) 200-9230 Email: Chris@boyerterry.com Total Assets: $3,037,441 Total Liabilities: $2,280,000 The petition was signed by Jacob Fried as sole member. A full-text copy of the petition containing, among other items, a list of the Debtor's seven unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/AUWINFA/SUDS_CLUB_LLC__gambke-23-51151__0001.0.pdf?mcid=tGE4TAMA TABULA RASA: Wins Interim Cash Collateral Access ------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, authorized Tabula Rasa, Co. to use cash collateral on an interim basis in accordance with the budget, with a 10% variance. The Debtor believes Dogwood State Bank assert an interest in the cash collateral by way of Security Agreement and UCC-1 financing statement numbers 20200155202M and 20200155207F filed on October 9, 2020, with the North Carolina Secretary of State. The potentially secured party has not yet consented to the Debtor's use of cash collateral. At the time of the petition, the Debtor had cash on hand of approximately $229 in its bank accounts, all of which was transferred to the Debtor's DIP account after filing and personal property (including inventory, equipment, furnishings, raw materials and finished goods) valued at approximately $239,122. The Debtor needs to use the funds in the DIP account to continue normal operations and to maintain its going concern value. As adequate protection, and to the extent that cash collateral is used, Dogwood will receive a post-petition lien on the Debtor's cash and inventory to the extent of the use and to the extent that the pre-petition lien in the same type of collateral was valid, perfected, enforceable, and non-avoidable as of the petition date. In addition, Debtor will make an adequate protection payment to Dogwood in the amount of $2,903, continuing monthly for as long as the Debtor's use of cash collateral is authorized. The next hearing on the matter is set for September 27, 2023 at 1 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=xd2Ozk from PacerMonitor.com. The Debtor projects $42,500 in gross revenue and $39,104 in total expenses for the period from August 17, 2023 through September 27, 2023. About Tabula Rasa, Co. Tabula Rasa, Co. is a North Carolina corporation that has operated for the past four years as a licensed distillery in the Raleigh and Garner, North Carolina area. Tabula Rasa also operates a small bar at its facility on Rand Mill Road in Garner. Tabula Rasa sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-01911) on July 10, 2023. In the petition signed by Paul Jacob Howland, president, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge David M. Warren oversees the case. Danny Bradford 23011, Esq., at Paul D. Bradford, PLLC, represents the Debtor as legal counsel. TOMIA BEAUTY: Lender Seeks to Prohibit Cash Access -------------------------------------------------- Lucky Color Israel, Ltd. asks the U.S. Bankruptcy Court for the District of New Jersey for entry of an order prohibiting Tomia Beauty Brands LLC from using cash collateral. At the time of the petition, Lucky Color held a second position perfected lien on, inter alia, the Debtor's cash and cash equivalents. Prior to filing the petition, the Debtor defaulted on its debt obligations to Lucky Color and its predecessor. The Debtor has not filed any motion authorizing the use of cash collateral, and therefore may be using Lucky Color's cash collateral without its consent or without permission of the Court as is required by 11 U.S.C. Section 363(c)(2). On August 25, 2021, the Debtor and Decathlon Alpha IV, L.P., and others, entered into that certain Revenue Loan and Security Agreement, as amended by a First Amendment to Revenue and Security Agreement, in the original principal amount of $500,000. To secure the Debtor's payments, performance, and other obligations under the Loan Agreement, the Debtor granted to Decathlon "a continuing security interest in all of its right, title and interest in and to the Collateral." On August 25, 2021, Decathlon filed a UCC-1 financing statement with the New York Secretary of State, Filing Number 202108250313235. On August 25, 2021, Decathlon, the Debtor, and Star Funding, Inc., entered into an Intercreditor Agreement whereby, inter alia, Decathlon and Star agreed to certain priorities and subordination of liens on certain of the Debtor's assets. Additionally, in the Intercreditor Agreement Decathlon and Star agreed that each enjoys a lien on 50% of the Debtor's general accounts receivables. On June 30, 2023, Decathlon and Lucky Color entered into the Assignment and Assumption Agreement, whereby Decathlon assigned its rights and obligations under the Loan Documents to Lucky Color, and Lucky Color assumed same. Lucky Color, as assignee and successor to Decathlon, holds a perfected, second position lien on the Debtor's Collateral. On January 17, 2023, Decathlon sent the Debtor a Notice of Default and Acceleration of amounts owed under the Loan Agreement. The Debtor had not made any payments to Decathlon under the Loan Agreement since April 2022. Accordingly, Decathlon demanded payment of all amounts due and owing under the Loan Agreement -- not less than $863,498, plus costs and attorneys' fees. As of the date of this filing, the total amount due and owing to Lucky Color under the Loan Agreement is approximately $960,563, plus applicable attorneys' fees and costs as provided for under the Loan Agreement. Alternatively, any use of Lucky Color's cash collateral should be restricted and conditioned by the Court upon such terms as may be appropriate to provide adequate protection, including but not limited to: a. Lucky Color should receive a replacement lien on the post-petition cash collateral, which lien shall be of the same extent, validity, and priority that Lucky Color held prepetition; b. the Court should enter an order specifically limiting the use of Lucky Color's cash collateral solely for ordinary course operating expenses and subject to a monthly budget; c. the Court should enter an order requiring the Debtor to provide monthly financial reports regarding cash collateral used and comparing actual use to the proposed budget; and d. the Court should enter an order requiring the Debtor to pay monthly adequate protection cash payments to Lucky Color in an amount not less than 20% of the Debtor's monthly budget. A copy of the motion is available at https://urlcurt.com/u?l=wxpqeH from PacerMonitor.com. About Tomia Beauty Brands LLC Tomia Beauty Brands LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N.J. Case No. 23-16967) on August 13, 2023. In the petition signed by Jennifer Kapahi, manager, the Debtor disclosed up to $10 million in both assets and liabilities. Todd E. Duffy, Esq., at Duffyamedro LLP, represents the Debtor as legal counsel. Lucky Color Israel, Ltd., as lender, is represented by: Scott A. Zuber, Esq. Terri Jane Freedman, Esq. Chiesa Shahinian & Giantomasi PC One Boland Drive West Orange, NJ 07052 Tel: (973) 325-1500 Email:szuber@csglaw.com Email: tfreedman@csglaw.com - and - Steven M. Berman, Esq. (pro hac vice pending) Shumaker, Loop & Kendrick, LLP Bank of America Plaza, Suite 2800 101 East Kennedy Boulevard Tampa, FL 33602 Tel: (813) 227-2232 Email: sberman@shumaker.com UNITY ELECTRICAL: Wins Cash Collateral Access on Final Basis ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, authorized Unity Electrical Services, LLC to use cash collateral on a final basis in accordance with the budget. The U.S. Internal Revenue Service, Simply Funding and U.S. Small Business Administration assert an interest in the Debtor's receivables and cash through filed UCC-1 Financing Statements. As adequate protection, the Secured Parties are granted replacement liens encumbering all property of the Debtor's estate, including all property and accounts receivable, acquired or generated by the Debtor after the Petition Date to the same extent, validity, and priority to which its liens attached prior to the Petition Date. The Replacement Liens will be deemed automatically valid and perfected with such priority as provided in the Order without any further notice or act by any party that may otherwise be required under any other law. The Debtor is directed to maintain insurance on all tangible assets of the estate and will provide written evidence of same to the IRS and the United States Trustee, no later than August 31, 2023. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=RmJ5C6 from PacerMonitor.com. The Debtor projects total cash paid out, on a monthly basis, as follows: $120,457 for September 2023; $119,714 for October 2023; $119,714 for November 2023; and $119,714 for December 2023. About Unity Electrical Services, LLC Unity Electrical Services, LLC is a one-stop solution for electrical needs in Cypress, Woodlands, Tomball and Houston area. The Debtor provides a full list of services for residential and commercial applications. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-32844) on July 28, 2023. In the petition signed by Andrea Clara, managing member, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge Jeffrey P. Norman oversees the case. Susan Tran Adams, Esq., at Tran Singh, LLP, represents the Debtor as legal counsel. VANTAGE TRAVEL: Wins Continued Cash Collateral, Financing Access ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, entered a fourth interim order authorizing Vantage Travel Service, Inc. to obtain secured financing from United Travel Pte. Ltd., on an interim basis. The Debtor is also authorized to continue using its prepetition lenders' cash collateral, including up to $70,000 of sale proceeds, through August 31, 2023 in accordance with the Three-Week Budget and the Financing Order. The Prepetition Lenders are R. Lewis Trust and Henry R. Lewis. A final hearing on the matter is set for August 30 at 2 p.m. As previously reported by the Troubled Company Reporter, United Travel is a Singapore corporation, which has agreed to acquire the Debtor's business operations and assets. The parties' asset purchase agreement is subject to court approval. The Debtor was authorized to borrow up to $560,000 from the DIP Lenders, inclusive of the $500,000 of borrowing authorized by the First Interim Order, on the terms and conditions of the DIP Notes as modified by the First Interim Order and Second Interim Order. The Debtor was authorized to borrow from both United travel and the Lewis entities. The Court held that a prior prohibition against borrowing from the HRL Trust Lender until entry of a final order on the Financing Motion is lifted. Each DIP Lender has consented to the terms of the Order and confirmed that no Event of Default will occur under the DIP Notes to the extent the terms of the Order are inconsistent with the DIP Notes. A copy of the order is available at https://urlcurt.com/u?l=qfZIDb from PacerMonitor.com. About Vantage Travel Service, Inc. Vantage Travel Service, Inc. is a travel agency providing deluxe international tours. Its travel offerings include trips on river and ocean-going vessels owned by affiliated, non-debtor entities, as well as river, ocean-going and land-based tours booked with third-party operators. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 23-11060) on June 29, 2023. In the petition signed by Gregory DelGreco, authorized officer, the Debtor disclosed up to $10 million in assets and up to $500 in liabilities. Judge Janet E. Bostwick oversees the case. Michael J. Goldberg, Esq., at Casner & Edwards, LLP, represents the Debtor as legal counsel. An ad hoc committee of customers is represented by: Andrew C. Helman, Esq. DENTONS BINGHAM GREENEBAUM LLP One Beacon Street, Suite 25300 Boston, MA 02108 Tel: (207) 619-0919 E-mail: andrew.helman@dentons.com VAUGHN ENVIRONMENTAL: Court OKs Cash Access on Final Basis ---------------------------------------------------------- The U.S. Bankruptcy Code for the District of Oregon authorized Vaughn Environmental, Inc. to use cash collateral on a final basis in accordance with the budget, with a 10% variance. The U.S. Small Business Administration and John Deere each assert a security interest in cash collateral as of the petition date and may assert their security interests are perfected. The Debtor had approximately $674,840 in accounts and receivables on the Petition Date, along with post-petition receivables. The cash collateral is the proceeds of the operation of the Debtor's business. Each creditor with a security interest in cash collateral will be granted adequate protection in the form of a replacement lien, dollar for dollar, in post-petition accounts and accounts receivable to replace their security interest in liens in collateral to the extent of pre-petition cash collateral utilized by Debtors during the pendency of this bankruptcy proceeding. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=dpUwP6 from PacerMonitor.com. The Debtor projects total expenses, on a monthly basis, as follows: $175,024 for September 2023; $188,368 for October 2023; $225,368 for November 2023; and $188,368 for December 2023. About Vaughn Environmental, Inc. Vaughn Environmental, Inc. operates a construction and excavation business. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ore. Case No. 23-31549) on July 17, 2023. In the petition signed by Raegan Vaughn, president, the Debtor disclosed up to $10 million in assets and liabilities. Judge Peter C Mckittrick oversees the case. Ted A. Troutman, Esq., at Troutman Law Firm P.C., represents the Debtor as legal counsel. VECTOR ESCAPES: Court OKs Cash Collateral Access Thru Sept 13 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada authorized Vector Escapes, Inc. to use cash collateral on an interim basis in amounts not to exceed 125% of each line item set forth in the cash collateral budget, through the date of the final hearing set for September 13, 2023 at 2 p.m. As previously reported by the Troubled Company Reporter, Pre-petition, the Debtor obtained a loans from CDC Small Business Finance, Celtic Bank and the Small Business Administration, which are secured by essentially all of the Debtor's personal property, including deposit accounts. The Debtor owes CDC approximately $147,075, owes Celtic approximately $140,498 and owes the SBA approximately $275,500. At the time the case was filed, the Debtor's personal property was valued at $44,662, which includes cash and cash equivalents of $35,862, Equipment valued at $6,250, inventory valued at $1,450 and other miscellaneous assets valued at $1,100. