/raid1/www/Hosts/bankrupt/TCR_Public/240101.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, January 1, 2024, Vol. 28, No. 0
Headlines
A.B.A.N.E. PROPERTIES: Case Summary & Two Unsecured Creditors
ADAPTIV RESEARCH: Future Income & Accounts Receivable to Fund Plan
ALPHA SUMMIT: Ch.11 Plan Confirmation Moved Up After DIP Prepayment
AMICAS PIZZA: Voluntary Chapter 11 Case Summary
ASTRA ACQUISITION: Fitch Lowers Issuer Default Rating to 'CCC'
BRIGHTSTAR PROPERTY: Case Summary & 20 Largest Unsecured Creditors
BRITELAB INC: Case Summary & 20 Largest Unsecured Creditors
CHRISTONE DISTRIBUTION: Amends Amazon Capital Secured Claim Pay
CMS HOLDINGS: Case Summary & 20 Largest Unsecured Creditors
CORUS ENTERTAINMENT: DBRS Cuts Issuer Rating to BB(low)
EDUCATION STATION: Case Summary & Four Unsecured Creditors
ENCO PROPERTIES: Case Summary & Two Unsecured Creditors
FLYING FISH: Case Summary & 20 Largest Unsecured Creditors
GBC EXPRESS: Unsecured Creditors to Split $1.9M in Plan
GS MORTGAGE 2023-PJ6: DBRS Finalizes B(high) Rating on B5 Notes
JER INVESTORS: Case Summary & Three Unsecured Creditors
KNOTTY NUFF: Case Summary & 15 Unsecured Creditors
LTL MANAGEMENT: NJ Judge Won't Rethink Quashing Law Firm Subpoenas
MORGAN STANLEY 2013-C11: DBRS Confirms C Rating on Class B Certs
NEW WAVE PROPERTY: Case Summary & 20 Largest Unsecured Creditors
NFP CORP: Fitch Puts 'B' LongTerm IDR on Watch Positive
SPARTA US: Moody's Rates New $70MM Incremental Sec. Term Loan 'B1'
STRATASYS LTD: Gets Nano Dimension Unsolicited Proposal
URBAN EMPIRE: Voluntary Chapter 11 Case Summary
US STEEL: Fitch Puts 'BB' LongTerm IDR on Watch Positive
WHITE COLUMNS: Voluntary Chapter 11 Case Summary
*********
A.B.A.N.E. PROPERTIES: Case Summary & Two Unsecured Creditors
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Debtor: A.B.A.N.E. Properties, Ltd.
1011 N Mesa St.
El Paso TX 79902
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 23-31398
Debtor's Counsel: Carlos Miranda, Esq.
MIRANDA & MALDONADO, PC
5915 Silver Springs Bldg. 7
El Paso TX 79912
Tel: (915) 587-5000
Email: cmiranda@eptxlawyers.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Nora Herrera as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/5FQXRPQ/ABANE_Properties_Ltd__txwbke-23-31398__0001.0.pdf?mcid=tGE4TAMA
ADAPTIV RESEARCH: Future Income & Accounts Receivable to Fund Plan
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Adaptiv Research & Development Group, LLC, filed with the U.S.
Bankruptcy Court for the Middle District of Florida a Plan of
Reorganization for Small Business dated December 26, 2023.
The Debtor is a limited liability company. Since 2021, it has been
in the business of the purchase, resale and distribution of COVID
testing kits at the wholesale level.
This Plan proposes to pay the creditors of the Debtor from future
income of the Debtor generated from operations, the collection of
accounts receivable owed to the Debtor, and the pursuit of any
actions the Debtor has against third parties, including, but not
limited to causes of action against creditors of the estate in
state court, U.S. District Court or appellate court, including
causes related to the claims against this estate and any vendor
actions that may later arise.
This Plan provides for one class of secured claims; one class of
priority unsecured claims; one class of unsecured non-priority
claims; and one class for the equity interests of the Debtor.
Non-priority unsecured creditors holding allowed claims will
receive distributions over the life of the Plan from the Debtor's
net cash flow from operations, the collection of accounts
receivable owed to the Debtor and the pursuit of any actions the
Debtor has against third parties. This Plan also provides for the
payment of administrative and priority claims in full.
Class 3 consists of Non-Priority Unsecured Claims. Holders of
allowed unsecured claims against the Debtor shall receive a
pro-rata share of a fund created by the Debtor's payment of its net
cash flow from operations for 60 months, the collection of accounts
receivable owed to the Debtor, and the pursuit of any actions the
Debtor has against third parties, including, but not limited to
causes of action against creditors of the estate in state court,
U.S. District Court or appellate court, including causes related to
the claims against this estate and any vendor actions that may
later arise. The monthly payments will commence on the distribution
date. Pro-rata means the entire amount of the fund divided by the
entire amount owed to creditors with allowed claims in this class.
The total amount of the allowed, liquidated claims in this class is
expected to be $3,823,110.01. The quarterly net cash flow from
operations during the 60-month payment period is projected to
initially be approximately $0.00 for the first quarter and increase
to approximately $371,250.00 per quarter in year five of the plan.
In addition to the monthly payments provided to allowed unsecured
claims from the monthly net cash flow from operations, allowed
unsecured claims will also be paid an amount equal to the net
recovery by the Debtor of funds received from the collection of
accounts receivable owed to the Debtor, and the pursuit of any
actions the Debtor has against third parties.
All Class 4 interests, upon the effective date, shall be modified
to deprive the holders thereof of any rights in respect of the
Debtor to any distribution upon liquidation of the corporation, or
upon sale of all or substantially all the Debtor's assets, and
shall be further modified to provide that no dividend shall be paid
by reason of such equity interests.
A full-text copy of the Plan of Reorganization dated Dec. 26, 2023
is available at https://urlcurt.com/u?l=uShKUZ from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Timothy W. Gensmer, Esq.
2831 Ringling Blvd., Suite 202A
Sarasota, Florida 34237
Phone: (941) 952-9377
Email: tim@timgensmer.com
About Adaptiv Research & Development Group
Adaptiv Research & Development Group, LLC, has been in the business
of the purchase, resale and distribution of COVID testing kits at
the wholesale level.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-04227) on Sept. 25,
2023, with up to $50,000 in both assets and liabilities.
Timothy W. Gensmer, Esq., at Timothy W Gensmer, PA, is the Debtor's
legal counsel.
ALPHA SUMMIT: Ch.11 Plan Confirmation Moved Up After DIP Prepayment
-------------------------------------------------------------------
Vince Sullivan of Law360 reports that bankrupt oil and gas driller
Alpine Summit Energy Partners moved up its Chapter 11 plan
confirmation schedule Thursday, December 21, 2023, after a Texas
judge allowed it to prepay $8.3 million in post-petition financing
obligations to avoid a continued default on the loan.
The Debtor is now targeting a Plan confirmation hearing for
February 5, 2024, at 1:30 p.m. (prevailing Central Time), and a
Jan. 31, 2024 Plan voting deadline.
About Alpine Summit Energy Partners
Alpine Summit Energy Partners Inc. and its affiliates develop,
own,
and operate oil and gas properties in several formations in Texas.
Alpine Summit Energy Partners and its affiliates, including HB2
Origination, LLC, sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 23-90739) on July
5, 2023. In the petition filed by Craig Perry, CEO and Chairman of
Board of Directors, Alpine Summit Energy Partners estimated assets
up to $50,000 and liabilities between $500,000 and $1 million.
Affiliate Ageron Energy II, LLC estimated $100 million to $500
million in assets and $1 million to $10 million in liabilities.
Affiliate HB2 Origination, LLC estimated $100 million to $500
million in assets and $50 million to $100 million in liabilities.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Porter Hedges, LLP as counsel; Houlihan Lokey
Capital, Inc. as investment banker; Huron Consulting Services, LLC
as financial advisor; and White & Case LLP as special litigation
counsel. Kroll Restructuring Administration, LLC is the claims
agent.
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The
committee tapped Reed Smith, LLP as bankruptcy counsel and Huron
Consulting Services, LLC as restructuring advisor. Ryan Bouley of
Huron serves as chief restructuring officer.
AMICAS PIZZA: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Amicas Pizza Microbrews & More, Inc.
d/b/a Stoke Mountain Barbeque
d/b/a Stoke BBQ
127 F Street
Salida, CO 81201
Business Description: The Debtor owns and operates a pizza
restaurant offering wood-fired pies & craft
beer in bright, laid-back digs.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
District of Colorado
Case No.: 23-16046
Judge: Hon. Thomas B Mcnamara
Debtor's Counsel: Jeffrey A. Weinman, Esq.
ALLEN VELLONE WOLF HELFRICH & FACTOR, P.C.
1600 Stout Street
1900
Denver, CO 80202
Tel: 303-534-4499
Email: jweinman@allen-vellone.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Christopher Bowers as president of Board
of Directors.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download at PacerMonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/4SMI7AQ/Amicas_Pizza_Microbrews__More__cobke-23-16046__0001.0.pdf?mcid=tGE4TAMA
ASTRA ACQUISITION: Fitch Lowers Issuer Default Rating to 'CCC'
--------------------------------------------------------------
Fitch Ratings has downgraded Astra Acquisition Corp.'s (d.b.a.
Anthology) Long-term Issuer Default Rating (IDR) to 'CCC' from
'B-'. In addition, Fitch has downgraded the company's first lien
credit facility and first lien term loan to 'CCC+'/'RR3' from
'BB-'/ 'RR1'. Fitch does not rate the $500 million 2L term loan.
Fitch has also downgraded Astra Intermediate Holding Corp.'s IDR to
'CCC' from 'B-'. Astra Intermediate Holding Corp. is the parent and
Astra Acquisition Corp. is the wholly-owned subsidiary
(collectively referred to as Astra).
The downgrade of the IDRs reflects Astra's significantly reduced
liquidity. The company generated weaker results in recent quarters,
leading to significant negative FCF. Cash on the balance sheet is
limited, and access to the $140 million revolver will likely be
restricted over the near term given the potential for a covenant
violation.
Astra benefits from a strong pro forma gross retention rate.
Recurring revenues as a percentage of total revenues were also
strong but are declining. Overall new bookings, including new
bookings for recurring revenues, have significantly declined, which
does not bode well for future revenue growth.
