/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/240205.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, February 5, 2024, Vol. 28, No. 35 Headlines 117 SPENCER: Unsecured Creditors Unimpaired in Plan 1840 NORTH AVE: Case Summary & Three Unsecured Creditors AB INTERNATIONAL: To Repurchase 45.2M Shares From Six Shareholders AJC MEDICAL: Unsecured Creditors to Split $20K over 5 Years ALLIED UNIVERSAL: Moody's Rates New $500MM Sr. Secured Notes 'B3' ALLIED UNIVERSAL: S&P Rates New Senior Secured Notes 'B' ALPINE SUMMIT: White & Case as Counsel in Chapter 11 Case Okayed APPLIED SYSTEMS: Moody's Rates New First Lien Loans 'B2' APPLIED SYSTEMS: S&P Rates New $2.4BB First-Lien Term Loan 'B-' ARENA GROUP: Missed SI Licensing Payment by Choice ASHFORD HOSPITALITY: Issues Tax Report for 2023 Share Distributions BALBOA INC: Obtains CCAA Stay Order; KSV as Monitor BARTON COLLEGE: S&P Lowers Long-Term Revenue Bond Rating to 'BB+' BELMONT TRADING: Claims Will be Paid from Asset Sale Proceeds BESTWALL LLC: U.S. Senators Urge High Court to Toss Bankruptcy Move BLACKBERRY LTD: FIFTHDELTA Entities Hold 5.14% Stake as of Jan. 24 BLACKBERRY LTD: Upsizes Private Notes Offering to $175M BRIDGE COMMUNICATIONS: $1.6M Unsecured Claims to Get 5% in 7 Years CANPACK GROUP: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable CAREISMATIC BRANDS: Hits Chapter 11 With Pre-Arranged Plan CBC SUBCO: Joseph Cotterman Named Subchapter V Trustee CCI BUYER: Moody's Affirms 'B2' CFR on Dividend Recap CCI BUYER: S&P Affirms 'B-' ICR on Announced Debt Add-On CHARIOT BUYER: Fitch Lowers Rating on First Lien Facilities to B- CHENIERE ENERGY: Declares $0.435 Per Share Quarterly Dividend COBRA AUTOMOTIVE: Douglas Adelsperger Named Subchapter V Trustee COMMSCOPE HOLDING: Lenders Puzzled on Capital Issuance Among Units CONSERVICE MIDCO: Moody's Rates New Backed First Lien Loans 'B3' CORE SCIENTIFIC: Exits Chapter 11 Bankruptcy Protection CRAFT BEVERAGE: Joseph Cotterman Named Subchapter V Trustee CRATE HOLDINGS: Joseph Kershaw Spong Named Subchapter V Trustee CVR ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable DELTA WHOLESALE: Continued Operations to Fund Plan DENN-OHIO LLC: Unsecureds to Split $54K in Non-Consensual Plan DIVERSIFIED HEALTHCARE: BlackRock Holds 7.8% Equity Stake DIVERSIFIED HEALTHCARE: Millennium Entities Report Equity Stake DMK PHARMACEUTICALS: Case Summary & 29 Largest Unsecured Creditors EBIX INC: Court OKs $85MM DIP Loan from Regions Bank ECLIPZ.IO INC: Unsecureds' Recovery "TBD" in Sale Plan ECO MATERIAL: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ENSONO INC: Moody's Rates New Incremental 1st Lien Term Loan 'B2' ENVIVA INC: Fitch Lowers IDR to 'C' on Missed Interest Payment ETTA BUCKTOWN: Case Summary & 20 Largest Unsecured Creditors ETTA COLLECTIVE: Case Summary & 20 Largest Unsecured Creditors ETTA RIVER NORTH: Case Summary & 20 Largest Unsecured Creditors EYE CARE: $8MM DIP Loan from Create Capital Has Interim OK FAB WEST SALOON: Case Summary & 10 Unsecured Creditors FARM LLC: L. Todd Budgen Named Subchapter V Trustee FREE SPEECH: Bankruptcy Proceeding Moves Towards Creditor Vote FRONT RUNNER: Chapter 15 Case Summary GALLERIA PAIN: Wins Cash Collateral Access, DIP Loan Thru March 31 GAMESTOP CORP: BlackRock Holds 7.4% Equity Stake as of Dec. 31 GEN DIGITAL: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative GLOBAL ONE: Case Summary & 10 Unsecured Creditors HERETIC BREWING: Joseph Cotterman Named Subchapter V Trustee HUMANIGEN INC: $200,000 Chapter 11 Bidder Fees Rejected INSYS THERAPEUTICS: Trustee Says Ex-CEO's Counterclaims Not Allowed IPWE INC: Court OKs $500,000 DIP Loan from Granicus JACOBS ENTERTAINMENT: S&P Affirms 'B' ICR, Outlook Stable KATY ABA: Voluntary Chapter 11 Case Summary KIDDE-FENWAL INC: U.S. Trustee Rejects Future Claims Representative KING STATE: Case Summary & 20 Largest Unsecured Creditors KITO CROSBY: S&P Assigns 'B' Rating on $1BB First-Lien Term Loan KITTYDOG INC: Case Summary & Five Unsecured Creditors LAX INTEGRATED: Fitch Lowers Rating on $1.2BB 2018A/B Bonds to BB+ LEON INDUSTRIES: U.S. Trustee Unable to Appoint Committee LI GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable MAD SCIENCE: Unsecureds Will Get 15% of Claims over 5 Years MALLINCKRODT PLC: Covidien Loses Bid to Toss Suit Over Spinoff MALLINCKRODT PLC: Extends CEO Employment, Negotiates New Agreement MBIA INC: BlackRock Holds 7% Equity Stake as of Dec. 31 MOAB BREWERS: Joseph Cotterman Named Subchapter V Trustee NATIONAL RIFLE ASSOC: Board Member Silenced After Examiner Motion NEWSOME TRUCKING: Gary Murphey Named Subchapter V Trustee NUSTAR ENERGY: Fitch Puts 'BB' LongTerm IDR on Watch Positive OIL DADDY: Voluntary Chapter 11 Case Summary PENNSYLVANIA REAL ESTATE: Chapter 11 Bankruptcy Plan Okayed PG&E CORP: Lawsuit Tossed, Liability for Blackouts Rejected PHOENIX GUARANTOR: S&P Upgrades ICR to 'B+' on Deleveraging PIGEONLY INC: Nathan Smith Named Subchapter V Trustee PRECISION SPLICING: Unsecureds to be Paid in Full over 58 Months PROS HOLDINGS: BlackRock Holds 8.4% Equity Stake PROTERRA INC: Ordered to Rework Plan's Shareholder Releases Q.Y. TANG'S HWA: Unsecureds to be Paid in Full over 3 Years RADIOLOGY PARTNERS: Kicks Off Bond Swap, Extends Loan Due Dates RAYONIER ADVANCED: BlackRock Holds 8.5% Equity Stake ROCKSOLID GRANIT: U.S. Trustee Unable to Appoint Committee ROOMPLACE FURNITURE: Case Summary & 20 Top Unsecured Creditors RPM RESOURCES: Voluntary Chapter 11 Case Summary RUBIO'S COASTAL GRILL: Seeks to Negotiate Restaurant Leases S.A.M.S. VENDING: Case Summary & 14 Unsecured Creditors SELINA HOSPITALITY: Completes $35.5M Funding, Other Transactions SILICON VALLEY BANK: Cayman Unit Files Chapter 15 Petition SIMEX INC: Chapter 15 Case Summary SIMEX INC: Covid-19, Liquidity Crisis Cue CCAA Filing SPANISH BROADCASTING: Moody's Cuts CFR & Sr. Secured Notes to Caa3 SPIRIT AIRLINES: BlackRock Holds 7.7% Equity Stake as of Dec. 31 SPIRIT AIRLINES: JetBlue Raises Concerns Over Merger Agreement SUNOCO LP: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable TANGLEWILDE LLC: Voluntary Chapter 11 Case Summary TEGNA INC: Enters 15th Amendment to Credit Agreement THE ARENA GROUP: J. Heckman, 4 Others Report Equity Stake THE ARENA GROUP: Names New Interim President, Board Chairman TIMBER PHARMACEUTICALS: Changes Name to Trex Wind-down Inc. TIMBER PHARMACEUTICALS: Closes Sale to Lender LEO TRP BRANDS: Case Summary & 20 Largest Unsecured Creditors USA RV: Unsecureds Projected a 0% Recovery in Liquidating Plan VECTOR UTILITIES: Feb. 29 Disclosure Statement Hearing Set VROOM INC: To Wind Down E-Commerce Operations WAITS R.V.: AFC Cites Deficiencies in Plan WASH MULTIFAMILY: Moody's Affirms 'B3' CFR, Outlook Remains Stable WILLIAM INSULATION: Case Summary & 20 Largest Unsecured Creditors WINDSOR HOLDINGS III: Fitch Lowers IDR to 'B+', Outlook Stable WYNN RESORTS: BlackRock Holds 6.7% Equity Stake as of Dec. 31 [*] Federal Judiciary Called to Curb Judge Shopping [*] Total Insolvencies up by 23% in Canada in 2023 [^] BOND PRICING: For the Week from Jan. 29 to Feb. 2, 2024 ********* 117 SPENCER: Unsecured Creditors Unimpaired in Plan --------------------------------------------------- 117 Spencer, LLC, and 136 Spencer, LLC, submitted an Amended Disclosure Statement with respect to Amended Joint Plan of Reorganization dated January 29, 2024. 117 Spencer previously owned a mixed use building with 2 retail units and 16 residential apartment units. One of the retail units and 15 of the residential units are rented, each pursuant to a lease with the Debtor. The 117 Property is worth approximately $4,000,000. 117 Spencer and QS negotiated a settlement of their disputes and have executed a Plan Settlement Agreement that memorializes that settlement. The Plan Settlement Agreement, among other things, requires QS to vote in favor of the Plan if it receives treatment under the Plan that is substantially the same as the treatment set forth in the Plan Settlement Agreement. The Town of Spencer, Massachusetts, filed a proof of claim against 117 Spencer asserting a secured claim in the amount of $4,000,000 which is, apparently, based on an alleged right of reversion contained in the deed to the 117 Property. The Debtor disputes the Town's claim to an interest in the 117 Property. The 117 Property was, in fact, renovated as proposed in the Response within 24 months of June 10, 2019. Indeed, Country Bank re-financed the 117 Property in May of 2021 and, upon review of the circumstances at that time, was satisfied that 117 Spencer had renovated the 117 Property as proposed in the Response. Although two and one-half years have passed since any reversionary interest in the 117 Property would have vested, the Town has not, until filing its proof of claim, asserted any interest in the 117 Property. The Debtor believes that any interest the Town had in the 117 Property expired in June of 2021. The Town asserts that, as identified in the terms of its duly recorded deed of the 117 Property to the Debtor in 2019, the Debtor obligated itself to the Town as a condition of the sale to renovate, inter alia, "10,000 square feet of retail space on the first floor" of the Property within two years. That obligation remains outstanding and has not been excused by the Town. Renovation of more than 50% of the 1st floor from its condition in 2019 remains incomplete, and that portion of the 1st floor has remained unoccupied since that time. The cost to the Debtor of fulfilling that obligation, as well as the damages to the Town resulting from the Debtor's failure to perform, can be reasonably estimated, and the Town will be prepared to do so. The Town obtained a lien against the 117 Property to secure the obligation in the form of an interest in property identified as a right of entry for condition broken, as set forth in the 2019 deed, which right does not by its terms expire for non-exercise within a period of time. That the Town did not exercise its right of entry after two years and prior to the filing of the current bankruptcy petition, whereupon the Town learned that the Debtor had made a conveyance of the Property without reference to the Town's lien, is immaterial. The Plan will be funded by the Plan contribution and from the Debtor's continued operations. The Plan permits the Debtors to restructure their debts and continue operations. Allowed Secured Claims, Allowed Administrative Expense Claims, and General Unsecured Claims will be paid in full. Class 3 consists of Country Bank's Secured Claim against 117 Spencer. In full and final satisfaction, settlement, discharge and release of the Allowed Country Bank Secured Claim against 117 Spencer, the holder of the Allowed Country Bank Secured Claim shall receive payment in full of such Claim from the Reorganized Debtors by one of the following methods: * Until the maturity date set forth in the Country Bank Note (1) monthly payments of principal, interest and any escrow deposits, in each instance in the amounts set forth in the Country Bank Note, and (2) payment of such other amount as may be due under the Country Bank Loan Documents in accordance with the terms of such documents, provided that any such amount that is accrued prior to the Effective Date shall be paid upon the earlier to occur of: (A) agreement between 117 Spencer and Country Bank as to such amount, or (B) within 5 business days of the Allowance of such amount by the Bankruptcy Court. All amounts due under the Country Bank Loan Documents shall be paid in full not later than the maturity date set forth in the Country Bank Note. * By such treatment as is agreed upon in writing between the Debtors and the holder of the Allowed Country Bank Secured Claim. Class 6 consists of the General Unsecured Claims against the Debtors. In full and final satisfaction, settlement, discharge and release of the Allowed General Unsecured Claims against the Debtors, each holder of an Allowed General Unsecured Claim shall receive, on the later to occur of the Effective Date or the date such Claim is Allowed, payment in full of such Allowed Claim with interest from the Petition Date to the Effective Date at the Federal Judgment Rate: (a) in cash, or (b) in three equal quarterly payments, with additional interest, calculated at the Federal Judgment Rate, until such time as the Allowed Claim has been paid in full. The Debtors shall elect which treatment the holder of an Allowed General Unsecured Claim shall receive. This Class is Unimpaired under the Plan. The Plan will be funded by the Plan Contribution and from the Debtors' continued operations. Upon the Effective Date, the Debtors are authorized to take all action permitted by their Organization Documents (as applicable) and by the law, including, without limitation, to use their Cash and other Assets for all purposes provided for in the Plan and in their operations, to borrow funds, to obtain new financing secured by their Assets (provided such financing is not secured by a Lien senior to the Liens retained by certain creditors under the Plan), and to grant liens on their unencumbered Assets. Ms. Venuto shall provide the Plan Contribution. Following the Effective Date, Ms. Venuto will be the manager of each of the Reorganized Debtors. For the first year following the Effective Date, Ms. Venuto will receive the reimbursement of her out of pocket expenses in acting as the manager, but will not receive any other compensation for such services. After that time, Ms. Venuto's compensation will be determined by the Reorganized Debtors, provided that any such compensation does not impair the Reorganized Debtors' ability to make the payments required under the Plan. A full-text copy of the Amended Disclosure Statement dated Jan. 29, 2024 is available at https://urlcurt.com/u?l=TP83xI from PacerMonitor.com at no charge. Counsel for the Debtor: D. Ethan Jeffery, Esq. Leah A. O'Farrell, Esq. MURPHY& KING, P.C. 28 State St., Suite 3101 Boston, MA 02109 Tel: (617) 423-0400 E-mail: ejeffery@murphyking.com lofarrell@murphyking.com About 117 Spencer and 136 Spencer 117 Spencer, LLC, is a Massachusetts limited liability company that was formed in 2019 to own and operate the real estate located at 117 Main Street, Spencer, Massachusetts. Lisa Venuto and Peter Venuto, who are married, collectively own 100% of the Debtor's membership interests. Peter Venuto is the manager of the Debtor. 117 Spencer, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-40590) on July 21, 2023. In the petition signed by Peter Venuto (by Lisa Venuto under power of attorney), the Debtor disclosed up to $10 million in both assets and liabilities. 136 Spencer LLC sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-40684) on Aug. 23, 2023, listing $500,001 to $1 million in both assets and liabilities. Judge Elizabeth D. Katz oversees the cases. D. Ethan Jeffery, Esq., at Murphy & King, Professional Corporation, serves as the Debtors' legal counsel. 1840 NORTH AVE: Case Summary & Three Unsecured Creditors -------------------------------------------------------- Debtor: 1840 North Ave., Corp. 1840 W. North Ave. Chicago, IL 60622 Chapter 11 Petition Date: February 1, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10143 Debtor's Counsel: Maria Aprile Sawczuk, Esq. GOLSTEIN & MCCLINTOCK LLLP 501 Silverside Road Suite 65 Wilmington, DE 19809 Tel: 302-444-6710 Fax: 302-444-6709 E-mail: marias@goldmclaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by David Pisor as president. A full-text copy of the petition containing, among other items, a list of the Debtor's three unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/7JSOZPQ/1840_North_Ave_Corp__debke-24-10143__0001.0.pdf?mcid=tGE4TAMA AB INTERNATIONAL: To Repurchase 45.2M Shares From Six Shareholders ------------------------------------------------------------------ AB International Group Corp. disclosed in a Form 8-K filed with the Securities and Exchange Commission that it entered into Repurchase Agreements with six shareholders, all non-affiliates of the Company, pursuant to which the Company agreed to repurchase shares of their Common Stock, $0.001 par value, amounting to 45,173,980 shares for cancellation. The price to be paid by the Company under the Repurchase Agreements is $112,935, which will be funded with cash on hand. About AB International Headquartered in Mt. Kisco, NY, AB International Group Corp. is an intellectual property (IP) and movie investment and licensing firm, focused on acquisitions and development of various intellectual property, including the acquisition and distribution of movies. Hackensack, New Jersey-based Prager Metis CPAs, LLC, the Company's auditor since 2022, issued a "going concern" qualification in its report dated Nov. 29, 2023, citing that the Company had an accumulated deficit of approximately $12.4 million and a working capital deficit of approximately $1.0 million. For the year ended August 31, 2023, the Company incurred a net loss of approximately $3.6 million and the net cash used in operating activities was approximately $0.6 million. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. As of November 30, 2023, the Company had an accumulated deficit of approximately $12.3 million and a working capital deficit of approximately $0.8 million. For the three months ended November 30, 2023, the net cash used in operating activities was approximately $36,000. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet the Company's obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. These factors, among others, raise the substantial doubt regarding the Company's ability to continue as a going concern, according to the Company's Quarterly Report for the period ended Nov. 30, 2023. AJC MEDICAL: Unsecured Creditors to Split $20K over 5 Years ----------------------------------------------------------- AJC Medical, PLLC, filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina a Disclosure Statement describing Chapter 11 Plan dated January 29, 2024. The Debtor is a North Carolina professional limited liability company which operates a medical spa specializing in cosmetic concerns. Dr. Indira Velasquez is the sole member of AJC Medical and the doctor who provides all treatments at the medical spa. The Debtor filed Chapter 11 to continue operations while simultaneously returning unneeded equipment, restructuring its equipment debt, and paying as much of its debt as is feasible. Upon confirmation of this Plan, Debtor will continue to operate and make plan payments from funds available after the payment of operating expenses. Debtor will also return or liquidate all equipment which is not needed for the operation of the business and which has not been surrendered already during the pendency of the bankruptcy case. Class 11 consists of Allowed Small Unsecured Claims under $1,000.00. Class 11 Claims shall be paid in full 60 days after the effective date. No interest shall be paid to Class 11. The Debtor estimates that Class 11 claims shall total $0.00. Class 12 consist of Allowed General Unsecured Claims. Class 12 shall be paid $1,000 per quarter for 5 years, for a total of $20,000, with the first payment being due on July 1, 2024. The Debtor estimates that Class 12 claims currently total $1,198,620.60 minus the value of any equipment liquidated to satisfy the claims of Classes 5 through 10, but that this number will be reduced during the claim objection process. Equity holders shall retain their equity interests. A full-text copy of the Disclosure Statement dated January 29, 2024 is available at https://urlcurt.com/u?l=V6qbIC from PacerMonitor.com at no charge. Counsel for Debtor: Kathleen O'Malley, Esq. Stevens Martin Vaughn & Tadych, PLLC 6300 Creedmoor Rd., Suite 170-370 Raleigh, NC 27612 Telephone: (919) 582-2300 Email: komalley@smvt.com About AJC Medical AJC Medical, PLLC, specializes in laser technology used for various cosmetic concerns, unwanted hair, spider veins, and nail fungus. It is based in Raleigh, N.C. AJC Medical filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-02119) on July 28, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Judge Pamela W. Mcafee oversees the case. Kathleen O'Malley, Esq., at Stevens Martin Vaughn & Tadych, PLLC, is the Debtor's legal counsel. ALLIED UNIVERSAL: Moody's Rates New $500MM Sr. Secured Notes 'B3' ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Allied Universal Holdco LLC's proposed $500 million senior secured notes due 2031. The outlook is stable. Proceeds from the issuance will be used to refinance a portion of the company's existing 6.625% senior secured notes due July 2026. The transaction will be leverage neutral. Moody's adjusted total debt to EBITDA as of the end of September 2023 was 8.2x. RATINGS RATIONALE The B3 CFR at Atlas Ontario LP ("Atlas Ontario") reflects its highly leveraged capital structure, thin profit margins, aggressive acquisition history and concentrated ownership. The company benefits from its market position as the largest security services company in North America and globally and the recession resistant nature of the security services business. EBITDA margins of 8.5% to 9% are low relative to other essential business services companies but similar to comparable security services companies. However, security services, which accounts for over 90% of revenues, features very low capital investment requirements, which benefits cash flow profile. As the labor market improves and the company centralizes its international shared services operations, margins should improve. However, the debt financed acquisitions will continue, which will limit leverage reduction. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be upgraded if: 1) revenue continues to grow on an organic and inorganic basis; 2) debt-to-EBITDA is expected to remain below 7.0x; 3) profitability improves and is expected to remain stable; and 4) free cash flow to debt is anticipated to remain above 3.0%. The ratings could be downgraded if 1) revenue growth rates decline toward break-even whether due to loss in customers or market share; 2) leverage increases from current levels and is expected to be sustained above 9x; 3) margins decline; or 4) liquidity deteriorates. The principal methodology used in this rating was Business and Consumer Services published in November 2021. All financial metrics cited reflect Moody's standard adjustments. Allied Universal, headquartered in Conshohocken, Pennsylvania and Santa Ana, California and controlled by affiliates of private equity sponsors Warburg Pincus and CDPQ, is one of the world's largest security and related services company. Revenue for FY 2023 is expected to be around $20 billion. ALLIED UNIVERSAL: S&P Rates New Senior Secured Notes 'B' -------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level rating and '3' recovery rating to global security services provider Allied Universal Holdco LLC's proposed senior secured notes due 2031. The company will use the proceeds to repay a portion of its senior secured notes due 2026. The company also plans to upsize its asset-based lending (ABL) facility by $100 million to $1.6 billion and extend the maturity of the ABL and its EUR300 million revolver to February 2029 and January 2029, respectively. Last year, it extended the maturity of its $300 million U.S. dollar-denominated revolver to November 2027, with a $25 million downsizing effective July 2024. S&P views these extensions as supportive to its liquidity position. S&P Said, "Our ratings on Allied's other debt and on its parent entities (Allied Universal Topco LLC and Atlas Ontario L.P.) are unchanged. The company noted sequentially improving performance in 2023, with strengthening cash generation in the second half that offset deficits in the first half. This was in line with our forecast and enabled by good working capital management, consistent organic revenue growth, and an improving labor environment. We continue to expect strengthening operations in fiscal 2024, including a modest 25-50 basis point EBITDA margin expansion and unadjusted free operating cash flow of over $100 million. Our forecast includes some incremental expenses associated with establishing shared services for its international operations and optimizing its administrative functions in North America. "Our issuer credit rating is limited by the company's very highly leveraged capital structure, which limits its cash flow generation. Still, S&P Global Ratings-adjusted leverage has improved by a full turn to 9x in fiscal 2023 from 10x in 2022. We think leverage will continue to improve to the low-8x area in fiscal 2024, which remains commensurate with our ratings." ISSUE RATINGS—RECOVERY ANALYSIS Key analytical factors: -- S&P's simulated default scenario contemplates a significant market share loss amid intense competition, eroding brand reputation, and rising labor costs while secular changes to its customer base impair demand. These conditions lead to significant deterioration in Allied's cash flow generation, leading to a payment default. -- In this scenario, S&P assumes the company will reorganize as a going concern to maximize its lenders' recovery prospects. -- S&P used an enterprise valuation approach and have applied a 6.5x multiple to its projected emergence-level EBITDA. This is higher than the multiples it uses for some of Allied's business services peers and reflects the company's widely established operating platform. -- S&P's recovery analysis assumes the company's ABL facility will be 60% drawn and its cash flow revolvers will be 85% drawn at the time of default, less outstanding letters of credit. -- The obligors of secured and unsecured debt include U.S. and foreign subsidiaries as issuers and guarantors. S&P said, "In the event of an insolvency proceeding, we anticipate Allied will file for bankruptcy protection under the auspices of the U.S. bankruptcy court system. Still, the global nature of its operations will likely add complexity, time, and added cost to the administration of the case. As such, we assumed a 7% administrative expense in our recovery analysis." -- S&P considers all the first-lien credit facilities and secured notes as pari passu with essentially the same guarantor/collateral structure. Simulated default assumptions: -- Simulated year of default: 2027 -- EBITDA at emergence: $1.2 billion -- Implied enterprise value (EV) multiple: 6.5x -- Estimated gross EV at emergence: $7.8 billion Simplified Waterfall: -- Net recovery value (after 7% administrative expense): $7.3 billion -- Net recovery value available to first-lien debt: $6.7 billion -- First-lien debt outstanding at default (credit facility and senior secured notes): $11.3 billion -- First-lien debt recovery range: 50%-70%, rounded estimate: 55% -- Unsecured senior note debt outstanding at default: $2.1 billion -- Unsecured senior note recovery range: 0%-10%, rounded estimate: 0% Note: Estimated claims amounts include about six months accrued but unpaid interest. ALPINE SUMMIT: White & Case as Counsel in Chapter 11 Case Okayed ---------------------------------------------------------------- Hilary Russ of Law360 reports that a Texas judge agreed on Monday, January 22, 2024, to allow bankrupt oil and gas driller Alpine Summit Energy Partners to retain White & Case LLP as special litigation counsel, noting that the firm's use of higher priced attorneys could be challenged later, particularly since a tentative settlement has been reached in the adversary action at issue. 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. APPLIED SYSTEMS: Moody's Rates New First Lien Loans 'B2' -------------------------------------------------------- Moody's Investors Service affirmed Applied Systems, Inc.'s B3 Corporate Family Rating and B3-PD Probability of Default Rating. Moody's also assigned B2 ratings to the proposed senior secured first lien term loan and senior secured first lien revolving credit facility and a Caa2 rating to the proposed senior secured second lien term loan. The outlook is stable. Net proceeds from the new debt will be used to refinance Applied Systems' existing credit facilities as well as repurchase a minority equity stake. There is no action on the ratings on Applied Systems' existing credit facilities and these ratings will be withdrawn upon closing of the refinancing transaction. RATINGS RATIONALE The B3 CFR reflects Applied Systems' elevated financial leverage with pro forma debt to EBITDA of about 9.7x based on estimated results as of December 31, 2023 pro forma for the proposed refinancing and minority stake repurchase. Moody's expects leverage to decline to about 8x by the end of 2025. This will be aided by continued strong revenue growth of around 10 percent with strong EBITDA margins (Moody's-adjusted) of around 40% or higher (when expensing stock compensation and without regards to pro forma adjustments). Applied Systems' revenue growth and margin are supported by the company's solid market position as the largest broker/agency management software provider with approximately 14,000 unique agency, brokerage and insurance clients and 214,000 active users concentrated in North America with additional business in the UK and Ireland. The mission criticality of Applied Systems' software drives customer retention rates of 95%. Over 80% of Applied Systems' revenue is subscription-based while around 10% is generally reoccurring transaction based. Given the stickiness and essential nature of Applied Systems' software, the company is able to consistently implement 5%-6% price increases, and 1-2 points higher in recent years. Moody's expects Applied Systems' free cash flow profile to normalize following a year of near breakeven free cash generation mainly driven by rising interest expense. Net interest expense was about $240 million in 2023, which is expected to improve by about $25 million on better anticipated pricing in conjunction with the current refinancing (and reflecting the benefit of an interest rate hedge). Applied Systems' free cash generation will be further supported by 10%-11% adjusted EBITDA growth and modest capital intensity. The stable outlook reflects Moody's expectation that Applied Systems will sustain revenue growth in the 10 percent range while maintaining its adjusted EBITDA margin around 40 percent (Moody's-adjusted). Growth at prevailing margins will support leverage declining to approximately 8x (absent a debt funded acquisition or dividend) by the end of 2025. Applied Systems' liquidity profile is good, supported by balance sheet cash and Moody's expectation of annualized free cash flow in the 2%-4% range of debt balances over the next 12-18 months. Additionally, the company will have a committed 5-year $150 million revolving credit facility, as proposed. Pro forma for the transaction, Applied Systems is expected to have over $140 million of cash. Revolver borrowings are not anticipated. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Applied Systems pursues a more conservative financial strategy while sustaining organic revenue and earnings growth in the high-single-digit percentage range, such that adjusted debt-to-EBITDA stays below 6.5x and free cash flow-to-debt exceeds 5%. Ratings could be downgraded if Applied Systems' free cash flow to debt is sustained below 1-2% while the company continues with an aggressive financial strategy. Conditions that could also put downward pressure on the ratings include market share losses, margin erosion, declines in the rate of revenue growth or adjusted leverage levels exceeding 9x on other than a temporary basis. The proposed senior secured first lien term loan due 2031, and the proposed revolving credit facility due 2029 are rated B2, one notch above the CFR, given their senior position in the capital structure, with a first lien on all assets, and loss absorption provided by the senior secured second lien term loan. The proposed senior secured second lien term loan due 2032 is rated Caa2, reflecting its effective subordination to the first lien debt. Marketing terms for the new credit facilities (final terms may differ materially) include the following: Incremental pari passu debt capacity up to the greater of $442 million and 100% of consolidated EBITDA, plus unlimited amounts subject to the greater of either 5.25x Consolidated First Lien Debt or leverage neutral; incremental second lien debt capacity up to either (1) the greater of 6.65x Consolidated Secured Debt or leverage neutral, or (2) an interest expense ratio of no less than 1.75x or the ratio immediately prior. There is an inside maturity sublimit up to the greater of $442 million and 100% of consolidated EBITDA along with incremental debt incurred in connection with a permitted acquisition, investment or other similar transaction. There are no "blocker" provisions which prohibit the transfer of specified assets to unrestricted subsidiaries. There are no express protective provisions prohibiting an up-tiering transaction. Amounts up to 100% of unused capacity from certain RP carve-outs along with any restricted investments may be reallocated to incur debt. Applied Systems, headquartered in University Park, Illinois, is a provider of software solutions to the P&C and benefits insurance industry, with a focus on insurance brokers and agencies in the US, Canada, the UK and Ireland. The company generated approximately $730 million revenue in the LTM period ending September 30, 2023. Applied Systems is owned by private equity investors Hellman & Friedman, JMI Equity, Stone Point Capital, and CapitalG. The principal methodology used in these ratings was Software published in June 2022. APPLIED SYSTEMS: S&P Rates New $2.4BB First-Lien Term Loan 'B-' --------------------------------------------------------------- S&P Global Ratings assigned its 'B-' issue-level rating and '3' recovery rating to University Park, Ill.-based Applied Systems Inc.'s proposed $2.4 billion first-lien term loan and 'CCC' issue-level rating and '6' recovery rating to its proposed $620 million second-lien term loan, maturing 2031 and 2032, respectively. S&P's 'B-' issuer credit rating and stable outlook on Applied Systems are unchanged. The company intends to use the proceeds from the term loan issuance to fully repay its existing $1.8 billion first-lien term loan and $565 million second-lien term loan. It also plans to repurchase a minority equity stake for $565 million. The company benefits from its mission-critical platform and resilient end-market base, as evidenced by annual revenue growth of more than 10% in each of the last seven years. S&P said, "We expect the company will continue its recent performance by growing revenue in the 10%-12% range in fiscals 2023 and 2024 (ending in December). This is due to the company's ability to increase prices in line with its historical trend (5%-6%), modest growth in its user base, and continued penetration of its extended solutions. The company's high recurring revenue of 93% and high retention rate further support its revenue visibility. We expect its S&P Global Ratings-adjusted EBITDA margin will remain in the high-40% area. We expect Applied System's leverage will be near 7.5x at the end of fiscal 2024 with the company's good revenue growth and high EBITDA generation supporting deleveraging going forward." ARENA GROUP: Missed SI Licensing Payment by Choice -------------------------------------------------- Kevin T. Dugan, staff writer at Intelligencer, reports that earlier in January, media conglomerate Arena Group defaulted on a $3.75 million quarterly licensing payment, resulting in the termination of the deal with Authentic Brands Group for the license to publish Sports Illustrated. In the wake of the decision, Arena's stock plummeted, and the venerable sports magazine announced it was laying off its entire staff On Jan. 25, 2024, the board of the media conglomerate the Arena Group met. At this meeting, the board was in possession of a takeover offer from James Heckman, one of its former CEOs. Heckman had negotiated the SI licensing deal back in 2019. The board also had to decide how to respond to a resignation email by another ex-CEO, Ross Levinsohn, who had accused them of actions that were "illegal, riddled with self-dealing, and will almost certainly lead to shareholder lawsuits." According to the Intelligencer report, Arena has never explained why it stopped paying to publish Sports Illustrated, but interviews with shareholders and current and former employees suggest that Arena missed the licensing payment by choice, not because it didn't have the money to make it. The company had about $10 million in cash in December, enough to pay its debts, its licensing fees, and make payroll, according to two people directly familiar with the numbers. Public documents and interviews with other employees show Arena wasn'' running out of money, and the missed payment occurred during the football and holiday season, typically when its revenues were highest. The company is now "in continuing discussions" to regain the license, according to a public filing. The roots of the debacle appear to go back to the summer, when Arena Group's management started looking for an investor who could inject cash into the company. Arena was facing financial trouble: More than $100 million in debts were coming due at the end of 2023, and by the fall, crypto billionaire and company investor Brock Pierce was suing them for allegedly blocking him from selling his shares. (The suit is ongoing, and the company denies doing anything wrong.) Under the Sports Illustrated licensing agreement, Arena paid $15 million a year to Authentic Brands Group, a management company led by Canadian billionaire Jamie Salter that owns many well-known clothing and sports brands and likenesses, including Reebok and Eddie Bauer. The deal was expensive -- it also came with a 10 percent annual interest rate -- but Arena and Authentic Brands were able to make it work, one person familiar with the deal said. Salter's company had a good relationship with Arena, and the two companies had previously cooperated to make sure that Arena could continue to pay to publish the magazine, the person said. Enter Manoj Bhargava, owner of 5-Hour Energy, a onetime Forbes billionaire who owns a network of local television stations throughout the U.S. In August, Bhargava offered a deal that would pump $50 million into Arena and require him to spend an additional $60 million in advertising over the next five years. In return, he would become the majority shareholder and Arena would merge with his broadcast company, Bridge Media Networks. Under the new structure, Sports Illustrated, the financial-news outlet TheStreet.com, and other Arena outlets would be a source of proprietary content for the television stations. The deal temporarily solved Arena's immediate debt problem. With Bhargava's backing, the creditor on the $100 million in debts agreed to push back the maturity date for two years -- giving the media company breathing room to keep operating while looking for ways to increase their profitability. Over the fall, however, negotiations on the Bhargava deal dragged. A due-diligence process in which each company inspected the other's financial health took longer than expected. One reason for the delay was that Bridge Media Networks, Bhargava's privately owned television company, didn't provide audited financial documents to Arena for months, one person directly familiar with the process said. The acquisition was supposed to close by December 31, but in early November, Levinsohn was telling investors that it could get pushed back into early 2024. It was around this time that Bhargava was offered an opportunity that would allow him to gain control of Arena more quickly. The company's then-largest shareholder was B. Riley, a Los Angeles financial-services firm. Bhargava bought B. Riley's position out at a discount, another person said, making him Arena's largest shareholder -- even as he was still waiting to buy the company outright. Almost immediately, the morale at Arena Group plunged, former employees there said. In early December, after the deal with B. Riley had closed, Bhargava gave a speech at an all-hands meeting in which he told employees, "The amount of useless stuff you guys do is staggering," according to two witnesses. Within days, most of Arena's top executives would leave, including Levinsohn, and the board installed Bhargava as interim CEO. The arrangement led to Bhargava becoming Arena's top executive, its most important shareholder, and its creditor all at once (Arena's debts had also been wrapped into the B. Riley deal). It was an extremely unusual situation for a corporate executive, potentially putting his interests in conflict with those of the company. Cutting expenses became a top priority, ex-employees said. Managers were told to cancel holiday parties and keep costs low. When it came to the Sports Illustrated license, Bhargava told Arena executives he believed he could force Authentic Brands to negotiate a new price with him by withholding payment, according to one person familiar with the conversation. By early January, not only had Arena failed to make a payment on the licensing agreement, it had also skipped a $2.8 million payment on debt now held by Bhargava. Again, no reason was given, but two people familiar with Arena speculated it was part of a broader plan to lower costs, which could possibly include corporate bankruptcy. Within weeks, it looked like Bhargava might lose control not only of Sports Illustrated but of all of Arena. Heckman, the former CEO, offered $120 million to take over the company, including buying the debt off Bhargava. The deal, however, wasn't a financially superior one to Bhargava's and wouldn't necessarily make Arena any more likely to get Sports Illustrated back and save the jobs of the employees who have been laid off. On January 25, the board passed on Heckman's offer-- without addressing it in a filing made later that night. (Heckman was ousted as CEO by the board in 2020.) Overall, the board held ranks, siding with Bhargava, including insisting that the decisions that led Arena to lose its flagship publication had "followed thoughtful process and deliberation and were determined to be in the best interest of the Company and its stockholders." What comes next for Arena isn't clear. The News Guild of New York and the Sports Illustrated union filed an unfair-labor-practices lawsuit and called Arena's default an "engineered dispute over the SI license as a cover to union-bust and unlawfully target our members." (Levinsohn, in his resignation email, also accused the company of "union-busting.") Arena has said in filings that it is in talks with Authentic Brands over the default, as well as other costs -- including a $45 million penalty triggered by the default on the licensing deal. But Bhargava's Arena is now just one bidder to publish Sports Illustrated, and his competition reportedly includes much larger, better-financed media and private-equity companies. "It'd be really hard for Jamie [Salter] to lower the licensing fee to Arena versus a new party," one of those people told me. "If he does that, every other licensee he has would play this card, and he doesn't want to be in that position." About Arena Group The Arena Group Holdings, Inc. (NYSE American: AREN) together with its subsidiaries, operates digital media platform the United States and internationally. The company offers the Platform, a proprietary online publishing platform comprising publishing tools, video platforms, social distribution channels, newsletter technology, machine learning content recommendations, notifications, and other technology. The company was formerly known as TheMaven, Inc., and changed its name to The Arena Group Holdings in February 2022. The Arena Group was incorporated in 1990 and is based in New York. ASHFORD HOSPITALITY: Issues Tax Report for 2023 Share Distributions ------------------------------------------------------------------- Ashford Hospitality Trust Inc. has announced the tax reporting (Federal Form 1099-DIV) information for the 2023 distributions on its Series D, F, G, H, I, J and K preferred shares. The Company revealed the amounts representing the income tax treatment applicable to each distribution that is reportable in 2023. The preferred distributions that the Company paid on January 17, 2023 to stockholders of record as of December 30, 2022 are reportable in 2023. The preferred distributions that the Company paid on January 16, 2024 to stockholders of record as of December 29, 2023 will be reportable in 2024. In accordance with IRS Code Section 6045B, the Company will post Form 8937, Report of Organizational Actions Affecting Basis of Securities, which may be found in the Corporate Actions section of the Company's website. A full-text copy of the Company's report is available at http://tinyurl.com/yc23rpuv About Ashford Hospitality Headquartered in Dallas, Texas, Ashford Hospitality Trust, Inc. operates as a self-advised real estate investment trust focusing on the lodging industry. As of September 30, 2023, the Trust had $3.7 billion in total assets against $3.9 billion in total liabilities. Egan-Jones Ratings Company, on May 5, 2023, maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Ashford Hospitality Trust, Inc. BALBOA INC: Obtains CCAA Stay Order; KSV as Monitor --------------------------------------------------- Pursuant to an order of the Ontario Superior Court of Justice (Commercial List) ("Court") made on Jan. 23, 2024 ("Initial Order"), Balboa Inc., DSPLN Inc., Happy Gilmore Inc., Interlude Inc., Multiville Inc., The Pink Flamingo Inc., Hometown Housing Inc., The Mulligan Inc., Horses In The Back Inc., Neat Nests Inc. and Joint Captain Real Estate Inc. ("Companies") were granted protection under the Companies’ Creditors Arrangement Act, as amended ("CCAA") and KSV Restructuring Inc. ("KSV") was appointed monitor of the Companies. The principal purpose of these CCAA proceedings is to create a stabilized environment to enable the Applicants to preserve and maximize value for their stakeholders and provide the stability and liquidity necessary to complete value accretive renovations to their portfolio of residential homes by securing debtor-in- possession ("DIP") financing, pursue a comprehensive refinancing or restructuring transaction and implement a consensual plan of compromise or arrangement while continuing operations in the ordinary course of business. To reduce the Companies' significant interest expense and improve their free cash flow, the Company began exploring refinancing and sale opportunities in early 2022. The Monitor understands that the Companies remain in negotiations with at least one party regarding a potential refinancing. The Monitor understands these efforts have been unsuccessful so far as a result of, among other things, the lack of cash flow generated by the Properties. In that respect, the DIP Facility provides immediate capital to renovate 98 properties, which is expected to result in additional annual operating cash flow of approximately $5 million, which will make a refinancing of the whole portfolio significantly more viable. In order to raise sufficient funds to complete the Companies' intended renovations and fund the costs of these proceedings, KSV approached two lenders to provide DIP proposals and assisted the Companies in negotiating the DIP Agreement with the DIP Lender. The significant terms of the DIP Agreement are: a) Borrowers: The Companies; b) DIP Lender: Harbour Mortgage Corp; c) Loan Amount: up to a maximum principal amount of $12 million; d) Maturity Date: the earlier of: i) Oct. 31, 2024, as such date may be extended by the Companies, if approved by the Monitor, and the DIP Lender in writing; ii) any Event of Default that has not been cured; and iii) the effective date of any CCAA plan of arrangement. e) Interest rate: the greater of (i) 12% per annum and (ii) Royal Bank prime rate plus 4.80%; f) Loan Fee: i) a non-refundable commitment fee in the amount of $240,000, which is to be deducted from the initial advance; ii) if the loan is extended by the DIP Lender at its sole discretion for a period not to exceed six months, an extension fee of $120,000 will be payable in full on the Repayment Date; and iii) all reasonable legal fees and disbursements of legal counsel incurred by the DIP Lender in connection with the DIP Facility; g) DIP Lender's Expenses: the Applicants are to pay all reasonable costs and expenses incurred by the DIP Lender in connection with the CCAA proceedings; h) DIP Lender's Charge: the obligations of the Companies under the DIP Agreement and DIP Facility are to be secured by the DIP Lender's Charge; i) Events of Default: the following is a summary of the material Events of Default: i) the issuance of an order terminating the CCAA proceedings or lifting the stay in the CCAA proceedings; ii) the issuance of an order granting an encumbrance of equal or superior status to that of the DIP Lender's Charge, other than the priority payables, the Administration Charge and any Permitted Encumbrance, including those payments which rank ahead of the DIP Lender's Charge; iii) the Companies fail to perform or comply with any term or condition set out in the DIP Agreement; and iv) a sale of all or substantially all of the Companies' assets that does not provide for the payment in full of the obligations owing under the DIP Facility; and j) Reporting: the Companies' reporting obligations include the provision of monthly "rolling" cash flow projections, confirmation that property taxes are current and monthly meetings to discuss recent developments in the CCAA proceedings. The Stay Period currently expires on Feb. 2, 2024. The Companies are requesting an extension to the Stay Period until March 28, 2024, as well as an extension of the benefit of the stay of proceedings to the Additional Stay Parties and the Additional Stay Parties' Property. The proposed Initial Order, the Court materials filed in the CCAA proceedings will be made available by KSV on its case website at https://www.ksvadvisory.com/experience/case/sid. The Monitor can be reached at: KSV Restructuring Inc. 220 Bay Street, 13th Floor Toronto, ON M5J 2W4 Noah Goldstein Tel: (416) 932-6207 Email: ngoldstein@ksvadvisory.com David Sieradzki Tel: (416) 932-6030 Email: dsieradzki@ksvadvisory.com Christian Vit Tel: (647) 848-1350 Email: cvit@ksvadvisory.com Nisan Thurairatnam Tel: (416) 932-6023 Email: NThurairatnam@ksvadvisory.com Lawyers for the Monitor: Cassels Brock & Blackwell LLP Suite 3200 Bay Adelaide Centre - North Tower 40 Temperance Street Toronto, ON M5H 0B4 Ryan Jacobs Tel: (416) 860-6465 Email: rjacobs@cassels.com Joseph J. Bellissimo Tel: (416) 860-6572 Email: jbellissimo@cassels.com The Proposed DIP Lender: Harbour Mortgage Corp. 36 Toronto Street, Suite 500 Toronto, Ontario M5C 2C5 Nelson Da Silva Email: ndasilva@harbourmortgage.ca Lawyers for the Proposed DIP Lender: Torkin Manes LLP 151 Yonge Street, Suite 1500 Toronto, ON M5C 2W7 Len Rodness Tel: (416) 777-5409 Email: lrodness@torkinmanes.com Tamara Markovic Tel: (416) 640-7287 Email: tmarkovic@torkinmanes.com The Lender Representative Counsel Chaitons LLP 5000 Yonge Street, 10th Floor Toronto, ON M2N 7E9 Harvey Chaiton Tel: (416) 218-1129 Email: harvey@chaitons.com George Benchetrit Tel: (416) 218-1141 Email: george@chaitons.com Lawyers for the Companies: Bennett Jones LLP 3400 One First Canadian Place P.O. Box 130 Toronto, ON M5X 1A4 Sean Zweig Tel: (416) 777-6254 Email: zweigs@bennettjones.com Joshua Foster Tel: (416) 777-7906 Email: fosterj@bennettjones.com Thomas Gray Tel: (416) 777-7924 Email: grayt@bennettjones.com Balboa Inc. specializes in the acquisition, renovation and leasing of distressed residential real estate in undervalued markets throughout Ontario, Canada. BARTON COLLEGE: S&P Lowers Long-Term Revenue Bond Rating to 'BB+' ----------------------------------------------------------------- S&P Global Ratings lowered its long-term rating one notch to 'BB+' from 'BBB-' on Wisconsin Public Finance Authority's revenue bonds, issued for Barton College, N.C. The outlook is stable. "The downgrade reflects our view of Barton College's worsening financial resources leading to two years of covenant violations on the college's line of credit and construction loan debt, as well as the college's persistently worse selectivity and matriculation rates following the pandemic-related decline in applications," said S&P Global Ratings credit analyst Nicholas Breeding. Barton College's general obligation pledge secures the bonds. S&P said, "We have assessed Barton College's enterprise risk profile as adequate, characterized by generally growing enrollment, slowly recovering applications, and somewhat worsened demand metrics. We have assessed the college's financial risk profile as vulnerable, as characterized by weak financial resources and modest operating deficits, though with fairly low debt. We think these factors, combined, lead to an anchor of 'bb'. As per our criteria, the final rating might be within one notch of the anchor. We think the final rating of 'BB+' better reflects Barton College's current financial resource ratios and growing enrollment." The rating reflects our opinion of Barton College's: -- Low and declining cash and investments, especially relative to operating expenses; -- Modest full-accrual operating deficits in four of the past five years, worsening slightly in fiscal 2023; and -- Weak selectivity following a severe decline in applications in fall 2021, although with some increased applications in the past two years. S&P believes somewhat offsetting factors are the college's: -- Growing enrollment trend through fall 2022, although with a slight decline in fall 2023; and -- Increasing net tuition revenue in four of the past five years. Founded in 1902, Barton College is a four-year, private, co-educational college in Wilson, S.C., approximately 45 miles east of Raleigh. The college is segmented into seven academic schools and offers more than 40 majors and six graduate programs. It primarily serves undergraduates and students from North Carolina at 93.5% and 76.0% of enrollment, respectively, in fall 2023. S&P said, "The stable outlook reflects S&P Global Ratings' expectation that financial resources will remain low and could continue to pressure Barton College's debt covenants, but that management's current repayment strategy for the relevant debt will reduce the near-term acceleration risk. We expect enrollment will remain generally stable but demand metrics will remain weak in the near term as recovery in applications takes further time. We also expect slight full-accrual operating deficits will continue in the near term. "We could revise the outlook to negative or lower the rating if further covenant violations occur, financial resources ratios are no longer commensurate with those of similarly rated peers, or if enrollment continues to decline from fall 2023 levels. We would also view persistent operating deficits or worsening demand metrics negatively. "We could revise the outlook to positive or raise the rating if Barton College repays its line of credit and construction loan debt, has no covenant violations in fiscal 2024, and if its financial resources improve significantly. We would also view enrollment stabilization, improvements in demand metrics, and full-accrual operating surpluses positively." BELMONT TRADING: Claims Will be Paid from Asset Sale Proceeds ------------------------------------------------------------- Belmont Trading Co., Inc., filed with the U.S. Bankruptcy Court for the Northern District of Illinois a Disclosure Statement in support of Plan of Liquidation dated January 29, 2024. The Debtor is an electronics recycling, processing and asset recovery company engaging in the processing of electronics products, such as cellular telephones, computers, LCD panels and computer parts for the past 35 years. The Debtor receives electronic devices and process them for parts or refurbishes them to be sold. Primarily due to the Covid-19 crisis, the loss of its major client T-Mobile and increased overhead expenses, the Debtor fell behind on its secured obligations. In addition, the Debtor had extensive global sales through wholly owned subsidiaries and in the Russian Market. Due to the war in Ukraine the Debtor's subsidiaries had cease operations in Russia and has ceased operations in several European countries and Asia as well. Belmont began cost cutting measures reducing the number of employees from over 