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=HhbWAX from PacerMonitor.com. The Debtor estimates it will have a total of $24,225 in monthly operating expenses. About Vector Escapes, Inc. Vector Escapes, Inc. operates an escape room business in Reno, Nevada. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 23-50553-hlb) on August 8, 2023. In the petition signed by Josh Morton, president, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge Hilary L. Barnes oversees the case. Kevin A. Darby, Esq., at Darby Law Practice, represents the Debtor as legal counsel. VECTOR UTILITIES: Seeks to Hire John F. Coggin as Accountant ------------------------------------------------------------ Vector Utilities LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire the John F. Coggin, CPA, PLLC. The Debtor requires an accountant to prepare its financial statements, corporate tax returns, long form franchise tax returns, and monthly operating reports; and provide other business services directly related to its Chapter 11 bankruptcy proceedings. The firm will be paid a flat fee of $1,200 for preparing IRS Tax Form 1120; a monthly fee of $500 for the preparation of monthly operating reports; and $55 per hour for staff accountants and $200 per hour for certified public accountants for ongoing request and data needs. John Coggin, CPA, a partner at the firm, 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: John F. Coggin, CPA John F. Coggin, CPA PLLC 4545 Bissonnet St, Suite 129 Bellaire, TX 77401 Tel: (713) 408-1318 Email: john@jcoggincpa.com About Vector Utilities Vector Utilities, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 23-60040) on July 16, 2023, with $1 million to $10 million in both assets and liabilities. Griselda C. Gaytan, managing member, signed the petition. Judge David R. Jones oversees the case. The Debtor tapped the Law Office of Margaret M. McClure as bankruptcy counsel and John F. Coggin, CPA, PLLC as accountant. VORNADO REALTY: Fitch Lowers LongTerm IDR to 'BB+', Outlook Stable ------------------------------------------------------------------ Fitch Ratings has downgraded the Issuer Default Ratings (IDRs) of Vornado Realty Trust (VNO) and Vornado Realty, LP to 'BB+' from 'BBB-'. The Rating Outlook is Stable. Fitch believes that VNO's leverage has been and is expected to remain at relatively high levels in relation to Fitch's expectations for other REITs at 'BBB' rating levels, even after consideration of the company's strong competitive position in high-quality Manhattan assets, significant access to institutional mortgage debt, and private equity capital. VNO's portfolio has faced challenges since the onset of the pandemic leading to weakening demand for office space and occupancy decreasing. Work-from-home trends have negatively affected New York property market fundamentals. To some extent, VNO's relatively high pre-pandemic occupancy rates and long-term leases with solid credit tenants have helped to balance this effect. The Stable Outlook reflects Fitch's expectation that VNO will operate with leverage within its sensitivities for the forecast horizon, given the possibility of lessening demand for office space going forward. KEY RATING DRIVERS Ongoing High Leverage: After operating above sensitivities in 2020 and 2021, VNO brought leverage down in 2022 with REIT leverage (net debt to recurring operating EBITDA) at 7.5x. Fitch expects that (re)development costs in the next two years on the Penn District projects, combined with a projected subdued recovery on underlying property operating fundamentals, will keep VNO's leverage at around the mid-high 7x level for the next couple of years. As Fitch anticipates more stabilization from the portfolio with further delivery of incremental NOI and completed (re)development spend, Fitch expects to see a partial deleveraging effect, although still expect leverage to be relatively high, getting to around low-7x level within the outer year of Fitch's ratings forecast horizon. Solid Contingent Liquidity: New York City's superior commercial real estate (CRE) market characteristics have helped to mitigate VNO's market concentration risk historically. New York City is the largest and arguably most diverse office market in the U.S., if not the world. New York City CRE has historically demonstrated contingent liquidity characteristics due to institutional lender and investor demand that maintained an interest in high quality product. VNO's New York-centric portfolio has some diversification by CRE property type as retail is approximately 19% of NYC NOI (17% overall). In addition, the company's interests in the MART in Chicago and 555 California Street in San Francisco provide some geographic diversification and represented approximately 15% of NOI at 2Q23. Fitch estimates VNO's gross UA/UD at approximately 1.7x, based on a direct capitalization approach of its annualized 2Q23 unencumbered NOI, using a 7.75% stressed, through-the-cycle cap rate. Fitch usually views 2.0x UA/UD coverage as the standard threshold for investment-grade REITs. On an unsecured debt net of cash basis, UA/UD is 2.6x for 2Q23. VNO's UA/UD coverage is supported by high asset quality, less use of unsecured debt and strategy of placing higher loan-to-value ratios on encumbered properties. Above-Average Portfolio Quality: VNO wholly owns and has interests in high-quality, primarily New York City office properties with above peer-average occupancy rates and rents with long-term leases to solid credit tenants. The company also owns and operates a large street retail portfolio in key, supply-constrained Manhattan shopping corridors, such as upper Fifth Avenue and Times Square. VNO generates 85% of its NOI from its New York portfolio and 15% from select class A office properties in Chicago and San Francisco at 2Q23. VNO has a long (8.9 years for NYC office leases signed in 2022) weighted average lease duration, which minimizes rollover risk. The company's tenant credit profile is strong with moderate concentration. VNO's top-10 tenants generally have healthy credit profiles and comprise approximately 30% of annualized revenues. Minimal Near-Term Maturities: VNO has well-laddered maturities with modest nearer-term debt coming due. Three mortgages for a total of $291 million come due through the end of 2024 with a more sizable component of three mortgages ($855 million) and