KEY RATING DRIVERS
Weak Performance in FY23: Astra's FY23 pro forma revenues (after
adjusting for the divestitures in 4QFY22 and 1QFY23) were flat to
slightly down, which was lower than Fitch's expectations of very
low single-digit growth. Revenues fell in the mid-single digits in
1QFY24 on a year over year basis. EBITDA margins were in the
mid-teens vs. Fitch's expectation of results in the upper-teens.
The competitive intensity for the industry has been increasing as
other players with stronger financial flexibility have increased
their customer base and grown revenues.
Negative FCF: Astra's FY23 actual results for FCF were negative
$151, which was much greater than Fitch's previous forecast for
negative FCF. Over the forecast horizon, Fitch continues to project
negative FCF, and there is limited liquidity. Fitch believes that
unless the sponsor injects significant equity the company may be
forced to declare bankruptcy or pursue a distressed debt exchange
in the near term.
Unsustainable Leverage: With proceeds from asset sales in 4QFY23
and 1QFY23, the company reduced its total debt by about $400
million. However, with weak EBITDA, Fitch calculates that leverage
was nearly 18x at the end of FY23 and prospects for significant
leverage reduction appear limited. Interest coverage is forecasted
by Fitch to remain under 1.0x over the rating horizon. If
management can successfully enhance EBITDA margins as it plans,
Astra's credit metrics could be better than Fitch's projections.
Retention Rates Below Historical Levels: For fiscal 2023, Astra's
net retention rate improved to 86% versus 83% in the prior year.
Management indicated that on a pro forma basis, it is expected to
be 90% once delayed contracts were signed for renewal and when
1QFY24 results were released, gross retention was 87% for the TTM.
These rates are lower than historical levels. Astra's gross
retention rate was 94% and net retention was 97% in FY21, while
Blackboard's gross retention rate was 95%, and its net retention
rate was 104% during the same period.
Competitive LMS Environment: Astra's largest segment is its
Learning Management Systems (LMS) where there is strong
competition, including Canvas, which is owned by Instructure (NYSE:
INST; BB-/Stable) and Brightspace, owned by D2L Inc. (TSE: DTOL;
not rated). The most recent quarterly results from INST and DTOL
show strong revenue growth yoy, whereas Astra showed a very modest
decline (on a pro forma basis adjusted for the sale of assets).
Past Divestitures Cut Debt: Astra acquired Blackboard in October
2021 for approximately $1.9 billion and has since evaluated its
portfolio of offerings, making some strategic decisions. Astra sold
Blackboard Collaboration in June 2022 and Blackboard Community
Engagement in September 2022. Fitch believes that Astra will have
to successfully execute on its strategic plans to gain market share
and grow its remaining offerings, which it has failed to do over
the last few quarters.
Impact from Divestitures: The company used $400 million of the $525
million of proceeds from the September 2022 and June 2022
divestitures of Blackboard Collaborate and Blackboard Community
Engagement to partially repay the first-lien term loan. This
somewhat helped reduce the company's interest expense burden, and
the EBITDA margins from the remaining businesses are below the
recent divestures.
Ownership Expected to Limit Deleveraging: Astra is majority owned
by private equity firm Veritas Capital. Fitch believes private
equity ownership has kept the company focused on optimizing ROE
versus leverage reduction.
DERIVATION SUMMARY
Astra's ratings are supported by the company's high recurring
revenues although they have been declining, strong product
portfolio and technology platform, as well as its strong market
position in the LMS space. The rating also reflects its weak and
concerning liquidity position, its smaller scale relative to the
larger and more diversified education software peers, such as
Ellucian (not rated), Oracle (ORCL; BBB/Neg), and Workday (not
rated).
The ratings are also constrained by the company's significant
leverage when compared to similarly sized Instructure Holdings,
Inc. (INST; BB-/Stable), a direct competitor in the LMS space.
Astra's 'CCC' rating is one notch below GoTo Group Inc (GoTo;
'CCC+') and QBS Parent (QBS; 'CCC+') due to Fitch's concerns about
liquidity in the very near term. Like other Fitch-rated software
issuers owned by private equity, Astra is in the single 'CCC'
rating category reflecting its limited liquidity and unsustainable
capital structure. The ownership structure is designed to optimize
ROE, limiting the prospect for accelerated deleveraging.
Fitch rates the IDRs of Astra Intermediate Holding Corp. and its
wholly-owned subsidiary, Astra Acquisition Corp., 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.
KEY ASSUMPTIONS
- In fiscal 2024, Fitch assumes modest revenue declines followed by
more revenue stability;
- EBITDA margins remain in the range of 13% to 15% in the forecast
years;
- FCF remains negative over the forecast horizon;
- Fitch assumes that Astra fully draws on its $140 million revolver
in FY24;
- No assumptions are made for acquisitions or dividends.
RECOVERY ANALYSIS
Recovery Rating Assumptions
The recovery assumes that Astra would be reorganized as a
going-concern entity in bankruptcy rather than liquidated. A 10%
administrative claim and that the $140 million revolver is fully
drawn.
Going-Concern (GC) Approach: Astra's GC EBITDA is assumed to be $85
million which is lower than the prior GC EBITDA of $133 million due
to lower revenues and weaker EBITDA margins in recent quarters.
This considers that as contracts come up for renewal, Astra loses
market share to other large players in the LMS space including
Instructure's Canvas LMS, Moodle, Google Classroom and others.
Fitch assumes that the company generates $425 million in revenues
and that the company can cut operating expenses during its
rehabilitation period. As a result, Fitch assumes Astra operates
with 20% EBITDA margins and the GC EBITDA is $85 million.
TEV/EBITDA Multiple Rationale: An EV Multiple of 6.5x EBITDA is
applied to the GC EBITDA to calculate a post-reorganization
enterprise value, which has been lowered from 7.0x to reflect the
company's weaker operating profile. The choice of this multiple
considered the following factors:
- Fitch's Bankruptcy Enterprise Values and Creditor Recoveries
showed that bankruptcy case study exit multiples for technology
peer companies ranged from 2.6x-10.8x.
- Of these companies, only five were in the Software sector: Allen
Systems Group, Inc. (8.4x), Avaya Inc. (2017: 8.1x and 2023: 7.5x);
Aspect Software Parent, Inc. (5.5x), Sungard Availability Services
Capital, Inc. (4.6x) and Riverbed Technology Software (8.3x).
As a result, Fitch rates the first lien credit facilities
'CCC+'/'RR3', one notch above Astra's 'CCC' IDR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Expectations of improved liquidity;
- Positive FCF generation on a sustained basis;
- Sustained revenue growth of mid-single digits, implying an
overall stable market position;
- (CFO-Capex)/Debt with Equity Credit above 0% on a sustained
basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Elevated default risk as a result of a lack of liquidity from the
capital markets and sponsor, which could hamper the company's
ability to conduct operations;
- Revenue declines beyond the single digit declines;
- Accelerating negative FCF.
LIQUIDITY AND DEBT STRUCTURE
Insufficient Liquidity: Fitch views Astra's liquidity as
insufficient considering expectations of negative FCF. As of Sept.
30, 2023, the company had $25 million of cash on the balance sheet
and full availability on its $140 million revolver which extends
until 2026. Fitch has concerns about Astra's ability to draw on the
revolver given that the bank defined first lien net leverage ratio
cannot exceed 8.0x and the ratio has been moving closer to that.
Debt Structure: Astra has a 1st lien senior secured facility,
including the undrawn $140 million revolver due 2026, and a $772
million term loan due in 2027. In addition, it has $500 million of
2nd lien debt due in 2028.
ISSUER PROFILE
Astra Acquisition Corp. (d.b.a. Anthology) is a provider of
cloud-based software solutions for higher educational institutions.
Its primary software solutions are learning management systems
(LMS) and it offers other products such as student information
systems (SIS) and customer relationship management (CRM) software.
ESG CONSIDERATIONS
Astra Acquisition Corporation has an ESG Relevance Score of '4' for
Customer Welfare - Fair Messaging, Privacy & Data Security due to
{DESCRIPTION OF ISSUE/RATIONALE}, 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
----------- ------ -------- -----
Astra Acquisition
Corporation LT IDR CCC Downgrade B-
senior secured LT CCC+ Downgrade RR3 BB-
Astra Intermediate
Holding Corp. LT IDR CCC Downgrade B-
BRIGHTSTAR PROPERTY: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Brightstar Property Maintenance Services, Inc.
3726 NW 15th Street
Fort Lauderdale, FL 33311
Business Description: The Debtor offers property maintenance
services.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 23-20835
Judge: Hon. Scott M. Grossman
Debtor's Counsel: Thomas L. Abrams, Esq.
THOMAS L ABRAMS PA
1213 SE 3rd Avenue
Fort Lauderdale, FL 33316
Tel: 954) 523-0900
E-mail: tabrams@tabramslaw.com
Total Assets: $1,100,683
Total Liabilities: $1,074,719
The petition was signed by Leon Nelson as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/6KKAJ4A/Brightstar_Property_Maintenance__flsbke-23-20835__0001.0.pdf?mcid=tGE4TAMA
BRITELAB INC: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: BriteLab, Inc.
FDBA E Systems Technology, Inc.
6341 San Ignacio Ave.
San Jose, CA 95119
Business Description: BriteLab offers OEM material handling robots
and systems for semiconductor fabrication as
well as contract services for engineering
and manufacturing assembly. Their 70,000
square foot warehouse supports the vast
robotics, production automation, E-mobility
and electro-mechanical hardware from concept
creation to box ready for shipment.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Northern District of California
Case No.: 23-51520
Judge: Hon. Stephen L Johnson
Debtor's Counsel: Ron Bender, Esq.
LEVENE, NEALE, BENDER, YOO & GOLUBCHIK L.L.P.
2818 La Cienega Avenue
Los Angeles, CA 90034
Tel: (310) 229-1234
Email: rb@lnbyg.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ali Bushehri as chief executive
officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/MOOBC7I/BriteLab_Inc__canbke-23-51520__0001.0.pdf?mcid=tGE4TAMA
CHRISTONE DISTRIBUTION: Amends Amazon Capital Secured Claim Pay
---------------------------------------------------------------
Christone Distribution, Inc., submitted an Amended Plan of
Reorganization for Small Business dated December 26, 2023.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income for the period described in
Section 1191(c)(2) of $48,333 (on average based on projections, and
before making any payments specified in the plan).
The final Plan payment is expected to be paid 60 months after the
effective date of the Plan.
This Plan of Reorganization under chapter 11 of the Bankruptcy Code
proposes to pay creditors of Christone Distribution, Inc. from
income generated from the future income from operations of the
e-commerce business and specifically sale of auto products.