100 to 45 at the time of filing. Belmont also has been seeking new avenues of electronics recycling. Unfortunately, due to the high monthly expenses Belmont has not yet been unable to formulate a long-term plan to reorganize. Belmont's secured lender Kassel filed a Secured Claim of $2,575,754.00. Given the large amount of the claim secured by all the Debtor’s Assets, the Debtor is unable to formulate a plan to pay this large loan amount. The Debtor's post-petition performance shows a thin margin that cannot support such debt service. Prior to the confirmation of the Plan the Debtor will file a motion to approve bid procedures and to sell all of its assets pursuant to Section 363 of the Bankruptcy Code. The Debtor's secured lender Kassel Financing, LLC may credit bid up to its loan amount and any other amount it may desire as a stalking horse bidder. The sale will be advertised for three consecutive weeks in the Chicago Tribune. As part of the sale motion Kassel will pay to creditors any amount received in excess of its loan amount of $3,474,252.60 to pay pro rata to unsecured creditors according to their order of priority under the Code. The Debtor's inventory is mostly consigned goods or goods in raw format that is of minimal value. The Debtor and Kassel have determined the maximum value will be to sell the Debtor as a going concern instead of a piecemeal sale. The exact amount of the Recovered Funds is unknown at this time. The Plan provides for payments on the Effective Date, which is the first business day 30 days after the confirmation date. The Plan provides for unsecured creditors to be paid a pro rata share of the Recovered Funds. Class 6 consists of the Unsecured Claim of T-Mobile USA, Inc. T-Mobile was scheduled as an unsecured claim $6,592,434.26 reduced to a pre-petition judgment entered in September 2023. T-Mobile did not file a proof of claim. The Debtor's Assets were fully encumbered by PNC and sold to the successor in interest Kassel. In the event the Recovered Funds exceed the Kassel Lien after the sale then this claim will be paid up to the amount of its Secured Claim if any. The Class is Impaired and is entitled to vote. Class 7 consists of the Unsecured Claim of Coherent Solutions Incorporated. CSI filed an unsecured claim number 13 for $192,300.00 reduced to a pre-petition judgment entered in August 2023. The Debtor's Assets were fully encumbered by PNC and sold to the successor in interest Kassel. In the event the Recovered Funds exceed the Kassel Lien after the sale then this claim will be paid up to the amount of its Secured Claim if any. Pursuant to 11 USC 1129 (b)(B)(ii) the holder of any claim or interest that is junior to the claims of this class will not receive or retain under the plan on account of such junior claim or interest any property. The Class is Impaired and is entitled to vote. Class 8 consists of General Unsecured Claims. This Class will be paid pro rata of the Recovered Funds on the Effective Date. The amount of the Recovered Funds is unknown at this time. Upon the conclusion of the Section 363 sale the class will receive the prorated amount from the Recovered Funds available to all creditors. The total of class 7 claims is estimated at $5,158,656.96. Pursuant to 11 USC 1129 (b)(B)(ii) the holder of any claim or interest that is junior to the claims of this class will not receive or retain under the plan on account of such junior claim or interest any property. The Class is impaired and is entitled to vote. The 100% of the Shares held by Igor Boguslavsky and Shmouel Yaari shall be cancelled on the Effective Date of the Plan. The Equity shareholder shall not receive any distribution under the liquidating plan for their equity positions. As described, (a) Administrative Claims will be paid from the Recovered Funds; (b) priority Classes will be paid from the Recovered Funds on the Effective Date to the extent the amount received from the Section 363 sale exceeds the amount of the Kassel Lien; and (c) unsecured Classes will be paid from the Recovered Funds. A full-text copy of the Disclosure Statement dated January 29, 2024 is available at https://urlcurt.com/u?l=eIPzHR from PacerMonitor.com at no charge. Attorney for the Plan Proponent: O. Allan Fridman, Esq. LAW OFFICE OF O. ALLAN FRIDMAN 555 Skokie Blvd, Suite 500 Northbrook, IL 60062 Telephone: (847) 412-0788 Facsimile: (847) 412-0898 Email: allanfridman@gmail.com About Belmont Trading Belmont Trading Co., Inc., offers full-service value recovery and recycling services for mobile devices. Belmont Trading processes retired mobile devices and remarket and resell them. Belmont Trading sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 23-12083) on Sept. 12, 2023. In the petition signed by Igor Boguslavsky, president, the Debtor disclosed $2,575,764 in assets and $15,773,104 in liabilities. Judge Janet S. Baer oversees the case. O. Allan Fridman, Esq., at Law Office of Allan Fridman, is the Debtor's legal counsel. BESTWALL LLC: U.S. Senators Urge High Court to Toss Bankruptcy Move ------------------------------------------------------------------- U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, led fellow Senate Judiciary Committee colleagues U.S. Senators Sheldon Whitehouse (D-RI) and Josh Hawley (R-MO) in submitting on Jan. 22, 2024, an amicus brief to the Supreme Court in Bestwall LLC v. Official Committee of Asbestos Claimants, supporting hundreds of thousands of victims of the company's asbestos-linked products. To avoid facing the legal claims of victims in court, Georgia-Pacific "moved" to Texas for less than five hours, offloaded its asbestos-related liabilities onto a shell company called Bestwall, put Bestwall into bankruptcy, and then claimed that Bestwall's bankruptcy protected the entire Georgia-Pacific enterprise from accountability. The bipartisan trio of Senators urge the Court to overturn the Fourth Circuit's decision to approve the stay of asbestos litigation against Georgia-Pacific, writing, "The bankruptcy system was not designed to provide solvent non-debtors with the option to simply decline to be held liable for alleged wrongdoing, but that is precisely what the Fourth Circuit's decision countenances. That was not what Congress intended, and it is not a result that this Court should permit." The Senators continue, "Bestwall's successful attempt to enjoin hundreds of thousands of legal claims against Georgia-Pacific exemplifies both the benefit of the Texas Two-Step to tortfeasors and the cost of the maneuver to the American people—and to the integrity of the bankruptcy system itself. Through its unprincipled, atextual interpretation of the Code's provisions, Bestwall has created a legal stratagem that radically expands the authority of bankruptcy courts and makes a mockery of congressional intent." In recent years, wealthy corporations have attempted to use this maneuver -- the "Texas Two-Step" -- to exploit loopholes in bankruptcy law and dodge accountability. Companies like Georgia-Pacific, Johnson & Johnson, 3M, and Corizon Health have repeatedly tried to bypass the mass tort system, freezing in place hundreds of thousands of legal claims while continuing business as usual. This trend—financially stable companies trying to obtain all of the benefits of bankruptcy without any of the costs—shows no sign of abating. In September 2023, the Committee heard testimony from Ms. Lori Knapp, whose father died from mesothelioma caused by asbestos exposure in Georgia-Pacific drywall products. The Knapp family was denied their day in court because Georgia-Pacific manipulated bankruptcy law to shield itself from lawsuits. Read the full amicus brief at https://www.judiciary.senate.gov/imo/media/doc/23-675%20Bestwall%20amicus%20FINAL.pdf The brief continues the work of Chair Durbin and the Senate Judiciary Committee to close loopholes in the bankruptcy system. In September, Durbin held a full committee hearing on evading accountability by manipulating bankruptcy, directly confronting Johnson & Johnson’s Worldwide Vice President of Litigation. He has also led efforts to condemn the shameful bankruptcy maneuvers by companies like 3M and Corizon Health, while highlighting the need for legislative reform. In 2022, Whitehouse led a subcommittee hearing on corporate efforts to side-step accountability through bankruptcy. About Bestwall LLC Bestwall LLC -- http://www.Bestwall.com/-- was created in an internal corporate restructuring and now holds asbestos liabilities. Bestwall's asbestos liabilities relate primarily to joint systems products manufactured by Bestwall Gypsum Company, a company acquired by Georgia-Pacific in 1965. The former Bestwall Gypsum entity manufactured joint compounds containing small amounts of chrysotile asbestos; the manufacture of these asbestos-containing products ceased in 1977. Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC ("PlasterCo"), develops, manufactures, sells and distributes gypsum plaster products, including gypsum floor underlayment, industrial plaster, metal casting plaster, industrial tooling plaster, dental plaster, medical plaster, arts and crafts plaster, pottery plaster and general purpose plaster. On Nov. 2, 2017, Bestwall sought Chapter 11 protection (Bankr. W.D.N.C. Case No. 17-31795) in an effort to equitably and permanently resolve all its current and future asbestos claims. The Debtor estimated assets and debt of $500 million to $1 billion. It has no funded indebtedness. The Hon. Laura T. Beyer is the case judge. The Debtor tapped Jones Day as bankruptcy counsel; Robinson, Bradshaw & Hinson, P.A., as local counsel; Schachter Harris, LLP as special litigation counsel for medicine science issues; King & Spalding as special counsel for asbestos matters; and Bates White, LLC, as asbestos consultants. Donlin Recano LLC is the claims and noticing agent. On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an official committee of asbestos claimants in the Debtor's case. The committee retained Montgomery McCracken Walker & Rhoads, LLP as legal counsel; and Hamilton Stephens Steele + Martin, PLLC and JD Thompson Law as local counsel. On Feb. 22, 2018, the court approved the appointment of Sander L. Esserman as the future claimants' representative in the Debtor's case. Mr. Esserman tapped Young Conaway Stargatt & Taylor, LLP, as legal counsel; Hull & Chandler, P.A., as local counsel; Ankura Consulting Group, LLC, as claims evaluation consultant; and FTI Consulting, Inc., as financial advisor. BLACKBERRY LTD: FIFTHDELTA Entities Hold 5.14% Stake as of Jan. 24 ------------------------------------------------------------------ In a Joint Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, FIFTHDELTA LTD and its affiliate, FIFTHDELTA Master Fund Limited, disclosed that as of January 24, 2024, both entities beneficially owned 30,077,058 shares of BlackBerry Limited's common stock, representing 5.14% of the shares outstanding. The percentage of shares beneficially owned is based on 585,350,929 Common Shares issued and outstanding as of December 18, 2023, as reported in BlackBerry's Quarterly Report on Form 10-Q for the quarter ended November 30, 2023, as filed with the Securities and Exchange Commission on December 21, 2023. A full-text copy of the Report is available at http://tinyurl.com/8jf8zj7m About BlackBerry Headquartered in Waterloo, Ontario, BlackBerry Limited (NYSE: BB; TSX: BB) provides intelligent security software and services to enterprises and governments around the world. As of Aug. 31, 2023, the Company had $1.613 billion in total assets against $784 million in total liabilities. In September 2023, Egan-Jones Ratings Company maintained its 'CCC' foreign currency and local currency senior unsecured ratings on debt issued by BlackBerry Limited. BLACKBERRY LTD: Upsizes Private Notes Offering to $175M ------------------------------------------------------- BlackBerry Limited announced the pricing of its private offering of $175 million aggregate principal amount of its 3.00% Convertible Senior Notes due 2029 at an approximately 32.50% conversion premium to the closing share price of $2.93 on The New York Stock Exchange on January 24, 2024. The notes were offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, and pursuant to prospectus exemptions in Canada and other jurisdictions. BlackBerry also granted the initial purchasers of the notes the option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $25 million aggregate principal amount of the notes. The offering was upsized from the previously announced offering of $160 million aggregate principal amount of notes. The closing of the offering is subject to customary closing conditions, including approval from the Toronto Stock Exchange. BlackBerry estimates that the net proceeds from the offering will be approximately $169.6 million (or approximately $194 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting fees and estimated offering expenses payable by BlackBerry. BlackBerry intends to use the net proceeds from the offering of the notes to fund the repayment or repurchase of its outstanding $150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures due February 15, 2024 and the remainder for general corporate purposes. The notes will be BlackBerry's general unsecured obligations, ranking senior to BlackBerry's obligations under the Existing Debentures. The notes will bear interest at a rate of 3.00% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2024, and the notes will mature on February 15, 2029, unless earlier converted, redeemed or repurchased. The initial conversion rate of the notes is 257.5826 common shares per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $3.88 per common share, representing a premium of approximately 32.50% over the closing share price of $2.93 on The New York Stock Exchange on January 24, 2024. Prior to the close of business on the business day immediately preceding November 15, 2028, the notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding February 15, 2029. BlackBerry may satisfy any conversions of the notes by paying or delivering, as the case may be, cash, its common shares or a combination of cash and its common shares, at BlackBerry's election (or, in the case of any notes called for redemption that are converted during the related redemption period, solely its common shares). BlackBerry may not redeem the notes prior to February 22, 2027, except in the event of certain tax law changes. On or after February 22, 2027, BlackBerry may redeem for cash all or a portion of the notes, at Blackberry's election, if the last reported sale price of Blackberry's common shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which BlackBerry provides notice of redemption at a cash redemption price equal to 100% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If BlackBerry undergoes a fundamental change (as defined in the indenture governing the notes), subject to certain conditions, BlackBerry will be required to make an offer to repurchase for cash all of the outstanding notes (or any portion thereof that a holder determines to sell to BlackBerry) at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In connection with certain corporate events or if BlackBerry calls the notes for redemption, BlackBerry will, under certain circumstances, increase the conversion rate for noteholders who elect to convert their notes in connection with such corporate event or convert their notes called for redemption. The offer and sale of the notes and the common shares issuable upon conversion of the notes, if any, have not been registered under the Securities Act or any state securities laws. Unless a subsequent sale is registered under the Securities Act, the notes and the common shares issuable upon conversion of the notes, if any, may only be offered or sold in the United States in a transaction that is exempt from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. About BlackBerry Headquartered in Waterloo, Ontario, BlackBerry Limited (NYSE: BB; TSX: BB) provides intelligent security software and services to enterprises and governments around the world. As of Aug. 31, 2023, the Company had $1.613 billion in total assets against $784 million in total liabilities. In September 2023, Egan-Jones Ratings Company maintained its 'CCC' foreign currency and local currency senior unsecured ratings on debt issued by BlackBerry Limited. BRIDGE COMMUNICATIONS: $1.6M Unsecured Claims to Get 5% in 7 Years ------------------------------------------------------------------ Bridge Communications, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of Virginia an Amended Disclosure Statement describing Amended Plan of Reorganization dated January 29, 2024. The Debtor filed its Chapter 11 case to restructure its debt because it was insolvent and could not make payments to creditors as they came due. A creditor had filed a lawsuit against the Debtor shortly before the bankruptcy filing. In order to preserve the value of the estate and to reorganize its debts, Debtor filed a Chapter 11 case on March 23, 2023. Under the Debtor's Plan, secured creditors will receive $755,636.00 and the unsecured creditors will receive $81,406.64. Debtor believes this outcome is far superior to the return it would obtain for creditors in a Chapter 7 liquidation. Class 5 consists of all general unsecured claims that were filed or scheduled above the value of $2,100. These claims shall be paid back at 5 percent of their allowed amount, without interest, over 7 years from the Effective Date of the Plan from the net profits of the Debtor. The amount of claim in this Class total $1,628,144 and will receive a distribution of $81,407. This class of claims is impaired. Class 6 consists of all general unsecured claims that were filed or scheduled at a value less than $2,100. These claims shall not be paid pursuant to 11 U.S.C. Sec. 1122(b), since 5% repayment on the amounts of these claims would result in an administrative inconvenience. The amount of claim in this Class total 5,455. This class of claims is impaired. Class 7 consists of all equity interest claims. This claim shall retain its full equity interest. The source of funds to be distributed pursuant to the Plan are funds in the Disbursing Account and projected net profits of the Debtor over 7 years. A full-text copy of the Amended Disclosure Statement dated Jan. 29, 2024 is available at https://urlcurt.com/u?l=UKshlg from PacerMonitor.com at no charge. Counsel for the Debtor: Ashvin Pandurangi, Esq Vivona Pandurangi, PLC 601 King Street, Suite 400 Alexandria, VA 22314 Tel: (703) 739-1353 Fax: (703) 337-0490 E-mail: jvivona@vpbklaw.com About Bridge Communications Bridge Communications LLC is a Virginia limited liability company that was formed June 14, 1999 by Edward Tropeano. At that time, it was a one-person operation producing informational videos for corporations and associations. In 2010, Bridge Communications gradually began to hire full-time employees to handle both sales, marketing, and video production. By 2018, its revenues had grown to almost 2 million dollars per year and it employed close to 25 employees. It was listed among Inc. Magazine's 5,000 fastest growing companies. However, when the Covid pandemic struck in 2020, the Debtor began to experience a serious downturn. It became increasingly difficult for Debtor to bring on new clients and revenues began to lag because its productions relied on the ability to travel to client's locations and conduct face to face interviews. As the pandemic was ending in 2022, inflation began to skyrocket out of control along with rising interest rates. This resulted in the Debtor's normal client base virtually halting any outside spending. Bridge Communications filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Case No. 23-10467) on March 23, 2023. The petition was signed by Edward Tropeano as owner. At the time of filing, the Debtor estimated $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Judge Brian F. Kenney oversees the case. Ashvin Pandurangi, Esq., at Vivona Pandurangi, PLC, is the Debtor's counsel. CANPACK GROUP: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has assigned CANPACK Group, Inc. (CANPACK Group) a Long-Term Issuer Default Rating (IDR) of 'BB-' with a Stable Outlook. The IDR of CANPACK S.A. has also been affirmed at 'BB-' with a Stable Outlook, and Fitch has subsequently withdrawn the CANPACK S.A. ratings. Fitch has affirmed the senior unsecured rating at 'BB-' with a Recovery Rating of 'RR4'. CANPACK Group's (a direct shareholder of CANPACK US and indirect shareholder of CANPACK S.A.) rating reflects the same credit metrics and assumptions as its rating for CANPACK S.A. and is effectively a transfer of the IDR between the entities following a reorganisation of the group. The rating is supported by its expectations of EBITDA gross leverage being within its rating sensitivity in 2024 and by an improvement in net leverage metrics on better cash generation. Fitch also believes that cash proceeds from the sale of the glass business will support its deleveraging capacity. Fitch expects CANPACK Group to see weak free cash flow generation (FCF) to 2027, largely due to capex, which is mostly uncommitted and can be postponed or cut if needed. This cash flow allocation follows management's strategy to prioritise internal growth and deleveraging over excessive shareholder distributions. Fitch has withdrawn CANPACK S.A.'s IDR due to the reorganisation of the group whereby CANPACK Group is added as a co-issuer for debt and is jointly liable for all existing debt instruments. KEY RATING DRIVERS Limited Gross Debt Deleveraging: Fitch expects gross leverage to steadily decline to 4.4x in 2024 - within its sensitivity of 4.5x - from an estimated 4.7x in 2023. Fitch expects stronger reduction in net leverage to 3.2x in 2024 from an estimated 3.6x in 2023 and 4.3x in 2022 on improved profitability, working-capital inflow and disposals delivering a stronger cash balance. Its rating case factors in modest debt repayment supported by the company's deleveraging commitment towards 2.5x (company-defined net leverage) without compromising growth opportunities. Slightly Improved Margins: Fitch forecasts CANPACK Group's EBITDA margin to improve to 11.4% by 2025 from 10.4% in 2022. The company renegotiated better terms for its metal-related input costs and has increased metal sourcing from its European suppliers to reduce reliance on sourcing from China. This allows its European entities to significantly reduce the time lag between setting supplier pricing and receipt of the raw materials which, together with metal hedging, helps to limit margin volatility. Fitch also expects the ramp-up of new production lines in the US to support EBITDA margins. FCF Trajectory and Cash Deployment: Expansionary capex and working-capital consumption have been a function of the company's high growth strategy and kept FCF largely negative in the past three years. Fitch estimates a positive FCF margin of 3.2% in 2023, benefiting from significant working-capital inflow due to better inventory management. Despite improved profitability Fitch expects FCF to be negative in 2024-2025 due to marginal positive working- capital impact but continuing high capex (although not as high as seen in 2020-2022). However, much of the capex remains uncommitted (specifically in 2025-2026) and this, together with flexibility in dividend payments, provides a cash buffer if needed. Polish Glass Facility Divestment: Fitch views the announced divestment of the Polish glass business as neutral for the rating given its limited contribution to EBITDA, although the proceeds support its deleveraging capacity. The glass business is more energy- and capex-intensive than the metal can business and it has never been the core packaging substrate for CANPACK Group. However, the company will continue with its glass business in India (4%-5% of revenue) as its customers require both metal and glass packaging. Expansion Strategy: CANPACK Group's growth has been almost exclusively through new greenfield investments, having developed operations in 16 countries over the last 18 years. The strategy is to grow with existing customers, mainly beverage producers, and with a large share of volumes for new facilities being pre-contracted. This has led to lower execution risk for new plant construction and projects being implemented within set timeframes, typically around 18 months from the start to project completion. The company has recently completed its expansionary capex in Indiana and Olyphant (seven new lines in total) with the expected ramp-up in 2024-2025. Rating Perimeter: Its rating case is now based on the consolidated accounts of CANPACK Group, which is the 100% parent of CANPACK S.A. and CANPACK US LLC. The consolidation at CANPACK Group results in very limited changes compared with the combined accounts of the two subsidiaries. All three companies are now co-issuers of debt and are jointly and severally liable for all senior unsecured bonds, which form the majority of the consolidated group's debt. DERIVATION SUMMARY CANPACK Group has strong market positions, ranking third in Europe and fourth globally behind global beverage can leaders Ball Corporation, Crown Holdings Inc and third-largest Ardagh Group S.A. (B-/Negative). However, these companies are 3x-5x larger than CANPACK Group, while Ardagh Metal Packaging S.A. (B/Negative) is of a similar size. CANPACK Group is larger than Titan Holdings II B.V. (B/Positive), Europe's largest metal food can producer, and is also better geographically diversified, after including the current US expansion. However, Titan has significantly better EBITDA margins (around 15.0%-16.0%) than CANPACK Group (around 11.5%). CANPACK Group's EBITDA and FCF margin volatility is typically higher than those of other packaging companies due to its strong investment growth phase and exposure to volatile aluminum prices with a less effective price pass-through mechanism. The company lacks the scale of peers, Berry Global Group, Inc. (BB+/Stable), Ball and Crown, and has lower margins. CANPACK Group's gross leverage profile is weaker than that of higher-rated peer Berry Global (4.4x end-September 2023 and 4.5x-4.2x for end-September 2024F-2025F).However, it is better than that of lower-rated Titan (4.4x at end-2022 and 5.6x-5.3x for 2023E-2024F), Fiber Bidco S.p.A. (B+/Stable; 5.4x at end-2022 and 5.9x-6.1x for 2023E-2024F) and Ardagh Metal Packaging (7.4x at end-2022 and 7.5x-6.0x for 2023E-2024F). KEY ASSUMPTIONS - Revenue growth of around 0.8% in 2023, 1.9% in 2024, and 2.6% in 2025 as added capacity and shipments of cans to North America are offset by normalised aluminium prices from their 2022 peak - EBITDA margins of about 11.3%-11.4% in 2023-2025 - Start-up costs for the US plants and grants received are excluded from EBITDA but included in funds from operations - Significant positive net working capital (NWC) in 2023 on an optimised inventory and lower aluminium prices - Cash adjusted by 2% of sales to reflect seasonal NWC swings - Capex at 6.8% of revenue in 2024 and 7.5% in 2025, down from 9% in 2023 - No dividends in 2023 and dividends of USD25 million a year from 2024 - Repayment of the outstanding amount of asset-based revolving facilities (ABL) in 2024 - Divestment of CANPACK Glass in Poland in 2024 - Partial refinancing and partial redemption of its USD400 million senior unsecured notes in 2025 RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - EBITDA margins above 14% - EBITDA gross leverage below 4.0x on a sustained basis - FCF margins above 1% on a sustained basis Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Delays to, and cost-overruns of, investments leading to weaker operating performance and EBITDA margins below 10% on a sustained basis - FCF margins failing to turn positive on a sustained basis - EBITDA gross leverage above 4.5x on a sustained basis LIQUIDITY AND DEBT STRUCTURE Satisfactory Liquidity: CANPACK Group had readily available cash of around USD470 million at end-September 2023 (after Fitch's adjustment for working-capital seasonality) and access to ABL totalling USD400 million (drawn by USD100 million) with maturity in March 2028, and another EUR100 million undrawn ABL with maturity in June 2028. Fitch forecasts the ABL will be repaid in the short term given strong cash generation in 2023. FCF is forecast to be marginally negative in 2024-2025 due to high capex. Fitch believes dividend payments of USD25 million and a portion of uncommitted growth capex will serve as a buffer from 2024 onwards. Manageable Refinancing Risk: CANPACK Group's debt is composed of EUR600 million and USD400 million unsecured notes issued in October 2020 maturing in 2027 and 2025, respectively, and USD800 million unsecured notes issued in 2021 maturing in 2029. These notes are jointly issued by CANPACK Group, CANPACK S.A. and CANPACK US, and the three companies are jointly and severally liable for the full amount of the notes as outlined in the bond documentation. Fitch sees manageable refinancing risk for the upcoming 2025 debt maturity due to improved pre-refinancing credit metrics, good liquidity with a high cash position and possibly cash proceeds from the glass business divestment. ISSUER PROFILE CANPACK Group is a global manufacturer of aluminium cans, glass containers and metal closures for the beverage industry and of steel cans for the food and chemical industries. 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 ----------- ------ -------- ----- CANPACK S.A. LT IDR BB- Affirmed BB- LT IDR WD Withdrawn BB- senior unsecured LT BB- Affirmed RR4 BB- CANPACK Group, Inc. LT IDR BB- New Rating CAREISMATIC BRANDS: Hits Chapter 11 With Pre-Arranged Plan ---------------------------------------------------------- Medical Scrubs supplier Careismatic Brands filed for Chapter 11 bankruptcy in New Jersey, seeking to carry out a pre-arranged restructuring agreement with creditors and eliminate $833 million of debt. Careismatic Brands, which claims to be the world's largest medical apparel provider, announced that it has commenced a financial restructuring process and has entered into a Restructuring Support Agreement ("RSA") with its equity sponsor and an ad hoc group representing approximately 76% of its first lien lenders and 70% of its second lien lenders that will strengthen its balance sheet and position the business for the future. To effectuate the transactions and with the support of key financial stakeholders, CBI has filed voluntary petitions for Chapter 11 relief in the United States Bankruptcy Court for the District of New Jersey. Through the Chapter 11 process, CBI will reset its financial foundation by eliminating $833 million of prepetition debt and substantially reducing the Company's interest expense burden, enabling it to advance its ongoing transformation efforts and better serve its customers at the highest levels. "Today's announcement is an important step forward that will enable us to continue to execute key strategic initiatives and achieve long-term profitable growth," said Sid Lakhani, CEO of CBI, in a Jan. 22 statement. "With a significantly stronger financial foundation, we will be better positioned to advance our leadership in the healthcare apparel industry as we serve the community of care well into the future. We remain laser-focused on leveraging our expansive portfolio of market-leading brands, unmatched scale, and global infrastructure to continue delivering best-in-class services and products to our customers." The RSA contemplates effectuation of this substantial deleveraging either through a full equitization of the Company’s first lien debt or an alternative value-maximizing plan. The RSA also includes certain milestones, including a 120-day milestone for the Court to enter an order confirming a Chapter 11 plan, subject to certain extensions. In connection with this in-court process, CBI will obtain $125 million debtor-in-possession ("DIP") financing from the Company's prepetition first lien lenders. Following Court approval, the Company expects this financing to provide incremental liquidity to continue operations in the ordinary course during the Chapter 11 process. CBI has filed a number of customary "First Day Motions" with the Court to facilitate a smooth transition into Chapter 11 and support operations throughout its cases. The Company intends to operate without disruption during the process, including continuing to pay employee wages and benefits, maintaining customer programs, and honoring obligations to vendors. The Company's international entities are not a part of this filing and will continue to operate as usual. About Careismatic Brands The Santa Monica, Calif.-based Careismatic Brands, LLC is a designer, marketer, and distributor of medical apparel, footwear, and accessories. Founded in 1995 in Chatsworth, California, Careismatic has grown from operating a single flagship brand, Cherokee Medical Uniforms, to a portfolio of seventeen brands. The Company offers value to its stakeholders through its spectrum of medical apparel and workwear and omnichannel distribution capabilities across the globe. The Company has an extensive portfolio of iconic and emerging brands across the health and wellness platform, including Cherokee Uniforms, Dickies Medical, Heartsoul Scrubs, Infinity, Scrubstar, Healing Hands, Med Couture, Medelita, Classroom Uniforms, AllHeart, Silverts Adaptive Apparel, and BALA Footwear. Careismatic Brands sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N.J. Lead Case No. 24-10561) on January 22, 2024. In the petition signed by Kent Percy, chief restructuring officer, the Debtor disclosed up to $10 billion in both assets and liabilities. Judge Vincent F. Papalia oversees the case. KIRKLAND & ELLIS LLP and KIRKLAND & ELLIS INTERNATIONAL LLP represent the Debtor as general bankruptcy counsel, COLE SCHOTZ P.C. as local bankruptcy counsel, AP SERVICES, LLC as financial advisor, and PJT PARTNERS LP as investment banker. DONLIN, RECANO & COMPANY, INC., is the claims, noticing, and solicitation agent and administrative advisor. C Street Advisory Group is serving as strategic communications advisor. CBC SUBCO: Joseph Cotterman Named Subchapter V Trustee ------------------------------------------------------ The U.S. Trustee for Region 14 appointed Joseph Cotterman as Subchapter V trustee for CBC SubCo, Inc. Mr. Cotterman will be paid an hourly fee of $500 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Cotterman declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Joseph E. Cotterman 5232 W. Oraibi Drive Glendale, AZ 85308 Telephone: 480-353-0540 Email: cottermail@cox.net About CBC SubCo CBC SubCo, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 24-00632) on January 26, 2024, with up to $50,000 in assets and $1 million to $10 million in liabilities. George Cole Jackson, authorized signatory, signed the petition. Christopher C. Simpson, Esq., at Osborn Maledon, P.A. represents the Debtor as legal counsel. CCI BUYER: Moody's Affirms 'B2' CFR on Dividend Recap ----------------------------------------------------- Moody's Investors Service has affirmed CCI Buyer, Inc.'s (Consumer Cellular) B2 corporate family rating and B2-PD probability of default rating. The net proceeds from a new incremental $500 million first lien term loan due December 2027 will be used in conjunction with balance sheet cash to facilitate a dividend recapitalization that will fund a $340 million dividend distribution to Consumer Cellular's sponsor and other equity owners, net of related transaction fees and expenses, and pay down at an above par redemption price approximately $192 million of 12% (PIK-optional) perpetual preferred stock held at CCI Topco, Inc. (CCI Topco), a non-guarantor holding company entity. Moody's believes approximately $392 million of preferred stock was outstanding at CCI Topco as of December 31, 2023. Moody's also affirmed the B1 rating on the company's existing approximately $1.9 billion first lien term loan due December 2027 and existing $100 million revolver due 2026. Moody's also assigned a B1 rating to the company's new $100 million revolver with a maturity of December 2027, a one-year extension from the prior revolver. Moody's also affirmed the Caa1 rating on the company's existing $395 million second lien term loan due December 2028. The outlook remains stable. The proposed dividend recapitalization is credit negative because Consumer Cellular's debt leverage (Moody's adjusted) will increase to approximately 6.6x at close from 5.8x as of the latest 12 months ended September 30, 2023. However, the rating affirmation reflects Moody's expectation that Consumer Cellular will generate mid-single-digit percent annual revenue growth and solid EBITDA growth that will provide capacity to reduce debt leverage to around 6.1x (Moody's adjusted) by mid-year 2025 while maintaining good liquidity. The proposed dividend recapitalization demonstrates the company's aggressive financial policy prioritizing shareholder returns under its financial sponsor. The company's first debt-funded dividend of $1.1 billion in February 2022 exceeded the initial equity investment of the sponsor and founders' rollover equity at the time of the December 2020 acquisition. While this current dividend is smaller in size, it elevates debt levels at a time of intensifying competition in the wireless industry. Moody's expects that Consumer Cellular will continue to maintain this aggressive financial policy under private equity ownership by pursuing debt-funded dividend distributions on a regular basis and when optimal. RATINGS RATIONALE Consumer Cellular's B2 CFR reflects the company's small market position in the fragmented mobile virtual network operator (MVNO) segment within the mature and intensely competitive wireless industry. MVNOs purchase capacity under wholesale terms from facilities-based wireless players and resell it to targeted customers under various postpaid usage plans. Consumer Cellular's need for strong execution, solid revenue and subscriber growth and continued churn mitigation are critical to sustaining operating performance and reducing elevated debt leverage (Moody's adjusted). Consumer Cellular has operated with periods of high debt leverage (Moody's adjusted) since its private equity sponsor acquired near full economic control from Consumer Cellular's original founders in December 2020. Pro forma for this latest $500 million debt-funded cash outflow, Consumer Cellular's absolute funded debt will have grown from $1.3 billion as of year-end 2020 at acquisition close to approximately $2.8 billion. Perpetual preferred stock held at non-guarantor CCI Topco is treated by Moody's as equity and is not incorporated into Moody's adjusted debt calculation. However, given this preferred stock's high 12% PIK accrual dividend and mandated increases of 1% per annum beginning in early 2029, Moody's views it as a source of potential refinancing pressure on Consumer Cellular over time. Other than mandated term loan amortization, no free cash flow generated by the company has yet been utilized to reduce absolute debt outstanding. Consumer Cellular's credit profile benefits from a largely recurring revenue model , good EBITDA margins and free cash flow upside with increasing scale economies. The company's high brand awareness among its target market serves as an intangible but relatively defensible barrier to new entrants, and Consumer Cellular's very strong reputation for good customer service generates immeasurable value in terms of customer loyalty. Moody's expects that Consumer Cellular will generate mid-single-digit percent annual revenue growth and solid EBITDA growth generally in line with continued subscriber growth, price expansion through customers' plan tier upgrades and anticipated general price increases over the next 12-18 months. Over the next 18months , initial pro forma debt leverage (Moody's adjusted) of 6.6x is projected to decline slowly towards 6.0x by mid-2025. However, in the battle for incremental wireless market share the company's operating and financial flexibility could be impaired quickly given the high likelihood for increasingly robust competitive offerings from larger and better capitalized MVNO players, as well as from facilities-based wireless carriers themselves. Consumer Cellular has good liquidity, supported by the company's undrawn revolver, lack of funded debt maturities until 2027, minimal capital investing requirements and expectations for growing free cash flow in 2024 and 2025. Even after accounting for the increased interest expense related to a higher debt burden, Moody's expects the company to generate around $125 million of free cash flow over the next 12 months, or an amount sufficient to meet term loan amortization and capital investing requirements. Consumer Cellular will also have an undrawn $100 million revolving credit facility that will now mature in December 2027, as well as around $80 million of cash on the balance sheet at close. The first and second lien term loans are covenant lite while the proposed extended revolver contains a springing maximum first lien net leverage ratio of 8.35x that is tested when the revolver is more than 35% drawn. The stable outlook reflects Moody's expectation that Consumer Cellular will reduce debt leverage (Moody's adjusted) towards 6x by mid-2025 and generate at least mid-single-digit percent annual revenue growth over the next 12-18 months. The company is also expected to maintain good liquidity and use any available free cash flow to pay down debt in addition to mandatory amortization requirements. The instrument ratings reflect both the probability of default of Consumer Cellular, as reflected in the B2-PD PDR rating, an average expected family recovery rate of 50% at default and the loss given default assessment of the debt instruments in the capital structure based on a priority of claims. The first lien credit facilities are rated B1, one notch higher than the B2 CFR, given the loss absorption provided by the Caa1-rated second lien term loan, reflecting its junior position in the capital structure. The first lien credit facilities are secured by a first priority lien on substantially all of the assets of the borrower and the guarantors. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Consumer Cellular maintains debt leverage at or below 4.5x and free cash flow to debt above 10% (both on a sustained and Moody's adjusted basis), along with a commitment to a more conservative financial policy and good liquidity. In addition, subscriber and revenue growth would need to be sustained at least in the mid-to-high single-digit percent range. The ratings could be downgraded if Consumer Cellular maintains debt leverage above 6x and free cash flow to debt is below 5% (both on a sustained and Moody's adjusted basis). Ratings could also be pressured if operating performance and churn trends materially weaken as a result of increased competition, leading to slower than expected subscriber and revenue growth, or if liquidity deteriorates. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. CCI Buyer, Inc. is a holding company for Consumer Cellular Incorporated, a nationwide mobile virtual network operator that provides postpaid wireless services. The company largely targets an end market comprised of customers over the age of 50, and employs a value-oriented marketing strategy focused mainly on low data usage plans. The company is majority owned by private equity firm GTCR. Revenue for the last 12 months ended September 30, 2023 was $1.6 billion. CCI BUYER: S&P Affirms 'B-' ICR on Announced Debt Add-On -------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer-credit rating on U.S.-based mobile virtual network operator (MVNO) CCI Buyer Inc. (Consumer Cellular). S&P said, "We also affirmed our 'B-' issue-level rating on its senior secured first-lien debt and our 'CCC' issue-level rating on its senior secured second-lien debt. "The stable outlook on Consumer Cellular reflects our expectation that, despite higher leverage because of the debt-financed dividend, low-single-digit percent subscriber growth, favorable pricing on its new wholesale contract with AT&T, margin expansion, and modest free operating cash flow (FOCF) will enable leverage reduction to about 6x over the next year, which supports the rating." Consumer Cellular plans to pay a $340 million dividend to its private-equity sponsor, GTCR LLC, using the proceeds from a tack-on $500 million senior secured first-lien term loan ($2.4 billion total). As part of the transaction, the company will pay down about $200 million of its perpetual preferred stock and extend the maturity of its revolving credit facility by one year to 2027. S&P said, "Despite raising additional debt to fund a dividend to its shareholders, we forecast S&P Global Ratings-adjusted debt to EBITDA will be about 6x in 2024, which supports the rating. Notwithstanding the incremental debt to partially fund a distribution to its private equity sponsor, we expect 2%-3% subscriber growth and modest average revenue per user (ARPU) growth will enable about a 4% top-line increase in the next year. Additionally, our base-case forecast assumes EBITDA margin expands to 28%-29% in 2024 from 27% in 2023, partly benefitting from the wind-down of its T-Mobile network contract over the next year. Coupled with solid FOCF, we expect adjusted leverage to decline to about 6x in 2024 from pro forma last-12-months leverage of about 6.9x as of Sept. 30. Further, as part of the transaction, Consumer Cellular is using $200 million of the proceeds to reduce its perpetual preferred stock balance to $200 million from $392 million as of Dec. 31, 2023. We treat these preferred shares as debt-like, which constrains leverage improvement due to the 12% payment-in-kind interest. While the company's operating trends will likely remain favorable over the next couple of years, we expect it to maintain an aggressive financial policy that likely includes distributions to its private equity sponsors, such that leverage remains elevated over the longer term. "Operating and financial performance were solid in 2023, but increasing competition could constrain growth. Consumer Cellular raised its service revenues 3% in the third quarter year over year because of subscriber growth and higher ARPU. Expanded marketing and distribution capabilities should sustain stable subscriber growth, augmented by higher ARPU as customers increasingly move to higher-tier data plans. We expect these trends to continue in 2024 and 2025, however increasing competitive pressures from larger, better capitalized incumbent mobile network operators (MNOs) and cable providers that are bundling in-home broadband with competitively priced mobile service using wholesale agreements could constrain growth and hurt margins, especially as industry conditions mature. "Consumer Cellular's new 10-year agreement with AT&T will provide cost savings, but its MVNO model constrains margins. We expect the company's margin will benefit from a one-time boost in 2024 when its T-Mobile contract winds down while its agreement with AT&T remains on fixed pricing until 2025. We believe the terms on the new 10-year, noncancellable agreement with AT&T are more favorable than its previous wholesale contracts, providing cost savings that will support earnings growth and margin expansion longer-term. However, as an MVNO, Consumer Cellular's lack of spectrum assets and network infrastructure makes it dependent on other wireless operators to provide service, resulting in weak EBITDA margins in the low-20% area. This is only partly offset by low capital intensity due to its asset-light model, which we expect will contribute to solid FOCF of 3%-4% of adjusted debt in 2024 and 2025. "The stable outlook on Consumer Cellular reflects our expectation that, despite higher leverage because of the debt-financed dividend, low-single-digit percent subscriber growth, favorable pricing on its new wholesale contract with AT&T, margin expansion, and modest FOCF will reduce leverage to about 6x over the next year." S&P could lower the rating if: -- The company faces increased price-based competition from the nationwide carriers and cable MVNOs in the senior demographic; -- Payments for network capacity and marketing and advertising expense are higher than our expectations, lifting leverage above 8x with limited prospects for long-term improvement; -- It pursues another debt-financed dividend to shareholders or an acquisition that is not immediately accretive such that leverage rises above 8x; or -- S&P believes the company could face a near-term liquidity shortfall. Although unlikely given Consumer Cellular's private-equity ownership, we could consider raising the rating if: -- Leverage declines below 6x; and -- S&P is confident that financial policy considerations will not increase leverage. CHARIOT BUYER: Fitch Lowers Rating on First Lien Facilities to B- ----------------------------------------------------------------- Fitch Ratings has downgraded Chariot Buyer LLC's first lien facilities, including the revolving credit facility, existing first lien term loan, and the proposed incremental first lien term loan to 'B-'/'RR4' from 'B'/'RR3'. Fitch had previously assigned a 'B'/'RR3' rating to the proposed issuance of incremental first lien term loan and affirmed the 'B'/'RR3' ratings on the revolving credit facility and existing first lien term loan on January 16 when the proposed incremental TL issuance was initially announced. The downgrade of the facility ratings reflects the higher than expected amount of the incremental first lien term loan, which is expected to be upsized to $775 million from the initial amount of $625 million. The proceeds will be used to repay the $600 million second lien term loan and the remaining proceeds for general corporate purposes. The downgrade of the recovery rating to 'RR4' from 'RR3' incorporates the diminished recovery coverage due to the meaningfully greater amount of first lien debt than previously expected. Fitch has affirmed the Issuer Default Ratings (IDRs) of Chariot Parent LLC and Chariot Buyer LLC (dba Chamberlain Group) at 'B-'. The Rating Outlook is Stable. Chamberlain Group's 'B-' IDR and Stable Outlook reflect its high leverage, which is counterbalanced by its strong profitability and FCF margins, its solid competitive position, and diversified end markets. Chamberlain's extended maturity schedule, adequate liquidity and manufacturing concentration risk are also factored into the ratings and Outlook. Fitch is also withdrawing the 'CCC'/'RR6' rating of Chariot Buyer LLC's second lien term loan, which will be repaid upon close of the transaction. KEY RATING DRIVERS High Leverage Levels: Fitch expects EBITDA leverage to situate around 6.5x-7.0x during the next few years compared with 7.5x at the end of 2022 and 6.9x for the LTM ending Sept. 30, 2023. Top line growth combined with EBITDA margin expansion, along with higher debt levels contributes to Fitch's expectation of elevated leverage in the coming years. Fitch's rating case forecast does not assume debt repayment beyond the required TL amortization or repayment of its revolving credit facilities, so further debt reduction and/or margin improvement exceeding Fitch's expectations may result in lower leverage. Improving Margins: Fitch expects EBITDA margins to expand to around 21.5%-22.0% in 2023 from 20.3% in 2022 as input cost inflation moderated, offset in part by higher labor costs. Chamberlain implemented pricing increases in 2021 and 2022 to offset cost inflation, which benefitted margins during 2023 as these increases were fully realized. Fitch expects EBITDA margins will stay around 21.5%-22.5% in 2024 as the company realizes synergies from Blackstone's ownership. Modest Cash Flow Generation: Fitch expects Chamberlain will generate an FCF margin of 1%-2% in 2023 and neutral in 2024 due to higher profitability and reduced working capital investment, offset in part by higher interest payments and dividend payments to its sponsor. Chamberlain made a $130 million dividend payment to its shareholders during 1Q23 and Fitch's rating case forecast assumes continued annual dividend payments. The company generated a 2.2% FCF margin in 2022 as higher working capital requirements reduced cash flow from operations. Solid Overall Competitive Position: Chamberlain has well-recognized brand names with leadership positions in the residential and commercial garage door opener markets. The company also has a well-diversified distribution network comprised of dealers and installers, distributors, original equipment manufacturers and large retailers, including The Home Depot and Lowe's. Fitch believes these attributes provide Chamberlain with a solid position in the value chain and help drive stable to growing margins. Exposure to Repair Segment Limits Cyclicality: Fitch views Chamberlain's well diversified end-market exposure positively as the residential and commercial construction markets typically have differing cycles and the retrofit market is less cyclical than the new construction market. This should allow the company to generate more stable revenues and cash flow through the cycle. Management estimates that about half of revenues are directed to the residential market, 40% to the commercial market, and the remainder to the automotive market and to international operations. Within its residential segment, about 76% is directed to the retrofit market, which includes a high proportion of non-discretionary break-fix activity. Manufacturing and Distribution Footprint: A vast majority of Chamberlain's products are manufactured at its facility in Nogales, Mexico and finished goods are shipped from this location to seven distribution centers across North America. The strategic manufacturing footprint allows the company to produce high-quality products at competitive costs. However, it also exposes Chamberlain to significant risks should disruptions occur at this facility. During the early part of the pandemic, Chamberlain's production facility in Nogales was shut down for six weeks. Additionally, the company's sales were temporarily disrupted during 2022 due to an order by the International Trade Commission (ITC) requiring the company to cease from importing, selling and distributing certain products that the ITC found infringed on certain patents maintained by a competitor. The company has since resolved issues related to the ITC disruption and the ITC orders have been vacated. Fitch expects management will evaluate alternatives to hedge against the manufacturing concentration risk. Blackstone Ownership: Fitch expects the sponsor will maintain a relatively high leverage tolerance as evidenced by the high leverage multiple for the company's acquisition by Blackstone. Fitch expects the company will lower leverage through EBITDA growth, but will likely remain in the 6x-7x range during the rating horizon. Fitch expects continued dividend payment to the sponsor, which will limit FCF generation that can be used for debt reduction beyond the required amortizations. Further realization of margin improvement in the next few years, combined with a commitment from the sponsor to reduce debt modestly beyond the required quarterly amortization, could provide positive momentum for the ratings. Fitch also expects Chamberlain will benefit from Blackstone's ownership, including accelerating the company's growth in the commercial garage door opener and access solutions market. DERIVATION SUMMARY Chamberlain has similar profitability and FCF metrics, but meaningfully higher leverage than Fitch's publicly rated universe of building products manufacturers, which are concentrated in the low-investment-grade rating categories. These peers typically have EBITDA leverage of less than or equal to 3.0x and global operating profiles. Chamberlain has slightly lower leverage than Park River Holdings, Inc. (B-/Stable), but higher leverage compared with LBM Acquisition, LLC (B/Stable). Chamberlain is smaller in scale but is better positioned in the value chain and has meaningfully higher profitability and FCF metrics compared with these building products distributors. Fitch applies its Parent and Subsidiary Linkage Criteria and uses a consolidated approach in determining the ratings of Chariot Parent LLC and Chariot Buyer LLC. The linkage follows a weak parent/strong subsidiary approach, and strong overall linkage between Chariot Parent and Chariot Buyer. Fitch rates Chariot Parent as it is the issuer of the financial statements and either directly or indirectly owns Chariot Buyer (borrower under the credit agreements) and all of its operating subsidiaries. KEY ASSUMPTIONS - Revenues grow 1.0%-1.5% in 2023 and are flat in 2024; - EBITDA margin of 21.5%-22.0% in 2023 and 21.5%-22.5% in 2024; - FCF margin of 0%-2.0% in 2023 and 2024; - EBITDA leverage of around 7.0x at the end of 2023 and 2024; - EBITDA interest coverage of around 2.0x during 2023 and 2024. RECOVERY ANALYSIS The recovery analysis assumes that Chamberlain would be considered a going-concern (GC) in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Chamberlain's GC EBITDA estimate of $275 million projects a post-restructuring sustainable cash flow and is about 27% below Fitch estimated Sept. 30, 2023 LTM EBITDA and 28% below Fitch's projected 2023 EBITDA. Fitch assumes that a default would occur from a meaningful and continued decline in residential and commercial construction activity, combined with the loss of one of its top customers. Fitch estimates revenues that are 20% lower ($1.4 billion) and EBITDA margin of about 19.4% (200 bps below Sept. 30, 2023 LTM EBITDA margin) would result in about $275 million GC EBITDA. This would capture the lower revenue base of the company after emerging from a downturn plus a sustainable margin profile after right sizing. An Enterprise Value (EV) multiple of 6.