one unsecured note ($450 million) maturing in 2025. Office Leasing Pressure Could Remain: Fitch believes in-office work will remain a core tenet of corporate America. However, with employers adapting to more flexible working environments and hybrid arrangements, it is likely to result in tenants leasing less space than in prior periods, potentially leading to a slower recovery in leasing and rent growth than typically seen after a downturn. As a result, the recovery in underlying utilization of NYC office space has been somewhat muted to this point. Nonetheless, a distinguishing feature that has emerged since the pandemic is the relative strength of higher quality space with modern amenities, sustainability features, and locations near major transportation hubs, which should benefit VNO and REITs relative to other landlords. Complex Structure Reduces Visibility: VNO's business complexity remains above average, despite its efforts to streamline operations and increased financial reporting. VNO's active (re)development platform and considerable use of joint ventures (JVs) challenge investor ability to forecast cash flows and liquidity requirements. VNO has disposed of considerable non-core assets in recent years. This included the sale of ownership stakes in shares of other publicly traded REITs, Lexington Realty Trust, Urban Edge Properties, Pennsylvania REIT and the spin-out of JGB Smith. Moderate Development Risk: VNO has an active development pipeline; however, it has completed a majority of capital spend on its current projects thereby lowering execution risk. The company's unfunded commitments totaled 1.7% of gross assets at June 30, 2023. The company has taken steps to manage its development risk, including using JV equity, and committed non-recourse construction loans, and lease-up of assets prior to construction completion. The company maintains adequate liquidity, underpinned by $1.134 billion of cash and $1.925 billion available under its committed $2.5 billion unsecured revolving credit facilities as of June 30, 2023. However, some of the cash is earmarked for redevelopment projects. DERIVATION SUMMARY VNO owns and controls a concentrated portfolio comprised primarily of high-quality office and street retail assets in Manhattan with strong access to institutional mortgage debt and private equity capital. The company is a large and established REIT that is well known to equity investors but less active in the public unsecured bond market due to its greater acceptance and strategic use of secured mortgage debt. VNO's solid ratio of unencumbered assets to net unsecured debt and leverage levels provide additional credit protection. The company's New York-focused portfolio has better contingent liquidity from institutional lenders and investors than REIT peer, Corporate Office Properties Trust, albeit with higher leverage. The geographic concentration risk that VNO possesses through its large regional presence in New York is partially mitigated by the historical strength and economic diversity of Manhattan, the relatively higher rents than most other markets, and greater institutional preference for its portfolio. SL Green Realty Corp. is the most similar peer to VNO as it also has a predominant NYC office focus, although SLG historically has had more of a secondary suburban concentration, while also maintaining a debt and preferred equity investment portfolio. Fitch rates the IDRs of the parent REIT and subsidiary operating partnership on a consolidated basis, using the weak parent/strong subsidiary approach and open access and control factors, based on the entities operating as a single enterprise with strong legal and operational ties. Fitch applies 50% equity credit to the company's perpetual preferred securities given the cumulative nature of coupon deferral with settlement through a manner other than equity (cash). Certain metrics calculate leverage including preferred stock. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Low single-digit SSNOI overall property decline in 2023, which is driven by an assumed 25bps occupancy decline and higher operating expenses, followed by flat to low single-digit SSNOI growth in 2024-2025, based on low single digit rent spreads and recovering occupancy of approximately 25-50bps per annum; - VNO funds remaining Penn Plaza redevelopment project costs; - Fitch assumes ongoing incremental PENN 1 delivery contributions and PENN 2 delivery in 2025; - No incremental debt and equity raises other than refinancing secured mortgages and unsecured notes; - Fitch assumes $100 million of stock buybacks of VNO's $200 million share repurchase program is completed in 2023. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch's expectation of REIT leverage (net debt to recurring operating EBITDA) sustaining below 7.0x; - Fitch's expectation of more consistent leverage and financial flexibility. - Fitch's expectation of UA/UD sustaining at or above 2.0x; Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation of REIT leverage (net debt to recurring operating EBITDA) sustaining above 8.0x; - Fitch's expectation of UA/UD sustaining below 1.5x; - Fitch will evaluate the aforementioned sensitivities and consider revising them if should Fitch expects material and lasting changes to the cash flow profile and financeability of the assets; - Fitch's expectation of a sustained liquidity coverage ratio below 1.0x. The Stable Outlook is predicated upon VNO maintaining REIT leverage below 8x by 2024. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity Coverage: VNO's sources of liquidity (cash, availability under its revolving credit facility, retained cash flow after dividends/distributions) cover its uses (pro rata debt maturities, recurring capex, non-discretionary development expenditures) by 2.9x for the period July 1, 2023 through Dec. 31, 2024. Fitch's liquidity analysis includes VNO refinancing upcoming maturities within the mentioned periods above, which includes 435 Seventh Avenue and 606 Broadway for 2024 as there are no consolidated mortgages maturing in 2023. This reflects VNO's good access to a variety of capital sources over time, which meaningfully mitigates refinancing risk in Fitch's view. VNO's liquidity coverage improves to 3.6x under a scenario where the company refinances 80% of maturing pro rata secured debt. In addition, this liquidity incorporates the assumption of Vornado's funding of redevelopment costs by the end of 2024 as well as anticipated remaining share repurchases in 2023. As of June 30, 2023, VNO had adequate availability under two separate revolvers totaling $2.5 billion. A higher utilization than usual ($1.075 billion) was drawn down at March 31, 2020, although this was done as a cautionary measure to raise cash during the onset of the pandemic and was restored to a $575 million draw in 3Q20, where it has remained for the last 12 quarters. Historically, VNO has more frequently accessed the mortgage market than the unsecured bond market as a source of funds; however, in 2021, VNO executed two tranches of unsecured public green bond issuances. As of June 30, 2023, 69% of the company's consolidated debt was secured. ISSUER PROFILE VNO is a New York-based equity REIT that owns, acquires, develops, and manages a portfolio of primarily Manhattan office and, to a lesser extent street retail properties. The company also owns select Class A office assets in San Francisco and Chicago. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Vornado Realty Trust LT IDR BB+ Downgrade BBB- Preferred LT BB- Downgrade BB Vornado Realty, LP LT IDR BB+ Downgrade BBB- senior unsecured LT BB+ Downgrade RR4 BBB- WINDSOR TERRACE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Nineteen affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. Windsor Terrace Healthcare, LLC (Lead Case) 23-11200 DBA Windsor Terrace Healthcare Center 7447 Sepulveda Blvd. Van Nuys, CA 91405 S&F Home Health Opco I, LLC 23-11201 S&F Hospice Opco I, LLC 23-11202 S&F Market Street Healthcare, LLC 23-11203 Windsor Care Center National City, Inc. 23-11204 Windsor Cheviot Hills, LLC 23-11206 Windsor Country Drive Care Center, LLC 23-11207 Windsor Court Assisted Living, LLC 23-11208 Windsor Cypress Gardens Healthcare, LLC 23-11209 Windsor El Camino Care Center, LLC 23-11210 Windsor Elk Grove and Rehabilitation, LLC 23-11212 Windsor Elmhaven Care Center, LLC 23-11213 Windsor Gardens Convalescent Hospital, Inc. 23-11214 Windsor Hampton Care Center, LLC 23-11215 Windsor Monterey Care Center, LLC 23-11216 Windsor Rosewood Care Center, LLC 23-11217 Windsor Skyline Care Center, LLC 23-11218 Windsor The Ridge Rehabilitation Center, LLC 23-11219 Windsor Vallejo Care Center, LLC 23-11220 Business Description: The Debtors are primarily engaged in the businesses of owning and operating skilled nursing facilities throughout the State of California. Collectively, the Debtors own and operate 16 skilled nursing facilities, which provide 24 hour, 7 days a week and 365 days a year care to patients who reside at those facilities. In addition to the 16 skilled nursing facilities, the Debtors own and operate one assisted living facility (which is Windsor Court Assisted Living, LLC), one home health care center (which is S&F Home Health Opco I, LLC), and one hospice care center (which is S&F Hospice Opco I, LLC). The Debtors do not own any of the real property upon which the facilities are located. Chapter 11 Petition Date: August 23, 2023 Court: United States Bankruptcy Court Central District of California Judge: Hon. Victoria S. Kaufman Debtors' Counsel: Ron Bender, Esq. Monica Y. Kim, Esq. Juliet Y. Oh, Esq. LEVENE, NEALE, BENDER, YOO & GOLUBCHIK L.L.P. 2818 La Cienega Avenue Los Angeles, CA 90034 Tel: (310) 229-1234 Fax: (310) 229-1244 Email: rb@lnbyg.com myk@lnbyg.com; jyo@lnbyg.com Debtors' Claims, Noticing & Solicitation Agent: STRETTO, INC. Lead Debtor's Estimated Assets: $1 million to $10 million Lead Debtor's Estimated Liabilities: $1 million to $10 million The petitions were signed by Avrohom Tress as manager. A full-text copy of the Lead Debtor's petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/4QPP6EI/Windsor_Terrace_Healthcare_LLC__cacbke-23-11200__0001.0.pdf?mcid=tGE4TAMA List of Windsor Terrace Healthcare's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount 1. Healthcare Services Group Inc. $989,879 3220 Tillman Dr Suite 300 Bensalem, PA 19020 2. Select Rehabilitation $830,944 PO Box 71985 Chicago, IL 60694-1985 3. Milana Le Geza Legal $750,000 136 E Lemon Ave Settlement Monrovia, CA 91016 4. Department of $342,004 Health Care Services MS 1101 PO Box 997415 Sacramento, CA 95899-7415 5. Skilled Nursing Pharmacy $330,866 16666 E. Johnson Drive Suite "C" City of Industry CA 91745 6. Ashley Clinical Diagnistic $306,850 Laboratoy IN 5542 N Figueroa St Los Angeles, CA 90042 7. TwoMagnets $235,793 PO Box 103125 Pasadena, CA 91189-3125 8. McKesson Medical Surgical $164,200 P.O. 690693 Cincinnati, OH 45263-0693 9. Dairy King $69,696 5528 Bandini Blvd Bell, CA 90201 10. Sysco Food Services $65,945 PO Box 138007 Sacramento, CA 95813-8007 11. GALE Healthcare $57,452 Solutions LLC PO Box 4729 Winter Park, FL 32793 12. Diagnostic Laboratories $56,250 & Radiology - AZ PO Box 676210 Attn: Cash Apps Dallas, TX 75267-6210 13. Plex Capital LLC $39,130 PO Box 674804 Dallas, TX 75267-4804 14. LA Dept of Water and Power $36,416 P.O. Box 30808 Los Angeles, CA 90030 15. Barber Ranen LLP $33,011 550 South Hope St Suite 2400 Los Angeles, CA 90071 16. Interactive Medical Systems $18,142 PO Box 843789 Los Angeles, CA 90084-3789 17. Hospital Mechanical Service $17,845 P.O. Box 12 Tustin, CA 92781 18. Nicholas M. Moreno Legal Settlement $17,345 c/o Lanzone Morgan (Reza Sobati) 356 Redondo Ave Long Beach, CA 90814 19. Direct Supply Equipment $15,289 P.O. Box 88201 Milwaukee, WI 53288 20. Hansen Hunter & Co PC $15,000 7080 SW FIR Loop Suite 100 Portland, OR 97223 WOLVERINE WORLD: S&P Downgrades ICR to 'B+', Outlook Negative ------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating to 'B+' from 'BB-' on U.S–based footwear company Wolverine World Wide Inc. The outlook is negative. At the same time, S&P lowered its issue-level rating on the senior secured credit facilities to 'BB-' from 'BB' and lowered the issue-level rating on the senior unsecured notes to 'B' from 'B+'. The negative outlook reflects the potential for a downgrade in the next 12 months if the company is unable to improve operating performance and it sustains adjusted leverage above 5x. The downgrade reflects Wolverine's continued underperformance and our revised expectation for delayed credit ratio improvement. S&P said, "Wolverine's operating performance continues to track below our prior expectations due to tough macro conditions and continued softness in the wholesale channel. The company saw increased order cancellations and lower new orders in the past 10 to 12 weeks as its wholesale customers cautiously managed inventory, and lowered its guidance for 2023. S&P Global Ratings-adjusted leverage for the last 12 months ended July 1, 2023, was at 6.3x. Although order trends have improved in recent weeks, we expect ongoing pressure with the business and continued softness in the wholesale channel for the balance of calendar 2023, which is likely to continue into the first half of 2024. We revised down our revenue and EBITDA forecast for 2023 and now expect revenue to decline mid-teens percentage in 2023, excluding Keds, which were recently sold. We expect adjusted EBITDA to decline around 10%, reflecting the volume decline, partially offset by savings initiatives. We now expect adjusted leverage will remain above 6x for the remainder of 2023 before gradually improving to the high-4x area in 2024. "We anticipate positive free operating cash flow (FOCF) around $80 million in 2023 mainly due to improvement in the company's working capital position." Though net inventory