Class 1 consists of the Secured claim of Amazon Capital Services,
Inc. ("ACS") in the amount of $386,745.35. ACS and Debtor have
reached an agreement by Stipulation for use of cash collateral, and
for plan treatment as follows: Neither the entry of the plan
confirmation order nor the terms of the plan shall affect the lien
rights of ACS. Upon the effective date of the plan, ACS shall hold
a first position lien on all collateral pledged to it under its
pre-petition loan documents and an allowed secured claim for the
full unpaid balance of the loan.
The Debtor shall disburse adequate protection payments to ACS of
$20,000 per month through plan confirmation. The ACS allowed
secured claim shall bear interest at the contract interest rate of
$10.99%. After confirmation, the Debtor shall disburse payments as
follows: 12/2024 ($5,000); 1/2024 ($5,000); 2/2024 ($5,000); 3/2024
($5,000); 4/2024 ($30,000); 5/2024 ($30,000); 6/2024 ($30,000);
7/2024 ($30,000); 8/2024 ($30,000); 8/2024 ($30,000); 9/2024
($30,000); 10/2024 ($19,359).
Like in the prior iteration of the Plan, Class 5 Non-priority
Unsecured Creditors will not receive a disbursement. Class 5 is
impaired.
A full-text copy of the Amended Plan dated December 26, 2023 is
available at https://urlcurt.com/u?l=M9c1ZA from PacerMonitor.com
at no charge.
Attorney for the Plan Proponent:
Seth D. Ballstaedt, Esq.
Ballstaedt Law Firm, LLC
d/b/a Fair Free Legal Services
8751 W. Charleston Blvd., Suite 220
Las Vegas, NV 89117
Telephone: (702) 715-0000
Facsimile: (702) 666-8215
Email: help@bkvegas.com
About Christone Distribution
Christone Distribution, Inc., is a professional auto spares and
tires manufacturer in Las Vegas. It has operated with its partners
as a special online e-commerce supply chain platform with related
online orders' fulfillment services in distributing a variety of
aftermarket auto parts.
Christone Distribution filed its voluntary petition for Chapter 11
protection (Bankr. D. Nev. Case No. 23-10055) on Jan. 7, 2023, with
$100,000 to $500,000 in assets and $1 million to $10 million in
liabilities. Jing Liu, president of Christone Distribution, signed
the petition.
Judge Mike K. Nakagawa oversees the case.
Seth D. Ballstaedt, Esq., at Ballstaedt Law Firm, LLC, is the
Debtor's bankruptcy counsel.
CMS HOLDINGS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
CMS Holdings Group, LLC 23-19382
20726 Summer Sweet Terrace
Germantown, MD 20876
CMS Processing, LLC 23-19388
3 E. Diamond Ave.
Gaithersburg, MD 20877
Merchant Portfolio Management Group, LLC 23-19392
3 E. Diamond Ave.
Gaithersburg, MD 20877
Chapter 11 Petition Date: December 28, 2023
Court: United States Bankruptcy Court
District of Maryland
Judge: Hon. Lori S. Simpson
Debtors' Counsel: James M. Hoffman, Esq.
OFFIT KURMAN, P.A.
7501 Wisconsin Ave, Suite 1000W
Bethesda, MD 20814
Tel: 240-507-1710
Fax: 240-507-1735
Email: jhoffman@offitkurman.com
Debtors'
Co-Counsel: MCNAMEE HOSEA, PA
CMS Holdings'
Estimated Assets: $0 to $50,000
CMS Holdings'
Estimated Liabilities: $100,000 to $500,000
CMS Processing's
Estimated Assets: $10 million to $50 million
CMS Processing's
Estimated Liabilities: $50 million to $100 million
Merchant Portfolio's
Estimated Assets: $10 million to $50 million
Merchant Portfolio's
Estimated Liabilities: $50 million to $100 million
The petitions were signed by G. Richard Gray, president of Gray &
Assoc., LLC, receiver.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/RLJCOGY/Merchant_Portfolio_Management__mdbke-23-19392__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/PSX6XQQ/CMS_Processing_LLC__mdbke-23-19388__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/IAVEQQI/CMS_Holdings_Group_LLC__mdbke-23-19382__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Aks, Nina $1,555,000
11406 Old
Georgetown Rd
Rockville, MD
20852-2891
2. Blumenfeld, Alan $1,049,301
54 Chippenham Drive
Voorhees, NJ 08043
3. Cates, Allen $1,432,500
9101 Tresanton Dr
Charlotte, NC
28210-8302
4. Cates, Larry (Cates $6,704,760
Investment LLC)
340 Cattail Dr
Whitefish, MT
59937-8563
5. Costa Valverde, Jose $1,505,300
885 Third Ave.
New York, NY 10022
6. Holtzman, Toby $2,607,187
37 Maryland Ave
Unit 521
Rockville, MD
20850-2462
7. J&L Capital LLC $1,000,000
3899 Woods Ln NE
Iowa City, IA 52240
8. McKenna, Todd $656,000
109 East 17th Street
Ste 5112
Cheyenne, WY 82001
9. Murphy, Steven and Lana $7,010,380
N6802 Shorewood
Hills Rd
Lake Mills, WI 53551
10. Mynatt, William $1,057,000
19680 Aqua View Ln
Miromar Lakes, FL
33913-9664
11. OB Enterprises $2,842,922
3899 Woods Ln NE
Iowa City, IA
52240-7962
12. Pottebaum, Eric $821,946
3899 Woods Ln NE
Iowa City, IA
52240-7962
13. Rubin, Michael $9,262,191
6931 Arlington Rd
Ste 480
Bethesda, MD
20814-5243
14. Shadow Creek $1,280,000
Defined Benefit Plan
PO Box 1051
Whitefish, MT
59937-1051
15. Sorensen, Orlan $2,500,000
440 Orchard Ridge Rd
Kalispell, MT
59901-7565
16. Strategic Payment $1,726,000
Systems Inc
7315 Wisconsin Ave
Suite 800 West
Bethesda, MD 20814
17. The Michael D Rubin $1,171,666
Family LP
6931 Arlington Rd
Ste 480
Bethesda, MD
20814-5243
18. Turner, Jonathan & Olivia $750,000
9006 Cascada Way
Apt 201
Naples, FL 34114
19. Worldpay ISO, Inc. $1,403,653
(Vantiv)
8500 Governors Hill Drive
Cincinnati, OH 45249
20. Zeiger, Jeffrey $629,333
8 Timberline Dr
Voorhees, NJ
08043-3409
CORUS ENTERTAINMENT: DBRS Cuts Issuer Rating to BB(low)
-------------------------------------------------------
DBRS Limited downgraded Corus Entertainment Inc.'s (Corus or the
Company) Issuer Rating to BB (low) from BB and downgraded the
Senior Unsecured Notes to BB (low) from BB; however, there is no
change to the recovery rating of RR4. DBRS Morningstar also changed
all trends to Stable from Negative. The credit rating downgrades
reflect DBRS Morningstar's concerns that Corus' near- to
medium-term earnings will remain under pressure as a result of a
contraction in advertising revenue affected by the confluence of
several factors, including a softening economic outlook, strike
activity (now resolved) affecting content creation, and an
increasingly competitive entertainment landscape.
On April 12, 2023, DBRS Morningstar confirmed Corus' Issuer Rating
at BB, but changed the trend to Negative from Stable. The trend
change reflected the concern that near-term earnings would be
pressured by slowing economic activity.
At that time, DBRS Morningstar forecast F2023 EBITDA to decline in
the high single digits largely as a result of a softening economic
environment and programming pressures that would require higher
spending on Canadian content. However, EBITDA was expected to
trough in F2023 and increase year over year (YOY) in F2024.
Further, leverage at YE F2023 was expected to be roughly 3.25 times
(x) and trend down in subsequent years.
F2023 operating results were softer than anticipated with revenue
of $1,511 million, down 5% YOY, as TV advertising revenue remained
under pressure, declining 11% YOY, and subscriber revenue declined
3% YOY. F2023 EBITDA of $334 million was down 25% YOY, primarily
reflecting higher program rights costs that were driven by an
increase in original Canadian content production as well as
investment in U.S. studio programming. The EBITDA decline was
despite a mid-single-digit decline in general and administrative
and compensation costs. As a result, the F2023 EBITDA margin was
22.1% compared with 27.8% in F2022.
The soft earnings results were also reflected in the Company's
financial profile. In F2023, free cash flow (FCF) after dividends
and before changes in working capital declined 76% YOY to $48
million from $207 million, primarily reflecting lower net income
before one-time items, as capital expenditures (capex) of $13
million and $53 million in dividend payments were both lower YOY.
DBRS Morningstar note that $141 million in net proceeds from the
sale of Toon Boom were directed toward debt repayment. As a result,
debt declined to $1.22 billion at YE F2023 compared with $1.3
billion in the prior year. However, as a result of the decline in
EBITDA and despite a lower debt balance, gross debt-to-EBITDA
increased to 3.65x, compared with 3.15x in F2022.
DBRS Morningstar expects the challenging television advertising
environment will likely persist through F2024 as advertisers
moderate their ad-spend and consumers contend with the rising cost
of living and higher interest rates. In addition, the Writers Guild
of America and Screen Actors Guild-American Federation of
Television and Radio Artists strikes have severely affected the
production of U.S. content, which will negatively affect operating
results in the company's seasonally strong first quarter. However,
with the resolution of both strikes as of early November, DBRS
Morningstar anticipates a full program schedule to return in H2
F2024.
While the prospect of new content and the return of a full program
schedule in the latter half of F2024 is encouraging, the
proliferation of digital entertainment options (including
subscription video on demand, free advertising supported TV, and
advertising video on demand, all platforms on which Corus also has
offerings), has intensified the competitive landscape and provides
consumers with an ever-expanding range of entertainment options.
While Corus' video-first strategy offers a strong slate of popular
programs, access to specialty channels and a robust production
slate of Canadian content that has international appeal, the rising
cost of living, and an uncertain economic climate are causing
consumers to be pickier with regard to their entertainment spend.