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The 6.5x multiple is below the 14.7x purchase multiple for the Chamberlain Group. The EV multiple is higher than the 6.0x multiple Fitch uses for LBM Acquisition, LLC and Park River Holdings, respectively. Fitch believes Chariot has a stronger competitive position in the value chain as a manufacturer compared with LBM and Park River, both of which are distributors. The company also benefits from a dominant market share, which is reflected in the EBITDA margins in the high-teens. The revolver is assumed to be fully drawn at default. The analysis results in a recovery corresponding to an 'RR4' for the $250 million first lien revolver, the existing $2.015 billion first lien secured term loan and the incremental $775million first lien secured term loan. The distributable value was reduced by the company's $125 million Accounts Receivables Securitization facility. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch's expectation that EBITDA leverage will be sustained below 6.5x; - EBITDA interest coverage sustained above 2.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA interest coverage sustained below 1.5x; - Fitch's expectation that FCF generation will be sustained at neutral or negative levels, leading to liquidity issues or concerns. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity Position: Chamberlain had an adequate liquidity position as of Sept. 30, 2023 with cash of $36 million and no borrowings under its $250 million revolving credit facility that matures in 2026. The company also has a $125 million accounts receivable securitization facility, of which $83.9 million was outstanding as of Sept. 30, 2023. The excess proceeds from the incremental TL B will further bolster the company's liquidity position. Fitch expects the company to generate FCF margin of 0%-2.0% in 2023 and 2024, and, together with cash on hand, is sufficient to cover annual amortization of $27.9 million under the existing 1L TL as well as the incremental TL. The company has no debt maturities until 2028, when the 1L TL matures. ISSUER PROFILE Chariot Parent, LLC (dba The Chamberlain Group) is a leading North American provider of access control solutions, with the number-one positions in residential garage door openers, commercial garage door openers, commercial gate controls, and automotive garage access remotes. 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 ----------- ------ -------- ----- Chariot Buyer LLC LT IDR B- Affirmed B- senior secured LT B- Downgrade RR4 B Senior Secured 2nd Lien LT WD Withdrawn CCC Chariot Parent LLC LT IDR B- Affirmed B- CHENIERE ENERGY: Declares $0.435 Per Share Quarterly Dividend ------------------------------------------------------------- Cheniere Energy, Inc. announced that its Board of Directors has declared a quarterly cash dividend of $0.435 per common share payable on February 23, 2024, to shareholders of record as of the close of business on February 6, 2024. About Cheniere Energy, Inc. Headquartered in Houston, Texas, Cheniere Energy, Inc. is a leading producer and exporter of liquefied natural gas in the United States, reliably providing a clean, secure, and affordable solution to the growing global need for natural gas. Cheniere is a full-service LNG provider, with capabilities that include gas procurement and transportation, liquefaction, vessel chartering, and LNG delivery. Egan-Jones Ratings Company on May 8, 2023, maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Cheniere Energy, Inc. COBRA AUTOMOTIVE: Douglas Adelsperger Named Subchapter V Trustee ---------------------------------------------------------------- The U.S. Trustee for Region 10 appointed Douglas Adelsperger, Esq., as Subchapter V trustee for Cobra Automotive, Inc. Mr. Adelsperger will be paid an hourly fee of $375 for his services as Subchapter V trustee and will be reimbursed for work related expenses incurred. Mr. Adelsperger declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Douglas R. Adelsperger, Trustee 1251 N. Eddy St., Suite 200 South Bend, IN 46617 Tel: (260) 407-0909 Email: trustee@adelspergerlawoffices.com About Cobra Automotive Cobra Automotive, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ind. Case No. 24-30076) on January 25, 2024, with $100,001 to $500,000 in assets and $500,001 to $1 million in liabilities. Judge Paul E. Singleton oversees the case. Katherine Everett Iskin, Esq., at May Oberfell Lorber represents the Debtor as legal counsel. COMMSCOPE HOLDING: Lenders Puzzled on Capital Issuance Among Units ------------------------------------------------------------------ Reshmi Basu of Bloomberg News reports that lenders to struggling telecommunications infrastructure provider CommScope were left scratching their heads after the firm disclosed that its parent company contributed around $2 billion of equity to a debt-issuing unit, according to people with knowledge of the matter. A brief notice provided to at least some lenders showed that CommScope Holding Co. made 10 contributions to its CommScope LLC unit. The payments ranged from $43 million to $276 million and were made between Dec. 26 and January 9, 2024, said the people, who asked not to be identified discussing a private matter. About CommScope Holding Headquartered in Hickory, North Carolina, CommScope Holding Company, Inc. -- https://www.commscope.com -- is a global provider of infrastructure solutions for communication, data center and entertainment networks. The Company's solutions for wired and wireless networks enable service providers, including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, Internet Protocol (IP) data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. CommScope reported a net loss of $1.28 billion in 2022, a net loss of $462.6 million in 2021, and net loss of $573.4 million in 2020. For the nine months ended Sept. 30, 2023, the Company incurred a net loss of $925.7 million. * * * As reported by the TCR on Nov. 22, 2023, S&P Global Ratings lowered its issuer credit rating on Network infrastructure provider CommScope Holding Co. Inc. to 'CCC' from 'B-' and removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 31, 2023. S&P revised the outlook to negative. The negative outlook reflects S&P's view that CommScope's expected weak financial performance of leverage above the 10x area and low FOCF generation in 2023 and 2024 will increase the risk of a distressed exchange or buyback within the next 12 months to address upcoming maturities. CONSERVICE MIDCO: Moody's Rates New Backed First Lien Loans 'B3' ---------------------------------------------------------------- Moody's Investors Service affirmed Conservice Midco, LLC's B3 Corporate Family Rating as well as the company's B3-PD Probability of Default Rating and maintained the stable outlook. Concurrently, Moody's assigned a B3 rating to the company's new backed first lien senior secured revolving credit facility and backed first lien senior secured term loan and withdrew the B2 ratings on the existing backed first lien senior secured revolving credit facility and backed first lien senior secured term loan. RATINGS RATIONALE Conservice's B3 CFR reflects the company's small scale relative to other business services peers as well as its high Moody's adjusted debt to EBITDA of around 6.0x at year end 2023. The rating also reflects the company's highly acquisitive track record, and Moody's expectation that Conservice will continue to grow its market share through M&A activity in the future. Conservice has a strong position within the utility management services niche with around 5 million units served and high retention rates. Moody's expects that the company's strong revenue and EBITDA growth will continue in 2024 as a combination of fee increases, upselling new services, as well as market share gains, leading to debt/EBITDA declining to around 5.5x at year end 2024. Conservice is a provider of utility management services and solutions to the real estate market, mostly multifamily housing operators and, to a lesser extent, single family, student housing and commercial real estate operators. In 2023, the company expects to report revenue growth of 14% and EBITDA (company adjusted) growth of 21% mostly as a result of organic growth. The company benefits from strong tail winds as property owners and managers outsource utility management of their properties to reduce their own operating expenses. However, growth in the company's addressable market remains linked to the activity in multifamily housing development as well as the buy-to-let market in the single family housing sector. Moody's expects growth in both sectors to slow in 2024 as interest rates remain elevated. Conservice has a good liquidity profile with around $50 million of cash on hand following the refinancing of its senior secured facilities. Moody's expects the company to generate positive but low free cash flow in the coming 12 months, mostly as a result of its currently high interest burden given all of its debt is on a floating rate basis. As part of the recent refinancing, the company extended the maturity on its $50 million revolving credit facility to May 2027. Moody's expects the revolver, which is subject to a net first lien debt/EBITDA covenant if utilization increases to more than 35%, to remain undrawn at closing. The stable outlook reflects Moody's views that, while the company's financial metrics should improve on the back of EBITDA growth, the company is likely to engage in debt funded acquisitions as it seeks to further increase its market share. The instrument ratings reflect the probability of default of the company, as reflected in the B3-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the mix of first and second lien debt in the capital structure, and the particular instruments' ranking in the capital structure. Moody's rate the first lien senior secured credit facilities B3 (LGD3), in line with the CFR, given their priority ranking ahead of only a modest amount of second lien debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Conservice's ratings could be upgraded if the company were to sustain revenue and EBITDA growth while managing its leverage such that Moody's debt/EBITDA were to decline below 6x on a sustained basis and free cash flow to debt were to increase to around 5%. The ratings could be downgraded should Conservice's competitive position weaken, or should the company pursue a more aggressive financial policy towards acquisitions. A downgrade could also occur if the company were unable to generate positive free cash flow or if its liquidity position were to materially weaken. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Conservice provides a comprehensive suite of utility management, billing management and data analytics services and solutions to institutional commercial property owners and manager. The company operates and services various property types, primarily multifamily rentals, single-family rentals, student housing, and other commercial real estate. The company is owned by two global private equity firms, Advent International Corporation and TA Associates Management, L.P., each owning around 45% with Conservice management retaining the remaining stake. CORE SCIENTIFIC: Exits Chapter 11 Bankruptcy Protection ------------------------------------------------------- Core Scientific, Inc., a leader in bitcoin mining and infrastructure for high-value compute, announced it has successfully completed its reorganization pursuant to Chapter 11 of the United States Bankruptcy Code. The Company emerges from Chapter 11 with a strengthened balance sheet and expects to commence the listing of its common stock, tranche 1 warrants and tranche 2 warrants on the Nasdaq Global Select Market under the symbols CORZ, CORZW and CORZZ, respectively, on January 24, 2024. Core Scientific is positioned as one of the largest bitcoin miners in North America, with specialized data centers in five U.S. states operating 724 megawatts of power. The Plan of Reorganization (“The Plan”) reduced Core Scientific's debt by $400 million through the conversion of equipment lender and convertible note holder debt to equity. The Plan also provides a pathway to de-lever the balance sheet further, assuming the conversion of remaining convertible debt, the cash exercise of all applicable warrants and the use of cash to pay down debt. With sufficient liquidity from a new credit facility and projected operating cash flow, the Company is set to emerge and continue executing its multi-year growth plan. In addition to operating 16.9 exahash of energized hash rate for its bitcoin mining business as of December 31, 2023, Core Scientific also operated 6.3 exahash for its hosting business for a total of 23.2 exahash, making it one of the largest hosting service providers for bitcoin mining in North America. “This week marks an important step forward for us as we emerge, re-list and now focus all our energy on the exciting opportunities ahead of us,"” said Adam Sullivan, Core Scientific Chief Executive Officer. "Throughout the reorganization process, the Company has maintained its position as one of the largest and most consequential bitcoin miners in North America. Now, with a pathway to de-lever our balance sheet, sufficient liquidity and an unmatched team, we are poised to execute our pragmatic growth plan, continue preparing for the coming halving and create value by transforming energy into high value compute for bitcoin mining and other potential applications." In 2023, Core Scientific produced 13,762 bitcoin from its owned fleet of miners and another 5,512 bitcoin on behalf of its hosting customers, some of which share proceeds with the Company. The Company is in the process of deploying and energizing approximately 27,000 new Bitmain S19 XP bitcoin miners and expects to deploy approximately 12,000 Bitmain S21 bitcoin miners before mid-year 2024. With 372 megawatts of partially developed infrastructure at its two Texas data centers, the Company plans to increase its capacity by more than 50% over the next four years at a much lower cost per megawatt as compared to new construction. New Board of Directors Core Scientific also announced its new Board of Directors, comprising six new independent directors, each of whom brings a wealth of experience, relevant expertise and fresh perspectives to the Company. These directors are: Todd Becker, President, Chief Executive Officer and Director of Green Plains Inc. Jeff Booth, Founding Partner at Ego Death Capital Jordan Levy, Managing Partner at SBNY (formerly SoftBank Capital NY) and Seed Capital Partners, Co-Managing Partner of Z80 Labs Jarrod Patten, Founder, President and Chief Executive Officer of global real estate advisory firm RRG, Director of Microstrategy Incorporated Yadin Razov, Founder and Managing Partner of Terrace Edge Ventures LLC Eric Weiss, Founder and Chief Investment Officer for Blockchain Investment Group LP and Bitcoin Investment Group LP Adam Sullivan, President and Chief Executive Officer of Core Scientific, Inc. "We are honored to have such a distinguished and highly qualified board of directors to help guide our growth," Mr. Sullivan added. "I look forward to working with each of our new directors to support our team as we execute our growth plan." For biographies of each director, please visit https://www.corescientific.com/team. Core Scientific released a webcast updating key elements of its emergence, including its post-emergence capital structure and the recovery value to shareholders and noteholders, on January 22, 2024. A recording of the webcast can be found here and in the "Events & Presentations" section under the "Investors" link on the Company's website. Advisors Weil, Gotshal & Manges LLP served as Core Scientific’s counsel. PJT Partners LP served as investment banker to Core Scientific. AlixPartners LLP served as restructuring advisor to Core Scientific. About Core Scientific Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S. publicly-traded Bitcoin mining company in computing power. Core Scientific, which was formed following a business combination in July 2021 with blank check company XPDI, is a large-scale operator of dedicated, purpose-built facilities for digital asset mining colocation services and a provider of blockchain infrastructure, software solutions and services. Core mines Bitcoin, Ethereum and other digital assets for third-party hosting customers and for its own account at its six fully operational data centers in North Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core was formed following a business combination in July 2021 with XPDI, a blank check company. In July 2022, one of the Company's largest customers, Celsius Mining LLC, filed for Chapter 11 bankruptcy in New York. With low Bitcoin prices depressing mining revenue to a record low, Core Scientific first warned in October 2022 that it may have to file for bankruptcy if the company can't find more funding to repay its debt that amounts to over $1 billion. Core Scientific did not make payments that came due in late October and early November 2022 with respect to several of its equipment and other financings, including its two bridge promissory notes. Core Scientific and its affiliates filed petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-90341) on Dec. 21, 2022. As of Sept. 30, 2022, Core Scientific had total assets of US$1.4 billion and total liabilities of US$1.3 billion. Judge Christopher M. Lopez oversees the cases. The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT Partners, LP as investment banker; and AlixPartners, LLP as financial advisor. Stretto is the claims agent. A group of Core Scientific convertible bondholders is working with restructuring lawyers at Paul Hastings. Meanwhile, B. Riley Commercial Capital, LLC, as administrative agent under the Replacement DIP facility, is represented by Choate, Hall & Stewart, LLP. On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee tapped Willkie Farr & Gallagher, LLP as legal counsel and Ducera Partners, LLC as investment banker. The U.S. Trustee for Region 7 appointed an official committee of equity security holders. The equity committee is represented by Vinson & Elkins, LLP. CRAFT BEVERAGE: Joseph Cotterman Named Subchapter V Trustee ----------------------------------------------------------- The U.S. Trustee for Region 14 appointed Joseph Cotterman as Subchapter V trustee for Craft Beverage Cooperative, LLC. Mr. Cotterman will be paid an hourly fee of $500 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Cotterman declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Joseph E. Cotterman 5232 W. Oraibi Drive Glendale, AZ 85308 Telephone: 480-353-0540 Email: cottermail@cox.net About Craft Beverage Cooperative Craft Beverage Cooperative, LLC was created to provide craft breweries and distilleries across the Western U.S. with the resources needed to support increased production capacity, infrastructure, and world-class sales and marketing, while preserving each producer's autonomy, authenticity and dedication to their local community. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 24-00633) on January 26, 2024, with up to $50,000 in assets and $1 million to $10 million in liabilities. George Cole Jackson, authorized signatory, signed the petition. Christopher C. Simpson, Esq., at Osborn Maledon, P.A. represents the Debtor as legal counsel. CRATE HOLDINGS: Joseph Kershaw Spong Named Subchapter V Trustee --------------------------------------------------------------- The Acting U.S. Trustee for Region 4 appointed Joseph Kershaw Spong as Subchapter V trustee for Crate Holdings, LLC. Mr. Spong will be paid an hourly fee of $350 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Melissa White, paralegal, and Rebecca Faulkenberry, legal assistant, charge $150 per hour and $125 per hour, respectively. Mr. Spong declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Joseph Kershaw Spong P.O. Box 11449 Columbia, SC 29211 Phone: 803.929.1400 Email: kspong@robinsongray.com About Crate Holdings Crate Holdings, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. S.C. Case No. 24-00312) on January 29, 2024, with $100,001 to $500,000 in assets and $500,001 to $1 million in liabilities. Judge Elisabetta Gm Gasparini oversees the case. Christine E. Brimm, Esq., at Barton Brimm, PA represents the Debtor as legal counsel. CVR ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed CVR Energy, Inc.'s (CVI) Long-Term Issuer Default Rating (IDR) at 'BB-'. Fitch also affirmed the rating of the unsecured notes at 'BB-'/'RR4'. The Rating Outlook is Stable. CVI's ratings reflect its medium-sized operations, advantaged geographical locations leading to improved pricing, an average complexity rating of 10.8, and relatively low operating costs. The company (excluding nonrecourse CVR Partners) has approximately $1.05 billion in liquidity (CVI cash of $800 million) as of Sept. 30, 2023, which should provide adequate ability to service current operations with no near-term maturities until 2028 following the 2025 note repayment. These factors are offset by the company's relatively limited scale, exposure to volatile crack spreads and oil differentials, and high shareholder distributions. The Nitrogen Fertilizer segment is non-recourse; however, it can be a source of cash at times through its approximately 37% ownership and corresponding distributions. The Stable Outlook reflects the normalization from all-time highs of crack spreads in the refining sector along with a comfortable liquidity profile. KEY RATING DRIVERS Size and Regional Concentration: CVI's ratings reflect the business risk associated with its medium-sized operations, albeit with strong asset quality, and with advantaged geographic locations resulting in price advantaged crude oil production in the Mid-Continent and operationally with flexibility to take advantage of light, heavy and sour crude. Its combined crude oil processing capacity is 206,500bpd, with an average complexity of 10.8, and its plants are located in Group 3 of PADD II. The company's two refineries are strategically located near Cushing, OK, with access to over 250,000bpd of production across the Midwest. However, CVI is an inland refiner with limited export options. The company has a strong asset portfolio of over 950 miles of owned and joint venture pipelines with over 7 million barrels of crude oil and product storage, 39 lease automatic custody transfer (LACT) units and 112 crude and liquefied petroleum gases (LPG) tractor trailers. Adequate Liquidity with Limited Refinancing Risks: Fitch believes CVI has adequate liquidity, with cash on hand of roughly $800 million and $251 million of availability under its undrawn revolver as of Sept. 30, 2023, excluding CVR Partners. Fitch will continue to monitor cash balances closely given the higher reliance on cash following the recent shift in structural liquidity with the reduction in the credit facility in November 2022. The company has historically not drawn on the facility with only LOCs currently outstanding. In the near term, the company's cash and debt balances are elevated as the $600 million note issued in December 2023 will be used to refinance the 2025 notes in 1Q24. Following the note repayment in 1Q24, refinancing risks will be reduced as there will be no near-term note maturities until 2028. Fitch expects CVI's EBITDA generation to moderate over the forecast as refinery economics gradually normalize to pre-pandemic levels. CVR Partners is nonrecourse, but must distribute all its available cash less reserves (as defined) to unitholders. CVI's approximate 37% ownership of CVR Partners implies these distributions could be an additional source of liquidity. CVI has an aggressive dividend policy and has paid $4.50 per share in 2023 through ordinary and special dividends funded with positive FCF. Strong 2023 Results: North American refiners experienced continued strong 2023 results, driven by continued elevated crack spreads, with NYMEX 2-1-1 and Group 3 2-1-1 spreads in the $32 barrel (bbl)-$40bbl range for much of the driving season, compared with normalized levels in the $10bbl-$20bbl range. Crack spreads decreased from 2022 highs, but are expected to normalize to mid-cycle levels in the near term. Cautious Macroeconomic Outlook: Fitch remains cautious given refining remains one of the most cyclical corporate sectors, and is subject to periods of boom and bust, with sharp swings in crack spreads over the cycle. In addition to cyclical challenges, the sector is also facing secular challenges with the growth of electric vehicles, which could reduce demand for refined hydrocarbons. Challenging Regulatory Environment: Fitch believes CVI's renewable identification numbers (RINs) obligations will be manageable in the near term. RIN prices were elevated in 2022 but have moderated in the second half of 2023. CVI reduced its RIN exposure through increased biofuel blending and renewable diesel production following the completion of its renewable diesel project in April 2022. In previous years, CVI's Wynnewood refinery received a Small Refinery Exemption that also reduced RIN exposure. The company has been denied this exemption since 2019 and is pursuing legal action to regain it. In 4Q23, the company received a favorable outcome in the fifth circuit court of appeals in addition received a temporary stay for satisfying its 2020-2022 RIN obligations. Fitch's forecasts do not currently assume an exemption given the uncertainty of this issue and timing until a final resolution. Renewable Diesel Project: Fitch believes renewable diesel production acts as a cash flow hedge against rising RINs costs and improves CVI's emissions profile as part of a larger ESG strategy. The company converted its 19,000 barrels per day (bpd) Wynnewood hydrocracker to process up to 100 million gallons per year of refined, bleached, and deodorized soybean oil and distiller's corn oil to produce renewable diesel and renewable naphtha in 2022. In 4Q23, CVI completed the Wynnewood feed pre-treater facility, which enables the facility to process inedible corn oil, animal fats and used cooking oils and should begin operations in 1Q24, which should help improve margins. In addition to generating RINs, the Renewable Diesel Unit generates credits from the Blenders Tax Credit and Low Carbon Fuel Standard, and reduces CVI's RINs obligations. CVI can return the unit to hydrocarbon processing if the margin differential between renewables and hydrocarbons changes. In the medium-to long-term, the company has identified similar renewable opportunities at its Coffeyville refinery for renewable diesel and Sustainable Aviation fuel (SAF) along with opportunities to produce SAF at Wynnewood, but it is currently in preliminary discussions for partners. Fitch has not incorporated this into the forecasts. CVR Partners, LP Affiliate: CVR Partners is nonrecourse to the debt issued at CVI and CVR Refining, LP. CVI explored the potential spinoff of CVR Partners, however, decided not to proceed at this time. Fitch does not expect CVI will provide credit support to CVR Partners, which is required to distribute its available cash (as defined) to its unitholders. Fitch expects this to be a source of cash for CVI given its ownership of 37% of the units, which could be material during periods of high ammonia, and urea and ammonium nitrate (UAN) prices. DERIVATION SUMMARY CVI's ratings reflect its status as a medium-sized Mid-Continent complex refiner with two refineries and approximately 206,500bpd of nameplate capacity. The company's refining capacity is smaller than peers Valero Energy Corporation (BBB/Stable) with 3.2 million barrels per day (mmbpd) of throughput capacity and PBF Holding company (BB/Stable) with 1.023 mmbpd. CVI is also smaller than peers HF Sinclair Corporation (BBB-/Stable) with 678mbpd and Delek US Holdings (BB-/Stable) with 302,000 barrels of oil equivalent per day (boepd). The company's refining asset quality is strong and advantaged in several ways, such as geographically with a concentration of price-advantaged crude oil production in the Mid-Continent, and operationally with flexibility to take advantage of light, heavy and sour crude. CVI also has strong logistics system that allows the company to easily transport and store crude oil and refined products. Fitch estimates CVI's refinery EBITDA leverage, for 2023 at 1.5x, although this is expected to increase to over 2.0x in the forecasted horizon as refining economics revert to normal levels. The major differentiator between 'BB' issuers such as CVI and PBF versus 'BBB' peers is primarily size, geographic diversification and business line diversification. KEY ASSUMPTIONS - WTI oil price of $75/bbl in 2024, $65/bbl in 2025, $60/bbl in 2026 and $57/bbl thereafter; - PADD II 2-1-1 crack spreads averaging $22 in 2024 and decreasing to $20 over the forecast period; - Assumes annual shareholder distributions of $100 million-$150 million over the forecast period; - Total capex ranging from $320 million to $425 million in the forecast period; - No assumptions for acquisition, divestitures, stock repurchases, or equity offerings over the forecast period; - 2025 notes are repaid in 1Q24. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Greater earnings diversification and scale, or evidence of lower cash flow volatility; - Reduced exposure to environmental and regulatory obligations due to increased focus on renewables; - Refinery segment midcycle EBITDA leverage sustained at or below 2.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Material reduction in liquidity over a sustained period; - A change in financial policy from a disproportionate increase in dividends or a share-repurchase program; - Refinery segment midcycle EBITDA leverage sustained above 3.0x; - Material regulatory changes that can potentially reduce earnings. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: CVI (excluding CVR Partners) had $800 million of cash and $251 million of availability under credit facilities as of Sept. 30, 2023. Year-end 2023 cash is expected to be temporarily elevated to roughly $1.2 billion-$1.4 billion due to the $600 million note issued Dec. 21, which will be used to repay the 2025 note in February 2024. CVR Refining, LP has a $275 million senior secured asset-based lending (ABL) credit facility due June 2027. Only LOCs of $24 million are currently outstanding. Fitch believes that existing liquidity should allow CVI to support operational and debt obligations in the near term with the expectation that continued improved refining economics will provide more than adequate liquidity over the forecast time horizon. Refinancing risk has been reduced as the 8.50% 2029 note issuance in December 2023 will be used to repay the 2025 notes in February 2024. Following the repayment, the next maturity is the 2028 notes. CVR Partners' (fertilizer business) only bond maturity is its $550 million, 6.125% secured note due in June 2028. ISSUER PROFILE CVR Energy, Inc. is a diversified holding company that primarily engages in petroleum refining, renewable fuels and nitrogen fertilizer manufacturing. CVR's petroleum segment is composed of two Mid-Continent refineries (Coffeyville and Wynnewood) and associated logistics assets. ESG CONSIDERATIONS CVR has an ESG Relevance Score of '4' for Governance Structure as Mr. Carl C. Icahn owns approximately 66% of the voting power of the common stock. The substantial ownership concentration has a negative impact on the credit profile and is relevant to the rating 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 ----------- ------ -------- ----- CVR Energy, Inc. LT IDR BB- Affirmed BB- senior unsecured LT BB- Affirmed RR4 BB- DELTA WHOLESALE: Continued Operations to Fund Plan -------------------------------------------------- Delta Wholesale Tire Center Inc. filed with the U.S. Bankruptcy Court for the Eastern District of Michigan a Plan of Reorganization dated January 29, 2024. The Debtor is a Michigan Corporation that operates a full service auto repair and tire service facility out of leased premises in Burton, Michigan and a parcel of unimproved real estate located down the street from the main shop. In early summer 2023, faced with cash flow problems created by the small margins in the wholesale tire sale market, the large payments due on the MCA loans and a shareholder lawsuit filed by James R. Wilkerson, the Debtor filed the instant Chapter 11 Case. The Debtor's financial projections show that the Debtor will have projected disposable income to provide a meaningful dividend to unsecured creditors. Class 4 consists of Unsecured Creditors. A review of the values of the Debtor's assets as well as the secured claims of the Debtor and the proofs of claims filed by various creditors reveal that the Debtor has unsecured claims totaling $2,350,043. This plan shall be funded by the future operations of the Debtor for 60 months following confirmation together with the net recovery by the estate of any Chapter 5 claims to wit. The Debtor projects that it can pay creditors the sum of $200,000 total over a 5-year period in quarterly payments of $10,526 each paid to unsecured creditors on a pro rata basis. The first of the 19 quarterly payments would be due 180 days from confirmation. In addition to the required payments of $10,526 each quarter, unsecured creditors shall also be paid 60% of any additional profit over and above the required payment of $10,526 per quarter. The determination shall be made quarterly and paid to the creditors with the following quarters payment. The Debtor's plan projections and liquidation analysis demonstrate the Debtor's ability to pay unsecured creditors in full over the term of the plan, making the pursuit of avoidance actions unnecessary. A full-text copy of the Plan of Reorganization dated January 29, 2024 is available at https://urlcurt.com/u?l=rlpq6f from PacerMonitor.com at no charge. Attorney for the Debtor: George E. Jacobs, Esq. 2425 S. Linden Rd., Ste. C Flint, MI 48532 Tel: (810) 720-4333 Email: george@bklawoffice.com About Delta Wholesale Tire Center Delta Wholesale Tire Center, Inc., operates a full service auto repair and tire service facility out of leased premises in Burton, Michigan. Delta Wholesale Tire Center filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-31065) on June 29, 2023, with $100,001 to $500,000 in assets and $500,001 to $1 million in liabilities. Judge Joel D. Applebaum oversees the case. The Debtor is represented by George E. Jacobs, Esq., at Bankruptcy Law Offices. DENN-OHIO LLC: Unsecureds to Split $54K in Non-Consensual Plan -------------------------------------------------------------- Denn-Ohio, LLC, filed with the U.S. Bankruptcy Court for the Western District of Michigan a Plan of Reorganization under Subchapter V dated January 29, 2024. Debtor operates nine Denny's(R) franchise restaurants in three states. On October 20, 2009, Thomas Pilbeam, Sr. and Jack Thompson organized Debtor as a Michigan Limited Liability Company under the Michigan Limited Liability Company Act. Initially, Debtor's operations were sufficient to satisfy its operating expenses and service the debt payments to FFCC. However, by 2019 Debtor began to experience financial difficulties from increased costs of operation. In addition, Thompson unexpectedly passed away in December of 2019. Those financial challenges were substantially exacerbated in 2020 by the COVID-19 pandemic. Unfortunately, in April of 2020, Debtor's efforts became insufficient to offset the full impact of the increased expenses/decreased revenue and Debtor defaulted on its loans to FFCC. Debtor and FFCC negotiated multiple forbearance agreements to provide Debtor with time to restructure its finances but the financial hole was simply too great. By August of 2023, FFCC elected to proceed with formal collection efforts, including filing a federal complaint seeking appointment of a receive in the United States District Court for the Southern District of Ohio. On October 31, 2023, Debtor sought to formally reorganize its liabilities by filing its Bankruptcy Petition. Debtor initially anticipated closing the Kalamazoo Denny's(R) post-petition; however, based on additional financial analysis conducted post-petition, Debtor instead determined that retaining the Kalamazoo Denny's(R) while selling the Louisville Denny's(R) provided it with the best financial base to successfully reorganize. Contemporaneous with this Plan, Debtor anticipates filing a motion for approval to sell the Louisville Denny's(R) under Section 363 of the Bankruptcy Code. Class 6 consists of all unsecured, non-priority claims, including, but not limited to: unsecured vendors, unsecured financing, personal injury claims, torts, breaches of contract, allowed deficiency balances from rejected executory contracts, any portion of a governmental entity claim not entitled to priority, as described more fully in Class 2; the unsecured portion of FFCC's secured claim; and Itria's wholly unsecured claim. The Debtor estimates that the unsecured non-priority claims in this estate will be approximately $1,500,000.00 (the "General Unsecured Claims"). If Debtor's plan is confirmed as consensual, within the meaning of Section 1191(a) of the Bankruptcy Code, then General Unsecured Claims shall: * Receive a pro rata share of $120,000.00 (the "Consensual General Unsecured Claim Base"). The Consensual General Unsecured Claim Base shall be satisfied through pro rata semi-annual payments of at least $12,000.00. The semiannual payments of at least $12,000.00 shall be paid on or before September 1 and March 1 until the total base has been distributed to creditors. The first semi-annual payment shall be due on or before September 1, 2024. * Receive, for tax years 2025 through 2028, a pro rata portion of 33% of Debtor's EBITDA in excess of $600,000.00 (the "Excess EBITDA Distribution"). -- Prior to the August 1st distribution of the General Unsecured Claim Base, Debtor's accounting firm will calculate the Excess EBITDA Distribution for the prior tax year pursuant to Generally Acceptable Accounting Principles ("GAAP"). -- If EBITDA for a given tax year is below $600,000.00 then unsecured non-priority claims will only receive a pro rata distribution from the $120,000.00 General Unsecured Claim Base. * The Excess EBITDA Distribution provision provides Debtor with incentive to grow its business during its Chapter 11 while providing its creditors with protection against the Debtor receiving an inequitable windfall after discharging significant liabilities through this Plan. Using EBITDA as the triggering factor is intended to compare "apples-to-apples" in that future net EBITDA would be calculated using future revenue and future expenses, which minimizes discrepancies form inflationary factors. It is specifically contemplated that the calculation of future EBITDA will include a reasonable salary for Pilbeam (he's not currently drawing a salary) and include accrual of any required renovations. If Debtor's Plan is confirmed as non-consensual, then the General Unsecured Claims shall receive a pro rata share of $54,000.00 (the "Non-Consensual General Unsecured Claim Base"). Debtor Plan must provide for all of its "projected disposable income," (emphasis added) for 36 to 60 months. Accordingly, if Debtor's Chapter 11 Plan is non-consensually confirmed, unsecured non-priority claims would not be entitled to the Excess EBITDA Distribution Debtor voluntarily provides to creditors under consensual confirmation of its Plan. Under either consensual or non-consensual confirmation General Unsecured Claims will, in addition to the distributions provided for in paragraphs 9.6 (a) or (b), also receive pro rata distributions of the net proceeds, after reduction for costs and administrative fees as approved by the Court, recovered under any Avoidance Actions. Debtor has identified approximately $100,000.00 of potential claims that it may pursue through Avoidance Actions and reserves the right to pursue additional Avoidance Actions if Debtor believes, in its best business judgment, that such actions are likely to result in net positive returns for the General Unsecured Claims. Class 7 consists of consists of Pilbeam Sr and Thompson's Estate's equity interest in Debtor. Pilbeam Sr. and Thompson's Estate's equity interest in Debtor shall be retained. Class 7 interests are unimpaired and are conclusively deemed to have accepted this Plan. Therefore, Class 7 interests are not entitled to vote. Payments required under the Plan will be made from Debtor's budget and net profit as projected in Debtors' Projected Budget. A full-text copy of the Plan of Reorganization dated January 29, 2024 is available at https://urlcurt.com/u?l=JzUPQA from PacerMonitor.com at no charge. Counsel to Debtor: Steven M. Bylenga, Esq. CBH ATTORNEYS & COUNSELORS, PLLC 25 Division Ave. S. Suite 500 Grand Rapids, MY 49508 Telephone: (616) 608-3061 Facsimile: (616) 719-3782 Email: nikki@chasebylenga.com About Denn-Ohio Denn-Ohio, LLC, operates its Denny's franchises at 10 leased commercial properties in Michigan, Ohio, and Kentucky. Denn-Ohio filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. W.D. Mich. Case No. 23-02533) on Oct. 31, 2023, with $1,860,816 in assets and $4,567,989 in liabilities. Thomas F. Pilbeam, member, signed the petition. Judge John T. Gregg oversees the case. Steven M. Bylenga, Esq., at CBH Attorneys & Counselors, PLLC, is the Debtor's legal counsel. DIVERSIFIED HEALTHCARE: BlackRock Holds 7.8% Equity Stake --------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed that as of December 31, 2023, it beneficially owned 18,689,085 shares of Diversified Healthcare's common stock, representing 7.8% of the shares outstanding. A full-text copy of the Report is available at http://tinyurl.com/br6t2e2m About Diversified Healthcare Trust Diversified Healthcare Trust (Nasdaq: DHC) -- www.dhcreit.com -- is a real estate investment trust, which owns senior living communities, medical office and life science buildings and wellness centers throughout the United States. As of Sept. 30, 2023, DHC's approximately $7.2 billion portfolio included 376 properties in 36 states and Washington, D.C., occupied by approximately 500 tenants, and totaling approximately 9 million square feet of life science and medical office properties and more than 27,000 senior living units. DHC is managed by The RMR Group (Nasdaq: RMR), an alternative asset management company with approximately $36 billion in assets under management as of Sept. 30, 2023 and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. The Company stated in its Quarterly Report for the period ended Sept. 30, 2023, that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of the financial statements. The Company's continuation as a going concern is dependent upon many factors, including its ability to meet its debt covenants and repay its debts and other obligations when due. While it believes raising permissible new capital, including proceeds from its planned asset sales, and the possible extension of its credit facility, will alleviate the substantial doubt about its ability to continue as a going concern, the Company cannot provide assurance that any new capital raised, including proceeds from its planned asset sales, will be available to the Company or sufficient to repay its upcoming maturing debt, or that its lenders will agree to an extension of the maturity date of its credit facility. The Company cannot be sure that it will be able to obtain any future debt financing, and any such debt financing it may obtain may not be sufficient to repay its upcoming maturing debt. If it is unable to obtain sufficient funds, the Company may be unable to continue as a going concern. * * * As reported by the TCR on Jan. 5, 2024, S&P Global Ratings raised its issuer credit rating on Diversified Healthcare Trust (DHC) to 'CCC+' from 'CCC-', its issue-level rating on its non-guaranteed senior unsecured notes to 'CCC+' from 'CCC-', and its issue-level rating on its guaranteed senior unsecured notes to 'B' from 'CCC+' and removed the ratings from CreditWatch, where S&P placed them with positive implications on Dec. 19, 2023. S&P also revised its recovery rating on the non-guaranteed notes to '4' from '3'. DIVERSIFIED HEALTHCARE: Millennium Entities Report Equity Stake --------------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, Millennium Management, LLC, Millennium Group Management, LLC and Israel A. Englander disclosed that as of December 31, 2023, each reporting person beneficially owned 834,008 common shares of Diversified Healthcare's beneficial interest, par value $0.01 per share, representing 0.3% of the shares outstanding. A full-text copy of the Report is available at http://tinyurl.com/4bhatfhj About Diversified Healthcare Trust Diversified Healthcare Trust (Nasdaq: DHC) -- www.dhcreit.com -- is a real estate investment trust, which owns senior living communities, medical office and life science buildings and wellness centers throughout the United States. As of Sept. 30, 2023, DHC's approximately $7.2 billion portfolio included 376 properties in 36 states and Washington, D.C., occupied by approximately 500 tenants, and totaling approximately 9 million square feet of life science and medical office properties and more than 27,000 senior living units. DHC is managed by The RMR Group (Nasdaq: RMR), an alternative asset management company with approximately $36 billion in assets under management as of Sept. 30, 2023 and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. The Company stated in its Quarterly Report for the period ended Sept. 30, 2023, that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of the financial statements. The Company's continuation as a going concern is dependent upon many factors, including its ability to meet its debt covenants and repay its debts and other obligations when due. While it believes raising permissible new capital, including proceeds from its planned asset sales, and the possible extension of its credit facility, will alleviate the substantial doubt about its ability to continue as a going concern, the Company cannot provide assurance that any new capital raised, including proceeds from its planned asset sales, will be available to the Company or sufficient to repay its upcoming maturing debt, or that its lenders will agree to an extension of the maturity date of its credit facility. The Company cannot be sure that it will be able to obtain any future debt financing, and any such debt financing it may obtain may not be sufficient to repay its upcoming maturing debt. If it is unable to obtain sufficient funds, the Company may be unable to continue as a going concern. * * * As reported by the TCR on Jan. 5, 2024, S&P Global Ratings raised its issuer credit rating on Diversified Healthcare Trust (DHC) to 'CCC+' from 'CCC-', its issue-level rating on its non-guaranteed senior unsecured notes to 'CCC+' from 'CCC-', and its issue-level rating on its guaranteed senior unsecured notes to 'B' from 'CCC+' and removed the ratings from CreditWatch, where S&P placed them with positive implications on Dec. 19, 2023. S&P also revised its recovery rating on the non-guaranteed notes to '4' from '3'. DMK PHARMACEUTICALS: Case Summary & 29 Largest Unsecured Creditors ------------------------------------------------------------------ Six affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- DMK Pharmaceuticals Corporation (Lead Case) 24-10153 f/k/a Adamis Pharmaceuticals Corporation 50 Division Street, Suite 501 Somerville, NJ 08876 Adamis Corporation 24-10154 Adamis Pharmaceuticals Corporation 24-10155 Biosyn, Inc. 24-10156 Rhombus Pharmaceuticals Corporation 24-10157 US Compounding, Inc. 24-10158 Business Description: The Debtors are composed of a family of pharmaceutical companies that own various therapies treating different indications. Over time, the Debtors' portfolio of treatments have focused on treatment of the opioid epidemic, both in an emergency setting and in the prophylactic treatment of Opioid Use Disorder. Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court District of Delaware Debtors' Counsel: Michael Busenkell, Esq. GELLERT SCALI BUSENKELL & BROWN LLC 1201 N. Orange Street, Suite 300 Wilmington, DE 19801 Tel: (302) 425-5812 Fax: (302) 425-5814 E-mail: mbusenkell@gsbblaw.com - and - Lee B. Hart, Esq. Adam D. Herring, Esq. NELSON, MULLINS, RILEY & SCARBOROUGH LLP 201 17th Street NW, Suite 1700 Atlanta, GA 30363 Tel: (404) 322-6000 Fax: (404) 322-6050 E-mail: lee.hart@nelsonmullins.com adam.hering@nelsonmullins.com - and - Dylan G. Trache, Esq. NELSON, MULLINS, RILEY & SCARBOROUGH LLP 101 Constitution Avenue, NW, Suite 900 Washington, D.C. 20001 Tel: (202) 689-2800 Fax: (202) 689-2860 E-mail: dylan.trache@nelsonmullins.com - and - Rachel A. Sternlieb, Esq. NELSON, MULLINS, RILEY & SCARBOROUGH LLP 1400 Wewatta Street, Suite 500 Denver, CO 80202 Tel: (303) 853-9900 Fax: (303) 583-9999 E-mail: rachel.sternlieb@nelsonmullins.com Debtors' Financial Advisor: ROCK CREEK ADVISORS, LLC Total Assets as of Sept. 30, 2023: $8,957,411 Total Debts as of Sept. 30, 2023: $13,922,050 The petitions were signed by Seth Cohen as chief financial officer. A full-text copy of Lead Debtor's petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/KIFOR5Y/DMK_Pharmaceuticals_Corporation__debke-24-10153__0001.0.pdf?mcid=tGE4TAMA List of Debtors' 29 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount 1. 