for the ongoing business was still elevated at the end of the second quarter, up 7% compared to last year, it declined another $78 million sequentially from the end of the first quarter due to the company's increasing focus on inventory management, including liquidating higher cost end-of-life inventory and reducing forward purchases with suppliers. S&P siad, "We believe the company is on track to achieve its year-end inventory target of $520 million, though the holiday season will be crucial to achieving this. We expect the company to continue to reduce its inventory and expect positive FOCF around $80 million in 2023 including $50 million FOCF in the second half due to working capital improvement." Wolverine has taken steps to reposition the business, but profit improvement remains to be seen. The company appointed new CEO Chris Hufnagel and new brand presidents for its growth brands, including Merrell, Saucony, and Sweaty Betty. The company is streamlining the business to align with a more focused portfolio and growth initiatives. It announced consolidating its U.S. office. It will continue to implement the profit improvement office initiatives to drive operating margin improvement and prioritize investment and resources for its growth brands. The company outlined incremental savings from its profit improvement initiatives, including rolling off transitory cost, supply chain and logistics savings, and reducing indirect spend. S&P believes Wolverine's profit improvement target of $200 million is aggressive as it may incur potential disruption related to the cost-saving initiatives, we have baked in 220 basis points improvement in EBITDA margin in 2024 due to cost savings. The company is pursuing the sale of certain non-core assets and exploring strategic alternatives for Sperry, which could help improve its credit metrics. As part of the company's strategy to reduce organizational complexity and prioritize growth brands to improve profits and permanently reduce debt, it is pursuing the sale of certain non-core assets. In addition, the company is exploring strategic alternatives for Sperry, which could include a sale, joint venture, or licensing opportunity. The company estimates at least $50 million proceeds from potential sale of certain non-core assets, which we have not reflected in our forecast but estimate a 0.2x deleveraging if realized. If the company is able to sell Sperry, it could help it de-lever the balance sheet faster; however, it could be tough for the company to get the right valuation under the current volatile market conditions. The negative outlook reflects Wolverine's very high leverage and need to materially improve operating performance. S&P could lower our rating if the company is unable to improve operating performance and adjusted leverage is sustained above 5x. This could occur if the company: -- Is unable to improve profitability and realize cost savings as planned under continued challenging macro-economic environment. -- Is unable to sell assets at prices sufficient to de-lever, or if it does not apply the proceeds towards debt reduction; or -- Prioritizes shareholder returns over restoring its credit metrics. S&P said, "We could also lower the rating if we unfavorably reassess our view of the business risk, potentially due to underlying brand health if the company cannot build the right products that resonate with customers which results in further market share losses. "We could take a positive rating action over the next 12 months if the company strengthens operating performance by prioritizing growth brands and reducing costs such that adjusted leverage improves to and is sustained below 5x and FOCF is positive." This could occur if: -- Consumer demand remains healthy and the company improves profit through its margin improvement and cost saving initiatives. -- The company prioritizes debt repayment from asset sale proceeds and FOCF generation. YELLOW CORP: Court OKs Interim Cash Collateral Access ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Yellow Corporation and affiliates to use UST cash collateral on an interim basis in accordance with the budget. The Debtors have demonstrated an immediate and critical need to use the UST Cash Collateral to fund the Chapter 11 Cases and maximize the value of their estates through an orderly winddown process of their businesses and a comprehensive sale process for their assets. The UST cash collateral means all of the Debtors' cash, wherever located and held, including cash in deposit accounts, (a) that constitutes or will constitute "cash collateral" of any of the Prepetition UST Secured Parties within the meaning of 11 U.S.C. Section 363(a) and (b) over which the Prepetition UST Secured Parties have liens, subject to the relative priorities of the Prepetition Secured Parties and the Prepetition UST Secured Parties as set forth in the Prepetition Intercreditor Agreement and the Interim DIP Order. Pursuant to the UST Tranche A Term Loan Credit Agreement, dated as of July 7, 2020, by and among (a) Yellow Corp, as borrower, (b) the guarantors party thereto, (c) The Bank of New York Mellon, as administrative agent and collateral agent, and (d) the lenders party thereto from time to time, the Prepetition UST Tranche A Loan Parties incurred Obligations to the Prepetition UST Tranche A Secured Parties on a joint and several basis. Pursuant to the UST Tranche B Term Loan Credit Agreement, dated as of July 7, 2020, documents, and instruments executed or delivered in connection therewith, by and among (a) Yellow Corp, as borrower, (b) the guarantors party thereto, (c) BNY, as administrative agent and collateral agent, and (d) the lenders party thereto from time to time, the Prepetition UST Tranche B Loan Parties incurred Obligations to the Prepetition UST Tranche B Secured Parties on a joint and several basis. Pursuant to (and to the extent set forth in) the Amended and Restated Intercreditor Agreement, dated as of July 7, 2020 by and among the Prepetition ABL Agent, the Prepetition B-2 Agent, the Prepetition UST Tranche A Agent and the Prepetition UST Tranche B Agent, which Prepetition Intercreditor Agreement, Prepetition UST Loan Documents, and Prepetition Loan Documents, are, in each case, binding and enforceable against the parties thereto, which agreed in the Prepetition Intercreditor Agreement, among other things, to the relative priority of such parties' respective security interests in the Prepetition Collateral, which relative priorities are set forth in and governed by the Prepetition Intercreditor Agreement. As of the Petition Date, the Prepetition UST Tranche A Loan Parties were indebted to the Prepetition UST Tranche A Secured Parties in the aggregate principal amount of not less than $337.1 million plus accrued and unpaid interest thereon and any fees, expenses and disbursements. As of the Petition Date, the Prepetition UST Tranche B Loan Parties were indebted to the Prepetition UST