Therefore, in order to reduce ad-spend friction, the Company must
be able to provide advertisers with a seamless buying experience
that is both effective and efficient across all linear and digital
distribution channels. Of note is that revenue from Corus'
streaming distribution platforms and digital video advertising
offerings continue to grow, and now represent approximately 11% of
TV advertising and subscription revenue, although the pace of
growth slowed to 2% YOY in F2023. In order to leverage its premium
content and remain relevant in the changing entertainment
landscape, Corus will have to deepen its expertise in
cross-platform selling, which is expected to take some time. As a
result, DBRS Morningstar expects F2024 revenue to decrease in the
high single-digit to low double-digit range and then increase in
the low single-digits in F2025. DBRS Morningstar expects the EBITDA
pressure witnessed in Q4 F2023 to persist through H1 F2024 but
moderate as the year progresses as the Company takes measures to
curb costs and faces easier YOY comparisons. As a result, DBRS
Morningstar expects EBITDA to decline in the mid-to-high single
digits in F2024, before returning to positive growth in F2025.
In terms of the financial outlook, Corus announced the suspension
of its quarterly dividend when it reported YE F2023 results in
order to prioritize continued debt reduction. DBRS Morningstar
estimates F2024 FCF after dividends and before changes in working
capital to be $110 million to $120 million, compared with $48
million in F2023, in part reflecting the absence of $36 million in
dividend payments in F2023. DBRS Morningstar expects the Company to
continue to prioritize using internally generated cash flow and/or
proceeds from asset divestitures toward reducing the balance of its
term facility for the foreseeable future. While debt is expected to
continue to decline in F2024, owing to the softness in EBITDA, YE
F2024 gross leverage is expected to remain roughly flat YOY at
~3.65x, before declining in F2025.
If key operating activity continues to deteriorate, particularly if
Corus has a full program schedule, and/or credit metrics remain
under pressure and/or leverage is maintained at a structurally
higher level and/or the Company pursues a more aggressive financial
management strategy (such as the reinstatement of a dividend while
operating performance is under pressure), a negative rating action
may occur. Conversely, should operating performance strengthen in a
sustainable manner, combined with the continued allocation of FCF
toward debt reduction such that gross leverage moves sustainably
below 3.0x, DBRS Morningstar may consider a positive rating
action.
Notes: All figures are in Canadian dollars unless otherwise noted.
EDUCATION STATION: Case Summary & Four Unsecured Creditors
----------------------------------------------------------
Debtor: Education Station, LLC
712 Main St.
Lavon, TX 75166
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 23-42499
Debtor's Counsel: Robert T. DeMarco, Esq.
DEMARCO MITCHELL, PLLC
500 N Central Expressway Suite 500
Plano TX 75074
Tel: (972) 578-1400
Email: robert@demarcomitchell.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Gary Richey as general manager and
director.
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/7KEUTQI/Education_Station_LLC__txebke-23-42499__0001.0.pdf?mcid=tGE4TAMA
ENCO PROPERTIES: Case Summary & Two Unsecured Creditors
-------------------------------------------------------
Debtor: ENCO Properties, LLC
d/b/a Sunset Village at 716 W. Yandell
d/b/a Sunset Village
d/b/a Sunset Village at 415 W. Yandell
1011 N Mesa St
El Paso, TX 79902
Business Description: The Debtor is primarily engaged in renting
and leasing real estate properties.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 23-31399
Debtor's Counsel: James Jopling, Esq.
JIM JOPLING, ATTORNEY AT LAW
521 Texas Ave Ste 102
El Paso, TX 79901
Tel: (915) 541-6099
Email: jim@joplinglaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Nora I. Herrera as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/37VVPXQ/ENCO_Properties_LLC__txwbke-23-31399__0001.0.pdf?mcid=tGE4TAMA
FLYING FISH: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Flying Fish Brewing Company, LLC
900 Kennedy Blvd.
Somerdale, NJ 08083
Chapter 11 Petition Date: December 28, 2023
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 23-21917
Debtor's Counsel: Ellen M. McDowell, Esq.
MCDOWELL LAW, PC
46 West Main St.
Maple Shade, NJ 08052
Tel: 856-482-5544
Fax: 856-482-5511
Email: emcdowell@mcdowelllegal.com
Total Assets: $1,277,747
Total Liabilities: $9,279,265
The petition was signed by James Lewandowski as chief executive
officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/4WBK3XQ/Flying_Fish_Brewing_Company_LLC__njbke-23-21917__0001.0.pdf?mcid=tGE4TAMA
GBC EXPRESS: Unsecured Creditors to Split $1.9M in Plan
-------------------------------------------------------
GBC Express, LLC, filed with the U.S. Bankruptcy Court for the
Western District of Washington a Plan of Reorganization dated
December 26, 2023.
The Debtor was founded in 2015. Originally it only had one truck
and reefer trailer but it grew to dispatch about 30 truck tractors
and 30 reefer trailers that primarily operate in all 48 states of
the United States.
The truck freight transportation industry is very cyclical and
trucking companies in the Pacific Northwest are heavily reliant on
international trade in consumer goods coming from the far east
moving through the ports of Seattle and Tacoma, as well as outbound
agricultural commodities. The trade war between the United States
and China in early 2019 impacted the companies' operations, but by
the end of 2019 the company was back on a growth trajectory.
On June 30, 2023, Commercial Credit Group ("CCG"), as a holder of
the secured notes on 16 trucks/tractors, seized 3 of the
trucks/trailers which are necessary for the continuation of the
business. Negotiations between debtor and CCG were not successful
and CCG was attempting repossession of additional tractors. GBC
EXPRESS LLC filed Chapter 11 Bankruptcy on September 26, 2023 to
prevent further repossession of the additional tractors/trucks.
This Plan of Reorganization proposes to pay creditors of the Debtor
in the manner and consistent with the terms contained herein.
This Plan provides for unclassified administrative claims and
priority tax claims, twelve classes of secured claims and one class
of unsecured claims, and no classes of equity security holders.
Class 14 consists of the Unsecured claim of Alliance Funding. The
claim of Alliance Funding at Claim No. 1 in the amount of
$73,039.73 will be paid as a Class 20 General Unsecured Claim as
the alleged collateral has been repossessed by the lender and
sold.
Class 15 consists of the Unsecured claim of North Mill Credit Trust
Claim No. 15. The claim of North Mill Credit Trust at Claim No. 17
in the amount of $148,664.96 will be paid as a Class 20 General
Unsecured Claim as the alleged collateral has been repossessed by
the lender and will be surrendered.
Class 16 consists of the Unsecured claim of North Mill Credit Trust
Claim No. 16. The claim of North Mill Credit Trust at Claim No. 17
in the amount of $87,942.50 will be paid as a Class 20 General
Unsecured Claim as the alleged collateral has been repossessed by
the lender and will be surrendered.
Class 17 consists of the Unsecured claim of North Mill Credit Trust
Claim No. 17. The claim of North Mill Credit Trust at Claim No. 17
in the amount of $79,568.60 will be paid as a Class 20 General
Unsecured Claim as the alleged collateral has been repossessed and
sold by the lender.
Class 18 consists of the unsecured priority claim of Washington
Department of Labor & Industries. The unclassified priority claim
of the Washington State Department of Labor & Industries, in the
amount of $60,368.72 will be paid monthly payments of $1208.00 on
the 15th of each month beginning March 15, 2024, and continuing
until May 2024. Thereafter, monthly payments of $5,362.00 from June
15, 2024, through July 15, 2024. Thereafter, monthly payments of
$10,518.08 through November 15, 2024, when the priority claim is
paid in full. Interest will accrue at the rate of 12% per annum.
and continuing thereafter until the claim is paid in full, not to
exceed 60 months from the petition date.
Class 19 consists of the unsecured priority claim of the IRS. The
priority claim of the IRS will be paid its priority claim in full
on the 15th of April 2024. If any amount remains outstanding in
January of 2029, Debtor will remit with its February payment
additional funds as necessary to satisfy any outstanding balance in
order to pay the claim in full.
Class 20 consists of all general unsecured claims. Each holder of
an allowed general unsecured claim will be paid $1,911,437.67 to be
paid in equal monthly installments of $10,000.00 per month
beginning October 15, 2024 through March 15, 2024. Thereafter,
monthly installments of $50,000 from April 15, 2024 and continuing
for 37 months. In addition, Class 20 claims will be paid a pro rata
share of all available funds after payment of secured, priority and
unclassified claims.
The Plan will be funded with revenue from the Debtor's operation.
During the Plan term, the Debtor will continue with the trucking
operations and anticipates that sufficient net income can be
generated from its services to make the payments under this
proposed plan.
A full-text copy of the Plan of Reorganization dated Dec. 26, 2023
is available at https://urlcurt.com/u?l=9VMbQ9 from
PacerMonitor.com at no charge.
Debtor's Counsel:
Steven Palmer, Esq.
Palmer & Associates, PLLC
6912 220th St SW, Suite 113
Mountlake Terrace, WA 98043
Tel. 425-292-8009
Fax: 425-200-0841
About GBC Express
GBC Express, LLC, is a trucking company in Bellevue, Washington.
GBC Express sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Wash. Case No. 23-11814) on September
26, 2023. In the petition signed by Mihail Nicoara, president, the
Debtor disclosed $2,653,339 in assets and $4,543,064 in
liabilities.
Judge Marc Barreca oversees the case.
Steven Palmer, Esq., at Curtis, Casteel & Palmer, PLLC, is the
Debtor's legal counsel.