800 Meters Strategic PR/IR/Lobbying $99,626 Communications, LLC 319 Penns Chapel Road Mandeveille, LA 70471 2. Academisch Ziekenhauis Pharma Services $125,000 Leiden h.o.d.n. LUM Albinusdreef 2 2333 ZA Leiden Netherlands 3. Broadridge Proxy/Stock $234,938 Broadridge ICS Related Services P.O. Box 416423 Boston, MA 02241-6423 4. Catalent Belgium Manufacturing $1,824,699 14 Schoolhouse Road Services Somerset, NJ 08873 5. Covington & Burling LLP PR/IR/Lobbying $215,281 One CityCenter 850 Tenth Street N.W. Washington, DC 20001 6. Curia Wisconsin, Inc. Pharma Services $101,581 870 Badger Circle Grafton, WI 53024 7. Fortrea Inc. Pharma Services $1,655,779 8 Moore Drive Durham, NC 27709 8. Gerresheimer Manufacturing $293,609 Bunde GmbH Services Erich-Martens-Strasse 26-32 Bunde, 32257 Denmark 9. K&L Gates Legal Services $126,804 PO Box 844255 Boston, MA 02284-4255 10. Latham & Watkins LLP Legal Services $446,025 555 West Fifth Street Los Angeles, CA 90013-1020 11. Matrix Biomed, Inc. Pharma Services $179,059 2301 Dupoint Drive Irvine, CA 92612-7532 12. Pacific North Court Holdings $135,470 c/o American Assets Trust Management LLC 3420 Carmel Mountain Rd Suite 100 San Diego, CA 92121 13. Phillips-Medisize LLC Manufacturing $1,697,551 2222 Wellington Court Services Lisle, IL 60532 14. Raymond James & Banking Services $509,000 Associates, Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 15. Reed Smith LLP $499,673 2672 Paysphere Circle Chicago, IL 60674 16. Sandoz Inc. $263,002 100 College Road West Princeton, NJ 08540 17. Gerresheimer Manufacturing $293,609 Bunde GmbH Services Erich-Martens-Strasse 26-32 Bunde, 32257 Denmark 18. K&L Gates Legal Services $126,804 PO Box 844255 Boston, MA 02284-4255 19. Latham & Watkins LLP Legal Services $446,025 555 West Fifth Street Los Angeles, CA 90013-1020 20. Matrix Biomed, Inc. Pharma Services $179,059 2301 Dupoint Drive Irvine, CA 92612-7532 21. Pacific North Court Holdings $135,470 c/o American Assets Trust Management LLC 3420 Carmel Mountain Rd Suite 100 San Diego, CA 92121 22. Phillips-Medisize LLC Manufacturing $1,697,551 2222 Wellington Court Services Lisle, IL 60532 23. Raymond James & Banking Services $509,000 Associates, Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 24. Reed Smith LLP $499,673 2672 Paysphere Circle Chicago, IL 60674 25. Sandoz Inc. $263,002 100 College Road West Princeton, NJ 08540 26. US Food and Drug Key Regulator $1,484,058 Administration P.O. Box 979107 St. Louis, MO 63197-9000 27. US WorldMeds Venture, LLC $199,938 4441 Springdale Rd Louisville, KY 40241-1086 28. Vinson & Elkins LLP Legal Services $1,279,197 1001 Fannin Street Houston, TX 77002 29. Weintraub Tobin Legal Services $432,380 Chediak Coleman 400 Capitol Mall Eleventh Floor Sacramento, CA 95814 EBIX INC: Court OKs $85MM DIP Loan from Regions Bank ---------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, authorized Ebix, Inc. and affiliates to use cash collateral and obtain postpetition financing, on a final basis. Ebix is permitted to obtain postpetition financing pursuant to a senior secured, superpriority, debtor-in-possession term loan credit facility from a consortium of lenders and Regions Bank, as administrative agent and collateral agent. The DIP facility consists of: A. new money term loans in an aggregate principal amount of $35 million from the DIP Lenders, of which $15 million was drawn upon entry of the Interim Order, with the remainder only to be available subject to and following entry of the Final Order, in each case in accordance with the terms of the DIP Documents and any Approved Budget; and B. on the date of entry of the Final Order, $70 million in the aggregate principal amount of outstanding Term Loans and Revolving Loans held by the DIP Lenders will be deemed substituted and exchanged for term loans under the DIP Credit Agreement, on a pro rata basis in accordance with the share of New Money DIP Loans made by the DIP Lender and subject to the terms and conditions of the DIP Credit Agreement, which Rolled-Up Loans will be deemed funded on the Roll-Up Effective Date. The Debtors are required to comply with these milestones: i) The Interim Order must have been entered by the Court not later than three business days following the Petition Date; ii) The Debtors must file a motion or motions seeking approval of sale bidding procedures with respect to the sale transaction, in form and substance acceptable to the DIP Agent, not later than 15 days following the Petition Date; iii) The Debtors must provide to the DIP Agent (for further transmission to the DIP Lenders) a confidential information memorandum and proposed list of interested buyers with respect to the sale transaction not later than 30 days following the Petition Date; iv) The Court must enter an order approving bid procedures with respect to the sale transaction, in form and substance acceptable to the DIP Agent, not later than 45 days following the Petition Date; v) The Bankruptcy Court must enter the Final Order not less than 45 days following the Petition Date; vi) The Debtors must file the plan, the related disclosure statement, and motion for approval of the disclosure statement, each in form and substance acceptable to the DIP Agent, not later than 75 days following the Petition Date; vii) The Debtors must receive a qualified bid with respect to the sale transaction (which may be the stalking horse bid) and all such qualified bids received must be promptly shared with the DIP Agent (for further transmission to the DIP Lenders) not later than 110 days following the Petition Date; viii) The Court must enter an order approving the disclosure statement for the plan and authorizing solicitation of votes for the plan not later than 110 days following the Petition Date; ix) The Debtors, in consultation with the DIP Agent, must select the qualified bidder(s) in connection with the sale transaction not later than 115 days following the Petition Date; x) The Debtors, in consultation with the DIP Agent, must select the qualified bidder(s) and hold an auction(s) among those qualified bidders in connection with the sale transaction to the extent there are multiple qualified bids, in each case not later than 125 days following the Petition Date; xi) The Court must enter an order approving the sale transaction, in form and substance acceptable to the DIP Agent, not later than 135 days following the Petition Date; xii) The Court must enter an order confirming the plan not later than 150 days following the Petition Date; and xiii) The effective date of the plan shall occur by not later than 170 days following the Petition Date. On August 5, 2014, the Debtor entered into a Credit Agreement with Regions Bank, as administrative agent and collateral agent. As of the Petition Date, the Prepetition Borrower and the Prepetition Guarantors were indebted and liable to the Prepetition Secured Parties in the aggregate principal amount of not less than (a) $171.9 million of the outstanding Prepetition Term Loans, and (b) $445 million of the outstanding Prepetition Revolving Loans, in each case pursuant to, and in accordance with the terms of, the Prepetition Credit Documents. The Debtors have a critical need to obtain the DIP Financing and to use Prepetition Collateral to permit, among other things, the orderly continuation of the operation of their businesses, to maintain business relationships with vendors, suppliers and customers, to pay salaries and wages, to make capital expenditures, to satisfy other working capital and operational needs, and to fund expenses of these Chapter 11 Cases. As adequate protection for the use of cash collateral, the Prepetition Agent, for itself and for the benefit of the Prepetition Lenders, was, by the Interim Order, and by the Final Order are granted, on account of its Adequate Protection Claims, a valid, perfected replacement security interest in and lien upon all of the DIP Collateral subject and subordinate only to (i) the Prepetition Permitted Senior Liens, (ii) the Carve-Out, and (iii) the DIP Liens. The Prepetition Agent, for itself and for the benefit of the Prepetition Lenders, are granted an allowed superpriority administrative expense claim on account of such Prepetition Secured Parties' Adequate Protection Claims as provided for in 11 U.S.C. section 507(b) of the Bankruptcy Code, which Adequate Protection 507(b) Claim will be payable from and have recourse to all DIP Collateral and all proceeds thereof. With respect to the Prepetition Collateral, the Adequate Protection 507(b) Claim will be senior to all other claims of any kind and, with respect to the DIP Collateral, the Adequate Protection 507(b) Claim will be subject and subordinate only to the Carve-Out, the Prepetition Permitted Senior Liens and the DIP Superpriority Claims. As further adequate protection, the Debtors will provide the Prepetition Agent, for the benefit of the applicable Prepetition Secured Parties, current cash payments, in accordance with the Prepetition Credit Documents, of all reasonable and documented prepetition and postpetition fees and expenses. A copy of the order is available at https://urlcurt.com/u?l=lJemlj from Omni Agent Solutions, Inc., the claims agent. About Ebix Inc. Ebix Inc. -- https://www.ebix.com/ -- is headquartered in Atlanta, Georgia, and it supplies software and electronic commerce solutions to the insurance industry. With approximately 200 offices across 6 continents, Ebix, Inc., (NASDAQ: EBIX) endeavors to provide on-demand infrastructure exchanges to the insurance, financial services, travel and healthcare industries. Ebix Inc. and its affiliates sought relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 23-80004) on Dec. 17, 2023. In the petition filed by Amit K. Garg, as secretary and authorized signatory, Ebix listed assets and liabilities between $500 million and $1 billion. Judge Scott W. Everett oversees the case. The Debtors tapped Sidley Austin LLP as bankruptcy counsel; AlixPartners, LLP, as financial advisor; and Jefferies LLC as investment banker. Omni Agent Solutions, Inc., is the claims agent. ECLIPZ.IO INC: Unsecureds' Recovery "TBD" in Sale Plan ------------------------------------------------------ Eclipz.io, Inc., filed with the U.S. Bankruptcy Court for the Northern District of California a Plan of Reorganization for Small Business dated January 29, 2024. The Debtor is a Delaware corporation. Since 2018, the Debtor has been in the business of developing encryption software. At present, the Debtor is pursuing a sale of substantially all of its assets. The Debtor intends to amend this Plan after the Debtor's efforts to sell substantially all of its assets have concluded. The amended Plan will include all Exhibits as well as details regarding asserted claims, estimated allowed claims, and expected distributions on allowed claims, which will be funded primarily, if not entirely, from the proceeds from the sale of substantially all of the Debtor's assets. This Plan of Reorganization proposes to pay creditors of the Debtor from the proceeds from the sale of substantially all of the Debtor's assets and any net recoveries on avoidance or other litigation claims. Non-priority unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at TBD cents on the dollar, because, (1) as noted above, distributions on allowed claims will be funded primarily, if not entirely, from the proceeds from the sale of substantially all of the Debtor's assets and (2) the Debtor is in the process of pursuing a sale of substantially all of its assets, after which time the Debtor will amend this Plan to provide more specific information. This Plan also provides for the payment of administrative and priority claims. Class 3 consists of non-priority unsecured creditors. The holders of allowed Class 3 non-priority unsecured claims are impaired. After the payment in full of all allowed Administrative Claims, Secured Claims, and Priority Claims, the balance of the Debtor's cash will be used to make a pro rata distribution to the holders of allowed Class 3 non-priority unsecured claims. The holders of allowed Class 3 claims will be paid from funds on hand upon the later of the effective date of this Plan, or the date on which such claim is allowed by a final non-appealable order. Class 4 Equity security holders of the Debtor will not receive anything under the Plan. Class 4 Equity security holders of the Debtor are impaired. The Plan will be funded will be funded primarily, if not entirely, from the proceeds from the sale of substantially all of the Debtor's assets. On the Effective Date, the Debtor is projected to have $TBD in cash to distribute to the holders of allowed claims. (TBD because, (1) as noted above, distributions on allowed claims will be funded primarily, if not entirely, from the proceeds from the sale of substantially all of the Debtor's assets, (2) the Debtor is in the process of pursuing a sale of substantially all of its assets, and (3) the Debtor intends to amend this Plan after the Debtor's efforts to sell substantially all of its assets have concluded, and the amended Plan will include details regarding cash to be distributed, asserted claims, estimated allowed claims, and expected distributions on allowed claims.) A full-text copy of the Plan of Reorganization dated January 29, 2024 is available at https://urlcurt.com/u?l=Cj0ddz from PacerMonitor.com at no charge. About Eclipz.io Inc. Eclipz.io, Inc., a company in Los Gatos, Calif., has been in the business of developing encryption software. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. N.D. Cal. Case No. 23-51253) on Oct. 30, 2023, with $50,000 to $100,000 in assets and $1 million to $10 million in liabilities. James Bailey, president, signed the petition. Judge Stephen L. Johnson oversees the case. Ron Bender, Esq., at Levene, Neale, Bender, Yoo & Golubchik, LLP, is the Debtor's legal counsel. ECO MATERIAL: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Eco Material Technologies Inc.'s Long-Term Issuer Default Rating (IDR) at 'B' and its senior secured notes, including a proposed add-on offering to the notes, at 'B+'/'RR3'. The Rating Outlook is Stable. Eco plans to issue a $100 million add-on to its current $525 million 7.875% senior secured notes due 2027. Proceeds from the proposed add-on will be used for general corporate purposes, including funding growth capital projects, which Fitch expects to accelerate in 2024. Eco's IDR reflects its elevated leverage, relatively small size and limited product diversification compared to larger building materials producers, the cyclicality of its end markets and its adequate liquidity position. Continued growth in public construction and ramping-up of the company's greenfield locations in 2024 should support modest deleveraging in the intermediate term through EBITDA growth. The company has a leading position within the niche supplementary cementitious materials (SCMs) market, strong profitability metrics and an extended debt maturity schedule. KEY RATING DRIVERS Temporarily Elevated Leverage: Following the proposed issuance add-on, Fitch expects EBITDA leverage to increase to 5.8x on a pro forma basis from 5.0x forecasted for year-end 2023. Fitch projects EBITDA leverage to decline to around 5.2x by YE 2024 and below 5.0x in 2025 driven by revenue and EBITDA growth from increased contributions from growth projects. EBITDA interest coverage is forecast to be 2.6x in 2023, and Fitch expects it will remain in the 2.5x-3.0x range through 2025. Deleveraging could be hindered by slower ramping-up of recently finished growth projects, issues completing newly undertaken projects and weaker-than-expected end market demand. Stable Demand Environment: Fitch expects a beneficial operating environment for building materials producers in 2024, particularly for issuers with outsized exposure to infrastructure spending. Fitch projects public construction activity to grow about 6% while privately funded construction markets are expected to decline low- to mid-single digit percentages. Fitch projects Eco's revenue to grow 8%-10% in 2024 driven by volume growth stemming from new plants coming online and ramping up production, as well as modestly higher selling prices. Strong Profitability: Fitch forecasts adjusted EBITDA margin to expand slightly in 2024 and 2025 to 17.5%-18.0% as benefits of operating leverage are slightly offset from higher expenses associated with new plants coming online. EBITDA margin expansion in 2023 of 275bps-300bps was greater than Fitch had anticipated despite volume declines due to moderation in transportation costs, some mix benefits and strong pricing. Eco's Fitch-adjusted EBITDA margin is strong relative to similarly rated producers of building products and materials. However, Eco's margin is below that of large aggregates producers and cement manufacturers, which typically have EBITDA margins above 20%. Due to the low capital intensity of maintaining its core business, Eco can generate free cash flow. However, Fitch expects the company will generate negative FCF in the near to intermediate term due to elevated growth capex associated with expanding its SCM product offerings. Aggressive Growth Strategy: The company has set forth an aggressive growth strategy centered around a shift in its current operating model of harvesting, treating, and distributing fresh fly ash, making meaningful investments to increase additional sources of SCMs, such as harvesting landfilled fly ash and using natural pozzolans. Fitch estimates Eco spent about $75 million on capex in 2023 and projects annual spending between $100 million and $120 million in 2024 and 2025. In the short to intermediate term, Fitch views the company's growth strategy as neutral to the credit profile as the execution risk of ramping up sourcing and production of SCMs is offset by its strong position in its fresh fly ash operations, which should have a modest runway in terms of available supply. Longer term, Fitch views the shift favorably due to the expectation of continued reduction of coal-fired power plants and building long term sustainable supply reserves, which are green alternatives. Leadership Position in Niche Market: Eco is poised to remain a leader in the U.S. SCM market through its large footprint and size relative to direct peers, portfolio of long-term supply contracts and customer relationships. The company's nationwide platform and extensive logistics capabilities should allow it to service customers of all sizes. Fitch believes Eco's established position as the leading supplier and distributor of fly ash adds stability to profitability and cash flows and situates the company well to further grow its sales from other sustainable cementitious products. Diverse Revenue Sources: Eco's revenues are predominately from U.S. construction activity but are balanced between public infrastructure, residential, and nonresidential end-markets, which typically have differing cycles. While the exposure to the highly cyclical new construction markets is a risk to the stability of profitability through economic cycles, Fitch believes the strong diversity of those end-markets helps partially insulate the company from cyclical downturns in any individual end-market. Public construction represents the greatest proportion of Eco's end-market exposure, which Fitch views favorably as this end-market tends to have lower volatility through a cycle relative to private construction end-markets. The company's operations are geographically diverse across the U.S., which provides additional cushion against regional construction downturns. The company is well-positioned to benefit from construction markets experiencing higher growth such as the South Central and Southeastern U.S. Pricing Power: Fly ash is generally less expensive than cement but has experienced strong pricing power over at least the last decade. Fitch expects Eco to continue increasing prices to offset any input cost inflation, given strong demand, the company's strong market position in SCMs and expectation of declining supply of fresh fly ash. Upstream products like aggregates and cement benefit from stronger pricing power relative to downstream products such as concrete and asphalt, which have lower entry barriers and relatively more saturated markets. DERIVATION SUMMARY Eco has weaker credit and profitability metrics than Fitch's publicly rated universe of building materials companies, which are concentrated in the low investment-grade rating category. These peers are larger in size and typically have EBITDA leverage less than 3.0x and a greater share of the broader building materials market. The company has more favorable end-market exposure and comparable profitability metrics compared with its closest publicly-traded peer, Summit Materials, Inc., but Summit is significantly larger and has stronger credit metrics. However, Eco's SCM product offerings are entirely upstream, which generally result in more consistent pricing power and stable margins through the cycle. Eco's leverage is in line with or below large building products distributors rated by Fitch, including Park River Holdings, Inc. (B-/Stable) and LBM Acquisition, LLC (B/Stable). Park River's EBITDA leverage is currently above 6.5x while LBM's is expected to sustain around 6.0x in the intermediate term. Eco is smaller in scale but has higher profitability and FCF generating potential compared with these companies. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenue growth in the high single-digit percentages in 2024 and 2025 supported by continued growth in public construction and contributions from the company's growth projects; - Fitch-adjusted EBITDA margin of 17.5%-18.0% in 2024 and 2025; - Elevated capex levels due to growth projects, with annual spend between $100 million and $120 million, resulting in negative FCF; - EBITDA leverage of 5.0x at YE 2023 and 5.2x at YE 2024. RECOVERY ANALYSIS Recovery Analysis Assumptions The recovery analysis assumes that Eco Material Technologies, Inc. would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. The going-concern EBITDA reflects Fitch's assumption that distress would likely occur from a combination of weak construction activity, increasing and sustained competitive pressures and poor operating performance. Fitch estimates annual revenue of $600 million and Fitch-adjusted EBITDA margin around 13.3% would capture the lower revenue base of the company after emerging from a downturn plus a sustainable margin profile after right sizing, which leads to Fitch's $80 million going-concern EBITDA assumption. To calculate the EV, Fitch used a going-concern EBITDA multiple of 6.0x, which is below the 6.6x multiple for the acquisition of Boral Resources, LLC. The 6.0x multiple is comparable to the multiples used for building products and distributor peers, which are meaningfully larger than Eco. Fitch applied a 6.5x EV multiple to Chariot Holdings, LLC, a leading North American provider of garage door openers and a 6.0x EV multiple to Park River Holdings, Inc., a leading national provider of specialty branded interior and exterior building products. Fitch does not have recent data on recovery multiples for building materials producers. The ABL revolver is assumed to be 70%-90% drawn at default, which accounts for potential shrinkage in the available borrowing base during a contraction in revenue that provokes a default, and is assumed to have prior-ranking claims to the senior secured notes in the recovery analysis. The analysis results in a recovery corresponding to an 'RR3' for the existing $525 million senior secured notes and the proposed add-on offering. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Successful execution on growth strategy as demonstrated by increased revenue from SCMs other than fresh fly ash while maintaining EBITDA margins in the mid- to high-teen percentages; - Fitch's expectation that EBITDA leverage will sustain below 5.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation that EBITDA leverage will sustain above 6.0x; - EBITDA interest coverage falling below 2.0x; - Failure to execute on growth strategy or material deterioration in current operating performance, resulting in EBITDA margins contracting into the low-teen percentages and neutral to negative FCF. LIQUIDITY AND DEBT STRUCTURE Liquidity Position: Eco has ample liquidity with $34.0 million of cash on the balance sheet and full availability under its $50 million ABL as of Sept. 30, 2023. Pro forma for the proposed notes add-on, the company's cash position will increase to around $140 million. Fitch projects the company to generate negative FCF in 2024 and 2025 as elevated growth capex exceeds cash flow from operations (CFO). Fitch expects Eco's high cash balance, CFO and ABL will provide enough liquidity to fund operations and growth projects. Debt Maturities: Eco has no maturities until its senior secured notes come due in 2027. The company's undrawn $50 million ABL matures in February 2026. ISSUER PROFILE Eco Material Technologies Inc. is a harvester, producer, marketer, and distributor of SCMs used in the production of concrete. 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 ----------- ------ -------- ----- Eco Material Technologies Inc. LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ ENSONO INC: Moody's Rates New Incremental 1st Lien Term Loan 'B2' ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the incremental senior secured first lien term loan of Ensono, Inc., a hybrid IT managed service provider. All other ratings, including the B3 corporate family rating, the B3-PD probability of default rating and the existing B2 ratings of the senior secured first lien credit facilities and the existing Caa2 rating of the senior secured second lien credit facility are unaffected at this time. The outlook is unchanged at stable. Proceeds from the term loan will be used for working capital, for other general corporate purposes and to pay fees and expenses related to the transaction. The assigned rating is subject to review of final documentation and no material change to the size, terms and conditions of the transaction as advised to Moody's. RATINGS RATIONALE Ensono's B3 CFR is pressured by significant success-based capital investments and an increase in working capital due to increased mainframe bookings and growth, as the company continues to increase its scale in the competitive hybrid IT managed services industry, resulting in temporarily elevated debt to EBITDA (Pro forma for the transaction, Moody's estimates debt to EBITDA to be 7.5x as of year-end 2023) and contributing to negative free cash flow in 2023 . These limiting factors are offset by Ensono's stable base of contracted recurring revenue and solid position within the market for managed mainframe and midrange computer services. Moody's expects Ensono to generate modestly positive free cash flow in 2024 on an organic basis with capital spending in the 5% to 6% range of revenue while still driving high single-digit percentage revenue growth over the next 18-24 months. Capital intensity, increasingly success-based in nature, could further moderate over time. The company largely targets Fortune 1000 enterprises with annual revenue from $1 to $15 billion. The compelling cost reduction benefits to on-premise IT managers from outsourcing mainframe and other IT workloads and operations is expected to continue to support Ensono's steady growth and margin expansion. The stable outlook reflects Moody's view that Ensono will produce strong revenue and EBITDA growth, deliver positive free cash flow in 2024 and decrease capital intensity over time such that debt leverage (Moody's adjusted) falls at a steady pace through 2024 towards 6x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Moody's could upgrade Ensono's ratings if debt/EBITDA (Moody's adjusted) were to fall below 5x on a sustainable basis and the company generates positive free cash flow on a sustainable basis. Downward rating pressure could develop if liquidity becomes strained or if debt/EBITDA (Moody's adjusted) stays above 6.25x for an extended period. Headquartered in the Chicago area, Ensono is a hybrid IT managed service provider focused on mission critical workloads for enterprise customers. The company supports mainframe, infrastructure, private cloud and public cloud solutions primarily in the US and Europe, with a differentiated expertise in legacy mainframe systems. The principal methodology used in this rating was Communications Infrastructure published in February 2022. ENVIVA INC: Fitch Lowers IDR to 'C' on Missed Interest Payment -------------------------------------------------------------- Fitch Ratings has downgraded Enviva Inc.'s (Enviva) Long-Term Issuer Default Rating (IDR) to 'C' from 'CCC-' and removed it from Rating Watch Negative. Fitch has also downgraded Enviva Inc.'s senior unsecured debt to 'C'/'RR5' from 'CC'/'RR5'. The downgrade reflects Enviva's missed Jan. 16 interest payment of $24.4 million on its $750 million of 6.5% senior notes due 2026. The company has entered a 30-day grace period to cure covenant breach. This development follows worsening operating losses and Enviva's announcement last fall of substantial doubt regarding its ability to continue as a going concern. Considerable uncertainty exists regarding Enviva's ability to renegotiate uneconomic customer contracts entered into 4Q22 and the company's related $300 million liability. A further downgrade of the IDR to 'RD' (Restricted Default) is likely if the interest payment deferral is not cured on expiry of the original grace period, in accordance with its rating definitions. KEY RATING DRIVERS Coupon Payment Deferral: Enviva has opted not to make a scheduled interest payment in an effort to enhance liquidity although it has the ability to do so given cash on hand as of Sept. 30 as it engages with advisors, customers, and lenders to review alternatives to strengthen its capital structure, augment liquidity, address contractual liabilities, and increase long-term profitability. Imminent Default: Failure to cure the interest payment within the 30-day grace period would be an event of default. Alternatively, changes agreed to by bondholders resulting in a worsening of terms or a distressed debt exchange (DDE) would result in a further downgrade by Fitch to 'RD'. Fitch expects the company to run out of liquidity by 2025 given current levels of earning and cashflows and believes a debt restructuring is likely absent success in renegotiating existing contracts with customers as it seeks a new strategic plan ahead of their $750 million bond maturity in 2026. Recent Initiatives: Enviva disclosed there is substantial doubt about its ability to continue as a going concern and retained advisory firms including Lazard, Alvarez & Marsal and Vinson & Elkins, to perform a comprehensive review of Enviva's capital structure. In addition, the company has made two key leadership changes, the appointment of recently hired CFO, Glenn Nunziata as interim CEO and the appointment of Mark Coscio, as Chief Operating Officer and has started contract renegotiations with existing customers. In addition, the company recorded a material non-cash pretax impairment charge related to goodwill of $103.9 million in 4Q23. These actions underscore a real risk of default. Earnings and Cash Flows Pressured: Enviva's cash flows have been under significant pressure over the last 12 months with Fitch projecting approximately $100 million of EBITDA for FY23, a significant decline from prior expectations of $225 million at the midpoint. Management has missed earnings targets announced earlier this year and anticipates the fourth-quarter results could potentially be weaker than results for 3Q23. There has been a significant contraction of operating margin over the past year under existing contracts due to challenging price dynamics including the 4Q22 transaction which has resulted in a significant decline in EBITDA and significant liquidity pressure. Negative and Significant Gross Margin Deferral Impact: Fitch remains concerned about the continued and significant negative impact of gross margin deferrals on earnings and cash flows. In 4Q22, Enviva entered into agreements with a customer to purchase approximately 1.8 MTPY of wood pellets between 2023 and 2025. Additionally, Enviva entered into additional wood pellet sales contracts that together with the existing sales contracts totaled approximately 2.8 million MT with deliveries between 2022 and 2026. Average purchase price under the purchase contracts are significantly higher than average sale price under the sales contracts. The transaction is uneconomic at current spot prices and Enviva is trying to renegotiate the terms of the contract with the customer. Failure to renegotiate the contract under favorable terms will likely strain liquidity and lead to a default. Under GAAP accounting, the gross margin generated from the sale of wood pellets during 4Q22 to a major customer will not be recognized until 2024-2025, when the customers purchase of wood pellet volumes under its long-term contracts with Enviva exceeds 1.8MTPY -- the amount of wood pellet purchases by Enviva from the same customer as a result of a purchase agreement signed in 4Q22. Enviva has $89 million of gross margin deferrals in 4Q22 associated with this transaction and the financial liability totalled $212 million as of Sept. 30. The negative impacts of sustained and continued gross margin deferrals will likely place further pressure on ratings. Construction Updates: The company is moving forward with the construction of its wood pellet production facility in Epes, AL while delaying construction on its new 1.1 million MTPY pellet production plant in Bond, MS by six to 12 months to conserve resources. Given Enviva's stressed liquidity, the company has identified completion of its Epes plant as a top priority. The plant is approximately 40% complete as of Sept. 30, 2023 and each plant was expected to cost $375 million on average which is up from $250 million estimated in early 2022. Fitch expects the company will have enough liquidity given current cash on hand to complete construction in the Epes plant. The Bond plant is the anticipated third of four planned pellet production facilities at company's growing Pascagoula cluster of assets which includes a deep-water shipping terminal. The Epes plant has an expected in-service date in 2024 and the Bond plant in 2025. Recent costs overruns highlight continued execution risks. ESG - Governance and Management Strategy: Fitch has maintained Enviva's ESG relevance scores following ongoing management changes following a significant reduction in FY23 earnings relative to prior expectations. This change also reflects Fitch's concern over the operational issues at the plants and the company's inability to meet production levels and earnings targets as expected. This material adjustment highlights greater than expected operating and execution risks. DERIVATION SUMMARY Enviva is the world's leading supplier of utility-grade wood pellets to major power generators across the globe. There are limited publicly traded comparable companies for Enviva given the size of the biomass sector as well as the competitive landscape. Enviva is growing rapidly, but exhibits a much smaller scale of operations than peers with expected annual EBITDA of approximately $100 million in the near term. This is a significant decline from prior expectations of $225 million of EBITDA at the midpoint, which itself was a decrease from approximately $300 million in EBITDA Fitch had previously projected in late 2022. The significant contraction of operating margins over the last year has accelerated the erosion of the company's competitive profile and stressed liquidity. Freeport LNG Investments, LLLP's (Freeport, IDR: B-/Negative) is a comparable for Enviva in the energy space. Like Enviva, Freeport ships energy - in this case liquified natural gas - to overseas customers. Both companies cashflows are structured under long-term take-or-pay contracts with creditworthy parties. Like Enviva, Freeport has experienced a significant contraction in earnings and cashflows over the last year although this was due to an explosion at one of its natural gas liquefaction plants. While Fitch projects Freeport's leverage to decline, approaching its positive sensitivity of 7.0x by 2024, Fitch expects Enviva's leverage to increase. Absent any improvement in wood pellet prices or contract negotiations with existing customers, and absent an equity cure, Fitch expects Enviva could breach its covenants under its secured credit agreement as soon as Dec. 31, 2023. KEY ASSUMPTIONS - Assumed approximately $100 million of EBITDA in FY23; - Completion of the Epes plant and delay in the construction of the Bond wood pellet production plant; - No dividends; - Base interest rate forecast in line with Fitch Global Economic Outlook. RECOVERY ANALYSIS Recovery Rating (RR) Assumptions: The recovery analysis assumes the enterprise value of Enviva is maximized in a going concern (GC) scenario versus a liquidation scenario. Fitch contemplates a scenario in which default may be caused by a breach of its covenants under its secured credit facility as soon as Dec. 31, 2023. Continued softness in spot wood pellet prices that are approximately 50% lower than this same time last year has significantly eroded Enviva's earnings and cashflows while heightening competitive pressures. The GC analysis assumes new customer contracts with improved margins as wood pellet prices are anticipated to normalize to recent mid-cycle levels. Under this scenario, Fitch estimates a GC EBITDA of approximately $220 million. Fitch assumes Enviva will receive a GC recovery multiple of 5x EBITDA under this scenario, in line with historical transaction multiples of 5x-6x for the energy and utility sector. At this time, Enviva has fully drawn on its $570 million secured credit revolver and has a $105 million term loan due under its secured credit facility. Enviva also has $1.1 billion of unsecured debt. Fitch assumes a 10% administrative claim through a restructuring, resulting in a 29% recovery for the unsecured debt and a downgrade of the rating of the unsecured debt to 'C'/'RR5'. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Repayment of coupon before expiration of 30-day grace period; - A successful resolution to an expected covenant breach of its senior secured revolving credit facility without entering bankruptcy or conducting a DDE, while maintaining a sufficient level of liquidity to meet debt service and execute on its cost reduction and margin improvement plans. Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Expiration of 30-day grace period without repayment of coupon on its $750 million of senior debt; - Entering into a formal bankruptcy procedure; - Evidence of worsening terms for noteholders resulting in a DDE. LIQUIDITY AND DEBT STRUCTURE Stressed Liquidity: Enviva's liquidity is stressed as the company seeks to renegotiate contractual liabilities, amend its capital structure and increase long-term profitability. Enviva has faced significant pressure on its liquidity given a material decline in wood pellet spot prices since late last year and has fully drawn down its $570 million revolving credit facility as of Sept. 30, 2023. Enviva's liquidity is provided by a $570 million revolving credit facility and a $105 million secured term loan due June 2027 under its secured credit agreement. Enviva had approximately $440 million of liquidity available as of Sept. 30, 2023, including $315 million of unrestricted cash on hand. Additionally, Enviva has $125 million of restricted cash to fund the construction of new wood pellet plants. However, Enviva is expected to breach its maximum leverage covenant of 5.75x under its revolving credit facility as soon as Dec. 31, 2023. The company's leverage ratio as calculated under the revolving credit facility agreement, was 5.11x as of Sept. 30, 2023. Even if Enviva is successful in amending its financial covenants under its revolving credit facility, Fitch expects the company to have adequate liquidity to finance construction on its Epes plant in 2024 but will run out of liquidity by 2025 given current levels of earning and cashflows. At that time, Fitch expects Enviva will need to access the capital markets to move forward with construction of its Bond plant in Mississippi. No long-term debt is expected to mature until 2026 when $750 million of senior notes are scheduled to mature and Fitch remains concerned about the company's ability to meet its debt obligations. ISSUER PROFILE Enviva Inc. is the world's largest supplier of utility-grade wood pellets to major power generators by production capacity. The company procures wood fiber and processes it into utility-grade wood pellets, which are then transported to their customers overseas through vessels. ESG CONSIDERATIONS Enviva Inc. has an ESG Relevance Score of '5' for both Governance and Management Strategy due to poor execution of corporate strategy which has led to a change in management and resulted in a significant and material decline in earnings and cash flows relative to prior expectations, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in a series of rating downgrades. 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 ----------- ------ -------- ----- Enviva Inc. LT IDR C Downgrade CCC- senior unsecured LT C Downgrade RR5 CC ETTA BUCKTOWN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Etta Bucktown, LLC 1840 W. North Avenue Chicago, IL 60622 Chapter 11 Petition Date: February 1, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10144 Debtor's Counsel: Maria Aprile Sawczuk, Esq. GOLDSTEIN & MCCLINTOCK LLLP 501 Silverside Road Suite 65 Wilmington, DE 19809 Tel: 302-444-6710 Fax: 302-444-6709 E-mail: marias@goldmclaw.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by David Pisor, Manager of Etta Collective LLC, Mgr of Etta Bucktown Manager, LLC, Mgr. 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/7TPNGDY/Etta_Bucktown_LLC__debke-24-10144__0001.0.pdf?mcid=tGE4TAMA ETTA COLLECTIVE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Etta Collective, LLC 433 W. Van Buren Street Chicago, IL 60607 Business Description: Etta Collective is a full-service restaurant. Chapter 11 Petition Date: February 1, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10146 Debtor's Counsel: Maria Aprile Sawczuk, Esq. GOLDSTEIN & MCCLINTOCK LLLP 501 Silverside Road Suite 65 Wilmington, DE 19809 Tel: 302-444-6710 Fax: 302-444-6709 E-mail: marias@goldmclaw.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by David Pisor as manager. 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/TZZE4CI/Etta_Collective_LLC__debke-24-10146__0001.0.pdf?mcid=tGE4TAMA ETTA RIVER NORTH: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Etta River North, LLC 700 N. Clark Chicago, IL 60654 Chapter 11 Petition Date: February 1, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10145 Debtor's Counsel: Maria Aprile Sawczuk, Esq. GOLDSTEIN & MCCLINTOCK LLP 501 Silverside Road Suite 65 Wilmington, DE 19809 Tel: 302-444-6710 Fax: 302-444-6709 E-mail: marias@goldmclaw.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by David Pisor, Manager of Etta Collective, LLC, Manager. 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/726DXFY/Etta_River_North_LLC__debke-24-10145__0001.0.pdf?mcid=tGE4TAMA EYE CARE: $8MM DIP Loan from Create Capital Has Interim OK ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, authorized Eye Care Leaders Portfolio Holdings, LLC and affiliates to use cash collateral and obtain postpetition financing, on an interim basis. The Debtors obtained a senior secured postpetition financing facility from Create Capital LLC consisting of a superpriority debtor-in-possession credit facility pursuant to the terms and conditions of the Superpriority Secured Debtor in Possession Credit Facility Term Sheet. The DIP Facility consists of a superpriority priming line of credit and term loan facility with an aggregate principal amount of up to $8 million. The Debtors are permitted to draw DIP Loans in the maximum amount of $1.3 million, subject to compliance with the terms, conditions, and covenants described in the DIP Term Sheet, the Interim DIP Order, and the Approved Budget. All DIP Obligations will be due and payable in full in cash unless otherwise agreed to by the DIP Lender in writing on the earliest of: (i) July 31, 2024, (ii) if the Final DIP Order has not been entered, 35 days after the Petition Date, (iii) the acceleration of the DIP Loan and the termination of the DIP Commitments upon the occurrence of an Event of Default, (iv) the effective date of any plan of reorganization, (v) the date the Court converts any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, (vi) the date the Court dismisses any of the Chapter 11 Cases, (vii) the consummation of the sale of all or substantially all of the Debtors' assets and (viii) the date an order is entered in any of the Chapter 11 Cases appointing a chapter 11 trustee or examiner with enlarged powers. Principal of, and accrued interest on, the DIP Loan and all other amounts owing to the DIP Lender under the DIP Facility will be payable on the DIP Termination Date. The Debtors are required to comply with these milestones: 1. No later than seven days after filing the Motion, the Court must have entered the Interim DIP Order. 2. No later than 14 days after the Petition Date, the Debtors must with the Court a motion to approve procedures for the marketing and sale of the Debtors' assets in form and substance reasonably acceptable to the DIP Lender. 3. No later than 21 days after the Bid Procedures Motion is filed, the Bankruptcy Court must have entered an order approving the same. The Bid Procedures Order and applicable bid procedures must, consistent with the DIP Term Sheet, authorize and approve the DIP Lender's credit bid of the DIP Obligations, in whole or in part, pursuant to 11 U.S.C. section 363(k, for any or all of the Debtors' assets; 4. Not later than 30 days after entry of the Bid Procedures Order, the Court must have entered an order approving one or more sales of the Debtors' assets; and 5. No later than 35 days after the Petition Date, the Court must have entered the Final DIP Order. Between 2014 and 2017, certain of the Debtors entered into multiple allegedly secured term loan agreements with various entities related to GHTG Investment, LLC for the purpose of acquiring certain other Debtor entities. Each Prepetition Term Loan, if truly debt, is due at maturity, bears interest at rates of 5–5.50% per annum and matures in either June 2029 or December 2029. As of the Petition Date, the outstanding aggregate principal and interest due under the Prepetition Term Loans purports to be approximately $118 million. The Debtors have no other long-term debt obligations. As a condition to entry into the DIP Loan Documents, the extensions of credit under the DIP Facility and the authorization to use cash, the Debtors have agreed, that proceeds of the DIP Facility and cash will be used in accordance with the terms of the Interim DIP Order, the DIP Loan Documents, and the Approved Budget, solely to (i) provide working capital and for general corporate purposes of the Debtors during the Chapter 11 Cases; (ii) pay interest, fees, costs and expenses related to the DIP Facility; (iii) pay the fees, costs and expenses of the estate professionals retained in the Chapter 11 Cases as set forth in the Approved Budget and approved by the Bankruptcy Court; (iv) pay the DIP Lender Reimbursements; (v) make all permitted payments of costs of administration of the Chapter 11 Cases; and (vi) pay such prepetition expenses as are consented to by the DIP Lender and approved by the Bankruptcy Court. As security for the DIP Obligations, the DIP Lender is granted security interests in and liens and mortgages upon all tangible and intangible prepetition and postpetition property in which any or each of the Debtors or their respective Estates have an interest of any kind or nature, whether existing on or as of the Petition Date or thereafter acquired or created, wherever located. The Prepetition Lenders are granted, pursuant to 11 U.S.C. sections 361, 362, 363(c)(2), and 363(e), replacement liens on the Prepetition Collateral to the same extent, validity and priority as existed prior to the Petition Date, subject and subordinate only to (i) the DIP Liens and (ii) the Carve Out. The events that constitute an "Event of Default" include: 1. Failure to make payments when due under the DIP Loan Documents; 2. Invalidity of the DIP Loan Documents; 3. Any of the Debtors will file a pleading seeking to vacate or modify the Interim DIP Order or the Final DIP Order over the objection of the DIP Lender; 4. Entry of an order without the prior written consent of the DIP Lender amending, supplementing or otherwise modifying the Interim DIP Order or the Final DIP Order; and 5. Reversal, vacatur or stay of the effectiveness of the Interim DIP Order or the Final DIP Order except to the extent reversed within five Business Days. The Carve-Out means (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee under 28 U.S.C. section 1930(a) plus interest pursuant to 31 U.S.C. section 3717; (ii) to the extent allowed by the Bankruptcy Court at any time, whether by interim order, final order, or otherwise, all accrued and unpaid fees, disbursements, costs and expenses incurred by persons or firms retained by the Debtors pursuant to 11 U.S.C. sections 327, 328 or 363 and all accrued unpaid fees, disbursements, costs and expenses incurred by the Committee (if any) pursuant to sections 328 and 1103 of the Bankruptcy Code at any time before or on the first business day following delivery by the DIP Lender of a Carve Out Trigger Notice, whether allowed by the Bankruptcy Court prior to or after delivery of a Carve Out Trigger Notice; and (iii) Allowed Professional Fees of Estate Professionals in an aggregate amount not to exceed $200,000 incurred after the first business day following delivery by the DIP Lender of a Carve Out Trigger Notice, to the extent allowed at any time, whether by interim order, final order, or otherwise. A final hearing on the matter is set for February 15, 2024 at 9:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=mzu8qq from PacerMonitor.com. About Eye Care Leaders Portfolio Eye Care Leaders Portfolio Holdings, LLC, provides a suite of software specifically geared towards ophthalmology and optometry practices, practice management, surgical, revenue cycle management (RCM), MIPS reporting and more. Eye Care Leaders is a one-stop shop for eye care specialists and their patients. Eye Care Leaders and more than 30 of its affiliates sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Tex. Lead Case No. 24-80001) on Jan. 16, 2024. In the petition filed by CEO/portfolio Sophie Turrell, Eye Care disclosed $100 million to $500 million in assets against $500 million to $1 billion in debt. Hon. Michelle V. Larson presides over the cases. Gray Reed is the Debtors' bankruptcy counsel. B. Riley Financial Inc. is the Debtors' financial advisor. FAB WEST SALOON: Case Summary & 10 Unsecured Creditors ------------------------------------------------------ Debtor: Fab West Saloon, LLC 1616 W Pacific Coast Hwy Long Beach, CA 90810 Business Description: The Debtor is a bar/saloon. It is engaged in selling food and alcohol. Chapter 11 Petition Date: January 2, 2024 Court: United States Bankruptcy Court Central District of California Case No.: 24-10820 Judge: Hon. Barry Russell Debtor's Counsel: Vanessa M. Haberbush, Esq. HABERBUSH, LLP 444 West Ocean Boulevard Suite 1400 Long Beach, CA 90802 Tel: (562) 435-3456 Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Joseph N. Mirkovich as managing member. A full-text copy of the petition containing, among other items, a list of the Debtor's 10 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/ODIS5AQ/Fab_West_Saloon_LLC__cacbke-24-10820__0001.0.pdf?mcid=tGE4TAMA FARM LLC: L. Todd Budgen Named Subchapter V Trustee --------------------------------------------------- The U.S. Trustee for Region 21 appointed L. Todd Budgen, Esq., as Subchapter V trustee for The Farm, LLC d/b/a Curated American Getaways, LLC. Mr. Budgen will be paid an hourly fee of $400 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Budgen declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: L. Todd Budgen, Esq. P.O. Box 520546 Longwood, FL 32752 Tel: (407) 232-9118 Email: Todd@C11Trustee.com About The Farm LLC The Farm, LLC, doing business as Curated American Getaways, LLC, offers luxury estate vacation rentals. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-00362) on January 25, 2024, with $624,659 in assets and $4,393,655 in liabilities. Katie Martin Loane, chief financial officer, signed the petition. Judge Lori V. Vaughan oversees the case. Jeffrey S. Ainsworth, Esq., at BransonLaw, PLLC represents the Debtor as bankruptcy counsel FREE SPEECH: Bankruptcy Proceeding Moves Towards Creditor Vote -------------------------------------------------------------- Alex Wolf of Bloomberg Law reports that the families of Sandy Hook school shooting victims are moving forward with a vote on competing plans to wrap up bankruptcy proceedings for right wing conspiracy theorist Alex Jones. Jones' creditors are being given the opportunity to vote for or against a plan proposed by the Sandy Hook families, who previously won $1.5 billion in defamation judgments against the Infowars talk show host, calling for an orderly liquidation of his assets. Conversely, the families are also being asked to vote on Jones' own proposal, which would pay the group at least $55 million over 10 years. About Free Speech Systems Free Speech Systems LLC is a broadcast media production and distribution company that provides broadcasting aural programs by radio to the public. Free Speech Systems is a family-run business founded by Alex Jones. FSS is presently engaged in the business of producing and syndicating Jones' radio and video talk shows and selling products targeted to Jones' loyal fan base via the Internet. Today, FSS produces Alex Jones' syndicated news/talk show (The Alex Jones Show) from Austin, Texas, which airs via the Genesis Communications Network on over 100 radio stations across the United States and via the internet through websites including Infowars.com. Due to the content of Alex Jones' shows, Jones and FSS have faced an all-out ban of Infowars from mainstream online spaces. Shunning from financial institutions and banning Jones and FSS from major tech companies began in 2018. Conspiracy theorist Alex Jones has been sued by victims' family members over Jones' lies that the 2012 Sandy Hook Elementary School shooting was a hoax. Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet TV, LLC, filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April 18, 2022. The Debtors agreed to the dismissal of the Chapter 11 cases in June 2022 after the Sandy Hook victim families dismissed the three bankrupt companies from their lawsuits. Free Speech Systems filed a voluntary petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-60043) on July 29, 2022. In the petition filed by W. Marc Schwartz, as chief restructuring officer, the Debtor reported assets and liabilities between $50 million and $100 million. Melissa A Haselden has been appointed as Subchapter V trustee. Alexander E. Jones filed for personal bankruptcy under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on Dec. 2, 2022, listing $1 million to $10 million in assets against liabilities of $1 billion to $10 billion in liabilities. Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC, is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C., led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan, and Antonio Ortiz are representing Alex Jones. FRONT RUNNER: Chapter 15 Case Summary ------------------------------------- Lead Debtor: Front Runner Productions, Inc. 1700-Park Place, 666 Burrard Street Vancouver, British Columbia Canada Business Description: The Debtors develop, produce and sell motion pictures, series television, and digital media content, which includes animation and interactive gaming. Foreign Proceeding: IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. C-36, AS AMENDED - AND - IN THE MATTER OF THE BUSINESS CORPORATIONS ACT, S.B.C. 2002, c. 57, AS AMENDED AND THE BUSINESS CORPORATIONS ACT, R.S.O. 1990, C. B.16, AS AMENDED - AND - AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF BRON MEDIA CORP., ET AL Foreign Representative: Aaron Gilbert, of BRON Media Corp. 1700-Park Place, 666 Burrard Street, Vancouver, British Columbia Canada Chapter 15 Petition Date: January 24, 2024 Court: United States Bankruptcy Court Northern District of Georgia Nineteen affiliates that concurrently filed voluntary petitions for relief under Chapter 15 of the Bankruptcy Code: Debtor Case No. ------ -------- Front Runner Productions, Inc. (Lead Case) 24-50790 Fonzo, LLC 24-50794 Red Sea LLC 24-50805 October Series Holdings, LLC 24-50814 Villains Production Services, Inc. 24-50813 Villains Pictures, LLC 24-50812 TWWMD Productions, Inc. 24-50810 TWWMD Holdings, LLC 24-50809 Tully Productions, LLC 24-50808 Surrounded Productions USA Inc. 24-50807 Red Sea Productions Inc. 24-50806 Brown Amy, LLC 24-50791 Para Productions, LLC 24-50804 Needle In A Timestack, LLC 24-50802 Harmon Monster Films, Inc. 24-50800 Harmon Films, LLC 24-50797 Green Moon Inc. 24-50796 Front Runner, LLC 24-50795 Fonzo Production Services Inc. 24-50792 Judge: Hon. Paul Baisier Foreign Representative's Counsel: Cameron M. McCord, Esq. JONES & WALDEN, LLC 699 Piedmont Avenue NE Atlanta, GA 30308 Tel: 404-564-9300 Fax: 404-564-9301 E-mail: info@joneswalden.com Estimated Assets: Unknown Estimated Debt: Unknown A full-text copy of Fonzo, LLC's Chapter 15 petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/6A4RYHQ/Fonzo_LLC__ganbke-24-50794__0001.0.pdf?mcid=tGE4TAMA GALLERIA PAIN: Wins Cash Collateral Access, DIP Loan Thru March 31 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, authorized Galleria Pain Physicians, PLLC to use cash collateral and obtain postpetitio financing, on an interim basis, through March 31, 2024. To make a restructuring possible, Arthritis Knee Pain Centers, LLC, an affiliate of the Debtor and its management company, has agreed to make a Debtor-in-possession loan to the Debtor of up to $100,000 as needed based on the Debtor's cash flow. The DIP Financing will accrue interest at 8% per year, but AKPC is not requiring interest to be paid current to help the Debtor's cash flow. The Debtor has two creditors that appear to assert a security interest in substantially all of the Debtor's assets to secure loan obligations: (i) PlainsCapital; and (ii) the U.S. Small Business Administration. The Court held that, in the event PlainsCapital Bank, the SBA, and ASD Specialist Healthcare, LLC d/b/a Besse Medical, consent, in writing, to the use of cash collateral in a manner or amount which does not conform to the Budget, the Debtor will be authorized pursuant to the Second Interim Order to expend cash collateral for such Non-Conforming Use without further Court approval, provided that notice of the proposed modification is also provided in advance to the Subchapter V Trustee and the United States Trustee. Any expense that is budgeted for payment in one month but is not paid in such month will be carried over for payment by the Debtor in subsequent months. As adequate protection for the Debtor's use of cash collateral, each of PlainsCapital, the SBA, and Besse Medical, to secure payment of an amount equal to any diminution in the value of their respective collateral, are granted a replacement security interest in and lien upon all assets of the Debtor upon which each respective lender had properly perfected liens pre-petition, if any, senior to any other security interests, liens, or encumbrances, with the Lenders' liens and replacement liens subject only to, in each case and in the following order of priority: (a) any lien on the Debtor's assets that the Court may approve in the future as being senior to such liens (with proper notice to PlainsCapital, Besse Medical, and the SBA and an opportunity to object); (b) valid, perfected, and enforceable prepetition liens which were senior to PlainsCapital, Besse Medical, and / or the SBA liens or security interests as of the Petition Date, and (c) the amount of fees and disbursements accrued as of the date of the termination of the Debtor's use of cash collateral after application by the Debtor's professionals and the subchapter V Trustee. As additional adequate protection for PlainsCapital, the Debtor will continue to make the regular payments required under the PlainsCapital loan documents (at regular nondefault rates), as set forth in the Budget. As additional adequate protection for Besse Medical, the Debtor will make interest only payments to Besse Medical in the amount of $726 per month. A continued interim hearing on the matter is set for March 26 at 9:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=fgKWZc from PacerMonitor.com. About Galleria Pain Physicians, PLLC Galleria Pain Physicians, PLLC is a provider of health care services in Texas. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 24-30130) on January 11, 2024. In the petition signed by Brent Callister, authorized representative, the Debtor disclosed up to $1 million in assets and up to $10 million in liabilities. Judge Jeffrey P. Norman oversees the case. Matthew E. McClintock, Esq., at GOLDSTEIN & MCCLINTOCK LLLP, represents the Debtor as legal counsel. GAMESTOP CORP: BlackRock Holds 7.4% Equity Stake as of Dec. 31 -------------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed that as of December 31, 2023, it beneficially owned 22,544,527 shares of GameStop Corp's common stock, representing 7.4% of the shares outstanding. A full-text copy of the Report is available at http://tinyurl.com/3wtkrchu About GameStop Grapevine, Texas-based GameStop Corp. is a specialty retailer offering games and entertainment products through its E-Commerce platforms and thousands of stores. GameStop reported a net loss of $313.1 million for the fiscal year ended Jan. 28, 2023, a net loss of $381.3 million for the fiscal year ended Jan. 29, 2022, a net loss of $215.3 million in 2020, a net loss of $470.9 million in 2019, and a net loss of $673 million in 2018. As of July 29, 2023, the Company had $2.80 billion in total assets, $1.53 billion in total liabilities, and $1.26 billion in total stockholders' equity. * * * Egan-Jones Ratings Company, on January 2, 2024, maintained its 'CC' foreign currency and local currency senior unsecured ratings on debt issued by GameStop Corporation. GEN DIGITAL: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed Gen Digital Inc.'s (fka NortonLifeLock Inc.; NYSE: GEN) Long-Term Issuer Default Rating (IDR) at 'BB+'. Fitch has also affirmed GEN's senior secured term loans and the secured revolver at 'BBB-'/'RR1' and its senior unsecured notes at 'BB+'/'RR4'. The Rating Outlook remains Negative. The Negative Outlook reflects GEN's leverage which remains elevated following September 2022 acquisition of Avast plc (Avast) for approximately $8.5 billion, which was largely funded with debt. GEN is a significant generator of FCF, and Fitch forecasts that the company's leverage (as defined by Fitch) will remain higher than the negative rating sensitivity of 3.5x for the next few quarters. GEN is committed to having long-term net leverage (as defined by the company) of approximately 3.0x, down from 3.9x at the end of 2QFY24 and Fitch believes the company can achieve this by balancing debt reduction with its share repurchase plan. Failure to repay debt over the next few quarters to reduce leverage below 3.5x (as defined by Fitch) on a sustained basis would likely result in a one notch downgrade of the IDR to 'BB'. KEY RATING DRIVERS Debt Repayment to Accelerate Deleveraging: Fitch defined leverage for the LTM ending Sept. 30, 2023 was 4.4x and Fitch projects it to remain close to that by the end of FY24 (FYE March 31). Fitch forecasts EBITDA growth and with mandatory amortization payments and expectations for the early repayment of debt, Fitch expects leverage to be close to 3.5x at FYE 2025 (FYE March 31). If the company does execute on debt reduction, leverage could be around there or lower which would result in the Outlook being revised to Stable. If Gen Digital does not, leverage will be above the negative rating trigger of 3.5x. Capital Allocation Strategy: Fitch estimates Gen Digital will generate $800 million to $900 million of FCF before dividends in FY24 and FY25. Gen Digital intends to utilize FCF for debt repayment and shareholder friendly activities including share repurchases and dividends. Fitch believes the company will reduce debt but the extent of debt repayments is uncertain. Over the LTM ending Sept. 30, 2023, voluntary debt repayments were $400 million and in October, it paid down $200 million more. For the LTM ending Sept. 30, 2023, it paid out $325 million in dividends and repurchased $541 million of shares. Share repurchases have slowed in the past two quarters with only $41 million repurchased in 1QFY24 and none in 2QFY24. Gen Digital's stated long-term target is to reduce its diluted share count to pre-Avast merger levels. For the merger, 94 million shares were issued. High Interest Expense Burden: Given rising interest rates, Gen Digital will have a significant amount of cash directed toward interest expense. Prepayment of debt will reduce the interest expense burden and help the company reach its publicly stated target of having net leverage, as defined by the company, of approximately 3.0x by fiscal YE 2027. Somewhat Diverse Offerings: For the quarter ending Sept. 29, 2023, 64% of Gen Digital's revenue came from consumer security solutions, such as Norton 360 Security, Avast Security offerings, Norton Secure VPN, Avira Security and other consumer security offerings. Almost 35% of revenue was from identity and information protection, including revenue from Norton 360 with LifeLock offerings, LifeLock and other privacy offerings. The remaining 2% of revenue derived from legacy revenue. Approximately 65% of revenue was from the Americas while 25% was from EMEA and the remaining 10% was from Asia-Pacific and Japan for the quarter. Avast Acquisition Strategy: Avast's focus was more on cyber privacy, and it did not have a strong presence in North America. Norton has more of a focus on cyber security, and LifeLock has a focus on identity, and both of these offerings are largely in the U.S. and Canada. Gen Digital plans to continue its focus on its cross-selling and upselling opportunities. In addition, Gen Digital has been successful in improving the retention rate to 77% in 2QFY24, up two points year over year. Overall improvement came from better retention rates at Avast while Norton and LifeLock had stable retention rates. DERIVATION SUMMARY Gen Digital's 'BB+' rating reflects its significant size, strong brand recognition, operating profile and EBITDA margins in the mid-to upper 50% range. With a strong focus on the consumer market, the company had actively looked to grow and expand its international presence. The Avast acquisition helps Gen Digital achieve these goals. The company's rating is the same as Open Text Corporation which has a Stable Outlook reflecting its announced asset divestiture which accelerates the company's deleveraging plan. Its leverage at the end of FY24 and FY25 is forecasted to be in the range of 3.0x to 3.5x. Gen Digital may reduce leverage to around 3.5x at the end of FY25 but only if it directs FCF toward voluntary debt repayments. Open Text's revenues are less than double of Gen Digital's and Open Text's EBITDA margins are in the mid 30's. Gen Digital is rated below other technology peers, including Constellation Software, Inc. (BBB+/Stable) and Cadence Design Systems Inc. (A-/Stable). These are rated above Gen Digital due to their stronger credit profiles. However, Gen Digital has consistently had stronger EBITDA and FCF margins, which benefit from its strong consumer market position. KEY ASSUMPTIONS - Revenue grows by double digits in fiscal 2024, reflecting the Avast acquisition, and by strong single digits thereafter, reflecting Fitch's assumptions for consumer appetite for cybersecurity software, privacy and identity protection; - Gross margins are in the low 80%; - EBITDA margins in the mid- to upper 50% range, reflecting increased operating efficiencies longer term; - FCF is directed toward debt repayment, and shareholder returns continue through flat dividends and share repurchases; - The company may be acquisitive once leverage is reduced to its target net leverage, as defined by Gen Digital, of 3.0x. RATING SENSITIVITIES Factors that Could, Individually or Collectively, lead to a Stable Outlook - (CFO-capex)/debt above 10% on a sustained basis; - EBITDA leverage, defined by Fitch, below 3.5x over the next several quarters. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - (CFO-capex)/debt above 17.5% on a sustained basis; - Fitch's expectation of leverage below 2.5x on a sustained basis. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - (CFO-capex)/debt below 10% on a sustained basis; - Fitch's expectation of leverage above 3.5x on a sustained basis; - Evidence of negative organic revenue growth or erosion of EBITDA and FCF margins; - Significant debt-financed acquisitions or share repurchases that significantly weaken the company's credit profile for a prolonged period of time. LIQUIDITY AND DEBT STRUCTURE Liquidity Expected to Remain Solid: As of Sept. 29, 2023, Gen Digital had $2.1 billion in liquidity, including $629 million of cash on the balance sheet and a fully undrawn, secured $1.5 billion revolving credit facility due 2027. Gen Digital has approximately 62% of its debt as floating-rate debt, and the remaining 38% is fixed-rate debt reflecting $1 billion of interest rate hedges. Gen Digital's term loan A2 amortizes at 5% per annum while term loan B amortizes at 1% per annum. The nearest debt maturity is in 2025, when $1.1 billion of senior notes come due. Given the company's strong FCF, Fitch expects Gen Digital's liquidity to remain robust. ISSUER PROFILE Gen Digital, Inc. (fka NortonLifeLock, Inc.; NYSE: GEN) is a global provider of consumer cyber safety solutions, with more than 500 million users in over 150 countries. The company offers consumers both premium and "freemium" software. Gen Digital provides solutions for cybersecurity, privacy and identity protection. 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 ----------- ------ -------- ----- Gen Digital Inc. LT IDR BB+ Affirmed BB+ senior unsecured LT BB+ Affirmed RR4 BB+ senior secured LT BBB- Affirmed RR1 BBB- GLOBAL ONE: Case Summary & 10 Unsecured Creditors ------------------------------------------------- Debtor: Global One Media, Inc. 6605 Grand Montecito Pkwy Ste 100 Las Vegas, NV 89149-0210 Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court District of Nevada Case No.: 24-10526 Debtor's Counsel: David Riggi, Esq. RIGGI LAW FIRM 5550 Painted Mirage Road Suite 320 Las Vegas, NV 89149 E-mail: riggilaw@gmail.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Richard Hudson as president/CEO. A full-text copy of the petition containing, among other items, a list of the Debtor's 10 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/22EWRZY/GLOBAL_ONE_MEDIA_INC__nvbke-24-10526__0001.0.pdf?mcid=tGE4TAMA HERETIC BREWING: Joseph Cotterman Named Subchapter V Trustee ------------------------------------------------------------ The U.S. Trustee for Region 14 appointed Joseph Cotterman as Subchapter V trustee for Heretic Brewing Company. Mr. Cotterman will be paid an hourly fee of $500 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Cotterman declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Joseph E. Cotterman 5232 W. Oraibi Drive Glendale, AZ 85308 Telephone: 480-353-0540 Email: cottermail@cox.net About Heretic Brewing Heretic Brewing Company is engaged in the beverage manufacturing business in Scottsdale, Ariz. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 24-00634) on January 26, 2024, with $500,000 to $1 million in assets and $1 million to $10 million in liabilities. George Cole Jackson, authorized signatory, signed the petition. Christopher C. Simpson, Esq., at Osborn Maledon, P.A. represents the Debtor as legal counsel. HUMANIGEN INC: $200,000 Chapter 11 Bidder Fees Rejected ------------------------------------------------------- Emily Lever of Law360 reports that a Delaware bankruptcy judge Tuesday, January 23, 2024, partially rejected bidding procedures for biopharmaceutical company Humanigen Inc.'s assets, saying a proposed $200,000 in bidding protections for the stalking horse bidder, which is also the DIP lender, was disproportionate to the $2 million purchase price. About Humanigen Based in Brisbane, Calif., Humanigen, Inc. (OTCQB: HGEN), formerly known as KaloBios Pharmaceuticals, Inc. -- @ www.humanigen.com -- is a clinical stage biopharmaceutical company, developing its portfolio of proprietary Humaneered anti-inflammatory immunology and immuno-oncology monoclonal antibodies. The Company's proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. The Company has developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied its Humaneered technology to optimize them. The Company's lead product candidate, lenzilumab, and its other product candidate, ifabotuzumab ("iFab"), are Humaneered monoclonal antibodies. Humanigen, Inc. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-10003) on January 3, 2024, with assets of $521,000 and liabilities of $44,131,000. Ronald Barliant, independent director, signed the petition. Potter Anderson & Corroon, LLP and SC&H Group, Inc., serve as the Debtor's bankruptcy counsel and investment banker, respectively. INSYS THERAPEUTICS: Trustee Says Ex-CEO's Counterclaims Not Allowed ------------------------------------------------------------------- Ben Zigterman of Law360 reports that the liquidation trustee of Insys Therapeutics on Tuesday, January 23, 2024, asked a Delaware bankruptcy judge for an injunction preventing the pharmaceutical company's former CEO Michael L. Babich from pursuing counterclaims in a clawback suit from the trustee in Delaware's Chancery Court. About Insys Therapeutics Headquartered in Chandler, Ariz., Insys Therapeutics Inc. -- http://www.insysrx.com/-- is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve patients' quality of life. Using proprietary spray technology and capabilities to develop pharmaceutical cannabinoids, Insys is developing a pipeline of products intended to address unmet medical needs and the clinical shortcomings of existing commercial products. Insys is committed to developing medications for potentially treating anaphylaxis, epilepsy, Prader-Willi syndrome, opioid addiction and overdose, and other disease areas with a significant unmet need. As of March 31, 2019, Insys had $172.6 million in total assets, $336.3 million in total liabilities, and a total stockholders' deficit of $163.7 million. Insys Therapeutics and six affiliated companies filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-11292) on June 10, 2019. The Debtors' cases are assigned to Judge Kevin Gross. The Debtors tapped Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., as legal counsel; Lazard Freres & Co. LLC as investment banker; FTI Consulting, Inc. as financial advisor; and Epiq Corporate Restructuring, LLC as claims agent. Andrew Vara, acting U.S. trustee for Region 3, on June 20, 2019, appointed nine creditors to serve on an official committee of unsecured creditors in the Chapter 11 cases. Akin Gump Strauss Hauer & Feld LLP, and Bayard, P.A., serve as the Committee's attorneys; and Province, Inc., is the financial advisor. * * * Insys sold its epinephrine 7mg and 8.5mg unit-dose nasal spray products and naloxone 8mg unit-dose nasal spray products and certain equipment and liabilities to Hikma Pharmaceuticals USA Inc. for $17 million. It sold for $12.2 million to Chilion Group Holdings US, Inc., its (i) CBD formulations across current pre-clinical, clinical, third-party grants and investigator initiated study activities (including any future activities or indications), (ii) THC programs of Syndros oral dronabinol solution, and (iii) Buprenorphine products. Insys sold to BTcP Pharma, LLC for $52 million in royalty payments plus other amounts all strengths, doses and formulations in the world (except for the Republic of Korea, et al.). Insys sold to Pharmbio Korea, Inc., for $1.2 million in cash specific intellectual property, records and certain other assets related to strengths, doses and formulations of the Subsys Product in the Republic of Korea, Japan, China, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam. After selling substantially all of their assets, the Debtors filed a Chapter 11 Plan and Disclosure Statement. Judge Kevin Gross on Jan. 16, 2020, confirmed the Debtors' Plan of Liquidation. IPWE INC: Court OKs $500,000 DIP Loan from Granicus --------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized IPwe Inc. to use cash collateral and obtain postpetition financing, on an interim basis. The Debtor is permitted to obtain up to $500,000 in postpetition debtor-in-possession financing from Granicus IP, LLC. About $150,000 of the loan proceeds is available upon entry of the interim order. The DIP Facility will incur interest at a rate of 5% per annum, which amounts will accrue but will not be payable until the Maturity Date. After an Event of Default, the interest will accrue at an interest rate of 10% per annum payable monthly. No amounts borrowed will be repaid until the Maturity Date. No amounts borrowed will be repaid until the Maturity Date. The DIP Facility will mature on the earlier to occur of the earlier of: Sale of Substantially all of the Debtor's assets or Effective Date of the Plan and the expiration of any Remedies Notice Period. As adequate protection for the use of cash collateral, the Prepetition Secured Parties are granted valid, binding, continuing, enforceable, fully perfected, first priority senior replacement liens on and security interests in any and all tangible and intangible pre- and post-petition property of the Debtor, whether existing before, on or after the Petition Date. The Adequate Protection Liens will be junior only to the Carve-Out, the superpriority lien as and when granted to the Final DIP portion, as and when approved, and any Permitted Encumbrance. The Adequate Protection Liens will otherwise be senior to all other security interests in, liens on, or claims against any of the Adequate Protection Collateral. The Adequate Protection Amount due to the Prepetition Secured Parties will constitute an allowed superpriority administrative expense claim against the Debtor in the amount of any diminution in value of the Prepetition Collateral. These events constitute an "Event of Default": (i) The Debtor's failure to obtain entry of the Final Order from the Court within 20 days after the Petition Date, subject to the Court's availability; (ii) The Adequate Protection Liens cease to be in full force and effect, or cease to create a perfected security interest in, and lien on, the Prepetition Collateral purported to be created thereby; (iii) The Debtor's failure to perform or comply with any of the terms, provisions, conditions, covenants, or obligations under the Interim Order, including all Budget Covenants; (iv) The Court enters an order granting relief from the automatic stay applicable under 11 U.S.C. section 362 authorizing an action by a lienholder with respect to assets of the Debtor on which such lienholder has a lien with an aggregate value in excess of $50,000; (v) The entry of an order: (a) appointing a trustee, receiver or examiner with expanded powers, including to manage the Debtor's business, with respect to the Debtor, (b) dismissing the Chapter 11 Case, (c) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, in each case where such order has become a final order not subject to appeal, or (d) terminating the Debtor's exclusivity period under section 1121 of the Bankruptcy Code for any reason whatsoever; (vi) The Debtor, after the Petition Date, takes any action, or as to insiders, permits any action, that would result in an "ownership change" as such term is used in 26 U.S.C. section 382; and (vii) The Debtor breaches or fails to comply with the terms of the Interim Order, the DIP Promissory Note, the Final Order or the Plan, in any material resect. A final hearing on the matter is set for February 16, 2024 at 10 a.m. A copy of the order is available at https://urlcurt.com/u?l=8jxpeG from PacerMonitor.com. About IPwe Inc. IPwe, Inc. has been at the forefront of developing blockchain solutions for IP strategy, collaborating with leading blockchain providers such as IBM, Hyperledger, and CasperLabs since 2018. The Debtor's cutting-edge IP strategy solution, Smart Intangible Asset Management, utilizes dynamic patent NFTs and its proprietary AI algorithm to consolidate IP data and generate data-driven metrics, including valuations, ratings, and benchmarks for every patent. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-10078) on January 24, 2024, with $156,169 in assets and $7,292,376 in liabilities. Leann M. Pinto, chief executive officer, signed the petition. Judge Craig T. Goldblatt oversees the case. Ronald S. Gellert, Esq., at Gellert Scali Busenkell & Brown, LLC represents the Debtor as legal counsel. JACOBS ENTERTAINMENT: S&P Affirms 'B' ICR, Outlook Stable --------------------------------------------------------- S&P Global Ratings affirmed all ratings, including its 'B' issuer credit rating on Jacobs Entertainment Inc. S&P said, "The stable outlook reflects our expectation for low-single-digit percent growth in 2024 due to improved performance at J Resort following renovations. We forecast S&P Global Ratings-adjusted EBITDA interest coverage of about 2.2x, which will provide some cushion. Further, we expect Jacob's to lower leverage to 6.3x by the end of 2024. "Despite estimated 2023 leverage that is at our 6.5x downgrade threshold and below our prior base-case forecast, we expect gaming operator Jacobs' leverage to improve below 6.5x in 2024 due to EBITDA growth and interest coverage remains above 2x. "While Jacob's credit metrics are weaker than expected, we affirmed the rating because we expect EBITDA to improve in 2024 and because adopting the new lease accounting does not affect credit quality. We assume construction at its J Resort this year will be less disruptive, and that Jacobs' will receive a larger benefit from renovations compared to 2023. Therefore, we expect performance at J Resort will not hurt EBITDA in 2024." In 2023, Jacobs Entertainment experienced modest softness in its operating performance in the nine months ended Sept. 30, 2023. This is primarily due to a reduction in fuel volume, phasing out of pandemic-related tax stimulus money and hurricane stimulus funds in the Louisiana market, and a decrease in gaming revenues in Nevada due to redevelopment disruption at J Resort. This partially offset new food and beverage outlets at J Resort, opening approximately 250 renovated hotel rooms at J Resort in the second quarter of 2023, and an increase in food and beverage revenue at its Ohio operations. S&P expects 2023 EBITDA margins declined about 300 basis points (bps) compared to 2022 mostly due to higher labor and marketing costs, driving an EBITDA decline of high-teens percent and about 7% lower than its base-case forecast for 2023. This added about 0.4x to its prior forecasted 2023 adjusted leverage of 5.8x. S&P said, "Starting from year-end 2022, as required for privately held companies, Jacobs adopted ASC Topic 842, the new lease accounting standard issued by the Financial Accounting Standards Board. Jacobs now reports about $90 million of operating and finance lease liabilities on its balance sheet. This represents a material increase compared to our previous estimate of $32 million, including our operating lease adjustment of $8 million, on Sept. 30, 2022. The increase in operating lease liabilities relates to how the company accounts for lease renewals and lower implied interest rates under the new accounting standard compared to our previous assumption. The inclusion of these larger lease liabilities as debt under our criteria increases the company's S&P Global Ratings-adjusted leverage by about 0.25x. "The new lease accounting standard does not fundamentally weaken the company's credit quality. We expect the company's leverage to stay elevated above 6x for the next two years, in part from adopting the new lease accounting standard and its treatment in our analysis. Although the company's balance sheet liability is higher than our previous calculation, our view of Jacobs' underlying creditworthiness is unchanged. "Therefore, to accommodate the lease adjustments, we have fine-tuned our outlook thresholds to add an EBITDA interest coverage threshold of 2x to measure credit risk and retained the 6.5x leverage threshold. If EBITDA interest coverage remains above 2x, we will tolerate a temporary increase in leverage above 6.5x while the company completes its J Resort redevelopment project and operations ramp up in 2024, as long as we believe leverage will not sustain above 6.5x. "We believe Jacobs' redevelopment of its J Resort property will generate incremental cash flow beginning in 2025. The company completed the first phase of its remodeling project at the end of the second quarter of 2023 and embarked on a second phase to expand the casino and add additional resort amenities. The $130 million first phase included a completely remodeled casino (including over 600 new gaming positions), renovated hotel rooms, surface parking spaces, and new food and beverage outlets. "Furthermore, Jacobs is the middle of its second redevelopment phase at its J Resort property, funded with the $100 million notes raised in February 2023, operating cash flow, and some revolver borrowings. The $120 million second phase development includes an expanded casino to accommodate the number of hotel rooms, another food and beverage offering, and additional resort amenities. We do not expect meaningful EBITDA contribution until 2025 when the redevelopment is complete and construction stops disrupting the property. "Once complete, we assume these projects will increase visitation and EBITDA at both of its Reno properties beginning in 2025. We also believe the improvements to the quality of its casinos and their surrounding neighborhoods could help Jacobs better capitalize on Reno's increased gaming revenue, which has supported from the city's steady population increases and investments in the area to support job creation. Still, we assume the company's casinos remain second-tier properties in the highly competitive Reno market with three Caesars Entertainment Inc.-owned properties. Caesars has greater resources for marketing. "We expect its Colorado and Louisiana properties will continue to be the leading contributors to its cash flow. We assume the performance of Jacobs' Black Hawk, Colo., properties, which account for about 40% of its property-level EBITDA, remain largely stable over time. We do not anticipate further changes in their operating environment following a gaming and amenity expansion at the competing Monarch Casino Resort. Further, we believe gross gaming revenue in Black Hawk will remain above pre-pandemic levels. This follows the mid-2021 implementation of Colorado's Amendment 77, which removed the $100 bet limit and permitted a greater variety of games in the market. Although Jacobs' Louisiana properties EBITDA experienced a modest decline in 2023 because of lower table games revenue and slot coin-in, they will likely continue to be a significant contributor. Jacobs has a leading position in the Louisiana truck stop market, which benefits from some barriers to entry given the limitations to eligible locations. "The stable outlook on Jacobs reflects our expectation for low-single-digit percent growth due to improved performance at J Resort as the property ramps up following the completion of renovations. We forecast S&P Global Ratings-adjusted leverage EBITDA interest coverage of about 2.2x which will provide some cushion relative to our downgrade threshold of 2x. While debt leverage of 6.5x is at our downgrade threshold, partly due to the change in accounting and drag on EBITDA from the Reno development, we expect Jacobs to lower leverage to 6.3x by the end of 2024. "We could lower our rating on Jacobs if we expect it to sustain S&P Global Ratings-adjusted EBITDA interest coverage below 2x and debt leverage of more than 6.5x. We could also lower the rating if liquidity becomes strained." This could occur if: -- EBITDA is 10% lower than we forecast; -- It undertakes higher-than-assumed debt-funded development spending; or -- Underperformance or higher-than-expected development capex depletes excess cash balances or results in greater-than-expected revolver borrowings and minimal covenant cushion. S&P said, "It is unlikely we will raise our rating on Jacobs over the next two years given our forecast for S&P Global Ratings-adjusted leverage above 6x and EBITDA interest coverage of 2.2x-2.4x. Nevertheless, we could do so if we expect the company to sustain S&P Global Ratings-adjusted leverage below 5x while aligning with the company's financial policy." KATY ABA: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Katy ABA Center of Texas, LLC 23222 Kingsland Blvd Katy, TX 77494 Business Description: Katy ABA is a medical clinic whose mission is to assist children who struggle with challenges including Autism Spectrum Disorder to reach their highest potential by using the principles of Applied Behavior Analysis. Chapter 11 Petition Date: February 1, 2024 Court: United States Bankruptcy Court Southern District of Texas Case No.: 24-30407 Judge: Hon. Jeffrey P Norman Debtor's Counsel: Susan Tran Adams, Esq. TRAN SINGH, LLP 2502 La Branch St Houston TX 77004 E-mail: stran@ts-llp.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Laura K. Gore as president. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A copy of the Debtor's petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/DRSGEBY/Katy_ABA_Center_of_Texas_LLC__txsbke-24-30407__0001.0.pdf?mcid=tGE4TAMA KIDDE-FENWAL INC: U.S. Trustee Rejects Future Claims Representative ------------------------------------------------------------------- Alex Wittenberg of Law360 reports that the U.S. Trustee's Office asked a Delaware bankruptcy judge to reject Kidde-Fenwal Inc. 's bid to appoint a representative for people who in the future claim they were injured by the company's use of firefighting foam containing so-called forever chemicals, saying the court should evaluate candidates instead of leaving it solely to the debtor. About Kidde-Fenwal Kidde-Fenwal Inc. -- https://www.kidde-fenwal.com/ -- manufactures fire protection systems. It offers products such as fire control systems, explosion aircraft protection, laser-based smoke detection devices, electronic gas ignitions, and fire suppressions. Kidde-Fenwal markets its products to mining, manufacturing, education, and commercial sectors. Kidde-Fenwal sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 23-10638) on May 14, 2023. In the petition filed by its chief transformation officer, James Mesterharm, the Debtor reported assets between $100 million and $500 million and estimated liabilities between $1 billion and $10 billion. The Debtor tapped Sullivan & Cromwell, LLP and Morris Nichols Arsht & Tunnell, LLP as legal counsels; and Guggenheim Securities, LLC, as investment banker. Stretto, Inc., is the claims and noticing agent and administrative advisor. KING STATE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: King State Coffee LLC 520 E. Floribraska Avenue Tampa, FL 33603 Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Middle District of Florida Case No.: 24-00576 Judge: Hon. Catherine Peek Mcewen Debtor's Counsel: David S. Jennis, Esq. DAVID JENNIS, PA D/B/A JENNIS MORSE 606 East Madison Street Tampa, FL 33602 Tel: (813) 229-2800 E-mail: ecf@JennisLaw.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Timothy F. McTague as manager. A full-text copy of the petition containing, among other items, a list of the Debtor's 10 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JY6FVPQ/King_State_Coffee_LLC__flmbke-24-00576__0001.0.pdf?mcid=tGE4TAMA KITO CROSBY: S&P Assigns 'B' Rating on $1BB First-Lien Term Loan ---------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level rating and '3' recovery rating to Kito Crosby Ltd.'s proposed $1.0 billion first-lien term loan maturing August 2029. The '3' recovery rating indicates its expectation of meaningful (50%-70%; rounded estimate: 55%) recovery for lenders in the event of a payment default. The company plans to use the proceeds from the term loan to repay the outstanding borrowings on its existing $454 million first-lien term loan and existing $532 million incremental first-lien term loan, and to pay associated transaction expenses. As part of the transaction, the company is also extending the maturity of its revolving credit facility to February 2029. All S&P's ratings on Kito Crosby, including its 'B' issuer credit rating and stable outlook, are unchanged because the transaction is leverage neutral. S&P expects favorable operating trends to continue over the next 12 months, supported by contributions from the KITO acquisition. It also expects financial policies to be supportive of maintaining debt leverage appropriate for the current ratings. ISSUE RATINGS -- RECOVERY ANALYSIS Key analytical factors -- The company's revised debt structure consists of the $120 million first-lien revolving loan facility due February 2029 and $1 billion first-lien term loan B due August 2029. S&P's recovery ratings on this debt remain unchanged. -- S&P's simulated default scenario contemplates a payment default occurring in 2027, due to end-market weakness affecting volumes across the company's portfolio of products. This would increase price competition and operational inefficiencies, leading to a sharp decline in revenue and margins. -- S&P believes lenders will aim to maximize Kito Crosby's value, and thus pursue a reorganization rather than a liquidation in a default scenario. Therefore, S&P values the company on a going-concern basis, and apply a 5.5x multiple to our projected emergence EBITDA. The 5.5x multiple reflects the company's relative scale and scope of operations within the capital goods sector. Simulated default assumptions -- Year of default: 2027 -- Emergence EBITDA: $125 million -- EBITDA multiple: 5.5x -- Jurisdiction: U.S. Simplified waterfall -- Gross enterprise value: $687 million -- Net enterprise value (after 5% administrative costs): $653 million -- Valuation split in % (obligors/nonobligors): 100%/0% -- Collateral value available to secured creditors: $653 million -- Secured first-lien term loans and senior revolver: $1.11 billion --Recovery expectation: 50%-70%; rounded estimate: 55% -- Recovery rating: '3' Note: All debt amounts include six months of prepetition interest. Revolver facility assumed 85% drawn at default. KITTYDOG INC: Case Summary & Five Unsecured Creditors ----------------------------------------------------- Debtor: Kittydog Inc. 601 Sycamore Street Unit 6106 Kissimmee, FL 34747 Business Description: The Debtor offers travel arrangement and reservation services. Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Middle District of Florida Case No.: 24-00523 Judge: Hon. Tiffany P Geyer Debtor's Counsel: Jeffrey S. Ainsworth, Esq. BRANSONLAW, PLLC 1501 E. Concord Street Orlando, FL 32803 Tel: 407-494-6834 E-mail: jeff@bransonlaw.com Total Assets: $0 Total Liabilities: $1,045,446 The petition was signed by Jacob Martin as president. A full-text copy of the petition containing, among other items, a list of the Debtor's five unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/MNDZQ5Q/Kittydog_Inc__flmbke-24-00523__0001.0.pdf?mcid=tGE4TAMA LAX INTEGRATED: Fitch Lowers Rating on $1.2BB 2018A/B Bonds to BB+ ------------------------------------------------------------------ Fitch Ratings has downgraded the rating on California Municipal Finance Authority's (CMFA) approximately $1.2 billion senior lien revenue bonds (LINXS Automated People Mover [APM] Project) series 2018A and 2018B issued on behalf of LAX Integrated Express Solutions, LLC (LINXS) to 'BB+' from 'BBB-'. The Rating Outlook is Negative. Entity/Debt Rating Prior ----------- ------ ----- LAX Integrated Express Solutions (TX) LAX Integrated Express Solutions (TX) /Availability Pay Revenues – First Lien/1 LT LT BB+ Downgrade BBB- RATING RATIONALE The downgrade reflects continued and increasing construction delays as well as a strained relationship between the project and its concession grantor -- Los Angeles World Airports (LAWA; rated AA/AA-; senior/sub) -- that has resulted in various disagreements and disputes between the parties over the last couple of months and the lack of timely resolution of the project's schedule relief and compensation claims. Due to the delays, the project currently has only a 16-day cushion to its lenders' longstop date, a breach of which could risk the ability to draw construction funding for the project. Although as per the recent technical advisor report, LINXS and LAWA have agreed to work towards a time extension and cost compensation agreement by Feb. 1, 2024, the confluence of a track record of delays, drawn-out dispute resolutions, and strained relationship between grantor and the project is not consistent with an investment-grade rating. Although the project is around 96% complete, the Negative Outlook reflects the likelihood that any unresolved construction issues, further deterioration of the relationship between the two parties, or further disputes during the testing and commissioning phase could result in additional material completion risk concerns. Moreover, a breach of the lenders' longstop date without LAWA's timely approval of schedule relief claims by Feb. 1, 2024, could lead to a further downgrade in the rating. Fitch will continue to closely monitor the project's progress and outcome of any ongoing and potential disputes. The 'BB+' rating reflects the completion risk issues noted above. Once operational, the project's credit profile will be reflective of a strong revenue-paying grantor and well-defined operating standards. Although the Fitch rating case average debt service coverage ratio (DSCR) of 1.15x and realistic outside cost (ROC) to breakeven multiple of 7.8x are consistent with an investment grade rating, the rating is currently constrained by project's completion risk profile. KEY RATING DRIVERS Completion Risk - Weaker Extended Construction Delays: The project has experienced extended construction delays, prolonged dispute resolution, and difficulties in the parties' working relationship. Although significant construction progress has been made, the project is required to undergo a rigorous testing and commissioning process and is not expected to be completed until April 2025. Although the DB contractor members are considered experienced with a strong history of successfully working together, the project's large-scale, long original construction duration, interface risks, as well as the systems integration related to the rolling stock, introduce construction complexities. The contractor-liquidated damages are considered adequate to cover unavoidable costs for these extended delays and the liquid security provided by the DB contractor after the recent step-up covers 365 days of delay liquidated damages. Cost Risk - Midrange Contracted Operations, Cost Resiliency: Once completed, the full scope of O&M and renewal works (lifecycle costs) of the APM project are passed down to the O&M joint venture (O&M contractor), which is comprised of affiliates of the equity sponsors, and backed by creditworthy parent guarantees. In addition, APM obligations are fulfilled by a highly experienced provider, Alstom, providing continuity through complete vertical integration and aligning interests. Lifecycle costs are moderate and well defined. There is no major maintenance reserve account; however, a five-year future handback reserve provides additional support. Scope Risk - Midrange; Cost Predictability - Stronger; Cost Volatility & Structural Protections - Midrange Revenue Risk - Stronger Payments from Strong Counterparty: Project payments stem from construction milestone payments, additional D&C payments, and availability payments from LAWA. Payment mechanics are consistent with other availability payment (AP) transactions in the U.S. Once operational, APs are split between operating and capital, the first of which will be paid by LAWA as an operating expense while capital APs (obligation rated 'A') will be funded from the discretionary purposes account at the bottom of LAWA's waterfall. Capital payments (70% of total APs) escalate annually at 3% and operating payments escalate based on a weighted index average. LAWA's payment commitment is not a constraint to a 'BBB' category rating and the deduction mechanism is clearly defined with ample cure periods for non-performance. Debt Structure - 1 - Midrange Standard Features, Flat Coverage: The debt structure is fixed-rate and fully amortizing, and benefits from a forward-and-backward looking 1.10x equity lockup trigger. These stronger features are offset by a relatively flat DSCR profile and a six-month debt service reserve fund (DSRF), which is funded at passenger service availability (PSA) date. Short-term debt will be repaid with the final milestone payment and equity injection and long-term debt will have a final maturity coterminous with the end of the DBFOM agreement. Additional parity debt is permitted, so long as it does not result in a rating downgrade and projected DSCR remains at least 1.15x. Financial Profile Fitch has adopted the sponsor's case as the Fitch base case due to Fitch's comfort level with the project's O&M and LC cost assumptions as a result of analysis and dialogue with the LTA. The model is sculpted to a relatively flat 1.15x DSCR profile. The Fitch rating case incorporates a weighted average ROC of 3.2%, as identified by the LTA. This results in an average DSCR of 1.15x, with minimum coverage of 1.14x, a level that is at the lower end for a 'BBB'-category rating. The minimum all-cost breakeven of approximately 25% results in a 7.8x multiple of the ROC, indicative of the project's robust ability to withstand stress. PEER GROUP The most comparable Fitch-rated availability-based projects are Purple Line Transit Partners (PLTP; 'BBB'/Stable) and Denver Transit Partners (DTP; 'A-'/Stable). Both projects include the construction of rail projects in major metropolitan areas. PLTP's higher rating reflects a more robust cost resiliency (13.1x ROC multiple) together with a stronger DSCR profile (1.3x). DTP's higher rating reflects in part its operational status whereas LINXS and PLTP are still subject to completion risk. DTP's ROC multiple of 7.9x is in line with LINXS's multiple of 7.8x; however, DTP's all-cost break-even is higher at 33% versus LINXS's at 25% and DTP's rating is supported by a much higher average DSCR of 2.1x compared with LINXS's average DSCR of 1.15x. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Further deterioration of the working relationship between the two parties leading to uncertainties regarding project completion; - Delay in approval of schedule relief claims by LAWA beyond a month thereby risking release of construction funding for the project due to breach of the lenders' long stop date; Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Completion of the project in line with its current schedule could lead to revision of the Outlook to Stable; - A rating upgrade is unlikely as the project continues to face extended construction delays and has a history of drawn-out disputes. CREDIT UPDATE The project continues to face extended delays. In April 2023, the project and LAWA agreed on a global settlement that resolved all delay claims that LINXS should have known before Dec. 8, 2022 and provided a 292-day time extension to the PSA date from Sept. 12, 2023 to June 30, 2024. As a part of the settlement, LAWA also agreed to provide cost compensation for missed availability payments from Sept. 13, 2023 through the earlier of June 30, 2024, the date of which passenger service commences on the automated people mover (APM) system, or the PSA date. LAWA also agreed to make milestone 6 payment on or before September 15, 2024 independent of the PSA date to avoid refinancing of the design-build loan. However, LAWA served a default notice to LINXS on July 21, 2023, alleging that LINXS abandoned performance of the additional roadway work that falls within LINXS' base scope of work. LAWA noted this action constituted a developer default and LAWA had recourse to remedies including to the performance security and ultimately, termination of the concession. In its response, LINXS claimed that the default notice was invalid due to LAWA's failure to provide notice to the collateral agent as required by the concession agreement and that it had not abandoned the roadway works. In September 2023, Fitch removed the Rating Watch Negative, reflecting the cure of the developer default notice issued by LAWA to LINXS in July 2023 but assigned a Rating Outlook Negative, reflecting extended completion delays faced by the project. Subsequently, LINXS and LAWA agreed upon a $69.5 million settlement for the roadway claims which was approved by LAWA's Board. In its October 2023 report, the technical advisor noted that LAWA believed LINXS was behind on the overall works and falsely represented the critical path. The parties continued to face disagreements over other issues, as highlighted by Project Neutral hearings in August 2023 and November 2023, both of which LAWA did not attend. The project delays have since increased from 165 days to 288 days with the current PSA date expected to be April 14, 2025. The increased delays beyond 180 days triggered the contingent security event and the DB contractor stepped up the liquid security, which now covers the full 365 days of liquidated damages through June 30, 2025. Barring timely approval of schedule relief by LAWA, further construction delays beyond the lenders' long stop date of April 30, 2025 could lead to financial pressure on the project as it will not be able to draw its design-build loan facility. The increased delay is driven by an ongoing information request related to LAWA IT network access requests (NARs), which is driving the critical path of the project. This is required for LINXS to develop their test procedures and to install and configure network equipment and integration activities. LAWA has now set a deadline for LAWA IT for the NARs issue which is expected to stop further slippage in schedule as per the technical advisor. There are additional issues faced by the project such as emergency power off buttons in the ConRAC building, and pedestrian egress in the new Metro AMC station. LINXS noted that it cannot proceed with the ConRAC work until LAWA issues a change order that LINXS accepts. Based on the January 2024 update by the technical advisor, a portion of the ConRAC emergency power off issue has been descoped from LINXS responsibility as LAWA will now undertake the work. Regarding one of the pedestrian walkways, LINXS has notified LAWA that it is unable to continue work until LAWA reissues a directive letter as a LAWA change. Fitch notes these delays are being worked through schedule relief claims with LAWA though these claims have not been approved yet. Additionally, there are several cost compensation claims pending with LAWA. As per the recent technical advisor report, both LAWA and LINXS have agreed to work towards a time extension and cost compensation agreement by Feb. 1, 2024; however, it remains unclear how much schedule relief will be granted. Although Fitch understands the parties do not expect the project to breach the lenders' long stop date and are working toward an agreement for extension of the PSA date, the headroom between the current PSA date of April 14, 2025 and the lenders' long stop date of April 30, 2025 has significantly reduced. If the project breaches its lenders' long stop date, there could be financial pressure as the project would not be able to draw the design-build loan unless the schedule relief is granted by LAWA. This could further lead to a default under the design-build contract due to non-payment of the DB contractor invoices if not resolved within the cure period of 21 days provided the DB contractor wants to issue such default notice. Failure to pay for design and construction work could also lead to a developer default under the concession agreement, if not cured within 30 days. Notwithstanding the expected resolution of this issue by Feb. 1, 2024, Fitch believes that the track record of delays, drawn-out dispute resolutions, and strained relationship between grantor and the project is not consistent with an investment-grade rating. Based on the December 2023 monthly status report, total cumulative earned value progress to date in the construction phase was 96.3% compared with a planned value of 99.9%. Progress lags behind the approved baseline plan as there have been a number of events that have affected the progress of the project. The project also needs to undergo a testing and commissioning phase before PSA is achieved. FINANCIAL ANALYSIS Fitch has adopted the sponsor's case as the Fitch base case due to Fitch's comfort level with the project's O&M and LC cost assumptions as a result of analysis and dialogue with the LTA. The model is sculpted to a relatively flat 1.15x DSCR profile. The minimum loan life coverage ratio (LLCR) is 1.27x (when discounting is begun post construction), whereas net leverage at the onset of operations is approximately 14.8x based on the first year of cash flow available for debt service. The rating case applies a ROC stress to the base case to measure the project's financial flexibility to absorb reasonable cost increases. Fitch looks to the LTA to identify the ROC (expressed as a percentage) level of O&M, LC, SPV, and insurance expenses exceeding initial projections in a conservative cost over-run scenario, based on its experience with similar projects and their assessment of potential scenarios. The LTA's ROC analysis resulted in an O&M increase of 3.7% and LC and energy costs, each increasing by 3.5%, or a weighted average ROC across all costs of 3.2%, somewhat lower than the criteria guideline of 7.5% for midrange projects, but in line with ROCs used for other transit projects and reasonable given the level of risk, profit, and contingency already embedded in the costs. The results are a 1.15x average and 1.14x minimum DSCR. Fitch analyzed a number of coverage ratio breakeven scenarios related to the proposed financial structure. When run on the Fitch base case, the model indicates the financial structure can withstand an approximate 24.8% increase in total costs (the breakeven rises above 30% in most individual years when pinch-points are excluded). This translates to a robust 7.8x breakeven-as-a-multiple-of-the-ROC, indicating costs could rise nearly 8x above the LTA's reasonable cost overrun analysis and the project would still meet debt service obligations at least 1.0x. SECURITY The bonds are secured by a senior lien on project revenue & all property interests of the borrower. 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. LEON INDUSTRIES: U.S. Trustee Unable to Appoint Committee --------------------------------------------------------- The U.S. Trustee for Region 2 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Leon Industries, LLC. About Leon Industries Leon Industries, LLC owns and operates a nitrile glove manufacturing facility in New York. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. N.Y. Case No. 23-11203) on Dec. 13, 2023, with as much as $10 million in both assets and liabilities. Jacomo Hakim, president, signed the petition. Judge Carl L. Bucki oversees the case. Arthur G. Baumeister, Jr., Esq., at Baumeister Denz, LLP represents the Debtor as legal counsel. LI GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable ---------------------------------------------------------- Moody's Investors Service affirmed LI Group Holdings, Inc.'s (dba "Liaison"), a Massachusetts-based provider of marketplace technology, applications, and analytics platform supporting the US higher education market, B2 corporate family rating, B2-PD probability of default rating, and B2 instrument ratings on the existing first lien senior secured bank credit facilities (term loan and revolver). The outlook is maintained stable. The affirmation of the B2 CFR and stable outlook reflects Moody's expectation for mid-single digit revenue and EBITDA growth and that Liaison's credit metrics will continue to improve, such that debt-to-EBITDA (Moody's adjusted) will trend towards mid-5.0 range over the next 12-18 months. Moody's anticipates that the company will generate annual free cash flow of around $20 million in 2024 and its free cash flow to debt (Moody's adjusted) will remain above 5%. The rating and outlook are also supported by Liaison's dominant competitive position in the large, stable and countercyclical higher education market, a highly recurring revenue model, and strong profitability with EBITDA margin (Moody's adjusted) approaching 40% in fiscal 2024. RATINGS RATIONALE Liaison's B2 CFR is constrained by the company's: (1) highly leveraged debt capital structure, with debt-to-EBITDA (Moody's adjusted and expensing all capitalized software development costs) at 6.2x as of twelve months ended September 30, 2023; (2) very modest revenue size; (3) narrowly focused products and services with limited customer end-market diversity; and (4) concentrated ownership and risk of more aggressive financial strategies. The credit profile is supported by: (1) its market-leading position as a provider of centralized application services (CASs) for graduate education programs and other admission management software solutions; (2) the highly predictable and recurring software revenue generated from a diverse customer base under multiyear contracts with historically high gross revenue retention above 95%; (3) very good EBITDA margin; and (4) Moody's expectation of very good liquidity, including free cash flow-to-debt (Moody's adjusted) at least 5% over the next 12-15 months. Moody's expects that Liaison will maintain very good liquidity over the next 12-15 months. Sources of liquidity consist of cash balances of around $38 million as of September 30, 2023, expectation for annual free cash flow generation of around $20 million and full access under its $15 million revolving credit facility due 2027. Given the voluntary repayment of debt in September 2023 ($50 million), Liaison has satisfied all mandatory quarterly amortization payment requirements until maturity. Liaison collects application fees quickly, through credit card payments, and working capital has historically been a modest source of funds annually. Given currently large cash position, Moody's does not foresee any use of the revolver in the upcoming 12-15 months. However, the size of the revolver is modest relative to annual interest expense and capital expenditures. Moody's consider the single financial covenant, a springing first-lien net leverage test for the benefit of revolver lenders only, applicable when at least 35% of the facility is drawn and set at 8.5 times, to be so loose as to provide scant protection for lenders. Although it was not applicable, as of the second quarter ended September 30, 2023, the company-calculated, senior secured first lien net leverage ratio was 3.27 times. The affirmation of the B2 rating on the first lien senior secured bank credit facility (revolver and term loan) incorporates both the probability of default as reflected in the B2-PD probability of default rating and a loss given default assessment of the individual debt instruments. Because there is a single family of debt, the individual instruments' risk reflects directly the overall corporate risk, captured in the B2 CFR, so the instruments are also rated B2. The stable outlook reflects Moody's expectation for revenue and EBITDA growth in the mid-single digit percentages over the next 12-18 months, driven by continued growth in applications processed and price increases, allowing the company to reduce debt-to-EBITDA towards the mid-5x range by March 31, 2025. Moody's also projects Liaison will maintain very good liquidity, including generate free cash flow to total debt (Moody's adjusted) of at least 5%. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would consider an upgrade to Liaison's ratings if the company: (1) can substantially and profitably grow its revenue base and maintain good customer retention; (2) sustains debt-to-EBITDA (Moody's adjusted and expensing all capitalized software development costs) below 5.0 times; (3) maintains free cash flow-to-debt above 8% (including Moody's standard adjustments); and (4) demonstrates conservative financial policies. The ratings could be downgraded if anticipated revenue growth slows, liquidity weakens substantially, or if Moody's expects that free cash flow as a percentage of debt will be maintained below 5% for other than temporary basis. Although unforeseen, any successful, disruptive competing technology that threatens Liaison's market position will also put pressure on the ratings. The principal methodology used in these ratings was Software published in June 2022. LI Group Holdings, Inc., headquartered in Watertown, MA, doing business as Liaison, is a provider of CAS for graduate education programs and other admission management software solutions. Liaison helps more than 31,000 undergraduate, graduate and post-baccalaureate programs across more than 1,500 campuses to achieve their recruitment, admissions, enrollment and student success goals. The company was acquired in December 2019 by private investor Meritage and management. Annual revenue is expected to remain sub-$250 million in 2024. MAD SCIENCE: Unsecureds Will Get 15% of Claims over 5 Years ----------------------------------------------------------- Mad Science Machining, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Texas a first Amended Plan of Reorganization dated January 29, 2024. Mad Science had to file bankruptcy due aggressive tactics of the multiple merchant cash advance companies. These tactics and the lockup of the business bank account by the merchant cash advance companies put an impossible strain on the finances of the company, including the withdrawal of funds and the inability to allow it to pay employees or operate. Not to mention the large amount of debt the company was holding and former employees were dishonest and funneling business to their own entities. The Debtor filed this case on September 7, 2023, to seek protection from aggressive collection efforts by creditors that, if continued, would be to the detriment of other creditors by crippling business operations. Debtor proposes to pay allowed unsecured based on the liquidation analysis and cash available. Debtor anticipates having enough business and cash available to fund the plan and pay the creditors pursuant to the proposed plan. The Debtor will continue operating its business. The Debtor's Plan will break the existing claims into seven classes of Claimants. These claimants will receive cash repayments over a period of time beginning on the Effective Date. While Debtor's Plan proposes to pay claims not to exceed 5 years, nothing prevents Debtor from prepaying its claims. Class 6 consists of Allowed Impaired Unsecured Claims. All allowed unsecured creditors shall receive a pro rata distribution at zero percent per annum over the next 5 years beginning not later than the 15th day of the first full calendar month following 30 days after the effective date of the plan and continuing every year thereafter for the additional 4 years remaining on this date. Debtor shall commence disbursements to the Class 6 claims beginning the second year of the plan through the fifth year after the effective date of confirmation. Debtor will distribute up to $384,000.00 to the general allowed unsecured creditor pool over the 5-year term of the plan. The Debtor can make monthly, quarterly or yearly payments as to the Class 6 Claimants. The Debtor's General Allowed Unsecured Claimants will receive 15% of their allowed claims under this plan. Any creditors listed in the schedules of Mad Science Co. as disputed and did not file a claim will not receive distributions under this plan. The allowed unsecured claims total $2,570,418.58. Class 7-1 consists of the Priority Claims of Gerolo Conroe, LLC. Debtor is to pay the priority pre-petition lease claim of $36,419.13 at 9.50% over 60 equal monthly payments at $3,193.36 per month. The first monthly payment on the secured claim amount will be due and payable 30 days after the effective date, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. Class 8 consists of Equity Interest Holders (Current Owner). The current owner will receive no payments under the Plan; however, they will be allowed to retain their ownership in the Debtor. Class 8 Claimants are not impaired under the Plan. Debtor anticipates the continued operations of the business to fund the Plan. A full-text copy of the First Amended Plan dated January 29, 2024 is available at https://urlcurt.com/u?l=hq03tk from PacerMonitor.com at no charge. Counsel to Debtor: Robert C. Lane, Esq. Joshua D. Gordon, Esq. THE LANE LAW FIRM, PLLC 6200 Savoy, Suite 1150 Houston, TX 77036 Telephone: (713) 595-8200 Facsimile: (713) 595-8201 Email: notifications@lanelaw.com joshua.gordon@lanelaw.com About Mad Science Machining Mad Science Machining, LLC, started operations in August 2014. It operates and manufactures at its CNC machine shop and as a contract manufacture for machine components for Aerospace, oil/gas, and defense business. Mad Science Machining is currently owned 100% by Ryan Madsen. Mr. Madsen will remain the president and representative of the Debtor going forward. MSS. Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-02487) on Aug. 28, 2023. In the petition signed by Matthew Filzen, vice president/chief operations officer, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Joseph N. Callaway oversees the case. Joseph Z. Frost, Esq., at Buckmiller, Boyette & Frost, PLLC, is the Debtor's legal counsel. MALLINCKRODT PLC: Covidien Loses Bid to Toss Suit Over Spinoff -------------------------------------------------------------- Medtronic plc subsidiary Covidien must face a broad bankruptcy court lawsuit accusing the medical device company of unfairly profiting billions from its 2013 spin-off of opioid manufacturer Mallinckrodt Plc, a bankruptcy judge issued a 93-page ruling on Jan. l8, 2024. The Chapter 11 trust set up for Mallinckrodt creditors has carried its burden to advance the bulk of a 2022 lawsuit against Covidien to recoup from alleged fraudulent transfers that left all of Covidien's potential opioid liability with Mallinckrodt. Judge John T. Dorsey of the US Bankruptcy Court for the District of Delaware issued a ruling dismissing some claims from the suit but allowing the trust to continue pursuing actual claims against Covidien. Plaintiff, Opioid Master Disbursement Trust II, commenced an action asserting claims arising from the 2013 spinoff (the "Spinoff") of the debtors in the above-captioned chapter 11 cases (collectively "Debtors" or "Mallinckrodt") from the corporate enterprise of the defendants, Covidien. The Trust seeks to avoid and recover several alleged fraudulent transfers that made up the Spinoff, including (a) approximately $867 million in cash transfers made between 2010 through 2012; (b) Covidien's retention of approximately $721 million in proceeds from Mallinckrodt's 2013 issuance of senior unsecured notes; (c) Mallinckrodt's assumption of hundreds of millions of dollars of tax liability previously held by Covidien; (d) Mallinckrodt's assumption of indemnification obligations to Covidien; and (e) the value of the enterprise (without the Debtors' pharmaceutical business) that was transferred away from the Debtors as a result of the Spinoff (collectively the "Transfers"). Additionally, the Trust asserts numerous other claims arising from the Spinoff, including breach of fiduciary duty, contribution, and equitable subordination. Covidien moved to dismiss the claims pursuant to Federal Rule of Civil Procedure 12(b)(6), applicable to these proceedings by Federal Rule of Bankruptcy Procedure 7012 (the "Motion to Dismiss" or "Motion"). In response to the Motion to Dismiss, the Trust filed a motion to amend the complaint (the "Motion to Amend"). Both motions were fully briefed and argued together at a hearing held on Aug. 16, 2023. Both motions are granted in part and denied in part, Judge John T. Dorsey ruled. The Motion to Dismiss is GRANTED, and the Motion to Amend is DENIED with respect to the following Counts in the Amended Complaint: * Count II (Constructive Fraudulent Transfer - Spinoff) * Count IV (Constructive Fraudulent Transfer - Indemnity Obligations) * Count VI (Constructive Fraudulent Transfer - Tax Liability) * Count VIII (Constructive Fraudulent Transfer - Cash Transfer) * Count IX (Fiduciary Duty) * Count XII (Equitable Disallowance) Further, the Motion to Dismiss is DENIED and the Motion to Amend is GRANTED with respect to the following Counts in the Amended Complaint: * Count I (Actual Fraudulent Transfer - Spinoff) * Count III (Actual Fraudulent Transfer - Indemnity Obligation) * Count V (Actual Fraudulent Transfers - Tax Liability) * Count VII (Actual Fraudulent Transfer - Cash Transfer) * Count X (Reimbursement, Indemnification, Contribution) * Count XI (Equitable Subordination) * Count XIII (Disallowance pursuant to Section 502(d)) * Count XIV (Disallowance pursuant to Section 502(e)). The Trust seeks to avoid the transfers made in connection with the Spinoff as actually fraudulent in four separate counts of the Amended Complaint, each one based on a different portion of the transaction: Count I (the Spinoff), Count III (the Indemnity Obligations), Count V (Tax Liability), and Count VII (Cash Transfers) (collectively the "Actual Fraud Counts"). The Trust describes these claims as being made pursuant to the "Uniform Fraudulent Transfer Act or other applicable law." "In sum, I find that the Trust has pled facts that support the presence of seven of the statutory badges of fraud. I further conclude that the totality of the circumstances supports the reasonable inference that Covidien's board of directors possessed the requisite intent to hinder, delay, or defraud the Debtors' creditors in approving the Spinoff. Covidien's Motion to Dismiss the Actual Fraudulent Transfer Claims is therefore denied," Judge Dorsey ruled. In Counts II, IV, VI, and VIII of the Amended Complaint, the Trust asserts claims for constructive fraud under "UFTA or other applicable law." Because the only triggering creditors that the Trust has identified would not have allowable claims under applicable state law, the Trust cannot state a claim pursuant to Section 544(b) for constructive fraudulent transfer. For that reason, the Motion is granted with respect to the constructive fraudulent transfer claims and Counts II, IV, VI, and VIII of the Amended Complaint are dismissed. A copy of the ruling is available at https://casetext.com/case/opioid-master-disbursement-tr-ii-v-covidien-unlimited-co-in-re-mallinckrodt-plc About Mallinckrodt plc Mallinckrodt (OTCMKTS: MNKTQ) -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt in mid-June 2022 successfully completed its reorganization process, emerged from Chapter 11 and completed the Irish Examinership proceedings. Mallinckrodt Plc said in a regulatory filing in early June 2023 that it was considering a second bankruptcy filing and other options after its lenders raised concerns over an upcoming $200 million payment related to opioid-related litigation. Mallinckrodt plc and certain of its affiliates again sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 23-11258) on Aug. 28, 2023. Mallinckrodt disclosed $5,106,900,000 in assets and $3,512,000,000 in liabilities as of June 30, 2023. Judge John T. Dorsey oversees the new cases. In the prior Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporateand finance counsel; Ropes & Gray, LLP as litigation counsel; Torys, LLP as CCAA counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. In the new Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A., as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Guggenheim Securities, LLC, as investment banker; and AlixPartners, LLP, as restructuring advisor. Kroll is the claims agent. MALLINCKRODT PLC: Extends CEO Employment, Negotiates New Agreement ------------------------------------------------------------------ Mallinckrodt plc disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on January 25, 2024, the Company announced an extension to the current employment agreement between Sigurdur (Siggi) Olafsson, Mallinckrodt's President and Chief Executive Officer, and Mallinckrodt's indirect subsidiary ST Shared Services LLC dated January 25, 2024. In connection with Mallinckrodt's recent emergence from bankruptcy and pursuant to the terms of his employment agreement with ST Shared Services (the "Existing Agreement"), Mr. Olafsson had previously provided written notice of his intention to resign as an employee effective January 29, 2024. The Employment Agreement Extension was entered into in connection with the ongoing discussions between Mr. Olafsson and Mallinckrodt regarding a new mutually agreeable employment agreement. While there is no assurance that the ongoing discussions will result in Mr. Olafsson remaining with Mallinckrodt past the Extension Period, Mallinckrodt currently anticipates finalizing the terms of a new agreement with Mr. Olafsson during the Extension Period in connection with its broader efforts to identify new members of its Board of Directors. As a result of entering into the Employment Agreement Extension, Mr. Olafsson has agreed to remain with Mallinckrodt for an additional thirty-day period through February 28, 2024 (the "Extension Period"), on the same terms and conditions as under his Existing Agreement. During the Extension Period, Mr. Olafsson will continue to receive his base salary and participate in benefit plans in accordance with the terms of the Existing agreement. In addition, upon the conclusion of the Extension Period, he will receive a cash payment of $123,750, which is equal to his target bonus amount attributable under his Existing Agreement to the Extension Period. The Employment Agreement Extension also provides that Mallinckrodt will reimburse Mr. Olafsson for reasonable, documented legal and tax advisory fees he incurs in connection with the ongoing negotiation of his potential continued employment terms, subject to execution of a release in accordance with the Existing Agreement if he does not enter into a new employment agreement. Upon the termination of his employment on the last day of the Extension Period, Mr. Olafsson will also receive the severance payments and benefits that he is entitled to receive pursuant to his Existing Agreement, subject to the terms and conditions set forth in the Existing Agreement. A full-text copy of the Employment Agreement Extension is available at http://tinyurl.com/5pwex2vx About Mallinckrodt plc Mallinckrodt (OTCMKTS: MNKTQ) -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The Company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt in mid-June 2022 successfully completed its reorganization process, emerged from Chapter 11 and completed the Irish Examinership proceedings. Mallinckrodt Plc said in a regulatory filing in early June 2023 that it was considering a second bankruptcy filing and other options after its lenders raised concerns over an upcoming $200 million payment related to opioid-related litigation. Mallinckrodt plc and certain of its affiliates again sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 23-11258) on Aug. 28, 2023. Mallinckrodt disclosed $5,106,900,000 in assets and $3,512,000,000 in liabilities as of June 30, 2023. Judge John T. Dorsey oversees the new cases. In the prior Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray, LLP as litigation counsel; Torys, LLP as CCAA counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. In the new Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A., as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. Kroll is the claims agent. MBIA INC: BlackRock Holds 7% Equity Stake as of Dec. 31 ------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed that as of December 31, 2023, it beneficially owned 3,599,514 shares of MBIA Inc.'s common stock, representing 7% of the class. A full-text copy of the Report is available at http://tinyurl.com/mrubyd2m About MBIA MBIA Inc., together with its consolidated subsidiaries, operates within the financial guarantee insurance industry. MBIA manages its business within three operating segments: 1) United States public finance insurance; 2) corporate; and 3) international and structured finance insurance. The Company's U.S. public finance insurance portfolio is managed through National Public Finance Guarantee Corporation, its corporate segment is managed through MBIA Inc. and several of its subsidiaries, including our service company, MBIA Services Corporation, and its international and structured finance insurance business is primarily managed through MBIA Insurance Corporation and its subsidiaries. MBIA reported a net loss attributable to the Company of $195 million in 2022, a net loss attributable to the Company of $445 million in 2021, and a net loss attributable to the Company of $578 million in 2020. * * * Egan-Jones Ratings Company on September 28, 2023, maintained its 'CCC-' foreign currency and local currency senior unsecured ratings on debt issued by MBIA Inc. MOAB BREWERS: Joseph Cotterman Named Subchapter V Trustee --------------------------------------------------------- The U.S. Trustee for Region 14 appointed Joseph Cotterman as Subchapter V trustee for Moab Brewers, LLC. Mr. Cotterman will be paid an hourly fee of $500 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Cotterman declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Joseph E. Cotterman 5232 W. Oraibi Drive Glendale, AZ 85308 Telephone: 480-353-0540 Email: cottermail@cox.net About Moab Brewers Moab Brewers, LLC operates a beverage manufacturing business in Scottsdale, Ariz. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 24-00635) on January 26, 2024, with $500,000 to $1 million in assets and $1 million to $10 million in liabilities. George Cole Jackson, authorized signatory, signed the petition. Christopher C. Simpson, Esq., at Osborn Maledon, P.A. represents the Debtor as legal counsel. NATIONAL RIFLE ASSOC: Board Member Silenced After Examiner Motion ----------------------------------------------------------------- Rachel Scharf of Law360 reports that a Kansas state court judge and former National Rifle Association board member told a New York jury on that he was silenced and called the gun rights group's "greatest enemy" after filing a motion to appoint an independent examiner in Chapter 11 bankruptcy proceedings. During the pendency of the Chapter 11 case, NRA board member Phillip Journey filed a motion to appoint an examiner to take an independent look at the group's affairs, saying that the NRA's Chapter 11 filing violated its bylaws and that directors have unanswered questions about management conduct. Mr. Journey claimed the NRA has engaged in actions that violate its fiduciary duties under the laws of New York and upon reason and belief many of such violations would also be violative of Texas law. About National Rifle Association Founded in 1871 in New York, the National Rifle Association of America is a gun rights advocacy group. The NRA claims to be the longest-standing civil rights organization and has more than five million members. Seeking to move its domicile and principal place of business to Texas amid lawsuits in New York, the National Rifle Association of America sought Chapter 11 protection (Bankr. N.D. Tex. Case No. 21-30085) on Jan. 15, 2021. Affiliate Sea Girt LLC simultaneously sought Chapter 11 protection (Case No. 21-30080). The NRA was estimated to have assets and liabilities of $100 million to $500 million as of the bankruptcy filing. Judge Harlin Dewayne Hale oversees the cases. The Debtors tapped Neligan LLP and Garman Turner Gordon LLP as their bankruptcy counsel, and Brewer, Attorneys & Counselors as their special counsel. The U.S. Trustee for Region 6 appointed an official committee of unsecured creditors on Feb. 4, 2021. Norton Rose Fulbright US, LLP and AlixPartners, LLP serve as the committee's legal counsel and financial advisor, respectively. * * * Following a 12-day trial, U.S. Bankruptcy Judge Harlin D. Hale dismissed the National Rifle Association's Chapter 11 case May 11, 2021, after finding the group filed its petition in bad faith in order to gain advantage in litigation brought by New York's attorney general. New York Attorney General Letitia James sought the dismissal of the case. The judge condemned the NRA's attempts to avoid accountability, making clear that the organization's actions were "not an appropriate use of bankruptcy." NEWSOME TRUCKING: Gary Murphey Named Subchapter V Trustee --------------------------------------------------------- The U.S. Trustee for Region 21 appointed Gary Murphey as Subchapter V Trustee for Newsome Trucking, Inc. Mr. Murphey will be paid an hourly fee of $400 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Murphey declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Gary Murphey 3330 Cumberland Blvd. Suite 500 Atlanta, GA 30330 Tel: 770-933-6855 Email: Murphey@RFSLimited.com About Newsome Trucking Newsome Trucking, Inc. is a privately held trucking company serving Cherokee County, Ga., and Cobb County, Ga., and the nearby areas. The company offers local and long-haul trucking services with a guarantee of on-time delivery. It offers a wide array of different trucking services including cargo services, hauling services and grading services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-20109) on January 29, 2024, with $1 million to $10 million in both assets and liabilities. Kevin R. Newsome, chief executive officer, signed the petition. Judge James R. Sacca oversees the case. Paul Reece Marr, Esq., at Paul Reece Marr, P.C. represents the Debtor as legal counsel. NUSTAR ENERGY: Fitch Puts 'BB' LongTerm IDR on Watch Positive ------------------------------------------------------------- Fitch Ratings has placed the 'BB' Long-Term Issuer Default Ratings (IDRs) for NuStar Energy, L.P. (NuStar) and NuStar Logistics, L.P.'s (Logistics) on Rating Watch Positive (RWP). Fitch has also affirmed Logistics' senior unsecured ratings at 'BB'/'RR4' and junior subordinated notes at 'B+'/'RR6' and NuStar's preferred equity rating at 'B+'/'RR6'. The RWP reflects the expectation for the announced acquisition by Sunoco LP (SUN; BB+/Stable) to close in the coming months. Fitch expects an improvement to NuStar's capital structure (based on transaction details announced) and that combining these two business franchises will yield benefits in the context of strong operational and financial trends at both over the forecast period. If existing NuStar debt were to receive credit support from SUN, Fitch would likely equalize the IDRs of NuStar and SUN. Absent that credit support, should Fitch determine there to be sufficient strategic and/or operational incentives, NuStar's IDR would likely be notched up to the IDR of SUN. While not expected, the resolution of the RWP via transaction close could take longer than six months. KEY RATING DRIVERS Announced Transaction a Positive: Fitch considers the announced acquisition transaction between NuStar and SUN to be positive for NuStar's credit quality. Based on announced financing plans at transaction closing, the only debt remaining at NuStar will be the currently outstanding unsecured notes and GO Zone Bonds. Additionally, NuStar's strong crude oil and refined products franchises, among others, will benefit from the increased geographic and business line diversity gained through the combination with SUN's extensive fuel distribution footprint. If existing NuStar debt were to receive credit support from SUN, Fitch would likely equalize the IDRs of NuStar and SUN. Absent that credit support, should Fitch determine there to be sufficient strategic and/or operational incentives, NuStar's IDR would likely be notched up to the IDR of SUN. Appropriate Current Leverage: Fitch forecasts NuStar to have EBITDA leverage of around 5.0x in 2023 and for the forecast period, not considering the announced acquisition. Given NuStar's size, position in the refined petroleum products value chain and contract portfolio, its expected leverage is appropriate for the middle of the 'BB' rating category. NuStar recently completed a common equity issuance, the proceeds from which were used to redeem early a series of expensive preferred units, further bolstering its strong financial profile. Contractual Support: Roughly one-third of NuStar's EBITDA is from contracts where the company will receive payment regardless of whether a product is moved or not. These contracts are with high credit quality counterparties including roughly 67% of 3Q23 revenue from investment- grade rated entities and about 13% from large private or international (not rated) customers. This provides good visibility into a portion of future expected cash flows. Roughly an additional one-third of forecast EBITDA is from fixed-fee volume exposed arrangements where NuStar has structural exclusivity. The company operates the only pipelines that carry crude oil into and refined products out of certain Valero Energy Corporation (BBB/Stable) refineries. The advantageous location and high capacity utilization of these refineries offer more certainty to expected NuStar volumes, compared with other fixed-fee fully volume exposed arrangements (i.e. acreage dedications). Once operational, the agreement NuStar has with OCI Global (NR) to transport ammonia will also have characteristics indicative of structural exclusivity. Some Volume and Price Exposure: NuStar generates roughly one third of EBITDA from fixed-fee volume exposed contracts and less than 5% from direct commodity price spread exposed activities. This exposure provides less visibility into future cash flows. Outside of the fuels marketing businesses (i.e. direct commodity price spread exposure), expected volumes and throughput for NuStar are supported by the relative attractiveness of its Permian crude oil pipeline system. The Permian Basin continues to be the preeminent oil producing region in the U.S., with breakeven costs that support continued near-term development expansion. The company's exposure to the Permian somewhat reduces near-term volumetric risk, compared with issuers with exposure to relatively less attractive basins. For fuels marketing, the company seeks to reduce volatility through the use of hedging; however, this business remains a source of cash flow variability for the company. Renewables Momentum: NuStar benefits from an early mover advantage in renewable fuels on the West Coast, increasing the diversity of its asset base and supporting near-to-medium-term growth expectations. The company has a unique franchise in its large-scale ammonia pipeline system, to participate in the growth of "blue" or "green" ammonia. These businesses offer NuStar growth opportunities outside of its traditional liquid petroleum operations and an ability to participate directly in the sector's move toward an energy transition. Rating Linkage: There is a parent/subsidiary relationship between NuStar and NuStar Logistics, L.P. Fitch determines NuStar's Standalone Credit Profile (SCP) based on consolidated metrics and consider Logistics' SCP to be stronger than NuStar's SCP. As such, Fitch followed the stronger subsidiary path. Legal ring fencing is open given the cross guarantees between NuStar and Logistics and the minimal limitations on flows between the entities. Access and control is also open given NuStar's 100% ownership interest in Logistics. Due to the aforementioned rating linkages, Fitch rates both entities on a consolidated credit profile with the same IDR. DERIVATION SUMMARY NuStar's closest rated peers are Buckeye Partners, L.P. (BB/RWN) and Plains All American Pipeline L.P. (PAA; BBB/Stable). All three feature operations that focus predominantly on the liquid petroleum midstream value chain providing pipeline, terminalling and storage services, among other activities. NuStar has smaller scale and less geographic and operational diversity, compared to both Buckeye and PAA. Fitch expect leverage at NuStar to remain around 5.0x over the forecast period. This compares with Buckeye falling below 6.0x by 2024 and Plains All American below 3.5x by 2024. Buckeye's diverse asset base and larger relative size and scale are offset by the expected leverage difference and leads to the assignment of the same IDRs for NuStar and Buckeye. The combination of much larger size and scale and meaningfully lower leverage account for the three-notch difference between the IDRs of NuStar and PAA. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer Include - The announced acquisition of NuStar by SUN closes in 2H24; - Crude and refined product production consistent with the Fitch price deck; - Pipeline segment results show continued upward momentum over the forecast period, driven in large part by volume growth on the company's Permian pipeline system, as well as incremental growth projects on the ammonia pipeline system; - Storage segment results in 2024 to benefit from inflation-indexed rate increases as well as growth capital spent in the West Coast U.S. franchise, largely offset by weakness at the St. James Terminal; - 2024 Fuels Marketing segment results in-line with current underlying commodity spread margins impacting, among other, the company's butane blending business; - Growth capex and maintenance capex in line with management guidance; - Distributions to common unitholders grow annually at a low-single digit rate; - No meaningful asset sales or equity issuances; - Base interest rates applicable to the company's outstanding variable rate debt obligations reflects the Fitch Global Economic Outlook. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch could equalize the IDRs of NuStar and SUN, if SUN were to provide credit support to NuStar's remaining outstanding debt such that outstanding NuStar unsecured debt ranks parri passu with outstanding SUN unsecured debt. Absent that credit support, should Fitch determine there to be sufficient strategic and/or operational incentives, NuStar's IDR would likely be notched up to the IDR of SUN; - If EBITDA leverage were expected to be sustained below 4.5x; - A meaningful increase in geographic or business line diversity or a meaningful increase in the percentage of EBITDA from long-term take-or-pay-type contracts, organically or through an acquisition or acquisitions funded in a debt-friendly manner. Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch could remove the Rating Watch should the announced transaction fail to close; - Actual or expected EBITDA leverage above 5.5x; - Significant increases in capital spending beyond Fitch's expectations with negative consequences for the credit profile; - An acquisition or acquisitions that meaningfully raise the business risk of NuStar. LIQUIDITY AND DEBT STRUCTURE As of Sept. 30, 2023, NuStar had total liquidity of $670 million, which included just over $665 million undrawn on its $1.0 billion revolver, after accounting for $4.6 million in letters of credit. Cash on the balance sheet was just over $4 million. The maturity on the revolver is in January 2027. NuStar's ability to draw on the revolver is restricted by a leverage covenant as defined in the bank agreement, which does not allow leverage to be greater than 5.0x for covenant compliance. Bank defined leverage was 3.83x, as of Sept. 30, 2023. Fitch expects NuStar to remain in compliance with its covenants over the forecast period. The covenant calculation allows for the exclusion of junior subordinated notes ($402.5 million) and preferred equity Series A, B, and C, totaling over $750 million. The covenant calculation allows for inclusion of pro forma EBITDA for material projects and acquisitions, providing some cushion in calculations. NuStar also has various notes outstanding aggregating $2.5 billion. The nearest unsecured maturity is the $600 million 5.75% notes due Oct. 1, 2025. The company also has a $100 million receivable financing agreement. The borrowers are NuStar and NuStar Finance LLC (NuStar Finance), a special purpose vehicle (SPV) and wholly-owned subsidiary of NuStar. There was $72.6 million of borrowings outstanding under the agreement as of Sept. 30, 2023. The securitization program extends until July 1, 2026. ISSUER PROFILE NuStar is a publicly traded master limited partnership that is primarily focused on the transportation and storage of crude oil, refined products and anhydrous ammonia with operations in the U.S. and Mexico. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch applies 50% equity credit to Logistics' junior subordinated notes due 2043 and 50% equity credit to NuStar's Series A, B and C preferred equity securities. 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 ----------- ------ -------- ----- NuStar Logistics, L.P. LT IDR BB Rating Watch On BB senior unsecured LT BB Affirmed RR4 BB junior subordinated LT B+ Affirmed RR6 B+ NuStar Energy L.P. LT IDR BB Rating Watch On BB preferred LT B+ Affirmed RR6 B+ OIL DADDY: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Oil Daddy, LLC 1440 N County Road 1110 Midland, TX 79706 Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Western District of Texas Case No.: 24-70009 Debtor's Counsel: Reese Baker, Esq. BAKER & ASSOCIATES 950 Echo Ln Ste 300 Houston TX 77004-2824 E-mail: courtdocs@bakerassociates.net Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Sidney Ivey 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/FKQNM2I/Oil_Daddy_LLC__txwbke-24-70009__0001.0.pdf?mcid=tGE4TAMA PENNSYLVANIA REAL ESTATE: Chapter 11 Bankruptcy Plan Okayed ----------------------------------------------------------- Rick Archer of Law360 reports that mall real estate investment trust Pennsylvania Real Estate Investment Trust's Chapter 11 plan has been approved without creditor claims releases. A Delaware bankruptcy judge on Monday, January 22, 2024, approved Pennsylvania Real Estate Investment Trust's plan to swap $727 million in debt for equity after stripping out the release of unimpaired creditors' claims against non-debtor third parties. About PREIT Pennsylvania Real Estate Investment Trust (OTCQB:PRET) -- http://www.preit.com/-- is a real estate investment trust that owns and manages innovative properties developed to be thoughtful, community-centric hubs. PREIT's robust portfolio of carefully curated, ever-evolving properties generates success for its tenants and meaningful impact for the communities it serves by keenly focusing on five core areas of established and emerging opportunity: multifamily & hotel, health & tech, retail, essentials & grocery and experiential. Located primarily in densely populated regions, PREIT is a top operator of high quality, purposeful places that serve as one-stop destinations for customers to shop, dine, play and stay. On Dec. 10, 2023, the Debtors voluntarily filed the Chapter 11 cases in the United States Bankruptcy Court. The Debtors filed a motion with the Bankruptcy Court seeking to jointly administer the Chapter 11 Cases under the caption "In re: Pennsylvania Real Estate Investment Trust, et al." The Hon. Karen B. Owens oversees the Case. As of Sept. 30, 2023, PREIT has $1.72 billion in total assets and total debt of $1.99 billion. DLA Piper LLP (US), Wachtell, Lipton, Rosen & Katz and Dilworth Paxson LLP are serving as legal counsel and PJT Partners LP is serving as financial advisor to PREIT. Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP are serving as legal counsel and Houlihan Lokey is serving as financial advisor to the ad hoc group of PREIT's first lien and second lien secured lenders. Paul Hastings also advises the DIP Lenders. Kroll Restructuring Administration LLC is the claims agent. PG&E CORP: Lawsuit Tossed, Liability for Blackouts Rejected ----------------------------------------------------------- Joyce E. Cutler of Bloomberg Law reports that Pacific Gas & Electric Co. will avoid liability for billions of dollars in financial losses the California utilit's customers experienced during power shutoffs aimed at preventing wildfires from erupting in dangerous weather conditions in 2019, a federal appeals court held Tuesday,January 18, 2024. The US Court of Appeals for the Ninth Circuit affirmed a trial court ruling that found state law preempted the claims. Two other federal courts, a bankruptcy court and the US District Court of the Northern District of California, had also dismissed the claims for the same reason. About PG&E Corporation PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a Fortune 200 energy-based holding company, headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric Company, faced extraordinary challenges relating to a series of catastrophic wildfires that occurred in Northern California in 2017 and 2018. The utility faced an estimated $30 billion in potential liability damages from California's deadliest wildfires of 2017 and 2018. On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary, Pacific Gas and Electric Company, filed voluntary Chapter 11 petitions (Bankr. N.D. Cal. Lead Case No. 19-30088). As of Sept. 30, 2018, the Debtors, on a consolidated basis, had reported $71.4 billion in assets on a book value basis and $51.7 billion in liabilities on a book value basis. Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP served as PG&E's legal counsel, Lazard as its investment banker and AlixPartners, LLP as the restructuring advisor to PG&E. Prime Clerk LLC is the claims and noticing agent. PG&E has appointed James A. Mesterharm, a managing director at AlixPartners, LLP, and an authorized representative of AP Services, LLC, to serve as Chief Restructuring Officer. In addition, PG&E appointed John Boken also a Managing Director at AlixPartners and an authorized representative of APS, to serve as Deputy Chief Restructuring Officer. Morrison & Foerster LLP served as the Debtors' special regulatory counsel. Munger Tolles & Olson LLP also served as special counsel. The Office of the U.S. Trustee appointed an official committee of creditors on Feb. 12, 2019. The Committee retained Milbank LLP as counsel; FTI Consulting, Inc., as financial advisor; Centerview Partners LLC as investment banker; and Epiq Corporate Restructuring, LLC as claims and noticing agent. On Feb. 15, 2019, the U.S. trustee appointed an official committee of tort claimants. The tort claimants' committee is represented by Baker & Hostetler LLP. * * * PG&E Corporation and Pacific Gas and Electric Co. announced July 1, 2020, that PG&E has emerged from Chapter 11, successfully completing its restructuring process and implementing PG&E's Plan of Reorganization that was confirmed by the United States Bankruptcy Court on June 20, 2020. For the benefit of fire victims, the Plan provided for a Fire Victim Trust, which was funded with an oft-stated value of $13.5 billion, to be half in cash and half in new company PG&E common stock. The $6.75 billion in cash was paid. With respect to the stock consideration, 478 million shares of PG&E stock were delivered to the Fire Victim Trust in accordance with an agreed-to formula under the Plan. PHOENIX GUARANTOR: S&P Upgrades ICR to 'B+' on Deleveraging ----------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Louisville, Ky.-based Phoenix Guarantor Inc. (BrightSpring Health Services) to 'B+' from 'B'. At the same time, S&P raised its issue-level ratings on the company's first-lien debt from to 'B+' from 'B'. The '3' recovery ratings are unchanged. S&P expects to withdraw ratings on its second-lien debt upon its repayment. Accordingly, those ratings are unaffected. The stable outlook reflects S&P's expectation for good revenue growth, flat margins, and that following its debt repayment, BrightSpring will generally maintain leverage below 5x and a ratio of free cash flow to debt above 5% over the next 12-24 months. S&P said, "We expect BrightSpring will use the proceeds of its recent IPO and tangible equity unit offerings to reduce S&P Global Ratings-adjusted (gross) leverage below 5x in 2024 and further over the next two to three years. This contrasts with leverage of about 7x over the last few years. The one-notch upgrade and stable outlook reflect the significant deleveraging with little change to our expectations for business performance. The substantial debt repayment should reduce BrightSpring's cash interest burden by over $110 million annually, which will materially improve both funds from operations (FFO) and free cash flow. We expect FFO to debt will improve to about 14%-17% over the next two years from mid- to high-single-digit percentages in the past three years. "We expect BrightSpring to adopt a more conservative financial policy and gradually bring leverage in line with that of publicly traded peers.BrightSpring articulated a net leverage target of 3x, about 1.2 turns below its pro forma covenant leverage. We expect about $100 million of acquisitions annually with deleveraging of about 0.5x annually. That said, the approximately 40% of remaining ownership by financial sponsors increases uncertainty around the allocation of capital between acquisitions and deleveraging. "Our stable outlook reflects our expectation for mid-single-digit percentage revenue growth and relatively flat margins. BrightSpring's EBITDA margins face pressure primarily from a shift in mix related to the rapid growth of its lower-margin specialty pharmacy business. This is compounded by industry headwinds related to labor costs and reimbursement pressures in the services business, partially offset by growth in BrightSpring's higher margin services segment. "The stable outlook reflects our expectation for good revenue growth, flat margins, and that following its debt repayment BrightSpring will maintain leverage below 5x and free cash flow to debt above 5% over the next 12-24 months." S&P could lower the rating if it expects BrightSpring will sustain: -- Adjusted leverage above 5x for more than 12 months; or -- Free cash flow generally less than 5% of debt. Such a scenario is possible if the company pursues debt-financed acquisitions or because of weakening operational or financial performance. Although unlikely over the next 12 months, S&P could upgrade BrightSpring if: -- S&P expects it to sustain leverage materially below 4x and free cash flow to debt to generally above 10%; and -- It further decreases financial sponsor ownership. PIGEONLY INC: Nathan Smith Named Subchapter V Trustee ----------------------------------------------------- The U.S. Trustee for Region 17 appointed Nathan Smith, Esq., as Subchapter V trustee for Pigeonly Inc. Mr. Smith, a partner at Malcolm & Cisneros, will be paid an hourly fee of $550 for his services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Mr. Smith declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Nathan F. Smith, Esq. Malcolm & Cisneros 2112 Business Center Drive Irvine, CA 92612 Phone: (949) 252-9400 Email: nathan@mclaw.org About Pigeonly Inc. Pigeonly Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 24-10355) on January 26, 2024, with $500,001 to $1 million in assets and $1,000,001 to $10 million in liabilities. Rulon J. Huntsman, Esq., represents the Debtor as legal counsel. PRECISION SPLICING: Unsecureds to be Paid in Full over 58 Months ---------------------------------------------------------------- Precision Splicing LLC filed with the U.S. Bankruptcy Court for the District of Colorado a Subchapter V Plan of Reorganization dated Jan. 29, 2024. The Debtor is a fiber optic splicing and technical service company that provides solutions to multiple service operators and internet service providers for design, audit, restoration, emergency on call, splicing, testing, turnup, activation and implementation of new build services on outside plant and inside plant fiber optic infrastructure. By the fall of 2023, the Debtor's work was beginning to stabilize and projected to increase over the next several months. However, with the high interest rates and the automatic ACH withdrawals taken from Debtor's bank account weekly, and in some instances daily, to pay the merchant cash advances, Debtor did not believe it would be able to continue to meet its operating expenses. Leading up to the bankruptcy filing, the Debtor took steps to reduce its operating expenses. The Debtor closed the Texas branch and laid off 5 employees. The Debtor sold some of its excess equipment and brought the remaining equipment in Texas to Denver. The Texas lease terminated and Debtor is no longer required to make the monthly lease payments for the Texas property. During the Chapter 11 Case, the Debtor has continued business operations. Debtor obtained authorization to pay prepetition employee wage claims and to use cash collateral. As adequate protection for the use of cash collateral, Debtor provided post-petition replacement Liens on Debtor's post-petition cash collateral in the same priority that existed on the Petition Date, but only to the extent of any diminution in value from the use of cash collateral. Class 9 shall consist of the Allowed General Unsecured Claims. The Class 9 General Unsecured Claims shall be paid in full over 58 monthly installment payments commencing on the 15th day of the first month following the Effective Date. Debtor may prepay the Class 9 General Unsecured Claims at any time without penalty. If this Plan is consensual, the payments will be made by Debtor; if non-consensual, the payments will be made by the Subchapter V Trustee. The allowed unsecured claims total $374,587.11. This Class is impaired. The Equity Interest Holders shall maintain their ownership interests in the Debtor. The Debtor shall be empowered to take such action as may be necessary to perform its obligations under this Plan. On the Effective Date of the Plan, Victor Solesky shall serve as the managing member of the Debtor pursuant to Section 1142(b) of the Bankruptcy Code for the purpose of carrying out the terms of the Plan and taking all actions deemed necessary or convenient to consummating the terms of the Plan. The Debtor proposes to pay creditors from its Available Cash generated from Disposable Income, which will be derived primarily from operational income, and, to the extent applicable, any proceeds from a sale of the Debtor's assets. Based on the Debtor's Projected Disposable Income, the Debtor believes the confirmation of the Plan is not likely to be followed by a liquidation, or the need for further financial reorganization. A full-text copy of the Subchapter V Plan dated January 29, 2024 is available at https://urlcurt.com/u?l=oRakOU from PacerMonitor.com at no charge. Attorneys for the Debtor: Joli A. Lofstedt, Esq. Gabrielle G. Palmer, Esq. Onsager Fletcher Johnson Palmer, LLC 600 17th Street Suite 425N Denver, Colorado 80202 Phone: (303) 512-1123 Email: joli@OFJlaw.com gpalmer@OFJlaw.com About Precision Splicing Precision Splicing, LLC, is a fiber optic splicing and technical service company that provides solutions to multiple service operators and internet service providers for design, audit, restoration, emergency on call, splicing, testing, turnup, activation and implementation of new build services on outside plant and inside plant fiber optic infrastructure. The company works on single last mile circuits to high count ribbon backbone intrastate to long haul transport interstate fiber optics. Precision Splicing filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Colo. Case No. 23-15037) on Oct. 31, 2023, with $100,001 to $500,000 in assets and $500,001 to $1 million in liabilities. Victor Solesky, chief executive officer and owner, signed the petition. Judge Michael E Romero oversees the case. Onsager Fletcher Johnson, LLC, is the Debtor's legal counsel. PROS HOLDINGS: BlackRock Holds 8.4% Equity Stake ------------------------------------------------ In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed beneficial ownership of 3,863,678 shares, representing 8.4% of PROS Holdings, Inc.'s common stock as of December 31, 2023. A full-text copy of the Report is available at http://tinyurl.com/2nznw3d8 About PROS Holdings Headquartered in Houston, Texas, PROS Holdings, Inc. (NYSE: PRO), is a provider of AI-powered SaaS pricing, CPQ, revenue management, and digital offer marketing solutions. As of Sept. 30, 2023, the Company had $431.85 million in total assets, $486.73 million in total liabilities, and a total stockholders' deficit of $54.88 million. Egan-Jones Ratings Company on October 9, 2023, maintained its 'CCC-' foreign currency and local currency senior unsecured ratings on debt issued by PROS Holdings, Inc. PROTERRA INC: Ordered to Rework Plan's Shareholder Releases ----------------------------------------------------------- Rick Archer of Law360 reports that a Delaware bankruptcy judge Tuesday, January 23, 2024, told electric-bus maker Proterra Inc. it will need to give its shareholders the choice to opt into the third-party claims releases in its Chapter 11 plan, rather than require them to opt out. About Proterra Inc. Proterra Inc.'s business involves designing, manufacturing, and selling electric transit buses and components, batteries, and electric drive trains, and providing and selling related products and services. Proterra Inc. and Proterra Operating Company, Inc., sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11120) on August 7, 2023. In the petition filed by Gareth T. Joyce, chief executive officer, the Debtor reported total assets as of June 30, 2023 amounting to $818,773,679 and total debt as of June 30, 2023 of $609,498,207. The Honorable Bankruptcy Judge Brendan Linehan Shannon oversees the cases. The Debtors tapped Young Conaway Stargatt & Taylor, LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel; FTI Consulting, Inc., as financial advisor; Moelis & Company, LLC, as investment banker; and Slaughter and May as special corporate counsel. Kurtzman Carson Consultants LLC is the claims agent. Q.Y. TANG'S HWA: Unsecureds to be Paid in Full over 3 Years ----------------------------------------------------------- Q.Y. Tang's Hwa Yuan, Inc., filed with the U.S. Bankruptcy Court for the Southern District of New York a Disclosure Statement for Plan of Reorganization dated January 29, 2024. The Debtor is the owner of the improved real property located at 42 East Broadway, New York, New York (the "Building" or "Property") on which is situated a restaurant owned and operated by 42-44 East Broadway Restaurant, Inc. The 42-44 East Broadway does business as Hwa Yuan Szechuan, serving fine Szechuan styled cuisine and occupying a total of three floors (inclusive of improved basement space) (the "Restaurant") and a Karaoke Bar owned and operated by 42 East Broadway Enterprise Inc. (the "Karaoke Bar") occupying the top two floors of the building. Each of the Debtor, the Restaurant and the Karaoke Bar are owned by Chen Lieh Tang. The Plan provides for optionality in the Debtor's restructuring. In the first instance, the Debtor has commenced a process for procuring a Capital Infusion in an amount sufficient to satisfy the Allowed Owemanco Claim in full. Under this option, the Plan shall be funded through a combination of (i) rental income received by the Debtor; and (ii) as applicable, the proceeds of the Capital Infusion. In the event that such Capital Infusion is not procured and approved by the Bankruptcy Court within nine months of the Confirmation Date, the Debtor shall market and sell the Property to the highest and best bidder pursuant to a Sale, the procedures for which shall be approved prior to the nine-month anniversary of the Confirmation Date. Under this option, proceeds of Sale and any cash on hand will be used to fund the Plan. Owemanco Mortgage NY Limited Partnership will be permitted to credit bid at any such auction up to the allowed amount of its Claim. During the pendency of this restructuring process, the Debtor will be making monthly payments to the secured creditor, Owemanco Mortgage NY Limited Partnership, in an amount no less than $76,500.00, in accordance with Sections 361 and 362(d) of the Bankruptcy Code. These payments will be made from the rental income received by the Debtor from its two tenants, pursuant to amended leases. Class 1 consists of the Owemanco Claim, to the extent it determined to be a secured claim pursuant Section 506(a) of the Bankruptcy Code. All Class 1 Allowed Claims shall be paid by Debtor in full, on the Effective Date from the proceeds of (i) the Capital Infusion or (ii) the Sale, as applicable. Class 1 Claims are unimpaired under the Plan and are deemed to accept the Plan. Class 2 consists of the Allowed Unsecured Claims of non-insider general unsecured claimants of the Debtor, to the extent not included in another class of claims, including any claims arising from the rejection of executory contracts and unexpired leases. Unless otherwise agreed to by Holders of Allowed Class 2 Claims and the Debtor, each Holder of an Allowed General Unsecured Claim will receive payment in full on account of their Allowed Class 2 Claim, with applicable interest, over a 3-year period beginning on the Effective Date and having a total value as of the Effective Date equal to the amount of such Holder's Allowed Class 2 Claim. Class 2 Claims are impaired under the Plan and are entitled to vote to accept or reject the Plan. Class 3 consists of the Unsecured Claims of Chen Lieh Tang against the Debtor and equity security interests in the Debtor. Class 3 Claims shall be deemed extinguished and cancelled upon the Effective Date and shall receive no distribution under this Plan. Class 3 Claims and Interests are impaired under the Plan and are deemed to reject the Plan. The Plan shall be funded through a combination of (i) rental income received by the Debtor; and (ii) as applicable, the proceeds of the Capital Infusion or Sale. The Debtor has commenced a process for procuring a Capital Infusion in an amount sufficient to satisfy the Allowed Owemanco Claim in full. In the event that such Capital Infusion is not procured and approved by the Bankruptcy Court within nine months of the Confirmation Date, the Debtor shall market and sell the Property to the highest and best bidder pursuant to a Sale, the procedures for which shall be approved prior to the nine-month anniversary of the Confirmation Date. During the pendency of this restructuring process, the Debtor shall make monthly interest payment to Owemanco in the amount of $76,500, subject to further agreement with Owemanco. A full-text copy of the Disclosure Statement dated Jan. 29, 2024 is available at https://urlcurt.com/u?l=RCqkXw from PacerMonitor.com at no charge. Attorneys for Debtor: Randolph E. White, Esq. White & Wolnerman, PLLC 950 Third Avenue, 11th Floor New York, NY 10022 Telephone: (212) 308-0667 Email: info@wwlawgroup.com About Q.Y. Tang's Hwa Yuan Q.Y. Tang's Hwa Yuan, Inc., is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). Q.Y. Tang's Hwa Yuan filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 23-11730) on Oct. 30, 2023, with $10 million to $50 million in both assets and liabilities. Chen Lieh Tang, president, signed the petition. Judge David S. Jones oversees the case. The Debtor tapped Randolph E. White, Esq., at White & Wolnerman, PLLC as bankruptcy counsel; Matthew Sheppe, Esq., at Reiss Sheppe LLP as special real estate counsel; and Trachtenberg & Pauker, LLP as accountant. RADIOLOGY PARTNERS: Kicks Off Bond Swap, Extends Loan Due Dates --------------------------------------------------------------- Jeremy Hill of Bloomberg Law reports that struggling medical practice network Radiology Partners Inc. said it kicked off a plan to address looming maturities by swapping bonds for longer-dated obligations and extending loan due dates. Radiology Partners on Jan. 19, 2024, announced it is commencing a comprehensive set of financing transactions to strengthen its financial position, increase its financial flexibility and support its continued growth. As part of these actions, RP is commencing an exchange offer with respect to its existing notes and will commence certain amend and extend transactions with respect to its outstanding credit facilities. RP also expects to raise new equity concurrent with the closing of the refinancing transactions. "As we look to the future and prepare for our next phase of growth, the steps we are initiating today will enable us to build on our position as a leading physician-led radiology practice in the U.S.," said Rich Whitney, RP's Board Chair and CEO. "This comprehensive set of financing transactions will provide us the financial resources and flexibility to continue aggressively investing in our practice, expanding our services to additional clients and geographies and extending our technology platform and AI capabilities for the benefit of our patients, hospital partners and physicians." "This is a significant, positive announcement for Radiology Partners," said Rod Owen, MD, RP radiologist and Board Director. "We are appreciative of the long-term support of our lenders and equity partners, which has been a key ingredient to our success. This set of transactions will position us to accelerate progress on our mission to transform radiology and broaden our positive impact on patients and the healthcare system." Refinancing Transactions: * Revolving credit facility lenders have agreed to extend the maturity from late 2024 to 2028 and amend certain terms thereof. * First Lien Term Loan lenders have agreed to extend the maturity from 2025 to 2029 and amend certain terms thereof. * RP is offering to exchange its senior secured notes due in 2025 for new first lien notes due in 2029 and its senior unsecured notes due in 2028 for new second lien notes due in 2030. Kirkland & Ellis LLP and Sidley Austin LLP are acting as legal counsel to Radiology Partners, and Moelis & Company LLC is serving as financial advisors to Radiology Partners. Gibson Dunn LLP and Centerview Partners are acting as legal and financial advisors to certain RP lenders. About Radiology Partners Radiology Partners, through its owned and affiliated practices, is a leading radiology practice in the U.S., serving more than 3,300 hospitals and other healthcare facilities across the nation. As a physician-led and physician-owned practice, its mission is to transform radiology by innovating across clinical value, technology, service and economics, while elevating the role of radiology and radiologists in healthcare. On the Web: http://radpartners.com/ RAYONIER ADVANCED: BlackRock Holds 8.5% Equity Stake ---------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed beneficial ownership of 5,566,117 shares, representing 8.5% of Rayonier Advanced Materials Inc.'s common stock as of December 31, 2023. A full-text copy of the Report is available at http://tinyurl.com/4rkpne8k About RYAM RYAM -- www.RYAM.com -- is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly used in the production of filters, food, pharmaceuticals, and other industrial applications. The Company also manufactures products for paper and packaging markets. The Company has manufacturing operations in the U.S., Canada, and France. * * * As reported by the TCR on Nov. 24, 2023, Moody's Investors Service has downgraded Rayonier Advanced Materials Inc.'s (RYAM) corporate family rating to Caa1 from B2 and changed the outlook to negative from stable. The downgrade of the CFR reflects Moody's view that RYAM's liquidity will be weak over the next 12 months and that there is a potential for a financial covenant breach. ROCKSOLID GRANIT: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------------- The U.S. Trustee for Region 21, until further notice, will not appoint an official committee of unsecured creditors in the Chapter 11 cases of Rocksolid Granit (USA), LLC and Rocksolid Granit (USA), Inc., according to court dockets. About Rocksolid Granit (USA) Rocksolid Granit (USA), LLC and Rocksolid Granit (USA), Inc. filed Chapter 11 petitions (Bankr. S.D. Fla. Case Nos. 23-20807 and 23-20809) on Dec. 28, 2023, with as much as X in assets and X in liabilities. At the time of the filing, Rocksolid LLC reported $500,001 to $1 million in assets and $10 million to $50 million in liabilities while Rocksolid Inc. reported $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Peter D. Russin oversees the cases. Edward J. Peterson, Esq., at Johnson, Pope, Bokor, Ruppel & Burns, LLP is the Debtors' legal counsel. ROOMPLACE FURNITURE: Case Summary & 20 Top Unsecured Creditors -------------------------------------------------------------- Debtor: The RoomPlace Furniture and Mattress LLC FKA TRP Acquisition, Inc. 1000-46 Rohlwing Rd. Lombard, IL 60148 Business Description: The Debtor is a one stop shop furniture store offering living room & dining room sets, bedroom furniture, mattresses & more. Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Northern District of Illinois Case No.: 24-01530 Debtor's Counsel: E. Philip Groben, Esq. GENSBURG CALANDRIELLO & KANTER, P.C. 200 W. Adams St., Ste. 2425 Chicago, IL 60606 Tel: (312) 263-2200 Fax: (312) 263-2242 Estimated Assets: $0 to $50,000 Estimated Liabilities: $100 million to $500 million The petition was signed by Valerie Berman-Knight as president. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/LECUNPQ/The_RoomPlace_Furniture_and_Mattress__ilnbke-24-01530__0001.0.pdf?mcid=tGE4TAMA List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount 1. Albany Industries $2,119,350 504 N Glenfield Rd New Albany, MS 38652 2. Altimate Delivery $3,026,257 Service, Inc. 3214 Wild Meadow Lane Aurora, IL 60504 3. Ashley Furniture Corp. $7,223,320 1 Ashley Way Arcadia, WI 5461 4. Bldg Managemeent Co Inc. $3,129,007 417 Fifth Avenue Suite 400 New York, NY 10016 5. Blue Cross Blue Shield of IL $4,205,433 25550 Network Pl Chicago, IL 60673-1255 6. Deliveright Logistics, Inc. $2,298,614 20 Pulaski St Bayonne, NJ 07002 7. Elements International Group $3,303,521 2020 Industrial Blvd Rockwall, TX 75087 8. Global Furniture, USA $1,955,091 47 6th St East Brunswick, NJ 08816 9. Google LLC $4,657,215 Dept 33654 San Francisco, CA 94139 10. Jackson Furniture Industries $2,230,420 180 Industrial Lane Cleveland, TN 37364 11. James Campbell Company LLC $2,562,900 Chicago Industrial Portfolio Chicago, IL 60691-018 12. Jason Furniture Ltd $3,988,335 d/b/a Kuka 113-11th St Hangzhou Zhejiang Cnzhe 13. Locksley Place $2,013,094 7300 Fulton Ave North Hollywood, CA 91605 14. Meta Platforms, Inc. $2,112,742 Attn: Accounts Receivable Chicago, IL 60693 15. Pegasus Logistics Group, Inc. $1,934,443 PO Box 679018 Dallas, TX 75267 16. Simmons $2,425,596 1809 Adel St Janesville, WI 53547 17. The Sussman Agency $9,036,232 29200 Northwestern Highway Southfield, MI 48034 18. Ther-a-Pedic Midwest, Inc. $2,848,819 2350 5th St Rock Island, IL 61201 19. Vertex $7,373,572 25528 Network Pl Chicago, IL 60673 20. Zieco Carriers of Indiana $4,163,345 8304 Kennedy Ave Highland, IN 46322 RPM RESOURCES: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: RPM Resources, LLC 1566 Laurel Fork Looneyville, WV 25259 Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Southern District of West Virginia Case No.: 24-20015 Judge: Hon. B. Mckay Mignault Debtor's Counsel: Joseph W. Caldwell, Esq. CALDWELL & RIFFEE 3818 MacCorkle Ave. S.E. Suite 101 Post Office Box 4427 Charleston, WV 25364-4427 Tel: (304) 925-2100 E-mail: jcaldwell@caldwellandriffee.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Melissa C. Nichols as member. 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/CUPLZOQ/RPM_Resources_LLC__wvsbke-24-20015__0001.0.pdf?mcid=tGE4TAMA RUBIO'S COASTAL GRILL: Seeks to Negotiate Restaurant Leases ----------------------------------------------------------- Reshmi Basu of Bloomberg News reports that Rubio's Coastal Grill is working with advisory firm Hilco Real Estate to address leases across its portfolio of restaurants, according to people with knowledge of the situation. The company operates more than 150 restaurants, its website shows. Known for its fish tacos, the California-based chain is also getting assistance from advisory firm Carl Marks, said the people, who asked not to be identified because the matter is private. The company's earnings have been impacted in part by higher labor costs, they said. Messages left with Rubio's, Hilco and Carl Marks were not returned. About Rubio's Coastal Grill Rubio's Coastal Grill, formerly known as Rubio's Fresh Mexican Grill -- http://www.rubios.com/-- is a fast casual "Fresh Mex" or "New Mex" restaurant chain specializing in Mexican food, with an emphasis on fish tacos. Rubio's began as a walk-up taco stand in Mission Bay in 1983. Headquartered in Carlsbad, Calif., Rubio's Restaurants, Inc., and its affiliates are operators and franchisors of 170 limited service restaurants in California, Arizona, and Nevada under the Rubio's Coastal Grill concept. Rubio's Restaurants, Inc., doing business as Rubio's Coastal Grill and Rubio's Fresh Mexican Grill, along with its affiliates, sought Chapter 11 protection (Bankr. D. Del. Case No. 20-12688) on Oct. 26, 2020. Rubio's Restaurants was estimated to have $50 million to $100 million in assets and $100 million to $500 million in liabilities. The Hon. Mary F. Walrath is the case judge. The Debtors tapped ROPES & GRAY LLP as bankruptcy counsel; YOUNG CONAWAY STARGATT & TAYLOR, LLP, as Delaware counsel; MACKINAC PARTNERS LLC as restructuring advisor; and GOWER ADVISERS as investment banker. B. RILEY FINANCIAL, INC., is the real estate advisor. STRETTO is the claims agent. S.A.M.S. VENDING: Case Summary & 14 Unsecured Creditors ------------------------------------------------------- Debtor: S.A.M.S. Vending, LLC d/b/a S.A.M.S. Breakroom Services 2207 15th Ave S. Fort Dodge, IA 50501 Business Description: The Debtor is a full service provider of vending machine solutions. Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Northern District of Iowa Case No.: 24-00085 Debtor's Counsel: Krystal R. Mikkilineni, Esq. DENTONS DAVIS BROWN PC 215 10th Street, Suite 1300 Des Moines, IA 50309 Tel: 515-288-2500 Fax: 515-243-0654 Email: krystal.mikkilineni@dentons.com Total Assets: $307,527 Total Liabilities: $1,139,430 The petition was signed by Joshua Gullicksen as manager/owner. A full-text copy of the petition containing, among other items, a list of the Debtor's 14 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/WGPRUCA/SAMS_Vending_LLC__ianbke-24-00085__0001.0.pdf?mcid=tGE4TAMA SELINA HOSPITALITY: Completes $35.5M Funding, Other Transactions ---------------------------------------------------------------- As previously announced by Selina Hospitality PLC via Reports on Form 6-K issued on December 4, 2023 and January 4, 2024 (the "Announcements"), the Company entered into an agreement in principle with a steering committee (the "Steering Committee") comprised of noteholders holding approximately 26.0% of the outstanding indebtedness under the Indenture between the Company and Wilmington Trust, National Association, as trustee ("Trustee"), dated as of October 27, 2022 (the "Existing Indenture"), in respect of $147.5 million principal amount of 6.0% Convertible Senior Notes due 2026 (the "2026 Notes"), and Osprey Investments Limited, the investor under the strategic financing arrangements announced by the Company on June 27, 2023 (the "Original Osprey Investment Arrangements"), to restructure the 2026 Notes (the "Note Restructuring") in a manner that would involve the Company exchanging the 2026 Notes held by each of the participating holders for warrants to acquire ordinary shares of the Company and new senior secured notes due 2029 (the "2029 Notes") in conjunction with (i) Osprey Investments or its affiliate agreeing to purchase $28.0 million of ordinary shares of the Company at a price of $0.20 per share, converting some of its existing convertible debt into equity of the Company and having the option to invest up to $20.0 million in additional funds at a price of $0.10 per share together with the participating holders of the 2026 Notes (the "New Osprey Investment Arrangements") and (ii) the Company seeking to raise an additional $20 million from investors (the "Incremental Fundraise"), all as described in the Announcements (the "Announced Transactions"). Certain elements of the Announced Transactions are subject to approval by the Company's shareholders at a general meeting to be convened by the Company to seek shareholder authority for the issuance of a sufficient number of new ordinary shares of the Company, on a non-pre-emptive basis, to give effect to the Transactions (the "Shareholder Approval"). The Company currently expects such general meeting to be convened by March 31, 2024 and to date, the participating holders of the 2026 Notes, Osprey Investment's affiliate that entered into the New Osprey Investment Arrangements, Osprey International Limited ("Osprey"), and holders of approximately 37.5% of the number of outstanding ordinary shares of the Company just prior to the Closing have provided undertakings pursuant to which each such holder, among other things, has agreed that such holder will vote in favor of, or otherwise support, the Shareholder Approval. On January 26, 2024, the Company announced that it has entered into definitive documentation for the Announced Transactions, resulting in funding commitments totaling $35.5 million, the elimination of $52.3 million of debt, and the reduction of approximately $19.9 million in cash outflow in 2024, including cash interest savings under the 2026 Notes and the two secured convertible promissory notes originally issued to Osprey Investments in June and July 2023 in the aggregate original principal amount of $15.6 million and the use of debt service reserve funds for payment of certain obligations owed to Inter-American Investment Corporation ("IDB") under its $50.0 million loan facility dated as of November 20, 2020 (as amended, the "IDB Facility"), as well as certain other deferrals and fee reductions agreed by IDB. Further to the foregoing and unless otherwise noted below, the Company expected to complete the following transactions on January 26, 2023 (the "Closing"): * Following completion of a consent solicitation process completed on January 12, 2024 (the "Consent Solicitation"), holders of more than 50% of the 2026 Notes have agreed to amend the 2026 Notes via a supplemental indenture executed by the Trustee on January 25, 2024; * The Note Restructuring involving 82.1% of the 2026 Notes (excluding the Kibbutz Notes), representing an aggregate principal amount of $109.0 million, and in connection therewith, will issue 2029 Notes in an aggregate principal amount of $65.4 million; * It will exchange a further $14.7 principal amount of 2026 Notes (the "Kibbutz Notes"), formerly held by Kibbutz Holding S.a.r.l., a related party of the Company which is controlled by Rafael Museri and Daniel Rudasevski, directors of the Company and its Chief Executive Officer and Chief Growth Officer, respectively, into ordinary shares of the Company as well as a new 6.0% convertible secured note due 2029, issued in the principal amount of $10.0 million (the "New Osprey Note"), all of which are held by Osprey; * The two secured convertible promissory notes issued to Osprey by a subsidiary of the Company, as the borrower, in June 2023 (in the original principal amount of $11.1 million, the "June Note") and July 2023 (in the original principal amount of $4.4 million, the "July Note"), have been amended and the lender's interest is now held by Osprey; * Osprey will convert $4.0 million of the July Note into ordinary shares of the Company; * A gross amount of $20.0 million will be funded to the Company on or about January 26, 2024 by Osprey pursuant to subscription agreements between the Company and Osprey, with an additional $8.0 million committed to be funded in phased payments following the Shareholder Approval; * A subsidiary of the Company has entered into a sale and purchase agreement ("SPA") and securityholders' agreement ("SHA") with GAH Education Holding Limited regarding the Company's investment in FutureLearn Limited, a company that owns and operates a British digital education platform that provides online courses, microcredentials and other degrees ("FutureLearn"), and the Company has invested $3.3 million of the Osprey investment proceeds into the FutureLearn business, with up to $0.7 million in further investments to be made by the Company; * A gross amount of $5.0 million will be funded to the Company by third party investors pursuant to subscription agreements between the Company and such investors, as part of the Incremental Fundraise, and to date the Company has entered into subscription agreements with investors for a further $2.5 million of the Incremental Fundraise, including $0.5 million from Messrs. Museri and Rudasevski and other employees, with such investments to be funded upon and subject to the Company obtaining Shareholder Approval; * The Company has entered into co-marketing arrangements with Osprey whereby the Company will grant to Osprey up to 1.5 billion Luna loyalty tokens over a period of three years for the use of accommodation and services at Selina branded hotels at discounted rates and provide other benefits to Osprey in exchange for Osprey promoting the Selina branded hotels and services to its employees, students and other parties within the network of universities operated by its affiliates; * The Company's subsidiaries, Selina Global Services Spain S.L. and Selina Operation One (1) S.A. ("SOP1"), the primary obligors under the IDB Facility have entered into amendment and waiver agreements relating to certain terms of the IDB Facility, including the deferral of various payments, that are anticipated to result in a reduction of cash outflow in 2024 of approximately $11.8 million (including the early release of funds held in a debt service reserve account established for IDB); * Certain provisions of the employment contracts of Messrs. Museri and Rudasavski, not including their compensation arrangements, have been varied as described in more detail below; and * In connection with the Closing, the Company has paid or agreed to pay approximately $7.0 million in legal, advisor and trustee fees, including certain costs incurred by the Steering Committee, Osprey and Osprey Investments, and Kibbutz Holding S.a.r.l., a related party of the Company ("Kibbutz") that has provided guarantees to Osprey and received warrants from the Company in respect of the Original Osprey Investment Arrangements. The Company also provided an updated summary of its note restructuring and consent solicitation in its Report. A full-text copy of the Company's Form 6-K report is available at http://tinyurl.com/yvr5x74x About Selina Hospitality PLC United Kingdom-based Selina (NASDAQ: SLNA) is one of the world's largest hospitality brands built to address the needs of millennial and Gen Z travelers, blending beautifully designed accommodation with coworking, recreation, wellness, and local experiences. Founded in 2014 and custom-built for today's nomadic traveler, Selina provides guests with a global infrastructure to seamlessly travel and work abroad. Each Selina property is designed in partnership with local artists, creators, and tastemakers, breathing new life into existing buildings in interesting locations in 24 countries on six continents -- from urban cities to remote beaches and jungles. SILICON VALLEY BANK: Cayman Unit Files Chapter 15 Petition ---------------------------------------------------------- The Cayman Islands unit of Silicon Valley Bank filed for Chapter 15 protection in New York, saying it needs authority to obtain documents from federal regulators about the status of its $866 million of customer deposits following the parent bank's 2023 collapse. The liquidators of Silicon Valley Bank (Cayman Islands Branch) seeks an order recognizing the Cayman Proceeding as a foreign main proceeding under 11 U.S.C. Sec. 1502, 1515, 1517(a) and (b)(1), or, in the alternative, as a foreign non-main proceeding pursuant to 11 U.S.C. Sec. 1517(b)(2) of the Bankruptcy Code. Founded in 1983, Silicon Valley Bank, Santa Clara ("SVB") was an FDIC-insured, state-chartered bank headquartered in California and established to provide banking services to Silicon Valley's growing number of technology companies. While SVB had affiliate relationships and joint ventures with foreign banks in China and the United Kingdom, SVB Cayman was the only deposit-taking foreign branch maintained by SVB. On August 16, 2007, SVB registered in the Cayman Islands as a foreign company under Part IX of the Companies Act. Parts V and IX of the Companies Act. Following its registration in the Cayman Islands and the granting of a Class "B" license from CIMA, SVB had an active branch in the Cayman Islands, the established SVB Cayman branch. SVB Cayman offered three types of accounts to customers: (1) Eurodollar Sweep Account; (2) Eurodollar Operating Account; and (3) Eurodollar Money Market Account. When SVB failed in March 2023, SVB Cayman’s customers had, in the aggregate, approximately $866 million deposited in all three types of accounts. "Since our appointment as JOLs, through our investigation, we have learned that prior to the SVB Collapse, it was the regular practice for SVB Cayman to deposit all of its cash with SVB in a deposit account located in the United States. SVB Cayman’s sole asset was the depository liability owed by SVB in connection with this account (the "SVB Cayman Domestic Account"). Notwithstanding the fact that the JOLs were appointed over six months ago in June 2023, the JOLs have to date received no notice from the FDIC concerning the status of the SVB Cayman Domestic Account. In particular, the JOLs' investigation has revealed that the SVB Cayman branch maintained a domestic account in the United States at SVB's main headquarters with account number xxxx0000 and the notation "non-interest bearing deposits" and "foreign offices," under circumstances where it was made clear that this was only SVB Cayman's bank account (as there were no other foreign deposit taking branches) and that the credits located in this domestic account were SVB Cayman's sole asset and located in the United States," the Liquidators said in court filings. "Additionally, the JOLs' investigation has revealed that SVB's main headquarters maintained domestic, United States sitused accounts for each and all of the three products offered at SVB Cayman with the following account numbers: (i) SVB Cayman Sweep (xxxx5000); (ii) Cayman Eurodollar MMA (xxxx6000); (iii) SVB Cash Sweep Clearing Purchases-Foreign Offices (xxxx1940); (iv) Interest Payable on SVB Cayman Sweep (xxxx0500); and (v) Interest Payable – Cayman Eurodollar MMA Deposits (xxxx0600). The significant indication is that all of these credits were geographically located in the United States." About Silicon Valley Bank Silicon Valley Bank was the nation's 16th largest bank and the biggest to fail since the 2008 financial meltdown. During the week of March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a severe "run-on-the-bank." On the morning of March 10, 2023, the California Department of Financial Protection and Innovation seized SVB and placed it under the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC on March 13, 2023, disclosed that it transferred all deposits -- both insured and uninsured -- and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated "bridge bank" in an action designed to protect all depositors of Silicon Valley Bank. SVB Financial Group is a financial services company focusing on the innovation economy, offering financial products and services to clients across the United States and in key international markets. Prior to March 10, 2023, SVB Financial Group owned and operated Silicon Valley Bank, a state-chartered bank. On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 23-10367). The Hon. Martin Glenn is the bankruptcy judge. The Debtor had assets of $19,679,000,000 and liabilities of $3,675,000,000 as of Dec. 31, 2022. Centerview Partners LLC is proposed financial advisor, Sullivan & Cromwell LLP proposed legal counsel and Alvarez & Marsal proposed restructuring advisor to SVB Financial Group as debtor-in-possession. Kroll is the claims agent. On 13 June 2023, a collective of depositors of the Silicon Valley Bank (Cayman Islands Branch) filed a petition with the Court seeking an order that SVB Cayman be wound up and liquidators be appointed under the provisions of the Companies Act (2023 Revision) on the grounds that the Company is insolvent. On 29 June 2023, the Grand Court of the Cayman Islands appointed Andrew Childe and Michael Pearson of FFP limited in the Cayman Islands and Niall Ledwidge from Stout in New York, United States as Joint Official Liquidators of SVB Cayman. Liquidators of Silicon Valley Bank (Cayman Islands) filed a Chapter 15 bankruptcy petition (Bankr. S.D.N.Y. Case No. 24-10076) on Jan. 18, 2024. The Liquidators' counsel in the U.S. case: Warren E. Gluck Holland & Knight LLP Tel: (212) 513-3396 E-mail: warren.gluck@hklaw.com SIMEX INC: Chapter 15 Case Summary ---------------------------------- Lead Debtor: SimEx Inc. 210 King St East, 600 Toronto M5A 1J7 ON Canada Business Description: SimEx-Iwerks specializes in immersive cinematic attractions featuring the latest technology and highest quality IP and films. The Company's attractions are featured in theme parks, museums, zoos, and aquariums across the globe. Chapter 15 Petition Date: January 25, 2024 Court: United States Bankruptcy Court District of Delaware Three affiliates that concurrently filed voluntary petitions for relief under Chapter 15 of the Bankruptcy Code: Debtor Case No. ------ -------- SimEx Inc. (Lead Case) 24-10083 Iwerks Entertainment, Inc. 24-10081 SimEx-Iwerks Myrtle Beach, LLC 24-10082 Judge: Hon. Thomas M. Horan Foreign Proceeding: CCAA proceedings Court File No. CV-24- 00713128-0000 Foreign Representative: Deloitte Restructuring Inc. Jorden Sleeth 8 Adelaide Street West, Suite 200 Toronto M5H 0A9 ON Canada Foreign Representative's Counsel: Mark L. Desgrosseilliers, Esq. CHIPMAN BROWN CICERO & COLE LLP Hercules Plaza, 1313 N. Market St., Suite 5400 Wilmington DE 19801 Tel: (302) 295-0192 Email: desgross@ChipmanBrown.com Estimated Assets: Unknown Estimated Debt: Unknown A full-text copy of the Lead Debtor's Chapter 15 is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/INW5TPQ/Deloitte_Restructuring_Inc_and__debke-24-10083__0001.0.pdf?mcid=tGE4TAMA SIMEX INC: Covid-19, Liquidity Crisis Cue CCAA Filing ----------------------------------------------------- SimEx Inc. and its subsidiaries, Iwerks Entertainment, Inc. and SimEx-Iwerks Myrtle Beach LLC initiated proceedings under the Companies Creditors Arrangements Act. The Ontario Superior Court of Justice granted an Initial Order which, among other things: (i) granted a stay of proceedings up to and including Jan. 29, 2024; and (ii) appointed Deloitte Restructuring Inc. as Court-appointed monitor of the business and financial affairs of SimEx-Iwerks. On Jan. 26, 2024, SimEx-Iwerks applied for and was granted relief from the Bankruptcy Court in Delaware, including: 1) An order (I) Directing Joint Administration of Cases Under Chapter 15 of the Bankruptcy Code and (II) Authorizing Foreign Representative to File Consolidated Lists of Information Required by Bankruptcy Rule 1007(A)(4). 2) An order Granting Provisional Relief Pursuant to Section 1519 of the Bankruptcy Code; and 3) An Order Scheduling Hearing and Specifying Form and Manner of Service of Notice Pursuant to Sections 105(a), 1514, and 1515 of the Bankruptcy Code and Bankruptcy Rules 2002 and 9007. The Companies said they have suffered significant losses due to the COVID-19 pandemic and associated lockdowns, as well as a slower-than-expected return to pre-COVID business levels. The Companies noted that they had also invested in projects that have been delayed or terminated due to COVID. Such projects are either "on hold" or amount to costs "thrown away". As a result of the foregoing, the Companies are experiencing a liquidity crisis and will be unable to satisfy go-forward obligations such as payroll, rent, and licensing fees without the protections afforded by the CCAA, including immediate access to interim funding. They have consulted with their senior secured lender, Royal Bank of Canada ("RBC"), and the proposed monitor, and have determined that an optimal outcome for all stakeholders will be best achieved by entering creditor protection under the Companies' Creditors Arrangement Act. Further information regarding the proceedings, contact Deloitte Restructuring Inc.: Deloitte Restructuring Inc. Monitor of SimEx Inc., Iwerks Entertainment, Inc. and SimEx-Iwerks Myrtle Beach LLC 8 Adelaide Street West, Suite 200 Toronto, ON M5H 0A9 Persons requiring further information not available on the website should email the Monitor at simexinc@deloitte.ca or call the Monitor's toll-free hotline at 416-354-1487. Copies of the Initial Order and the Companies' application materials have been posted on the Monitor's website at https://www.insolvencies.deloitte.ca/en-ca/SimEx. Monitor can be reached at: Deloitte Restructuring Canada Inc. Attn: Jorden Sleeth Richard Williams 8 Adelaide St. West, Suite 200 Toronto, ON M5H 0A9 Tel: (416) 819-2322 (416) 258-8761 Email: jsleeth@deloitte.ca richwilliams@deloitte.ca Lawyers for the Monitor: Borden Ladner Gervais Attn: Roger Jaipargas Bay Adelaide Centre, East Tower 22 Adelaide St., West Toronto, ON M5H 4E3 Tel: (416) 367-6266 Email: RJaipargas@blg.com Lawyers for the Companies: Loopstra Nixon LLP Attn: Graham Phoenix Shahrzad Hamraz 130 Adelaide St. West, Suite 2800 Toronto, ON M5H 3P5 Tel: (416) 748-4776 (416) 748-5116 Fax: (416) 748-8319 Email: gphoenix@LN.law shamraz@LN.law Royal Bank of Canada can be reached at: Royal Bank of Canada Attn: Nadia Hamadi 20 King Street West 2nd Floor Toronto, ON M5H 1C4 Tel: 416) 974-3401 Email: nada.hamadi@rbc.com Lawyers for Royal Bank of Canada: Dentons Canada Attn: Ken Kraft John Salmas Sarah Lam 77 King St. West, Suite 400 Toronto, ON M5K 0A1 Tel: (416) 863-4374 (416) 866-4737 Email: kenneth.kraft@dentons.com john.salmas@dentons.com sarah.lam@dentons.com SimEx Inc. , together with Iwerks Entertainment, Inc. and SimEx-Iwerks Myrtle Beach, LLB, operate a unique single business enterprise in the specialized "4D" motion rides and cinematic attractions space. The Companies operate in the "theatre attractions" or "motion rides" space, and as such rely nearly exclusively on tourism. SPANISH BROADCASTING: Moody's Cuts CFR & Sr. Secured Notes to Caa3 ------------------------------------------------------------------ Moody's Investors Service downgraded Spanish Broadcasting System, Inc.'s Corporate Family Rating to Caa3 from Caa1, the Probability of Default Rating to Caa3-PD from Caa1-PD, and the senior secured notes rating to Caa3 from Caa1. The outlook is negative. The downgrade of the CFR to Caa3 and negative outlook reflect Spanish Broadcasting's deteriorating operating performance amid continued pressures on radio advertising demand, very high leverage and a weak liquidity position. Moody's expects adjusted debt to EBITDA to increase to high-12x in 2023 before declining to low-11x in 2024 driven by political revenue; however, leverage still remains elevated. In addition to lower profitability, the termination of the Purchase Agreement to sell Spanish Broadcasting's Mega TV business and associated real estate for $64 million further pressured the company's liquidity position. The weak credit metrics create elevated risk of a balance sheet restructuring including a distressed debt exchange given refinancing risks related to the senior secured notes maturing in March 2026. Governance considerations, as reflected in the company's Credit Impact score of CIS-5 and governance issuer profile score (IPS) of G-5, were a key driver of the rating action. The company's financial policies have contributed to operating with high leverage, weak liquidity position and potentially an unsustainable capital structure. RATINGS RATIONALE The Caa3 CFR reflects Spanish Broadcasting's small operating scale, very high leverage, weak liquidity and the risk that the capital structure is unsustainable which raises the possibility of distressed debt exchanges. Moody's adjusted debt to EBITDA (excluding Moody's standard lease adjustments) is expected at high-12x in 2023 resulting from continued recessionary pressures on radio advertising demand and lower political advertising revenue in a non-political year. In addition, operating expenses have also increased as Spanish Broadcasting has made investments in talent, content, digital infrastructure, and three new stations in Orlando, Tampa and Houston acquired over the past two years. While these investments will contribute to growth over time, they may not be sufficient to offset the impact of cyclical and secular pressures on operating performance. In 2024, Moody's projects revenue growth in the mid-single digits and adjusted EBITDA margin to expand modestly to high-17% despite additional political ad dollars. The acquisition of additional stations that are reformatted to Spanish language content may weigh on EBITDA in the near term. After a station is reformatted, additional marketing spend is typically required to drive consumer awareness and listenership. It also takes several quarters to develop good ratings that can be used to help sell advertising time on the new station. Some new stations also have periods of commercial free music to drive listenership. As a result, reformatted stations typically have higher expenses and low advertising revenue in the beginning which can lead to negative earnings at a new station. The very high leverage will reduce Spanish Broadcasting's ability to withstand any additional disruptions to the economy or contend with an increase in industry secular pressures. The rating also takes into consideration the company's good market positions with leading stations in most of the markets that it operates. Demographic trends will help support audience and advertising demand due to the strong growth of the Hispanic population in the US and advertiser interest in increasing spending with minority owned businesses. Spanish Broadcasting will also benefit from its AIRE radio network and digital interactive services including the LaMusica radio app and streaming site. Moody's expects Spanish Broadcasting will maintain weak liquidity over the next 12 months. The company has a modest balance of cash holdings in the amount of $7 million as of Q3 2023. While the company has access to a $15 million ABL revolving credit facility (not rated by Moody's) due February 2025 with approximately $1.5 million outstanding, there are refinancing risks given its weak operating performance. Moody's projects free cash flow to turn modestly positive in 2024 from political revenue; however, it is expected to turn back to slightly negative in a non-political year. The timing of interest payments in March and September will lead to negative free cash flow in the first and third quarters. Capex is expected to be about $2-$3 million per annum. The termination of the $64 million asset sale has put pressure on liquidity as the company planned to utilize the proceeds for additional acquisitions or debt repayment. The Caa3 rating on the senior secured notes due March 2026 is the same as the Caa3 CFR given the secured debt represents the preponderance of the capital structure except for the $15 million ABL revolver due February 2025, which is not rated by Moody's. The secured note is not subject to a financial maintenance covenant. The ABL revolving facility is subject to a maximum net leverage and minimum fixed charge coverage ratio when availability on the revolver is less than $7.5 million. Spanish Broadcasting's ESG Credit Impact Score is CIS-5 reflecting the company's significant exposure to secular societal trends in radio broadcasting and governance risks related to financial policies that have tolerated operating with very high leverage levels, weak liquidity and elevated risk of an unsustainable capital structure. The negative outlook reflects very high financial leverage, negative free cash flow generation, secular headwinds facing the radio industry, and refinancing risks related to 2026 debt maturities. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be upgraded if Spanish Broadcasting is able to substantially grow profitability or reduce debt levels such that the liquidity position improves and the probability of default declines. The ratings could be downgraded further if there is increasing risk that the capital structure is unsustainable or Moody's assessment of the probability of default were to increase. Spanish Broadcasting System, Inc. (Spanish Broadcasting) owns and operates radio stations in addition to the AIRE radio network, digital interactive services, and live events focused on Spanish language content. The company's station portfolio is located in 9 markets (Los Angeles, New York, Puerto Rico, Chicago, Miami, San Francisco, Orlando, Tampa and Houston). Chairman of the Board of Directors and Chief Executive Officer, Raul Alarcon has voting control of the company via a dual-class share structure. Spanish Broadcasting generated approximately $154 million in revenue for the last twelve months ending September 2023. The principal methodology used in these ratings was Media published in June 2021. SPIRIT AIRLINES: BlackRock Holds 7.7% Equity Stake as of Dec. 31 ---------------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed that as of December 31, 2023, it beneficially owned 8,421,544 shares of Spirit Airlines, Inc.'s common stock, representing 7.7% of the shares outstanding. A full-text copy of the Report is available at http://tinyurl.com/2djv3xsy About Spirit Airlines Spirit Airlines Inc. is a major United States ultra-low cost airline headquartered in Miramar, Florida, in the Miami metropolitan area. In September 2023, Fitch Ratings has revised the Rating Outlook for Spirit Airlines to Negative from Stable and affirmed Spirit's Long-term Issuer Default Rating at 'B+'. Fitch has also affirmed Spirit IP Cayman Ltd.'s and Spirit Loyalty Cayman Ltd.'s senior secured debt at 'BB+'/'RR1'. Also in September 2023, Egan-Jones Ratings Company maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Spirit Airlines, Inc. Meanwhile, Moody's Investors Service downgraded its corporate family rating of Spirit Airlines to Caa1 from B2 and probability of default rating to Caa1-PD from B2-PD, the TCR reported on November 22, 2023. SPIRIT AIRLINES: JetBlue Raises Concerns Over Merger Agreement -------------------------------------------------------------- Spirit Airlines Inc. disclosed in a Form 8-K Report filed with the Securities and Exchange Commission that JetBlue Airways Corporation filed a Form 8K stating that JetBlue informed the Company that "certain conditions to closing required by the Agreement and Plan of Merger, dated as of July 28, 2022, among JetBlue, Spirit and Sundown Acquisition Corp., a Delaware corporation, and a direct wholly owned subsidiary of JetBlue may not be satisfied prior to the outside dates set forth in the Merger Agreement (and also informed Spirit that accordingly the Merger Agreement may be terminable on and after January 28, 2024). JetBlue continues to evaluate its options under the Merger Agreement. Unless and until such time as the Merger Agreement is terminated pursuant to its terms, JetBlue will continue to abide by all of its obligations under the Merger Agreement. Spirit believes there is no basis for terminating the Merger Agreement. Spirit will continue to abide by all of its obligations under the Merger Agreement, and it expects JetBlue to do the same. About Spirit Airlines Spirit Airlines Inc. is a major United States ultra-low cost airline headquartered in Miramar, Florida, in the Miami metropolitan area. In September 2023, Fitch Ratings has revised the Rating Outlook for Spirit Airlines to Negative from Stable and affirmed Spirit's Long-term Issuer Default Rating at 'B+'. Fitch has also affirmed Spirit IP Cayman Ltd.'s and Spirit Loyalty Cayman Ltd.'s senior secured debt at 'BB+'/'RR1'. Also in September 2023, Egan-Jones Ratings Company maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Spirit Airlines, Inc. Meanwhile, Moody's Investors Service downgraded its corporate family rating of Spirit Airlines to Caa1 from B2 and probability of default rating to Caa1-PD from B2-PD, the TCR reported on November 22, 2023. SUNOCO LP: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Sunoco LP's (SUN) Long-Term Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook, following the company's acquisition announcement of NuStar Energy, L.P. (NuStar; BB/Stable). Fitch has also affirmed the senior unsecured bonds co-issued by SUN and Sunoco Finance Corp. at 'BB+'/'RR4' and the senior secured revolver rating at 'BBB-'/'RR1'. Fitch believes the acquisition of NuStar will improve SUN's business risk profile through an increase in geographic and business line diversity. Fitch considers the announced financing plan to be balanced and expects leverage to return to the low 4x range within two years of transaction close. The Stable Outlook reflects Fitch's expectation for supportive fundamentals underlying the combined entity's businesses including expectations for resilient demand for refined products across North America, continued crude oil production growth in the Permian Basin, further increased demand for renewable fuels and other products supporting the energy evolution. KEY RATING DRIVERS Improved Business Mix and Geographic Diversity: NuStar will contribute crude terminals and pipelines, refined products terminals and pipelines, a large ammonia pipeline, and exposure to renewable fuels on West Coast. Of the pro-forma EBITDA, approximately 45% will come from fuel distribution, 25% from crude oil, and 25% from refined products, with the balance from other services. The ammonia pipeline and renewables presence on the West Coast provides for near-to-medium-term growth opportunities in the energy evolution. Prior to the acquisition, a large majority of EBITDA came from fuel distribution. NuStar has a substantial asset footprint in the Midwest, where it has refined products terminals and pipelines and its ammonia pipeline. The company also has some refined products terminals and storage on the West Coast. This increased geographic diversity is credit positive, as it decreases exposure to region specific events that could negatively impact operations. Stable Cash Flows: SUN currently has a contract with 7-Eleven, Inc. with 10 years remaining provides a fixed price for a fixed number of gallons per annum. The specified base gallonage currently accounts for a little over 25% of the partnership's run rate total, and is expected to increase as part of a recently announced sale of SUN's West Texas assets to 7-Eleven. In addition, the entire value chain stretching from retail stores (where the partnership is a lessor, and, in small numbers, a retailer) to wholesaling (the partnership core) features elements that make for resilient margins. The product is a necessity of most U.S. citizens' everyday lives, and the value chain in aggregate generally adjusts its selling price when volumes fall, like at the onset of the pandemic, to preserve a gross margin dollar value. Fitch believes the combined entity will have improved cash flow stability. NuStar's EBITDA is made up of roughly one-third of each of the following: take-or-pay contracts with largely high creditworthy or large private/international counterparties, fixed-fee contracts for the only pipelines into and out of location advantaged and highly utilized Valero Energy Corporation (BBB/Stable) refineries, and fixed-fee volume exposed contracts that are almost entirely exposed to Permian Basin crude oil dynamics. In volume exposed contracts, exposure to the Permian is somewhat mitigated because it is in the basin with the lowest breakevens in the U.S. Leverage Target Unchanged: Within about two years of acquisition close, Fitch expects SUN to be back around its 4.0x leverage target, a target that remains unchanged with the acquisition. SUN's acquisition of NuStar is being financed in a balanced manner and will include the assumption of NuStar debt. Expensive pieces of subordinated debt and preferred units at NuStar are expected to be replaced with senior unsecured notes. SUN calculates its leverage using a net leverage, which generally leads to a lower leverage number than Fitch's figure. Fragmented Motor Fuels Distribution Sector: Sunoco is the largest independent distributor of motor fuels in the U.S. The overall sector, including both independents and non-independents, is highly fragmented. Sunoco's current business has a wide range of activities, from being the bridge between credit card banks and Sunoco credit card customers, to wholesaling to other wholesalers at its terminals. Terminal ownership continues to grow as the company makes acquisitions, and over the years, the company has demonstrated its ability to smoothly integrate new acquisitions. Fitch believes the sector is likely to present attractive acquisition opportunities. In the event a series of new deals are struck, Fitch will monitor acquisition multiples and financing plans. Fitch believes Sunoco's 4.0x long term-leverage target policy is important to its rating. Parent-Subsidiary Linkage: Sunoco's ratings reflect its Standalone Credit Profile with no express linkage to its parent company. Fitch believes Energy Transfer LP (ET; BBB-/Positive), the general partner and owner of a minority but meaningful stake in the limited partnership units, has the stronger credit profile of the two entities, given ET's size; scale; and geographic, operational and cash flow diversity relative to Sunoco. No uplift is provided to Sunoco's ratings, as Fitch considers strategic, operational and legal (e.g., cross-defaults) incentives weak. Certain Sunoco board members are designated as independent board members and serve on a conflicts committee. DERIVATION SUMMARY Pro-forma for the acquisition of NuStar, Sunoco's leading peer is Plains All American Pipeline, L.P. (Plains; BBB/Stable). Within its coverage, SUN's combination of its wholesale motor fuel distribution segment and to be acquired crude oil and refined products segments makes it unique in Fitch's North American midstream energy coverage. Similar to SUN, Plains is a company that covers many regions, with operations in all of the major production basins and most of the critical demand centers in the U.S. and Canada. After SUN merges with NuStar, SUN and Plains will have similar scale. About 20% of Plains' EBITDA comes from NGL, with the remainder from a crude oil segment with a large Permian presence and an asset base that covers the entire crude oil midstream value chain. SUN's EBITDA will largely come from wholesale motor fuel distribution and crude oil and refined products terminals and pipelines. Both companies have fairly predictable cash flows, with Plains having substantial operations in the strongest U.S. basin and SUN selling a highly demanded product (gasoline) and also having various MVC or MVC-like contracts in its contract portfolio. Fitch expects Plains will remain within its 3.25x-3.75x leverage target and Sunoco will deleverage back to around its 4.0x stated leverage target by about two years after the acquisition close. Due to higher business risk and higher leverage, SUN is rated two notches below Plains. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer Include: - Fitch's oil price deck, which bears, over the long term, a relationship to the price of motor fuels and production of crude and refined products; - Motor fuel sales gallons sold in line with management's guidance, with cents per gallon (CPG) immaterially lower than management guidance; - Volume growth on NuStar's acquired Permian pipeline system and incremental growth projects on its ammonia pipeline system; - Increasing distributions to unitholders; - Maintenance capex and growth capex generally in line with management's guidance; - Some small acquisitions in the wholesale motor fuel distribution segment; - Meaningful financial and operating synergies realized by outer years of the forecast; - Refinancing rate for new debt of 8%; - SUN units issued to NuStar unitholders at a value of 0.4 to 1; - Base interest rates in line with Fitch's Global Economic Outlook. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - After successful integration of the two companies, EBITDA leverage expected to be at or below 3.8x on a sustained basis; - A meaningful increase in the percentage of EBITDA coming from take-or-pay type contracts. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - EBITDA leverage expected to be at or above 4.8x on a sustained basis; - Sustained deterioration in motor fuel margins; - An acquisition or pursuit of organic growth strategy that significantly increases business risk. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: Sunoco has a $1.5 billion secured revolving credit agreement that matures in April 2027. Prior to the acquisition, SUN had no upcoming maturities until 2027, and pro forma for the NuStar acquisition, the nearest bond maturity is in October 2025. Fitch expects the pro-forma entity's maturity schedule is manageable over the forecast period. As of Sept. 30, 2023, Sunoco had $256 million in cash and around $850 million in revolver availability. Both companies currently have $2.5 billion in aggregate revolving commitments, with neither company meaningfully using its revolvers in the normal course of business, outside of SUN using its revolver for small acquisitions. The pro forma entity will have $1.5 billion in revolving commitments, which Fitch deems sufficient. The revolving credit agreement requires the partnership to maintain a net leverage ratio below 5.5x and an interest coverage ratio above 2.25x. As of Sept. 30, 2023, Sunoco was in compliance with its covenants, and Fitch believes that Sunoco will remain in compliance with its covenants through its forecast period. The revolver is secured by a security interest in, among other things, all its present and future personal property and all present and future personal property of its guarantors, the capital stock of its material subsidiaries (or 66% of the capital stock of material foreign subsidiaries), and any intercompany debt. ISSUER PROFILE SUN is a wholesale motor fuels distributor that distributes diesel and gasoline to retail service stations throughout the U.S., with a focus on the Northeast. Pro forma for the NuStar acquisition, SUN will have an increased presence in the Midwest, crude terminals and pipelines, refined products terminals and pipelines, a large ammonia pipeline, and exposure to renewable fuels on West Coast. SUMMARY OF FINANCIAL ADJUSTMENTS For unconsolidated investees, Fitch incorporates in EBITDA distributions from such entities, not equity-method income, nor pro-rata EBITDA. 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 ----------- ------ -------- ----- Sunoco LP LT IDR BB+ Affirmed BB+ senior secured LT BBB- Affirmed RR1 BBB- senior unsecured LT BB+ Affirmed RR4 BB+ Sunoco Finance Corp. senior unsecured LT BB+ Affirmed RR4 BB+ TANGLEWILDE LLC: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Tanglewilde LLC 1201 Pacific Avenue, Suite 1200 Tacoma, WA 98402-4395 Business Description: Tanglewilde is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Western District of Washington Case No.: 24-40232 Judge: Hon. Brian D Lynch Debtor's Counsel: Aditi Paranjpye, Esq. CAIRNCROSS & HEMPELMANN, P.S. 524 Second Avenue Suite 500 Seattle, WA 98104 Tel: 206-587-0700 E-mail: aparanjpye@cairncross.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by Shelly Crocker as Chief Restructuring Officer for HCDI. 