Tranche B Secured Parties in the aggregate principal amount of not less than $400 million. As adequate protection for the Debtors' use of UST Cash Collateral, the Debtors will meet timely several milestones including: (i) No later than 12 calendar days after the Petition Date, the Court will have entered the Interim DIP Order and the Interim UST Cash Collateral Order, each in form and substance satisfactory to the Prepetition UST Secured Parties; (ii) No later than 30 calendar days after the Petition Date, the Court will have entered the Bidding Procedures Order, in form and substance reasonably satisfactory to the Prepetition UST Secured Parties; (iii) No later than 15 calendar days after the granting of the Interim DIP Order and the Interim UST Cash Collateral Order by the Court, the Canadian Court will have issued the Canadian Initial Recognition Order, the Canadian Supplemental Order, and the Canadian Interim DIP Recognition Order, each in form and substance reasonably satisfactory to the Prepetition UST Secured Parties. and (vii) No later than 100 calendar days after the Petition Date, the Debtors will have received unique, non-duplicative binding cash bids pursuant to the Bidding Procedures Order which are not subject to any financing contingencies for Prepetition B-2 Priority Collateral pursuant to the Bidding Procedures Order that would generate, in the aggregate, net proceeds at least equal to $450 million. The Prepetition UST Tranche B Agent and UST Tranche A Agent are granted, for the benefit of the Prepetition UST Tranche B Secured Parties, a valid, perfected replacement security interest in and lien on account of the Diminution in Value upon all of the DIP Collateral. The Prepetition UST Tranche B Secured Parties and UST Tranche A Secured Parties are also granted allowed superpriority administrative expense claims against the Debtors on a joint and several basis (without the need to file any proof of claim) on account of the Prepetition UST Tranche B Secured Parties' Diminution in Value under Section 507(b) of the Bankruptcy Code. A final hearing on the matter is set for September 18, 2023 at 2 p.m. A copy of the order is available at https://urlcurt.com/u?l=xINjd3 from PacerMonitor.com. About Yellow Corp Yellow Corporation -- www.myyellow.com -- operates logistics and less-than-truckload (LTL) networks in North America, providing customers with regional, national, and international shipping services throughout. Yellow's principal office is in Nashville, Tenn., and is the holding company for a portfolio of LTL brands including Holland, New Penn, Reddaway, and YRC Freight, as well as the logistics company Yellow Logistics. Yellow Corporation and 23 affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had $2,152,200,000 in total assets against $2,588,800,000 in total liabilities. The petitions were signed by Matthew A. Doheny as chief restructuring officer. Kirkland & Ellis LLP is serving as the Company's restructuring counsel, Pachulski Stang Ziehl & Jones LLP is serving as the Company's Delaware local counsel, Kasowitz, Benson and Torres LLP is serving as special litigation counsel, Goodmans LLP is serving as the Company's special Canadian counsel, Ducera Partners LLC is serving as the Company's investment banker, and Alvarez and Marsal is serving as the Company's financial advisor. Epiq Bankruptcy Solutions serves as claims and noticing agent. Milbank LLP, serves as counsel to certain investment funds and accounts managed by affiliates of Apollo Capital Management, L.P. White & Case LLP, serves as counsel to Beal Bank USA. Arnold & Porter Kaye Scholer LLP, serves as counsel to the United States Department of the Treasury. Alter Domus Products Corp., the Administrative Agent to the DIP Lenders, is represented by Holland & Knight LLP. [^] Recent Small-Dollar & Individual Chapter 11 Filings ------------------------------------------------------- In re Fast Glass Service LLC Bankr. E.D. Ark. Case No. 23-12505 Chapter 11 Petition filed August 14, 2023 See https://www.pacermonitor.com/view/34VH6NQ/Fast_Glass_Service_LLC__arebke-23-12505__0001.0.pdf?mcid=tGE4TAMA represented by: Kevin P. Keech, Esq. KEECH LAW FIRM, PA E-mail: kkeech@keechlawfirm.com In re American Real Estate Group, Inc Bankr. E.D. Cal. Case No. 23-90375 Chapter 11 Petition filed August 14, 2023 See https://www.pacermonitor.com/view/MRLAOHY/American_Real_Estate_Group_Inc__caebke-23-90375__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Modern Farm LLC Bankr. D. Ariz. Case No. 23-05555 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/KQASUFY/MODERN_FARM_LLC__azbke-23-05555__0001.0.pdf?mcid=tGE4TAMA represented by: D. Lamar Hawkins, Esq. GUIDANT LAW, PLC E-mail: lamar@guidant.law In re Sun Valley Recovery LLC Bankr. D. Ariz. Case No. 23-05552 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/CZVDB3Q/SUN_VALLEY_RECOVERY_LLC__azbke-23-05552__0001.0.pdf?mcid=tGE4TAMA represented by: D. Lamar Hawkins, Esq. GUIDANT LAW, PLC E-mail: lamar@guidant.law In re Sean Benjamin Cooke and Cynthia Louise Cooke Bankr. D. Ariz. Case No. 23-05558 Chapter 11 Petition filed August 15, 2023 represented by: D. Hawkins, Esq. GUIDANT LAW, PLC In re 383 Valencia Inc. Bankr. N.D. Cal. Case No. 23-30550 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/BOCGJDQ/383_Valencia_Inc__canbke-23-30550__0001.0.pdf?mcid=tGE4TAMA represented by: Robert L. Goldstein, Esq. LAW OFFICES OF ROBERT L. GOLDSTEIN E-mail: info@taxexit.com In re Merrill Properties LLC Bankr. N.D. Ga. Case No. 23-10978 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/BLV24VI/Merrill_Properties_LLC__ganbke-23-10978__0001.0.pdf?mcid=tGE4TAMA represented by: Michael D Robl, Esq. ROBL LAW GROUP LLC E-mail: michael@roblgroup.com In re Midwest Dough Guys, LLC Bankr. D. Neb. Case No. 23-40758 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/6X5XXZI/Midwest_Dough_Guys_LLC__nebke-23-40758__0001.0.pdf?mcid=tGE4TAMA represented by: John A. Lentz, Esq. LENTZ LAW, PC, LLO E-mail: john@johnlentz.com In re VRS LLC Bankr. D. Nev. Case No. 23-13412 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/KUHBK6A/VRS_LLC__nvbke-23-13412__0001.0.pdf?mcid=tGE4TAMA represented by: Samuel A. Schwartz, Esq. SCHWARTZ LAW, PLLC E-mail: saschwartz@nvfirm.com In re 1194 Nostrand Avenue Realty Corp Bankr. E.D.N.Y. Case No. 23-42908 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/EM67W3A/1194_Nostrand_Avenue_Realty_Corp__nyebke-23-42908__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Premlall Nandkishur Bankr. E.D.N.Y. Case No. 23-42914 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/YOIC4PI/Premlall_Nandkishur__nyebke-23-42914__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re The Corner Lounge 1 LLC Bankr. S.D.N.Y. Case No. 23-11304 Chapter 11 Petition filed August 15, 2023 See https://www.pacermonitor.com/view/MFG7BDY/The_Corner_Lounge_1_LLC__nysbke-23-11304__0001.0.pdf?mcid=tGE4TAMA represented by: Ronald Paltrowitz, Esq. LAW OFFICES