GS MORTGAGE 2023-PJ6: DBRS Finalizes B(high) Rating on B5 Notes
---------------------------------------------------------------
DBRS, Inc. finalized the following provisional credit ratings to
Mortgage-Backed Notes, Series 2023-PJ6 (the Notes) issued by GS
Mortgage-Backed Securities Trust 2023-PJ6 (GSMBS 2023-PJ6):
-- $295.3 million Class A-1 at AAA (sf)
-- $295.3 million Class A-1-X at AAA (sf)
-- $295.3 million Class A-2 at AAA (sf)
-- $272.7 million Class A-3 at AAA (sf)
-- $272.7 million Class A-3A at AAA (sf)
-- $272.7 million Class A-3-X at AAA (sf)
-- $272.7 million Class A-4 at AAA (sf)
-- $272.7 million Class A-4A at AAA (sf)
-- $136.4 million Class A-5 at AAA (sf)
-- $136.4 million Class A-5-X at AAA (sf)
-- $136.4 million Class A-6 at AAA (sf)
-- $163.6 million Class A-7 at AAA (sf)
-- $163.6 million Class A-7-X at AAA (sf)
-- $163.6 million Class A-8 at AAA (sf)
-- $27.3 million Class A-9 at AAA (sf)
-- $27.3 million Class A-9-X at AAA (sf)
-- $27.3 million Class A-10 at AAA (sf)
-- $68.2 million Class A-11 at AAA (sf)
-- $68.2 million Class A-11-X at AAA (sf)
-- $68.2 million Class A-12 at AAA (sf)
-- $40.9 million Class A-13 at AAA (sf)
-- $40.9 million Class A-13-X at AAA (sf)
-- $40.9 million Class A-14 at AAA (sf)
-- $204.5 million Class A-15 at AAA (sf)
-- $204.5 million Class A-15-X at AAA (sf)
-- $204.5 million Class A-16 at AAA (sf)
-- $136.4 million Class A-17 at AAA (sf)
-- $136.4 million Class A-17-X at AAA (sf)
-- $136.4 million Class A-18 at AAA (sf)
-- $109.1 million Class A-19 at AAA (sf)
-- $109.1 million Class A-19-X at AAA (sf)
-- $109.1 million Class A-20 at AAA (sf)
-- $68.2 million Class A-21 at AAA (sf)
-- $68.2 million Class A-21-X at AAA (sf)
-- $68.2 million Class A-22 at AAA (sf)
-- $22.6 million Class A-23 at AAA (sf)
-- $22.6 million Class A-23-X at AAA (sf)
-- $22.6 million Class A-24 at AAA (sf)
-- $295.3 million Class A-X at AAA (sf)
-- $7.7 million Class B-1 at AA (sf)
-- $6.9 million Class B-2 at A (sf)
-- $4.8 million Class B-3 at BBB (sf)
-- $2.6 million Class B-4 at BB (high) (sf)
-- $1.4 million Class B-5 at B (high) (sf)
DBRS Morningstar discontinued and withdrew its credit ratings on
Classes A-3L, A-4L, A-16L, and A-22L Loans initially contemplated
in the offering documents, as they were not issued at closing.
Classes A-1-X, A-3-X, A-5-X, A-7-X, A-9-X, A-11-X, A-13-X, A-15-X,
A-17-X, A-19-X, A-21-X, A-23-X, and A-X are interest-only (IO)
notes. The class balances represent notional amounts.
Classes A-1, A-1-X, A-2, A-3, A-3A, A-3-X, A-4, A-4A, A-6, A-7,
A-7-X, A-8, A-10, A-10, A-11, A-11-X, A-12, A-14, A-15, A-15-X,
A-16, A-17, A-17-X, A-18, A-19, A-19-X, A-20, and A-24 are
exchangeable notes. These classes can be exchanged for combinations
of exchange notes as specified in the offering documents.
Classes A-3, A-3A, A-4, A-4A, A-5, A-6, A-7, A-8, A-9, A-10, A-11,
A-12, A-13, A-14, A-15, A-16, A-17, A-18, A-19, A-20, A-21, and
A-22 are super senior notes. These classes benefit from additional
protection from the senior support notes (Classes A-23 and A-24)
with respect to loss allocation.
The AAA (sf) credit ratings on the Notes reflect 7.95% of credit
enhancement provided by subordinated notes. The AA (sf), A (sf),
BBB (sf), BB (high) (sf), and B (high) (sf) credit ratings reflect
5.55%, 3.40%, 1.90%, 1.10%, and 0.65% credit enhancement,
respectively.
Other than the specified classes above, DBRS Morningstar does not
rate any other classes in this transaction.
This transaction is a securitization of a portfolio of first-lien
fixed-rate prime residential mortgages funded by the issuance of
the Notes. The Notes are backed by 269 loans with a total principal
balance of $320,851,860 as of the Cut-Off Date (November 1, 2023).
The pool consists of first-lien, fully amortizing fixed-rate
mortgages (FRMs) with original terms to maturity of up to 30 years.
The weighted-average (WA) original combined loan-to-value ratio
(CLTV) for the portfolio is 72.7%, and a minority of the pool
(10.9%) comprises loans with DBRS Morningstar calculated current
CLTVs greater than 80.0%, but not higher than 90%. In addition, all
the loans in the pool were originated in accordance with the new
general Qualified Mortgage (QM) rule.
The originators for the aggregate mortgage pool are United
Wholesale Mortgage, LLC (UWM) (67.2%), Cross Country Mortgage, LLC
(7.7%), Fairway Independent Mortgage Corp. (5.6%), and various
other originators, each comprising less than 5.0% of the pool.
The mortgage loans will be serviced by Newrez, LLC doing business
as Shellpoint Mortgage Servicing (99.0%) and UWM (1.0%). Cenlar FSB
will act as subservicer for UWM-serviced loans.
Computershare Trust Company, N.A. will act as the Master Servicer,
Paying Agent, Loan Agent, Note Registrar, Rule 17g-5 Information
Provider, and Custodian. U.S. Bank Trust Company, National
Association (U.S. Bank; rated AA (high) with a Negative trend by
DBRS Morningstar) will act as Delaware Trustee. Pentalpha
Surveillance LLC will serve as the File Reviewer.
The transaction employs a senior-subordinate, shifting-interest
cash flow structure that is enhanced from a precrisis structure.
This transaction allows for the issuance of Classes A-3L, A-4L,
A-16L, and A-22L loans, which are the equivalent of ownership of
Classes A-3, A-4, A-16, and A-22 Notes, respectively. These classes
are issued in the form of a loan are made by the investor instead
of a note purchased by the investor. If these loans are funded at
closing, the holder may convert such class into an equal aggregate
debt amount of the corresponding Notes. There is no change to the
structure if these classes are elected.
Notes: All figures are in U.S. dollars unless otherwise noted.
JER INVESTORS: Case Summary & Three Unsecured Creditors
-------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
JER Investors Trust Inc. 23-12109
Ten Bank Street, Suite 1100
White Plains, NY 10606
JERIT Non-CDO CMBS 1 LLC 23-12108
Ten Bank Street, Suite 1100
White Plains, NY 10606
Business Description: JER Investors Trust Inc., a mortgage real
estate investment trust (REIT).
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
District of Delaware
Judge: Hon. Thomas M. Horan
Debtors' Counsel: David M. Fournier, Esq.
TROUTMAN PEPPER HAMILTON SANDERS LLP
Hercules Plaza
1313 Market Street
Suite 5100
Wilmington, DE 19801
Tel: (302) 777-6500
Email: David.Fournier@troutman.com
Debtors'
Financial
Advisor: DUNDON ADVISERS
JER Investors'
Estimated Assets: $10 million to $50 million
JER Investors'
Estimated Liabilities: $100 million to $500 million
JERIT Non-CDO's
Estimated Assets: $10 million to $50 million
JERIT Non-CDO's
Estimated Liabilities: $0 to $50,000
The petitions were signed by Matthew J. Dundon as chief
restructuring officer.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/3TKZWUA/JER_Investors_Trust_Inc__debke-23-12109__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/WTCKZDA/JERIT_Non-CDO_CMBS_1_LLC__debke-23-12108__0001.0.pdf?mcid=tGE4TAMA
JERIT Non-CDO indicated it has no unsecured creditors.
List of JER Investors' Three Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. C-III Capital Partners Trade Debt $4,789,996
6031 Connection Drive
Irving, TX 75039
2. C-III JERIT Manager LLC Trade Debt $15,000,000
6031 Connection Drive
Irving, TX 75039
3. The Bank of New Unsecured $93,878,204
York Mellon Trust Note Payable
240 Greenwich St
New York, NY 10286
KNOTTY NUFF: Case Summary & 15 Unsecured Creditors
--------------------------------------------------
Debtor: Knotty Nuff Wood, Inc.
1005 S Hathaway S
Santa Ana, CA 92705-4127
Business Description: The Debtor is a custom cabinet, closet and
woodworking company based out of Orange
County, CA.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Central District of California
Case No.: 23-12759
Judge: Hon. Theodor Albert
Debtor's Counsel: Misty Perry Isaacson, Esq.
PAGLER AND PERRY ISAACSON
1851 East First Street Suite 700
Santa Ana CA 92705
Tel: (714) 541-6072
Email: misty@ppilawyers.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ryan Aguire as chief executive officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 15 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/6MYNAYQ/Knotty_Nuff_Wood_Inc__cacbke-23-12759__0001.0.pdf?mcid=tGE4TAMA
LTL MANAGEMENT: NJ Judge Won't Rethink Quashing Law Firm Subpoenas
------------------------------------------------------------------
Henrik Nilsson of Law360 reports that a New Jersey federal judge
has denied Johnson & Johnson's renewed efforts to subpoena
communications between nonparty law firms and media outlets about
the company's talcum powder products in a securities class action,
saying the request is time-barred and fails to show the court erred
in denying the initial discovery motion.
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the
time of the filing, the Debtor was estimated to have $1 billion to
$10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP, as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S.
Trustee for Regions 3 and 9 reconstituted the talc claimants'
committee and appointed two separate committees: (i) the official
committee of talc claimants I, which represents ovarian cancer
claimants, and (ii) the official committee of talc claimants II,
which represents mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
Re-Filing of Chapter 11 Petition
On Jan. 30, 2023, a panel of the Third Circuit issued an opinion
directing the Court to dismiss the 2021 Chapter 11 case on the
basis that it was not filed in good faith. Although the Third
Circuit panel recognized that the Debtor "inherited massive
liabilities" and faced "thousands" of future claims, it concluded
that the Debtor was not in financial distress before the filing.
On March 22, 2023, the Third Circuit entered an order denying the
Debtor's petition for rehearing. The Third Circuit entered an
order denying LTL's stay motion on March 31, 2023, and, on the same
day, issued its mandate directing the Bankruptcy Court to dismiss
the 2021 Chapter 11 Case.
The Bankruptcy Court entered an order dismissing the 2021 Case on
April 4, 2023.
Johnson & Johnson on April 4, 2023, announced that its subsidiary
LTL Management LLC (LTL) has re-filed for voluntary Chapter 11
bankruptcy protection (Bankr. D.N.J. Case No. 23-12825) to obtain
approval of a reorganization plan that will equitably and
efficiently resolve all claims arising from cosmetic talc
litigation against the Company and its affiliates in North
America.
In August 2023, U.S. Bankruptcy Judge Michael Kaplan in Trenton,
New Jersey, ruled that the second bankruptcy case should be
dismissed, ending J&J's second attempt to use bankruptcy to resolve
thousands of lawsuits alleging that its talc products sometimes
contained asbestos and caused mesothelioma and ovarian cancer.