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/RMRHBIY/Tanglewilde_LLC__wawbke-24-40232__0001.0.pdf?mcid=tGE4TAMA TEGNA INC: Enters 15th Amendment to Credit Agreement ---------------------------------------------------- TEGNA Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on January 25, 2024, the Company entered into an amendment to that certain Amended and Restated Competitive Advance and Revolving Credit Agreement, dated December 13, 2004 and effective as of January 5, 2005, and as amended and restated as of August 5, 2013, as further amended as of June 29, 2015, September 30, 2016, August 1, 2017, June 21, 2018, August 15, 2019, June 11, 2020, and May 14, 2023, among the Company, the several lender parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and swingline lender, Citibank, N.A., Barclays Bank PLC, and Royal Bank of Canada, as issuing lenders. Under the Credit Agreement, the Company's maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at 4.50 to 1.00. Among other things, the Credit Agreement was amended to: * Reduce the Five-Year Commitments (as defined in the Credit Agreement) to $750 million; * Extend the term of such Five-Year Commitments to January 25, 2029, subject to a 91-day springing maturity date if debt in excess of $300 million (subject to certain exceptions) were to mature before such date; * Add the right to obtain a temporary 0.5x step-up in the Total Leverage Ratio (as defined in the Credit Agreement) after consummating a Qualified Acquisition (as defined in the Credit Agreement); * Increase the amount of Unrestricted Cash (as defined in the Credit Agreement) to $600 million; * Amend the definition of Consolidated EBITDA to include an add-back for certain professional fees and expenses; and * Establish a $50 million swingline facility. Several of the lenders and agents under the Credit Agreement and their respective affiliates have performed, and may in the future perform, various commercial banking, investment banking and other financial advisory services for the Company and its subsidiaries for which they have received, and will receive, customary fees and expenses. A full-text copy of the Amendment is available at http://tinyurl.com/bdwnxfyu About TEGNA Headquartered in Virginia, TEGNA Inc. is a broadcasting, digital media and marketing services company. As of Sept. 30, 2023, TEGNA has $7.20 billion in total assets and $4.22 billion in total liabilities. Egan-Jones Ratings Company, on January 16, 2024, maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by TEGNA Inc. THE ARENA GROUP: J. Heckman, 4 Others Report Equity Stake --------------------------------------------------------- In a Schedule 13D report filed with the U.S. Securities and Exchange Commission, the following entities disclosed beneficial ownership of The Arena Group Holdings, Inc.'s Common Stock: Reporting Shares Beneficially Percent of Persons Owned Class James C. Heckman 288,396 1.2% Warlock Partners, LLC 1,488,617 6.3% The Roundtable LLC, Series 1111 1,488,617 6.3% Brock Pierce 1,488,617 6.3% Mark E. Strome 1,108,194 4.7% The reported shares consist of (a) 186,123 shares of Arena's common stock, par value $0.01, and (b) 102,273 shares of Common Stock that are issuable upon the exercise of the options granted under the 2016 Equity Incentive Plan. The reported securities exclude 659,509 shares of Common Stock that are issuable upon the exercise of the unvested options granted under the 2019 Equity Incentive Plan. The 2019 Plan Options are subject to performance-based vesting that is tied to a target stock price and a target daily liquidity of the Common Stock, which have not been achieved. The percentages are based on 23,834,891 shares of Common Stock outstanding as of November 10, 2023, as reported in the Issuer's quarterly report on Form 10-Q filed with the SEC on November 14, 2023. A full-text copy of the Report is available at http://tinyurl.com/mrxa43bf About The Arena Group Holdings The Arena Group Holdings, Inc. (NYSE American: AREN) together with its subsidiaries, operates digital media platform the United States and internationally. The company offers the Platform, a proprietary online publishing platform comprising publishing tools, video platforms, social distribution channels, newsletter technology, machine learning content recommendations, notifications, and other technology. The company was formerly known as TheMaven, Inc. and changed its name to The Arena Group Holdings in February 2022. The Arena Group was incorporated in 1990 and is based in New York. THE ARENA GROUP: Names New Interim President, Board Chairman ------------------------------------------------------------ The Arena Group Holdings, Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on January 19, 2024, the Company received email correspondence from Ross Levinsohn tendering his resignation as a member of the Board of Directors of the Company. Levinsohn's resignation was accepted by the Company on the same day. Levinsohn states that his resignation is a result of disagreement with certain recent actions by the Board, including the Board's approval of the Company's plan to manage its operating expenses by implementing a reduction of its current workforce, as previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2024. The Company disagrees with the comments in the Resignation Email. The Company believes that Levinsohn's comments are reflective of a disgruntled former executive who was terminated on December 11, 2023. The members of the Board take their fiduciary duties and responsibilities seriously. The Company's decisions regarding operating expenses, strategic transactions, or otherwise, followed thoughtful process and deliberation and were determined to be in the best interest of the Company and its stockholders. Accordingly, on January 23, 2024, the Board appointed Jason Frankl as interim President of the Company, effective immediately. Frankl, 50, has served as Chief Business Transformation Officer of the Company since January 5, 2024. He has served as Senior Managing Director at FTI Consulting, a global business advisory firm, since March 2004. The Company previously entered into an engagement letter with FTI Consulting (the "Engagement Letter") for the provision of Frankl as Chief Business Transformation Officer. The Engagement Letter is not being amended and no additional compensation is being paid to Frankl in connection with his appointment as interim President. Frankl has not received and will not receive any compensation directly from the Company. The Company will instead pay FTI Consulting for Frankl's services. Other than as described above, the Company has not entered into any plan, contract, agreement, grant or award in connection with Frankl's appointment to serve as interim President and there is no arrangement or understanding between Frankl and any other persons, pursuant to which Frankl was selected as an officer and no family relationships among any of the Company's directors or executive officers and Frankl. Frankl does not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Additionally, on January 23, 2024, the Board appointed Cavitt Randall as Chairman of the Board, effective immediately. In addition, the Board, in connection with its regular assessment of skills and experience of the members of the Board, approved the reconstitution of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Special Finance and Governance Committee of the Board. Effective immediately, (i) the Audit Committee shall consist of Laura Lee (chair), Christopher Petzel and Carlo Zola; (ii) the Compensation Committee shall consist of Hunt Allred (chair), Christopher Petzel and Laura Lee; (iii) the Nominating and Corporate Governance Committee shall consist of Carlo Zola (chair), Christopher Petzel and Hunt Allred; and (iv) the Special Transaction Committee shall consist of Christopher Petzel (chair) and Hunt Allred. About The Arena Group Holdings The Arena Group Holdings, Inc. (NYSE American: AREN) together with its subsidiaries, operates digital media platform the United States and internationally. The company offers the Platform, a proprietary online publishing platform comprising publishing tools, video platforms, social distribution channels, newsletter technology, machine learning content recommendations, notifications, and other technology. The company was formerly known as TheMaven, Inc. and changed its name to The Arena Group Holdings in February 2022. The Arena Group was incorporated in 1990 and is based in New York. TIMBER PHARMACEUTICALS: Changes Name to Trex Wind-down Inc. ----------------------------------------------------------- Timber Pharmaceuticals, Inc., now known as Trex Wind-down, Inc., disclosed in a Form 8-K report that on January 23, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to the Company's certificate of incorporation, as amended (the "Name Change Amendment"), in connection with the previously announced closing of the sale of substantially all of the assets of the Company and its subsidiaries on January 22, 2024 pursuant to the "stalking horse" asset purchase agreement by and among the Debtors, LEO Pharma A/S and LEO Spiny Merger Sub, Inc. The Name Change Amendment did not amend the certificate of incorporation except to change the corporate name from "Timber Pharmaceuticals, Inc." to "Trex Wind-down, Inc.", effective January 23, 2024. About Timber Pharmaceuticals Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation -- http://www.timberpharma.com-- is a biopharmaceutical company focused on the development and commercialization of treatments for orphan dermatologic diseases. The Company's investigational therapies have proven mechanisms-of-action backed by decades of clinical experience and well-established CMC (chemistry, manufacturing and control) and safety profiles. The Company is initially focused on developing non-systemic treatments for rare dermatologic diseases including congenital ichthyosis (CI), facial angiofibromas (FAs) in tuberous sclerosis complex (TSC), and localized scleroderma. Timber Pharmaceuticals, Inc., and affiliates Timber Pharmaceuticals LLC and BioPharmX Inc. sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 23-11878) on Nov. 17, 2023. Timber Pharmaceuticals, Inc., disclosed total assets of $3,326,213 against total debt of $5,947,297. The Debtors tapped Morris, Nichols, Arhst & Tunnell LLP as bankruptcy counsel; Lowenstein Sandler LLP as special counsel; and VRS Restructuring Services LLC to provide a chief restructuring officer. Counsel to the DIP Lender, LEO US Holding, Inc., are Covington & Burling LLP and Cole Shotz P.C. TIMBER PHARMACEUTICALS: Closes Sale to Lender LEO ------------------------------------------------- A Delaware bankruptcy judge on Monday, January 22, 2024, approved dermatology drug developer Timber Pharmaceuticals' plan for a Chapter 11 sale of its assets. In connection with the Chapter 11 case, on Nov. 17, 2023, the Debtors, LEO Pharma A/S and LEO Spiny Merger Sub, Inc., a Delaware corporation and direct, wholly-owned subsidiary of LEO US Holding, Inc., a Delaware corporation (collectively with LEO Pharma A/S and LEO Spiny Merger Sub, Inc., "LEO") entered into a "stalking horse" asset purchase agreement. Pursuant to the terms of the Stalking Horse Agreement. the Debtors agreed to sell substantially all of the assets of the Company and its subsidiaries, including TMB-001, to LEO (the "Asset Sale"), for a purchase price of $14.35 million (the "Purchase Price") plus the assumption of certain liabilities, subject to approval by the Bankruptcy Court and other agreed-upon conditions. On Jan. 22, 2024, the Bankruptcy Court entered an order authorizing the Asset Sale pursuant to the terms of the Stalking Horse Agreement. On Jan. 22, 2024, the Debtors and LEO closed the Asset Sale contemplated by the Stalking Horse Agreement, thereby completing the disposition of the substantially all of the assets of the Company and its subsidiaries, including TMB-001. In connection with the closing of the Asset Sale, the Purchase Price was paid by LEO, inter alia, through a credit bid of all outstanding obligations owed under the DIP Loan Agreement in the principal amount of $13.9 million (plus outstanding interest and fees owed thereunder). Accordingly, as of the closing of the Asset Sale, the DIP Loan Agreement was deemed satisfied and paid in full. Departure of Officers Effective as of the closing of the Asset Sale, each of John Koconis, Chief Executive Officer, President and Chairman of the Board, and Joseph Lucchese, Chief Financial Officer, Treasurer and Secretary, resigned from their respective executive officer and other employment positions they held with the Company and the Company's subsidiaries, as applicable, and assumed employment positions with LEO Spiny Merger Sub, Inc. Also effective as of the closing of the Asset Sale, Alan Mendelsohn, Chief Medical Officer, no longer serves as Chief Medical Officer of the Company and any other positions with the Company's subsidiaries, as applicable and has been offered employment with LEO Spiny Merger Sub, Inc. About Timber Pharmaceuticals Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation -- http://www.timberpharma.com-- is a biopharmaceutical company focused on the development and commercialization of treatments for orphan dermatologic diseases. The Company's investigational therapies have proven mechanisms-of-action backed by decades of clinical experience and well-established CMC (chemistry, manufacturing and control) and safety profiles. The Company is initially focused on developing non-systemic treatments for rare dermatologic diseases including congenital ichthyosis (CI), facial angiofibromas (FAs) in tuberous sclerosis complex (TSC), and localized scleroderma. Timber Pharmaceuticals, Inc., and affiliates Timber Pharmaceuticals LLC and BioPharmX Inc. sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 23-11878) on Nov. 17, 2023. Timber Pharmaceuticals, Inc., disclosed total assets of $3,326,213 against total debt of $5,947,297. The Debtors tapped Morris, Nichols, Arhst & Tunnell LLP as bankruptcy counsel; Lowenstein Sandler LLP as special counsel; and VRS Restructuring Services LLC to provide a chief restructuring officer. Counsel to the DIP Lender, LEO US Holding, Inc., are Covington & Burling LLP and Cole Shotz P.C. TRP BRANDS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: TRP Brands LLC 1000-46 N. Rohlwing Rd. Lombard, IL 60148 Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court Northern District of Illinois Case No.: 24-01529 Judge: Hon. Deborah L. Thorne Debtor's Counsel: E. Philip Groben, Esq. GENSBURG CALANDRIELLO & KANTER, P.C. 200 W. Adams St., Ste. 2425 Chicago, IL 60606 Tel: (312) 263-2200 Fax: (312) 263-2242 Estimated Assets: $0 to $50,000 Estimated Liabilities: $50 million to $100 million The petition was signed by Valerie Berman-Knight as president. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/K7O7R7Q/TRP_Brands_LLC__ilnbke-24-01529__0001.0.pdf?mcid=tGE4TAMA List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount 1. Bedgear, LLC $1,247,420 200 Sea Lane Farmingdale, NY 11735 2. Blue Cross Blue $4,205,433 Shield of IL 25550 Network Pl Chicago, IL 60673-1255 3. Deliveright Logistics, Inc. $2,298,614 20 Pulaski St Bayonne, NJ 07002 4. EJ Lauren, LLC $1,666,383 2690 Pellissier PL City of Industry, CA 90601 5. EJ Lauren, LLC $1,057,870 201 W Everman Parkway Fort Worth, TX 76134 6. Elements International Group $3,303,521 2020 Industrial Blvd Rockwall, TX 75087 7. Flores Design Fine Furniture $4,888,114 4618 Pacific Blvd Vernon, CA 90058 8. Freight Club LLC $1,366,443 1209 Orange St Wilmington, DE 19801 9. Google LLC $4,657,215 Dept 33654 San Francisco, CA 94139 10. Jason Furniture Ltd $3,988,335 d/b/a Kuka 113-11th St Hangzhou Zhejiang Cnzhe 11. Launch Interactive, LLC $730,000 195 Arizona Ave NE Atlanta, GA 30307 12. LS Direct Marketing $936,723 4 Suffern Place Suffern, NY 10901 13. Manor House Inc. $1,063,857 9830 W 190th St Suite A Mokena, IL 60448 14. Meta Platforms, Inc. $2,112,742 Attn: Accounts Receivable Chicago, IL 60693 15. Tempur-Pedic $1,524,732 1713 Jaggie Fox Way Lexington, KY 40511 16. The Sussman Agency $9,036,232 29200 Northwestern Highway Southfield, MI 48034 17. Ther-a-Pedic Midwest, Inc. $2,848,819 2350 5th St Rock Island, IL 61201 18. Top-Line $1,084,441 1455 West Thorndale Ave Itasca, IL 60106 19. Vertex $7,373,572 25528 Network Pl Chicago, IL 60673 20. Windstream $869,574 P. O. Box 9001013 Louisville, KY 40290-1013 USA RV: Unsecureds Projected a 0% Recovery in Liquidating Plan -------------------------------------------------------------- USA RV, LLC submitted a Chapter 11 Plan and a Disclosure Statement dated Jan. 17, 2024. General unsecured creditors are classified in Class 3, and will receive a distribution of approximately 0% of their allowed claims. Each Allowed General Unsecured Claim shall be paid the balance of all proceeds from the Debtor's liquidation to the extent there are funds available after payment of all Secured and Priority Claims as required under the Bankruptcy Code. The Debtor proposes to make the payments proposed in its Plan from the liquidation of its assets. Since the Petition Date, the Debtor has obtained a cash collateral order allowing its use of cash collateral. As a part of the Order, the Debtor is surrendering unsold inventory to Wells Fargo for re-sale to manufacturers, and is working to liquidate remaining inventory on the Automotive Finance Corporation, ("AFC"), floor plan. As a part of this liquidating Plan, the Debtor has agreed to maintain payments to AFC while it liquidates the units that remain on its floor plan and to sell other assets for distribution under this liquidating Plan. The Debtor is working with counsel to liquidate all of its remaining assets for distribution pursuant to its liquidating Plan. Under the Plan Class 3 General Unsecured Claims total $1,349,242.60. The Debtor will liquidate all assets not being surrender in Classes 1A through 10 herein no later than March 31, 2024. To the extent that there are any amounts remaining from the sale of said assets after the satisfaction of all Secured and Priority Claims And payment of Allowed Administrative Expenses, the Debtor shall pay said balance to holders of Allowed General Unsecured a Claims on a pro rata basis no later than July 8, 2024, one week after the last date for filing governmental claims. The Debtor does not expect there to be a significant dividend to Class 3 Allowed General Unsecured Claims but believes that there may be some funds available for that purpose. Class 3 is impaired. Payments and distributions under the Plan will be funded by the following: * The Debtor intends to liquidate all of the remaining inventory subject to the AFC floor plan no later than March 8, 2024. The Debtor shall liquidate the remaining units on the AFC floor plan and make payments of all secured amounts for each unit, as they are soid, pursuant to the terms and conditions of its pre-petition contract agreements with AFC and Cash Collateral Orders as entered. * The Debtor shall continue to sell AFC floor plan units through the end of business on March 8, 2024. Any AFC inventory that is not under contract for sale by that date shall be surrendered to AFC for disposition pursuant to the terms and conditions of the Debtor's contract and other agreements with AFC. * For all units that are under contract, but for which sales have not closed as of March 8, 2024, the Debtor shall have fourteen days to close all such sales, barring which any remaining units shall be surrendered to AFC for disposition pursuant to the terms and conditions of the Debtor's contract and other agreements with AFC as well. * The Debtor shall liquidate the remaining units on the Wells Fargo floor plan and make payments of all secured amounts for each unit, as they are sold, pursuant to the terms and conditions of its pre-petition contract agreements with Wells Fargo and Cash Collateral Orders as entered. * The Debtor shall continue to sell Wells Fargo floor plan units through the end of business on January 15.2024. Any Wells Fargo inventory that is not under contract for sale by that date shall be surrendered to Wells Fargo for disposition pursuant to the terms and conditions of the Debtor's contract and other agreements with Wells Fargo. * For all units that are under contract, but for which sales have not closed as of January 15, 2024, the Debtor shall have fourteen days to close all such sales, barring which any remaining units shall be surrendered to Wells Fargo for disposition pursuant to the terms and conditions of the Debtor's contract and other agreements with Wells Fargo as well. * In addition to Inventory that is subject to the AFC and Wells Fargo floor plan liens, the Debtor intends to sell other assets that are subject to various liens, more fully described in the treatment of Classes 1A through 1E herein. Such assets include, but are not limited to: DIP account balances, parts inventory, tools and non-titled equipment, office equipment, furnishings and supplies, computers and office equipment and uniforms. The Debtor believes that said assets are worth approximately $90,250.00 plus whatever amount of cash is on hand as of the Effective Date of the Plan. * Finally, the Debtor believes that it will generate some amount of cash from the sale of items that are not subject to any lien. These assets include, but are not limited to: 1 cargo trailer, 1 2004 Ford F-350 and 1 2003 Chevrolet 3500. The Debtor believes these assets to be worth approximately $15,400.00. In summary, after collection of all funds for asset sales described herein, the Debtor shall make distributions of all funds on hand as follows: 1. First, the Debtor will satisfy all outstanding Allowed Administrative Expense Claims. 2. The Debtor will pay all net proceeds from asset sales that are subject to the liens of Classes 1A through 1E in the following priority: 1st = Any balance owed to AFC after liquidation of all floor plan inventory. 2nd = The SBA claim in Class 1C, after full satisfaction of the AFC Class 1A claim. 3rd = The Northpoint claim in Class 1D, after full satisfaction of the AFC Class 1A claim and the SBA Class 1C claim. 4th = The Southstate claim in Class 1E, after full satisfaction of the AFC Class 1A claim, the SBA Class 1C claim and the Northpoint Class 1D claim. 5th = The Wells Fargo claim in Class 1B, after full satisfaction of the AFC Class 1A claim, the SBA Class 1C claim, the Northpoint Class 1D claim and the Southstate Class 1E claim. To the extent that any claim in classes 1A through 1O remain unpaid after the liquidation of all floor plan inventory and other assets subject to the liens of Class 1A through 1O claims, the unpaid balances of all such claims shall be allowed as Class 3 General Unsecured Claims herein. 3. All funds that remain after payment of all outstanding Allowed Administrative Expense Claims, priority claims and secured claims, shall be paid to Allowed General Unsecured Claims in Class 3 herein on a Pro Rata basis, including any amounts remaining from the sale of assets that are not subject to any lien of claimants in Classes 1A through 1E herein. A copy of the Disclosure Statement dated Jan. 17, 2024, is available at https://tinyurl.ph/hnsXE from PacerMonitor.com. About USA RV, LLC USA RV, LLC is a locally owned and operated company that sells new and used recreational vehicles. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. N.C. Case No. 24-00001) on January 1, 2024. In the petition signed by David W. Hall, member, the Debtor disclosed $2,850,847 in assets and $4,487,838 in liabilities. Judge David M. Warren oversees the case. Danny Bradford, Esq., at Paul D. Bradford, PLLC, is the Debtor's legal counsel. VECTOR UTILITIES: Feb. 29 Disclosure Statement Hearing Set ---------------------------------------------------------- Judge Jeffrey Norman has entered an order that the hearing on the Disclosure Statement of Vector Utilities is set at 9:30 a.m. on Feb. 29, 2024, in 2nd Floor Courtroom, United States Courthouse, 1300 Victoria Street, Laredo, Texas. The response deadline is 5:00 p.m. on Feb. 22, 2024. About Vector Utilities Vector Utilities, LLC, specializes in providing construction services to the telecommunications industry it also provides heavy construction services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-60040) on July 16, 2023. In the petition signed by Griselda C. Gaytan, managing member, the Debtor disclosed up to $10 million in both assets and liabilities. Rolando and Griselda Gaytan also sought Chapter 11 protection (Case No. 23-60041), and the cases are jointly administered with Vector's. Judge David R. Jones oversees the cases. Margaret M. McClure, Esq., at Law Office of Margaret M. McClure, is the Debtor's legal counsel. VROOM INC: To Wind Down E-Commerce Operations --------------------------------------------- Vroom, Inc. (Nasdaq:VRM), a leading ecommerce platform for buying and selling used vehicles, on Jan. 22, 2024, announced that it is discontinuing its ecommerce operations and winding down its used vehicle dealership business in order to preserve liquidity and enable the Company to maximize stakeholder value through its remaining businesses. Vroom owns and operates United Auto Credit Corporation (UACC), a leading automotive finance company, and CarStory, a leader in AI-powered analytics and digital services for automotive retail. UACC and CarStory will continue to serve their third-party customers and focus on growing those businesses. Under the Value Maximization Plan approved by Vrooms Board of Directors, the Company is suspending transactions through vroom.com, planning to sell its current used vehicle inventory through wholesale channels, halting purchases of additional vehicles, and executing a reduction-in-force commensurate with its reduced operations. Thomas Shortt, the Company's Chief Executive Officer, said "As we previously disclosed, we intended to raise additional capital to fund our operations and support the extension of our vehicle floorplan facility beyond its current expiration date of March 31, 2024. Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market. Obviously, we are very disappointed with this outcome. Two years ago, we set out to build a well-oiled machine, improve unit economics and dramatically improve our customer experience and I believe we achieved those goals. I want to thank our dedicated Vroommates, customers and business partners, as well as our Board of Directors and investors, all of whom have supported us over the years." Robert Mylod, Independent Executive Chair of the Board, said "Although we were unable to raise the capital necessary to achieve profitability in our ecommerce operations, we are committed to responsibly managing our remaining businesses and prudently deploying our capital as we seek to maximize value for all of our stakeholders." About Vroom Inc. Vroom, Inc. (NASDAQ: VRM) is a parent company of United Auto Credit Corporation and CarStory. Previously, it was a used car retailer and e-commerce company that let consumers buy, sell, and finance cars online. Vroom ceased e-commerce automotive sales operations on Jan. 22, 2024. WAITS R.V.: AFC Cites Deficiencies in Plan ------------------------------------------ Pursuant to 11 U.S.C. Sec. 1129, Automotive Finance Corporation ("AFC") submits its objection to the Plan of Reorganization for Waits RV Center, Inc. filed by Waits R.V. Center, Inc., the debtor. Prepetition, on or about August 16, 2017, the Debtor executed a Demand Promissory Note and Security Agreement (the "Note") pursuant to which AFC agreed to provide floorplan financing to the Debtor for the purchase of motor vehicles and the Debtor promised to pay AFC $500,000, or such greater or lesser principal amount as may be advanced by AFC to the Debtor pursuant thereto, together with interest. Under the terms of the Note and to secure the Debtor's present and future obligations to AFC under that note and any other instrument, guaranty, or other document, the Debtor granted AFC a security interest in substantially all of the Debtor's assets then owned or thereafter acquired, including vehicle inventory, and a purchase money security interest in all vehicles financed by AFC under the Note. AFC properly perfected and maintained its security interests in the Debtor's assets by filing the appropriate UCC financing and continuation statements with the Florida Department of State. Prior to the petition date, the Debtor requested that AFC advance it money and/or extend it credit under the Note to finance the purchase of certain vehicle inventory, and AFC in fact made such advances. On the petition date, the total amount due and owing from the Debtor to AFC under the Note was approximately $411,356.87, which amount is secured by substantially all assets of the Debtor, including the Secured Vehicles and other vehicle inventory. Because the Plan does not propose to sell AFC's collateral subject to 11 U.S.C. s 363(k) (11 U.S.C. s 1129(b)(2)(A)(ii)) or provide AFC with the indubitable equivalent of its claim (11 U.S.C. s 1129(b)(2)(A)(iii)), to be fair and equitable it must provide that AFC will retain its liens and receive deferred cash payments with interest (11 U.S.C. s 1129(b)(2)(A)(i)). While the Plan provides that AFC will receive deferred cash payments with interest pursuant to the terms of the Note, it does not provide that AFC will retain its liens pending the satisfaction of its claim. Instead, Article V of the Plan provides that, "Upon entry of the Confirmation Order, the Debtor shall be vested with all the Debtor in Possessions' rights, title, and interests in the assets Waits RV Center, Inc. free and clear, of all claims and interests of Creditors, except as otherwise provided herein." Plan, at Art. 5.2. Because this treatment strips AFC of its liens at Confirmation and prior to the satisfaction of its secured claim, the plan is not fair and equitable under 11 U.S.C. s 1129(b)(2)(A)(i) and cannot be confirmed. In addition, this treatment necessarily impairs AFC's claim under 11 U.S.C. s 1124 and AFC is entitled to vote on the Plan under 11 U.S.C. s 1126. AFC believes these Plan deficiencies can be remedied by the following modification of the Plan and the treatment of AFC's secured claim: Class Three (Automotive Finance Corporation): The secured claim of Automotive Finance Corporation will be allowed in the full amount due and owing under the Debtor's prepetition loan documents with AFC (the "AFC Agreement") on the Confirmation Date, which is approximately $157,575.88, and the Class Three Allowed Secured Claim will be paid pursuant to the terms of the AFC Agreement. Pending full payment and satisfaction of the Class Three Allowed Secured Claim, AFC will retain its liens on the Debtor's property and proceeds thereof and will retain all rights and remedies under the AFC Agreement, including the right to enforce such rights and remedies in the event of default. Attorneys for Automotive Finance Corporation: Craig A. Pugatch, Esq. LORIUM LAW 101 N.E. Third Avenue, Suite 1800 Fort Lauderdale, Florida 33301 Tel: (954) 462-8000 Fax: (954) 462-4300 E-mail: capugatch@loriumlaw.com About Waits RV Center Waits R.V. Center, Inc., is a corporation organized under the laws of the State of Florida. Waits R.V. Center is owned by William Waits, who is the 100% shareholder and President of the Debtor. By way of background, Waits R.V. Center is an RV sales and servicing company with a primary business office in Riviera Beach, Florida. Waits R.V. Center sells both new and used RV's. On Oct. 15, 2023, the Debtor filed a voluntary petition for Reorganization under Chapter 11 in the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-18437). KELLEY KAPLAN & ELLER, PLLC, is the Debtor's counsel. WASH MULTIFAMILY: Moody's Affirms 'B3' CFR, Outlook Remains Stable ------------------------------------------------------------------ Moody's Investors Service affirmed WASH Multifamily Acquisition, Inc.'s B3 corporate family rating, B3-PD probability of default rating, and B3 rating on its senior secured first lien notes. The outlook is maintained at stable. "The ratings affirmation and stable outlook reflects Moody's expectation for WASH to generate modest free cash flow in 2024," said Justin Remsen, Moody's Assistant Vice President - Analyst. "Moody's expect WASH's EBITDA to grow through price increases and larger fleet size, while maintaining similar levels of capital spend in 2024. The company benefits from a mostly fixed interest rate capital structure, but will have to address their revolver expiring in January 2026 and $850 million notes maturing in April 2026," added Remsen. RATINGS RATIONALE WASH's B3 CFR reflects elevated leverage and adequate liquidity. WASH's leverage will decline gradually with EBITDA growth though pricing actions and fleet growth - where the company is converting owner-operators to their platform and gaining share primarily from local/regional players. WASH's free cash flow is hampered by significant capital spending requirements and a competitive business landscape, although the company has focused on increasing its re-manufacturing capacity where the cost of machine is far lower than a new machine. WASH's CFR benefit from the company's solid market position as one of the top providers of outsourced laundry equipment services for multifamily housing properties and colleges in the US and Canada. Through long term contracts and strong retention rates, WASH generates a predictable revenue stream and strong margins. Recession resistant qualities of the business enhance its ability to raise prices. WASH has adequate liquidity, with a $105 million credit facility expiring in January 2026 and minimal free cash flow. As of September 30, 2023, WASH had $16 million of balance sheet cash and $60 million of revolver availability. WASH typically spends about 12-15% of its sales on maintenance and growth capital spending through investments in laundry equipment. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if adjusted debt to EBITDA is sustained below 5.5x, EBITA to interest greater than 1.75x, the company shows an improvement in free cash flow, and maintains a good liquidity profile. The ratings could be downgraded if adjusted debt to EBITDA is above 7.0x, EBITA to interest is below 1.0x, there is a deterioration in liquidity including negative free cash flow, or the company does not timely or economically address its 2026 maturities. Headquartered in Torrance, California, WASH Multifamily Acquisition, Inc. is a leading outsourced laundry service provider to multifamily apartments and universities in the US and Canada. The company has been privately owned by EQT, a global investment organization since 2015. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. WILLIAM INSULATION: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: William Insulation Company, Inc. 7220 W Derick Drive Casper, WY 82604 Business Description: WIC is an industrial insulation contractor serving the industrial insulation and fire proofing market. Chapter 11 Petition Date: February 2, 2024 Court: United States Bankruptcy Court District of Wyoming Case No.: 24-20024 Debtor's Counsel: Bradley T. Hunsicker, Esq. MARKUS WILLIAMS YOUNG & HUNSICKER LLC 2120 Carey Avenue Suite 101 Cheyenne, WY 82001 Tel: 307-778-8178 E-mail: bhunsicker@markuswilliams.com Total Assets: $5,588,438 Total Liabilities: $10,402,598 The petition was signed by Kenneth Milne as CEO. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/UD6O2NQ/William_Insulation_Company_Inc__wybke-24-20024__0001.0.pdf?mcid=tGE4TAMA WINDSOR HOLDINGS III: Fitch Lowers IDR to 'B+', Outlook Stable -------------------------------------------------------------- Fitch Ratings has downgraded Windsor Holdings III, LLC's (d/b/a Univar Solutions) Long-Term Issuer Default Rating (IDR) to 'B+' from 'BB-'. Fitch has also downgraded the Long-Term issue rating for the company's senior secured term loans and notes to 'BB-'/'RR3' from 'BB+'/'RR2', and affirmed the company's $1.4 billion senior secured ABL revolver at 'BB+'/'RR1'. The Rating Outlook is Stable. The downgrade reflects Univar's announcement that it plans to issue $450 million in incremental senior secured term loans in order to fund a distribution to shareholders, as well as a shift in capital allocation strategy and financial structure that is more in line with the 'B' rating category. The 'B+' IDR also reflects the heightened leverage profile of the pro forma capital structure with EBITDA leverage of around 6.0x, and Univar's leading market positions in chemicals and ingredients distribution. The rating also incorporates the issuer's resilient EBITDA margins and considerable FCF generation. The Stable Outlook reflects Fitch's expectations for EBITDA leverage to gradually improve but remain between 5.5x-6.5x through the forecast horizon. KEY RATING DRIVERS Dividend Recapitalization: Fitch believes Univar's contemplated dividend recapitalization weakens the issuer's financial structure, and comes at a time when near-term prospects for meaningful recoveries in earnings are limited. Fitch estimates the $450 million in incremental term loans, being issued to fund a distribution to Univar's new shareholders, will lead to pro forma Fitch-calculated EBITDA Leverage of around 6.0x. Fitch's forecast indicates EBITDA leverage peaking at around 6.0x at YE 2024, driven by weak global demand and lower margins, before gradually trending toward 5.5x thereafter as operating conditions improve. Durably Leveraging Transaction: The dividend recapitalization comes around six months post close of Univar's leveraging take-private acquisition by affiliates of Apollo Global Management in August 2023, and represents a capital allocation strategy and financial structure that is more in line with the 'B' rating category. Specifically, an increase in future debt-funded acquisitions or special dividends may further pressure credit metrics if not balanced with equity contributions or meaningful subsequent debt reduction. Fitch expects Univar to continue to focus on organic and inorganic investments to accelerate growth of the business, and that bolt-on acquisition spending remains disciplined relative to cash flow generation. While increased penetration into stable end-markets would be favorable toward Univar's business profile, Fitch expects that any materially leveraging transaction would be supported by a credible plan to bring EBITDA leverage back to the 5.5x-6.5x range within 24 months. Fitch's current forecast assumes only amortization payments under the term loans, and continued utilization of the ABL to partially fund annual bolt-on acquisition spending of approximately $200 million. Weaker Earnings, Stable FCF: While Univar's earnings substantially weakened in 2023, the company's strong working capital management preserved strong FCF generation of around $500 million. Univar's sales and Fitch-defined EBITDA declined by 13% and 23%, respectively through YTD 3Q 2023, as industry destocking and a challenging macroeconomic environment led to lower demand and pricing. However, the company still maintained stable Fitch-defined EBITDA margins in the 8% range, demonstrating the benefits of its cost management, pricing discipline, and product mix. While Fitch believes industry destocking will fully abate by 2024, its forecast assumes a continued period of weak chemicals pricing and volumes to partially offset benefits from ongoing cost reduction initiatives, leading to roughly flat earnings relative to 2023 levels. Fitch believes the company should still retain substantial financial flexibility to pursue its strategic priorities through the ratings horizon, supported by expectations for the company to generate stable FCF and an ability to reduce capex spending to preserve liquidity. Resilient Margins: Univar has successfully sought to improve EBITDA margins in recent years by implementing various operational cost-reduction initiatives, pruning or divesting some of its lower margin or non-core products, investing in logistics, productivity, revamping its U.S. salesforce and building out its solutions centers in order to understand and solve customer needs with more complex solutions. The 2019 Nexeo acquisition also strengthened Univar's product portfolio and provided the opportunity for additional product capture from existing customers in its more resilient, higher margin, higher growth markets, including adhesives and sealants, food ingredients, personal care and pharmaceutical ingredients. Univar reports that its Ingredients & Specialty business is approximately 40% of gross profit. The company aims to focus on growing this business through further market share gains and new partnerships, which should support stronger margins going forward. Fitch forecasts Univar maintaining EBITDA margins around 8% through the forecast horizon. Leading Position in Fragmented Market: Univar is better positioned to navigate logistical challenges and counterparty risk than smaller competitors given its size, operational scale and diversification. The global chemical distribution market is highly fragmented, with an estimated market size of roughly $200 billion and the top two distributors accounting for about 10% of the market. The company maintains the largest chemicals and ingredients sales force in North America, the broadest product offering and an increasingly efficient supply chain network, allowing Univar to continue to grow by leveraging its footprint to cover more products, customers and regions. DERIVATION SUMMARY Univar is the second largest global chemical distributor behind Brenntag and is the largest North American chemical distributor in a fragmented industry. Fitch compares Univar with chemical distributors Brenntag and Blue Tree Holdings (BB-/Stable), IT distributor Arrow Electronics, Inc. (BBB-/Stable) and metals distributor Reliance Steel and Aluminum Co. (BBB+/Stable). Each of these distributors benefits from significant size, scale and diversification compared with peers within their markets. Fitch believes the fragmented nature of, and potential for, continued outsourcing within chemicals distribution provides Univar a unique opportunity to increase market share and capture potential market expansion. Supported by an unmatched value-added service offering, Univar generates stronger EBITDA margins than Blue Tree and Arrow Electronics. Fitch views cash flow risk within the distribution industry as relatively low compared with chemicals producers given the limited commodity price risk, diversification of customers and end markets, low annual capex requirements of 1%-2% of revenue and working capital benefits amid the current down cycle. While technology and metals distribution market risks differ, the overall operating performances and cashflow resiliency are similar, with FCF margins for these distribution peers averaging in the low- to mid-single digits over the past five years. Univar's financial structure is weaker than the peer set, with expectations for EBITDA leverage to trend between 5.5x-6.5x. KEY ASSUMPTIONS Fitch's Key Assumptions Within The Rating Case for the Issuer: - Sales are roughly flat in 2024, as an assumed economic slowdown leads to only modest improvements in volumes and pricing, followed by growth exceeding GDP thereafter; - EBITDA margin remains in the low-8% range in 2024 as benefits from cost savings and improved mix are offset by weak assumed pricing and volumes, followed by a trend toward mid-8% range thereafter; - Capex remains close to 2023 levels, with various growth projects planned; - Excess FCF is applied to bolt-on acquisitions. RECOVERY ANALYSIS Key Recovery Rating Assumptions The recovery analysis assumes that Univar would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim, and that the $1.4 billion ABL is 80% drawn. This is due to the likelihood the ABL borrowing base will gradually reduce in a distressed scenario as the pricing environment declines over time. Going-Concern (GC) Approach Fitch projects Univar's Going Concern (GC) EBITDA (GC EBITDA) of $650 million, which assumes a rebound from an assumed trough EBITDA of around $640 million. This reflects an improvement in the underlying economic conditions that would have likely precipitated the default, as well as corrective actions taken during restructuring (or actions that would be priced in by potential bidders). This compares to around $640 million in Fitch-calculated EBITDA generated by Univar in the 2020 trough period. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which it bases the enterprise valuation. Specifically, the GC EBITDA depicts a sustained economic contraction in North America, resulting in severe, prolonged volume headwinds that more than offset working capital releases. Fitch assumes that upon default, Univar would be unable to improve EBITDA as economic and industry headwinds would likely limit the benefits of cost reductions. However, Fitch also assumes that the underlying business fundamentals would improve over time as the cycle corrects, leading to the assumed GC EBITDA. Fitch applies a 6.0x enterprise value multiple to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considers the company's high-quality asset profile including an extensive worldwide chemical and ingredient distribution network, various product transportation assets, technical development assets, and a leading proprietary e-commerce platform. Fitch considers these competitive advantages unique relative to most chemicals distribution space, which typically employ a more asset-light approach with a more limited set of value-added assets. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade - Gross debt reduction leading to EBITDA Leverage sustained below 5.5x; - Balanced allocation of FCF that maintains balance sheet flexibility along with a commitment to lower leverage. Factors that could, individually or collectively, lead to negative rating action/downgrade - EBITDA Leverage sustained above 6.5x; - A sustained reduction in EBITDA margins below historical levels of 6%-7% or ineffective working capital management leading to weaker FCF generation and financial flexibility; - A large transformational debt-funded acquisition or dividend recapitalization where there is no clear path to deleveraging within 24 months. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: Univar is expected to maintain sufficient liquidity pro forma for the contemplated transaction, supported by the issuer's stable FCF profile, high availability under the new $1.4 billion ABL revolver, and an adequate cash balance. The company also benefits from no material debt maturities through the forecast horizon, other than around $28 million in annual term loan amortization payments. Univar is materially exposed to an elevated interest rate environment over the medium-term, notwithstanding some benefits from interest rate swaps, given that around 85% of pro forma total debt is floating rate. ISSUER PROFILE Windsor Holdings III, LLC (d/b/a Univar Solutions) is an issuing holding company that wholly owns Univar Solutions, Inc. Univar Solutions is a leading global chemical and ingredients distribution company and provider of value-added services, working with leading suppliers worldwide. 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 ----------- ------ -------- ----- Windsor Holdings III, LLC LT IDR B+ Downgrade BB- senior secured LT BB- Downgrade RR3 BB+ senior secured LT BB+ Affirmed RR1 BB+ WYNN RESORTS: BlackRock Holds 6.7% Equity Stake as of Dec. 31 ------------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, BlackRock, Inc. disclosed that as of December 31, 2023, it beneficially owned 7,623,440 shares of Wynn Resorts Ltd's common stock, representing 6.7% of the shares outstanding. A full-text copy of the Report is available at http://tinyurl.com/57huv79s About Wynn Resorts Ltd. Headquartered in Las Vegas, Nevada, Wynn Resorts, Limited owns and operates hotels and casino resorts. As of Sept. 30, 2023, Wynn Resorts has $13.34 billion in total assets and $15.05 billion in total liabilities. Egan-Jones Ratings Company on September 19, 2023, maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Wynn Resorts, Limited. [*] Federal Judiciary Called to Curb Judge Shopping --------------------------------------------------- James Nani of Bloomberg Law reports that advocates are urging the federal judiciary to require that large bankruptcy cases be randomly assigned among all judges within a district as a way to curb judge shopping. Local court rules that funnel large bankruptcies to certain judges "undermine public confidence in the Chapter 11 system," several bankruptcy academics and industry groups said Friday, January 19, 2024, in a letter to H. Thomas Byron III, rules committee chief counsel with the Administrative Office of the US Courts. The request comes comes as venue shopping has become a broader area of concern in the federal judiciary for civil cases. The US Justice Department recently called on the federal judiciary to implement a rule addressing concerns raised over "forum shopping," or lawsuits filed in certain courts seeking to obtain rulings from judges against the federal government. The bankruptcy academics and industry groups proposed rule changes in the letter to the Judicial Conference -- the federal court system's policymaking body -- that would narrow the wide latitude bankruptcy courts have to make up rules for their own, local case assignment systems. Those rules have led to large Chapter 11 cases being concentrated in certain districts and allowed debtors to essentially choose their judges, the letter said. "A Federal Rule is necessary to provide uniformity across all bankruptcy courts to provide a level playing field and to avoid debtors creating the perception of a two-tiered justice system," the letter said. The Southern District of Texas bankruptcy court in Houston has become the biggest target of criticism for the practice. Two months ago, one of the judges in the district confirmed that a two-judge panel that handles complex Chapter 11 cases in Houston will remain intact for now, despite controversy surrounding the judge who helped found it. The panel is popular among attorneys representing large, corporate Chapter 11 debtors. Rule changes ushered in by former Bankruptcy Judge David R. Jones have been credited with turning the Southern District of Texas into a corporate bankruptcy hub by creating a complex case panel that assigned large Chapter 11 cases to either himself or one other Houston-based judge. The system, launched in 2016, gave troubled companies the reassurance of knowing which judges would handle their bankruptcies. Bankruptcy academics and industry groups in November called on the Southern District of Texas bankruptcy court to abolish the two-judge panel and randomly assign cases to all bankruptcy judges within the district. That same month, complex panel member Judge Christopher M. Lopez said the panel would remain. Some bankruptcy districts have changed their rules amid controversy over alleged forum shopping. In 2021, the Southern District of New York, one of the most sought-after bankruptcy venues, announced it would randomly assign its judges to large Chapter 11 cases, regardless of which of its three courthouses throughout the district first received a new bankruptcy petition. The Eastern District of Virginia made similar changes in 2022. The letter notes that the federal judiciary's Advisory Committee on Court Administration and Case Management for Civil Cases will address at its April meeting case assignment procedures in divisions with only one or two district judges. The letter was signed by, among others, Georgetown University bankruptcy law professor Adam Levitin; University of Nevada, Las Vegas bankruptcy law professor Nancy B. Rapoport; the Creditor Rights Coalition; and Clifford J. White, a former director of the US Justice Department's bankruptcy monitoring unit, the US Trustee's office. [*] Total Insolvencies up by 23% in Canada in 2023 -------------------------------------------------- CBC.ca reports that business insolvencies jumped by more than 41 per cent in 2023, according to data released Friday by Canada's top financial regulator. The report from the Office of the Superintendent of Bankruptcy showed that the total number of insolvencies -- meaning those filed by both businesses and consumers -- was up by 23.6 per cent last year. The high insolvency rates for businesses are "telling a story that we've been a little concerned about, and that is essentially that we're seeing a very tough economic climate for a lot of businesses" amid low economic activity, said Pedro Antunes, chief economist at the Conference Board of Canada. "Profits have plummeted and we've seen the stresses of CEBA loan repayments due, and perhaps other stresses coming into play," he said, adding there might be more job losses in the coming months. He said that if things start to unravel, there's still room for the Bank of Canada to lower interest rates, which would help businesses repay their loans and reduce the need for job cuts. "But we're at that crux. We're at that moment where everybody's kind of holding their breath to see what's going to come of this," he noted. The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) said in a statement that Friday's numbers marked the sharpest increase in business insolvencies in 36 years of records. Analysts were expecting businesses to be hit hard in 2023, with many having fallen behind on their pandemic loan repayments. Finance Minister Chrystia Freeland said on Jan. 23 that a quarter of small businesses that took out a Canadian emergency business account (CEBA) loan had missed the repayment-with-partial-forgiveness deadline of Jan. 18. "Many businesses are already on a razor's edge. The additional costs to service their debts due to higher interest rates will mean even less room to cover increasing costs of business going into 2024," said CAIRP chair André Bolduc. Cost of living a major factor The insolvency numbers take bankruptcies and creditor proposals into account. The latter is when a person in debt offers a formal proposal to their creditors asking for a different arrangement to pay back the money they owe. They might pay a percentage of their original debt or negotiate the repayment deadline, or a combination of both. Richard Goldhar, a licensed insolvency trustee who assists clients with such arrangements, says things are busy at his Toronto-based firm. "Our staff are always talking to clients now, the phones are ringing all the time," said Goldhar. His firm files bankruptcy or bankruptcy proposals on behalf of individuals and businesses, then helps them restructure their debts. [^] BOND PRICING: For the Week from Jan. 29 to Feb. 2, 2024 ----------------------------------------------------------- Company Ticker Coupon Bid Price Maturity ------- ------ ------ --------- -------- 2U Inc TWOU 2.250 49.250 5/1/2025 99 Escrow Issuer Inc NDN 7.500 31.302 1/15/2026 99 Escrow Issuer Inc NDN 7.500 31.302 1/15/2026 99 Escrow Issuer Inc NDN 7.500 31.302 1/15/2026 Acorda Therapeutics Inc ACOR 6.000 56.788 12/1/2024 Amyris Inc AMRS 1.500 2.750 11/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 10.000 1.234 8/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 10.000 1.234 8/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 10.000 1.234 8/15/2026 At Home Group Inc HOME 7.125 30.155 7/15/2029 At Home Group Inc HOME 7.125 30.480 7/15/2029 Audacy Capital Corp CBSR 6.750 3.875 3/31/2029 Audacy Capital Corp CBSR 6.500 4.375 5/1/2027 Audacy Capital Corp CBSR 6.750 3.438 3/31/2029 BPZ Resources Inc BPZR 6.500 3.017 3/1/2049 Bank of New York Mellon Corp/The BK 3.650 99.701 2/4/2024 Biora Therapeutics Inc BIOR 7.250 58.750 12/1/2025 Cano Health LLC CANHEA 6.250 7.250 10/1/2028 Cano Health LLC CANHEA 6.250 7.651 10/1/2028 Citigroup Global Markets Holdings Inc/United States C 8.300 75.000 5/25/2037 CommScope Inc COMM 8.250 43.394 3/1/2027 CommScope Inc COMM 8.250 44.261 3/1/2027 CommScope Technologies COMM 5.000 36.298 3/15/2027 CommScope Technologies COMM 5.000 36.474 3/15/2027 CorEnergy Infrastructure Trust Inc CORR 5.875 60.200 8/15/2025 Cornerstone Chemical Co CRNRCH 10.250 29.922 9/1/2027 Curo Group Holdings Corp CURO 7.500 23.000 8/1/2028 Curo Group Holdings Corp CURO 7.500 20.000 8/1/2028 Cutera Inc CUTR 2.250 26.713 6/1/2028 Cutera Inc CUTR 4.000 24.750 6/1/2029 Cutera Inc CUTR 2.250 40.875 3/15/2026 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 4.450 93.692 4/1/2024 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 5.150 9.288 3/15/2042 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 6.000 11.828 8/15/2040 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 6.350 12.013 3/15/2040 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 5.150 9.288 3/15/2042 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 5.150 9.288 3/15/2042 Danimer Scientific Inc DNMR 3.250 7.250 12/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 6.125 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 6.625 5.750 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 5.000 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 6.375 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 6.000 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 6.625 6.000 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 6.125 8/15/2026 Endo Finance LLC / Endo Finco Inc ENDP 5.375 5.129 1/15/2023 Endo Finance LLC / Endo Finco Inc ENDP 5.375 5.129 1/15/2023 Energy Conversion Devices Inc ENER 3.000 0.551 6/15/2013 Enviva Partners LP / Enviva Partners Finance Corp EVA 6.500 37.617 1/15/2026 Enviva Partners LP / Enviva Partners Finance Corp EVA 6.500 52.000 1/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 11.500 27.000 7/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 11.500 26.674 7/15/2026 Federal Home Loan Banks FHLB 0.300 99.285 2/9/2024 Federal Home Loan Banks FHLB 5.120 89.872 4/26/2024 Federal Home Loan Banks FHLB 4.750 99.831 2/2/2024 Federal Home Loan Banks FHLB 0.200 96.580 2/5/2024 Federal Home Loan Banks FHLB 3.750 99.381 2/8/2024 Federal Home Loan Mortgage Corp FHLMC 0.200 99.348 2/5/2024 Federal National Mortgage Association FNMA 5.220 78.676 5/3/2024 Federal National Mortgage Association FNMA 5.210 87.498 5/15/2024 First Republic Bank/CA FRCB 4.375 4.925 8/1/2046 First Republic Bank/CA FRCB 4.625 5.603 2/13/2047 Fisker Inc FSR 2.500 11.750 9/15/2026 GNC Holdings Inc GNC 1.500 0.409 8/15/2020 Goodman Networks Inc GOODNT 8.000 5.000 5/11/2022 Goodman Networks Inc GOODNT 8.000 1.000 5/31/2022 Gossamer Bio Inc GOSS 5.000 37.456 6/1/2027 H-Food Holdings LLC / Hearthside Finance Co Inc HEFOSO 8.500 5.500 6/1/2026 H-Food Holdings LLC / Hearthside Finance Co Inc HEFOSO 8.500 8.250 6/1/2026 Hallmark Financial Services Inc HALL 6.250 19.850 8/15/2029 Hill-Rom Holdings Inc HRC 7.000 98.186 2/15/2024 HomeStreet Inc HMST 3.500 33.500 1/30/2032 Homer City Generation LP HOMCTY 8.734 38.750 10/1/2026 Independent Bank Corp INDB 4.750 96.140 3/15/2029 Independent Bank Corp INDB 4.750 96.140 3/15/2029 Inseego Corp INSG 3.250 31.250 5/1/2025 Invacare Corp IVC 5.000 83.125 11/15/2024 Invacare Corp IVC 4.250 0.591 3/15/2026 JPMorgan Chase Bank NA JPM 2.000 87.878 9/10/2031 Karyopharm Therapeutics KPTI 3.000 50.750 10/15/2025 Ligado Networks LLC NEWLSQ 15.500 17.500 11/1/2023 Ligado Networks LLC NEWLSQ 15.500 21.478 11/1/2023 Lumen Technologies Inc LUMN 6.875 36.407 1/15/2028 Lumen Technologies Inc LUMN 4.500 22.449 1/15/2029 Lumen Technologies Inc LUMN 4.500 22.382 1/15/2029 Lumen Technologies Inc LUMN 5.375 24.658 6/15/2029 Lumen Technologies Inc LUMN 5.375 24.735 6/15/2029 MBIA Insurance Corp MBI 16.836 3.011 1/15/2033 MBIA Insurance Corp MBI 16.812 4.000 1/15/2033 Macy's Retail Holdings M 6.900 90.170 1/15/2032 Mashantucket Western Pequot Tribe MASHTU 7.350 46.475 7/1/2026 Morgan Stanley MS 1.800 77.112 8/27/2036 OMX Timber Finance Investments II LLC OMX 5.540 0.850 1/29/2020 Photo Holdings Merger Sub Inc SFLY 8.500 36.508 10/1/2026 Photo Holdings Merger Sub Inc SFLY 8.500 36.508 10/1/2026 Polar US Borrower LLC / Schenectady International Group Inc SIGRP 6.750 21.485 5/15/2026 Polar US Borrower LLC / Schenectady International Group Inc SIGRP 6.750 22.601 5/15/2026 Porch Group Inc PRCH 0.750 31.000 9/15/2026 PureCycle Technologies PCT 7.250 31.278 8/15/2030 Renco Metals Inc RENCO 11.500 24.875 7/1/2003 Rite Aid Corp RAD 7.700 4.563 2/15/2027 Rite Aid Corp RAD 6.875 5.679 12/15/2028 Rite Aid Corp RAD 6.875 5.679 12/15/2028 RumbleON Inc RMBL 6.750 54.533 1/1/2025 SBL Holdings Inc SECBEN 7.000 67.750 N/A SBL Holdings Inc SECBEN 7.000 66.000 N/A SVB Financial Group SIVB 4.000 2.125 N/A SVB Financial Group SIVB 4.250 2.500 N/A SVB Financial Group SIVB 3.500 67.000 1/29/2025 SVB Financial Group SIVB 4.100 2.188 N/A SVB Financial Group SIVB 4.700 1.500 N/A Shift Technologies Inc SFT 4.750 1.150 5/15/2026 Spanish Broadcasting System Inc SBSAA 9.750 52.766 3/1/2026 Spanish Broadcasting System Inc SBSAA 9.750 53.035 3/1/2026 Spirit Airlines Inc SAVE 1.000 38.250 5/15/2026 TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019 Tricida Inc TCDA 3.500 9.779 5/15/2027 Trustees of Princeton University/The PRNCTN 5.700 111.608 3/1/2039 Veritone Inc VERI 1.750 28.375 11/15/2026 Virgin Galactic Holdings Inc SPCE 2.500 38.250 2/1/2027 Voyager Aviation Holdings LLC VAHLLC 8.500 28.000 5/9/2026 Voyager Aviation Holdings LLC VAHLLC 8.500 28.000 5/9/2026 Voyager Aviation Holdings LLC VAHLLC 8.500 28.000 5/9/2026 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 5.000 4.063 7/10/2025 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 5.000 4.250 7/10/2025 WeWork Cos US LLC WEWORK 7.875 4.500 5/1/2025 WeWork Cos US LLC WEWORK 7.875 4.125 5/1/2025 WeWork Cos US LLC WEWORK 11.000 19.375 8/15/2027 WeWork Cos US LLC WEWORK 15.000 33.000 8/15/2027 WeWork Cos US LLC WEWORK 12.000 1.905 8/15/2027 WeWork Cos US LLC WEWORK 15.000 33.950 8/15/2027 WeWork Cos US LLC WEWORK 11.000 19.125 8/15/2027 Wesco Aircraft Holdings WAIR 9.000 9.750 11/15/2026 Wesco Aircraft Holdings WAIR 13.125 3.657 11/15/2027 Wesco Aircraft Holdings WAIR 8.500 10.000 11/15/2024 Wesco Aircraft Holdings WAIR 8.500 9.757 11/15/2024 Wesco Aircraft Holdings WAIR 9.000 9.497 11/15/2026 Wesco Aircraft Holdings WAIR 13.125 3.657 11/15/2027 Wheel Pros Inc WHLPRO 6.500 30.250 5/15/2029 Wheel Pros Inc WHLPRO 6.500 30.153 5/15/2029 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA. Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***