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/raid1/www/Hosts/bankrupt/TCR_Public/240802.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, August 2, 2024, Vol. 28, No. 214 Headlines 1416 EASTERN AVE: Court OKs Appointment of Marc Albert as Trustee 2U INC: Noteholder Group & Greenvale File Rule 2019 Statement 365 CHURCH: Disposable Income to Fund Plan Payments 5D CARGO EXPRESS: Unsecureds Will Get 68% of Claims over 60 Months 72ND AVENUE: Files Amendment to Disclosure Statement AIRSPAN NETWORKS: Asks Court Permission for $5 Million DIP Loan ALTA MESA: Mustang Gas Not Entitled to Sales Proceeds, Court Says AMC ENTERTAINMENT: Enters Refinancing Deal to Extend Maturities APEX DISASTER: Unsecureds to Get Share of Income for 5 Years ATI INC: S&P Hikes Issuer Credit Rating to 'BB-', Outlook Positive AZEK COMPANY: Fitch Assigns 'BB' LongTerm IDR, Outlook Positive BELK INC: Gives Lenders Control of Company, Raises $485M BIG LOTS: Stores Shutting in California BROOKDALE SENIOR: Registers 12.6MM Shares for 2024 Incentive Plan CANOO INC: Announces Stock Sale as Losses Continue CAPTAIN YURI'S: Unsecureds Will Get 16.73% of Claims over 5 Years CARIBBEAN GRILL: L. Todd Budgen Named Subchapter V Trustee CHRISTIAN HORIZONS: Fitch Lowers Issuer Default Rating to 'D' CONN'S INC: Hits Chapter 11 Bankruptcy After Sales Decreased CPPIB OVM: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable CREATIVE INVESTORS: Updates Unsecured Claims Details CYTOSORBENTS CORP: Registers $150MM Mixed Securities Offering DELEK US: Moody's Affirms 'Ba3' CFR & Alters Outlook to Negative EIGER BIOPHARMACEUTICALS: Unsecureds Unimpaired in Liquidating Plan ENOVA INT'L: Moody's Rates New $400MM Unsecured Notes 'B2' EPIC COMPANIES: U.S. Trustee Appoints Creditors' Committee EPR INVESTMENTS: Claims to be Paid From Financing or Sale Proceeds EQM MIDSTREAM: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable ETIENNE ESTATES: Voluntary Chapter 11 Case Summary EYM PIZZA LP: Seeks Chapter 11 Bankruptcy FAMULUS HEALTH: U.S. Trustee Unable to Appoint Committee FINANCE OF AMERICA: B. Libman Holds 47.7% Stake After Stock Split FINANCE OF AMERICA: Blackstone Holds 54.4% of Class A Common Shares FINANCE OF AMERICA: Effects 1-for-10 Reverse Stock Split FROM START: Involuntary Chapter 11 Case Summary GIRARDI: Court Limits Tom Clients Injury Details in Next Trial GLOBAL TELLINK: S&P Downgrades ICR to 'B-' Then Withdraws Rating GOLDEN RULE: Eric Terry Named Subchapter V Trustee GORDON'S COATINGS: U.S. Trustee Unable to Appoint Committee GUANELLA PASS: Amends First Savings Unsecured Claims Pay HADAD DESIGN: Chris Quinn Named Subchapter V Trustee HALO BUYER: S&P Places 'CCC+' ICR on CreditWatch Negative HAWAIIAN HOLDINGS: Completes Note Exchange With 99.5% Participation INGLES MARKETS: Moody's Affirms 'Ba1' CFR, Outlook Remains Stable INTEGRITY DIRECTIONAL: 10th Cir. Rejects Falcon's Late-Filed Claim INTENSIVE COMMUNITY: Paula Beran Named Subchapter V Trustee INVITAE CORP: Awaits Bankruptcy Judge's Ch. 11 Plan Ruling JMMJ DEVELOPMENT: Files for Chapter 11 Bankruptcy JON MICHAEL SHIBLEY: Loses Bid for Sanctions v. SouthState Bank JONES DESLAURIERS: $175MM Unsec. Notes No Impact on Moody's B3 CFR JW REALTY HOLDINGS: Seeks Chapter 11 Bankruptcy in S.D.N.Y. LESLIE'S POOLMART: S&P Downgrades ICR to 'B+', Outlook Negative LTL MANAGEMENT: Dismissal of Second Chapter 11 Petition Affirmed MATRIX PARENT: Moody's Withdraws 'Ca' CFR on Bankruptcy Filing MCGRAW-HILL EDUCATION: Fitch Affirms & Withdraws 'B+' LongTerm IDR MCGRAW-HILL EDUCATION: Moody's Rates New Secured Loans 'B2' MEIER'S WINE CELLARS: Files for Chapter 11 Bankruptcy MIDCONTINENT COMMUNICATIONS: S&P Rates Sec. Credit Facility 'BB+' MR. KNICKERBOCKER: U.S. Trustee Unable to Appoint Committee NB FLATS: Property Sale Proceeds to Fund Plan Payments ON POINT DIRECTIONAL: Case Summary & 20 Top Unsecured Creditors ONE TABLE RESTAURANT: Seeks Ch.11 Bankruptcy Citing Post COVID Woes OPTIMUS BUILDING: Truist Bank Seeks Chapter 11 Trustee Appointment OWENS & MINOR: Fitch Puts 'BB-' LongTerm IDR on Watch Negative PAGE HOUSING: Jill Durkin Named Subchapter V Trustee PINE TREE: Tamara Miles Ogier Named Subchapter V Trustee PINEAPPLE ENERGY: Regains Compliance With Nasdaq Equity Rule PINEAPPLE ENERGY: Secures $1MM Bridge Loans From Conduit, MBB PINNACLE HOLDINGS: Files Amendment to Disclosure Statement PLASKOLITE PPC: Moody's Affirms B3 CFR & Alters Outlook to Negative PLC JETBOX: Linda Leali Named Subchapter V Trustee PLOURDE SAND: Unsecureds Will Get 100% Dividend over 60 Months POLERAX USA: Unsecureds Will Get 2% of Claims over 60 Months PREMIER CAR WASH: U.S. Trustee Unable to Appoint Committee PREMIER CAR WASH: U.S. Trustee Unable to Appoint Committee PRIME CAPITAL: Court Dismisses Chapter 11 Bankruptcy Case PRO MACH: Moody's Affirms B2 CFR & Cuts First Lien Loans to B2 PUSHPAY USA: Moody's Assigns First Time B3 Corporate Family Rating QUALTEK LLC: Moody's Withdraws 'Caa1' Corporate Family Rating R&N EASLEY: U.S. Trustee Unable to Appoint Committee R&N SENECA: U.S. Trustee Unable to Appoint Committee R.R. DONNELLEY: Moody's Rates New $650MM Jr. Lien Sec. Notes 'Caa1' ROYAL CARIBBEAN: Moody's Rates New Senior Unsecured Notes 'Ba2' RR DONNELLEY: Fitch Affirms 'B' LongTerm IDR, Outlook Stable SHELSON NATURAL: Richardo Kilpatrick Named Subchapter V Trustee SL GREEN: Moody's Lowers Senior Unsecured Shelf Rating to (P)Ba3 SNAP MEDICAL: Michael Colvard Named Subchapter V Trustee SOBR SAFE: Stockholders Okay Share Issuance for Warrant Conversion STANDARD BUILDING: Moody's Rates New Senior Unsecured Notes 'B1' STEWARD HEALTH: Dinsmore & Shohl Advises Humana & DaVita Creditors STUDIO PB: Lucy Sikes Named Subchapter V Trustee SUPERSTAR ELIZABETH: Hits Chapter 11 Bankruptcy Protection SWAN PIZZA: L. Todd Budgen Named Subchapter V Trustee SWEETWATER BORROWER: Moody's Affirms 'B2' CFR, Outlook Stable SYNIVERSE CORP: S&P Upgrades Long-Term ICR to 'B-', Outlook Stable TEXAS E&P: Court Grants Former Counsel's Motion to Designate TITAN PURCHASER: $50MM Term Loan Add-on No Impact on Moody's B1 CFR TNC SRQ: Claims Will be Paid from Property Sale/Refinance URGENTPOINT INC: U.S. Trustee Wants Chapter 11 Converted to Ch. 7 VERITEXT: Fitch Affirms 'B' LongTerm IDR, Outlook Stable VICTORY CAPITAL: Moody's Upgrades CFR & Senior Secured Debt to Ba1 VITAL ENERGY: Point Energy Deal No Impact on Moody's 'B1' Rating WYATT RESTAURANT: Voluntary Chapter 11 Case Summary [*] Judge Paek Confirmed to Southern District Bankruptcy Bench [] Ganguli Rejoins AlixPartners' Automotive & Industrial Practice [^] BOOK REVIEW: TAKING CHARGE: Management Guide to Troubled ********* 1416 EASTERN AVE: Court OKs Appointment of Marc Albert as Trustee ----------------------------------------------------------------- Judge Elizabeth Gunn of the U.S. Bankruptcy Court for the District of Columbia approved the appointment of Marc Albert, Esq., as Chapter 11 trustee for 1416 Eastern Ave NE, LLC and its affiliates. The appointment comes upon the application filed by Gerard Vetter, the Acting U.S. Trustee for Region 4, to appoint a bankruptcy trustee in the companies' Chapter 11 cases. Mr. Albert is a partner at Stinson, LLP, a law firm in Washington, DC. Mr. Albert disclosed in a court filing that he and his firm have no connection with the companies, creditors or any other party involved in the companies' bankruptcy cases. A copy of the appointment order is available for free at https://urlcurt.com/u?l=hcZnVM from PacerMonitor.com. About 1416 Eastern Ave NE 1416 Eastern Ave NE, LLC filed Chapter 11 bankruptcy petition (Bankr. D.C. Case No. 24-00180) on May 29, 2024, with as much as $1 million in both assets and liabilities. Judge Elizabeth L. Gunn oversees the case. The Debtor is represented by Maurice Verstandig, Esq., at The Belmont Firm. 2U INC: Noteholder Group & Greenvale File Rule 2019 Statement ------------------------------------------------------------- In the Chapter 11 cases of 2U, Inc., and affiliates, the Ad Hoc Noteholder Group and Greenvale Capital LLP filed a verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure. The Ad Hoc Noteholder Group is composed of certain unaffiliated beneficial holders, and/or investment advisors or managers of beneficial holders of the 2.25% convertible senior notes issued by 2U, Inc., as borrower due May 1, 2025 under that certain Indenture, dated as of April 23, 2020 (the "2025 Notes") and 4.50% senior unsecured convertible notes due February 1, 2030, issued under that certain Indenture, dated as of January 11, 2023 (the "2030 Notes", together with the 2025 Notes, the "Notes"), each as amended, supplemented, or otherwise modified from time to time. On or around October 30, 2023, the Ad Hoc Noteholder Group engaged Weil, Gotshal & Manges LLP to represent it in connection with a potential restructuring of 2U, Inc. and its affiliated debtors. On or around April 12, 2024, Greenvale engaged Schulte Roth & Zabel LLP to represent it in connection with a potential restructuring of the Debtors. On or around April 12, 2024, the Debtors and their advisors began to negotiate with (a) Weil, on behalf of the Ad Hoc Noteholder Group, and (b) Schulte, on behalf of Greenvale, as holders of Notes, regarding a comprehensive restructuring transaction. Weil has been advised that the members of the Ad Hoc Noteholder Group either hold disclosable economic interests or act as investment advisor, sub-advisor, or manager to certain funds and/or accounts that hold disclosable economic interests in the Debtors' estates. Schulte has been advised that Greenvale either holds disclosable economic interests or acts as investment advisor, sub-advisor, or manager to certain funds and/or accounts that hold disclosable economic interests in the Debtors' estates. The names and addresses of each of the members of the Ad Hoc Noteholder Group and Greenvale together with the nature and amount of the disclosable economic interests held by each of them in relation to the Debtors as of July 24, 2024, are as follows: 1. Bayside Capital, LLC 1271 Avenue of Americas, 22nd Fl New York, NY 10020 * First Lien Loans ($15,182,396.19) * 2025 Notes ($68,581,000.00) 2. Blantyre Capital Limited 52 Jermyn Street London, SW1Y 6LX United Kingdom * First Lien Loans ($15,102,123.50) * 2025 Notes ($40,411,000.00) 3. Greenvale Capital LLP 1 Vere St London, W1G 0DF United Kingdom * 2025 Notes ($57,500,000.00) * 2030 Notes ($132,500,000.00) 4. Mudrick Capital Management, L.P. 527 Madison Avenue, 6th Fl New York, NY 10022 * First Lien Loans ($73,781,458.48) * 2025 Notes ($163,703,000.00) * 2030 Notes ($7,500,000.00) Counsel to the Ad Hoc Noteholder Group: WEIL, GOTSHAL & MANGES LLP Matt Barr, Esq. David Griffiths, Esq. F. Gavin Andrews, Esq. 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Email: Matt.Barr@weil.com David.Griffiths@weil.com F.Gavin.Andrews@weil.com Counsel to Greenvale Capital LLP: SCHULTE ROTH & ZABEL LLP Kristine Manoukian, Esq. Kelly Knight, Esq. Reuben E. Dizengoff, Esq. 919 Third Avenue New York, New York 10022 Telephone: (212) 756-2000 Email: Kristine.Manoukian@srz.com Kelly.Knight@srz.com Reuben.Dizengoff@srz.com About 2U Inc. Headquartered in Lanham, Maryland, 2U is an online education platform company. The Company's mission is to expand access to high-quality education and unlock human potential. As a trusted partner to top-ranked nonprofit universities and other leading organizations, the Company delivers technology and services that enable its clients to bring their educational offerings online at scale. 2U, Inc. reported a net loss of $317.61 million for the year ended Dec. 31, 2023, compared to a net loss of $322.15 million for the year ended Dec. 31, 2022. As of March 31, 2024, the Company had $1.43 billion in total assets, $1.26 billion in total liabilities, and $168.58 million in total stockholders' equity. McLean, Virginia-based KPMG LLP, the Company's auditor since 2013, issued a "going concern" qualification in its report dated March 6, 2024, citing that the Company projects that it will not have sufficient cash on hand or available liquidity to meet the obligations of the Second Amended Credit Agreement. As a result, substantial doubt is raised about the Company's ability to continue as a going concern. 365 CHURCH: Disposable Income to Fund Plan Payments --------------------------------------------------- 365 Church filed with the U.S. Bankruptcy Court for the Northern District of West Virginia a Plan of Reorganization for Small Business dated July 15, 2024. The Debtor is a non-denominational church that organized in 2005. In 2012, it purchased a 14,000 sq ft church on 1.854 acres located at 881 Mid Atlantic Pkwy Martinsburg, Berkeley County, WV 25404 for $699,500. According to an appraisal performed on behalf of the mortgage creditor, the real property was worth $1,125,000 as of May 1, 2024. In 2013, Pastor Matt Francis and Misty Francis became the owners of the church. In 2017, the church paid off two earlier deeds of trust from 2012 and 2013 after obtaining a credit line deed of trust from Branch Banking and Trust Company ("BB&T") in the amount of $513,000 that was set to mature in October 2022. BB&T assigned the loan to LSC 164A, LLC ("LSC"), in 2018. Over time, the Debtor slowly began to rebuild its congregation, currently consisting of 200-300 regular attendees and growing. However, the mortgage had fallen past due and also matured. To stop the foreclosure sale scheduled by LCS, the Debtor filed for protection under Chapter 11 of the bankruptcy code on April 16, 2024. LCS filed a claim in the amount of 502,680.33 and, after adding 5.50% interest, the balance is currently estimated to be $510,000. SBA filed a claim in the amount of $350,672.45 and, after adding 2.75% interest, the balance is currently estimated to be $354,000. The IRS originally filed a claim listing estimated taxes owed but subsequently amended its claim to $0. The WV State Tax Department agreed that $0 was owed and chose not to file a claim and to further release two prior recorded tax liens. The Plan Proponent's financial projections show that the Debtor will have projected disposable income of $8,850. The final Plan payment is expected to be paid within 6 months. Non-priority unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at approximately 100 cents on the dollar. This Plan also provides for the payment of administrative and priority claims. The Debtor will continue operating its church and receiving donations from its dedicated and growing number of attendees. The Debtor will continue to maintain adequate property and liability insurance but will otherwise sharply reduce expenditures. The Debtor will use its net income to pay LSC and SBA adequate protection. The Debtor is actively seeking funding from multiple sources, including Citizen's Bank. With substantial equity and growing cashflow, the Debtor believes that it can pay the adequate protection and obtain the funding needed to pay in full LSC, SBA, and all Administrative Expenses within 6 months. Should that fail, the Debtor will use its equity to market and sell its assets. A full-text copy of the Plan of Reorganization dated July 15, 2024 is available at https://urlcurt.com/u?l=dFEOvu from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Todd B. Johnson, Esq. Johnson Law, PLLC P.O. Box 519 Morgantown, WV 26507 Phone: (304) 292-7933 Fax: (304) 292-7931 Email: todd@jlawpllc.com About 365 Church 365 Church owns a 14,000 sq. ft. church on 1.854 acres located at 881 Mid Atlantic Pkwy Martinsburg, WV 25404 having a current value of $1 million. 365 Church filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D.W.V. Case No. 24-00188) on April 16, 2024, listing $1,085,000 in assets and $649,300 in liabilities. The petition was signed by Matt Francis as president. Judge David L. Bissett presides over the case. Todd Johnson, Esq., at JOHNSON LAW PLLC, is the Debtor's counsel. 5D CARGO EXPRESS: Unsecureds Will Get 68% of Claims over 60 Months ------------------------------------------------------------------ 5D Cargo Express, Inc., filed with the U.S. Bankruptcy Court for the Southern District of Texas a Disclosure Statement describing Chapter 11 dated July 15, 2024. On January 26, 2017, Carlos F. Grajeda formed the Debtor to purchase commercial trucks and trailers on credit to be leased to and operated by Carlos F. Grajeda's related company, SBC Transportation, Inc. Three years later, COVID hit which affected the trucking industry and increased the demand for trucking. The Debtor purchased additional trucks in 2022 and 2023 believing the demand would remain. But then the rates started going down and the cost of diesel started increasing making it difficult to operate at a profit. The Debtor struggled to make all of the payments on the trucks and trailers eventually resulting in a threat of and actual attempts to prepossess trucks and trailer. The Chapter 11 case was filed to stop the repossessions and to reorganize the debts. Class 26 consists of General Unsecured Claims. This Class shall receive a monthly payment of $25,000 shared prorate for 36 months. Payments will begin on 26th month and end 60 months. The allowed unsecured claims total $1,313,991.68. This Class will receive a distribution of 68% of their allowed claims. This Class is impaired. Equity Interest Holders in Class 27 shall retain interest. Payments and distributions under the Plan will be funded by profit from operating the business estimated to be $300,000 per month for years 1 & 2 and then $325,000 a month for years 3, 4 & 5. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=B9m1la from PacerMonitor.com at no charge. Counsel to the Debtor: Steven G. Cennamo, Esq. Law Office of Cennamo and Werner 8546 Broadway, Suite 100 San Antonio, TX 78217 Tel: (210) 905-0529 Fax: (210) 905-4373 About 5D Cargo Express 5D Cargo Express, Inc. in Laredo, TX, filed its voluntary petition for Chapter 11 protection (Bankr. S.D. Tex. Case No. 24-50034) on March 15, 2024, listing as much as $10 million to $50 million in both assets and liabilities. Carlos F. Grajeda as president, signed the petition. Judge Jeffrey P Norman oversees the case. The LAW OFFICE OF CENNAMO & WERNER serves as the Debtor's legal counsel. 72ND AVENUE: Files Amendment to Disclosure Statement ---------------------------------------------------- 72nd Avenue Property, LLC, submitted a First Amended Disclosure Statement describing Plan of Reorganization. The Debtor owns a parcel of real property with offices and buildings located at 11740 SW 72nd Avenue, Tigard, Oregon ("72nd Property"). The 72nd Property has been valued by the Debtor's Member at $17,800,000, pursuant to his valuation methodology. Debtor's Member is a licensed certified general appraiser that holds an MAI designation and believes this valuation is credible and he intends to provide an appraisal demonstrating this current market value to the Court. Debtor performs building and rental management services for the 72nd Property. The Plan currently projects that the Debtor will not have sufficient net income to fully service the proposed payments to the Class 1, 2 and 3 Claimants during the Plan period, making them negatively amortizing. Those Claimant's Claims shall increase and reduce available equity in the 72nd Property. Net income to make these payments shall be defined as gross rental and non-rental income, minus costs to operate the property and funds to pay income taxes and other payments under the Plan. The costs to operate the 72nd Property shall include utility payments, property taxes, insurance, maintenance, cleaning and repair costs, advertising costs, legal and accounting professional costs, and reserves for replacements. Debtor's Member shall only be compensated to operate the property after refinance of the Class 1, 2, and 3 Claimants as outlined below. Debtor will provide ongoing monthly reporting to confirm compliance with the waterfall payment treatment. The accompanying Plan of reorganization describes how all claims will be treated under the proposed Plan. To summarize: non-classified administrative claims will be paid in full on the Effective Date of the plan or later as agreed in writing; secured claim holders will be impaired and paid as proposed by the Chapter 11 Plan; administrative convenience claims will be paid in full with no interest thirty days after the Effective Date of the plan; general unsecured claims will receive 100% of their claims, estimated at approximately $630,000, with interest at the Federal Judgment Rate, in ten semi-annual payments of $1,000, with the final payment being a balloon payment for the remaining balance, starting 120 days after the Effective Date of the Plan. The Debtor may pay the claimants off sooner upon liquidation or refinance of the 72nd Property. The Plan contemplates the refinance or sale of the 72nd Property and distribution of the proceeds from that sale to the secured and unsecured creditors. Like in the prior iteration of the Plan, General Unsecured Creditors will share in pro rata semi-annual distributions totaling not less than $1,000.00, with interest at the federal judgment rate in effect on the Effective Date, to be paid in ten semi-annual payments unless paid off sooner. The plan will be implemented in whole or in part by the following: First, Debtor shall remove the 72nd Property from the market and immediately stabilize the rental situation and bring the occupancy back up to 95%. Debtor's Member believes that he can accomplish this by December 31, 2024. Second, once the 72nd Property is stabilized at 95% occupancy, he will retain a new realtor to list and market the property with a projected sale timeline of 1-2 years. Third, Debtor and Debtor's Member will use best efforts to immediately seek a refinance of the Property. As to the secured creditors, Debtor will distribute rents monthly, to those creditors in order of lien priority, after payment of all outstanding expenses to operate the business. As to the unsecured creditors, Debtor's Member shall personally pay the semi-annual pro-rata payments, if insufficient funds exist from from the Debtor's business operations after repayment of the secured creditors. Ultimately, all creditors will be satisfied from positive cash flow realized from the refinance and operation of the property in the future or sale of the 72nd Property. Debtor also plans to renegotiate the leases of the 72nd Property to maximize cash flow on an ongoing basis. A full-text copy of the First Amended Disclosure Statement dated July 14, 2024 is available at https://urlcurt.com/u?l=Kpe7TG from PacerMonitor.com at no charge. Attorneys for the Debtor: Michael D. O'Brien, Esq. Theodore J. Piteo, Esq. Michael D. O'Brien & Associates, P.C. 12909 SW 68th Pkwy, Suite 160 Portland, OR 97223 Tel: (503) 786-3800 Email: enc@pdxlegal.com About 72nd Avenue Property, LLC 72nd Avenue Property, LLC, owns new luxury apartments located at 11740 SW 72nd Avenue, Tigard, OR 97223. The subject property is a five story mixed-use building located on a 25,634-quare foot site. The Property has an appraised value of $17.8 million. 72nd Avenue Property, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Ore. Case No. 24-31211) on April 30, 2024, listing $17,800,382 in assets and $14,626,199 in liabilities. The petition was signed by Richard Cassinelli as managing member. Judge Peter C. McKittrick presides over the case. Theodore J. Piteo, Esq. at Michael D. O'Brien & Associates, is the Debtor's counsel. AIRSPAN NETWORKS: Asks Court Permission for $5 Million DIP Loan --------------------------------------------------------------- Alex Wittenberg of Bloomberg Law reports that telecommunications company Airspan Networks has asked a Delaware bankruptcy court for permission to borrow an additional $5 million in debtor-in-possession financing to support the business as it waits for regulatory approval in the United Kingdom of its confirmed restructuring plan. About Airspan Networks Holdings Inc. Airspan Networks Holdings Inc. is a U.S.-based provider of groundbreaking, disruptive software and hardware for 5G Networks, and a pioneer in end-to-end Open RAN solutions that provide interoperability with other vendors. As a result of innovative technology and significant R&D investments to build and expand 5G solutions, Airspan believes it is well-positioned with 5G indoor and outdoor, Open RAN, private networks for enterprise customers and industrial use applications, fixed wireless access (FWA), Air-To-Ground, Neutral Host Networks and Utilities solutions to help mobile network operators of all sizes deploy their networks of the future, today. With over one million cells shipped to 1,000 customers in more than 100 countries, Airspan has global scale. On the Web: http://www.airspan.com/ Airspan Networks sought relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 24-10621) on March 31, 2024. In the petition filed by Glenn Laxdal, as president and chief executive officer, the Debtor reports total assets as of Sept. 30, 2023 amounting to $58,965,000 and total debts as of Sept. 30, 2023 of $176,745,000. The Honorable Bankruptcy Judge Thomas M. Horan oversees the case. Dorsey & Whitney LLP is serving as legal counsel to Airspan. VRS Restructuring Services, LLC is serving as Airspan's financialadvisor and Intrepid Investment Bankers LLC is serving as Airspan's investment banker. Epiq is the claims agent. ALTA MESA: Mustang Gas Not Entitled to Sales Proceeds, Court Says ----------------------------------------------------------------- Judge Marvin Isgur of the United States Bankruptcy Court for the Southern District of Texas granted the motion for summary judgment filed by Wells Fargo Bank, N.A. and Tribolet Advisors LLC against Mustang Gas Products, LLC's claims in an adversary dispute between the parties involving property interests in Oklahoma mineral estates in the bankruptcy case of Alta Mesa Resources, Inc. Oklahoma Energy Acquisitions, Inc. is one of the Alta Mesa Holdings Debtors, which collectively filed for chapter 11 on September 11, 2019. Wells Fargo Bank, N.A, is the Administrative Agent under the AMH Credit Agreement. Tribolet Advisors LLC is the AMH Plan Administrator. Mustang seeks: (i) a declaration that its interests under its agreements with OEA are real property rights and interests burdening the OEA assets and their sale proceeds; (ii) a determination of the value of those interests; (iii) a declaration that its interests are superior in right to the interests of all Defendants in the OEA assets and their sale proceeds; and (iv) an order that the value of those interests are to be paid from the OEA asset sale proceeds. Mustang contends it possesses covenants running with the land burdening OEA's assets and, after those assets were sold, the sale proceeds. OEA owned mineral interests in Kingfisher County, Oklahoma, and operated producing gas wells. There were 27 agreements between Mustang and OEA under which Mustang seeks recovery in this lawsuit. Twenty-five of the agreements generally originated in the 1960s. Two agreements were entered into more recently: the Hinkle Agreement in 2007 and the Chaparral Agreement in 2011. Mustang is the successor owner of a gas processing plant -- the Dover-Hennessey Gas Products Plant -- built in the 1960s to process the limited gas volumes being produced from vertical wells. When Mustang acquired the Plant from ExxonMobil Corporation in 2005, it also acquired 25 agreements. Those 25 agreements were executed by Mustang's predecessors between 1961 and 1972. Under those agreements, OEA is the seller and Mustang is the buyer. The Court authorized the sale of all or substantially all of the AMH Debtors' assets, including OEA's assets, on January 24, 2020. The Court further authorized the AMH Debtors to enter into and perform under a modified purchase and sale agreement with BCE-Mach III. The sale closed on April 9, 2020. On December 20, 2019, the Court ruled in Alta Mesa Holdings, LP, et al. v. Kingfisher Midstream, LLC, et al. that OEA's dedications of gas to Kingfisher formed covenants running with the land that could not be rejected under Sec. 365 of the Bankruptcy Code. Kingfisher sold substantially all of its and its subsidiaries' assets in a Sec. 363 sale approved by the Court on January 24, 2020. On July 16, 2020, Defendants filed their first motion for summary judgment. The Court denied summary judgment because the summary judgment record did not show whether Wells Fargo satisfied its duty of inquiry as a bona fide purchaser. On July 22, 2021, Defendants filed their motion to reconsider the denial. The Court denied reconsideration on the basis that fact issues and disputes remain precluding summary judgment. On October 8, 2021, while awaiting a ruling on their motion to reconsider, Defendants filed their second motion for summary judgment. Defendants seek summary judgment on five principal grounds: 1. Defendants argue that the Court's ruling in Kingfisher dealt with the very same real property rights over which Mustang asserts ownership. As a result, Defendants argue, Mustang's claims fail because Kingfisher owned, and ultimately sold, those rights. 2. In case the Court disagrees that Kingfisher owned and sold the property right, Defendants argue no portion of the OEA sale proceeds are attributable to the right. Rather, the sale proceeds were reduced by the right because OEA "had to accept the buyer's agreement to assume OEA's obligations and liabilities under the Kingfisher Agreement as a form of non-cash consideration." 3. Defendants argue Mustang is attempting to put itself ahead of other general unsecured creditors. 4. Defendants argue Mustang is not entitled to a first priority right to recover from the sale proceeds because, at most, it possesses a claim for breach of real covenant, which only gives right to an unsecured damages claim. 5. And most foundational, Defendants argue Mustang's agreements with OEA never created covenants running with the land to begin with. According to the Court, careful review of the 27 agreements at issue reveals no "expressed intention of the parties" to create a covenant running with the land. Mustang did not possess covenants running with the land burdening OEA's sale proceeds, the Court holds. This determination moots all other bases for summary judgment, the Court says. A copy of the Court's decision dated July 25, 2024, is available at https://urlcurt.com/u?l=DxtVUf About Alta Mesa Resources Alta Mesa Resources, Inc., is an independent energy company focused on the development and acquisition of unconventional oil and natural gas reserves in the Anadarko Basin in Oklahoma, and through Kingfisher Midstream, LLC, provides best-in-class midstream energy services, including crude oil and gas gathering, processing and marketing and produced water disposal to producers in the STACK play. Alta Mesa reported $1.4 billion in assets and $864 million in liabilities as of Dec. 31, 2018. On September 11, 2019, Alta Mesa Resources, Inc. and six affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. On January 12 and 13, 2020, Kingfisher Midstream, LLC, Kingfisher STACK Oil Pipeline, LLC, Oklahoma Produced Water Solutions, LLC, and Cimarron Express Pipeline, LLC -- Kingfisher Debtors -- and SRII Opco, LP and SRII Opco GP, LLC -- SRII Debtors -- filed voluntary petitions for relief in the Court. All the cases are jointly administered under Case No. 4:19-bk-35133 (Bankr. S.D. Texas) before Judge Martin Isgur. The Debtors tapped Porter Hedges LLP and Latham & Watkins LLP as attorneys; and Perella Weinberg Partners LP and its affiliate Tudor Pickering Holt & Co Advisors LP as investment banker. Prime Clerk LLC, n/k/a Kroll, was the claims agent. On April 17, 2020, the Alta Mesa Debtors filed their Plan of Reorganization and the Disclosure Statement related thereto. On April 22, 2020, the Bankruptcy Court entered an order conditionally approving the Alta Mesa Disclosure Statement. The Bankruptcy Court held a hearing to consider final approval of the adequacy of the Alta Mesa Disclosure Statement and confirmation of the Plan on May 27, 2020. On June 8, 2020, the Effective Date of the Plan occurred, and the Plan was consummated. On April 22, 2020, the Kingfisher Debtors filed their Amended Joint Chapter Plan and the Disclosure Statement related thereto. The Bankruptcy Court held a combined hearing to consider approval of the Kingfisher Disclosure Statement and confirmation of the Plan on May 27, 2020. On June 8, 2020, the Effective Date of the Plan occurred, and the Plan was consummated. On September 26, 2021, the Court entered a Final Decree closing the Kingfisher Debtors' chapter 11 cases. AMC ENTERTAINMENT: Enters Refinancing Deal to Extend Maturities --------------------------------------------------------------- Greg Chang of Bloomberg News reports that AMC Entertainment Holdings confirmed it entered refinancing transactions to extend up to $2.45 billion of debt from 2026 to 2029 and beyond. The transactions contemplate: * A total $1.2 billion of new secured term loans due 2029 issued in consideration for an open market purchase of senior secured term loans due 2026. * A potential to extend an additional $800m of 2026 maturities to 2029. The $500 million of 10%/12% cash/PIK toggle second lien subordinated secured notes due 2026 exchanged into new secured term loans due 2029 or repurchased with proceeds of $414m new exchangeable notes due 2030. * An opportunity to reduce debt by $464 million through the conversion of exchangeable notes into equity. About AMC Entertainment AMC Entertainment Holdings, Inc., is engaged in the theatrical exhibition business. It operates through theatrical exhibition operations segment. It licenses first-run motion pictures from distributors owned by film production companies and from independent distributors. The Company also offers a range of food and beverage items, which include popcorn; soft drinks; candy; hot dogs; specialty drinks, including beers, wine and mixed drinks, and made to order hot foods, including menu choices, such as curly fries, chicken tenders and mozzarella sticks. AMC operates over 900 theatres with 10,000 screens globally, including over 661 theatres with 8,200 screens in the United States and over 244 theatres with approximately 2,200 screens in Europe. The Company's subsidiary also includes Carmike Cinemas, Inc. AMC was forced to close its shutter its theaters when the Covid-19 pandemic struck in March 2020. It eventually reopened its theaters but admissions remained substantially low. The world's biggest theater chain said in an October 2020 filing that liquidity will be largely depleted by the end of the year or early 2021 if attendance doesn't pick up, and it's exploring actions that include asset sales and joint ventures. However, AMC managed to raise $1.8 billion in 2021, capitalizing on the rally triggered by retail investors' interest in meme stocks. * * * In February 2024, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD' (selective default) on AMC Entertainment Holdings Inc., the world's largest motion picture exhibitor. S&P also raised its issue-level rating on the second-lien notes to 'CCC-' from 'D'. The negative outlook reflects S&P's expectation that AMC's revenue will decline 8%-9% in 2024 due to a limited theatrical release slate, resulting in negative free operating cash flow (FOCF) and leverage around 8x. AMC completed a series of distressed exchanges to swap an aggregate $123 million of its second-lien notes due 2026 for common equity. APEX DISASTER: Unsecureds to Get Share of Income for 5 Years ------------------------------------------------------------ Apex Disaster Specialists Louisiana, LLC filed with the U.S. Bankruptcy Court for the Western District of Louisiana a Plan of Reorganization dated July 13, 2024. The Debtor was formed on October 1, 2019, and is domiciled in Sulphur, Calcasieu Parish, Louisiana, as a disaster mitigation company. The company provides services to mitigate water damage and mold in buildings affected by weather events. The Debtor subcontracted with Bacik Group, LLC to assist with a large mitigation project, which in the opinion of the debtor was not performed properly and payment to Bacik was refused. This resulted in litigation in U.S. District Court for the Western District of Louisiana, with two judgments totaling $285,960.22 against the debtor. This is a final judgment and is not appealable. Further, most income for the debtor is paid for through hazard insurance claims. The accounts receivable of the debtor lag in payment for substantial periods of time while the insurance company processes the claims and, in some cases, the mortgage company holds up payments when it receives the insurance proceeds to verify completion. The threat of collection action on the Bacik lawsuit and slow cash flow from insurance prompted this filing. This plan contemplates 60 monthly payments to the unsecured class of its net cash flow after expenses. Assuming a $1,200 per month net cash flow for 60 months which could be paid to unsecured creditors amounting to $72,000, it appears more likely than not that creditors will fare better with a reorganized debtor. A natural disaster in Southwest Louisiana during the next 5 years would obviously significantly increase the dividend to unsecured creditors. Class 3 consists of the Unsecured Claim of Bacik Group, LLC. Bacik Group, LLC filed an unsecured claim in the amount of $285,960.22 based on judgments rendered in U. S. District Court for the Western District of Louisiana. The claim was filed after the Bar Date set for filing claims and an objection to this claim has been filed and set for hearing on July 24, 2024. Bacik has responded to the objection stating that it did not receive notice of these proceedings timely. Should the Court sustain this objection to Bacik's claim, this creditor shall not receive a distribution under the Plan and its claim shall be discharged. Should the Court allow the late filed claim, this claim shall be treated in Class 4 as an unsecured claim. Class 4 consists of Under-secured and General Unsecured Creditors. Class 4 shall consist of the claims of the general unsecured and under secured claims which have been filed prior to the Bar Date. In the event the SBA objection to claim is sustained, the SBA's claims shall be treated as fully unsecured and treated in this class. In the event the objection to Bacik's claim is sustained, it shall not be treated in this class and its claim shall be deemed barred. Class 4 is impaired by the Plan, and the holders of such claims are entitled to vote to accept or reject the Plan. In the case of Bacik, if the Court allows its claim which was filed after the Bar Date, its claim shall be treated herein. The claims in this class shall be paid pro-rata from the disposable income of the debtor as defined by Section 1191(d) meaning income that is received by the debtor that is not reasonably necessary to be expended for operations of the business for a period of 5 years from the Confirmation Date. Payments to creditors of this class shall be made monthly beginning 30 days after the Effective Date. Class 5 shall consist of the equity security claims of the owners of the limited liability company interests. The equity security holders shall retain their interests as allowed by 11 USC 1181, et seq as the absolute priority rule does not apply in a Subchapter V Chapter 11 case. On and after the Effective Date, the Debtor shall operate the company in accordance with the provisions of this Plan. Jennifer Roulon shall continue to receive $5,000 per month in salary plus health care insurance. On and after the Effective Date, the Debtor shall continue to operate its business, and may use, acquire, and dispose of its property without supervision or approval by the Court, and free of any restrictions of the Code other than as expressly provided herein. The Debtor's assets shall vest free and clear of any liens, charges, encumbrances, and interests, as modified in this plan. On and after the Effective Date, the Debtor shall no longer be liable for and shall be discharged from any and all claims against the Debtor. A full-text copy of the Plan of Reorganization dated July 13, 2024 is available at https://urlcurt.com/u?l=V4miy7 from PacerMonitor.com at no charge. Counsel to the Debtor: Wade N. Kelly 2201 Oak Park Boulevard Lake Charles, Louisiana 70601 (337) 431-7170 About Apex Disaster Specialists Louisiana Apex Disaster Specialists Louisiana, LLC was formed on October 1, 2019, and is domiciled in Sulphur, Calcasieu Parish, Louisiana, as a disaster mitigation company. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. La. Case No. 24-20176) on April 15, 2024, listing under $1 million in both assets and liabilities. Judge John W. Kolwe oversees the case. Wade N. Kelly, Esq., is the Debtor's bankruptcy counsel. ATI INC: S&P Hikes Issuer Credit Rating to 'BB-', Outlook Positive ------------------------------------------------------------------ S&P Global Ratings raised its issuer credit rating to 'BB-' from 'B+' on ATI Inc. At the same time, S&P raised its issue-level rating on the company's senior unsecured notes to 'BB-' from 'B+' and on subsidiary, Allegheny Ludlum Corp.'s, unsecured debt to 'BB' from 'BB-'. The '4' and '2' recovery ratings remain unchanged. The positive outlook reflects S&P's expectations that ATI's debt to EBITDA will trend toward to 2x over the next 12 to 24 months, as it continues to benefit from strong tailwinds in the aerospace and defense market and structurally stronger cash flow generation. ATI has strengthened its business and financial positions, which is translating into stronger cash flow generation due to strong demand in aerospace and defense end markets. S&P said, "We believe cash flow generation should continue to strengthen as previous drains on cash have been alleviated. ATI's exit from the working capital intensive and volatile commodity stainless steel business and other low margin business is helping cash generation and has lowered working capital swings related to commodity prices. Additionally, ATI is no longer required to make annual cash contributions to its pension plan, which was more than $100 million in some years, following the annuitization transaction undertaken in 2023. This positions ATI well to benefit from strong market fundamentals over the next few years. We expect ATI to generate free operating cash flow (FOCF) of about $250 million to $350 million per year in 2024 and 2025, compared with its historically uneven free cash flow after pension contributions over the last several years." Aircraft market fundamentals are also strengthening but delivery rates are well below prevailing demand and older commercial aircraft are remaining in service longer than expected. ATI's order backlog is at an all-time high. The continued ramp up in productivity will be critical to it capitalizing on the positive demand environment. The company has a good track record of reliability while facing labor tightness and high turnover in recent years. S&P said, "While we see execution risk with this backlog, this risk is not exclusive to ATI and constraints in the industry may result in lumpy order deliveries. However, overall, we expect supply chain problems to normalize over time." ATI's profitability is improving as it prioritizes aerospace sales after consolidating its footprint to improve productivity and exit low margin and commodity products. ATI continues to secure new contracts and sales commitments with large aerospace original equipment manufacturers. S&P expects market share growth, capacity increases and higher pricing to drive earnings growth and stronger EBITDA margins of 16% to 17% over the next 12 to 24 months. ATI reached pre-pandemic revenue in 2023, of about $4.1 billion, but generated EBITDA margins of 16% compared with an average of 12.5% over the five years prior. Earnings growth, as well as incremental debt reduction, should support debt to EBITDA trending toward 2x over the next 12 to 24 months. The company's debt burden from pension liabilities has been significantly reduced. S&P said, "Our pension debt adjustment was $167 million in 2023 compared with an average of about $700 million over the last five years. We expect ATI's debt position could further decline as the company has signaled plans to reduce leverage and has roughly $290 million of convertible notes and $150 million of subsidiary debt due in 2025. Additionally, we expect the company will allocate cash flow generation toward reinvestment in its business, at higher-than-historical levels, and incremental shareholder returns via opportunistic share repurchases." Examples of recent capital expenditure (capex) projects include the increase in titanium production capacity coming online this year, through brownfield investment (reflecting 35% increase in capacity) and ramping up existing assets (reflecting 45% increase in capacity). The positive outlook reflects S&P's expectations that ATI's debt to EBITDA will trend toward to 2x over the next 12 to 24 months, as it continues to benefit from strong tailwinds in the aerospace and defense market and structurally stronger cash flow generation. S&P could revise the outlook to stable if debt to EBITDA remains above 3x. This could occur if: -- The company is unable to achieve productivity levels required to execute on its record sales backlog, resulting in a loss of market share and deterioration in its aerospace competitive position; or -- Cash flows weaken and ATI's liquidity cushion tightens because of persistently high working capital, more capex, or discretionary spending. S&P could raise the rating if debt to EBITDA remains below 3x. This could arise if ATI is able to: -- Continue executing on its robust aerospace backlog; -- Achieve EBITDA and profitability growth; and -- Reduce debt. A higher rating would also be predicated on S&P's view that the company's competitive position continues to strengthen in the aerospace and defense market, demonstrated by strong FOCF, which could enable the company to undertake investment in its businesses and in possible in organic growth. AZEK COMPANY: Fitch Assigns 'BB' LongTerm IDR, Outlook Positive --------------------------------------------------------------- Fitch Ratings has assigned first-time Long-Term Issuer Default Ratings (IDRs) of 'BB' to The AZEK Company Inc and The AZEK Group LLC (collectively, AZEK). Fitch has also assigned a 'BBB-'/'RR1' rating to the company's first lien senior secured asset-based lending (ABL) facility and a 'BB+'/'RR2' rating to its first lien senior secured term loan B. The Rating Outlook is Positive. The 'BB' IDR reflects AZEK's leading market position in sustainable outdoor living products, secular tailwinds from material conversion, favorable end-market mix, positive FCF generation and conservative financial policies. The rating also incorporates its exposure to largely discretionary demand, limited product offering, modest customer concentration and aggressive share repurchase program. The Positive Outlook reflects Fitch's expectation that EBITDA leverage will remain between 1.0x and 1.5x over the intermediate term due to a disciplined growth strategy, positive FCF generation, and Fitch's expectation of stronger margins as it executes its strategic initiatives. Fitch may consider upgrading AZEK's IDR to 'BB+' if the company demonstrates sustained margin improvement and remediation of current material weaknesses in its internal controls. Key Rating Drivers Strong Credit Metrics: AZEK's credit metrics are strong for the 'BB' IDR, with Fitch-calculated EBITDA leverage of 1.7x for the LTM ended March 31, 2024. Fitch projects EBITDA leverage to decline to around 1.3x at the end of FY 2024 (ending September 30) and to settle around 1.1x by FY 2025, driven by EBITDA growth and debt reduction. Management targets net debt to EBITDA of 2.0x-2.5x, providing sufficient headroom to execute capital allocation strategies. Despite potential temporary increases in leverage during market downturns, Fitch expects AZEK to remain within Fitch's leverage sensitivities for the 'BB' IDR. High Profitability and Improving FCF: AZEK has demonstrated high profitability with a Fitch-calculated EBITDA margin of 20.0% in FY 2023, and is projected to improve to 24.0%-24.5% in FY 2024 and FY 2025 due to organic revenue growth and the divestiture of its lower margin Vycom business, partially offset by increased marketing spend. AZEK reported a significant increase in FCF margin to 19.6% in 2023, from negative in 2022, driven by working capital reduction and lower capex. Fitch expects FCF margins to remain in the high single to low double-digit percentages during the next few years, supporting debt reduction and share repurchases. Fitch expects the company's continued investment in marketing efforts should drive market conversion and demand growth through enhanced brand and product awareness, but could be a drag on margin expansion in the intermediate term. Leading Market Position: AZEK is a leading player in the residential outdoor living market, with a network of over 40 distributors and more than 10,000 professional dealer and retail outlets across North America. Fitch believes it is one of the top brands in the decking category and expects the company to capitalize on the long-term material conversion trends from traditional materials like wood to drive above-market growth. This is reflected in strong sales growth in recent years, margins that are similar to investment-grade building products peers and relatively stable gross margins even during periods of inflationary input costs. Strong Yet Cyclical Demand: Demand for residential outdoor living and home exteriors is closely tied to home repair and remodeling activity, which is sensitive to interest rates and the availability of home equity. Fitch expects AZEK to benefit from a long-term trend toward material conversion from traditional materials, such as wood, to low-maintenance, engineered options. Fitch expects sales to be relatively stable through the cycle as lower demand for outdoor living products during cyclical downturns would be mitigated by market share gains from material conversion to engineered products. Favorable End Markets: AZEK's end-market exposure is a credit positive, as the majority of revenues are derived from residential repair and remodel activity, which is relatively less volatile than the new construction market. This relatively higher repair and remodel exposure helps mitigate risks associated with cyclical downturns. However, this benefit is somewhat offset by the largely discretionary nature and high cost projects associated with the AZEK's products. The residential segment represented 89% of revenues in FY 2023 and the commercial segment comprised the remaining 11% of revenues. Following the Vycom divestiture, Fitch estimates the residential segment to be about 95% of revenues going forward. Disciplined Growth Strategy: Fitch views the company's growth strategy as credit positive as AZEK balances both organic and inorganic initiatives. Organically, the company invests in increasing manufacturing capacity and enhancing its recycling capabilities. Inorganically, it focuses on strategic acquisitions to broaden its product portfolio, enhance its market position and support long-term growth. AZEK also divested its Vycom business in November 2023 from its Commercial segment to focus on higher growth and higher margin opportunities in the outdoor living markets. Distributor and Supplier Concentrations: AZEK's operations depend on maintaining strong relationships with its network of distributors and dealers. The top ten distributors accounted for a majority of net sales for FY 2023 with the largest distributor, Parksite Inc., representing 19% of net sales during that period. The high dependence on key distributors would adversely impact earnings and credit metrics if its relationships were impaired or were to abruptly end, which Fitch does not assume in its rating case forecast. The company also faces supplier concentration, with 17% of its material purchases in FY 2023 coming from its largest supplier, which could impact production if the supplier fails to meet quality or delivery standards. Material Weakness in Internal Controls: Management has concluded that there were material weaknesses in its internal control over financial reporting. The company is in the process of designing and implementing remediation plans and steps to address the cause of the material weaknesses. An independent investigation revealed that a former employee had misstated inventory by creating inaccurate and unsupported manual journal entries, which led to an overstatement of inventory on the balance sheet and an understatement of cost of sales on the income statement. Consequently, the financial statements for fiscal years 2023, 2022 and 2021 as well as prior periods, were restated. Derivation Summary AZEK is smaller in terms of revenues and less geographically diversified compared to building products manufacturers like MasterBrand, Inc. (BB+/Stable), James Hardie International Group Ltd. (BBB-/Positive), and Standard Building Solutions (BB/Stable). However, AZEK's credit metrics are stronger than those of MasterBrand, significantly stronger than those of Standard and similar to those of James Hardie. AZEK has a similar end-market diversification to MasterBrand, James Hardie, and Standard. Similar to MasterBrand and James Hardie's products, AZEK's products are more discretionary in nature and are generally part of larger, more costly remodel projects. AZEK holds a strong market position in North America for residential composite outdoor living, with an estimated 30% share of the composite decking and railing market, which translates to 6% of the overall market. In contrast, MasterBrand holds the #1 market position in North American residential cabinets, with an estimated 22% share of the overall market. Key Assumptions - Revenue grows 5%-6% in 2024 and 6.5%-7.5% organically in 2025; - EBITDA margin expands 400bps-500bps in 2024 and 25bps-50bps in 2025 from higher gross margins and realization of cost benefits; - Capex of around 6%-7% of revenue in 2024 and 2025; - FCF margin of 6%-7% in 2024 and 10%-11% in 2025; - FCF applied towards share repurchases and acquisitions; - EBITDA leverage of 1.0x-1.5x at FYE 2024 and FYE 2025 due to EBITDA growth and debt reduction. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA margin sustained at or above 20%; - (CFO-capex)/debt sustained above 8%; - Remediation of the material weaknesses in internal control over financial reporting; - Fitch's expectation that EBITDA leverage will sustain below 3.0x; - Company increases its size and/or expands its product portfolio while maintaining a majority of sales to the remodel market. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Sustained erosion of revenue and EBITDA due to meaningful and continued loss of market share, including loss of key distributor, and/or sustained materials cost pressures that contract EBITDA margins to the low-double digits percentages; - Fitch's expectation that EBITDA leverage will sustain above 3.5x; - (CFO-capex)/debt sustained below 5%. Liquidity and Debt Structure Liquidity Position: As of March 31, 2024, AZEK had a strong liquidity position with $227.4 million of cash and approximately $147.8 million available under its ABL. The facility has a total capacity of $150 million, subject to an asset-based borrowing base, and can be increased by up to $100 million under certain conditions. Extended Debt Maturity Schedule: AZEK's debt maturity schedule is well-structured to minimize near-term refinancing risks. The 2022 term loan agreement, totaling $591.0 million, matures on April 28, 2029, with quarterly amortization payments of $1.5 million and the remaining balance due upon maturity. Additionally, the ABL matures on March 31, 2026. Issuer Profile The AZEK Company Inc. is a designer and manufacturer of low maintenance and environmentally sustainable outdoor living products, including TimberTech® decking, Versatex® and AZEK® Trim, and StruXureTM pergolas. Date of Relevant Committee 10 July 2024 ESG Considerations The AZEK Company Inc has an ESG Relevance Score of '4' for Financial Transparency due to material weaknesses in the company's internal controls and restatements of certain financial statements, which 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 ----------- ------ -------- The AZEK Group LLC LT IDR BB New Rating senior secured LT BB+ New Rating RR2 senior secured LT BBB- New Rating RR1 The AZEK Company Inc LT IDR BB New Rating BELK INC: Gives Lenders Control of Company, Raises $485M -------------------------------------------------------- Jeremy Hill of Bloomberg News reports that Belk Inc. raised nearly $500 million and slashed its debt load in a deal that sees longtime backer Sycamore Partners cede control of the struggling department-store chain to lenders. The Charlotte, North Carolina-based retailer cut its debt by almost $1 billion, delayed the repayment date of its asset-based credit line to 2029 and raised fresh money, in part by pledging revenue streams from its loyalty credit card program to lenders, according to a statement. The restructuring preserves thousands of jobs at its nearly 300 stores across the Southeastern US. About Belk Inc. Belk Inc. is an American department store chain based in Charlotte, NC. BIG LOTS: Stores Shutting in California --------------------------------------- Jeremiah Martinez of Fox 5 KUSI News reports that with Big Lots expected to shut down stores nationwide, closures are expected in California. The discount retailer said its expected to close dozens of stores throughout the country in its quarterly report filed in June 2024, but didn't disclose information on which stores will be affected. The company said inflation, cost of goods, and competitive and economic pressures led to "substantial doubt" of their stores operations. California has 109 Big Lots stores, the second most in the nation behind Texas (116). The company has 1,400 stores throughout the country. FOX40.com reached out to Big Lots for comment, but a media representative didn't immediately respond to an email on Monday morning. Which California stores are closing? A large "closing" sign was placed on a Big Lots location in Sacramento located about four miles from Sacramento State. Signs displayed at the store were advertising sales withs sales up to 20%. Four other Big Locations in California's capital city are slated to close, according to the stores' website. As for the rest of California, here are stores that are expected to close, according to their websites: * Anaheim: 1670 W Katella Avenue; Anaheim, CA 92802 * Anaheim: 6336 E Santa Ana Canyon Road; Anaheim, CA 92807 * Atascadero: 2240 El Camino Real; Atascadero, CA 93422 * Atwater: 1085 Bellevue Road; Atwater, CA, 95301 * Bakersfield: 1211 Olive Drive; Bakersfield, CA 93308 * Bakersfield: 2621 Fashion Place; Bakersfield, CA 93306 * Beaumont: 1782 E 2nd Street; Beaumont, CA 92223 * Camarillo: 353 Carmen Drive; Camarillo, CA 93010 * Santa Clarita/Canyon County: 19331 Soledad Canyon Road; Canyon County, CA 91351 * Chico: 1927 E 20th Street; Chico, CA 95928 * Concord: 2060 Monument Boulevard; Concord, CA 94520 * Corona: 740 N Main Street; Corona, CA 92880 * Culver City: 5587 Sepulveda Boulevard; Culver City, CA 90230 * Delano: 912 County Line Road; Delano, CA 93215 * El Cajon: 1085 E Main Street; El Cajon, CA 92021 * Fairfield: 1500 Oliver Road; Fairfield, CA 94534 * Folsom: 9500 Greenback Lane, Ste 22; Folsom, CA 95630 * Fresno: 7370 N Blackstone Avenue; Fresno, CA 93650 * Gilroy: 360 E 10th Street; Gilroy, CA 95020 * Hercules: 1551 Sycamore; Hercules, CA 94547 * Indio: 42225 Jackson Street, Ste B; Indio, CA 92203 * La Mesa: 6145 Lake Murray Boulevard; La Mesa, CA 91942 * Livermore: 4484 Las Positas Road; Livermore, CA 94551 * Lompoc: 1009 N H Street, Ste M; Lompoc, CA 93436 * Long Beach: 2238 N Bellflower Boulevard; Long Beach, CA 90815 * Los Banos: 951 W Pacheco Boulevard; Los Banos, CA 93635 * Manteca: 1321 West Yosemite, Avenue; Manteca, CA 95337 * Merced: 665 Fairfield Drive; Merced, CA 95348 * Milpitas: 111 Ranch Drive; Milpitas, CA 95035 * Modesto: 3900 Sisk Road; Modesto, CA 95356 * Oceanside: 1702 Oceanside Boulevard; Oceanside, CA 92054 * Ontario: 4430 Ontario Mills Parkwasy; Ontario, CA 91764 * Placerville: 47 Fair Lane; Placerville, CA 95667 * Rancho Santa Margarita: 30501 Avenida De Las Flores; Rancho Santa Margarita, CA 92688 * Redlands: 810 Tri City Center; Redlands, CA 92374 * Riverside: 2620 Canyon Springs Parkway; Riverside, CA 92507 * Rohnert Park: 565 Rohner Park Expressway; Rohner Park, CA 94928 * Sacramento: 6630 Valley Hi Drive; Sacramento, CA 95823 * Sacramento: 8700 La Riviera Drive; Sacramento, CA 95826 * Salinas: 370 Northridge Mall; Salinas, CA 93906 * San Bernardino: 499 W Orange Show Road; San Bernardino, CA 92408 * Santa Clara: 3735 El Camino Real; Santa Clara, CA 95051 * Santa Maria: 1417 S Broadway; Santa Maria, CA 93454 * Santa Paula: 568 W Main Street, Ste B; Santa Paula, CA 93060 * Santa Rosa: 2055 Mendocino Avenue; Santa Rosa, CA 95401 * Simi Valley: 1189 Simi Town Center Way; Simi Valley, CA 93065 * Stockton: 2720 Country Club Boulevard; Stockton, CA 95204 * Temecula: 27411 Ynez Road: Temcula, CA 92591 * Tracy: 2681 N Tracy Boulevard; Tracy, CA 95376 * Turlock: 1840 Countryside Drive; Turlock, CA 95380 * Ukiah: 225 Orchard Plz; Ukiah, CA 95482 * Vacaville: 818 Alamo Drive; Vacaville, CA 95688 * Visalia: 2525 S Monney Boulevard; Visalia, CA 93277 •Woodland: 52 W Court Street; Woodland, CA 95695 About Big Lots Inc. Big Lots sells a wide assortment of brand-name and private label items, such as food, furniture, seasonal items, electronics and accessories, home decor, toys, and gifts. BROOKDALE SENIOR: Registers 12.6MM Shares for 2024 Incentive Plan ----------------------------------------------------------------- Brookdale Senior Living Inc. filed a registration statement on Form S-8 with the U.S. Securities and Exchange Commission covering the offer and sale of 12,626,920 shares of common stock, par value $0.01 per share, of the Company that may be issued and sold under the Brookdale Senior Living Inc. 2024 Omnibus Incentive Plan. The amount of Common Stock registered includes the 9,100,000 shares of Common Stock reserved for issuance pursuant to the Plan as approved by the Company's stockholders at the Annual Meeting of Stockholders held on June 18, 2024 and 3,526,920 shares of Common Stock reserved but unissued under the Brookdale Senior Living Inc. 2014 Omnibus Incentive Plan as of June 18, 2024. No new awards will be granted under the 2014 Omnibus Incentive Plan. A full-text copy of the Registration Statement is available at: https://tinyurl.com/ycyepnf4 About Brookdale Senior Living Headquartered in Brentwood, Tenn., Brookdale Senior Living Inc. operates senior living facilities in the United States. As of March 31, 2024, the Company had $5.5 billion in total assets and $5.2 billion in total liabilities. * * * Egan-Jones Ratings Company on October 26, 2023, maintained its 'CC' foreign currency and local currency senior unsecured ratings on debt issued by Brookdale Senior Living Inc. CANOO INC: Announces Stock Sale as Losses Continue -------------------------------------------------- TBP reports that it's a mystery as to how much longer Canoo – the electric vehicle maker that once planned to be based in Bentonville – can remain a going concern. The company on Tuesday (July 22) announced the sale of 13.719 million shares in an effort to raise cash. The company said in Tuesday's, July 23, 2024, federal filing about the stock sale that it does not know how much cash the sale will provide. The company, still based in Torrance, Calif., reported cash, cash equivalents and restricted cash of $18.2 million as of March 31. That's close to being pocket change when considering the company continues to bleed money. Canoo reported a first-quarter 2024 loss of $111.54 million, more than the $90.72 million loss in the same quarter of 2023. The first quarter loss followed a full-year 2023 loss of $302.02 million, or a loss of $1.13 per share, which was better than the $487.69 million loss in 2022. Despite the ongoing deep losses, the Canoo CEO continues to say brighter days are ahead. "We are proud that our LDV190 vehicles have been delivered to the USPS South Atlanta Sorting and Delivery Center and are already delivering mail. These vehicles speak to the differentiation of our model where we deliver unique customized configurations to meet the needs of our large fleet customers and their associates. We continue to execute on our strategy of acquiring deeply discounted long-lead time assets as we prepare for step level manufacturing," Tony Aquila, Canoo executive chairman and CEO, said in the first quarter report. Canoo is set to post second quarter financials on Aug. 14. The consensus estimate among four analysts who follow the stock (NASDAQ: GOEV) is a 77 cents per share loss on revenue of just $910,000. Tuesday's prospectus filing with the U.S. Securities and Exchange Commission included five pages outlining risk factors to consider before investing with the company. "We are an early stage company with a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future. … Our current business plans require a significant amount of capital. If we are unable to obtain sufficient funding or do not have access to capital, we will be unable to execute our business plans and our prospects, financial condition and results of operations could be materially adversely affected," noted the first few risk-factor bullet points in Canoo's prospectus. As of Tuesday, the company had 73,888,348 shares of common stock, 45,000 shares of Series B Cumulative Perpetual Redeemable Preferred Stock, and 16,500 shares of Series C Cumulative Perpetual Redeemable Preferred Stock issued and outstanding. The company on March 8, 2024, had a 1-for-23 reverse stock split. The company announced in July 2022 that it secured a deal with Walmart for 4,500 electric delivery vehicles, with an option to boost the deal to 10,000 deliveries. But that deal never materialized. Also attracting dust are Canoo's plans to build its headquarters and a manufacturing facility in Bentonville. The company announced on July 3 that Go2 Delivery signed a deal to buy five electric vehicles from Canoo. Also, the company said it is now listed on the Russell 3000 Index, the small-cap Russell 2000 and the Russell Microcap Index. Such listings don't secure revenue, and a company that reports having 651 employees will need more than $18 million in cash and other reserves if it continues to post such hefty quarterly losses while reporting no significant vehicle orders. Company shares closed Tuesday at $2.12, down 0.03 cents. During the past 52 weeks the share price ranged between $15.96 and $1.22. The company's market capitalization was $152.918 million as of Tuesday. Attempts to contact Canoo for comment were unsuccessful. About Canoo Inc. Torrance, California-based Canoo Inc. -- http://www.canoo.com/-- is a high tech advanced mobility technology company with a proprietary modular electric vehicle platform and connected services initially focused on commercial fleet, government and military customers. The Company has developed a breakthrough EV platform that it believes will enable it to rapidly innovate, iterate and bring new products, addressing multiple use cases, to market faster than its competition and at lower cost. Austin, Texas-based Deloitte & Touche LLP, the Company's auditor since 2021, issued a "going concern" qualification in its report dated April 1, 2024, citing that the Company has suffered recurring losses from operations, has a working capital deficit, has generated recurring negative cash flows from operating activities, and expects to continue to incur net losses, a working capital deficit and negative cash flows from operating activities in accordance with its ongoing activities. These matters raise substantial doubt about the Company's ability to continue as a going concern. CAPTAIN YURI'S: Unsecureds Will Get 16.73% of Claims over 5 Years ----------------------------------------------------------------- Captain Yuri's Charters, Inc., filed with the U.S. Bankruptcy Court for the Southern District of Florida a Disclosure Statement for Small Business describing Chapter 11 Plan dated July 15, 2024. The Debtor is a fishing charter business, offering three to four-day fishing trips out of Key West, Florida. The Debtor, a Florida corporation, was founded in June 2014. The President and 100% owner is Yuri Vakselis. The Debtor surrendered one vessel, the Magic, back to Centennial Bank, which subsequently sold on April 9, 2024. The sale resulted in the reduction and reclassification of the Bank's claim from a secured claim in the amount of $172,069.00, to an unsecured claim in the amount of $101,164.08. The Debtor, since January 2024, and pursuant to the Order Granting Agreed Motion for Continued Use of the Lauren Jeanne, has been paying the full contract loan payment to the Bank for the Lauren Jeanne in the amount of $3,575.00 per month. The Debtor believes the approximately balance owed to the Bank as of July 1, 2024 is $66,296.00. Class 1 and Class 2 propose treatment for two secured lenders: Centennial Bank, who financed the purchase of Debtor's vessel, Lauren Jeanne, comprises Class 1; and the U.S. Small Business Administration ("SBA"), who extended an EIDL loan to Debtor in 2021, comprises Class 2. Class 3 consists of customers who have made pre-petition deposits and are due a refund and/or have filed an allowed Proof of Claim. Pursuant to Code Section 507(a)(7), they will receive a priority claim up to $3,350.00 and an unsecured claim for any remaining amount. (Note: almost all deposits are in the amount of $2,000.00). The total of Class 3 deposits is $33,700.00. Class 4 consists of one claim for pre-petition wages in the amount of $51,821.85. Under Section 507(a)(4) of the Code, Class 4 will receive a priority claim payment in the amount of $15,150.00 with the balance of $36,671.85 being classified as unsecured and included in Class 5. Class 5 consists of general unsecured claims in the amount of $358,622.44 (approximately 10 claims). Class 5 creditors will receive a 16.73% distribution or $60,000.00. Class 6 consists of customers who have made pre-petition deposits, but have not yet completed their contracted fishing trip. The Debtor will be sending notice to these customers regarding their intent to complete their contracted fishing trip; however, they will not receive any price adjustment or refund. This class is more for identification and informational purposes to evaluate costs of future trips. The treatment of members of this class does not include any type of payment directly to its members. Class 7 consists of customers who have made post-petition deposits. As administrative transactions they will be handled in the ordinary course of business, and, upon request, will receive full refunds consistent with Debtor's refund policy. No funds are being identified in the plan to fund this class. Class 5 consists of General Unsecured Claims. The total amount of the Allowed Unsecured Claims included in Class 5 is $358,622.44 with no insiders receiving payment. The plan distribution of $60,000.00 representing approximately 16.73% of each Allowed Unsecured Claim, will be made in 20 quarterly payments of $5,000.00 each, commencing in Year 3 through Year 5 of the Plan. This Class is impaired. Payments and distributions under the Plan will be funded by income generated from the revenues received from the Debtor's fishing trips. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=DZwKqY from PacerMonitor.com at no charge. Counsel to the Debtor: Chad Van Horn, Esq. Van Horn Law Group PA 500 NE 4th St., Ste. 200 Fort Lauderdale, FL 33301 Telephone: (954) 765-3166 Email: chad@cvhlawgroup.com About Captain Yuri's Charters Captain Yuri's Charters, Inc. is a fishing charter business, offering three to four-day fishing trips out of Key West, Florida. The Debtor filed Chapter 11 petition (Bankr. S.D. Fla. Case No. 23-17488) on Sept. 19, 2023, with up to $50,000 in assets and $500,001 to $1 million in liabilities. Yuri Vakselis, president, signed the petition. Judge Robert A. Mark oversees the case. Chad Van Horn, Esq., at Van Horn Law Group PA, serves as the Debtor's bankruptcy counsel. CARIBBEAN GRILL: L. Todd Budgen Named Subchapter V Trustee ---------------------------------------------------------- The U.S. Trustee for Region 21 appointed L. Todd Budgen, Esq., a practicing attorney in Longwood, Fla., as Subchapter V trustee for Caribbean Grill & Roti Shop, Inc. 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 Caribbean Grill & Roti Shop Caribbean Grill & Roti Shop, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-03776) on July 23, 2024, with $50,001 to $100,000 in assets and $100,001 to $500,000 in liabilities. Judge Lori V. Vaughan presides over the case. Jeffrey Ainsworth, Esq. at Bransonlaw PLLC represents the Debtor as legal counsel. CHRISTIAN HORIZONS: Fitch Lowers Issuer Default Rating to 'D' ------------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Rating to 'D' from 'C' of Illinois Christian Horizons, formerly known as Christian Homes, Inc. (CH). Fitch has also downgraded approximately $24 million series 2021A and 2021B bonds and $66.690 million series 2016 and 2018 outstanding bonds previously issued through various authorities on behalf of CH to 'D' from 'C'. Entity/Debt Rating Prior ----------- ------ ----- Christian Homes, Inc. (IL) LT IDR D Downgrade C Christian Homes, Inc. (IL) /General Revenues/1 LT LT D Downgrade C The downgrade to 'D' from 'C' reflects CH's bankruptcy filing. On July 16, 2024, CH filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Eastern District of Missouri. For more information on CH's financial distress refer to the Fitch rating action commentary published on April 18, 2024. SECURITY The bonds are secured by a pledge of gross revenue, first-lien mortgage and security interest in the facilities, and a debt service reserve fund. Revenue Defensibility - 'b' Operating Risk - 'b' Financial Profile - 'b' RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Rating sensitivities are no longer relevant given CH's 'D' rating. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Rating sensitivities are no longer relevant given CH's 'D' rating. PROFILE CH is a large senior living system that operates facilities in Illinois, Indiana, Iowa and Missouri. CH's parent company changed the organization's brand name to Christian Horizons in January 2017. Fitch's analysis is based upon CH's OG, which includes five facilities with 344 IL units, 270 AL units and 579 SNF beds. Total OG operating revenue equaled approximately $100 million in fiscal 2023. Sources of Information In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by data from Lumesis. 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. CONN'S INC: Hits Chapter 11 Bankruptcy After Sales Decreased ------------------------------------------------------------ Reshmi Basu and Eliza Ronalds-Hannon of BNN Bloomberg report that furniture retailer Conn's Inc. has filed for bankruptcy amid lagging sales and trouble integrating a rival chain. The company sought Chapter 11 protection in Texas, court papers show. Conn's listed assets and liabilities of at least $1 billion each in its bankruptcy petition. The filing allows the company, which sells discount home goods and furniture, to keep operating while it works out a plan to pay creditors. Bloomberg earlier reported Conn's was preparing to file for bankruptcy. The company last year purchased home goods retailer W.S. Badcock LLC from Franchise Group Inc. About Conn's Inc. Conn's Inc. is a retailer of home goods and furniture. Conn's Inc. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 24-33357) on July 23, 2024. In its petition, the Debtor reports assets and liabilities of at least $1 billion each. The Honorable Bankruptcy Judge Jeffrey P. Norman oversees the case. The Debtor is represented by Duston K. McFaul of Sidley Austin LLP. CPPIB OVM: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable ---------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issuer credit rating, with a stable outlook, to CPPIB OVM Member U.S. LLC (CPPIB OVM) and its 'B+' issue-level rating and '3' recovery rating to the senior secured term loan B. The '3' recovery rating on the term loan indicates its expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. S&P said, "The stable outlook reflects that we expect CPPIB OVM Member U.S. LLC to have relatively stable distributions from Ohio Valley Midstream LLC especially considering the relatively low capital requirements at OVM. We expect CPPIB OVM to have interest coverage of 3.0x–3.25x in 2025 and 3.75x–4.0x in 2026. In addition, we expect CPPIB OVM to have leverage of 3.75x–4.0x in 2025 and 3.25x-3.5x in 2026. "Our 'B+' issuer credit rating on CPPIB OVM reflects the differentiated credit quality compared to its investee OVM. CPPIB OVM holds a 35% equity interest in OVM and relies on distributions from the investee to service its $600 million term loan due in 2031 because it does not have other substantive assets. As a result, we rate CPPIB OVM under our noncontrolling equity interest (NCEI) criteria. As such, our view on CPPIB OVM's credit profile incorporates its financial ratios, OVM's cash flow stability, its ability to influence OVM's financial policy, and its ability to liquidate its investment in OVM to repay the $600 million term loan. "We expect the company to receive steady distributions from Ohio Valley Midstream LLC over the life of the term loan. OVM's cash flows are 100% fee-based and very stable with no direct commodity price exposure. OVM's assets are concentrated in the Marcellus and Utica shale regions, which have lower break-even drilling costs than other regions. OVM has a diverse customer base, consisting of upstream Appalachia producers including EQT Corp., Antero Resources Corp., Southwestern Energy Co. and Encino Energy LLC. Investment-grade customers make up about 42% of fiscal 2024 revenues, with the remaining comprising speculative-grade (53%) or nonrated producers (5%). The average remaining contract life is approximately eight years. The volumes are primarily derived from long-term acreage dedications, with about 14% of total revenues attributable to minimum volume commitments (MVCs). Given the volumetric risk exposure from the acreage dedication backed contracts, we limit our cash flow stability assessment to neutral. "Our positive view of CPPIB OVM's corporate governance and financial policy is influenced by its significant governance rights in OVM. OVM has a stable track record of EBITDA growth and has increased its distributions annually since its inception. OVM is required to distribute the vast majority of cash to CPPIB OVM and The Williams Cos. Inc. As such, we believe OVM has an incentive to maintain consistent or growing distributions. CPPIB OVM has a notable influence, with three out of six board seats, effectively granting it 35% of the voting rights, commensurate with with its ownership interest of 35%. Any change to OVM's distribution policy would require CPPIB OVM's approval. A supermajority vote (i.e., 75% of voting interests) on key items including the incurrence of material debt or equity, distribution policy, budget changes, capital contributions, material acquisitions and divestitures, filing bankruptcy, guaranteeing material debt, and material capital spending is in place. "We forecast that CPPIB OVM's S&P Global Ratings-adjusted debt to EBITDA ratio will be about 3.75x - 4.0x in 2025, and an EBITDA interest coverage ratio of 3.0x - 3.25x. We expect credit metrics to improve in 2026, with leverage decreasing to the 3.25x-3.5x range and interest coverage of about 3.75x-4.0x. Our assumptions are supported by a forecasted improvement in distributions from OVM, and a mandatory amortization of 1% annually on the term loan B. The company's term loan B is also subject to a 75% excess cash flow sweep if leverage exceeds 5.0x, with the percentage decreasing to 50% when leverage is between 4.5x and 5.0x, 25% when leverage is between 4.0x -and 4.5x and no cash sweep when it falls below 4.0x. We do not foresee a cash flow sweep over the forecast period, because we expect leverage to remain below 4.0x. "Our view of CPPIB OVM's ability to liquidate its investment in OVM is negative because OVM is not publicly traded. "The stable outlook reflects our expectation that CPPIB OVM Member U.S. LLC will have relatively stable distributions from Ohio Valley Midstream LLC, especially considering the relatively low capital requirements at OVM. We expect CPPIB OVM to have interest coverage of 3.0x-3.25x in 2025 and 3.75x-4.0x in 2026. In addition, we expect CPPIB OVM to have leverage of 3.75x-4.0x in 2025 and 3.25x-3.5x in 2026. "We could consider a negative rating action if the company maintained interest coverage of less than 3.0x and debt leverage of greater than 4.0x. This could occur if investee company Ohio Valley Midstream LLC was more aggressive with growth projects than our current expectations. We could also consider a negative rating action if investee company OVM changed its financial policy, and issued significant debt." S&P could consider a positive rating action if the company maintained interest coverage of more than 4x on a sustained basis. This could occur if the company maintained a more conservative financial policy, which may include less debt at CPPIB OVM. We could also consider a positive rating action at CPPIB OVM if credit quality at Ohio Valley Midstream improved. Environmental factors are a negative consideration in S&P's credit rating analysis of CPPIB OVM. CPPIB OVM holds a 35% noncontrolling interest in Ohio Valley Midstream LLC, which owns natural gas gathering and processing assess in the Appalachian basin. This exposes the company to climate transition risks that could affect long-term gas supplies or drilling activity of OVM's major shippers. Other direct environmental risks relate to potential gas leakage and damages to the environment. CREATIVE INVESTORS: Updates Unsecured Claims Details ---------------------------------------------------- Creative Investors, Inc., submitted an Amended Disclosure Statement describing Amended Plan of Reorganization dated July 15, 2024. Creative Investors was a family owned corporation that was started in the 1990s. The corporation was started to invest in private mortgages. However, in 2008, when the market crashed, it lost many properties in second lien positions, or upside down in the value since the property values diminished by 50, 60, 70, sometimes even 80% in value. Creative agreed that There was an outstanding loan of approximately $30,000 that was owed to them under Additionally, there was approximately $30,000 that was owed to them on the Muse property and there was $72,000 that was being held in their attorneys escrow account on the Miami Auto Property, which was acknowledged that money belonged to them and not Creative Investors. Since then, Creative has paid them the $30,000 on the judgment. The $72,000 being held in their attorneys trust account on the Miami Auto property, was released to them by their previous attorney, Joseph Miles. The only money that was pending owed to them was the $30,000 on the Muse property. However, Santibanez has refused to provide a satisfaction of judgment for the $30,000. They have also refused to acknowledge that the $72,000 that was being held in their attorneys trust account, that was released to them directly after the trial was for full satisfaction and payment of the Miami Auto Portion of the judgment. And, since they were not happy with what they were awarded in the Muse property, they filed a separate lawsuit, in another court, without ever notifying the court of the previous case, and/or even serving Creative. Creative is trying to get a real payoff from Santibanez to close this chapter and move on, but even after 16 years have passed, they refuse to end the litigation between the parties. Now the state court litigation has not changed the result. Ms. Rodriguez is now working toto refinance the property 8440 SW 32 St and pay off the secured, administrative and unsecured claims. This Amended Plan of Reorganization proposes to pay creditors of the Debtor from sources of payment, such as payments by Arlene Rodriguez, rents, and refinancing of 8440 SW 32 St. Debtor needs 90 days to complete refinancing which will be brought before the court for approval on a motion to borrow. This Plan provides for several classes of secured claims; 1 class of unsecured claims; and 1 class of equity security holders. Unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has estimated valued at approximately 43 cents on the dollar, depending on allowance of claims. This Plan also provides for the payment of administrative and priority claims by payment in full. Class 10 consists of General Unsecured Claims. General Unsecured Creditors include Bank of America SBA ($218,000); Marilein Camacho ($260,000); IRS claim 2 ($11,399.07); and Sergio Santibanez and Maria Santibanez disputed claim 6-2 $84,330.14. The allowed unsecured claims total $573,729. Unsecured claims will keep their claims. This Class is impaired. The plan will be implemented by payments on the effective date, as required under Section 1123(a)(5) of the Code, curing of arrearages, and the plan will be funded by Arlene Rodriguez who as well will be serving as director, and officer of the reorganized debtor. Ms. Rodriguez owns vacation properties, has a real estate business and also a therapy business, from which she will fund the payments under the plan. A full-text copy of the Amended Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=sXsTUM from PacerMonitor.com at no charge. Counsel to the Debtor: Joel M. Aresty, Esq. Joel M. Aresty, P.A. 309 1st Ave S Tierra Verde, FL 75202 Telephone: (305) 904-1903 Facsimile: (800) 899-1870 Email: Aresty@Mac.com About Creative Investors Creative Investors, Inc., is a Limited Liability Corporation owned by Arlene Rodriguez. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-10171) on Jan. 10, 2023, with $500,001 to $1 million in assets and $100,001 to $500,000 in liabilities. Judge Laurel M. Isicoff oversees the case. Joel M. Aresty, P.A. and Armando R. Alfonso, Esq., at A.R.A Law serve as the Debtor's bankruptcy counsel and special counsel, respectively. CYTOSORBENTS CORP: Registers $150MM Mixed Securities Offering ------------------------------------------------------------- CytoSorbents Corporation filed a Registration Statement on Form S-3 with the U.S. Securities and Exchange Commission relating to the offering from time to time in one or more offerings up to an aggregate of $150,000,000 of the common stock, preferred stock, debt securities, warrants or units described in the prospectus, separately or together in one or more combinations. The preferred stock, debt securities, and warrants may be convertible into or exercisable or exchangeable for common stock or preferred stock or other securities. CytoSorbents may also authorize one or more free writing prospectuses to be provided in connection with these offerings. The Company may offer and sell the securities through underwriters, dealers or agents, or directly to purchasers, or through a combination of these methods. If any agents or underwriters are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such agents or underwriters and any applicable fees, commissions, discounts or over-allotment options will be set forth in a prospectus supplement. The price to the public of such securities and the net proceeds the Company expects to receive from such sale will also be set forth in a prospectus supplement. CytoSorbents' common stock is listed on the Nasdaq Capital Market under the symbol "CTSO." The last reported sale price of its common stock on the Nasdaq Capital Market on July 25, 2024 was $1.03 per share. As of July 25, 2024, the aggregate market value of CytoSorbents' outstanding common stock held by non-affiliates, also known as its public float, is $59,111,703, based on 52,778,307 shares of its outstanding common stock held by non-affiliates as of June 30, 2024 and a price of $1.12 per share, the closing price of common stock on July 16, 2024. Pursuant to General Instruction I.B.6 of Form S-3, in no event will the Company sell securities in a public offering with a value of more than one-third of its public float in any 12-month period, so long as the public float is less than $75,000,000. As of the date of the prospectus, the Company have not offered and sold any shares of its common stock pursuant to General Instruction I.B.6 to Form S-3 during the prior 12 calendar month period that ends on and includes the date hereof. A full-text copy of the Registration Statement is available at: https://tinyurl.com/4v3tnwv5 About CytoSorbents Based in Monmouth Junction, N.J., CytoSorbents Corporation is engaged in critical care immunotherapy, specializing in blood purification. Its flagship product, CytoSorb, is approved in the European Union with distribution in more than 75 countries around the world as an extracorporeal cytokine adsorber designed to reduce the "cytokine storm" or "cytokine release syndrome" seen in common critical illnesses that may result in massive inflammation, organ failure and patient death. East Brunswick, New Jersey-based WithumSmith+Brown, PC, the Company's auditor since 2004, issued a "going concern" qualification in its report dated March 14, 2024, citing that the Company has suffered recurring losses from operations, has experienced cash used from operations, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern. DELEK US: Moody's Affirms 'Ba3' CFR & Alters Outlook to Negative ---------------------------------------------------------------- Moody's Ratings changed the outlook for Delek US Holdings, Inc. to negative from stable and affirmed its existing ratings, including the Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating and B1 rating on the senior secured term loan B. The SGL-3 Speculative Grade Liquidity Rating remains unchanged. "The negative outlook on Delek US Holdings, Inc.'s ratings reflects its weakening profit margins, high leverage on its refining assets and the expectation the company will generate sizeable negative free cash flow in 2024-2025 that will erode its cash balance," stated James Wilkins, Moody's Ratings Vice President - Senior Analyst. RATINGS RATIONALE The change of outlook to negative reflects Delek's weakening margins, high gross leverage on its refining and marketing operations and anticipated negative free cash flow. Moody's expect the decline in industry crack spreads and planned capital expenditures in excess of maintenance levels will result in the company generating negative free cash flow in 2024-2025. The company's consolidated leverage (debt / EBITDA) was 5.6x as of March 31, 2024. The company has been pursuing various initiatives to unlock value for shareholders, including improving its cost structure and optimizing its refining operations, but it is uncertain how impactful the initiatives will be on the company's profitability. The company does have elevated cash balances, which is indicative of its relatively conservative financial policies that has historically supported its liquidity through the refining market cycles. Delek's Ba3 CFR also reflects its volatile profit margins, potentially high cost of compliance with the renewable fuels standard program (RINs expenses) and modest scale in its refining and marketing operations with four refineries that are geographically focused and have a combined crude oil throughput capacity of 302 thousand barrels per day (mbpd). The refineries are positioned in Texas, Louisiana and Arkansas where they can benefit from both growing Permian crude oil production and other locally-sourced crudes that are purchased at a discount to WTI Cushing prices. The company also benefits from more stable earnings generated by midstream operations, through its ownership interests in Delek Logistics Partners, LP (B1 stable) and a retail gas station network. The secured term loan is rated B1, one notch below the Ba3 CFR, reflecting the priority claim of the $1.1 billion revolving credit facility, which shares the same collateral as the term loan, but has a first lien on working capital and a second lien on fixed assets, whereas the term loan has a first lien priority claim on fixed assets and a second lien on working capital. Delek maintains adequate liquidity reflected in its SGL-3 Speculative Grade Liquidity rating. The liquidity position is supported by its large cash balance ($753 million as of March 31, 2024), significant availability under committed bank facilities and distributions from DKL, its logistics MLP subsidiary. For the twelve months ended March 31, 2024, Delek's consolidated free cash flow was positive, but Moody's expect weakening profitability in its refining business will lead to negative free cash flow generation in 2024-2025. At the end of Q1 2024, Delek's $1.1 billion ABL revolving credit facility had no borrowings and outstanding letters of credit totaling $281 million, leaving about $820 million of borrowing capacity. The facility matures Oct. 26, 2027. The revolver has a minimum fixed charge coverage ratio of 1.0x, which is only tested if excess availability is less than the greater of 10% of the revolver borrowing base (capped at $1.1 billion) and $90 million. Moody's do not expect the covenant to be tested through 2025. The company's liquidity position further benefits from an inventory intermediation agreement with Citibank Energy Inc. that covers three refineries and provides up to $800 million of working capital funding. The agreement was established in December 2022 and matures on January 31, 2026. Should the agreement not be renewed at maturity, Delek would have to invest a substantial amount in working capital. The obligation under the inventory intermediation agreement totaled $493 million as of March 31, 2024. The company does not have significant near-term debt maturities. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if profitability of refining operations declines such that the company does not generate positive free cash flow with mid-cycle refining margins, retained cash flow to debt remains below 15% or if liquidity deteriorates. The ratings could be upgraded if retained cash flow to debt is sustainable above 25%, refining margins improve such that all refineries produce free cash flow in trough market conditions and the company increases scale by adding refineries to its portfolio or expanding existing operations such that it benefits from larger scale operations (refineries with throughput capacity greater than 100 mbpd). The principal methodology used in these ratings was Refining and Marketing published in August 2021. Delek US Holdings, Inc. (NYSE: DK), headquartered in Brentwood, Tennessee, is an independent refining and wholesale marketing company with 302 Mbpd of total crude oil throughput capacity at four refineries, midstream assets and retail operations. EIGER BIOPHARMACEUTICALS: Unsecureds Unimpaired in Liquidating Plan ------------------------------------------------------------------- Eiger BioPharmaceuticals, Inc., and its affiliates filed with the U.S. Bankruptcy Court for the Northern District of Texas a Disclosure Statement for Joint Plan of Liquidation dated July 15, 2024. Eiger Biopharmaceuticals, Inc. was founded in 2008 as a privately-held biopharmaceutical company focused on bringing to market novel products and "orphan drugs" for the treatment of rare diseases. The Debtors operate collectively as a commercial-stage biopharmaceutical company focused on the development of innovative therapies for life-threatening, rare and serious diseases with high unmet medical needs and no approved therapies. At the heart of the Debtors' business is Zokinvy, the first and only product on the market that has received FDA approval for the treatment of progeria—an ultra-rare and rapidly fatal genetic condition that causes accelerated aging in children. The Debtors engaged with the Sentynl Therapeutics, Inc. in the six months leading up to the Petition Date, in parallel with their financing efforts. Initially, the sale was intended to be consummated outside of Court, but, as the Debtors' circumstances evolved and, with the loss of the potential investment, the Debtor worked with the Sentynl to pivot to an incourt transaction and in the Bid Procedures Motion. Prior to filing these chapter 11 cases, on March 31, 2024, the Debtors negotiated and entered into an agreement (the "Zokinvy Stalking Horse APA") with Sentynl for the acquisition and sublicense of the Zokinvy assets (the "Zokinvy Assets") at a purchase price of $26 million if the Zokinvy Sale Transaction closed no later than April 24, 2024; provided, however, that for every day after April 24, 2024 that the closing did not occur, the stalking horse bid decreased by an amount equal to $214,285.71 (the "Zokinvy Stalking Horse Bid"), as further explained in the Bid Procedures Motion. The Zokinvy Stalking Horse APA was the culmination of the prepetition marketing process and provided the necessary momentum to launch a post-petition marketing and auction process to maximize the value of the Debtors' assets. To facilitate a competitive post-petition auction process, the Debtors filed the Bid Procedures Motion, with the bid from Sentynl serving as the initial opening bid. Pursuant to the Bid Procedures, interested parties including those contacted by the Debtors and their advisors prepetition—had the opportunity to submit bids for the purchase of the Debtors' Zokinvy Assets along a sale timeline established by the Bid Procedures. In accordance with the Bid Procedures, the Zokinvy Stalking Horse APA was subject to higher and better offers. The Bid Procedures also formalized a process for a sale of the Debtors' other assets (the "Remaining Assets"), including Lonafarnib for the treatment of HDV, Avexitide, and Lambda (the "Remaining Assets Sale Transaction(s)," and, collectively with the Zokinvy Sale Transaction, the "Sale Transactions"). Accordingly, the Debtors orchestrated a bifurcated sales process with two separate, but both expedited, timelines. Pursuant to the Bid Procedures, interested parties had approximately 16 days from the Petition Date to submit bids for the Zokinvy Assets and approximately 72 days to submit bids for the Remaining Assets. The Bankruptcy Court approved these expedited timelines as sufficient to run a comprehensive sale process—particularly in light of the extensive marketing process conducted by the Debtors prepetition. Further, the Bankruptcy Court approved the entirety of the Zokinvy Sale Transaction on April 24, 2024, via the Order (I) Approving the Sale of the Debtors' Zokinvy Assets, (II) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases Related Thereto, and (III) Granting Related Relief (the "Zokinvy Sale Order"). The Plan contemplates a liquidation of the Debtors and their Estates and is therefore referred to as a "plan of liquidation." The primary objective of the Plan is to maximize the value of recoveries to Holders of Allowed Claims and Interests and to distribute all property of the Debtors' Estates that is or becomes available for distribution in accordance with the Bankruptcy Code and Plan. The Debtors assert that the Plan accomplishes this objective and is in the best interests of their Estates, and therefore seek to confirm the Plan. Class 4 consists of all General Unsecured Claims against the Debtors. Except to the extent the Holder of an Allowed General Unsecured Claim agrees to less favorable treatment, each Holder of an Allowed General Unsecured Claim shall receive, in full and final satisfaction, settlement, release, and discharge of such Claim, payment in full in Cash, including post-petition interest calculated at the applicable contract rate, the Federal Judgment Rate, or such other rate as determined by the Bankruptcy Court. Class 4 is Unimpaired, and Holders of General Unsecured Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, Holders of Class 4 General Unsecured Claims are not entitled to vote to accept or reject the Plan. Class 6 consists of all Existing Equity Interests in the Debtors. Except to the extent the Holder of an Existing Equity Interest agrees to less favorable treatment, each Holder of an Existing Equity Interest shall receive, in full and final satisfaction, settlement, release, and discharge of such Interest, its pro rata share of the Existing Equity Interest Recovery Pool. The Debtors or the Plan Administrator, as applicable, shall fund distributions under the Plan with proceeds from the Sale Transactions and the Debtors' Cash on hand, all in accordance with the terms of the Plan and the Wind-Down Budget. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=UCPzyK from Kurtzman Carson Consultants LLC, the claims agent. Attorneys for the Debtors: Thomas R. Califano, Esq. William E. Curtin, Esq. Anne G. Wallice, Esq. SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY 10019 Tel: (212) 839-5300 Fax: (212) 839-5599 Email: tom.califano@sidley.com wcurtin@sidley.com anne.wallice@sidley.com Charles M. Persons, Esq. SIDLEY AUSTIN LLP 2021 McKinney Avenue, Suite 2000 Dallas, Texas 75201 Telephone: (214) 981-3300 Facsimile: (214) 981-3400 Email: cpersons@sidley.com About Eiger BioPharmaceuticals Palo Alto, California-based Eiger BioPharmaceuticals, Inc., is a commercial-stage biopharmaceutical company focused on the development of innovative therapies for rare metabolic diseases. The company's shares traded on Nasdaq under the symbol "EIGR". Eiger Biopharmaceuticals Inc. and its subsidiaries sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 24-80040) on April 1, 2024. In its petition, Eiger listed $38.8 million in assets and $53.1 million in liabilities as of the bankruptcy filing. Judge Stacey G. Jernigan oversees the cases. The Debtors are represented by Sidley Austin LLP as legal counsel, Alvarez & Marsal as financial advisor and SSG Capital Advisors, LLC as restructuring investment banker. Kurtzman Carson Consultants LLC is the claims agent. ENOVA INT'L: Moody's Rates New $400MM Unsecured Notes 'B2' ---------------------------------------------------------- Moody's Ratings has assigned a B2 rating to Enova International, Inc.'s proposed $400 million senior unsecured notes. Proceeds from the proposed issuance (after fees and expenses) will be used to refinance its existing $375 million senior unsecured notes due 2025. Enova's existing ratings, including its B1 corporate family rating, are unaffected by this transaction. RATINGS RATIONALE The B2 rating assigned to the proposed senior unsecured notes reflects the shift in debt mix over the last several years away from unsecured debt, which is how the firm historically funded itself, to a mix of secured and unsecured debt. The presence of secured debt subordinates unsecured creditors relative to secured creditors, resulting in the senior unsecured rating being positioned one notch below Enova's B1 CFR. The CFR reflects Enova's transformation from an online subprime consumer lender into a more diversified business balanced between subprime consumer lending and small business (SMB) lending. The SMB business carries lower legal and regulatory risks than the firm's subprime consumer business, a sector that has been subject to high regulatory scrutiny at the state and federal levels over the last several years. Along with increased business diversification, Enova has continued to exhibit strong financial performance. The firm's profitability and asset quality have outperformed other rated non-prime consumer lending peers in a challenging macroeconomic environment. The firm's consumer delinquencies and charge-offs have trended up over the past year, but remain around 2019 levels. Capitalization also remains a relative strength for Enova. As of June 30, 2024, the ratio of tangible common equity to tangible managed assets (TCE/TMA) was approximately 19%. Moody's expect TCE/TMA to remain in the range of 17-22%, comparing favorably to similarly rated non-prime consumer lending peers and providing good protection for creditors in the event of unexpected losses. At the same time, the rating reflects credit challenges associated with the rise in loan loss rates following the pandemic, which remains a risk given the uncertain macroeconomic environment. Furthermore, the firm's subprime consumer business continues to face legal and regulatory risks, which over time could lead to higher scrutiny and adverse changes to relevant laws, such as caps on the annual percentage rate (APR) firms are permitted to charge customers. And while SMB lending has experienced lower levels of scrutiny in the past relative to subprime consumer lending, regulatory pressures could emerge in the future given the small scale of these businesses and the high APRs and elevated charge-offs associated with these loans. Nonetheless, Enova has demonstrated an ability to navigate these challenges while maintaining strong profitability along with moderate leverage and adequate liquidity. The stable outlook reflects Moody's expectation that Enova will demonstrate strong earnings and adequate capitalization over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Enova's ratings could be upgraded if the firm were able to reduce its overall legal and regulatory risks while maintaining strong profitability and TCE/TMA above 20%. Enova's ratings could be downgraded if the firm experiences a significant degradation in asset quality, if profitability declines and remains below 4%, or if Moody's expect TCE/TMA to decline and remain below 17%. The principal methodology used in these ratings was Finance Companies Methodology published in July 2024. EPIC COMPANIES: U.S. Trustee Appoints Creditors' Committee ---------------------------------------------------------- The U.S. Trustee for Region 12 appointed an official committee to represent unsecured creditors in the Chapter 11 cases of EPIC Companies Midwest, LLC and affiliates. The committee members are: 1. Jim Johnson 109 Monterey Ave #5 Capitola, CA 95010 JJOHNSONLGCA@gmail.com (408) 888-8620 2. Beth Postemski P.O. Box 772184 Steamboat Springs, CO 80477 Postemski@gmail.com (970) 846-2395 3. Zachary Frappier 5431 12th Street S Fargo, ND 58104 ztfrappi@gmail.com 701-388-6919 4. Randy Henke 9400 275th Ave SE Sawyer, ND 58781 randystechnicaledge@gmail.com (701)340-8393 5. William E. Altringer 4613 Borden Harbor Dr Mandan, ND 58554 Wealtringer@gmail.com (701) 220-6088 Official creditors' committees serve as fiduciaries to the general population of creditors they represent. They may investigate the debtor's business and financial affairs. Committees have the right to employ legal counsel, accountants and financial advisors at a debtor's expense. About EPIC Companies Midwest EPIC Companies Midwest LLC, a real estate investing and development firm in Minot, N.D., and its affiliates filed voluntary Chapter 11 petitions (Bankr. D.N.D. Lead Case No. 24-30281) on July 8, 2024. In the petitions signed by Patrick Finn, chief restructuring officer, EPIC Companies Midwest disclosed $10 million to $50 million in both assets and liabilities. Judge Shon Hastings oversees the cases. Steven Kinsella, Esq., at Fredrikson & Byron, PA represents the Debtors as legal counsel. EPR INVESTMENTS: Claims to be Paid From Financing or Sale Proceeds ------------------------------------------------------------------ EPR Investments, L.C., filed with the U.S. Bankruptcy Court for the Middle District of Florida a Disclosure Statement for Chapter 11 Plan of Reorganization dated July 15, 2024. EPR is an entity whose business purpose is to own and hold real property located at 4904 W. Waters Avenue, Tampa, Florida 33634, consisting of 5.4 acres of land and an office/industrial complex of 111,665 square feet (the "Property"). The Debtor is a Florida limited liability company, formed on or around April 30, 1999, by Elliot Rubinson, along with his wife Pamela Keris-Rubinson. Armadillo Distribution Enterprises, Inc. is another entity that was formed by Elliott and Pam. Armadillo has occupied the Property and operated its business there since on or around the year 2004. EPR's source of revenue is from payments made by Armadillo to the mortgage holder. Armadillo also pays for maintenance on the Property, Property insurance, and tangible personal property taxes. Real property taxes owing on the Property have historically been paid by Pam. Given Evan's ongoing efforts to harm Pam and Evan's argument that the majority interest of EPR belongs in the Trust, Pam did not make the most recent payment due for 2023 real property taxes. EPR filed the Petition to stop the wrongful foreclosure of the Property and the disputes it has with Water49 and Valley. A foreclosure would result in the loss of millions of dollars in equity in the Property and would disrupt and damage the ongoing business operations of Armadillo. To avoid this, the Debtor seeks to: obtain financing or sell the Property and use these proceeds to pay Allowed Claims under the plan in full with interest. The sale of the Property is likewise hindered due to the Oscher Litigation. However, upon determination of the Oscher Litigation, given the large amount of equity in the Property, the Debtor anticipates that it will be able to obtain financing given the large amount of equity in the Property or be able to sell the Property and have funds sufficient to pay Allowed Claims in full under the Plan. In connection with efforts to secure financing, the Debtor will also seek to obtain a written lease with Armadillo. EPR's total liabilities are $6,643,393.76 as of the Petition Date, consisting of $6,439,11.21 in secured claims and $52,500 in unsecured claims. The amount owed to Water49 is in dispute and has been disputed in the Water49 Adversary. Evan has filed a proof of claim for "unpaid member distributions," alleged to be in an "unknown" amount, which claim is in dispute and calculated in the amount of $0.00. The Plan separates Claims against and Equity Interests in Debtor into Classes according to their relative seniority and other criteria, and provides for payment in full of all Claims, provided that no Insider Claims will receive any distribution until all General Unsecured Claims have been satisfied in full. All EPR Old Equity Interests will be retained by Reorganized EPR. Class 4 consists of Allowed General Unsecured Claims. On or before the Effective Date, Allowed General Unsecured Claims shall be paid, in full satisfaction, settlement, release and exchange for such Allowed General Unsecured Claim, together with Postpetition Date Interest, proceeds from financing obtained by the Debtor or proceeds from a Sale of the Property. If the Debtor has not obtained financing or sold the Property by the Effective Date, a Holder of an Allowed Claim may move to convert this Case to one under Chapter 7. Class 4 is Impaired. Class 6(a) consists of EPR Old Equity Interests. Unless otherwise determined in the Oscher Litigation, Reorganized EPR shall retain the EPR Old Equity Interests under this Plan. On or before the Effective Date, the Debtor shall have either obtained financing or sold the Property to pay all Allowed Claims under the Plan. All Allowed Claims will be paid in full with interest under the Plan, either from proceeds from financing or from proceeds from the Sale of the Property, by the Effective Date. All EPR Old Equity Interests will be retained by Reorganized EPR. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=RouM60 from PacerMonitor.com at no charge. The Debtor's Counsel: Robert Elgidely, Esq. FOX ROTHSCHILD LLP One Biscayne Tower 2 S. Biscayne Boulevard, Suite 2750 Miami, FL 33131 Tel: 305-442-6543 Email: relgidely@foxrothschild.com -and- Jeanette E. McPherson, Esq. 1980 Festival Plaza Drive, Suite 700 Las Vegas, Nevada 89135 Telephone: 702.262.6899 Facsimile: 702.597.5503 Email: jmcpherson@foxrothschild.com About EPR Investments EPR Investments, L.C., is a Single Asset Real Estate as defined in 11 U.S.C. Section 101(51B). The Debtor is the owner of a real property located at 4904 W. Waters Avenue, Tampa, Fla., valued at $17.2 million. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-01969) on April 10, 2024, with $17,200,000 in assets and $6,506,127 in liabilities. Pamela Keris-Rubinson, managing member, signed the petition. Judge Catherine Peek Mcewen presides over the case. Robert Elgidely, Esq., at Fox Rothschild, LLP, is the Debtor's legal counsel. EQM MIDSTREAM: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable ---------------------------------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) of EQM Midstream Partners, L.P. (EQM) to 'BB+' from 'BB' and the senior unsecured ratings to 'BB+'/'RR4' from 'BB'/'RR4'. These actions follow the acquisition by EQT Corporation (EQT; BBB-/Stable) on July 22, 2024. EQM's ratings reflect the linkage to its parent EQT, which exhibits credit quality commensurate with the 'BBB-' rating category. Fitch has removed the Positive Watch and assigned a Stable Outlook. The ratings also reflect the company's stable cash flow profile and the strong counterparty, balanced by geographic and customer concentration, as well as certain volumetric risks. Key Rating Drivers Rating Linkage to EQT: Fitch considers EQT a stronger parent for EQM, with low legal incentives but medium strategic and high operational incentives to support EQM's credit profile. The absence of debt guarantees indicates low legal incentives. Fitch rates strategic incentives as medium since EQM provides a competitive advantage and contributes significantly to the combined company's financial and asset value. EQM is viewed as having moderate growth potential, primarily driven by the Mountain Valley Pipeline (MVP) joint venture. Operational incentives are high due to integrated systems and centralized decision-making at EQT. These factors led Fitch to apply a top-down-minus-one approach, resulting in a one-notch elevation of EQM's IDR. Accelerated Debt Reduction: Fitch expects EQM to expedite debt reduction, aligning with EQT management's goal of lowering consolidated debt to approximately $7.5 billion within 12-18 months of closing. Upon closing, EQM began reducing its debt level by fully redeeming the Class A preferred shares, and the full repayment and termination of the EQM senior unsecured revolver. The lower leverage will support EQM's ratings. Stable Cash Flow: EQM's operations are supported by long-term contracts with firm reservations in both the gathering and transmission segments. For the six months ended June 30, 2024, approximately 68% of the company's revenues came from firm reservation fees, consistent with 2023. This contract structure adds stability to cash flows and offers protection from volumetric risk, especially during periods of soft natural gas prices. The weighted average remaining life of the company's firm gathering contracts, and firm transmission and storage contracts is approximately 13 years and 11 years, respectively. Fitch will closely monitor the potential asset sale announced on EQT's Q2 earnings call and assess its implication on EQM's cash flow profile. Limited Geographic and Counterparty Diversification: EQM's business lines and geographic diversity are limited due to its strong ties with EQT's production in the Appalachian region. Fitch believes single-basin operators with large customer concentration are typically exposed to outsized event risk, which could be triggered by an operating issue at the large customer or any production volatilities in the single basin. Despite its location in one of the most prolific gas basins in the U.S., EQM's growth is constrained by the flat to moderate production growth of its exploration and production customers over Fitch's forecast period. Producers in the region continue to maintain capital discipline and prioritize free cash flow against the backdrop of natural gas price volatility, basin takeaway constraints, and macroeconomic uncertainties. Derivation Summary In the absence of explicit rating linkage between EQM and EQT, Fitch views EQM's standalone credit profile to be consistent with 'BB' rated midstream issuers rated by Fitch. DT Midstream (DTM; BB+/Rating Watch Positive) and EQM are comparable peers, both operating in the Appalachian basin and engaged in natural gas gathering and transmission with strong contractual support. DTM focuses more on transmission and smaller in size. Both companies face customer and geographic concentration risks. EQM operates exclusively in the Appalachian basin, while DTM also extends to Haynesville. Each relies on a single counterparty for about 60% of its revenues. EQM's major counterparty, EQT, is investment grade, whereas DTM's major counterparty, Southwestern Energy (SWN; BB+/ Rating Watch Positive), is below investment grade. Fitch expects DTM's leverage to remain below 3.5x throughout the forecast period, and forecasts an EQM leverage of about 5.4x in 2024 and 4.4x in 2025. DTM's leverage is strong for its rating category, making leverage not a key differentiating factor. Fitch views DTM's slightly lower business risk and financial risk as the factors driving the one-notch difference with EQM's standalone rating. EQM receives one-notch uplift from the rating linkage with EQT. Key Assumptions - Natural gas gathering volumes consistent with Fitch's price deck for Henry Hub prices of $2.50/thousand cubic feet (mcf) in 2024, $3.00/mcf in 2025-2026, and $2.75/mcf thereafter - Base interest rates per Fitch's "Global Economic Outlook"; - MVP brownfield expansion project completed towards the latter half of Fitch's forecast period; - Asset sales to expedite debt reduction; - Excess cash flow distributed to EQT. RATING SENSITIVITIES Factors That Could, Individually Or Collectively, Lead To Positive Rating Action/Upgrade An upgrade is unlikely given EQM's rating linkage to its parent, EQT. However, Fitch may consider positive rating action if: - An upgrade at EQT could lead to a positive rating action; - EBITDA leverage expected to be sustained below 3.0x. Factors That Could, Individually Or Collectively, Lead To Negative Rating Action/Downgrade A downgrade is unlikely given EQM's rating linkage to its parent, EQT. However, Fitch may consider negative rating action if: - A multi-notch downgrade at EQT; - Lacking parent support, which leads Fitch to change its view on parent subsidiary linkage, EBITDA leverage expected to be sustained above 4.0x. Liquidity and Debt Structure Sufficient Liquidity: As of June 30, 2024, EQM had over $1.0 billion in liquidity. Cash on the balance sheet was about $142 million, and EQM had the ability to borrow about $895 million under the $1.55 billion senior unsecured credit facility. Availability at Jun. 30, 2024 was governed by a leverage covenant of 6.25x. As of Jun. 30, 2024, EQM was in compliance with its covenants. The revolving credit facility was fully repaid and terminated after the closing of EQT acquisition. With strong free cash flow and modest working capital and maintenance capex needs, EQM is unlikely to require external financing. Fitch also expects EQT to support any short-term liquidity needs of EQM. EQM's next maturity is the $300 million senior unsecured notes due on Aug. 1, 2024. Fitch anticipates the notes to be refinanced or repaid at maturity. Issuer Profile EQM Midstream Partners, LP (EQM) is an indirectly wholly owned subsidiary of EQT Corporation (EQT). EQM owns and operates gathering, transmission, and water assets in the Appalachian basin, providing services to producers, local distribution companies and marketers. Summary of Financial Adjustments EBITDA in the forecast metrics reflects cash received from EQT that is booked as deferred revenue rather than revenue; when EQT payments eventually transition to where the deferred revenue is being amortized into revenue, this amortization will be removed from revenue to arrive at EBITDA. Regarding unconsolidated affiliates, Fitch calculates midstream energy companies' EBITDA by use of cash distributions from those affiliates, rather than, for example, ratable EBITDA from those affiliates. 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 ----------- ------ -------- ----- EQM Midstream Partners, LP LT IDR BB+ Upgrade BB senior unsecured LT BB+ Upgrade RR4 BB ETIENNE ESTATES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Etienne Estates at Washington LLC 301 Washington Avenue AB Brooklyn, NY 11205 Business Description: The Debtor holds title to real property located at 301 Washington Avenue, Brooklyn, New York valued at $6.3 million. Chapter 11 Petition Date: July 31, 2024 Court: United States Bankruptcy Court Eastern District of New York Case No.: 24-43203 Judge: Hon. Nancy Hershey Lord Debtor's Counsel: Kevin Nash, Esq. GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP 125 Park Ave New York, NY 10017-5690 E-mail: knash@gwfglaw.com Total Assets: $6,800,084 Total Liabilities: $2,655,845 The petition was signed by Johanna ML Francis 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/SO75NWQ/Etienne_Estates_at_Washington__nyebke-24-43203__0001.0.pdf?mcid=tGE4TAMA EYM PIZZA LP: Seeks Chapter 11 Bankruptcy ----------------------------------------- Bret Thorn of Nation's Restaurant News reports that Pizza Hut franchisee EYM Pizza L.P. and affiliated companies filed for Chapter 11 bankruptcy protection in the Eastern District of Texas on Monday, July 22, 2024. The filing, which includes related companies in Wisconsin and Indiana, only listed two creditors: Manufacturers Bank, which it owes more than $21 million, and Pizza Hut itself, which is owed just under $2.25 million. The filing comes after Pizza Hut sued EYM, which operates around 140 Pizza Hut restaurants in the South and Midwest, for not paying royalties on time even after a forbearance period granted last year that ended in February. EYM had previously sued Pizza Hut for breach of fiduciary duty, among other claims, but the case was dismissed, opening the way for Pizza Hut's own lawsuit. EYM, which was founded by former McDonald's Mexico president Eduardo Diaz in 2008, has been operating Pizza Hut restaurants since 2015, but recently closed more than 15 locations in Ohio and Indiana. This is the latest in a spate of restaurant bankruptcies. Since April, Red Lobster, Rubio's Coastal Grill, Melt Bar & Grilled, Sticky's, Tijuana Flats, One Table Restaurants (parent of Tender Greens and Tocaya), Louisiana-based Arby's franchisee Miracle Restaurant Group, and San Antionio-based Subway franchisee River Sub have all filed for protection. MOD Pizza reportedly narrowly avoided declaring bankruptcy by finding a buyer. The moves for financial restructuring come after many operators took on debt as they struggled to get through the pandemic, which was followed by costly supply chain disruptions, rising labor costs, and inflation that both drove up the cost of doing business and also caused many consumers, especially low-income ones, to cut back on spending. About EYM Pizza LP EYM Pizza LP is a Pizza Hut franchisee. EYM Pizza LP and affiliates sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D> Tex. Case No. 24-41669) on July 22, 2024. In the petition filed by Eduardo E. Diaz, as president of EYM Group Inc., the Debtor reports estimated assets under $2.25 million and estimated liabilities more than $21 million. The Debtors are represented by: Howard Marc Spector, Esq. Spector & Cox, PLLC 4925 N OCONNOR BLVD ST 200 Irving, TX 75062 FAMULUS HEALTH: U.S. Trustee Unable to Appoint Committee -------------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Famulus Health, LLC. About Famulus Health Famulus Health LLC -- https://www.famulushealth.com -- is a limited liability company. Famulus Health filed Chapter 11 petition (Bankr. D. S.C. Case No. 24-02019) on June 3, 2024, with assets of $50 million to $100 million and liabilities of $10 million to $50 million. Michael Szwajkos, manager, signed the petition. Judge Elisabetta Gm Gasparini oversees the case. The Debtor is represented by Kevin Campbell, Esq., at Campbell Law Firm, PA. FINANCE OF AMERICA: B. Libman Holds 47.7% Stake After Stock Split ----------------------------------------------------------------- Brian L. Libman and its affiliate, Libman Family Holdings, LLC, disclosed in a Schedule 13D/A Report filed with the U.S. Securities and Exchange Commission that as of July 25, 2024, they beneficially owned 8,086,959 shares of Finance of America's Class A Common Stock, representing 47.7%, based on 9,918,193 shares of Class A Common Stock outstanding following the Reverse Stock Split. The Reporting Persons own an aggregate of 6,955,056 FoA Units, 1,131,903 shares of Class A Common Stock and 879,190 Earnout Rights, which includes (i) 44,947 shares of Class A Common Stock held by Mr. Libman or by entities for which Mr. Libman is a trustee; (ii) 1,086,956 shares of Class A Common Stock, 6,955,056 FoA Units and 856,420 Earnout Rights held by LFH; and (iii) 22,770 Earnout Rights held by TMO. The Reporting Persons beneficially own 47.9% of the outstanding Class A Common Stock in the aggregate, as calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended. Not included in the Schedule 13D are 10,000 restricted stock units granted to Mr. Libman which are scheduled to vest on the earlier of (i) May 13, 2025 or (ii) the next regularly scheduled annual stockholders' meeting of the Issuer, and upon vesting, will be settled into one share of Class A Common Stock or cash (or a combination thereof) at the discretion of the Issuer's compensation committee. Pursuant to the limited liability company agreements of LFH and TMO, each of LFH and TMO is managed by a board of managers consisting of Brian Libman as the sole manager. A full-text copy of Mr. Libman's SEC Report is available at: https://tinyurl.com/55km54r2 About Finance of America Plano, Texas-based, Finance of America Companies Inc. is a financial services holding company which, through its operating subsidiaries, is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home. In addition, FoA offers capital markets and portfolio management capabilities to optimize distribution to investors. As of December 31, 2023, the Company had $27.11 billion in total assets, $26.84 billion in total liabilities, and $272.41 million in total equity. As reported by the Troubled Company Reporter on Oct. 20, 2023, Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of Finance of America Companies Inc. and its subsidiaries, Finance of America Equity Capital LLC and Finance of America Funding LLC, to 'CCC+' from 'B-'. Fitch has also downgraded Finance of America Funding LLC's senior unsecured debt rating to 'CCC-'/'RR6' from 'CCC+'/'RR5'. The Rating Outlook remains Negative. The rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. The rating downgrade reflects the operating losses and resulting erosion of tangible equity FOA has experienced over the last year, which has resulted in continuing covenant breaches, which may limit the company's ability to extend debt maturities and secure future funding. High interest rates and borrower affordability challenges have reduced origination volumes, which, along with widening credits preads, have resulted in significant negative fair value adjustments to FOA's assets. Tangible equity has decreased to negative $5 million at 2Q23, down from $288 million in 2Q22 and $480 million at YE21. The Negative Outlook reflects Fitch's expectation that FOA's profitability will remain weak, challenging its ability to rebuild tangible capital levels over the Outlook horizon. Additionally, Fitch's believes execution risk remains with regard to the integration of American Advisors Group (AAG) and the restructuring of FOA's continuing business segments, which could impact its long-term franchise and market position. FINANCE OF AMERICA: Blackstone Holds 54.4% of Class A Common Shares ------------------------------------------------------------------- Blackstone Inc. filed Amendment No. 7 with the U.S. Securities and Exchange Commission to its Schedule 13D Report, relating to the Class A common stock, par value $0.0001 per share, of Finance of America Companies Inc. Blackstone reported that as of July 25, 2024, the firm and its affiliates -- collectively the "Reporting Persons" -- are reported to beneficially own an aggregate of 8,029,817 shares of Class A Common Stock, which represents 54.4% of the outstanding Class A Common Stock, as calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, based on the following: BTO Urban Holdings L.L.C. beneficially owns 5,581,632 shares of Class A Common Stock, of which 4,809,922 would be received upon conversion of FoA Units, Blackstone Family Tactical Opportunities Investment Partnership — NQ — ESC L.P. beneficially owns 31,933 shares of Class A Common Stock, of which 27,611 would be received upon conversion of FoA Units and BTO Urban Holdings II L.P. holds 2,416,252 shares of Class A Common Stock. BTO Urban Holdings L.L.C. also holds 594,246 Earnout Rights, Blackstone Family Tactical Opportunities Investment Partnership — NQ — ESC L.P. also holds 3,410 Earnout Rights, BTO Urban Holdings II L.P. also holds 223,804 Earnout Rights and Blackstone Tactical Opportunities Associates—NQ L.L.C. also holds 36,300 Earnout Rights. BTO Urban Holdings L.L.C. is owned by the Blackstone Tactical Opportunities Funds, BTAS NQ Holdings L.L.C. and Blackstone Family Tactical Opportunities Investment Partnership SMD L.P. Blackstone Tactical Opportunities Associates — NQ L.L.C. is the general partner of each of the Blackstone Tactical Opportunities Funds and BTO Urban Holdings II L.P. The sole member of Blackstone Tactical Opportunities Associates — NQ L.L.C. is BTOA — NQ L.L.C. The managing member of BTOA — NQ L.L.C. is Blackstone Holdings II L.P. The managing member of BTAS NQ Holdings L.L.C. is BTAS Associates — NQ L.L.C. The managing member of BTAS Associates — NQ L.L.C. is Blackstone Holdings II L.P. The general partner of Blackstone Family Tactical Opportunities Investment Partnership SMD L.P. is Blackstone Family GP L.L.C. Blackstone Family GP L.L.C. is wholly owned by Blackstone's senior managing directors and controlled by its founder, Mr. Schwarzman. The general partner of Blackstone Family Tactical Opportunities Investment Partnership — NQ — ESC L.P. is BTO-NQ Side-by-Side GP L.L.C. The sole member of BTO-NQ Side-by-Side GP L.L.C. is Blackstone Holdings II L.P. The general partner of Blackstone Holdings II L.P. is Blackstone Holdings I/II GP L.L.C. Blackstone Inc. is the sole member of Blackstone Holdings I/II GP L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone's senior managing directors and controlled by its founder, Stephen A. Schwarzman. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that any Reporting Person is the beneficial owner of the Class A Common Stock referred to herein for purposes of Section 13(d) of the Exchange Act, or for any other purpose and each of the Reporting Persons expressly disclaims beneficial ownership of such shares of Class A Common Stock. By virtue of the Stockholders Agreement, the Reporting Persons and Brian Libman and his affiliates may be deemed to be members of a group for purposes of Section 13(d) of the Exchange Act. Mr. Libman and his affiliates are filing a separate Schedule 13D to report the Class A Common Stock that they may be deemed to beneficially own. Collectively, the Reporting Persons and Mr. Libman and his affiliates may be deemed to beneficially own in the aggregate 16,116,776 shares of Class A Common Stock, representing 74.2% of the outstanding Class A Common Stock, calculated pursuant to Rule 13d-3 of the Exchange Act. A full-text copy of the SEC Report is available at: https://tinyurl.com/9jyw67h9 About Finance of America Plano, Texas-based, Finance of America Companies Inc. is a financial services holding company which, through its operating subsidiaries, is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home. In addition, FoA offers capital markets and portfolio management capabilities to optimize distribution to investors. As of December 31, 2023, the Company had $27.11 billion in total assets, $26.84 billion in total liabilities, and $272.41 million in total equity. As reported by the Troubled Company Reporter on Oct. 20, 2023, Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of Finance of America Companies Inc. and its subsidiaries, Finance of America Equity Capital LLC and Finance of America Funding LLC, to 'CCC+' from 'B-'. Fitch has also downgraded Finance of America Funding LLC's senior unsecured debt rating to 'CCC-'/'RR6' from 'CCC+'/'RR5'. The Rating Outlook remains Negative. The rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. The rating downgrade reflects the operating losses and resulting erosion of tangible equity FOA has experienced over the last year, which has resulted in continuing covenant breaches, which may limit the company's ability to extend debt maturities and secure future funding. High interest rates and borrower affordability challenges have reduced origination volumes, which, along with widening credits preads, have resulted in significant negative fair value adjustments to FOA's assets. Tangible equity has decreased to negative $5 million at 2Q23, down from $288 million in 2Q22 and $480 million at YE21. The Negative Outlook reflects Fitch's expectation that FOA's profitability will remain weak, challenging its ability to rebuild tangible capital levels over the Outlook horizon. Additionally, Fitch's believes execution risk remains with regard to the integration of American Advisors Group (AAG) and the restructuring of FOA's continuing business segments, which could impact its long-term franchise and market position. FINANCE OF AMERICA: Effects 1-for-10 Reverse Stock Split -------------------------------------------------------- Finance of America Companies Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that effective as of 5:00 p.m. on July 25, 2024, the Company amended its Amended and Restated Certificate of Incorporation to effect a 1-for-10 reverse stock split of its outstanding shares of Class A Common Stock. As previously disclosed in the Company's Definitive Information Statement, dated June 27, 2024, as filed with the Securities and Exchange Commission, the Amendment was approved by the Board of Directors of the Company and the holders of the majority in voting power of all of the then-outstanding shares of capital stock of the Company entitled to vote, acting by written consent. As of the Effective Time, every ten issued and outstanding shares of the Company's Class A Common Stock were automatically reclassified into one issued and outstanding share of the Company's Class A Common Stock, with cash issued in lieu of fractional shares (on a pro rata basis). All shares of Class A Common Stock outstanding immediately following the effectiveness of the Reverse Stock Split remain fully paid and non-assessable and the shares of Class A Common Stock continue to trade on the New York Stock Exchange under the existing symbol (FOA). Additionally, the Reverse Stock Split did not affect the number of authorized shares, the par value or other terms of the Class A Common Stock, or the number of outstanding shares of Class B Common Stock. The Reverse Stock Split had the principal effect of proportionately decreasing the number of outstanding shares of Class A Common Stock at the 10:1 reverse stock split ratio. In connection with the Reverse Stock Split, proportionate adjustments were made to the terms of the Company's outstanding warrants, equity-based awards, limited liability company units of Finance of America Equity Capital LLC (which are exchangeable for shares of Class A Common Stock on a one-for-one basis), the Company's equity plans and certain other agreements, in accordance with the terms of the applicable agreements, and proportionate adjustments are deemed to be made to securities covered by the Company's existing registration statements. With respect to the Company's warrants, every ten shares of Class A Common Stock that may be purchased pursuant to the exercise of warrants prior to the Effective Time represent one share of Class A Common Stock that may be purchased pursuant to such warrants following the Effective Time. The exercise price for each warrant following the Effective Time equals the product of ten multiplied by the exercise price prior to the Effective Time. Accordingly, the exercise price for the Company's public warrants is $115. Given the parallel adjustment to FoA Units, each holder of Class A Common Stock and Class B Common Stock holds the same percentage of the outstanding voting power immediately following the Reverse Stock Split as that stockholder held immediately prior to the Reverse Stock Split, except to the extent that the Reverse Stock Split resulted in holders of Class A Common Stock receiving cash in lieu of fractional shares and rounding down of any fractional FoA Units for holders of Class B Common Stock. The Company's Class A Common Stock began trading on a split-adjusted basis on the NYSE under the existing symbol (FOA) when the market opened on July 26, 2024. The new CUSIP number for the Company's Class A Common Stock following the Reverse Stock Split is 31738L 206. About Finance of America Plano, Texas-based, Finance of America Companies Inc. is a financial services holding company which, through its operating subsidiaries, is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home. In addition, FoA offers capital markets and portfolio management capabilities to optimize distribution to investors. As of December 31, 2023, the Company had $27.11 billion in total assets, $26.84 billion in total liabilities, and $272.41 million in total equity. As reported by the Troubled Company Reporter on Oct. 20, 2023, Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of Finance of America Companies Inc. and its subsidiaries, Finance of America Equity Capital LLC and Finance of America Funding LLC, to 'CCC+' from 'B-'. Fitch has also downgraded Finance of America Funding LLC's senior unsecured debt rating to 'CCC-'/'RR6' from 'CCC+'/'RR5'. The Rating Outlook remains Negative. The rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. The rating downgrade reflects the operating losses and resulting erosion of tangible equity FOA has experienced over the last year, which has resulted in continuing covenant breaches, which may limit the company's ability to extend debt maturities and secure future funding. High interest rates and borrower affordability challenges have reduced origination volumes, which, along with widening credits preads, have resulted in significant negative fair value adjustments to FOA's assets. Tangible equity has decreased to negative $5 million at 2Q23, down from $288 million in 2Q22 and $480 million at YE21. The Negative Outlook reflects Fitch's expectation that FOA's profitability will remain weak, challenging its ability to rebuild tangible capital levels over the Outlook horizon. Additionally, Fitch's believes execution risk remains with regard to the integration of American Advisors Group (AAG) and the restructuring of FOA's continuing business segments, which could impact its long-term franchise and market position. FROM START: Involuntary Chapter 11 Case Summary ----------------------------------------------- Alleged Debtor: From Start 2 Flipping LLC 1 Bridge Plaza N Suite 665 Fort Lee, NJ 07605 Involuntary Chapter 11 Petition Date: July 31, 2024 Court: United States Bankruptcy Court District of New Jersey Case No.: 24-17551 Petitioners' Counsel: Sean Mack, Esq. PASHMAN STEIN WALDER HAYDEN PC 21 Main Street, Suite 200 Hackensack NJ 07601 Tel: 201-270-4919 Email: smack@pashmanstein.com A full-text copy of the Involuntary Petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/4UHAF2I/From_Start_2_Flipping_LLC__njbke-24-17551__0001.0.pdf?mcid=tGE4TAMA Alleged creditors who signed the petition: Petitioner Nature of Claim Claim Amount Phenomenal Rentals LLC Fraud/breach of contract $103,500 1144 Clinton Avenue Irvington NJ 07011 Sovarg Investments LLC Fraud/breach of contract $250,000 109 Sumner Avenue Yonkers NY 10704 Buying & Marketing Fraud/breach of contract $100,000 Real Estate LLC 34444 W 100th Terrace Hialeah FL 33018 Jonathan Vicioso Fraud/breach of contract $200,000 728 Broadway Blvd Paterson NJ 07514 John Francois, Fraud/breach of contract $100,000 Staceona Francois, Jonathan Thomas 1275 E51st, Apt 2h Brooklyn NY 11234 GIRARDI: Court Limits Tom Clients Injury Details in Next Trial -------------------------------------------------------------- Brandon Lowrey of Law360 reports that jurors in former celebrity lawyer Tom Girardi's upcoming fraud trial will be spared detailed testimony about the severe injuries that drove his alleged victims to hire his law firm, a Los Angeles federal judge has ruled, saying the former clients' injuries are a key part of their stories, but graphic details are not necessary. About Girardi & Keese Girardi and Keese or Girardi & Keese was a Los Angeles-based law firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It served clients in California in a variety of legal areas. It was known for representing plaintiffs against major corporations. An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No. 20-21022) was filed in December 2020 against GIRARDI KEESE by alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian, Erika Saldana, Virginia Antonio, and Kimberly Archie. The petitioners' attorneys: Andrew Goodman Goodman Law Offices, Apc Tel: 818-802-5044 E-mail: agoodman@andyglaw.com Elissa D. Miller, a member of the firm SulmeyerKupetz, has been appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7 trustee can be reached at: Elissa D. Miller 333 South Grand Ave., Suite 3400 Los Angeles, California 90071-1406 Telephone: (213) 626-2311 Facsimile: (213) 629-4520 E-mail: emiller@sulmeyerlaw.com An involuntary Chapter 7 petition was also filed against Thomas Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter 7 trustee can be reached at: Jason M. Rund Email: trustee@srlawyers.com 840 Apollo Street, Suite 351 El Segundo, CA 90245 GLOBAL TELLINK: S&P Downgrades ICR to 'B-' Then Withdraws Rating ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based provider of inmate telecommunications services Global Tel*Link Corp. (ViaPath Technologies) to 'B-' from 'B' and removed it from CreditWatch, where S&P placed it with negative implications on July 22, 2024. S&P also lowered its issue-level ratings on the company's first-lien debt to 'B-' from 'B' and on the second-lien debt to 'CCC' from 'CCC+'. S&P subsequently withdrew all ratings on ViaPath at the company's request. The outlook was stable at the time of the withdrawal. New FCC rules will reduce earnings more than expected in 2025 and beyond. S&P said, "We believe credit metrics will remain relatively weak in 2025, when the rules go into effect (January). Our base-case forecast assumes the FCC's lower rate caps on phone and video communication services and the elimination of ancillary service fees (including $40 million-$50 million in deposit and breakage fees) be a roughly $150 million headwind to gross revenue. We expect ViaPath to partially offset this with savings from the elimination of cash and in-kind site commissions associated with the provision of Incarcerated People's Communication Services (IPCS) as well as the prohibition of numerous safety and security services, resulting in EBITDA $20 million-$30 million lower than our previous forecast." Lower earnings and a wider interest rate spread on the new term loan will pressure operating cash flow over the next several years, contributing to S&P's forecast for weaker credit metrics. We expect free operating cash flow (FOCF) to debt sustained below 5% and EBITDA interest coverage in the mid-1x area through 2025. ViaPath's proposed refinancing transaction alleviates near-term refinancing risk. The company is refinancing its capital structure by issuing a new $1.525 billion first-lien facility, comprising a $150 million revolving credit facility and $1.375 billion term loan. ViaPath will use the proceeds to repay outstanding debt, including its $888 million first-lien term loan, $475 million second-lien term loan, and $32 million outstanding on its $40 million revolving credit facility. The transaction extends the company's debt maturities roughly five years to 2030 and modestly increases total debt to $1.45 billion from $1.395 million under capital structure. S&P said, "However, we expect cash interest expense to increase to about $165 million in 2024 and $161 million in 2025 due to the higher SOFR + 750 basis points rate under the new first-lien term loan (versus SOFR + 425 basis points under the existing first-lien term loan). We expect ViaPath will generate sufficient cash flow to support higher interest payments. "The stable outlook reflects our expectation for weaker credit metrics, including FOCF to debt below 5% and EBITDA interest coverage in the mid-1x area over the next 12 months." S&P could lower its rating on ViaPath if: -- S&P views the capital structure as unsustainable; or -- Liquidity deteriorates. This could occur if inmate call volumes are flat or decline materially due to net contract losses to competitors or a deterioration in economic conditions that reduces discretionary income for inmates and their families such that tablet usage declines materially. S&P could raise its ratings on ViaPath within the next 12 months if: -- FOCF to debt improves above 5% on a sustained basis; and -- EBITDA interest coverage improves and is sustained above 2x. GOLDEN RULE: Eric Terry Named Subchapter V Trustee -------------------------------------------------- The U.S. Trustee for Region 7 appointed Eric Terry as Subchapter V trustee for Golden Rule Resources, LLC. Mr. Terry will charge $450 per hour for his services as Subchapter V trustee and will seek reimbursement for work-related expenses incurred. Mr. Terry declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Eric Terry 3511 Broadway San Antonio, TX 78209 Phone: (210)468-8274 Email: eric@ericterrylaw.com About Golden Rule Resources Golden Rule Resources, LLC is primarily engaged in renting and leasing real estate properties. The Debtor is the fee owner of five properties located in San Antonio, TX valued at $1.13 million in the aggregate. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Texas Case No. 24-51355) on July 21, 2024, with $1,300,894 in assets and $1,263,618 in liabilities. Carmen Hall, member, signed the petition. Judge Craig A. Gargotta presides over the case. Morris E. "Trey" White, III, Esq., at Villa & White, LLP represents the Debtor as legal counsel. GORDON'S COATINGS: U.S. Trustee Unable to Appoint Committee ----------------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Gordon's Coatings, LLC. About Gordon's Coatings Gordon's Coatings, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. S.C. Case No. 24-02404) on July 2, 2024, with $100,001 to $500,000 in both assets and liabilities. Christine Brimm, Esq., serves as Subchapter V trustee. Judge Helen E. Burris presides over the case. Robert A. Pohl, Esq., at Pohl, P.A. represents the Debtor as legal counsel. GUANELLA PASS: Amends First Savings Unsecured Claims Pay -------------------------------------------------------- Guanella Pass Brewing Company, LLC, submitted a Corrected Amended Plan of Reorganization for Small Business dated July 12, 2024. The Debtor's president, Steve Skalski, with input from its accountant, has drafted projections for the 5-year period of the Plan. These projections take into consideration the uncertainties the pandemic continues to present and the seasonality of the business. Prior to the Petition Date, Rarified Air, LLC was obligated on the debt with First Savings Bank and Switchback8530, LLC was obligated on the debts with Clear Creek Economic Development and Matchless Partners, LLC, a seller carryback note on that property. Through the Plan, Debtor's monthly rental payment will allow each of the Properties to service their respective secured debts directly. For the five-year total, Debtor projects $56,664.00net cash flow which can be paid to creditors under the "disposable income" requirement of the Code. Payments to unsecured creditors shall commence after Debtor's accumulates $100,000.00 in cash required for its working capital in ongoing business operations. The Class 2 Creditor consists of the allowed unsecured claims of the First Savings Bank in the amount of $488,237. The Class 2 creditor shall be paid the lesser of (1) their pro rata share of the Plan Payment Fund along with the Class 4 Allowed Claims, or (2) whatever shortfall may exist between the monthly amount due to Class 2 creditor during the plan period and the sum of the Class 1 monthly payment plus the monthly rent passthrough from co-debtor Rarified Air, LLC, a non-debtor entity who is an obligor under these claims. Rarified Air, LLC is obligated through a pre-petition assignment of rent agreement to pass through to First Savings Bank and shall be paid a total of $5,816.42 per month. The Class 2 claim shall not be discharged per stipulation of the parties. Debtor agrees to execute a reaffirmation agreement to the extent necessary to preserve such claim. The Class 2 creditor shall not receive a plan payment from Debtor but shall receive passthrough of Debtor's monthly rent from codebtor Rarified Air, LLC, a non-debtor entity who is an obligor under the Class 1 and Class 2 claims. Any shortfall in monthly rent payment by Debtor to Rarefied Air LLC resulting in a passthrough of less than $5,618.42 to FSB in any given month may be satisfied out of FSB's pro rata share of Plan Payment Fund distributions, should such shortfall ever occur. Debtor reserves all rights to object to amounts related to the secured or unsecured claims of First Savings Bank, including but not limited to, fees, charges, or interest. The Class 2 claim is impaired under the Plan. Like in the prior iteration of the Plan, the Class 4 Allowed Unsecured Creditors shall each be paid their pro rata share of the Plan Payment Fund along with the Class 2 Claims. The Debtor's Plan is feasible because the Plan Payment Fund shall be funded following accumulation of $100,000.00 in cash required for Debtor's working capital as provided for in the projections, but in no event later than 30 days following the Effective Date for Class 1 and Class 3 Secured Claims and annually following the Effective Date for all other classes. Due to the seasonality of Debtor's business, its net revenue varies substantially throughout the year. Therefore, Debtor shall make annual payments beginning July 30, 2025, through the term of the Plan. A full-text copy of the Corrected Amended Plan dated July 12, 2024 is available at https://urlcurt.com/u?l=uzQ260 from PacerMonitor.com at no charge. Attorneys for the Debtor: Jeffrey A. Weinman, Esq. Katharine S. Sender, Esq. Allen Vellone Wolf Helfrich & Factor, P.C. 1600 Stout Street, Suite 1900 Denver, CO 80202 Telephone: (720) 245-2423 Fax: (303) 534-4499 Email: jweinman@allen-vellone.com ksender@allen-vellone.com About Guanella Pass Brewing Guanella Pass Brewing owns and operates a brewery in Georgetown, CO. Guanella Pass Brewing Company, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 23-16068) on Dec. 30, 2023. The petition was signed by Steven Skalski as managing member. At the time of filing, the Debtor estimated $72,340 in assets and $2,282,564 in liabilities. Judge Thomas B. McNamara presides over the case. Katharine Sender, Esq., at COHEN & COHEN, P.C., is the Debtor's counsel. HADAD DESIGN: Chris Quinn Named Subchapter V Trustee ---------------------------------------------------- The U.S. Trustee for Region 7 appointed Chris Quinn as Subchapter V trustee for Hadad Design and Construction, Inc. Mr. Quinn 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. Quinn declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Chris Quinn 26414 Cottage Cypress Lane Cypress, TX 77433 Phone: 713-498-8500 Email: chris.quinn2021@outlook.com About Hadad Design and Construction Hadad Design and Construction, Inc. is a full-service kitchen and bathroom remodeling company in Houston, Texas. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 24-33277) on July 18, 2024, with $500,000 to $1 million in assets and $1 million to $10 million in liabilities. Elias Haddad, president and director, signed the petition. Judge Christopher M. Lopez presides over the case. Leonard Simon, Esq., at Pendergraft & Simon, LLP represents the Debtor as legal counsel. HALO BUYER: S&P Places 'CCC+' ICR on CreditWatch Negative --------------------------------------------------------- S&P Global Ratings placed its ratings on Halo Buyer Inc., including its 'CCC+' issuer credit rating, on CreditWatch with negative implications. The CreditWatch negative placement signals at least a 50% chance that S&P could lower S&P's ratings on Halo over the next 90 days if it fails to successfully refinance its upcoming maturities. Halo Buyer faces heightened refinancing risk as its $72 million revolving credit facility ($21 million outstanding) is due in April 2025 and its $320 million first-lien term loan matures in June 2025. The CreditWatch negative placement reflects rising refinancing risks. Halo Inc.'s revolving credit facility, which has $21 million in outstanding borrowings, matures April 28, 2025. It also has roughly $320 million of principal on its loan tranche maturing in June 2025. As of March 31, 2024, it lacked sufficient internal liquidity sources to cover this debt. S&P said, "Although we believe Halo will look to execute a potential refinancing over the near term, it may lack the ability to do so if macroeconomic conditions, its operating performance, or credit markets deteriorate. We also believe Halo's sponsor, TPG, is now closer to the end of its holding period, given that it made its initial investment in 2018, and could seek to monetize its investment in the near future, which could delay refinancing of the company's debt capital structure. "Based on these risks, we placed our ratings on CreditWatch with negative implications. The CreditWatch negative placement signals at least a 50% chance that we could lower our ratings on Halo over the next 90 days if it fails to successfully refinance its upcoming maturities. "We believe Halo's improved operating performance will support refinancing efforts. While the promotion products industry remains weak, Halo's cash flow has improved amid industry declines. Because we expect declines to moderate in 2024, we forecast Halo will generate about $15 million-$20 million in free operating cash flow and its leverage will decline to about 8x from about 10x as of year-end 2023. We believe this will support prospects for refinancing. Nevertheless, as time passes, the company's room for operational error will decline, increasing refinancing risks. The CreditWatch placement reflects the heightened risk of default if the company cannot successfully refinance its capital structure. We could lower our ratings on Halo over the next 90 days if it fails to successfully refinance its upcoming maturities." HAWAIIAN HOLDINGS: Completes Note Exchange With 99.5% Participation ------------------------------------------------------------------- Hawaiian Airlines, Inc. announced that Hawaiian Brand Intellectual Property, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands and an indirect wholly owned subsidiary of the Company, and HawaiianMiles Loyalty, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands and an indirect wholly owned subsidiary of the Company, have released the final results for their previously announced offer to exchange any and all of their outstanding 5.750% Senior Secured Notes due 2026 held by Eligible Holders, for the Issuers' 11.000% Senior Secured Notes due 2029 and cash following the expiration of the Exchange Offer. In connection with the Exchange Offer, the Issuers solicited consents to the adoption of certain amendments to the indenture governing the Existing Notes. Eligible Holders who tendered their Existing Notes pursuant to the Exchange Offer also were required to deliver Consents to the Proposed Amendments. Eligible Holders could not deliver Consents to the Proposed Amendments without also validly tendering their Existing Notes. As of the Expiration Time of 5:00 p.m., New York City time, on July 24, 2024, according to information provided by Global Bondholder Services Corporation, the Information and Exchange Agent for the Exchange Offer and Consent Solicitation, $1,193,732,902 aggregate principal amount (or approximately 99.5% of the outstanding principal amount) of the Existing Notes had been validly tendered and not validly withdrawn in the Exchange Offer. The Exchange Consideration will be paid to holders of Existing Notes validly tendered after the Early Exchange Time but at or prior to the Expiration Time and accepted by the Issuers for exchange, which will result in a payment to such holders of $825.0 of New Notes and $125 in cash for every $1,000 principal amount of Existing Notes tendered. The Total Exchange Consideration, which includes the Early Exchange Payment of $50.0 in cash per $1,000 principal amount of Existing Notes, will be paid to holders of Existing Notes validly tendered on or prior to the Early Exchange Time and accepted by the Issuers for exchange, which will result in a payment to such holders of $825.0 of New Notes and $175.0 in cash for every $1,000 principal amount of Existing Notes tendered. Holders of Existing Notes accepted in the Exchange Offer as of the Early Exchange Time will also receive a cash interest payment for each $1,000 principal amount of Existing Notes exchanged. The Exchange Offer was made solely to Eligible Holders upon the terms and subject to the conditions set forth in the confidential offering memorandum and solicitation statement and the related letter of transmittal, each dated June 24, 2024. The Exchange Offer and Consent Solicitation was made only (a) in the United States, to holders of Existing Notes who were reasonably believed to be "qualified institutional buyers," as defined in Rule 144A under the Securities Act of 1933, as amended, and (b) outside the United States, to holders of Existing Notes who are not "U.S. persons" (as defined in Regulation S under the Securities Act) in offshore transactions in compliance with Regulation S. The Company refer to the holders of Existing Notes who have certified that they were eligible to participate in the Exchange Offer and Consent Solicitation pursuant to at least one of the foregoing conditions as "Eligible Holders." About Hawaiian Holdings Headquartered in Honolulu, Hawaii, Hawaiian Holdings, Inc. provides transportation services. As of September 30, 2023, Hawaiian Holdings has $3,923,260 in total assets and $3,744,502 in total liabilities. As of March 31, 2024, the Company had $3.79 billion in total assets, $917.6 million in total liabilities, and $40.2 million in total stockholders' equity. Hawaiian Holdings reported a net loss of $260.5 million for the year ended December 31, 2023, compared to a net loss of $240.08 million for the year ended December 31, 2022. As of March 31, 2024, the Company had $3.79 billion in total assets, $3.83 billion in total liabilities, and $40.2 million in total shareholders' deficit. On December 2, 2023, the Company entered into an Agreement and Plan of Merger with Alaska Air Group, Inc., a Delaware corporation, and Marlin Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Alaska, pursuant to which, subject to satisfaction or waiver of conditions therein, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Alaska. At the effective time of the Merger, each share of the Company's common stock, Series B Special Preferred Stock, Series C Special Preferred Stock, and Series D Special Preferred Stock issued and outstanding immediately prior to the Effective Time, subject to certain customary exceptions specified in the Merger Agreement, will be converted into the right to receive $18.00 per share, payable to the holder in cash, without interest. Completion of the Merger is subject to customary closing conditions, including approval by the Company's stockholders, which was obtained on February 16, 2024; performance by the parties in all material respects of all their obligations under the Merger Agreement; the receipt of required regulatory approvals; and the absence of an order or law preventing, materially restraining, or materially impairing the consummation of the Merger. On February 7, 2024, the Company and Alaska each received a request for additional information and documentary material from the Department of Justice in connection with the DOJ's review of the Merger. On March 27, 2024, the Company and Alaska entered into a timing agreement with the DOJ pursuant to which we agreed, among other things, not to consummate the Merger before 90 days following the date on which both parties have certified substantial compliance with the Second Request unless we have received written notice from the DOJ prior to the end of such 90-day period that the DOJ has closed its investigation of the Merger. The Merger Agreement includes customary termination rights in favor of each party. In certain circumstances, the Company may be required to pay Alaska a termination fee of $39.6 million in connection with the termination of the Merger Agreement. The Merger is expected to close within 12 to 18 months of the date of the Merger Agreement. * * * On June 4, 2024, Egan-Jones Ratings Company maintained its 'CCC-' foreign currency and local currency senior unsecured ratings on debt issued by Hawaiian Holdings, Inc. INGLES MARKETS: Moody's Affirms 'Ba1' CFR, Outlook Remains Stable ----------------------------------------------------------------- Moody's Ratings affirmed the ratings for Ingles Markets, Incorporated ("Ingles"), including its Corporate Family Rating at Ba1, its probability of default rating at Ba1-PD and its senior unsecured notes at Ba2. The company's SGL-1 speculative grade liquidity rating (SGL) remains unchanged. The outlook remains stable. The affirmations reflect Ingles' position as a solid operator in a regionally concentrated market with a number of much larger competitive players. Ingles' primarily owned store base reduces its fixed cost burden relative to companies with leased real estate, and provides an alternate source of liquidity. The company continues to demonstrate steady operating performance, solid credit metrics and good free cash flow generation. RATINGS RATIONALE Ingles' Ba1 corporate family rating reflects its solid regional franchise, its base of owned real estate and very good liquidity. Ingles' largely owned store base reduces the company's fixed cost burden relative to companies with leased real estate and provides a source of value to creditors. Ingles' financial leverage is modest with debt/EBITDA at about 1.5x and interest coverage is strong with EBIT/interest at about 10.4x for the LTM ended March 30, 2024. Moody's expect financial leverage to be about 1.5-2.0x and EBIT to interest at about 9.0-9.5x in the next 12-18 months reflecting some earnings weakness from high labor costs and increased promotional activity, but partially offset by continued debt repayment. The company's credit profille is constrained by its small scale, increasing competitive encroachment and geographic concentration in just six southeastern states. Its SGL-1 speculative grade liquidity rating is supported by $302 million of cash at March 30, 2024, a fully available $150 million unsecured line of credit expiring in 2026 and free cash flow that Moody's estimate at about $40-45 million per annum. The stable outlook incorporates Moody's expectation that Ingles' same store sales growth will continue to meet or outperform its peers, financial policies will remain benign and credit metrics will not deteriorate meaningfully in the next 12 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The increasing competitive encroachment and the company's regional concentration are constraints to an upgrade. An upgrade would require an articulated financial policy, capital structure, meaningfully enhanced competitive position and liquidity that supports an investment grade rating. Quantitatively ratings could be upgraded if same store sales growth is consistently positive, liquidity is very good, debt/EBITDA is sustained below 2.25x, and EBIT/interest is sustained above 5.5x. Ratings could be downgraded if the company's profitability or liquidity deteriorate or same store sales growth demonstrates a declining trend. Quantitatively ratings could be downgraded if debt to EBITDA is sustained above 3.0x or EBIT to interest is sustained below 3.5x. Ingles Markets, Incorporated is a supermarket chain with operations in six southeastern states. Headquartered in Asheville, North Carolina, the company operates 198 supermarkets. The company also owns and operates neighborhood shopping centers, most of which contain an Ingles supermarket. The company owns 167 of its supermarkets, either in free-standing stores or as the anchor tenant in an owned shopping center. The company also owns and operates a milk processing and packaging plant that supplies approximately 72% of the milk products sold by the company's supermarkets as well as a variety of organic milk, fruit juices and bottled water products. In addition, the milk processing and packaging plant sells approximately 81% of its products to other retailers. Revenues are approximately $5.9 billion. The principal methodology used in these ratings was Retail and Apparel published in November 2023. INTEGRITY DIRECTIONAL: 10th Cir. Rejects Falcon's Late-Filed Claim ------------------------------------------------------------------ Judge Scott M. Matheson, Jr. of the United States Court of Appeals for the Tenth Circuit overturned the judgment of the United States District Court for the Western District of Oklahoma that reversed the order of the United States Bankruptcy Court for the Western District of Oklahoma denying the motion to amend informal proofs of claim filed by Falcon Strategic Partners IV against Integrity Directional Services LLC. Chapter 7 bankruptcy courts have recognized an exception to the claims bar date -- the "informal proof of claim" doctrine. This judicially created doctrine allows creditors to file amended formal proofs of claim after the deadline and to have those claims relate back to an earlier filing made before the deadline, making them timely under Sec. 726. The claims bar deadline in this case was October 8, 2019. Eighty-four creditors filed timely proofs of claim, but Falcon filed its proof of claim on October 10, asserting "a total combined claim of $56,351,794 and secured claims of $13,000[,]000." Falcon averred it mistakenly filed late, stating "Proofs of Claim were prepared by counsel in July and approved by Falcon in August, three and two months before the bar date, respectively. Only by way of miscommunication within the law firm were Falcon's claims filed two days beyond the bar date." On October 16, 2019, Falcon filed a "Motion for Amendment of Informal Proofs of Claim." It requested the bankruptcy court to "deem Falcon's informal proofs of claim amended by the filing of Falcon's formal proofs of claim and to relate the time of filing back to April 29, 2019 -- the date on which [it had previously filed a] motion for relief from stay." The Trustee opposed the motion, and the bankruptcy court denied it, applying these Reliance factors: 1. The proof of claim must be in writing; 2. The writing must contain a demand by the creditor on the debtor's estate; 3. The writing must express an intent to hold the debtor liable for the debt; 4. The proof of claim must be filed with the Bankruptcy Court; and 5. based on the facts of the case, it would be equitable to allow the amendment. The bankruptcy court concluded that "none of Falcon's five filings/writings [it] relied upon or the schedules as prepared and filed by the Trustee [met all of] the first four requirements of the Reliance test." Although the five filings met Reliance's first and fourth requirements for a "writing" "filed with the Bankruptcy Court," they did not, the court concluded, satisfy the second and third requirements for "a demand by the creditor on the debtors' estate" and an expression of "intent to hold the debtor liable for the debt." The bankruptcy court further found that Falcon did not meet the fifth factor either because the equities did not favor applying the informal proof of claim doctrine. The court therefore denied the motion and concluded "Falcon's payment and priority of its claim, represented by its tardily filed proofs of claim . . . shall be governed by 11 U.S.C. Sec. 726." Falcon appealed under 28 U.S.C. Sec. 158(c) to the district court, which reversed. The district court disagreed with the bankruptcy court that Falcon had failed to meet Reliance's "demand" and "intent" factors. It also concluded that the bankruptcy court abused its discretion in finding the equities disfavored application of the informal proof of claim doctrine. It agreed with the bankruptcy court that Falcon was a sophisticated and counseled creditor, had notice of the claims bar date, and was "intimately involved" in the bankruptcy case. But the district court thought Falcon's status as Integrity's largest creditor, no claim of prejudice from any party based on the late filing, and the Trustee's knowledge of Falcon's claim before the deadline outweighed these considerations. The district court's equities analysis left it "with a definite and firm conviction that the bankruptcy court made a mistake," so it reversed and remanded. Judge Matheson says, "Although we do not fault the district court's analysis, we cannot say the bankruptcy court 'ma[d]e a clear error of judgment or exceed[ed] the bounds of permissible choice under the circumstances,' when it denied Falcon's motion. Rather, it made a reasonable and a permissible choice between competing equitable considerations. It therefore did not abuse its discretion. " A copy of the Tenth Circuit's decision dated July 25, 2024, is available at https://urlcurt.com/u?l=2OFxmo About Integrity Directional Services LLC Integrity Directional Services is a directional drilling service provider with operations primarily focused in Texas, Arkansas, Oklahoma, North Dakota and the Rocky Mountains. The Company's service offering includes directional drilling, measurement while drilling, performance drilling and well planning / engineering. In addition to fluids based directional drilling, the Company also provides specialized air based directional drilling services. The Company was formed in 2008 and has drilled over 1,600 wells. An involuntary Chapter 7 petition was filed against Integrity Directional Services LLC (Bankr. W.D. Okla. Case No. 19-11494) on April 15, 2019, by creditors B&T, Stevens Trucking Co., and SMS Precision Tech. By consent of all the parties, an Order for Relief was entered under Chapter 7 of the Bankruptcy Code (11 U.S.C. Sec. 101 et seq.) on May 9, 2019. INTENSIVE COMMUNITY: Paula Beran Named Subchapter V Trustee ----------------------------------------------------------- The Acting U.S. Trustee for Region 4 appointed Paula Beran, Esq., at Tavenner & Beran, PLC as Subchapter V trustee for Intensive Community Outreach Services, LLC. Ms. Beran will be paid an hourly fee of $480 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Ms. Beran declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Paula S. Beran, Esq. Tavenner & Beran, PLC 20 North 8th Street Richmond, Virginia 23219 Phone: (804) 783-8300 Email: Beran@TB-LawFirm.com About Intensive Community Outreach Intensive Community Outreach Services, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Va. Case No. 24-32735) on July 23, 2024, with $100,001 to $500,000 in assets and $500,001 to $1 million in liabilities. Christopher Mark Winslow, Esq., at Winslow, Mccurry & Maccormac, PLLC represents the Debtor as legal counsel. INVITAE CORP: Awaits Bankruptcy Judge's Ch. 11 Plan Ruling ---------------------------------------------------------- Ben Zigterman of Law360 Bankruptcy Authority reports that following a lengthy and contentious hearing Monday, July 22, 2024, a New Jersey bankruptcy judge said he would rule Tuesday on a motion seeking confirmation of genetic testing business Invitae's Chapter 11 plan, which would repay creditors using proceeds from a sale of the company's assets to Labcorp. About Invitae Corp. Invitae Corporation is a medical genetics company that is in the business of delivering genetic testing services, digital health solutions, and health data services that support a lifetime of patient care and improved outcomes. Invitae Corp. and five of its affiliates sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.N.J. Lead Case No. 24-11362) on Feb. 13, 2024. In the petition filed by Ana Schrank, chief financial officer, disclosed $535,115,000 in assets against $1,618,519,000 in debt. Judge Michael B. Kaplan oversees the case. Kirkland & Ellis LLP and Kirkland & Ellis International LLP are the Debtors' bankruptcy counsel and Cole Schotz, P.C. is the Debtors' co-bankruptcy counsel. Moelis & Company LLC is the Debtors' investment banker. FTI Consulting Inc is the Debtors' restructuring advisor. Kurtzman Carson Consultants LLC is the Debtors's notice and claims agent. Deloitte Touche Tohmatsu Limited serves as the Debtors' tax advisor. JMMJ DEVELOPMENT: Files for Chapter 11 Bankruptcy ------------------------------------------------- JMMJ Development LLC filed Chapter 11 protection in the Northern District of New York. According to court documents, the Debtor reports between $500,000 and $1 million in debt owed to 1 and 49 creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for August 13, 2024 at 1:00 p.m. at First Meeting Albany. About JMMJ Development LLC JMMJ Development LLC is engaged in activities related to real estate. JMMJ Development LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case No. 24-10803) on July 17, 2024. In the petition filed by Joseph Melino, as managing member, the Debtor estimated assets between $1 million and $10 million and estimated liabilities between $500,000 and $1 million. The Honorable Bankruptcy Judge Robert E. Littlefield Jr. oversees the case. The Debtor is represented by: Peter A. Pastore, Esq. O'CONNELL & ARONOWITZ, P.C. 54 State Street Albany NY 12207 Tel: 518-462-5601 Email: papastore@oalaw.com JON MICHAEL SHIBLEY: Loses Bid for Sanctions v. SouthState Bank --------------------------------------------------------------- Judge Lisa Ritchey Craig of the United States Bankruptcy Court for the Northern District of Georgia denied Jon Michael Hayes Shibley's motion for sanctions against SouthState Bank, seeking compensatory damages for having been overcharged on property taxes. On November 5, 2018, the Debtor filed a voluntary petition under Chapter 11 of the Bankruptcy Code. The Court converted the Debtor's Chapter 11 case to Chapter 7 on July 25, 2019, and Edwin K. Palmer was appointed as the Chapter 7 trustee. On the Petition Date, the Debtor owned, with his wife, his residence, commonly known as 770 and 780 Clubside Drive, Roswell, Georgia. The Property was subject to a deed to secure debt held by the Bank. In August 2021, the Property was abandoned to the Debtor following the filing of the notice of abandonment, no objections having been filed to the notice, and ceased to be property of the Debtor's bankruptcy estate. The Debtor submits that the Bank added the cost to its debt balance for amounts it allegedly paid for property taxes owed on the Property when, in fact, the Bank had not advanced those funds for payment of the property taxes, the property taxes remained outstanding, and the Debtor and his wife paid the property taxes upon the sale of the Property. Consequently, the Debtor asserts he was damaged by having been overcharged the amount of the property taxes -- $182,000. He also argues the false statements made by the Bank regarding its payment of property taxes in its motion for relief from the stay swayed the Court, such that, had the Bank not made these false statements, the Court would not have lifted the automatic stay to allow the Bank to begin foreclosure proceedings and the Debtor would have realized $350,000 in additional equity when he sold the Property. He asks the Court to sanction the Bank in an amount equal to his lost equity, relying on the Georgia Fair Business Practices Act and the Fair Debt Collection Practices Act as a source of authority The Bank denies the Debtor's allegations and raises the defenses