MORGAN STANLEY 2013-C11: DBRS Confirms C Rating on Class B Certs
----------------------------------------------------------------
DBRS Limited downgraded its credit ratings on five classes of
Commercial Mortgage Pass-Through Certificates, Series 2013-C11
issued by Morgan Stanley Bank of America Merrill Lynch Trust
2013-C11 as follows:
-- Class C to D (sf) from C (sf)
-- Class D to D (sf) from C (sf)
-- Class E to D (sf) from C (sf)
-- Class F to D (sf) from C (sf)
-- Class PST to D (sf) from C (sf)
DBRS Morningstar simultaneously discontinued and withdrew its
credit ratings on Classes C, D, E, F, and PST.
Additionally, DBRS Morningstar confirmed its credit ratings on the
following classes:
-- Class A-S at BBB (high) (sf)
-- Class B at C (sf)
DBRS Morningstar also discontinued its credit ratings on Classes
A-4 and X-A as they have been repaid in full. The trend on Class
A-S is Stable, and Class B has a credit rating that does not
typically carry a trend in commercial mortgage-backed securities
(CMBS) credit ratings.
The credit rating downgrade on Classes C, D, E, F, and PST follow
realized losses to the trust that were reflected with the October
2023 remittance. The Mall at Tuttle Crossing (Prospectus ID#2),
previously 32.3% of the pool, was liquidated from the trust at a
loss of approximately $70.4 million, which was slightly higher than
DBRS Morningstar's projected loss. Prior to this credit rating
action, these five bonds carried DBRS Morningstar credit ratings of
C (sf), indicating significant expected losses at disposition of
the asset. The remaining credit rating confirmations reflect DBRS
Morningstar's expectations for the three remaining loans in the
pool, which are all in special servicing. As of the November 2023
remittance, there has been a collateral reduction of approximately
85.1% with a total reported $115.8 million in realized losses.
The largest loan remaining, Westfield Countryside (Prospectus ID#1,
70.1% of the current pool), is the primary driver of DBRS
Morningstar's expected losses. The loan is secured by 464,398
square feet (sf) of a 1.3 million-sf regional mall in Clearwater,
Florida. The loan transferred to special servicing in June 2020 for
imminent default and a receiver was appointed in January 2021. The
sponsor, Unibail-Rodamco-Westfield, is reportedly cooperating in a
friendly foreclosure and, according to investor reporting, the
special servicer is marketing the asset for sale. An October 2023
appraisal valued the subject at $116.0 million, marking an increase
from the September 2022 appraised value of $108.0 million and the
August 2020 appraised value of $91.5 million but well below the
issuance appraised value of $270.0 million.
The mall's non collateral anchors are Nordstrom Rack, Macy's,
Dillard's and JCPenney. A fifth anchor pad previously occupied by
Sears, which closed in 2018, has been partially backfilled by Whole
Foods. The YE2022 reported net cash flow (NCF) and debt service
coverage ratio (DSCR) were $8.6 million and 0.98 times (x),
respectively, a slight decrease from the YE2021 figures of $8.8
million and 1.01x, respectively. In-line occupancy has declined
through the first three quarters of 2023, falling to 68.1% in
September 2023 compared with 89.5% in YE2022. Leases representing
10.5% of the net rentable area are scheduled to expire in the next
12 months, indicating the potential for further declines in cash
flow and occupancy. According to the August 2023 sales report,
in-line tenants reported average sales of $344 per square foot
(psf) for the trailing 12-month (T-12) period compared with $244
psf for the T-12 period ended June 2021.
Two other loans are in special servicing, having defaulted at
maturity. Bridgewater Campus (Prospectus ID#6, 28.8% of the current
pool) is secured by eight Class B mixed-use office buildings in
Bridgewater, New Jersey. The loan was transferred to special
servicing in June 2023. According to the special servicer, the
borrower has requested a loan extension. As of September 2023, the
property was 83.4% occupied by three tenants, none of which have
lease expirations in the near to medium term. The YE2022 NCF and
DSCR were reported at $4.5 million and 1.7x, respectively. An
updated appraised value was received in September 2023, valuing the
property at $46.0 million compared with $63.5 million at issuance,
representing a 27.6% reduction in value. Similar to the approach
for Westfield Countryside, DBRS Morningstar's analysis considered
various liquidation scenarios based on a range of stresses to the
most recent appraised value for Bridgewater Campus.
Walgreens-McAllen Texas (Prospectus ID#38, 1.1% of the current
pool) is backed by a single-tenant retail property originally
leased to Walgreens. Walgreens vacated in 2017 but the property was
re-tenanted by Dollar Tree on a sublease through April 2035. The
special servicer has noted that the borrower is working to pay off
the loan in full but is dual-tracking foreclosure and has ordered
an appraisal.
Given the status of the remaining assets, uncertain disposition and
workout timelines, and the continued underperformance of the
largest loan, DBRS Morningstar tested different liquidation
scenarios based on stresses to the most recent appraised values to
determine the recoverability of the remaining bonds. DBRS
Morningstar determined that the nearly 72% credit support available
to the Class A-S bond supports its credit rating confirmation at
BBB (high) (sf). The credit rating remains constrained given the
pool concentration and exposure to defaulted assets, as well as
increased propensity to interest shortfalls. Should these loans
wallow in special servicing, incurring trust expenses, and/or
decline significantly in value beyond DBRS Morningstar's
expectations, DBRS Morningstar may consider downgrading the credit
rating.
Notes: All figures are in U.S. dollars unless otherwise noted.
NEW WAVE PROPERTY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: New Wave Property Service, LLC
5500 W. 96th Street, Suite C
Zionsville IN 46077
Business Description: New Wave is a family-owned-and-operated lawn
care company offering lawn care, tree, and
irrigation services.
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Southern District of Indiana
Case No.: 23-05800
Judge: Hon. James M. Carr
Debtor's Counsel: Jeffrey Hester, Esq.
HESTER BAKER KREBS LLC
One Indiana Sq Suite 1330
Indianapolis IN 46204
Tel: 317-833-3030
Email: jhester@hbkfirm.com
Total Assets: $1,277,607
Total Liabilities: $3,781,668
The petition was signed by Jeremy Ryan as authorized representative
of the Debtor.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/XJ442UY/New_Wave_Property_Service_LLC__insbke-23-05800__0001.0.pdf?mcid=tGE4TAMA
NFP CORP: Fitch Puts 'B' LongTerm IDR on Watch Positive
-------------------------------------------------------
Fitch Ratings has placed NFP Corp's and NFP Holdings, LLC's 'B'
Long-Term Issuer Default Ratings (IDRs) on Rating Watch Positive
following its acquisition announcement by Aon plc (BBB+/Negative).
Fitch has also affirmed the company's senior secured revolver, term
loans and notes at 'BB-'/'RR2' and unsecured notes at
'CCC+'/'RR6'.
The Rating Watch Positive reflects Fitch's view that Aon has
stronger credit qualities than NFP. Fitch expects this will
positively impact NFP's business and financial risk profile post
acquisition, given Aon's leading global competitive position in the
insurance brokerage and retirement/HR/health consulting
industries.
NFP's ratings continue to reflect the company's solid market
position in insurance brokerage, stable and recurring business
model, solid EBITDA margins, and exposure to a recession resilient
end market. However, high EBITDA leverage (debt/EBITDA), weak
interest coverage, and an aggressive M&A strategy weighs against
the ratings. Fitch rates NFP relative to other insurance brokers
and business services issuers.
KEY RATING DRIVERS
Acquisition by AON: Fitch views Aon's intended acquisition of NFP
Corp. for $13.4 billion as a credit positive, given the IG-rated
issuer has a much stronger credit profile. Aon is a global industry
leader in delivering Risk and Human Capital capabilities, and thus
NFP's clients will benefit from Aon's global resources and
distribution. NFP is one of the largest U.S. middle market
insurance brokers, which Fitch expects will continue to operate its
current strategy, including growing via M&A, in the next 12-24
months until deal closing.
Once the acquisition is complete (estimated sometime between
mid-2024 and mid-2025), Fitch believes NFP Corp. debt will be fully
repaid by Aon and the NFP entities will no longer be borrowers.
Market Position: Fitch views NFP's position as one of the 15
largest U.S. insurance brokers as a credit positive that positions
it well in a fragmented industry landscape. The company reported
2022 revenue of more than $2.2 billion and operates across U.S.,
Canada and Europe with more than 7,200 employees. NFP's organic
revenue growth ranged from approximately 2% to 11% since 2014,
although its reported revenue grew faster due to acquisitions over
the past decade. NFP's business is characterized by high client
retention and organic growth that has proven resilient
historically. NFP continues to expand its presence in many end
markets and regions through acquisitions and producer recruitment.
Diversified Revenue Profile: NFP's ratings benefit from
diversification across its business. NFP provides a full range of
brokerage, consulting and advisory services, including benefits,
property and casualty, life insurance and wealth management and
retirement solutions and has organized its business into three
reportable segments: Benefits and Life (50% of FY 2022 revenues),
P&C (33%) and Wealth and Retirement (16%).
Geographically, the company earns its revenues across U.S., Canada,
and Europe, but the vast majority of its commissions (~92%) come
from the U.S. NFP has diversified its U.S. exposure via M&A and
producer recruitment over the past few years. NFP has limited
concentration in terms of carriers and clients, with no
relationship comprising more than 5% of revenue.
M&A Strategy: Fitch expects M&A will remain a core component of
NFP's growth strategy for the foreseeable future, even during 2024
as the company works toward its acquisition by Aon. Fitch estimates
the company could spend nearly $650 million on acquisitions in 2023
and spent more than $2.6 billion since 2018. NFP completed more
than 350 deals since 2013, with most acquisitions being relatively
small tuck-in deals. NFP historically funded M&A via a combination
of debt and operating cash flow, resulting in a high leverage
profile. The company's leverage ratio is expected to remain high
until deal completion in 2024/2025.
High Leverage; Weak Coverage: M&A activity has led to high
financial leverage that Fitch projects will remain elevated in the
next few years, although Fitch believes the pending Aon deal could
lead to all of NFP's debt being repaid. If the deal were to be
terminated for any reason, however, leverage and coverage would
remain key rating factors Fitch considers.
Cash Flow Ratios Constrained: Fitch-defined FCF will likely be
constrained over the ratings horizon due to continued debt-financed
M&A that has increased leverage and interest expense, particularly
with rising rates. Much of the constrained FCF is a derivative of
the company's M&A roll-up strategy, and Fitch views the underlying
cash generation profile of the business as reasonably healthy. If
the company were to significantly slow M&A, Fitch believes cash
flow generation would improve materially unless all of excess cash
flow were then diverted to shareholder capital returns.