OF RONALD I. PALTROWITZ In re Persian Broadcast Service Global, Inc. Bankr. C.D. Cal. Case No. 23-11154 Chapter 11 Petition filed August 16, 2023 See https://www.pacermonitor.com/view/N2XWNOY/Persian_Broadcast_Service_Global__cacbke-23-11154__0001.0.pdf?mcid=tGE4TAMA represented by: Thomas B. Ure, Esq. URE LAW FIRM E-mail: tom@urelawfirm.com In re Avalon EV LLC Bankr. M.D. Fla. Case No. 23-03525 Chapter 11 Petition filed August 16, 2023 See https://www.pacermonitor.com/view/26OWXHA/Avalon_EV_LLC__flmbke-23-03525__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Albert Anthony Martinez Bankr. S.D. Fla. Case No. 23-16480 Chapter 11 Petition filed August 16, 2023 represented by: Robert Furr, Esq. In re Sha-Yah Allah, LLC Bankr. N.D. Ga. Case No. 23-57839 Chapter 11 Petition filed August 16, 2023 Case Opened In re 155 Chambersfood, Inc. Bankr. E.D.N.Y. Case No. 23-42937 Chapter 11 Petition filed August 16, 2023 See https://www.pacermonitor.com/view/GYSOJ3I/155_Chambersfood_Inc__nyebke-23-42937__0001.0.pdf?mcid=tGE4TAMA represented by: Alla Kachan, Esq. LAW OFFICES OF ALLA KACHAN, P.C. E-mail: alla@kachanlaw.com In re Capital Sleep Supply-Vienna, LLC Bankr. E.D. Va. Case No. 23-11304 Chapter 11 Petition filed August 16, 2023 See https://www.pacermonitor.com/view/EDQFTHQ/Capital_Sleep_Supply-Vienna_LLC__vaebke-23-11304__0001.0.pdf?mcid=tGE4TAMA represented by: Christopher L. Rogan, Esq. ROGANMILLERZIMMERMAN, PLLC E-mail: crogan@RMZLawFirm.com In re Abundant Treasures LLC Bankr. C.D. Cal. Case No. 23-15281 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/JKZWSII/Abundant_Treasures_LLC__cacbke-23-15281__0001.0.pdf?mcid=tGE4TAMA represented by: Andrew A. Moher, Esq. MOHER LAW GROUP E-mail: amoher@moherlaw.com In re Wagner A. Lemus Bankr. C.D. Cal. Case No. 23-13691 Chapter 11 Petition filed August 17, 2023 represented by: D. Hays, Esq. In re 138-12 249 Street Inc. Bankr. E.D.N.Y. Case No. 23-42941 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/MVJHQMQ/138-12_249_Street_Inc__nyebke-23-42941__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Radyo Panou Inc. Bankr. E.D.N.Y. Case No. 23-42942 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/MKL5PQQ/RADYO_PANOU_INC__nyebke-23-42942__0001.0.pdf?mcid=tGE4TAMA represented by: Narissa A. Joseph, Esq. LAW OFFICE OF NARISSA A. JOSEPH E-mail: njosephlaw@aol.com In re 469 Dekalb LLC Bankr. E.D.N.Y. Case No. 23-42944 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/C3AMLEA/469_DEKALB_LLC__nyebke-23-42944__0001.0.pdf?mcid=tGE4TAMA represented by: Narissa A. Joseph, Esq. LAW OFFICE OF NARISSA A. JOSEPH E-mail: njosephlaw@aol.com In re 138-12 249 Street Inc. Bankr. E.D.N.Y. Case No. 23-42941 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/MVJHQMQ/138-12_249_Street_Inc__nyebke-23-42941__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Rubygold Main Holdings, LLC Bankr. E.D.N.Y. Case No. 23-73046 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/P3Q65DY/Rubygold_Main_Holdings_LLC__nyebke-23-73046__0001.0.pdf?mcid=tGE4TAMA Filed Pro Se In re Under The Hood, LLC Bankr. N.D. Ohio Case No. 23-12834 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/4U4CEYY/UNDER_THE_HOOD_LLC__ohnbke-23-12834__0001.0.pdf?mcid=tGE4TAMA represented by: Glenn E. Forbes, Esq. FORBES LAW LLC E-mail: bankruptcy@geflaw.net In re Royal Empire USA LLC Bankr. E.D. Tex. Case No. 23-41482 Chapter 11 Petition filed August 17, 2023 See https://www.pacermonitor.com/view/NIISPMI/Royal_Empire_USA_LLC__txebke-23-41482__0001.0.pdf?mcid=tGE4TAMA represented by: Eric A. Liepins, Esq. ERIC A. LIEPINS E-mail: eric@ealpc.com In re San Tan Air Conditioning Comfort Professionals, Inc. Bankr. D. Ariz. Case No. 23-05651 Chapter 11 Petition filed August 18, 2023 See https://www.pacermonitor.com/view/OX4BFQA/SAN_TAN_AIR_CONDITIONING_COMFORT__azbke-23-05651__0001.0.pdf?mcid=tGE4TAMA represented by: James F. Kahn, Esq. KAHN & AHART, PLLC E-mail: James.Kahn@azbk.biz In re Studio Forte Spa Salon & Co. Inc. Bankr. N.D. Ga. Case No. 23-10998 Chapter 11 Petition filed August 18, 2023 Case Opened In re Sea Recovery 2 LLC Bankr. C.D. Cal. Case No. 23-11694 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/RCURYWY/Sea_Recovery_2_LLC__cacbke-23-11694__0001.0.pdf?mcid=tGE4TAMA represented by: Dennis Connelly Esq. LAW OFFICE OF DENNIS CONNELLY E-mail: socalesquire@gmail.com In re Julie Esther Ayaad and Osama Hassan Ayaad Bankr. D. Colo. Case No. 23-13723 Chapter 11 Petition filed August 21, 2023 represented by: Kelsey Buechler, Esq. BUECHLER LAW OFFICE, LLC In re S&R Affordable Towing LLC Bankr. D. Colo. Case No. 23-13732 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/LFKIO7Q/SR_Affordable_Towing_LLC__cobke-23-13732__0001.0.pdf?mcid=tGE4TAMA represented by: Jonathan M. Dickey, Esq. KUTNER BRINEN DICKEY RILEY PC E-mail: jmd@kutnerlaw.com In re Sticky Holsters, Inc. Bankr. M.D. Fla. Case No. 23-00962 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/VBMGHVQ/Sticky_Holsters_Inc__flmbke-23-00962__0001.0.pdf?mcid=tGE4TAMA represented by: Stephen R. Leslie, Esq. STICHTER, RIEDEL, BLAIN & POSTLER, P.A. In re Matthew Collins Bankr. M.D. Fla. Case No. 23-01976 Chapter 11 Petition filed August 21, 2023 represented by: Thomas Adam, Esq. In re Michael Earl Chapman, Jr. and Nikita Margarita Chapman Bankr. N.D. Fla. Case No. 23-30580 Chapter 11 Petition filed August 21, 2023 represented by: Chad Van Horn, Esq. In re M.V.J. Auto World, Inc. Bankr. S.D. Fla. Case No. 23-16612 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/DRJEWEQ/MVJ_Auto_World_Inc__flsbke-23-16612__0001.0.pdf?mcid=tGE4TAMA represented by: Timothy S. Kingcade, Esq. KINGCADE, GARCIA & MCMAKEN, P.A. E-mail: scanner@miamibankruptcy.com In re Heywar Jackson, Jr. Bankr. D. Nev. Case No. 23-13512 Chapter 11 Petition filed August 21, 2023 In re Rommel T. Nacino and Lisa M. Nacino Bankr. D.N.J. Case No. 23-17232 Chapter 11 Petition filed August 21, 2023 represented by: Robert Schmidt, Esq. In re Artists in Motion Dance Studio, LLC Bankr. D.N.J. Case No. 23-17203 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/LEYFCPY/Artists_in_Motion_Dance_Studio__njbke-23-17203__0001.0.pdf?mcid=tGE4TAMA represented by: David A. Kasen, Esq. KASEN & KASEN, P.C. E-mail: dkasen@kasenlaw.com In re Adom Rental Transportation Inc. Bankr. E.D.N.Y. Case No. 23-42971 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/6JXCDXI/Adom_Rental_Transportation_Inc__nyebke-23-42971__0001.0.pdf?mcid=tGE4TAMA represented by: Gregory M. Messer, Esq. LAW OFFICE OF GREGORY MESSER E-mail: gmesser@messer-law.com In re 2580RootRiverParkway, LLC Bankr. E.D. Wisc. Case No. 23-23770 Chapter 11 Petition filed August 21, 2023 See https://www.pacermonitor.com/view/75XVDKI/2580RootRiverParkway_LLC__wiebke-23-23770__0001.0.pdf?mcid=tGE4TAMA represented by: Evan P. Schmit, Esq. KERKMAN & DUNN E-mail: eschmit@kerkmandunn.com ********* 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. 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