Stable Industry: Fitch believes the company operates a fairly
predictable business model in an industry that performed well
across the economic cycle. The insurance brokerage industry was
stable historically even during periods of economic shock, such as
the global financial crisis in 2008-2009 and the pandemic in 2020.
Some of the largest insurance brokers experienced only low- to
mid-single-digit organic declines in the 2008-2010 timeframe. Fitch
believes industry stability stems from insurance and benefits
services being fairly essential across the cycle. Additionally, the
brokerage business model inherently has an adjustable cost
structure.
DERIVATION SUMMARY
NFP competes in a fragmented landscape of insurance brokerage and
benefits services providers that includes other local/regional
companies, national agents and large multi-national brokers. Fitch
rates numerous companies in the insurance brokerage industry that
are comparable in terms of scale, operating profile and business
model.
NFP maintains its position as the 13th largest U.S. insurance
broker with revenue of $2.2 billion in 2022. However, it remains
relatively small and has meaningfully higher financial leverage
versus larger global brokers such as Marsh & McLennan Companies,
Inc. (A-/Stable), Willis Towers Watson plc (BBB/Positive), Arthur
J. Gallagher & Co. (BBB+/Stable), among others. Fitch also rates
Navacord Corp. (B/Stable), which is meaningfully smaller and
concentrated within a single country, but similar to NFP is highly
levered and is focused on an aggressive, M&A-driven growth
strategy.
The 'B' rating reflects NFP's strong historic growth profile, solid
profitability, and diversification among its customers and business
segments. This is offset by an aggressive, debt-financed M&A
strategy, high EBITDA leverage, and relatively weak interest
coverage.
KEY ASSUMPTIONS
- Organic revenue growth in the mid-single digit percentage range
over the ratings horizon plus contributions from incremental new
M&A. EBITDA margins estimated in the mid-20% range.
- Cash taxes and working capital remain a modest use of cash flow
in the next few years.
- Fitch assumes NFP continues to execute on its growth-driven M&A
strategy in the brokerage space, with cash outflows related to
purchase and integration costs from M&A. Fitch assumes this remains
the primary use of cash flow and incremental M&A is funded via
internal cash flow and incremental debt.
RECOVERY ANALYSIS
- For entities rated 'B+' and below, where default is closer and
recovery prospects are more meaningful to investors, Fitch
undertakes a tailored, or bespoke, analysis of recovery upon
default for each issuance. The resulting debt instrument rating
includes a Recovery Rating or published 'RR' (graded from RR1 to
RR6), and is notched from the Issuer Default Rating accordingly. In
this analysis, there are three steps: (i) estimating the distressed
enterprise value (EV); (ii) estimating creditor claims; and (iii)
distribution of value.
- Fitch assumes NFP would emerge from a default scenario under the
going concern approach liquidation. Key assumptions used in the
recovery analysis are as follows:
(i) Going concern EBITDA - Fitch estimates a going concern EBITDA
of approximately $440 million, or below the company's current
run-rate EBITDA. This lower level of EBITDA considers competitive
and/or company-specific pressures that hurt earnings in the future
while also considering that its M&A strategy could lead to a much
higher EBITDA base before any risk of bankruptcy.
(ii) EV Multiple - Fitch assumes a 6.5x multiple, which is
validated by historic public company trading multiples, industry
M&A and past reorganization multiples Fitch has seen across various
industries.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch could upgrade NFP's ratings to a level equalized with Aon
plc upon closing of the acquisition;
In the event that the transaction is not closed, the following
could lead to positive rating action:
- EBITDA leverage, defined as debt/EBITDA, is sustained below
6.5x;
- CFO-Capex/Debt sustained in low double digits.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage sustained above 8x with no clear deleveraging
path;
- Interest coverage, defined as EBITDA/interest paid, sustained
below 1.5x;
- CFO-Capex/Debt sustained near 1% or below, excluding M&A-related
costs;
- Deterioration in operating fundamentals that lead to weaker
revenue trends, margin underperformance, and compression of cash
flows.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Profile: Fitch believes NFP's liquidity is adequate and
should enable it to invest for growth while also providing
sufficient downside protection for the rating category. The company
has more than $500 million of cash on its balance sheet as of
September 2023 and an unutilized $440 million first-lien senior
secured revolver as of Sept. 30, 2023 that supports its overall
liquidity profile. Fitch also projects FCF could be modestly
positive over the forecast, although M&A and other one-time
expenses, as well as higher interest expense will constrain cash
flow generation.
Debt Structure: NFP's capital structure consists of both first
lien, senior secured and senior unsecured debt. Its first-lien
senior secured debt includes: (i) a $440 million revolver; (ii)
term loans outstanding of $1.86 billion maturing in 2027; and (iii)
$1.25 billion of senior secured notes and (iv) $2.07 billion of
unsecured notes. The term loan amortizes at 1% per annum. Fitch
expects all outstanding debt to be repaid upon closing of the
acquisition by Aon.
ISSUER PROFILE
NFP provides a full range of brokerage, consulting and advisory
services, including benefits, property and casualty, life insurance
and wealth management and retirement solutions. The company is
privately held by Madison Dearborn Partners, among others, and was
founded in 1998.
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
----------- ------ -------- -----
NFP Holdings, LLC LT IDR B Rating Watch On B
NFP Corp. LT IDR B Rating Watch On B
senior
unsecured LT CCC+ Affirmed RR6 CCC+
senior secured LT BB- Affirmed RR2 BB-
SPARTA US: Moody's Rates New $70MM Incremental Sec. Term Loan 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Sparta U.S.
HoldCo LLC's (dba PQ Corporation) proposed $70 million incremental
delayed draw senior secured first lien term loan. The B1 Corporate
Family Rating, B1-PD Probability of Default Rating, B1 ratings on
the $125 million senior secured revolving bank credit facility
maturing 2026 and $750 million senior secured first lien term loan
due 2028 are unchanged. The outlook is stable.
"The B1 rating assigned to the proposed term loan add-on reflects
the strategic rationale for the use of proceeds to expand silicate
production in the an area that has further growth potential, albeit
temporarily stretching leverage metrics," said Domenick R. Fumai,
Moody's Vice President and lead analyst for Sparta U.S. HoldCo
LLC.
RATINGS RATIONALE
Although the incremental delayed draw term loan (DDTL) will add $70
million of debt to the balance sheet and result in leverage metrics
that temporarily exceed Moody's threshold for the rating, the
brownfield expansion at Augusta, Georgia should support further
revenue and EBITDA growth once it comes online. PQ Corporation
currently holds the second largest production capacity share in the
fastest growing Southeast region of the US and the additional
capacity will allow it to meet future market growth with existing
long-term customers. The additional capacity also allows the
company to rebalance its network and reduce shipping costs.
Moody's further considers PQ Corporation's good liquidity profile,
with $111 million of cash and full availability under its $125
million revolving credit facility as of September 30, 2023, as
mitigating factors that support the additional debt.
PQ Corporation's B1 CFR reflects the company's leading industry
positions in silicates, especially in North America, where it is
estimated to have over 50% market share in spray dry silicates,
silica gels and zeolites. Further supporting the rating is good
geographic diversity with a global manufacturing footprint that
ensures the ability to supply customers in a timely and
cost-efficient manner. For its silicates products, competition is
limited by transportation costs, which can be a meaningful expense
for the delivered product. PQ Corporation's end market
diversification and leading market positions contribute to
relatively stable operating performance throughout economic cycles
that should enable the company to operate with financial leverage
in the low-to-mid 5x area over the rating horizon. The rating also
incorporates strong technical expertise, fairly significant
barriers to entry given the capital investment and qualification
requirements of customers and long-term customer relationships with
a number of well-known brand names.
PQ Corporation's rating is constrained by its lack of scale as a
number of key competitors are much larger and more highly rated. In
addition, the credit profile is tempered by limited product
diversity and narrow business profile as the company's main
products are largely silicates and silicate derivatives, which
operate in fairly mature markets with low organic growth rates.
While PQ Corporation has very good end market diversity, there is
significant exposure to the detergent and institutional and
industrial cleaning markets. The credit profile further assumes
that the company will pursue bolt-on acquisitions to add
complementary products to boost market share.
The rating outlook is stable as the sponsor has capitalized the
company on a relatively conservative basis ensuring solid credit
metrics, but the company's small size and lack of product diversity
limit future upside to the rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
A rating upgrade would require Debt/EBITDA, including Moody's
standard adjustments, to be sustained below 4.0x and the private
equity sponsors demonstrated commitment to financial policies that
maintain leverage at or below that level, an increase in scale to
over $1 billion in revenue, improved product diversity, and for
free cash flow to remain consistently positive.
Moody's would likely consider a downgrade if Debt/EBITDA is
sustained above 5.5x, if free cash flow is persistently negative,
if there is a significant deterioration in liquidity, a large
debt-financed acquisition or large dividend to the sponsors.
STRUCTURAL CONSIDERATIONS
The B1 rating assigned to the company's existing and proposed DDTL
reflects their senior position in the capital structure. The first
lien term loan is secured by a first lien on the assets of the
borrower and guarantors, which include domestic subsidiaries and
stock pledges in foreign subsidiaries. The senior secured first
lien term loan does not contain financial maintenance covenants
while the senior secured revolving credit facility contains a
springing maximum first lien leverage ratio covenant that will be
tested when the revolver is more than 35% drawn at the end of the
quarter. Moody's do not expect the company to trigger the springing
first lien test.
Sparta U.S. HoldCo LLC (dba PQ Corporation), headquartered in
Malvern, PA, is a leading global producer of sodium silicates,
specialty silicas and zeolites that have applications in diverse
end markets such as personal care, industrial cleaning products,
food & beverage and catalysts. The company is a carve-out from
Ecovyst Inc. and on March 1, 2021, a partnership of Cerberus
Capital Management, L.P. and Koch Minerals & Trading, LLC reached a
definitive agreement to acquire the business for a total purchase
price of approximately $1.1 billion. The company generated revenue
of approximately $753million for the last twelve months ended
September 30, 2023.
The principal methodology used in this rating was Chemicals
published in October 2023.
STRATASYS LTD: Gets Nano Dimension Unsolicited Proposal
-------------------------------------------------------
Stratasys Ltd. (Nasdaq: SSYS), a leader in polymer 3D printing
solutions, on Dec. 24, 2023, confirmed that it has received a
preliminary proposal from Nano Dimension Ltd. (Nasdaq: NNDM) to
purchase all the outstanding shares of Stratasys it does not
currently own for $16.50 per share in cash.
As previously announced on September 28, 2023, the Stratasys Board
of Directors, in consultation with its independent financial and
legal advisors, initiated a process to explore strategic
alternatives for the Company. The Stratasys Board will carefully
review and consider Nano's unsolicited preliminary proposal as part
of this process.
There can be no assurance that the Company's strategic review
process will result in any transaction or other strategic outcome.
Stratasys does not intend to disclose further developments on this
strategic review process unless and until it determines that such
disclosure is appropriate or necessary.
Stratasys shareholders do not need to take any action at this time
with respect to Nano’s preliminary proposal.
J.P. Morgan is acting as exclusive financial advisor to Stratasys,
and Meitar Law Offices and Wachtell, Lipton, Rosen & Katz are
serving as legal counsel.
About Stratasys
Stratasys is leading the global shift to additive manufacturing
with innovative 3D printing solutions for industries such as
aerospace, automotive, consumer products and healthcare. Through
smart and connected 3D printers, polymer materials, a software
ecosystem, and parts on demand, Stratasys solutions deliver
competitive advantages at every stage in the product value chain.
The world's leading organizations turn to Stratasys to transform
product design, bring agility to manufacturing and supply chains,
and improve patient care.
To learn more about Stratasys visit http://www.stratasys.com/, the
Stratasys blog, X/Twitter, LinkedIn, or Facebook. Stratasys
reserves the right to utilize any of the foregoing social media
platforms, including the company's Websites, to share material,
non-public information pursuant to the SEC's Regulation FD. To the
extent necessary and mandated by applicable law, Stratasys will
also include such information in its public disclosure filings.
URBAN EMPIRE: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Urban Empire, LLC
410 SE 16th Ct
Apt 609
Fort Lauderdale, FL 33316
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 23-20876
Judge: Hon. Scott M. Grossman
Debtor's Counsel: Bart Houston, Esq.
HOUSTON RODERMAN PLLC
633 S. Andrews Avenue Suite 500
Ft. Lauderdale, FL 33301
Tel: 954-900-2615
Email: bhouston@thehoustonfirm.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jaykaran Kambo as manager.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/NEXNN5I/Urban_Empire_LLC__flsbke-23-20876__0001.0.pdf?mcid=tGE4TAMA
US STEEL: Fitch Puts 'BB' LongTerm IDR on Watch Positive
--------------------------------------------------------
Fitch Ratings has placed United States Steel Corporation's (U. S.
Steel) Long-Term Issuer Default Rating (IDR), senior unsecured and
secured ratings on Rating Watch Positive.
The Positive Watch reflects the meaningful increase in size and
earnings of the combined entity following the expected close of the
acquisition of U. S. Steel by Nippon Steel Corporation (NSC). Fitch
views NSC's likely debt financed portion of the acquisition of U.
S. Steel as more than offset by NSC's EBITDA generation, which was
roughly $8.3 billion on average over the past two years compared to
U. S. Steel's estimated mid-cycle EBITDA generation of $1.5
billion-$2.0 billion. The acquisition is expected to close in Q2 or
Q3 of 2024. The Watch could take more than six months to resolve
depending on the timing of the close.
KEY RATING DRIVERS
NSC Acquisition Credit Positive: Fitch views the meaningful
increase in size and earnings as positive to U. S. Steel's credit
profile. NSC's annual steel capacity of roughly 73 million tons
represents more than triple U. S. Steel's annual capacity of
roughly 23 million tons pro forma Big River 2 coming online in 2024
and the indefinite idling of Granite City Works. The roughly $3.8
billion assumption of U. S. Steel debt is more than offset by NSC's
EBITDA, which was about $8.3 billion annually on average over the
past two years. The acquisition is expected to close in the Q2 or
Q3 quarter of 2024.
Conservative Leverage Expectations: Fitch expects U. S. Steel's
EBITDA leverage, roughly 2.0x at Sept. 30, 2023, to remain at or
below 2.5x on average through 2026. U. S. Steel reduced total debt
outstanding by more than $2.0 billion since first-quarter 2021 and
has no outstanding borrowings on its credit facilities. Fitch
expects U. S. Steel's stand-alone EBITDA to moderate from the
2021/2022 peak of around $5 billion per year, but to average around
$1.5 billion-$2.0 billion annually through 2026. This compares with
Fitch-calculated EBITDA of approximately $1.5 billion during a
previous high point in the cycle in 2018.
Best for All Strategy: Fitch views U. S. Steel's strategy to invest
in flexible and lower-cost, less capital-intensive, more-efficient
assets positively, and believes it will improve EBITDA and the
company's overall cost position and operating profile, resulting in
reduced earnings volatility through the cycle. U. S. Steel acquired
a 49.9% equity interest in BRS in 4Q19, an electric arc furnace
(EAF) facility with 3.3 million tons of annual capacity, and
acquired the remaining equity interest in 1Q21.
In 1Q22, U. S. Steel began construction on the new $3 billion
approximately three million ton Big River 2 mini mill, with
production expected to begin in 2H24. Fitch believes Big River 2,
in addition to the new value-added lines being constructed at BRS,
will lower the company's overall cost position, improving margins
and EBITDA generation.
Strong Liquidity Position: U. S. Steel generated over $825 million
of Fitch-calculated FCF in the first three quarters of 2023, and
the company had cash and cash equivalents of roughly $3.2 billion
as of Sept. 30, 2023. Fitch believes cash on hand in combination
with future cash flow generation will be sufficient to fund the
remaining approximately $1.1 billion investment to build Big River
2. The ability to fund capex with cash on hand and internally
generated cash lowers the risk of compromising the balance sheet if
there is a period of prolonged economic weakness.
Strategic Capex Improves EBITDA: U. S. Steel completed construction
on a $450 million nongrain-oriented (NGO) electrical steel line at
Big River Steel (BRS) in 3Q23. U. S. Steel is one of two producers
of NGO electrical steel in the U.S. The 200,000-ton NGO electrical
steel line is expected to be available to meet growing electric
vehicle demand expected in North America over the coming years, as
NGO electrical steel is a critical component of motors used in
hybrid/electric vehicles.
U. S. Steel also announced a 325,000-ton galvanizing/galvalume line
at BRS in 3Q21. Fitch expects this $280 million investment to come
online in 2024 and expand the company's presence in value-added
construction and appliance applications. Both the NGO line and
galvanizing/galvalume lines are expected to enhance BRS's product
mix.
U. S. Steel began producing pig iron in 4Q22 at a new $60 million
pig iron facility constructed at Gary Works. The facility is
expected to have production capacity of around 500,000 tons of pig
iron intended to be consumed internally at its EAFs and provide
nearly 50% of BRS's ore-based metallics requirements. In 4Q23, U.
S. Steel also completed construction of a $150 million direct
reduced (DR)-grade pellet facility at its Keetac iron ore
operations. The new facility provides the ability to produce
DR-grade pellets as feedstock for direct reduced iron for EAFs in
addition to providing the flexibility to continue producing
BF-grade pellets and optionality to ship DR-grade pellets to third
parties.
DERIVATION SUMMARY
U. S. Steel is comparable in size and has a similar operating
profile compared with Cleveland-Cliffs Inc. (BB/Stable), as both
companies are integrated and have both blast furnace and EAF
production, but are primarily blast furnace producers. U. S. Steel
is more diversified by product and geography, with slightly more
favorable credit metrics than Cleveland-Cliffs.
U. S. Steel is larger in terms of annual shipments compared with
EAF steel producer Commercial Metals Company (CMC; BB+/Positive).
U. S. Steel has higher product and end-market diversification
compared with CMC, but CMC has historically lower leverage metrics
and its profitability is less volatile, resulting in more stable
margins and leverage metrics through the cycle. U. S. Steel is
larger in terms of total shipments, but is less profitable with
weaker credit metrics compared with EAF producer Steel Dynamics,
Inc. (BBB/Stable) and smaller with less favorable metrics compared
with EAF producer Nucor Corporation (A-/Stable).
KEY ASSUMPTIONS
- Declining flat-rolled steel prices through 2026;
- Combined flat-rolled segment and mini mill segment steel
shipments of approximately 11.0 million tons to 11.5 million tons
in 2023, increasing as Big River 2 comes online in 2024;
- Capex of approximately $2.6 billion in 2023, declining
significantly thereafter following completion of Big River 2;
- Big River 2 is funded primarily with internally generated cash
and cash on hand;
- Share repurchases made with excess cash flow.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Visibility into completion and start of commercial production of
Big River 2, in addition to the ability to fund the project
primarily with cash on hand and internally generated cash;
- EBITDA margins sustained above 12%;
- EBITDA leverage sustained below 2.3x.
The Watch could be removed and the Outlook revised to Stable if the
acquisition does not go through. Fitch will address the Watch at or
before the close of the transaction.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A material weakening of domestic steel market conditions leading
to EBITDA leverage sustained above 3.3x;
- EBITDA margins sustained below 10%.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: U. S. Steel had roughly $3.22 billion of cash and
cash equivalents as of Sept. 30, 2023 and roughly $2.27 billion in
aggregate available under its $1.75 billion asset-based loan (ABL)
credit facility due 2027, its U. S. Steel Kosice, s.r.o. (USSK)
credit facilities due 2026 and the BRS ABL due 2026.
ISSUER PROFILE
U. S. Steel is an integrated steel producer of flat-rolled steel
and tubular products with operations in North America and Europe.
The company has a combination of blast furnace and electric arc
furnace capacity.
Nippon Steel Corporation is the largest steel producer in Japan and
the fourth largest steel producer globally.
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
----------- ------ -------- -----
United States
Steel Corporation LT IDR BB Rating Watch On BB
senior unsecured LT BB Rating Watch On RR4 BB
senior secured LT BBB- Rating Watch On RR1 BBB-
WHITE COLUMNS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: White Columns at Kingston, LLC
45 East Howard St.
Box 515
Kingston GA 30145-0515
Business Description: White Columns is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: December 29, 2023
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 23-41933
Debtor's Counsel: John Michael Levengood, Esq.
LAW OFFICE OF J. MICHAEL LEVENGOOD, LLC
150 S. Perry St., Suite 208
Lawrenceville, GA 30046
Tel: 678-765-1745
E-mail: mlevengood@levengoodlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Thomas M. Linder, Jr as member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OW5MYNQ/White_Columns_at_Kingston_LLC__ganbke-23-41933__0001.0.pdf?mcid=tGE4TAMA
*********
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