of release and res judicata. Specifically, the Bank points to a settlement agreement between the Debtor and his wife, in which the Debtor agreed that the amount of the debt owed to the Bank and secured by the Property as of October 18, 2023, was $1,144,357.82 plus additional accruing interest of $94.08 per day. In the Settlement Agreement, in exchange for the Bank's agreement to accept a payoff of only $1,018,000 and forbear from foreclosing on the Property, the Debtor released and forever discharged the Bank from any and all claims, debts, liabilities, demands, obligations, attorney's fees, costs, expenses, actions, and causes of action of every nature, character, and description, known or unknown, which Debtor then owned or held, by reason of any matter, fact, transaction, occurrence, or event whatsoever, from the beginning of the world, to the date of the Settlement Agreement. The Bank also relies on the preclusive effect of the Debtor's voluntary dismissal with prejudice of three lawsuits filed by the Debtor in the Superior Court of Fulton County, Georgia, on January 26, 2024, and removed by the Bank to the United States District Court for the Northern District of Georgia. In the First Case, the Debtor pled claims for violations of the Georgia Fair Business Practices Act and the Fair Debt Collection Practices Act and specifically alleged that the Bank knowingly "collected Tax Escrow, rolled them into the loan, but did not pay the property taxes," and made "multiple motions to remove the stay" that were grounded in fraud and false statements, and misrepresentations." Debtor dismissed the First Case "with prejudice" pursuant to Rule 41(a)(1)(A) on February 5, 2024. As a threshold issue, the Court addresses the Bank's res judicata argument because, if claim preclusion applies, it is an absolute bar to the Claims. The Court points out the Claims are identical, both factually and legally, to those raised in the First Case, and the Debtor dismissed those claims with prejudice. Accordingly, the Debtor is absolutely barred from bringing the Claims in Bankruptcy Court, and the Claims must be dismissed. The Court also agrees with the Bank that the Claims must be dismissed because the Debtor released the claims in the Settlement Agreement. As the release captures all claims, even those unknown by the parties, the Court finds the release of the Claims is an additional basis for dismissing the Claims and denying the Motion. A copy of the Court's decision dated July 25, 2024, is available at https://urlcurt.com/u?l=XGeKJl Jon Michael Hayes Shibley filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ga. Case No. 18-68584) on November 5, 2018, listing under $1 million in both assets and liabilities. The Debtor was represented by Paul Reece Marr, Esq. at Paul Reece Marr, P.C. The Court converted the case to Chapter 7 on July 25, 2019, and Edwin K. Palmer was appointed as the Chapter 7 trustee. JONES DESLAURIERS: $175MM Unsec. Notes No Impact on Moody's B3 CFR ------------------------------------------------------------------ Moody's Ratings said the B3 corporate family rating and B3-PD probability of default rating of Jones DesLauriers Insurance Management Inc., a wholly owned subsidiary of Navacord Corp., remain unchanged following the company's announcement that it plans to issue an incremental USD175 million of senior unsecured notes, raising the total outstanding amount of senior unsecured notes to USD475 million (rated Caa2). Net proceeds from the offering will be used for general corporate purposes, including to help fund acquisitions and pay related fees and expenses. The rating outlook for Jones DesLauriers is stable. RATINGS RATIONALE According to Moody's, the company's ratings reflect Navacord's growing market presence as the fourth-largest commercial lines insurance broker in Canada generally serving middle market clients. The company has a good mix of business across commercial and personal property & casualty insurance and employee benefits, with specialties in construction and transportation. The company is diversified geographically across Canada, particularly in Ontario, Alberta and British Columbia. Navacord has produced strong organic growth in the low double digits in past years, supporting healthy EBITDA margins in the mid-to-low-30s (per Moody's calculations). The company maintains an active acquisition strategy and operates using a decentralized model that allows acquired entities to manage their business fairly autonomously while benefitting from Navacord's centralized services. These strengths are tempered by Navacord's aggressive financial leverage and low fixed charge coverage, execution risk associated with acquisitions, and limited scale relative to other rated insurance brokers. Navacord also faces potential liabilities arising from errors and omissions, a risk inherent in professional services. Given effect to the proposed incremental financing, Moody's estimate that Navacord's pro forma debt-to-EBITDA ratio will be in the range of 7.0-7.5x, with (EBITDA-capex) coverage of interest of 1.2x-1.5x and a free-cash-flow-to-debt ratio in the low single digits. These pro forma metrics include Moody's adjustments for operating leases, certain other debt-like obligations, and run-rate earnings from acquisitions. Based in Toronto, Canada, Navacord Corp. offers a diversified mix of property & casualty insurance, employee benefits and specialized products mainly to middle market businesses across Canada. The company generated revenue of CAD703 million for the 12 months through April 2024. JW REALTY HOLDINGS: Seeks Chapter 11 Bankruptcy in S.D.N.Y. ----------------------------------------------------------- JW Realty Holdings LLC filed Chapter 11 protection in the Southern District of New York. According to court documents, the Debtor reports between $1 million and $10 million in debt owed to 1 and 49 creditors. The petition states funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for August 14, 2024 at 12:30 p.m. at Office of UST (TELECONFERENCE ONLY). About JW Realty Holdings JW Realty Holdings LLC is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). JW Realty Holdings LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 24-35685) on July 14, 2024. In the petition filed by Yitzchok Weiner, as member, the Debtor reports estimated assets and liabilities between $1 million and $10 million each. The Debtor is represented by: Ted Mozes, Esq. TED MOZES PLLC 16 Gladwyne Court Spring Valley NY 10977 Tel: 845-362-6951 Email: tmozeslaw@gmail.com LESLIE'S POOLMART: S&P Downgrades ICR to 'B+', Outlook Negative --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S. specialty pool supply retailer Leslie's Poolmart Inc. to 'B+' from 'BB-'. The outlook is negative. S&P also lowered its issue-level rating on its term loan to 'B+' from 'BB-'. S&P's '4' recovery rating on the term loan is unchanged. The negative outlook reflects the potential for a lower rating over the next 12 months if operating performance remains volatile and credit metrics do not improve in line with our revised expectations. Leslie's recent operating challenges and repeated guidance revisions reflect outsized performance volatility. Third-quarter preliminary sales declined about 7%, reflecting its sixth consecutive quarter of sales decline. S&P said, "We attribute the slower demand to weather-related headwinds, as well as weakness in discretionary and higher-ticket categories such as equipment. Leslie's also lowered its fiscal 2024 guidance, reducing its company-adjusted EBITDA expectation by about 30%. The meaningful revision following the third quarter reflects the highly seasonal nature of the business. The second half of Leslie's fiscal year (April-September) accounts for about 75% of sales and more than 100% of operating profit. Moreover, we believe the persistent sales declines indicate that Leslie's product offering may be more discretionary during periods of macroeconomic weakness, particularly as consumers look to stretch time between servicing their pools, opt to repair instead of replace higher-cost equipment, and trade down to less expensive options. Given Leslie's recent track record of outsized performance volatility and our view that its product offering is more susceptible to macroeconomic weakness than previously understood, we have revised our business risk assessment to weak from fair." S&P said, "We forecast elevated S&P Global Ratings-adjusted leverage of above 5x in fiscal 2024, with improvement in fiscal 2025. We anticipate Leslie's will end fiscal 2024 with adjusted leverage in the low-5x area, but peak in the mid-5x area (second quarter rolling-12-month adjusted leverage was 5.4x), as weak demand trends and previous chemical pricing actions constrain EBITDA. Specifically, we forecast S&P Global Ratings-adjusted EBITDA margin will decline roughly 120 basis points (bps) to 14.5% for the year, compared with our previous forecast for a roughly 140 bps expansion and an improvement in leverage to the high-3x area. As a result, we have revised our financial risk profile to aggressive from significant. "Leslie's stated financial policy includes a target leverage ratio of approximately 3x, which it is meaningfully above. We anticipate the company will pause share repurchases and limit acquisitions in the near term while it dedicates excess cash to debt paydown and growth investments. However, our leverage forecast does not currently incorporate debt reduction given uncertainty surrounding amount and timing. "Nonetheless, we expect demand trends will stabilize in fiscal 2025 given our view that consumers can only delay pool maintenance and repairs for a finite period. We expect this, combined with good expense management and better product margin as consumer price sensitivity wanes, will enable Leslie's to improve profitability and return leverage to the high-4x area in fiscal 2025. "We expect Leslie's will generate $40 million to $50 million of free operating cash flow (FOCF) in fiscal 2024, improving to more than $60 million in fiscal 2025. The company burned $33 million of cash in fiscal 2023 as deteriorating profitability compounded significant working capital outflows. Notwithstanding incremental profitability pressures, we forecast significantly improved FOCF prospects in fiscal 2024 due to working capital inflows given tight inventory management and more normalized payables timing, as well as reduced capital spending in the range of $30 million to $35 million to support 15 new store openings and maintenance needs. Moreover, we forecast improving topline and profitability prospects will support annual FOCF of more than $60 million in fiscal 2025 and thereafter. "The negative outlook reflects the possibility that we could lower the rating on Leslie's if weak demand trends persist or deteriorate further than we anticipate in its fourth fiscal quarter or the subsequent pool selling season, challenging the company's ability to restore leverage to below 5x." S&P could lower the rating if operating performance weakens more than it currently forecast, such that S&P no longer sees a clear path to adjusted leverage improving to below 5x. This could occur if: -- Consumer demand for pool supply products remains weak for longer than S&P currently anticipates due to unfavorable weather, excess supply, and/or price sensitivity; or -- Profitability remains pressured due to pricing pressure amid an increasingly competitive environment—potentially leading to market share erosion-- or an inability to effectively manage costs. S&P could revise its outlook back to stable if S&P determines there is evidence to support Leslie's is on track to reduce leverage to below 5x. This could occur if: -- Operating pressures subside and Leslie's profitability strengthens from fiscal 2024, in line with or better than S&P's base case; and -- The company demonstrates a willingness and ability to prioritize debt paydown initiatives, gaining line of sight toward its publicly communicated leverage target of 3x (company-calculated). LTL MANAGEMENT: Dismissal of Second Chapter 11 Petition Affirmed ---------------------------------------------------------------- Judge Thomas Ambro of the United States Court of Appeals for the Third Circuit affirmed the decision issued by the United States Bankruptcy Court for the District of New Jersey dismissing LTL Management LLC's second Chapter 11 bankruptcy petition for want of good faith because it was not in financial distress. LTL and the Ad Hoc Committee of Supporting Counsel filed an appeal challenging the Bankruptcy Court's decision. Johnson & Johnson sold talc-based products for decades through certain corporate subsidiaries. Starting in the 2010s, plaintiffs -- suffering from mesothelioma or ovarian cancer -- began suing J&J on the theory those products contained asbestos and caused their disease. After a substantial verdict, the number of suits filed against J&J began to grow rapidly. But it had success defending them: J&J "settl[ed] roughly 6,800 talc-related claims for just under $1 billion in total and successfully obtain[ed] dismissals without payment of [more than 1,500] actions." In 2021, J&J sought to use bankruptcy to settle permanently all talc claims -- including those resulting from future diagnoses resulting from the lag between asbestos exposure and cancer development. Through a complicated series of corporate transactions, J&J claims to have transferred all talc liability to the newly formed LTL, which received a funding agreement directly obligating J&J to cover LTL's talc liabilities and bankruptcy expenses up to roughly $61.5 billion. LTL promptly filed a Chapter 11 petition under the Bankruptcy Code, 11 U.S.C. Sec. 101 et seq. An official committee of talc claimants, formed as part of the Chapter 11 process, Code Sec. 1102, moved to dismiss LTL's bankruptcy for want of good faith. The Bankruptcy Court denied the motion, concluding that bankruptcy was better for the talc plaintiffs than the tort system, as the former offered the best chance for a prompt and equitable recovery. On appeal, the Third Circuit reversed. Well-established Third Circuit caselaw bars a bankruptcy absent financial distress. LTL amended the funding agreement hours after its case was dismissed. Because the amended funding agreement was promised only by LTL's direct parent -- Johnson & Johnson HoldCo (NA) Inc., referred to hereafter as "HoldCo," the new funding agreement realistically provided LTL with access to around $30 billion (HoldCo's going concern value -- less than half of what J&J offered under the initial funding agreement. The chief legal officer of LTL admitted that it agreed to shrink the funding agreement to "resolve the concerns that led the Third Circuit to conclude that [the first LTL bankruptcy] should be dismissed," i.e., to place LTL in financial distress. With that, LTL filed for Chapter 11 once again The Talc Committee moved to dismiss LTL's bankruptcy. The Bankruptcy Court held a four-day trial. Applying the Third Circuit's decision in In re LTL Mgmt., LLC ("LTL II"), the Court concluded that, even with the substantially reduced funding agreement, LTL was still not financially distressed and so was not eligible for bankruptcy. Before the Bankruptcy Court, LTL primarily argued that it will be unable to pay its liabilities "in both the short and long term." The Court was unpersuaded by LTL's theory of short-term costs, finding it was "bottomed on assumptions which are dramatically at odds with the historical run rates as to both trial costs and settlements." As to the long term, it compared LTL's $21 billion "worst-case" estimate for lifetime talc liabilities -- extending far into the future -- with HoldCo's estimated $22.3 billion "forced liquidation value." Because that value exceeded LTL's worst-case scenario, the Court did not see financial distress. The Third Circuit points out while LTL suggested that future verdicts could skyrocket its liabilities beyond its projections, the Bankruptcy Court did not give those unsupported hypotheticals persuasive weight. On appeal, LTL offers two challenges on the merits of the dismissal of its case: the Bankruptcy Court erred in its factfinding, and, even if it did not, the Court misapplied the Third Circuit's decision in LTL II. The Ad Hoc Committee, which agreed to support a bankruptcy plan in the second LTL bankruptcy, makes a third argument: even if LTL's filing was in bad faith, the case should not have been dismissed. Finally, LTL challenges procedurally the ability of the Bankruptcy Court to authorize the Talc Committee to litigate the appeal and require LTL to pay the Committee's expenses. None of these arguments persuades the Third Circuit. LTL contests the Bankruptcy Court's findings on overall talc liability. Specifically, it claims the Court erred by concluding that liability was not greater than $21 billion, which was the high-end estimate of LTL's expert using several "assumptions that likely overstate [its] likely financial exposure. The support for LTL's assertion was that the expert's opinion did not consider blockbuster verdicts (thus underestimating LTL's overall exposure), plus the Talc Committee's implied valuation of the talc claims greatly exceeds that number. LTL points to no evidence projecting the likelihood and size of those verdicts, and LTL II counseled strongly against authorizing mass-tort bankruptcies absent "reasonable projections" of future liability resulting in insolvency, the Third Circuit states. LTL believes the Bankruptcy Court misread LTL II as providing an "insolvency standard . . . looking only to current conditions." Not so, Judge Ambro says. LTL II, of course, did not require insolvency before filing for bankruptcy, the Third Circuit notes. But LTL's two arguments for financial distress -- insolvency and cash-flow difficulties that could result in liquidations at HoldCo -- do not qualify, the Third Circuit holds. Moreover, it did not gesture at any other form of financial distress at LTL, such as difficulties with employees, customers and vendors wary of the firm's credit risk, challenges in the capital markets, liquidity problems, and cutbacks in spending and investment that impair the firm's value, the Third Circuit adds. And bankruptcy requires "apparent” financial distress, the Appellate Court notes. A copy of the Court's decision dated July 25, 2024, is available at https://urlcurt.com/u?l=D5NkDe About LLT Management LLT Management, LLC (formerly known as LTL Management LLC) , is a subsidiary of Johnson & Johnson that was formed to manage and defend thousands of talc-related claims and oversee the operations of Royalty A&M. Royalty A&M owns a portfolio of royalty revenue streams, including royalty revenue streams based on third-party sales of LACTAID, MYLANTA/MYLICON and ROGAINE products. LTL Management first filed a petition for Chapter 11 protection (Bankr. W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov. 16, 2021. The Hon. Michael B. Kaplan is the case judge. At the time of the filing, the Debtor was estimated to have $1 billion to $10 billion in both assets and liabilities. The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon LLP as special counsel; McCarter & English, LLP as litigation consultant; Bates White, LLC as financial consultant; and AlixPartners, LLP as restructuring advisor. Epiq Corporate Restructuring, LLC, served as the claims agent. An official committee of talc claimants was formed in the Debtor's Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S. Trustee for Regions 3 and 9 reconstituted the talc claimants' committee and appointed two separate committees: (i) the official committee of talc claimants I, which represents ovarian cancer claimants, and (ii) the official committee of talc claimants II, which represents mesothelioma claimants. The official committee of talc claimants I tapped Genova Burns LLC, Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its legal counsel. Meanwhile, the official committee of talc claimants II is represented by the law firms of Cooley LLP, Bailey Glasser LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and Sherman Silverstein Kohl Rose & Podolsky P.A. Re-Filing of Chapter 11 Petition On January 30, 2023, a panel of the Third Circuit issued an opinion directing this Court to dismiss the 2021 Chapter 11 Case on the basis that it was not filed in good faith. Although the Third Circuit panel recognized that the Debtor "inherited massive liabilities" and faced "thousands" of future claims, it concluded that the Debtor was not in financial distress before the filing. On March 22, 2023, the Third Circuit entered an order denying the Debtor's petition for rehearing. The Third Circuit entered an order denying LTL's stay motion on March 31, 2023, and, on the dame day, issued its mandate directing the Bankruptcy Court to dismiss the 2021 Chapter 11 Case. The Bankruptcy Court entered an order dismissing the 2021 Case on April 4, 2023. Johnson & Johnson on April 4, 2023, announced that its subsidiary LTL Management LLC (LTL) has re-filed for voluntary Chapter 11 bankruptcy protection (Bankr. D.N.J. Case No. 23-12825) to obtain approval of a reorganization plan that will equitably and efficiently resolve all claims arising from cosmetic talc litigation against the Company and its affiliates in North America. In the new filing, J&J said it has agreed to contribute up to a present value of $8.9 billion, payable over 25 years, to resolve all the current and future talc claims, which is an increase of $6.9 billion over the $2 billion previously committed in connection with LTL's initial bankruptcy filing in October 2021. LTL also has secured commitments from over 60,000 current claimants to support a global resolution on these terms. In August 2023, U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey, ruled that the second bankruptcy case should be dismissed. 3rd Try In May 2024, J&J announced its subsidiary LLT Management LLC is soliciting support for a consensual prepackaged bankruptcy plan to resolve its talc-related liabilities. Under the terms of the plan, a trust would be funded with over $5.4 billion in the first three years and more than $8 billion over the course of 25 years, which J&J calculates to have a net present value of $6.475 billion. Claimants must cast their vote to accept or reject the Plan by 4:00 p.m. (Central Time) on July 26, 2024. A solicitation package may be requested at www.OfficialTalcClaims.com or by calling 1-888-431-4056. If the Plan is accepted by at least 75% of voters, a bankruptcy may be filed under the case name In re: Red River Talc LLC in a bankruptcy court in Texas or in the bankruptcy court of another jurisdiction. Epiq Corporate Restructuring, LLC is serving as balloting and solicitation agent for LLT. On May 22, 2024, five individuals, both individually and on behalf of a proposed class, filed a class action complaint against, among others, LLT, J&J, Holdco, and certain of their officers and directors in the United States District Court for the District of New Jersey and is proceeding under case number 3:24-cv-06320. The tort claimants are represented by: (a) Golomb Legal; (b) Levin, Papantonio, Rafferty, Proctor, Buchanan, O’Brien, Barr, Mougey, P.A.; (c) Bailey Glasser LLP; (d) Beasley, Allen, Crow, Methvin, Portis & Miles P.C.; (e) Aschraft & Gerel, LLP; and (f) Burns Charest LLP. The proposed class includes all persons who, as of August 11, 2023, either had a pending lawsuit alleging an ovarian cancer or mesothelioma personal injury claim caused by asbestos or other constituents in J&J talcum powder products or had executed a retainer agreement with a lawyer or law firm to pursue such a claim. The complaint alleges 10 causes of action that generally seek to avoid: the 2021 Corporate Restructuring; the termination of the 2021 Funding Agreement; and the separation of J&J’s consumer health division into Kenvue on the basis that these transactions were actual fraudulent transfers. LLT, J&J, Holdco, and the other defendants dispute the allegations in the Class Action Complaint and believe it lacks merit. In May 2024, J&J and LLT filed in In re Johnson & Johnson Talcum Powder Products Mktg., Sales Practices and Products Litig., MDL No. 2738, Civil Action No. 16-2638 (FLW) (D.N.J. April 27, 2020), a notice of their intent to issue a subpoena to Ellington Management Group, who J&J and LLT believe may have financed Beasley Allen's, or their co-counsel's, talc litigation. J&J and LLT have also filed a notice to issue a subpoena to the Smith Law Firm PLLC. These subpoenas seek documents relating to any litigation financing arrangements. Proposed Counsel to LLT: Gregory M. Gordon, Esq. Dan B. Prieto, Esq. Amanda Rush, Esq. JONES DAY 2727 N. Harwood Street Dallas, TX 75201 Telephone: (214) 220-3939 Facsimile: (214) 969-5100 E-mail: gmgordon@jonesday.com dbprieto@jonesday.com asrush@jonesday.com - and - Brad B. Erens, Esq. Caitlin K. Cahow, Esq. JONES DAY 110 N. Wacker Drive, Suite 4800 Chicago, IL 60606 Telephone: (312) 782-3939 Facsimile: (312) 782-8585 E-mail: bberens@jonesday.com ccahow@jonesday.com Counsel for Johnson & Johnson Jessica C. Lauria, Esq. Gregory Starner, Esq. WHITE & CASE LLP 1221 Avenue of the Americas New York, NY 10020 Telephone: (212) 819-8200 Facsimile: (212) 354-8113 E-mail: jessica.lauria@whitecase.com gstarner@whitecase.com - and - Matthew E. Linder, Esq. Laura E. Baccash WHITE & CASE LLP 111 S. Wacker Drive, Suite 5100 Chicago, IL 60606 Telephone: (312) 881-5400 Facsimile: (312) 881-5450 E-mail: mlinder@whitecase.com laura.baccash@whitecase.com - and - Jim Murdica, Esq. BARNES & THORNBURG LLP 2029 Century Park East, Suite 300 Los Angeles, CA 90067 E-mail: jmurdica@btlaw.com The Members of the Talc Trust Advisory Committee: Anne Andrews, Esq. ANDREWS & THORNTON 4701 Von Karman Ave. Suite 300 Newport Beach, CA 92660 E-mail: aa@andrewsthornton.com - and - Adam Pulaski, Esq. PULASKI KHERKHER, PLLC 2925 Richmond Avenue, Suite 1725 Houston, TX 77098 E-mail: adam@pulaskilawfirm.com - and - Mikal Watts, Esq. WATTS LAW FIRM LLP 811 Barton Springs Road #725 Austin, TX 78704 E-mail: mikal@wattsllp.com - and - James Onder, Esq. ONDERLAW, LLC 110 E. Lockwood Ave St. Louis, MO 63119 E-mail: Onder@onderlaw.com - and - Majed Nachawati, Esq. NACHAWATI LAW GROUP 5489 Blair Road Dallas, TX 75231 E-mail: mn@ntrial.com MATRIX PARENT: Moody's Withdraws 'Ca' CFR on Bankruptcy Filing -------------------------------------------------------------- Moody's Ratings has withdrawn Matrix Parent, Inc. (dba Mobileum) ratings including the Ca Corporate Family Rating, D-PD Probability of Default Rating, Caa3 ratings on the senior secured first lien bank credit facilities, and C rating on the senior secured second lien term loan. The outlook prior to withdrawal was stable. The action follows the commencement of Chapter 11 bankruptcy proceedings. RATINGS RATIONALE The ratings withdrawal follows Mobileum filing a petition for reorganization under Chapter 11 of the US Bankruptcy Code on July 23, 2024 at the U.S. Bankruptcy Court for the Southern District of Texas. Moody's last rating action for Mobileum occurred on December 19, 2023 when the CFR was downgraded to Ca, and PDR was downgraded to D-PD with a stable outlook, reflecting Moody's assessment of the expected loss to lenders following a notice of default for a missed interest payment on the first lien term loan. Governance risk considerations are material to the withdrawal action following Mobileum's voluntary pre-packaged chapter 11 bankruptcy filing. Headquartered in Cupertino, CA, Matrix Parent, Inc. is a provider of integrated analytic solutions for roaming and network services, security, risk management, and testing and monitoring solutions for the telecommunications industry. MCGRAW-HILL EDUCATION: Fitch Affirms & Withdraws 'B+' LongTerm IDR ------------------------------------------------------------------ Fitch Ratings has affirmed McGraw-Hill Education, Inc.'s (MHE) Long-Term Issuer Default Rating (IDR) at 'B+' and senior secured and unsecured debt ratings. The Rating Outlook is Positive. The ratings reflect MHE's leading position in the domestic K-12, global Higher Education and Professional textbook publisher markets. The Ratings also consider the company's elevated leverage but improving margins and free cash flow (FCF) generation, while maintaining a solid liquidity position. The Positive Outlook highlights a persistent adjusted EBITDA margin expansion growing to 37% in fiscal 2023 from 24% in 2019 as result of the successful integration of Achieve3000 and an outstanding digital transformation. This shift significantly increased the digital billings mix (excluding K-12) to 77%, compared to 31% in 2015, translating into more sustainable margins, as the company becomes less exposed to supply chain and physical manufacturing risks. Fitch has withdrawn all of MHE's ratings for commercial reasons. Fitch will therefore no longer provide rating or analytical coverage on the company. Key Rating Drivers Elevated Leverage: MHE's leverage peaked at 7.0x on June 30, 2021 due to its acquisition by Platinum Equity, LLC and the follow-on acquisition of Achive3000, both of which were funded with a mix of debt and equity. Since then, the company has focused on realizing synergies related to these transactions and its ongoing digital transformation and repaid approximately $375 million of debt. These actions have driven EBITDA leverage down to 5.1x as of FYE March 31, 2024. Fitch expects leverage to continue to decline due to further operating improvements driven by the ongoing digital transformation and favorable momentum of the conversion cycle in the U.S. Improved Adjusted EBITDA Margin: Since closing the two transactions, MHE has realized around $100 million in cost savings and expects to realize additional synergies. The successful integration and continuing internal digital transformation drove adjusted EBITDA margins to 35% at FYE March 31, 2024 from 32% and FYE March 31, 2021. Fitch expects margins to stabilize around the mid-thirties in the medium to long term, assuming MHE maintains an efficient cost structure, the consolidation of its digital platform reflecting deeper engagement and recurring revenue, and new opportunities in the K-12 adoption market. Long-Term Digital Opportunity: Fitch believes the transition to digital will continue apace, with digital billings growing to 64% of FYE March 31, 2024 total billings from 31% in FY15 (K-12 billings are excluded from this number due to adoption-related variations). Fitch expects the transition to digital, accelerated by the pandemic, to continue, allowing for a more efficient cost structure. Fitch also expects MHE to continue investing in its digital platform through small bolt-on acquisitions and development of generative A.I. Leading Market Share: MHE holds leading positions in its two largest segments. The company has a strong market share in the U.S. higher education market, with its digital offerings showing continued growth. According to the spring 2024 enrollment data released by NSC (National Student Clearinghouse), higher education enrollment trends are more favorable than last year, reporting a 2.5% increase in undergraduate enrollment for the second consecutive time since the pandemic. Community colleges are up 4.7%, supported by a 4.7% increase in freshman enrollment over the last 12 months. For the U.S. K-12 publishing market, Fitch believes Houghton Mifflin Harcourt, MHE and Savvas Learning Company (f.k.a. Pearson U.S. K12 Education) collectively hold more than 80% market share. Diversified Revenue Profile: For the full year ending March 31, 2024, approximately 36% of MHE's total reported revenues were derived from higher education content, 46% from K-12 content, and about 18% from its international and global professional content. The company generated approximately 64% of its total consolidated revenue from digital content with 36% from its printed products (compared to 47% of printed revenue in 2020), making the increasing results of its digital transformation more evident over the last adoption cycle. Resilient Sector During Economic Distress: During the pandemic, several rounds of direct and indirect federal stimulus injections mitigated the economic impact on state budgets. Funds could be used for multiple purposes including improving digital infrastructure and platforms and, to a lesser extent, purchasing educational learning tools. While local governments derive varying portions of their revenues from property taxes, they could also use these funds to pay for school safety measures, including establishing and maintaining remote learning infrastructure. During prior periods of economic stress, K-12 adoptions were rarely cancelled or even delayed (and then only for one year). While Fitch will continue to pay close attention to near-term adoption calendars for delays, delays do not represent a near-term concern given the significant stimulus funding. For higher education, the potential for cuts in funding and student aid is always an issue. Fitch believes long-term enrollment will stabilize as college degrees remain a necessity for many jobs. In addition, college enrollment typically increases during recessions as jobs are harder to find and people look to augment their skills. Most funding for higher education course materials comes directly from students. Derivation Summary McGraw-Hill is well positioned in the domestic K-12 and global higher education textbook publisher markets, with additional global exposure to professional education content and services. Following the acquisition of Achieve3000, the expanded McGraw-Hill platform consolidated a solid position as one of the leading global providers of a full set of content and services across a broader range of education segments. Key Assumptions - For FY25 and beyond, a mid-single digit revenue increase with printed revenue decreasing at a low single-digit rate per year is assumed, anticipating existing higher education enrollment trends remain. - For FY25, a larger adoption takes place resulting in a low-single digit revenue increase for the year. Fitch also assumed FY27 to be a larger adoption opportunity year, reflecting a similar revenue increase. For the rest of the years with smaller adoptions, Fitch assumed a lower revenue growth. - Low-single digit revenue growth in global professional and international per year, assuming similar market conditions with digital content representing about 60% of total revenues throughout the projection. - During smaller adoption years, consolidated revenue resulting in low-single digit growth, while during larger adoption cycles resulting in mid-single digit revenue growth. - Fitch expects adjusted EBITDA margins to bounce back to the 37%-38% level during larger adoption years, and during smaller adoption years a lower margin around the mid-thirties. - Fitch assumes that the company will continue to roll-out its digital conversion strategy, affecting primarily its Higher Education, K-12 and Global Professional segments with the consolidated digital revenue mix growing to 70% by the end of the projection from 64% in FY24, resulting in an improved cost structure (versus printed services) and healthier margins over the long term. Other Assumptions Include: - 7.0% of net revenues in capex and pre-publication expenditures (capital intensity) per year. - $750 million dividend pay-out in FY26, partially financed by fully drawing the $150 million RCF. - Assuming the existing revolving credit facility and ABL facilities are refinanced in 2026 and extended to 2031. Similarly, the 2022 Term Loan Facility is refinanced in 2028 at similar terms. - Interest rate calculation as per the CA (using SOFR as Base Rate). - Assuming NWC financing need ranging from $72 million to $120 million per year to reflect additional opex related to the development and maintenance of its digital content. - Assuming about $50 million in deferred revenues per year to reflect a more stable digital adoption throughout the projection. Billings is a non-GAAP metric used by MHE to measure sales performance. Billings is defined as total revenue plus the change in total deferred revenue, net of acquired deferred revenue. Recovery Analysis Key Recovery Rating Assumptions The recovery analysis assumes MHE would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. MHE's recovery analysis assumes significant K-12 adoption delays followed by market share loss, driven by an inability to win enough upcoming adoptions and ongoing industry issues in the higher education segment dragging down revenues, which pressure margins. The post-reorganization GC EBITDA of $550 million is based on Fitch's estimate of MHE's average EBITDA over a normal cycle. It also reflects an improved cost structure as result of a number of cost saving initiatives post-LBO, the full integration of Achieve3000, and the ongoing digital transformation that offers an improved margin (versus its printed business), which have permanently reset the company's cost structure. Fitch assumes MHE will receive a GC recovery EV multiple of 7.0x EBITDA. The estimate considered several factors. HMHC and Pearson have traded at a mid-teen median EV/EBITDA. Platinum acquired MHE for $4.6 billion, or 8.7x Fitch-calculated adjusted EBITDA, including the change in deferred revenues and Fitch-estimated savings. In February 2019, Pearson sold its K-12 business for 9.5x operating profit (EBITDA was not disclosed). In March 2013 Apollo Global Management LLC acquired MHE from S&P Global, Inc. for $2.5 billion, or approximately 7x estimated EBITDA. During the last financial recession, Pearson traded at approximately 8.0x EV/EBITDA, while neither MHE nor HMHC were public at the time. In 2014, Cengage emerged from bankruptcy with a $3.6 billion valuation, equating to an emergence multiple of 7.7x. Fitch assumes the ABL credit facilities will be 75% drawn ($150 million outstanding) and the $150 million revolver will be 100% drawn at bankruptcy. Under this scenario it estimates full recovery prospects for the proposed first lien senior secured credit facilities and rates them 'BB+'/'RR1', or three notches above MHE's 'B+' IDR. The unsecured debt was equalized with the IDR at 'B+'/'RR4' as over the last two years the issuer has proactively prepaid senior secured and unsecured debt resulting in a better recovery prospects to the notes. RATING SENSITIVITIES Rating sensitivities do not apply as the ratings have been withdrawn. Liquidity and Debt Structure Adequate Liquidity: As of March 31, 2024, MHE reported a liquidity position of $554 million composed by $204 million of cash on balance and full availability under its ABL revolving facilities of $200 million and cash flow revolving facility ($150 million). Liquidity is further supported by Fitch's expectation of annual FCF in excess of $200 million annually. No Significant Short-Term Maturities: The next debt maturities coming due are the ABL and cash flow revolving facilities due in July 2026, currently there is no outstanding amount drawn. Outside of these two facilities, the next maturity coming due is on July 30, 2028 when the 2022 term-loan B and secured notes become due. Additionally, the company has repaid about $375 million since the Platinum acquisition in July 2021, since the last review MHE repurchased about $78 million in senior unsecured notes and about $80 million in senior secured debt. Issuer Profile MHE is a global provider of outcome-focused learning solutions, delivering physical and digital learning tools and platforms to over than 45 million learners and educators around the world. The company has evolved from a print centric producer of textbooks to a leader in the development of digital learning solutions. 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. Following the withdrawal of ratings for McGraw-Hill Education, Inc. Fitch will no longer be providing the associated ESG Relevance Scores. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- McGraw-Hill Education, Inc. LT IDR B+ Affirmed B+ LT IDR WD Withdrawn B+ senior secured LT BB+ Affirmed RR1 BB+ senior secured LT WD Withdrawn BB+ senior unsecured LT B+ Affirmed RR4 B+ senior unsecured LT WD Withdrawn B+ MCGRAW-HILL EDUCATION: Moody's Rates New Secured Loans 'B2' ----------------------------------------------------------- Moody's Ratings assigned a B2 rating to McGraw-Hill Education, Inc.'s proposed backed senior secured bank credit facility and backed senior secured notes. McGraw's existing ratings and positive outlook remain unchanged. The existing ratings include the company's B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 senior secured bank credit facility rating and senior secured notes and Caa2 senior unsecured notes. The rating actions follow McGraw's announcement [1] that it is seeking to issue a 7-year $650 million senior secured notes and senior secured guaranteed credit facility consisting of a $1,317 million 7-year term loan and $150 million 5-year revolver. The company plans to use the proceeds to repay in full its existing senior secured term loan ($2,067 million outstanding at June 30, 2024). Concurrently with the proposed refinancing, the company will repay $100 million of existing senior secured term loan and will pay fees and expenses associated with the refinancing using cash on hand. In connection with the refinancing, McGraw plans to upsize its ABL Revolver (unrated) to $300 million from $200 million and extend its maturity to 2029. Moody's view the refinancing transaction as credit positive because it reduces debt by $100 million, extends the credit facility's maturity and upsizes and extends the ABL revolver (unrated). Moody's also expect that McGraw's leverage, which is currently high, at 6.5x (Moody's adjusted) as of FYE March 2024, will continue improving over the next 12-18 months as the company's grows earnings and pays down debt in excess of mandatory amortization. RATINGS RATIONALE McGraw's B3 CFR reflects the company's high financial leverage, seasonality of cash flows, and inherent cyclicality of its K-12 business. Within its higher education segment, earnings growth is tempered by affordability-driven price compression, competition from open educational resources, rental and used textbooks and declining enrollment trends. Competition among leading companies is intense as the market continues its transition to digital products and services from traditional print learning materials. These credit challenges are counterbalanced by McGraw's well recognized brand, good market position, long-standing relationships with education institutions, proprietary content developed through long-term exclusive relationships with leading authors and broad range of product offerings across multiple business segments. McGraw's FYE 3/2024 leverage, defined as Moody's adjusted Debt/ EBITDA (excluding the change in deferred revenue) was high at 6.5x. Moody's project Moody's adjusted Debt/EBITDA to decline to under 6x by the end of FY 3/2025 and closer to mid-5x by the end of FYE 3/2026 supported by further debt reduction and stronger K-12 adoption year in fiscal 2025 while cash balance continues to build. Moody's also expect McGraw's operating cash flows to remain strong and favorably impacted by working capital unwind and stronger K-12 billing in FYE 3/2025 despite high interest expense. This will result in free cash flow generation of at least 6%-10% relative to debt for fiscal 2025 and 2026. STRUCTURAL CONSIDERATIONS The B2 ratings on the proposed senior secured guaranteed credit facilities ($150 million 5-year revolver and 7-year $1.3 billion term loan), the proposed $650 million senior secured notes and the company's existing senior secured credit facility and senior secured notes benefit from their senior position in the capital structure, resulting in a one-notch uplift from the CFR. Both the senior secured credit facilities and notes are ranked above the $725 million unsecured notes ($639 million outstanding as of March 31, 2024) due August 2029. The unsecured notes are rated Caa2 and subordinated to the first lien senior secured credit facilities and the amended and extended $300 million ABL facility (unrated). The ABL revolver has first priority lien on all current asset collateral and second priority lien on fixed asset collateral. Given its pledge on the most liquid assets, Moody's ranked it ahead of all rated secured and unsecured debt instruments in Moody's priority of claim waterfall. Moody's expect that McGraw will have good liquidity supported by its cash balance ($66 million proforma for the refinancing), Moody's expectation of annual free cash flow generation in excess of $300 million (or $200 million after deducting prepublication costs) in fiscal 2025, access to an upsized and extended $300 million five-year ABL facility (unrated) and a proposed $150 million revolver both due July 2029. As of March 31, 2024, the revolver was undrawn and the ABL revolver had $196 million of availability (net of $4 million in letters of credit). Moody's project that the company's cash on hand, internally generated cash flow and seasonal borrowings against the ABL facility will be sufficient to fund the company's highly seasonal cash flow and the 1% required annual term loan amortization of roughly $13 million, $70 - $90 million in capex and $75 - $100 million in plate spending. Proforma for the refinancing, there are no debt maturities until 2028 when the $900 million senior secured notes ($828 million outstanding as of March 31, 2024) comes due. McGraw's proposed revolver is expected to have a springing net leverage covenant of 6.95x tested at 40% or greater draw, and the ABL facility is subject to a springing minimum fixed charge coverage ratio of 1.0x if adjusted availability falls below certain amount. Moody's do not expect the ABL or revolver covenants to spring over the next 12-18 months. The proposed term loan is covenant-lite. McGraw's CIS-4 credit impact score indicates that the rating is lower than it would have been if ESG risk exposures did not exist. The score reflects the company's high exposure to governance risks reflecting an aggressive financial strategy under private equity ownership, which raises the potential for debt-funded shareholder dividends in the future. There is also a lack of independent directors on the board. McGraw is also exposed to demographic and social risks, impacting students' preferences toward greater use of adaptive learning, real-time interaction and personalized educational content and the business model's ongoing transformation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if McGraw is able to demonstrate earnings growth and debt reduction resulting in Debt/EBITDA (Moody's adjusted) approaching 5.5x with growing cash balances along with a commitment to operating at that leverage level. Good liquidity and free-cash-flow-to-debt sustained in the mid- single-digit percentage range or better, would also be needed for an upgrade. A downgrade is unlikely over the next 12-18 months given a positive outlook. The ratings could be downgraded if free cash flow turns negative on other than a temporary basis, or Moody's adjusted Debt/EBITDA is sustained materially above 6.5x. The principal methodology used in these ratings was Media published in June 2021. McGraw-Hill Education, Inc. is a global provider of educational materials and learning services targeting the higher education, K-12, professional learning and information markets with content, tools and services delivered via digital, print and hybrid offerings. McGraw reported fiscal year 2023 GAAP revenue of $1.96 billion and billings of $2.023 billion. MEIER'S WINE CELLARS: Files for Chapter 11 Bankruptcy ----------------------------------------------------- MarketScreener reports that Meier's Wine Cellars Acquisition, LLC, along with its 10 affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the District of Delaware on July 24, 2024. The debtor listed both its assets and liabilities in the range of $100 million to $500 million. The debtor is represented by Zachary Javorsky, Matthew P. Milana and Zachary I Shapiro of Richards, Layton & Finger, P.A. and Jones Day as its legal counsels. The debtor also hired GLC Advisors & Co., LLC, as investment banking advisor and Riveron Consulting, LLC, as financial advisor. About Meier's Wine Cellars Acquisition LLC Meier's Wine Cellars Acquisition LLC -- https://www.vintagewineestates.com -- sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-11575) on July 24, 2024. In the petition filed by Kristina Johnston, as secretary and treasurer, the Debtor reports estimated assets and liabilities between $100 million and $500 million each. The debtor is represented by Zachary Javorsky, Matthew P. Milana and Zachary I Shapiro of Richards, Layton & Finger, P.A. and Jones Day as its legal counsels. The debtor also hired GLC Advisors & Co., LLC, as investment banking advisor and Riveron Consulting, LLC, as financial advisor. MIDCONTINENT COMMUNICATIONS: S&P Rates Sec. Credit Facility 'BB+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating and '2' recovery rating to Sioux Falls, S.D.-based cable provider Midcontinent Communications' proposed $600 million term loan B due in 2031 and $500 million revolving credit facility due in 2029, which will replace the $400 million revolver due in 2027. S&P said, "The '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default. We expect Midcontinent to use the proceeds from the term loan issuance to partially pay down the $621 million balance on its term loan B due in 2026. "Our 'BB' issuer credit rating (ICR) on Midcontinent is unchanged because the transaction, for all intents and purposes, is leverage neutral. However, we believe the company could issue senior unsecured notes in the near term to support a modest dividend, which we believe would still be in line with our ratings, including the ICR." MR. KNICKERBOCKER: U.S. Trustee Unable to Appoint Committee ----------------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Mr. Knickerbocker, Inc. About Mr. Knickerbocker Mr. Knickerbocker, Inc. is a retailer of apparel and accessories in Clemson, S.C. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. S.C. Case No. 24-02433) on July 5, 2024, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Christine Brimm, Esq., serves as Subchapter V trustee. Judge Helen E. Burris presides over the case. W. Harrison Penn, Esq., at Penn Law Firm, LLC represents the Debtor as bankruptcy counsel. NB FLATS: Property Sale Proceeds to Fund Plan Payments ------------------------------------------------------ NB Flats, DST, filed with the U.S. Bankruptcy Court for the District of Utah a Disclosure Statement in connection with the Plan of Liquidation dated July 15, 2024. The Debtor is a Delaware Statutory Trust, a creature of Delaware state law. The Debtor was formed in early 2017. The Debtor raised funds from third-party investors to purchase an apartment building located at 729 and 745 East 900 North in Logan, Utah (Parcel Nos. 05-032-0007 and 05-032- 0015 on file with the Cache County Recorder's Office), commonly known as: "Alpine Flats" (the "Property") via that certain Confidential Private Placement Memorandum dated April 11, 2017, which was supplemented on June 6, 2017 (the "PPM"). The Debtor essentially is an investment vehicle that holds the Property in trust for its investors under the terms of the PPM as supplemented. The Debtor had no employees, officers, directors, or management prepetition. The signatory trustee of NB Flats, DST is NB Flats ST, LLC, whose sole manager and member is Patrick Nelson. As a result of the decreased amount of rent paid to the Debtor with the pandemic-caused drop in the occupancy rate, the Debtor stopped making its monthly mortgage payments in February 2024, after the loan matured. Months later, the original lender declared a default and scheduled a non-judicial foreclosure sale of the Property, then assigned its security interests in the Debtor to Logan EPA, LLC. Logan EPA filed another notice of default and election to sell and then noticed up a nonjudicial foreclosure for mid-April. The Debtor filed its petition for relief under Chapter 11 hours before the scheduled foreclosure sale to preserve the equity in the Debtor's real property. As of June 30, 2024 the Debtor had $25 in cash on hand. As of June 30, 2024, the Debtor had real property and related assets consisting of the Alpine Flats Property with an estimated value of $9.1 million dollars. The Plan is a liquidating plan that will sell the Property through the Plan if Alpine Flats has not already been sold by the Plan's Effective Date. The lien of secured creditor Logan EPA will attach to the portion of the sales proceeds to the extent of its valid lien, administrative and priority claims will be paid, Allowed Claims will be paid in full, and remainder will remain in escrow so that the Investors to make their elections for 1031 property exchanges in a timely manner while resolving LeaseCo's claim to a disposition fee and any other potential claim the Debtor may have had, including any claim as to the nature and extent of Logan EPA's claim amount. Class 4 consists of the Allowed General Unsecured Claims. Provided that the holder of an Allowed Class 4 Claim has not yet been paid, the Holders of the Allowed Class 4 Claim shall be paid in full from Available Cash following payment of Secured and Priority Claims. Holders of Class 4 Claims are impaired and are entitled to vote on the Plan. Scheduled unsecured claims total $103,514.74. The Debtor has a pending motion to authorize the sale of the Alpine Flats Property for $9.1 million dollars. If that sale does not close prior to the Effective Date, the Liquidation Trustee shall continue to market and sell that property as soon as reasonably practicable after the Effective Date upon reasonable terms and conditions unless previously sold pursuant to Bankruptcy Court order under section 363. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=eVcJfX from PacerMonitor.com at no charge. Attorneys for the Debtor: Douglas J. Payne, Esq. David P. Billings, Esq. FABIAN VANCOTT 95 South State Street, Suite 2300 Salt Lake City, UT 84111 Telephone: (801) 531-8900 Email: dpayne@fabianvancott.com Email: dbillings@fabianvancott.com About NB Flats, DST NB Flats, DST, is an investment vehicle that holds the Property in trust for its investors under the terms of the Private Placement Memorandum as supplemented. The Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Utah Case No. 24-21724) on April 16, 2024, listing $10,000,001 to $50 million in assets and $1,000,001 to $10 million in liabilities. Judge Peggy Hunt presides over the case. David P. Billings, Esq. at Fabian & Clendenin, d/b/a Fabian Vancott, represents the Debtor as counsel. ON POINT DIRECTIONAL: Case Summary & 20 Top Unsecured Creditors --------------------------------------------------------------- Debtor: On Point Directional Drilling and Trenching LLC 263 Co Rd 406 Jonesboro, AR 72404 Business Description: The Debtor specializes in providing drilling and trenching services. Chapter 11 Petition Date: July 31, 2024 Court: United States Bankruptcy Court Eastern District of Arkansas Case No.: 24-12506 Judge: Hon. Phyllis M Jones Debtor's Counsel: Kevin P. Keech, Esq. KEECH LAW FIRM, PA 2011 South Broadway Little Rock, AR 72206 Tel: 501-221-3200 Fax: 501 221 3201 Email: kkeech@keechlawfirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Matthew Mommsen as managing member. 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/JYHKRVA/On_Point_Directional_Drilling__arebke-24-12506__0001.0.pdf?mcid=tGE4TAMA ONE TABLE RESTAURANT: Seeks Ch.11 Bankruptcy Citing Post COVID Woes ------------------------------------------------------------------- Yun Park of Law360 reports that the Los Angeles-based casual restaurant chain that operates Tender Greens and Mexican eatery Tocaya, One Table Restaurant Brands LLC, filed for Chapter 11 bankruptcy Wednesday, July 17, 2024, in Delaware bankruptcy court, with its CEO saying the COVID-19 pandemic was "catastrophic" to their business. About One Table Restaurant Brands One Table Restaurant Brands LLC is a next generation restaurant platform of best-in-class emerging concepts. One Table Restaurant Brands LLC sought relief under Chapter 11 of the U.S. Bankruptcy Protection (Bankr. D. Del. Case No. 24-11553) on July 18, 2024. In the petition filed by Harald Herrmann, as authorized signatory, the Debtor reports estimated assets up to $50,000 and estimated liabilities between $10 million and $50 million. The Debtor is represented by: Thomas Joseph Francella, Jr., Esq. Raines Feldman Littrell LLP 1201 W. 5th Street Suite T-400 Los Angeles, CA 90017 OPTIMUS BUILDING: Truist Bank Seeks Chapter 11 Trustee Appointment ------------------------------------------------------------------ Secured Creditor Truist Bank asked the U.S. Bankruptcy Court for the Western District of North Carolina to appoint a Chapter 11 trustee for The Optimus Building, LLC. In August 2019, Optimus purchased the real property located at 1024 N. Tryon Street and 1027 N. College Street for the purpose of redeveloping it as a mixed-use facility, with both office and event space. Truist provided a portion of the acquisition and development financing for the project. As part of this financing, Truist extended a commercial loan to the company in the amount of $1,435,921. The company, as maker, executed a promissory note dated August 8, 2019 in favor of Truist in the original principal amount of $1,435,921. To secure the note, Optimus executed a Construction Deed of Trust Securing Future Advances dated August 8, 2019. On March 15, 2024, Truist filed a secured proof of claim in the amount of $1,425,288.33. No payments have been received by Truist during the pendency of the company's Chapter 11 case. Truist claims that the company has clearly made no progress towards completing the sale of the property. In fact, the company's principal, Ms. Ellerbe, has been a hinderance to the process as noted by the broker. Her refusal to engage or assist the broker in selling the property is frustrating the efforts of the company to carry out its successful reorganization. The bank explains that the company has been in this Chapter 11 for over eight months and has been marketing the property for sale for over half of that time. To date, there have been no formal offers nor even a term sheet. Much of that fault lies at the feet of the company's principal, whose hesitation, ambivalence or emotional attachment towards selling the property has impaired the process. Truist believes that selling the property through this bankruptcy case is in the best interest of all stakeholders but for this plan to work, a Chapter 11 trustee should be appointed to complete the process. A Chapter 11 trustee will not have an emotional attachment to the property and will better appreciate the importance of working responsively with the broker and potential purchasers to consummate a sale of the property. A copy of the motion is available for free at https://urlcurt.com/u?l=FpiUbI from PacerMonitor.com. Attorneys for Truist Bank: Womble Bond Dickinson (US), LLP James S. Livermon, III, Esq. 555 Fayetteville Street, Suite 1100 Raleigh, North Carolina 27601 Telephone: 919.755.2148 Email: Charlie.Livermon@wbd-us.com About The Optimus Building The Optimus Building, LLC, a company in Charlotte, N.C., filed Chapter 11 petition (Bankr. W.D.N.C. Case No. 23-30866) on December 7, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Tara Ellerbe, managing member, signed the petition. Judge Laura T. Beyer oversees the case. The Debtor tapped Waldrep Wall Babcock & Bailey, PLLC as legal counsel and Howard A. McDonald at McDonald CPA, PLLC as accountant. OWENS & MINOR: Fitch Puts 'BB-' LongTerm IDR on Watch Negative -------------------------------------------------------------- Fitch Ratings has placed Owens & Minor, Inc.'s (OMI) and certain of its subsidiaries' ratings, including their Long-Term Issuer Default Ratings (IDRs) on Rating Watch Negative (RWN) following the company's announcement that it has entered into a definitive agreement to acquire Rotech Healthcare Holdings, Inc. for $1.36 billion in cash. Fitch expects the Rotech acquisition to result in OMI's EBITDA leverage and cash flow-capex/debt ratio remaining outside of Fitch's negative rating sensitivities for 12-24 months. OMI has operated outside of Fitch's negative rating sensitivity for EBITDA leverage since it completed the acquisition of Apria. During the Rating Watch, Fitch will assess OMI's ability to achieve its deleveraging plan, including the extent to which the plan will rely on debt reduction, EBITDA growth or both. Depending on the nature and extent of deleveraging, Fitch will determine whether to downgrade, or affirm the ratings with a Negative or with a Stable Outlook. Fitch expects to resolve the RWN once the transaction is completed under the announced terms, which may take longer than six months. Key Rating Drivers Strong Position as Medical Product Distributor: OMI has a comprehensive portfolio of proprietary products and services to serve the acute care hospital and ambulatory markets through its extensive distribution network. Fitch believes OMI has upside growth potential in the medium term as it leverages its scale, enhances efficiency via technology investments and expands its portfolio of proprietary products. Fitch believes OMI has a sound plan to deal with pressures that emerged from the pandemic, including excess product supply, inflation and competitor pricing. Favorable Outlook for Home Healthcare: Rising demand for products and services in the home healthcare market represents an opportunity for continued growth. The 2022 acquisition of Apria, Inc., a leading U.S. provider of home medical equipment delivery and clinical support, fits well in this market. Fitch believes the aging U.S. population, rising levels of chronic conditions and increasing preference for home care will contribute to high single-digit revenue growth. The home-based care market also offers higher margins than the core distribution business of medical products and aligns with the focus of payors and physicians pursuing more value-based care models. Rotech: Growth with Leverage: Fitch believes the Rotech merger helps to improve the growth and scale of OMI's Patient Direct business by leveraging a combined network of approximately 625 locations. Additionally, Fitch expects the merger will enhance EBITDA margins and improve free cash flow. However, Fitch anticipates that such improvements will emerge gradually and not be fully realized for about three years. The synergies offered by the merger may be derived from improved procurement and network consolidation. Management estimates such synergies will be as much as $50 million by the end of year three, with further upside potential. However, Fitch believes the realization of such synergies may be offset by restructuring costs needed for a successful integration of processes and systems. Following the close of the merger, OMI's leverage may peak around 5.0x. Although management is expected to prioritize deleveraging, Fitch believes that pace of debt reduction may be slower than management's forecast because of light cash conversion elsewhere in the business. This is likely to cause OMI's EBITDA leverage and cash flow-capex/debt ratios to remain outside of Fitch's negative rating sensitivities for 12-24 months, or more. Stand-Alone OMI EBITDA Momentum: Fitch's estimate of OMI's stand-alone adjusted EBITDA is higher in 2024 compared to 2023, albeit modestly, as product demand accelerates. Higher EBITDA is supported by the realization of incremental earnings from expanded product offerings, the sale of more OMI-branded products and cost-structure optimization in the Products and Healthcare Services Segment. Slower EBITDA generation since the Apria acquisition than expected was driven by a fall in PPE revenue, attributable to lower glove pricing and less demand for pandemic-related products. Light Cash Conversion: OMI has thin FCF relative to EBITDA; this appears to be a function of unfavorable changes in working capital and heightened levels of exit and re-alignment costs. Continued reliance on external liquidity sources, such as OMI's revolving credit facility, receivables finance agreements and receivables purchasing agreements (factoring program) signals that OMI is generating sufficient cash flow from operations (CFO) to fund working capital investments and capital expenditures independently. The added debt from the Rotech merger is expected to increase debt more than cash flow from operations over the near term. Competitive Environment: The medical-surgical supply distribution industry in the U.S. is highly competitive and characterized by pricing pressure with narrow margins. OMI competes with other national distributors, including Cardinal Health, Inc. (CAH, BBB/Positive) and Medline Borrower, LP (B+/Stable), regional and local distributors, customer self-distribution models and, to a lesser extent, third-party logistics companies. OMI competes on price, product availability, delivery times and ease of doing business, while managing internal costs and expenses. A focus on customer service has improved retention, preventing the contract losses seen in prior years. Derivation Summary OMI's 'BB-' Long-Term IDR reflects its strong growth platform in home-based care products and services, its solid foundation as a distributor of critical products to hospitals and physicians and focus on continuously improving customer service. Those strengths are offset by its concentrated customer base, dependence on certain significant suppliers, and its material indebtedness relative to expected FCF. Fitch expects OMI's EBITDA leverage to fluctuate between 4.0x-5.0x over the medium term following the Rotech Healthcare acquisition. OMI's much higher leverage and smaller scale compared with other distributors such as Cardinal Health (BBB/Positive) and McKesson Corp. (A-/Stable) lead Fitch to rate the company below those peers. OMI competes with other large national distributors, such as Medline (B+/Stable); customer self-distribution models; and, to a lesser extent, certain third-party logistics companies. In contrast to other larger distributors, Fitch considers OMI less diversified in terms of customers, revenues and suppliers. Apria has helped to improve OMI's profile by offering higher-margin growth through the patient direct marketplace. The acquisition of Rotech Healthcare offers expanded opportunities for revenue and earnings growth in OMI's Patient Direct segment that hopefully will enable it to achieve improved service across its key stakeholders. However, even on a pro forma basis, OMI's revenues and profitability are expected to remain well below Medline's. OMI has been more profitable than Cardinal's Global Medical Products and Distribution segment despite OMI's smaller revenue base. Fitch uses the strong parent approach to assess the overall linkage between OMI and its subsidiaries. The assessment reflects high legal, operational and strategic incentives between the parent and subsidiaries. Fitch consolidated the parent and subsidiary IDRs in light of those strong ties. A key legal factor is that across the entire capital structure, there are cross-default provisions between the company's revolving credit agreement, term loan agreement, 2024 notes, 2029 notes, 2030 notes and a receivables financing agreement. Key Assumptions - Revenue (pro forma for the Rotech merger) increasing at 6.5% CAGR through to 2027. - Operating EBITDA margin improving to approximately 6%, pro forma for the Rotech merger. - CFO, along with external sources of working capital borrowing, to be sufficient to fund internal growth and capex of approximately 1.8%-2.3% of revenue. - Incremental acquisition financing resulting in an effective interest expense rising above 7.5% over the forecast period; - The change in working capital to dampen CFO, although CFO may vary depending on growth in inventory and receivables turnover. - 2024 secured notes and 2027 term loan A assumed to be paid. - EBITDA leverage fluctuating between 4.0x-5.0x over the next 24 months, depending on the use of receivables factoring, which offsets reported debt reduction, and the amount and use of FCF. - No material common dividends or share repurchases through to 2027. - Proposed acquisition of Rotech Healthcare results in incremental debt of $1.4 billion and $200 million of EBITDA (pro forma) in 2025. Integration costs are expected to offset cost-reduction opportunities of ($50 million) for the 24 months after acquisition closing. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Reduced dependence on short-term borrowing for working capital needs. - Top-line growth sustained at 4% or higher, balanced across segments and geographies and supported by consistent service levels and customer persistency. - Gross EBITDA leverage sustained below 3.0x and cash flow-capex/debt above 7.5%. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Substantial dependence on external liquidity facilities for working capital needs. - Increased level of debt for shareholder returns (dividends or share repurchases) or highly leveraged acquisitions that Fitch expects will raise business and financial risks without sufficient returns. - Loss of health care provider customers or a GPO that causes a material loss of revenue and EBITDA. - Gross EBITDA leverage sustained above 4.0x and cash flow-capex/debt sustained below 5.0%. Liquidity and Debt Structure Adequate Liquidity: OMI's key sources of liquidity comprise CFO and a revolving credit facility of up to $450 million. OMI's free cash flow is thin compared to its EBITDA due to negative working capital changes and significant exit/re-alignment costs, with a heavy dependence on external liquidity sources highlighting challenges in funding operations and investments through its cash flow from operations alone. OMI entered into a master receivables purchase agreement in March 2023, with an aggregate outstanding amount not to exceed $200 million. Totals of $103 million and $124 million of uncollected account receivables had been sold and removed from OMI's consolidated balance sheet as of March 31, 2024 and Dec. 31, 2023, respectively. Fitch has reinstated the balance of uncollected receivables on the balance sheet with a related addition to debt. Additionally, Fitch has adjusted cash flow from operating and financing activities in accordance with its "Corporate Rating Criteria". Favorable Maturity Profile: OMI has a note maturity in December 2024 for $171 million and a term loan A maturity in March 2027 for $393 million. Thereafter, the balance of its debt is due in 2029 and 2030. Fitch expects available cash and FCF to service debt amortization and debt maturities through 2027 adequately. Fitch believes the debt incurred to finance the acquisition of Apria and Rotech will dampen FCF in the medium term, because of the higher for longer level of SOFR, which Fitch expects to range from 4.5% to 5.3% over the near term. The addition of the Rotech acquisition debt will be significant ($1.4 billion), but will not place any material added burden on refinancing risk in the near term; however, annual debt service tied to such debt is expected to further dampen FCF until it is substantially reduced. Issuer Profile Owens & Minor, Inc. and subsidiaries, a Fortune 500 company headquartered in Richmond, VA, is a global health care solutions company that incorporates product manufacturing, distribution support and technology services to deliver products and services to health care industry customers in approximately 80 countries. Summary of Financial Adjustments Historical and projected EBITDA are adjusted principally for non-recurring expenses, including acquisition-related costs. Fitch has reinstated the balance of accounts receivables that were treated as sold under OMI's master receivables purchase agreement on the balance sheet with a related addition to debt; accordingly, cash flow from operating and financing activities have also been adjusted. 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 ----------- ------ -------- ----- Barista Acquisition I, LLC LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ O&M Halyard, Inc. LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ Owens & Minor, Inc. LT IDR BB- Rating Watch On BB- senior unsecured LT BB- Rating Watch On RR4 BB- senior secured LT BB+ Rating Watch On RR2 BB+ Byram Healthcare Centers, Inc. LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ Owens & Minor Medical, Inc. LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ Barista Acquisition II, LLC LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ Owens & Minor Distribution, Inc. LT IDR BB- Rating Watch On BB- senior secured LT BB+ Rating Watch On RR2 BB+ PAGE HOUSING: Jill Durkin Named Subchapter V Trustee ---------------------------------------------------- The U.S. Trustee for Regions 3 and 9 appointed Jill Durkin, Esq., at Durkin Law, LLC as Subchapter V trustee for Page Housing Group, LLC. Ms. Durkin will be paid an hourly fee of $325 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Ms. Durkin declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Jill E. Durkin, Esq. Durkin Law, LLC 401 Marshbrook Road Factoryville, PA 18419 Phone number: (570) 881-4158 Email: jilldurkinesq@gmail.com About Page Housing Group Page Housing Group, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Pa. Case No. 24-01803) on July 23, 2024, with $500,001 to $1 million in both assets and liabilities. Judge Mark J. Conway presides over the case. Robert E. Chernicoff, Esq., at Cunningham and Chernicoff PC represents the Debtor as legal counsel. PINE TREE: Tamara Miles Ogier Named Subchapter V Trustee -------------------------------------------------------- The U.S. Trustee for Region 21 appointed Tamara Miles Ogier, Esq., at Ogier, Rothschild & Rosenfeld, PC as Subchapter V trustee for Pine Tree Condominium Association, Inc. Ms. Ogier will be paid an hourly fee of $450 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Ms. Ogier declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Tamara Miles Ogier, Esq. Ogier, Rothschild & Rosenfeld, PC P.O. Box 1547 Decatur, GA 30031 Phone: (404) 525-4000 About Pine Tree Condominium Association Pine Tree Condominium Association, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-57695) on July 26, 2024, with $383,876 in assets and $2,263,903 in liabilities. Marion Webb, vice president, signed the petition. Mark D. Gensburg, Esq., at Jones & Walden, LLC represents the Debtor as legal counsel. PINEAPPLE ENERGY: Regains Compliance With Nasdaq Equity Rule ------------------------------------------------------------ Pineapple Energy Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on July 26, 2024, the Company received a decision from the Nasdaq Hearings Panel informing the Company that Nasdaq has determined and agreed that the Company is now in compliance with the Equity Rule. As previously disclosed, on May 16, 2024, the Company received a notice from the Listing Qualifications Department of the Nasdaq Stock Market informing the Company that it no longer complies with the requirement under Nasdaq Listing Rule 5550(b)(1) to maintain a minimum of $2,500,000 in stockholders' equity for continued listing on Nasdaq. The Company will remain on a one-year Nasdaq Panel Monitor, which means that if the Company falls out of compliance again, it will not be able to submit a remediation plan to the Staff, but rather it will be required to go back into the hearings process. About Pineapple Energy Inc. Pineapple Energy Inc. is a growing domestic operator and consolidator of residential and commercial solar, battery storage, and grid services solutions. Its strategy is focused on acquiring, integrating, and growing leading local and regional solar, storage, and energy services companies nationwide. Pineapple is primarily engaged in the sale, design, and installation of photovoltaic solar energy systems and battery storage systems through its Hawaii-based Hawaii Energy Connection and New York-based SUNation Solar Systems entities. As of December 31, 2023, the Company had $58.2 million in total assets, $37.7 million in total liabilities, and $20.4 million in total stockholders' equity. Melville, N.Y.-based UHY LLP, the Company's auditor since 2023, issued a "going concern" qualification in its report dated March 29, 2024, citing that the Company's current financial position and the Company's forecasted future cash flows for 12 months beyond the date of issuance of the financial statements indicate that the Company will not have sufficient cash to make the first SUNation earnout payment in the second quarter of 2024 or the first principal payment of the Long-Term Note due on November 9, 2024, factors which raise substantial doubt about the Company's ability to continue as a going concern. PINEAPPLE ENERGY: Secures $1MM Bridge Loans From Conduit, MBB ------------------------------------------------------------- Pineapple Energy Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that the Company obtained bridge loan financing for working capital purposes from Conduit Capital U.S. Holdings LLC, an unaffiliated lender. On such date, Conduit loaned the principal sum of $500,000 to the Company on an original issue basis of 20% and accordingly, Conduit advanced $400,000.00 to the Company. The Initial Conduit Loan will accrue interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20%. Commencing on October 21, 2024 through and including the Conduit Maturity Date, the Company may request that Conduit provide additional advances for working capital on identical terms, conditions and interest rate as the Initial Conduit Loan on an OID basis, up to an aggregate principal sum of $500,000.00, and Conduit shall have the right, without commitment or obligation, to make such requested loan(s) by advancing 80% percent of the principal thereof. All such loans are secured by a pledge of all of the Company's assets. The loans due to Conduit will become due on July 21, 2025. In accordance with the terms of the loan agreements with Conduit, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $3,150,000.00, it will be required to repay the unpaid principal balance of the Initial Conduit Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $4,400,000.00, the Company will be required to repay the entire unpaid principal amount of all loans due to Conduit, including the OID, simultaneous with the closing(s) of such offering(s). As a condition to such loan(s), the Company agreed to cause the nomination of a designee of Conduit for election to its Board of Directors. Additionally, on July 22, 2024, the Company obtained bridge loan financing from MBB Energy. LLC for working capital purposes. Scott Maskin, the Company's interim chief executive officer and a director, is a principal of MBB and accordingly, MBB is an affiliate of the Company. On such date, MBB loaned the principal sum of $500,000 to the Company on an OID basis of 20% and accordingly, MBB advanced the sum of $400,000.00 to the Company. The Initial MBB Loan will accrue interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20%. Commencing on October 21, 2024 through and including the MBB Maturity Date, the Company may request that MBB provide additional advances for working capital on identical terms, conditions and interest rate as the Initial MBB Loan on an OID basis, up to an aggregate principal sum of $500,000.00, and MBB shall have the right, without commitment or obligation, to make such requested loan(s) by advancing 80% percent of the principal thereof. All such loans are secured by a pledge of all of the Company's assets. The loans due by the Company to MBB will become due on July 21, 2025. In accordance with the terms of the loan agreements with MBB, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which it derives aggregate gross proceeds of at least $3,150,000.00, it will be required to repay the unpaid principal balance of the Initial MBB Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which the Company derives aggregate gross proceeds of at least $4,400,000.00, the Company will be required to repay the entire unpaid principal amount of all loans due to MBB, including the OID, simultaneous with the closing(s) of such offering(s). MBB has granted Conduit the exclusive right to enforce MBB's loans on MBB's behalf. Furthermore, effective July 22, 2024, Decathlon Growth Credit, LLC (as assignee of Decathlon Specialty Finance, LLC entered into a First Amendment with the Company with respect to the Revenue Loan and Security Agreement dated June 1, 2023 among Decathlon, the Company, and Pineapple Energy LLC, SUNation Solar Systems, Inc., SUNation Service, LLC, SUNation Roofing, LLC and SUNation Energy, LLC. The First Amendment designated Scott Maskin as the "Key Person" under the Decathlon Agreement and approved the Company's working capital loans from Conduit and MBB. The summary above is qualified by the full text of the First Amendment to Revenue Loan and Security Agreement, dated July 22, 2024, by and among the Company, the Guarantors party thereto, and Decathlon. The Company also entered into a Joinder and Amendment to Subordination Agreement with Decathlon, Hercules Capital, Inc., Conduit and MBB. Pursuant thereto, Conduit and MBB became parties to the Subordination Agreement dated June 21, 2023, among the Company, Decathlon, and Hercules Capital, Inc. In accordance with the Joinder Agreement, Conduit and MBB agreed to subordinate their respective security interests in the Company's assets, pari passu, to the first priority security interest of Decathlon and the second security priority interest of Hercules. About Pineapple Energy Inc. Pineapple Energy Inc. is a growing domestic operator and consolidator of residential and commercial solar, battery storage, and grid services solutions. Its strategy is focused on acquiring, integrating, and growing leading local and regional solar, storage, and energy services companies nationwide. Pineapple is primarily engaged in the sale, design, and installation of photovoltaic solar energy systems and battery storage systems through its Hawaii-based Hawaii Energy Connection and New York-based SUNation Solar Systems entities. As of December 31, 2023, the Company had $58.2 million in total assets, $37.7 million in total liabilities, and $20.4 million in total stockholders' equity. Melville, N.Y.-based UHY LLP, the Company's auditor since 2023, issued a "going concern" qualification in its report dated March 29, 2024, citing that the Company's current financial position and the Company's forecasted future cash flows for 12 months beyond the date of issuance of the financial statements indicate that the Company will not have sufficient cash to make the first SUNation earnout payment in the second quarter of 2024 or the first principal payment of the Long-Term Note due on November 9, 2024, factors which raise substantial doubt about the Company's ability to continue as a going concern. PINNACLE HOLDINGS: Files Amendment to Disclosure Statement ---------------------------------------------------------- Pinnacle Holdings, LLC, submitted an Amended Disclosure Statement describing Amended Chapter 11 Plan. The Debtor is a Limited Liability Company. Since January 10, 2017, the Debtor has been in the business of commercial real estate rental. The subject property located at 22 Frontage Road, Westerly, Rhode Island 02891. The building is not 100% completed for its intended purpose of housing a medical marijuana and adult use cultivation and processing center. The Debtor has no employees. Harold T. Panciera, III is the managing member and remains working on site, without expectation of reimbursement for his efforts, other than compensation as an equity member if and when the subject property sells and call creditors' claims, as set forth herein, are paid in full, with no impairment. On or about October 6, 2022, Pinnacle Holdings, LLC, along with Managing Member, Harold Panciera and Green Room Organics, LLC filed multiple count complaint, KC-2022-0772, against Pinnacle member, Kristin Vaughn, individually and in her capacity as Member and Managing of GRO and Member of Pinnacle Holding. Plaintiffs have requested the state court to enter an order regarding Defendant Vaughn's divestiture from GRO and Pinnacle, requiring her to divest immediately so that GRO can move forward with licensing, operations and payment to lenders to which it has obligations. No further action has taken place oon the state Court's calendar, since the filing of the Debtor's Chapter 11 bankruptcy petition. Numerous events gave rise to secured creditors not being paid timely, causing several aborted foreclosure sales. The final foreclosure scheduled for February 27, 2024 was not stopped by alternate means, which resulted in Debtor's seeking relief from the Bankruptcy Court on the same date. General unsecured creditors are classified in Class 4, and will receive a distribution of at least 1% of their allowed claims, to be distributed upon the sale of the property known as 22 Frontage Road, Westerly, Rhode Island. Payments and distributions under the Plan will be funded by the sale of 22 Frontage Street, Westerly, Rhode Island. A full-text copy of the Amended Disclosure Statement dated July 14, 2024 is available at https://urlcurt.com/u?l=cVwguv from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Kevin D. Heitke, Esq. HEITKE COOK ASSOCIATES LLC 365 Eddy Street Providence, RI 02903 Telephone: (401) 454-4100 Facsimile: (401) 454-4144 Email: kdh@HCALAWRI.com About Pinnacle Holdings LLC Pinnacle Holdings LLC in Westerly, RI, has been in the business of commercial real estate rental. The Debtor filed its voluntary petition for Chapter 11 protection (Bankr. D.R.I. Case No. 24-10106) on Feb. 27, 2024, listing as much as $1 million to $10 million in both assets and liabilities. Harold T. Panciera, III, as managing member, signed the petition. Judge Diane Finkle oversees the case. HEITKE COOK ASSOCIATES LLC serves as the Debtor's legal counsel. PLASKOLITE PPC: Moody's Affirms B3 CFR & Alters Outlook to Negative ------------------------------------------------------------------- Moody's Ratings has changed Plaskolite PPC Intermediate II LLC's ("Plaskolite") outlook to negative from stable. At the same time, Moody's have affirmed the company's B3 Corporate Family Ratin, B3-PD probability of default rating, and the B3 ratings of the company's senior secured first-lien term loan and the revolving credit facility. RATINGS RATIONALE The negative outlook reflects Plaskolite's improving profitability albeit still weak credit metrics in 2024, relatively weak macroeconomic growth expectations for 2025 and the maturity of the term loan in the fourth quarter of 2025. Also, the company's revolver expires in December 2024. The revolver and term loan account for about 70% of Plaskolite's adjusted debts at end March 2024, the successful refinancing of these debts in a timely manner would likely cause us to reassess the negative outlook. Plaskolite's performance was significantly impacted by volume decline due to weak demands and competitive pricing pressures in 2023 and its Moody's adjusted debt/EBITDA reached to more than 15.0x during the year. While Moody's expect Plaskolite's financial performance will improve from the trough level due to the end of destocking, integration of acquired businesses and cost cutting measures, its leverage will remain elevated around 10.0x in the absence of a strong demand recovery over the next 12-18 months. At the same time, its free cash flow generation will remain challenging with high interest expenses under the current rate environment. Such elevated financial leverage and weak free cash flow could make refinancing at reasonable terms difficult. Plaskolite's B3 CFR also reflect the company's business focus on manufacturing largely acrylic sheets and polycarbonate sheets and a relatively concentrated customer base. Interchangeability and substitution risk from other types of thermoplastics and competitions with large backward integrated plastics producers are other rating constraints. Nonetheless, the rating is supported by its leading market position in thermoplastic products, diverse end markets, and capital light business which provides flexibility in cash conservation during the downcycle. Plaskolite's liquidity is weak. While the company had a cash balance of $28.5 million and $46 million availability under its $100 million revolving credit facility as of March 31, 2024, its revolver expires in December 2024 and its 1st lien term loan with total outstanding amount of $684 million matures in Dec 2025. Moody's expect Plaskolite to generate breakeven free cash flow over the next 12-18 months. Hence, the company will need to complete the refinancing of its revolver and 1st lien term loan over the next six months to avoid additional negative rating actions. The B3 ratings of Plaskolite's first lien revolver and term loan are in line with its CFR, reflecting their preponderance in the company's debt capital and the effective seniority to the second-lien term loan. The second-lien term loan is not rated by Moody's. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings will be downgraded if the company fails to make further progress in refinancing its debt maturities such that the risk of default increases. Deterioration in earnings and leverage or a more aggressive financial strategy could also prompt a ratings downgrade. The ratings are unlikely to be upgraded in the near term given the negative outlook. However an upgrade could be considered if the company addresses its refinancing needs and continues to improve its earnings and free cash flow. A reduction in adjusted debt/EBITDA to below 6.0x on a sustainable basis will support the consideration for a rating upgrade. ESG CONSIDERATIONS Environmental, social and governance ("ESG") factors are important considerations in Plaskolite's credit quality but are not driver of the action. Plaskolite's credit Impact Score ("CIS") of 4 mainly reflects its governance risks including high debt leverage and track record of debt-funded acquisitions under private equity ownership. The company is also exposed to the environmental and social risks due to the nature of its products and the production process. Headquartered in Columbus, Ohio, Plaskolite PPC Intermediate II LLC is a global leader in manufacturing engineering thermoplastics, including; Acrylic, Polycarbonate, ABS, Olefin, PVC, and PETG Sheet, Extruded Profiles and PMMA Polymers. Based in Columbus, Ohio and owned by Pritzker Private Capital along with, management and other co-investors, Plaskolite's customized products are used in a wide variety of applications, including windows, lighting, signage, point-of-purchase displays, semiconductor, marine, transportation, security, and bath & spa products. The company operates 19 manufacturing facilities with locations in the US, Mexico, Chile, Israel, Bulgaria, and Spain and has a distribution center in the Netherlands. PPC Partners acquired the company from Charlesbank in December 2018. The principal methodology used in these ratings was Chemicals published in October 2023. PLC JETBOX: Linda Leali Named Subchapter V Trustee -------------------------------------------------- The U.S. Trustee for Region 21 appointed Linda Leali, Esq., as Subchapter V trustee for PLC Jetbox Worldwide, LLC. Ms. Leali will be paid an hourly fee of $450 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Ms. Leali declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Linda M. Leali Linda M. Leali, P.A. 2525 Ponce De Leon Blvd., Suite 300 Coral Gables, FL 33134 Telephone: (305) 341-0671, ext. 1 Facsimile: (786) 294-6671 Email: leali@lealilaw.com About PLC Jetbox Worldwide PLC Jetbox Worldwide, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 24-17390) on July 23, 2024, with $50,001 to $100,000 in assets and $100,001 to $500,000 in liabilities. Judge Robert A. Mark presides over the case. Gabriel Gonzalez, Esq. represents the Debtor as legal counsel. PLOURDE SAND: Unsecureds Will Get 100% Dividend over 60 Months -------------------------------------------------------------- Plourde Sand & Gravel Co., Inc., filed with the U.S. Bankruptcy Court for the District of New Hampshire a Disclosure Statement pertaining to Plan of Reorganization dated July 15, 2024. The Debtor was formed in 1929 and was incorporated on or about April 1, 1970. The principal office address is 519-523 W. River Road, Hooksett, New Hampshire 03106. The Debtor is owned by Daniel O. Plourde, who is the Sole Shareholder and Vice President. The Debtor owns several parcels of real estate: 519-523 West River Road, Hooksett, New Hampshire, 13 Allenstown Road, Allenstown, New Hampshire and 84 S. Village Road, Loudon, New Hampshire. These 3 properties have liens against them by the Internal Revenue Service and GreenLake Real Estate Funding LLC and Granite Woods, LLC. The Debtor plans on filing a motion to employ James W. Powers also to sell the real estate located in Allenstown, NH. The Debtor anticipates that the property would sell for $2,000,000.00. This Disclosure Statement under Chapter 11 of the Code proposes to address claims of creditors, the sale of certain assets of the Debtor to reduce its mortgage with GreenLake Real Estate Funding, LLC, and GreenLake retaining a mortgage, to the extent allowed, against assets of the Debtor and its affiliates. The quarterly fees due the US Trustee (Class 1) will be paid in accordance with 11 U.S.C. Section 1129(a)(12). The quarterly fees due the US Trustee will be dependent upon the outcome of any sale transaction and at a minimum will be estimated to be $250.00. The claims of the Town of Hooksett and Town of Allenstown (Class 2) will be paid in full over a 60 month period with the first payment commencing within 30 days of confirmation. The claim of GreenLake Real Estate Funding LLC (Class 3), to the extent allowed, and the claims of the Internal Revenue Service ("IRS") and Universal Finance Corp (Class 5) will continue to be paid through monthly installments. The NH Department of Labor (Class 4) will be paid from the sale of the property at 91 Whittimore Road, Pembroke, New Hampshire. GreenLake's mortgage will be reduced by the sale of the Allenstown, NH real estate. The IRS will retain its secured position in the Debtor's real estate; however, the IRS claim will be reduced by the sale of the Allenstown, NH real estate. Universal will retain its secured position in the Debtor's collateral. The State of Maine Tax Claim (Class 6) will be paid in full; the priority amount will be paid over a 12 month period with the first payment commencing within 30 days of confirmation. The Unsecured Creditors (Class 7) will be paid in full over a 60 month period with the first payment commencing within 30 days of confirmation. Since unsecured creditors will be paid in full, Equity (Class 8) will retain ownership of the Debtor. The Debtor plans on holding an auction for some of its equipment or sell the equipment through private sale and will use the net sale proceeds to pay the IRS claim and the unsecured creditors’ dividend payment. The equipment that the Debtor plans on selling will not be necessary for the continued operation of the business. Class 7 consists of Unsecured Claims. The unsecured claims consist of general unsecured creditors in the amount of $1,449,941.00. The Unsecured Claims are not impaired. The Debtor anticipates paying these unsecured creditors a dividend payment of 100% over a period of 60 months, with the first dividend payment within 30 days after confirmation of the plan. The Debtor has objected to Proof of Claim #6 of Service Federal Credit Union in the amount of $3,138.78 as the Debtor has never had credit card or bank account with Service Credit Union, and moreover has never had an employee or owner named Steven J. Robichaud, the signer on the credit application attached to the Proof of Claim. The hearing on the Objection to Proof of Claim is scheduled for August 27, 2024 at 10:00 a.m. The Debtor will file an Objection to the claim of CLF. CLF has not filed a proof of claim. They were a creditor of the Debtor; however, the Debtor does not believe it owes CLF any funds. Class 8 consists of Equity Holders. Daniel Plourde is the owner of the Debtor. He will retain ownership of the Debtor as the unsecured creditors will be paid in full. Upon confirmation, the Debtor will continue to make its mortgage payments. The Debtor will sell the property at 91 Whittimore Road, Pembroke, New Hampshire and the lien of New Hampshire Department of Labor will be paid in full. Following confirmation, the Debtor plans on selling Allenstown, NH real estate and using two thirds of the sale proceeds to pay GreenLake to reduce the mortgage principal, to the extent determined and allowed, and the remaining one third to the IRS to reduce its claim. The Debtor also contemplates selling 84 S. Village Road and using two thirds of the sale proceeds to pay GreenLake to reduce the mortgage principal and the remaining one third to the IRS to reduce its claim. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=4RG3kP from PacerMonitor.com at no charge. Counsel to the Debtor: Eleanor Wm. Dahar, Esq. VICTOR W. DAHAR, P.A. 20 Merrimack Street Manchester, NH 03101 Tel: (603) 622-6595 Fax: (603) 647-8054 Email: vdaharpa@att.net About Plourde Sand & Gravel Co., Inc. Plourde Sand & Gravel Co., Inc., is a New Hampshire Corporation formed in 1929. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N.H. Case No. 24-10015) on January 9, 2024. In the petition signed by Daniel O. Plourde, sole shareholder and vice president, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Bruce A. Harwood oversees the case. Eleanor Wm. Dahar, Esq., at VICTOR W. DAHAR PROFESSIONAL ASSOCIATION, represents the Debtor as legal counsel. POLERAX USA: Unsecureds Will Get 2% of Claims over 60 Months ------------------------------------------------------------ Polerax USA Inc. filed with the U.S. Bankruptcy Court for the Central District of California a Plan of Reorganization for Small Business dated July 15, 2024. The Debtor was formed in 2016 by Kyung J. Lee who is the Debtor's president and a 100% shareholder. The Debtor began operations as an embroidery company in the city of Montebello, CA. When Covid-19 began, the Debtor's largest clients stopped orders because of the shutdown. This had greatly affected the Debtor's revenue. When the Covid-imposed restrictions started to slowly go away, the high margin work had already stopped and it was difficult for the Debtor to recover the lost revenue. To ensure that the operation would remain without any interruption, the Debtor obtained several merchant cash advance loans but eventually was not able to keep up with the monthly payments, thus necessitating the need for a reorganization. The final Plan payment is expected to be paid on November 2029. This Plan of Reorganization proposes to pay creditors from business operations. Class 3 consists of non-priority unsecured creditors. The total amount of the allowed general unsecured claims is $3,372,520.39 and includes the fully and partially undersecured portion of creditors. Based on the liquidation analysis and the income valuation of the Debtor's assets, the holders of allowed general unsecured claims will be receiving an estimated 2% pro-rata distribution through the Plan. The distribution to allowed general unsecured claims will be made monthly, with the first payment of $1,124.17 due on the effective date, followed by 59 consecutive payments, each in the amount of $1,124.17 to be paid pro-rata to each holder of allowed general unsecured claim. Mr. Kyung Lee is the president and a 100% equity security holder of the Debtor. Mr. Lee does not hold a pre-petition or a post-petition claim against the Debtor. The Debtor's proposed 5-year projections itemize the Debtor's revenue sources and the expenses for the next 5 years. The Debtor intends to fund its plan from the continued operation on its business. A full-text copy of the Plan of Reorganization dated July 15, 2024 is available at https://urlcurt.com/u?l=o3QUj6 from PacerMonitor.com at no charge. Attorney for the Debtor: Michael Jay Berger, Esq. Law Offices of Michael Jay Berger 9454 Wilshire Boulevard, 6th Floor, Beverly Hills, CA 90212 Telephone: (310) 271-6223 Facsimile: (310) 271-9805 Email: rnichael.bergerbankruptcypower.com About Polerax USA Inc. Polerax USA Inc. in Los Angeles, CA, filed its voluntary petition for Chapter 11 protection (Bankr. C.D. Cal. Case No. 24-12938) on April 16, 2024, listing $99,458 in assets and $3,368,075 in liabilities. Kyung J. Lee as president, signed the petition. Judge Neil W. Bason oversees the case. LAW OFFICES OF MICHAEL JAY BERGER serves as the Debtor's legal counsel. PREMIER CAR WASH: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Premier Car Wash Easley, LLC. About Premier Car Wash Easley Premier Car Wash Easley, LLC owns and operates a car wash business in Easley S.C. Premier Car Wash Easley filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. S.C. Case No. 24-02205) on June 20, 2024, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Joseph Kershaw Spong serves as Subchapter V trustee. Christine E. Brimm, Esq. at Barton Brimm, PA represents the Debtor as legal counsel. PREMIER CAR WASH: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Premier Car Wash Seneca, LLC. About Premier Car Wash Seneca Premier Car Wash Seneca, LLC owns and operates a car wash business in Seneca, S.C. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.S.C. Case No. 24-02225) on June 20, 2024, with up to $50,000 in assets and up to $10 million in liabilities. Joseph Kershaw Spong serves as Subchapter V trustee. Judge Helen E. Burris presides over the case. Robert H. Cooper, Esq., at The Cooper Law Firm represents the Debtor as bankruptcy counsel. PRIME CAPITAL: Court Dismisses Chapter 11 Bankruptcy Case --------------------------------------------------------- Judge Robert E. Littlefield, Jr. of the United States Bankruptcy Court for the Northern District of New York granted the motion filed by B and R Acquisition Partners, LLC and JHM Lending Ventures, LLC to dismiss the Chapter 11 bankruptcy case of Prime Capital Ventures, LLC pursuant to 11 U.S.C. Sec. 1112(b), without prejudice. On January 12, 2024, District Judge Mae A. D'Agostino appointed Paul A. Levine, Esq. as the temporary receiver of the Debtor in the case, Compass-Charlotte 1031, LLC v. Prime Capital Ventures, LLC et al., Case No. 24-cv-00055. On January 24, 2024, Judge D'Agostino made the Receiver's appointment permanent. On February 15, 2024, Kris Daniel Roglieri, the sole member and 100% shareholder of Prime, filed an individual Subchapter V bankruptcy petition. On May 14, 2024, the Receiver filed a voluntary Chapter 11 petition on behalf of Prime. On May 15, 2024, Roglieri's bankruptcy case was converted to Chapter 7. On June 25, 2024, B and R Acquisition Partners, LLC and JHM Lending Ventures, LLC filed the Motion alleging Prime's case was improperly filed. On July 9, 2024, Christian H. Dribusch, Esq., the Chapter 7 Trustee for the estate of Roglieri, filed a statement of ratification of Prime's bankruptcy filing. On July 10, 2024, the Trustee filed opposition to the Motion. CompassCharlotte 1031, LLC and the Receiver have also objected. On July 17, 2024, a hearing on the Motion was held and the matter was placed on reserve. The B&R Parties argue the Receiver did not have the requisite authority to file the present bankruptcy case, citing a lack of "managerial authority" and "any authority to direct litigation or the claims of the Debtor. The Objecting Parties collectively argue four points in opposition to the Motion: 1. The Receiver argues the B&R Parties lack standing to challenge the Receiver's authority. 2. Compass and the Receiver aver that the Receiver did, in fact, have the authority to file the bankruptcy, citing the District Court's granting of "exclusive dominion and control over all of the assets, . . . operations and business affairs of [Prime]" and authority over "all of [Prime's] assets of any nature . . . ." 3. The Objecting Parties claim that the question of the Receiver's authority is moot since the Trustee has subsequently ratified the bankruptcy. 4. The Trustee contends that dismissal of this case would not be in the best interest of creditors. The Receiver relies on several cases to argue the B&R Parties "lack standing to raise issues concerning the Receiver's authority to file the Chapter 11 case." Only one of the cited cases, In re Gucci, 174 B.R. 401 (Bankr. S.D.N.Y. 1994), involves a Sec. 1112(b) standing matter, the Court notes. In Gucci, creditors of the parent company filed a motion to dismiss the bankruptcies of several subsidiaries under Sec. 1112(b), alleging that the trustee lacked the authority to file them. But the question of the creditors' standing arose because they "base[d] their challenge to the Trustee's authority, not as creditors of one of the Related Entities, but as creditors of the [parent companies]." In this case, the B&R Parties bring this Motion as direct creditors of Prime, the Court states. As such, the Court finds the reasoning of Gucci to be unpersuasive and that the B&R Parties have standing to bring the Motion. A receiver's authority "is wholly determined by the order of the appointing court." Compass and the Receiver's position is based on specific language in the District Court's January 24, 2024, order which enumerates the scope of the receivership: 1. The Receiver shall have and retain and is hereby granted exclusive dominion and control over all of the assets, books and records, operations and business affairs of Defendants. 2. The Receiver's authority hereunder shall be, and hereby is, vested in and extended to all of Defendants' real property, equitable property, tangible and intangible personal property, interest, or assets of any nature, wherever located. 3. The Receiver is authorized to take any and all actions the Receiver, in his sole discretion, deems appropriate in order to ascertain the amount and location of Defendants' assets. 4. The Receiver shall have the duties and responsibilities of a receiver under law, shall be answerable and account to the Court for the Receiver's activities, and shall maintain a detailed accounting of his activities, including without limitation, any and all funds collected and used for any purpose. 5. The Receiver shall not be liable for any debts or liabilities of Defendants. The arguments in favor of the Receiver having proper authority rely heavily on the first and second clauses, claiming that the order is "worded in the broadest terms possible" and "could not be more expansive." The Court disagrees, pointing out that Compass and the Receiver fail to analyze the remaining clauses. The first and second clauses define the extent of the Receiver's control, granting him dominion over assets and the operation of the Defendants' businesses. But it is the third clause that defines the scope of the Receiver's authority. Specifically, "[t]he Receiver is authorized to take any and all actions the Receiver, in his sole discretion, deems appropriate in order to ascertain the amount and location of Defendants' assets." The broad powers that the District Court granted to the Receiver are for the purpose of identifying and locating assets. The first and second clauses are confined to the furtherance of the purpose enshrined in the third clause. There is nothing in the authorizing language suggesting the Receiver's authority includes placing Prime into bankruptcy. The Court also holds that the B&R Parties have established the Receiver did not have the authority to file this bankruptcy case on Prime's behalf. In his statement of ratification, the Trustee claims to have authority to ratify the bankruptcy "in his capacity as the Chapter 7 Trustee to the bankruptcy estate of [Kris] Daniel Roglieri . . .which bankruptcy estate is the sole member of Prime Capital Ventures, LLC . . . ." The Objecting Parties cite to several cases in support of ratification but fail to cite the most important authority: Prime's operating agreement, the Court finds. Prime's operating agreement does not contradict Delaware law, therefore Roglieri "cease[d] to be a member" of Prime upon filing, the Court states. Furthermore, Prime's operating agreement makes it clear that the Trustee did not receive management authority upon the transfer of Roglieri's interest in Prime, the Court adds. Under Delaware law and Prime's operating agreement, the Trustee has no authority to participate in the management of Prime. This includes making the decision to ratify the present bankruptcy case, the Court notes. The Objecting Parties' mere assumption that the Trustee has such authority, without any reference to or analysis of the operating agreement, does not stand up to scrutiny. Therefore, the Trustee's ratification is ineffective, the Court concludes. According to the Court, the Receiver clearly did not have the ability to act on behalf of Prime. Further, the Trustee's purported ratification does not cure the deficiency, the Court adds. As such, the Court deems dismissal pursuant to 11 U.S.C. Sec. 1112(b) to be appropriate under these circumstances. Judge Littlefield says, "To permit this case to continue would be for the Court to sanction misuse of the Bankruptcy Code. Every subsequent act or proceeding in this case would be overshadowed by its impropriety. All work performed and progress made by the parties would be in a constant state of uncertainty as the case's flawed foundation threatens to topple what is built upon it." In anticipation of an appeal of this decision and request for a stay pending appeal, the Court has concluded it will not grant such a stay in this case. By granting a stay pending appeal, the Court would be further frustrating the B&R Parties' right as established in arbitration and a court of law. To grant a stay pending appeal would be to further condone an unauthorized filing, which runs counter to the public goal of the bankruptcy system, the Court says. A copy of the Court's decision dated July 23, 2024, is available at https://urlcurt.com/u?l=ZqC1wy Attorneys for B and R Acquisition Partners, LLC and JHM Lending Ventures, LLC: M. Patrick Everman, Esq. Matthew W. McDade, Esq. BALCH & BINGHAM LLP 188 East Capitol Street, Suite 1400 Jackson, MS 39201 E-mail: peverman@balch.com mmcdade@balch.com Proposed Attorneys for Debtor, Prime Capital Ventures, LLC One Lincoln Center: Stephen A. Donato, Esq. Edward J. Lobello, Esq. Justin S. Krell, Esq. Andrew S. Rivera, Esq. BOND, SCHOENECK & KING, PLLC One Lincoln Center Syracuse, NY 13202 E-mail: sdonato@bsk.com elobello@bsk.com jkrell@bsk.com arivera@bsk.com Permanent Receiver for Prime Capital Ventures, LLC: Paul A. Levine, Esq. LEMERY GREISLER LLC 677 Broadway, 8th Floor Albany, NY 12207 Chapter 7 Trustee in the Matter of Kris Daniel Roglieri, Case No. 24-10157: Christian H. Dribusch, Esq. THE DRIBUSCH LAW FIRM 187 Wolf Road, Suite 300-20 Albany, NY 12205 Former Attorney for Prime Capital Ventures, LLC: Pieter H.B. Van Tol, III, Esq. HOGAN LOVELLS US LLP 390 Madison Avenue New York, NY 10017 E-mail: pieter.vantol@hoganlovells.com Attorneys for Compass-Charlotte 1031, LLC: Justin A. Heller, Esq. Matthew M. Zapala, Esq. NOLAN HELLER KAUFFMAN LLP 80 North Pearl Street, 11th Floor Albany, NY 12207 E-mail: jheller@nhkllp.com mzapala@nhkllp.com -- and -- William L. Esser, IV, Esq. PARKER, POE, ADAMS & BERNSTEIN LLP 620 South Tryon Street, Suite 800 Charlotte, NC 28202 E-mail: willesser@parkerpoe.com Attorney for Piper Capital Funding LLC: Jon T. Powers, Esq. WHITE AND WILLIAMS LLP 7 Times Square, Suite 2900 New York, NY 10036 E-mail: powerst@whiteandwilliams.com Attorney for ER Tennessee LLC: Joseph P. Lombardo, Esq. CHAPMAN AND CUTLER LLP 320 South Canal Street Chicago, IL 60606 E-mail: lombardo@chapman.com About Prime Capital Ventures, LLC Prime Capital Ventures, LLC is an investment firm. Prime Capital filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D.N.Y. Case No. 24-10531) on May 14, 2024, listing $10 million to $50 million in assets and $100 million to $500 million in liabilities. The petition was signed by Paul A. Levine as receiver. Stephen A. Donato, Esq., at Bond, Schoeneck & King, PLLC represents the Debtor as counsel. PRO MACH: Moody's Affirms B2 CFR & Cuts First Lien Loans to B2 -------------------------------------------------------------- Moody's Ratings affirmed Pro Mach Group, Inc.'s B2 corporate family rating and B2-PD probability of default rating. Moody's also downgraded the ratings on the company's senior secured first lien term loan and senior secured first lien revolving credit facility to B2 from B1. The downgrade of the first lien credit facilities results from Pro Mach repaying it existing senior secured second lien term loan by upsizing its senior secured first lien term loan. The transaction is leverage neutral. The outlook is stable. The affirmation of the B2 CFR reflects Pro Mach's high financial leverage and demand that is volatile and cyclical in nature. The downgrade of the senior secured first lien term loan and senior secured first lien revolving credit facility reflects the change in the debt capital structure following the retirement of the senior secured second lien term loan. RATINGS RATIONALE Pro Mach's B2 CFR reflects the company's high adjusted debt/EBITDA of 6.2 times for the twelve months ended March 31, 2024. Moody's expect leverage to decline modestly over the next 12-18 months from an improving EBITDA margin, assuming no debt-financed acquisitions. Pro Mach's heavy reliance on debt-financed acquisitions has prevented significant deleveraging despite solid earnings growth in the past. Pro Mach's has a diverse product offering and a large installed base that supports a stable, high-margin aftermarket business which is beneficial. The company has exposure to relatively stable end markets including food and beverage and pharmaceuticals, has good scale and low customer and supplier concentrations. Pro Mach's ESG Credit Impact Score reflects moderate environmental and social risk, balanced against high governance risk. Pro Mach's moderate environmental risk reflects its exposure to physical climate risks as a manufacturer, energy and raw material intensive production processes with waste as a by-product and rising environmental regulation. Its social risk has exposure to human capital risk with potential disruptions of availability of highly skilled labor, labor standards and wage demands. Governance risk stems from the company's high leverage, aggressive financial policy and propensity to raise leverage for acquisitions. Pro Mach's stable outlook is based on Moody's expectation that the company will be able to maintain a strong EBITDA margin and stable cash flow from steady demand and backlog build across its end markets. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Pro Mach achieves continued growth of revenue and earnings, sustains adjusted debt/EBITDA below 5.0 times, sustains EBITA-to-Interest above 2.0 times and demonstrates more conservative financial policies. The ratings could be downgraded if organic growth stalls or EBITDA margin declines, Pro Mach undertakes a large debt-financed acquisition or shareholder dividend, debt/EBITDA is sustained meaningfully above current levels, EBITA-to-interest falls below 1.5 times or liquidity deteriorates. The principal methodology used in these ratings was Manufacturing published in September 2021. Headquartered in Covington, Kentucky, Pro Mach Group, Inc. manufactures a broad range of processing and packaging equipment and related aftermarket parts and services for a number of industries including the food, beverage, household goods and pharmaceutical industries. Pro Mach is owned by Leonard Green & Partners and BDT Capital Partners. Pro Mach's revenue for the twelve months ended March 31, 2024 was about $1.88 billion. PUSHPAY USA: Moody's Assigns First Time B3 Corporate Family Rating ------------------------------------------------------------------ Moody's Ratings assigned a B3 Corporate Family Rating and a B3-PD Probability of Default Rating to Pushpay USA Inc. In addition, Moody's assigned a B3 rating to the proposed Senior Secured First Lien Bank Credit Facilities (Revolver and Term Loan). The outlook is stable. The new financing includes a proposed $30 million undrawn revolving credit facility and a proposed $410 million term loan. The proceeds will be used to refinance about $387 million of existing debt, cover estimated $18 million in fees and expenses, and provide about $5 million of balance sheet cash. The stable outlook reflects Moody's expectation for modest growth of about 3.5% in FY 2025 (ending March 31, 2025) continued healthy margins, and positive free cash flow generation in FY 2025. RATINGS RATIONALE The B3 Corporate Family Rating (CFR) reflects the company's high leverage with continued leveraging M&A appetite, exposure to the nonprofit faith sector which can have challenging economics and modest growth prospects, and a concentrated ownership structure. Pro forma leverage is approximately 6.8x (Moody's adjusted) at March 31, 2024, and Moody's expect it to decline to about 6.4x at FY 2025 (ending March 31, 2025) mainly from topline growth. The company's equity used to trade publicly in the New Zealand stock exchange, until it was taken private by BGH Capital and Sixth Street Partners through an approximately $1.1 billion purchase price in May 2023, which included a more substantial load of debt than the company carried when public. Moody's rating considerations also consider Pushpay's solid position in the faith space, with approximately 15,000 customers and about $8 billion in annual donation processing volumes as well as growing SaaS subscription revenues from its Church Management System (ChMS) and streaming service offerings. Additionally, the company has maintained solid mid-90s gross retention rates and over 100% net retention rates. Healthy margins as well as favorable tax assets as well as low capex needs going forward produce a supportive cash flow profile, despite the elevated interest costs. Governance considerations were a key factor in the rating process and reflect the company's concentrated ownership, high leverage, and the potential for debt-funded acquisitions. Moody's expect Pushpay to have good liquidity over the next twelve to eighteen months. This is supported by a pro forma $17 million cash balance, a $30 million undrawn revolver, and free cash flow generation. The revolver is expected to have a springing maximum first lien secured leverage ratio when the revolver is drawn more than 35% of the committed amount. The B3 rating for Pushpay's senior secured credit facility reflects a B3-PD Probability of Default Rating (PDR), assumed average recovery of 50% in a default scenario, and a Loss Given Default (LGD) assessment of LGD3. The facility rating is the same as the CFR reflecting the single class of secured debt comprising the preponderance of the capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if total debt-to-EBITDA (inclusive of Moody's adjustments) is sustained below 5.5x, free-cash-flow-to-debt is maintained around 5%, the company exhibits prudent financial policies, maintains good liquidity, and grows revenues and EBITDA. The ratings could be downgraded if organic revenue and EBITDA decline, total debt-to-EBITDA is sustained above 7.5x, liquidity deteriorates, free cash flow turns negative, and/or the company engages in leveraging acquisitions or sizable shareholder distributions. 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 a fixed dollar amount and 100% of Consolidated EBITDA, plus unlimited amounts subject to the first lien secured net leverage ratio at closing, with an inside maturity sublimit up to the greater of a fixed dollar amount and 50% of Consolidated EBITDA. A "blocker" provision restricts the transfer of material intellectual property to unrestricted subsidiaries. The credit agreement provides some limitations on up-tiering transactions, requiring affected lender consent for amendments that subordinate the debt and liens unless such lenders can ratably participate in such priming debt. Pushpay is a provider of payment processing, donation management, church management, and streaming software and services primarily to churches, mainly in the United States, with a particularly strong presence among Protestant medium and large churches. The principal methodology used in these ratings was Software published in June 2022. QUALTEK LLC: Moody's Withdraws 'Caa1' Corporate Family Rating ------------------------------------------------------------- Moody's Ratings has withdrawn all the ratings of QualTek LLC, including the Caa1 corporate family rating, Caa1-PD probability of default rating, Caa1 rating on the senior secured first lien term loan, Caa2 rating on the senior secured second lien term loan, and Caa3 rating on the senior secured third lien term loan. The stable outlook was also withdrawn. RATINGS RATIONALE Moody's has decided to withdraw the rating(s) following a review of the issuer's request to withdraw its rating(s). R&N EASLEY: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of R&N Easley, LLC. About R&N Easley R&N Easley, LLC, a company in Easley, S.C., filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.S.C. Case No. 24-02223) on June 20, 2024, with up to $50,000 in assets and up to $10 million in liabilities. Joseph Kershaw Spong serves as Subchapter V trustee. Judge Helen E. Burris presides over the case. Robert H. Cooper, Esq., at The Cooper Law Firm represents the Debtor as bankruptcy counsel. R&N SENECA: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------- The Acting U.S. Trustee for Region 4 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of R&N Seneca, LLC. About R&N Seneca R&N Seneca, LLC, a company in Easley SC, filed its voluntary petition for Chapter 11 protection (Bankr. D.S.C. Case No. 24-02206) on June 20, 2024, with as much as $1 million to $10 million in both assets and liabilities. Joseph Kershaw Spong serves as Subchapter V trustee. Judge Helen E. Burris oversees the case. Christine E. Brimm, Esq., at Barton Brimm, PA is the Debtor's legal counsel. R.R. DONNELLEY: Moody's Rates New $650MM Jr. Lien Sec. Notes 'Caa1' ------------------------------------------------------------------- Moody's Ratings has upgraded R.R. Donnelley & Sons Company's (RRD) ratings for the proposed senior secured notes to B1 from B2. The upgrade reflects the changes in the proposed debt amounts and the addition of the junior lien notes in the debt structure. At the same time, Moody's have assigned a Caa1 rating to RRD's proposed $650 million junior lien secured notes. Moody's have also withdrawn the B2 rating on the previously proposed backed senior secured term loan B. The company also plans to raise an additional $650 million private term loan B (unrated). Moody's have also affirmed RRD's B3 corporate family rating, B3-PD probability of default rating, and Caa1 senior unsecured ratings. The outlook is stable. The existing B1 rating on the backed senior secured bank credit facility and B3 rating on the senior secured notes (junior lien) have been reviewed in the rating committee and remain unchanged and will be withdrawn once repaid. The net proceeds of the $2.3 billion new debt will be used to fund the acquisition, and refinance RRD's existing term loan and junior lien senior secured notes. The transaction will increase RRD's consolidated leverage to 6.5x from 5.9x at year end 2023, including the $1.1 billion Holdco Payment-In-Kind (PIK) notes. RRD announced on July 22, 2024 that it has closed the acquisition of the digital and print marketing business (Valassis) from Vericast Corp. (Vericast, Caa3 Negative). Moody's believe the $1.33 billion acquisition of the Valassis business is credit negative as it increases RRD's leverage without materially improving its business profile. A vast majority of the acquired business is the print marketing business, which Moody's believe is in secular decline. However, the addition of the growing DM&T business, which benefits from the growing demand in digital marketing, is strategically positive for RRD. RATINGS RATIONALE R.R. Donnelley & Sons Company's CFR is constrained by: (1) aggressive financial policies and shareholder friendly transactions by RRD's private owners, investment funds managed by Chatham Asset Management; (2) high adjusted Debt/EBITDA of 6.5x at Q4 2023, including the $1.1 billion Holdco Payment-In-Kind (PIK) notes and pro forma for the acquisition and new debt issuance; (3) exposure to the secular decline in commercial printing due to digital substitution pressuring its revenue and profitability; and (4) execution risks as it transforms itself from a commercial printer focused on manuals, publications, brochures, and business cards to innovative businesses such as packaging, labels, direct marketing and digital print. The company's rating benefits from: (1) good position in the commercial printing market, large scale and client diversity; (2) continued cost reduction, which partially mitigates the pressure on EBITDA; and (3) good liquidity, including its ability to generate free cash flow despite ongoing demand pressures. RRD has good liquidity through to mid-2025 pro forma for the debt issuance, with sources totaling about $610 million versus about $6.5 million mandatory annual debt amortization. Liquidity is supported by about $250 million of cash (pro forma for Valassis acquisition and debt issuance) as of March 2024, projected free cash flow of about $60 million through to June 2025 and Moody's estimate of about $300 million of pro forma availability as of March 2023 under its $750 million ABL facility expiring April 2026 (subject to a borrowing base). RRD's ABL has a springing fixed charge coverage covenant of 1x, where the company has good cushion. RRD has limited ability to generate liquidity from asset sales. Following the debt raise, RRD will have five classes of debt: (1) $750 million ABL facility expiring April 2026; (2) the proposed $1,000 million senior secured notes due August 2029 and $650 million private term loan B; (3) proposed $650 million junior lien notes; (4) senior unsecured notes and debentures due 2029 through 2031; and (5) $1 billion Holdco PIK subordinated notes due in October 2031 (unrated). RRD's ABL facility benefits from a first priority lien on accounts receivable, inventory, and equipment and a second priority lien on principal properties. The senior secured notes are rated B1, two notches above the CFR, because it benefits from first priority liens on principal properties and second priority liens on accounts receivable, inventory, and equipment and are ahead of the Holdco PIK notes and junior lien notes. The proposed junior lien notes and unsecured notes and debentures are rated Caa1 to reflect their junior ranking to the ABL, term loan and secured notes, but ahead of the Holdco PIK notes. The senior secured notes and junior lien notes could be notched down if there was a material reduction in the Holdco PIK notes. The stable outlook reflects Moody's expectation that RRD will maintain good liquidity with debt to EBITDA in the high 6x range in the next 12-18 months. The outlook also reflects Moody's expectation that the company will manage its cost structure to offset the secular decline in its commercial printing segment. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if the company is unable to successfully complete the debt financing transaction to fund Valassis, or revenue and EBITDA declines that results in an untenable capital structure or higher refinancing risk. The ratings could also be downgraded if debt to EBITDA moves towards 7x (including PIK notes), (EBITDA-Capex)/Interest remaining below 1x (including PIK interest), or weak liquidity, possibly from persistent negative free cash flow. The ratings could be upgraded if the company generates sustainable positive organic growth in revenue and EBITDA, and maintains debt to EBITDA below 5x. The principal methodology used in these ratings was Media published in June 2021. Headquartered in Chicago, Illinois, R.R. Donnelley & Sons Company is the leader in the North American commercial printing industry. ROYAL CARIBBEAN: Moody's Rates New Senior Unsecured Notes 'Ba2' --------------------------------------------------------------- Moody's Ratings assigned a Ba2 rating to the senior unsecured notes (Notes) that Royal Caribbean Cruises Ltd. (Royal) announced earlier. The company will use the net proceeds plus cash on hand and / or revolver borrowings to redeem its $1 billion, 9.25% backed senior unsecured notes due January 15, 2029 and then its $1 billion, 8.25% backed senior secured notes due January 15, 2029. The existing Ba2 corporate family rating, Ba2-PD probability of default rating, Baa2 backed senior secured rating, Ba1 backed senior unsecured rating, Ba2 senior unsecured rating and NP commercial paper rating are unaffected by the debt issuance. The SGL-2 speculative grade liquidity and positive outlook are also unaffected. Royal reported strong results for the second quarter and first six months of the year, taking up its guidance for the full year, as well. Operating profit increased by about 80% to $1.8 billion in the first six months. However, operating cash flow increased by only $200 million, to $2.9 billion during this period. Free cash flow was $519 million on $1.3 billion of higher capital expenditures in the first six months of 2024, down from $1.7 billion in the same period of 2023, when capital investment was only $1.05 billion. The strong demand environment that has led to much of 2024 capacity already being sold at favorable pricing and a faster pace of bookings for 2025, also at higher pricing than for trips in 2024, will support earnings expansion for at least the next 18 months. The positive outlook reflects Moody's expectations that Royal Caribbean's debt/EBITDA and EBITA/interest expense will continue to strengthen into 2025. RATINGS RATIONALE The Ba2 corporate family rating reflects Royal's strong market position as the second largest global ocean cruise operator based on capacity and revenue. Further support for the rating comes from Royal's brand strength and good diversification by geography and market segment. The company also benefits from the favorable value proposition of a cruise vacation, as well as a group of loyal cruise customers who will support a base level of demand. Risks include cost inflation, including for fuel, demand's exposure to economic cycles and customers' numerous options for land-based vacations. Improving credit metrics also support the Ba2 rating. Debt/EBITDA and Funds from operations + interest to interest were 4.1x and 3.7x, respectively, at March 31, 2024. The improving results in Q2 and increased profit expectations for the full year will promote further strengthening of metrics as the year progresses. Moody's expect Royal to maintain good liquidity. The company reported $391 million of cash at June 30, 2024 and had $3.4 billion available on its $3.7 billion of committed unsecured revolving credit facilities (unrated). Moody's project annual free cash flow near $2 billion in 2024 and about $3 billion in 2025 with capital investment of about $3.5 billion and $2.5 billion in these years, respectively. The reinstatement of a quarterly dividend, at $0.40 per share, with the first payment in October 2024, will consume approximately $411 million of cash per year initially, which would otherwise be available for debt reduction or funding new ship deliveries. While the dividend may slow the pace of future deleveraging, Moody's believe that operating cash flows will be sufficient to fund the dividends from internal sources. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The rating could be upgraded if Moody's expect debt/EBITDA to be sustained near 3.5x and funds from operations plus interest to interest above 6.0x. The rating could be downgraded if Moody's expect free cash flow will be no better than breakeven, funds from operations plus interest to interest will be sustained below 4.0x or debt/EBITDA will be sustained above 4.0x. The principal methodology used in this rating was Business and Consumer Services published in November 2021. Royal Caribbean Cruises Ltd. (operating under the name Royal Caribbean Group) is a vacation industry leader with a global fleet of 68 ships across its five brands traveling to approximately 1,000 destinations. Royal Caribbean International, Celebrity Cruises, and Silversea are its three cruise brands. The company also owns 50% of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises Revenue was $13.9 billion in 2023. RR DONNELLEY: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) for R.R. Donnelley & Sons Company (RRD) at 'B'. The Rating Outlook is Stable. Fitch has upgraded the first lien term loan B and senior secured notes to 'BB'/'RR1' from 'BB-'/ 'RR2' based on RRD's revised capital structure. Fitch has assigned a 'B-'/ 'RR5' rating to the new junior lien secured notes. Fitch has also affirmed the rating for the ABL facility at 'BB'/'RR1 and the rating for the unsecured notes at 'B-'/ 'RR5'. The Ratings and Outlook reflect RRD's leading market position, scale, client and end-market diversification, and EBITDA expansion through continued cost rationalization and operational improvements. The ratings are constrained by secular industry headwinds in the print segment that limit revenue growth over the forecast period, execution risk associated with the Valassis acquisition, and moderately high leverage. Key Rating Drivers Execution Risk: Fitch believes there is an elevated execution risk following the acquisition of the digital and print marketing business from Vericast Corp. for approximately $1.3 billion. RRD plans to issue new first lien debt, which will comprise of about $650 million in private term loan B ($800 million of syndicated term loan B was announced previously), $1 billion in senior secured notes maturing in August 2029 ($1.5 billion was announced previously) and new junior lien secured notes of $650 million. The proceeds from this transaction will be used to repay the $1.85 billion bridge facility that was utilized to fund the acquisition of Valassis and the repayment of the existing term loan of $973 million, along with the redemption of junior lien notes of about $312 million. Fitch believes that secular decline in Valassis' print segment revenue could impede RRD's growth profile post-acquisition. Low revenue growth in a relatively low margin business increases the risk and uncertainty surrounding RRD's capital structure and operating performance over time, although this is mitigated to some extent by manageable leverage for the IDR. Print Pressures: In Fitch's view, RRD's business profile continues to face moderate secular headwinds limiting revenue growth in the print segment over the forecast period. RRD's commercial print accounted for roughly 29% of 2023 revenues, although this has declined from 34% in 2018. Fitch believes the print industry will continue to see volume declines as the adoption of digital devices has curbed demand for printed products. According to a recent IBIS report, printing revenue has fallen at a CAGR of 1.9% over the past five years with expected revenues of $87.7 billion. The pandemic has accelerated the shift to digital media by catapulting the distribution and hosting of media content through online channels. Meanwhile, the company's transformation into a comprehensive provider of marketing solutions, packaging, labels and supply chain services, along with continued cost rationalization through facility closures, asset sales, business dispositions, reorganization, improvements in operational efficiency, and general SG&A related savings, has driven EBITDA margin improvements over the last few years. Fitch believes RRD will continue to rationalize costs over the rating horizon. Leverage: Fitch estimates RRD's proforma EBITDA leverage at 4.4x, excluding RRD's parent company's PIK notes. Fitch treats the PIK notes as a shareholder loan and not debt, in accordance with Fitch's criteria for rating holdco PIK shareholder loans. RRD reduced absolute debt by roughly $900 million since 2016 while also increasing EBITDA margins, resulting in EBITDA leverage of 3.2x at FYE 2023. Fitch believes deleveraging will be manageable through continued asset sales as well as EBITDA expansion and expects EBITDA leverage in the high 3.0x range over the forecast period. Fitch assumes that RRD will be able to successfully refinance/extend the ABL facility due in 2026. Fitch expects the company's (CFO-Capex)/Debt (%) to remain in the low-mid single digit range over the forecast period versus approximately 7% as of YE 2023. Scale in Fragmented Industry: RRD's credit profile is supported by its scale and diverse product offerings as one of the largest commercial printers and marketing solutions provider in the U.S. Fitch believes the company's significant scale and size provides economies of scale benefits in a highly competitive and fragmented printing industry. RRD also benefits from longstanding relationships with its clients with 80% having a tenure of over seven years, low customer concentration and a high contracted revenue base. Diversified Client-Base & Industry-Mix: RRD serves over 18,000 clients including over 75% of the Fortune 500 in over 160 locations worldwide with about 75% of the revenues generated from the U.S. RRD provides services across major industry verticals including retail, health care, financials, services, manufacturing, publishing and various other end markets. The company's top 10 customers represent about 20% of total revenues, but it has strong client retention. Fitch expects that the diversified customer base across various industry verticals and geographies reduces distinctive risks associated with individual industry verticals as well as minimizes revenue volatility given long-standing customer relationships. Asset Monetization: RRD continues to optimize parts of its portfolio, seeking opportunities to monetize asset sales. In addition to the divestiture of GDS, R&D and Logistics businesses, Chile & Brazil operations prior to 2021, the company recently sold a printing facility in Shenzhen, China and disposed of its Canadian operations in 2023. Fitch believes that continued cost rationalization and deleveraging through the sale of any non-core assets could provide RRD with additional financial flexibility. Derivation Summary RRD has a relatively strong competitive position based on the scale and size of its operations compared to Fitch-rated peer, Quad/Graphics, Inc. (B+/Positive). RRD's ratings reflect its leading market position in the U.S. commercial printing market, client and end-market diversification, EBITDA expansion through continued cost rationalization and operational improvements, along with debt reduction through asset sales and business dispositions. Quad/Graphics, which is the second-largest U.S. printing company by revenue after RRD, has lower EBITDA leverage, FCF margin in low single-digit range, and higher interest coverage compared to RRD. Although RRD's scale, revenue growth, and EBITDA margins are better than those of Quad/Graphics, RRD's rating is constrained by its moderately high leverage and low FCF. RRD's ratings are constrained by secular industry headwinds that limit revenue growth execution risk associated with the Valassis acquisition, and the lack of commitment to a financial policy due to private equity ownership, which could prioritize shareholder returns over deleveraging. Relative to other printing and services industry peers rated by Fitch, RRD is well positioned at the 'B' rating level. Key Assumptions - Fitch expects 2024 revenue to increase in low single digits due to secular decline in commercial print, slower demand and overall economic conditions; - EBITDA margins are assumed in low double-digit range over the forecast period based on the recent cost initiatives and plant closures; - Fitch projects FCF as a percentage of revenue to be in the low single-digit range over the next few years, compared to a negative FCF of 7.8% in 2023 due to the dividend payout; - Capex of about $115 million-$120 million range annually; - Cash taxes and working capital remain a modest use of cash flow in the next few years; - Fitch expects company to refinance the ABL facility in 2026. Recovery Analysis For entities rated 'B+' and below, where default is a higher possibility and recovery prospects are more meaningful to investors, Fitch undertakes a tailored, or bespoke, analysis of recovery upon default for each issuance. The resulting debt instrument rating includes a Recovery Rating or published 'RR' (graded from RR1 to RR6) and is notched from the IDR accordingly. In this analysis, there are three steps: (i) estimating the distressed enterprise value (EV); (ii) estimating creditor claims; and (iii) distribution of value. Key Recovery Rating Assumptions: Fitch assumes that RRD would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach: Fitch estimates a going concern EBITDA of $500 million, or meaningfully below the company's proforma EBITDA including Valassis. The going-concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. Fitch contemplates a scenario in which a secular decline in commercial printing and highly competitive and fragmented nature of the industry, impairs RRD's debt-servicing facility. Any incremental first lien debt could result in changes to the Recovery Rating for the term loan B facility and senior secured notes. EV Multiple: Fitch assumes a 5.0x multiple, which is validated by historical public company trading multiples, industry M&A and past reorganization multiples Fitch has seen across various industries. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Material improvement in operating profile evidenced by sustained positive low single-digit revenue growth and continued improvement in EBITDA margins; - Consistently positive FCFs with FCF margins at mid-single digits or higher; - EBITDA leverage sustained below 4.0x; - (CFO-Capex)/Debt above 5%. Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Sustained revenue declines or higher than expected deterioration of EBITDA margins; - FCFs sustained near zero; - EBITDA leverage at or above 5.0x; - (CFO-Capex)/Debt less than 2.5%. Liquidity and Debt Structure Sufficient Liquidity: Fitch views RRD's liquidity position as adequate, supported by the company's cash balances, availability under its asset-based revolving credit facility of $192.9 million as of March 31, 2024, adjusted for the borrowing base, outstanding LOCs and borrowings under the facility. The company had cash balances of $253.7 million as of March 31, 2024. Fitch also projects positive FCF over the ratings horizon. Debt Structure: Pro forma debt capital consists of: (i) a $750 million ABL facility maturing April 2026; (ii) a new $650 million private term loan B facility maturing 2029; (iii) new $1 billion five-year senior secured notes; iv) new $650 million five-year junior lien secured notes and v) less than $90 million of senior unsecured notes and debentures due 2029 through 2031. Issuer Profile R.R. Donnelley and Sons Company is one of the largest global commercial printers and a provider of marketing, packaging, labels, print, and supply chain solutions. The company has over 18,000 clients in over 160 locations globally. It is held by investment funds managed by private investment firm Chatham Asset Management, LLC. 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 ----------- ------ -------- ----- R.R. Donnelley & Sons Company LT IDR B Affirmed B senior secured LT B- New Rating RR5 senior unsecured LT B- Affirmed RR5 B- senior secured LT BB Affirmed RR1 BB senior secured LT BB Upgrade RR1 BB- SHELSON NATURAL: Richardo Kilpatrick Named Subchapter V Trustee --------------------------------------------------------------- The U.S. Trustee for Regions 3 and 9 appointed Richardo Kilpatrick, Esq., at Kilpatrick & Associates, P.C. as Subchapter V trustee for Shelson Natural Health, LLC. Mr. Kilpatrick 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. Kilpatrick declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Richardo I. Kilpatrick, Esq. Kilpatrick & Associates, P.C. 903 N. Opdyke Rd., Ste. C. Auburn Hills, MI 48326 Phone: (248) 377-0700 Fax: (248) 377-0800 Email: rkilpatrick@kaalaw.com About Shelson Natural Health Shelson Natural Health, LLC offers a wide range of services including herbal tinctures, homeopathy, supplements, and vitamins. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 24-20907) on July 25, 2024, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Matthew J. Shelson, sole member, signed the petition. Judge Daniel S. Oppermanbaycity presides over the case. Zachary R. Tucker, Esq. at Winegarden, Haley, Lindholm, Tucker & Himelhoch represents the Debtor as legal counsel. SL GREEN: Moody's Lowers Senior Unsecured Shelf Rating to (P)Ba3 ---------------------------------------------------------------- Moody's Ratings downgraded the ratings of SL Green Realty Corp. as follows: the backed senior unsecured shelf rating to (P)Ba3 from (P)Ba2, the backed subordinate shelf rating to (P)B1 from (P)Ba3, the backed junior subordinate shelf rating to (P)B1 from (P)Ba3, the preferred stock rating to B2 from B1, the backed preferred shelf rating to (P)B2 from (P)B1, and the backed preferred shelf non-cumulative rating to (P)B2 from (P)B1. Moody's also downgraded SL Green Operating Partnership, L.P.'s (collectively, with SL Green Realty Corp., "SL Green") corporate family rating to Ba3 from Ba2 as well as its backed senior unsecured shelf rating to (P)Ba3 from (P)Ba2, its backed subordinate shelf rating to (P)B1 from (P)Ba3, and its backed junior subordinate shelf rating to (P)B1 from (P)Ba3. SL Green's speculative grade liquidity rating is unchanged at SGL-3. The outlook on all entities changed to stable from negative. The downgrade reflects SL Green's continued weak credit metrics, which have not improved materially in the past 12 months. In particular, the REIT's very high leverage and fixed charge coverage both remain weak. While leasing activity was good in H1 2024, the resulting earnings and cash flow impact from these new leases will take time to flow through and Moody's do not expect metrics to start materially improving until the second half of 2025. RATINGS RATIONALE SL Green's Ba3 CFR reflects SL Green's very high net debt/EBITDA (Moody's adjusted and including pro-rata share of unconsolidated joint ventures) which Moody's expect will remain around 13x in 2024. In addition, the REIT's fixed charge cover ratio will remain low at around 1.5x in 2024. The rating also reflects concentration of the REIT's operations in the office sector which continues to experience weaker demand, higher vacancy and more difficult access to financing as compared to the past as a result of the COVID pandemic which dislocated demand for in-office work, especially in the large coastal office markets. SL Green's Ba3 rating also reflects the REIT's top quality office portfolio generating the majority of rental income from assets located in the most desirable Manhattan submarkets, including trophy assets such as One Vanderbilt. This has allowed SL Green to outperform the broader New York office market by a margin, with occupancy (as defined by the company) near 90% and continued positive mark-to-market rents. The REIT also has a manageable lease expiration schedule and a diversified tenant base, with a focus on the financial services which represent around 40% of NOI and have led the way in implementing stricter return-to-office policies than other sectors. SL Green's operating performance still outperforms the broader market by a wide margin. While same store NOI declined slightly in H1 2024, this was on the back of three material move outs in the first quarter. Leasing activity has been very strong with 1.4 million square feet leased year-to-date. The mix of new leases vs. renewals has also been positive with most of the signed leases in the first half being new leases. This reflects the strong demand for the REIT's high-quality, and well-located Manhattan office portfolio. The REIT also has a manageable lease expiration schedule and highly diversified tenant base. Offsetting these strengths are the company's complex structure and its JV focused growth strategy, very high financial leverage, weak fixed charge coverage, and significant asset and geographic concentration. SL Green's liquidity is adequate, as reflected in its SGL-3 speculative grade liquidity rating. Liquidity is supported by $355 million of cash (including SL Green's share unrestricted JV cash) as of Q2 2024 and the company's access to its $1.25 billion revolving credit facility of which around $710 million was available at the end of Q2 2024. Upcoming debt maturities include $441 million in H2 2024 made up of $241 million of non-recourse debt and $200 million of unsecured term loan debt. In 2025, maturities amount to $1.9 billion, and comprise $1.74 billion of non-recourse mortgage debt and $161 million of consolidated debt ($100 million unsecured note and $60.5 million of secured mortgage). SL Green has successfully extended or refinanced $2.1 billion of debt in the first half of 2024 with little cash outflow and no worsening of the credit terms. This strong recent track record, as well as the non-recourse nature of the majority of the upcoming debt, alleviates some of Moody's liquidity concerns. SL Green also benefits from some trophy Manhattan assets, which could provide alternate liquidity if liquidated. The stable outlook reflects Moody's expectations that, while SL Green's credit metrics will remain weak potentially through H1 2025, its operating metrics will continue to strengthen. Moody's expect the REIT to improve occupancy in the coming quarters on the back of the strong leasing activity it has achieved, as well as a more benign interest rate environment. Moody's also expect SL Green to continue to focus proceeds from its asset disposition towards balance sheet improvements leading to both leverage and fixed charge cover ratios improving from current levels through 2025. Governance risks that Moody's consider in SL Green's credit profile include the company's aggressive financial policy with persistently high leverage and secured debt. SL Green's capital structure includes a significant share of primarily non-recourse property level mortgage debt that reduces flexibility for future capital raises. Other considerations include the REIT's historical development and JV focused growth strategy which constrains strategic flexibility and liquidity. SL Green's exposure to highly leveraged JVs is higher than peers', and will continue to increase as the company shifts to a primarily asset management model going forward. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if SL Green's credit metrics, in particular net debt/EBITDA and its fixed charge cover ratio, fail to improve from current levels. Declining occupancy, difficulties selling assets, or refinancing maturing mortgages or corporate debt at reasonable terms, or failure to strengthen liquidity could also precipitate a downgrade. SL Green's ratings could be upgraded should the company demonstrate improved operating performance leading to net debt/EBITDA declining materially to around 10x on a sustainable basis. An upgrade would also require a strengthening of its fixed charge coverage ratio above 2.0x. The principal methodology used in these ratings was REITS and Other Commercial Real Estate Firms published in February 2024. SL Green Realty Corp. (NYSE: SLG) is a real estate investment trust that owns, operates and acquires primarily commercial office properties in the Manhattan submarket of the New York metropolitan area. As of June 30, 2024, SL Green held interests in 55 buildings totaling 31.8 million square feet. SNAP MEDICAL: Michael Colvard Named Subchapter V Trustee -------------------------------------------------------- The U.S. Trustee for Region 7 appointed Michael Colvard as Subchapter V trustee for Snap Medical Transport, LLC. Mr. Colvard will charge $400 per hour for his services as Subchapter V trustee and will seek reimbursement for work-related expenses incurred. Mr. Colvard declared that he is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Michael Colvard Weston Centre 112 East Pecan St., Ste. 1616 San Antonio, TX 78205 Email: mcolvard@mdtlaw.com Telephone: (210) 220-1334 About Snap Medical Transport Snap Medical Transport, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Texas Case No. 24-51370) on July 23, 2024, with $100,001 to $500,000 in assets and $1,000,001 to $10 million in liabilities. David T. Cain, Esq. represents the Debtor as legal counsel. SOBR SAFE: Stockholders Okay Share Issuance for Warrant Conversion ------------------------------------------------------------------ SOBR Safe, Inc. convened its 2024 Special Stockholder Meeting virtually on July 22, 2024 at via webcast at www.virtualshareholdermeeting.com/SOBR2024SM. A quorum was present for the Special Meeting. Two proposals were described in the Proxy Statement as filed with the Securities and Exchange Commission on June 24, 2024. As of the record date, June 18, 2024, a total of 30,133,154 shares of common stock of the Company were issued and a total of 30,120,825 shares of common stock were outstanding and entitled to vote. The holders of record of 11,381,588 shares of common stock were present or represented by proxy at said meeting for a total of 11,381,588 votes represented at the meeting. Such amount represented 37.78% of the total shares outstanding and entitled to vote at the Special Meeting. At the Special Meeting, the stockholders approved Proposal 1, which was the only proposal submitted to a vote. Proposal No. 1 – Issuance of Shares upon Conversion of a Common Stock Purchase Warrant. The stockholders approved, for purposes of complying with applicable Nasdaq rules and upon exercise of that certain Common Stock Purchase Warrant dated June 4, 2024, the issuance of up to 20,638,326 shares of common stock of the Company. Proposal No. 2 - the approval of the adjournment of the Special Meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the Special Meeting to approve Proposal 1 or establish a quorum, was not presented to the stockholders at the meeting, as a quorum had been established and preliminary voting results indicated that Proposal 1 was approved. About SOBR Safe, Inc. SOBR Safe, Inc. provides non-invasive technology to quickly and humanely identify the presence of alcohol in individuals. These technologies are integrated within the Company's robust and scalable data platform, producing statistical and measurable user and business data. Its mission is to save lives, increase productivity, create significant economic benefits and positively impact behavior. To that end, the Company developed the scalable, patent-pending SOBRsafe software platform for non-invasive alcohol detection and identity verification. Littleton, Colorado-based Haynie and Company, the Company's auditor since 2023, issued a "going concern" qualification in its report dated March 29, 2024, citing that the Company has incurred recurring losses from operations and has limited cash liquidity and capital resources to meet future capital requirements. "Management believes that cash balances of approximately $2,800,000 and positive working capital of approximately $1,900,000 at December 31, 2023, do not provide adequate capital for operating activities for the next twelve months after the date these financial statements are issued. However, management believes actions presently being taken to generate product and services revenues, and positive cash flows, in addition to the Company's plans and ability to access capital sources and implement expense reduction tactics to preserve working capital provide the opportunity for the Company to continue as a going concern as of December 31, 2023. These plans are contingent upon the actions to be performed by the Company and these conditions have not been met on or before December 31, 2023. As such, substantial doubt about the entity's ability to continue as a going concern has not been alleviated as of December 31, 2023," the Company said in its Annual Report for the year ended Dec. 31, 2023. STANDARD BUILDING: Moody's Rates New Senior Unsecured Notes 'B1' ---------------------------------------------------------------- Moody's Ratings assigned a B1 senior unsecured rating to Standard Building Solutions Inc.'s proposed senior unsecured notes. Moody's expect the terms and conditions of the proposed senior unsecured notes to be similar to Standard Building's B1 rated senior unsecured notes. The unsecured notes are pari passu. Proceeds from the new notes will go towards paying down the company's existing Baa3 rated senior secured first lien term loan due 2028 and for general corporate purposes. Cash on hand will be used to pay related fees and expenses in a leverage-neutral transaction. Standard Building's Ba3 corporate family rating and Ba3-PD probability of default rating are not affected as well as the assigned as well as the assigned ratings on the company's debt. The outlook remains stable. Moody's view the proposed transaction as credit positive, reducing refinancing risk in 2028 at which time the balance of the term loan matures in addition to $1 billion in unsecured notes that come due. There will be some interest savings, but the amount is not material relative to Standard Building's cash interest payments of about $340 million per year. RATINGS RATIONALE Standard Building's CFR reflects strong operating performance, with adjusted EBITDA margin in the range of 19% - 21% in 2024 and decent cash flow (prior to discretionary dividends). The company is a global leader in manufacturing roofing products, with a very strong market share for roofing products in both North America and Europe. Standard Building should benefit from some improvement in end market dynamics. Standard Building maintains a levered capital structure, with adjusted debt-to-EBITDA trending towards 4x by late 2024. Interest coverage, measured as adjusted EBITA-to-interest expense, should remain in the range of 3x – 3.5x. Corporate governance regarding the long-term deployment of capital for potential acquisitions and dividends is the greatest credit challenge. Moody's expect ongoing dividends to the extent the company generates sufficient earnings and cash flow to support these payments. The aggregate amount of distributions could be substantial since there are very little dividend restrictions in any of the company's credit facilities. In addition intense competition makes it difficult to achieve large price increases and expand market share, growing potentially through acquisitions. Moody's project that Standard Building will have very good liquidity, generating reasonable cash flow (prior to discretionary dividends) through 2024. Cash on hand is a source of additional liquidity and more than sufficient to meet working capital needs due to seasonal demands and debt service requirements. Standard Building has full access to a $800 million asset based revolving credit facility, which is governed by a borrowing base calculation that fluctuates with business seasonality. Due to the company's cash position, Moody's do not anticipate utilization of the revolver, except for a minimal amount of letter of credit issuances. Standard Building has no material near-term maturities until late 2026 when the company's euro-denominated notes come due. The Baa3 rating on Standard Building's senior secured term loan, three notches above the corporate family rating, results from its priority claim relative to the company's considerable amount of unsecured debt, despite its subordination to the asset based revolving credit facility. The B1 ratings on the company's senior unsecured notes, one notch below the corporate family rating, results from their subordination to Standard Building's secured debt. The stable outlook reflects Moody's expectation that Standard Building will continue to perform well, benefitting from inelastic demand for roofing products and generating healthy operating margin. Very good liquidity and no material maturities until late 2026 further support the stable outlook. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING A ratings upgrade could occur if end markets remain supportive of organic growth, with cash flow used to pay down debt such that adjusted debt-to-EBITDA is sustained below 4.25x. Upwards rating movement also requires no meaningful weakening in operating performance, preservation of very good liquidity and more conservative financial policies. A ratings downgrade could occur if adjusted debt-to-EBITDA is above 5.25x or adjusted EBITDA margin is trending towards 18%. Negative ratings pressure may also transpire if the company experiences a deterioration in liquidity or adopts aggressive acquisition or financial policies. Standard Building Solutions Inc., headquartered in Parsippany, New Jersey, is the leading manufacturer and marketer of roofing and related products with operations primarily in North America and Europe. Trusts for the benefit of the heirs of Ronnie F. Heyman, co-founder of Standard Building, are the owners of Standard Building. Standard Building's revenue for the twelve months ending March 31, 2024 was $8.8 billion. The principal methodology used in this rating was Manufacturing published in September 2021. STEWARD HEALTH: Dinsmore & Shohl Advises Humana & DaVita Creditors ------------------------------------------------------------------ Ellen Arvin Kennedy of the law firm of Dinsmore & Shohl LLP filed a verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure to disclose that in the Chapter 11 cases of Steward Health Care System LLC, and affiliates, the firm represents: 1. Humana Insurance Company, Humana Health Plan, Inc., Humana Government Business, Inc. and their affiliates that underwrite or administer health plans ("the Humana Creditors"); and 2. DaVita Inc., Total Renal Care, Inc., RVM Texas Renal Care, LLC, Renal Treatment Centers - Southeast, LP, Sebastian River Acutes, Wuesthoff Acutes, RVM Texas Renal Care Acutes, and Midland Odessa Acutes, and their respective subsidiaries and affiliates ("the DaVita Creditors"). The Humana Creditors are unsecured creditors who have an interest in this proceeding by virtue of the fact that they are, or were, parties to various contracts with the Debtors. Dinsmore has been retained to assist the Humana Creditors in protecting their rights and interests with regard to these contracts and has filed proofs of claim on their behalf. The Humana Creditors have offices in Louisville, Kentucky. The Humana Creditors retained Dinsmore to represent them in this bankruptcy proceeding shortly after the Petition Date. They were existing clients of Dinsmore at the time. The DaVita Creditors are unsecured creditors who have an interest in this proceeding by virtue of the fact that they are, or were, parties to certain hospital services agreements with the Debtors. Dinsmore has been retained to assist the DaVita Creditors in protecting their rights and interests with regard to these hospital services agreements and has filed proofs of claim on their behalf. The DaVita Creditors have offices in Denver, Colorado. The DaVita Creditors retained Dinsmore to represent them in this bankruptcy proceeding shortly after the Petition Date. They were existing clients of Dinsmore at the time. Dinsmore has no written contract of representation with these clients, other than standard engagement letters. Dinsmore holds no claims against the Debtors in this proceeding at this time. Attorney for Humana and DaVita Creditors: DINSMORE & SHOHL LLP Ellen Arvin Kennedy, Esq. 100 West Main Street, Suite 900 Lexington, KY 40507 Telephone: (859) 425-1000 Facsimile: (859) 425-1099 Email: ellen.kennedy@dinsmore.com About Steward Health Care Steward Health Care System LLC owns and operates the largest private physician-owned for-profit healthcare network in the U.S. Headquartered in Dallas, Texas, Steward's operations include 31 hospitals in eight states, approximately 400 facility locations, 4,500 primary and specialty care physicians, 3,600 staffed beds, and nearly 30,000 employees. Steward Health Care provides care to more than two million patients annually. Steward and 166 affiliated debtors filed chapter 11 petitions (Bankr. S.D. Texas Lead Case No. 24-90213) on May 6, 2024, in the U.S. Bankruptcy Court for the Southern District of Texas, and the Honorable Christopher M. Lopez oversees the proceeding. Weil, Gotshal & Manges LLP is serving as the Company's legal counsel. AlixPartners, LLP is providing financial advisory services to the Company, and John Castellano of AlixPartners is serving as the Company's Chief Restructuring Officer. Lazard Freres & Co. LLC, Leerink Partners LLC, and Cain Brothers, a division of KeyBanc Capital Markets Inc. are providing investment banking services to the Company. McDermott Will & Emery is special corporate and regulatory counsel for the company. Kroll is the claims agent. STUDIO PB: Lucy Sikes Named Subchapter V Trustee ------------------------------------------------ The Acting U.S. Trustee for Region 5 appointed Lucy Sikes as Subchapter V trustee for Studio PB, LLC. Ms. Sikes will be paid an hourly fee of $375 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Ms. Sikes declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Lucy G. Sikes P.O. Box 52545 Lafayette, LA 70505-2545 Telephone: 337-366-0214 Facsimile: 337-628-1319 Email: lucygsikes1@gmail.com About Studio PB Studio PB, LLC, doing business as Pure Barre Metairie, is a physical fitness company in Metairie, La., offering a total body workout focused on low-impact/high-intensity movements that improve strength and flexibility. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code ((Bankr. E.D. La. Case No. 24-11449) on July 25, 2024, with $61,906 in assets and $1,658,086 in liabilities. Mark Conner, managing member, signed the petition. Judge Meredith S. Grabill presides over the case. Robin R. De Leo, Esq., at The De Leo Law Firm, LLC represents the Debtor as bankruptcy counsel. SUPERSTAR ELIZABETH: Hits Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Superstar Elizabeth LLC filed Chapter 11 protection in the District of Columbia. According to court filing, the Debtor reports between $1 million and $10 million in debt owed to 1 and 49 creditors. The petition states funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for August 14, 2024 at 2:00 p.m. in Room Telephonically on telephone conference line: (877) 465-7076. participant access code: 7191296. About Superstar Elizabeth Superstar Elizabeth LLC is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). Superstar Elizabeth LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Col. Case No. 24-00253) on July 17, 2024. In the petition signed by Daniel Lledo, as sole and managing member, the Debtor reports estimated assets and liabilities between $1 million and $10 million each. The Debtor is represented by: Michael A. Ostroff, Esq. MONTERO LAW GROUP, LLC 1738 Elton Road, Ste 105 Silver Spring, MD 20903 Tel: 301-588-8100 Fax: 301-588-8101 SWAN PIZZA: L. Todd Budgen Named Subchapter V Trustee ----------------------------------------------------- The U.S. Trustee for Region 21 appointed L. Todd Budgen, Esq., a practicing attorney in Longwood, Fla., as Subchapter V trustee for Swan Pizza, Inc. 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 Swan Pizza Swan Pizza, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-03735) on July 22, 2024, with up to $50,000 in assets and up to $500,000 in liabilities. Judge Tiffany P. Geyer presides over the case. Robert H. Zipperer, Esq., represents the Debtor as legal counsel. SWEETWATER BORROWER: Moody's Affirms 'B2' CFR, Outlook Stable ------------------------------------------------------------- Moody's Ratings has affirmed Sweetwater Borrower, LLC's B2 corporate family rating, B2-PD probability of default rating and its B2 backed senior secured revolving credit facility and backed senior secured first lien term loan B ratings. The outlook remains stable. RATINGS RATIONALE Sweetwater's B2 CFR is supported by the company's strong, long-term track record of revenue growth driven by increasing e-commerce penetration in the musical products sector spanning both traditional retail as well as commercial customers, and the company's good execution capabilities. Sweetwater's personalized customer interaction model led by extensively trained musician sales engineers differentiates it from competitors and drives high retention rates and lifetime customer value. Sweetwater's B2 CFR also benefits from its strong market position as the second largest musical instrument retailer in the US and largest online musical instrument retailer in the US. Sweetwater's B2 CFR is constrained by moderately high leverage and moderate coverage, governance risks associated with private equity ownership and the company's narrow focus on the discretionary musical instruments category. Credit metrics are currently within expectations for the rating level with leverage as measured by debt/EBITDA as of LTM March 31, 2024 of approximately 4.8x (4.4x pro forma for the February 2024 debt-funded acquisition of Gator Cases) and coverage as measured by EBITA/interest of approximately 2.4x. Although Moody's expect demand pressures stemming from the difficult consumer spending environment to result in revenue and earnings headwinds, Moody's expect debt/EBITDA to be in the 4.25x-4.5x range and EBITA/interest coverage to in the 2.25x-2.5x range, in line with expectations for the current rating level. The stable outlook reflects Moody's expectation for very good liquidity and relatively stable credit metrics over the next 12-18 months despite demand headwinds. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company maintains steady growth, good liquidity and a financial policy that balances shareholder and creditor interests. Quantitatively, the ratings could be upgraded if debt/EBITDA is maintained below 5.0x and EBITA/interest expense above 2.5x. The ratings could be downgraded if earnings or liquidity decline, or the company undertakes aggressive financial strategy actions. Quantitatively, the ratings could be downgraded if debt/EBITDA is maintained above 6.25x and EBITA/interest expense below 1.5x. The principal methodology used in these ratings was Retail and Apparel published in November 2023. Headquartered in Ft Wayne, Indiana, Sweetwater Borrower, LLC is the largest online music products retailer in the US. The company is controlled by funds affiliated with Providence Equity Partners LLC. Revenue for the LTM period ended March 31, 2024 was approximately $1.6 billion. SYNIVERSE CORP: S&P Upgrades Long-Term ICR to 'B-', Outlook Stable ------------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit rating and senior secured debt rating on U.S.-based Syniverse Corp. to 'B-' from 'CCC+'. S&P said, "The stable outlook reflects our expectation that mid-single-digit percent revenue growth from higher messaging volumes and roaming activity, combined with stable margins, will enable solid earnings growth. We believe this will allow Syniverse to maintain leverage in the low-7x area over the next 12 months, despite the loss of political messaging revenue in 2025." The upgrade reflects Syniverse’s ability to consistently reduce leverage through earnings growth and FOCF generation. S&P said, "The company has steadily improved its operating and financial performance over the past several quarters, and we now expect it will improve its S&P Global Ratings-adjusted leverage to 7x in 2024 from 8.4x in 2023 and remain around 7x in 2025. Syniverse generated positive FOCF for three consecutive quarters, and we expect it will record around $28 million of reported FOCF in 2024 as the result of continued strong sales in its Mobility and Messaging segments, cost reductions, and new business wins. We note the company will benefit from increased political revenue in its Messaging segment in the back half of 2024 from the U.S. Presidential election. Therefore, we expect limited credit metric improvement in 2025 given the loss of this revenue in a non-political year. In addition, the company's pay-in-kind (PIK) preferred equity instrument limits its ability to materially reduce leverage." The company is sensitive to macroeconomic headwinds, which could hurt financial results. Most of the company's earnings, particularly in Messaging, are volume-based and sensitive to changes in the broader macroeconomic environment. Reduced travel or deteriorating economic conditions could hurt top line growth and limit margin expansion. S&P said, "While we acknowledge that volume growth and new business wins in both the Mobility and Messaging segments have enabled the company to materially exceed our expectations, there is uncertainty about the longer-term forecast, particularly given the potential for interest rates to remain higher for longer. Our base-case forecast does not consider a significant pullback in consumer or business spending, although S&P Global economists expect tepid global GDP growth over the next couple of years." Additionally, regulatory issues reduced one Asia-Pacific country's use of third-party messaging apps, and we do not expect this issue to resolve itself soon. S&P said, "We expect Syniverse will improve its free cash flow generation and maintain sufficient liquidity over the next 12-18 months.Our base-case forecast now assumes the company will generate FOCF of about $28 million in 2024 and $35 million-$40 million in 2025 as working capital headwinds subside. As of May 31, 2024, Syniverse had a cash balance of about $35 million and about $90 million of availability (net of letters of credit) under its two senior secured revolving credit facilities due in 2027, providing incremental liquidity support. Given our expectation for continued positive FOCF generation, we expect Syniverse could use excess cash flow to repay revolver borrowings over the next couple of years, although this is not incorporated in our forecast. "We do not believe the recent signaling service degradation will have a significant near-term effect on financial results, although the longer-term impact is uncertain.In late June 2024, an international roaming outage caused Syniverse’s network to be disrupted for about three days, leading to many roaming customers reporting issues making calls, sending texts or accessing data without Wi-Fi. The immediate financial impact was an incremental $0.5 million of capital expenditures to fix the signaling network. We expect the company will be somewhat insulated from mobile subscriber churn since its contracts are with the carriers, not individual customers. That said, there is some risk that carriers will look to re-negotiate their contracts with Syniverse in the aftermath of this incident. "The stable outlook reflects our expectation that mid-single-digit percent revenue growth from higher messaging volumes and roaming activity, combined with stable margins, will enable solid earnings growth. We believe this will allow Syniverse to maintain leverage in the low-7x area over the next 12 months, despite the loss of political messaging revenue in 2025." S&P could lower the rating on Syniverse if: -- Reduced travel results in lower roaming volumes; -- Its operating performance is substantially weaker than S&P expects because of slower growth in Messaging and Mobility (roaming) products, which limits EBITDA growth and keeps leverage elevated such that the company's financial commitments appear unsustainable over the long term; or -- S&P believes the company will face a near-term liquidity crisis. S&P could raise the rating if: -- Syniverse sustains healthy growth in its Mobility and Messaging businesses and increases revenue from other strategic products such as 5G-based products like Evolved Mobility and IPX; -- It improves FOCF to debt to above 5%; and -- The company reduces leverage to below 6.5x, with prospects for further improvement over time. TEXAS E&P: Court Grants Former Counsel's Motion to Designate ------------------------------------------------------------ In the adversary proceeding captioned as ROBERT YAQUINTO, JR., as Chapter 7 Trustee, Plaintiff, v. KRAGE & JANVEY, L.L.P, Defendant, Adversary No. 19-03231-sgj (Bankr. N.D. Texas), filed in the bankruptcy case of Texas E&P Operating, Inc., Judge Stacey G. Jernigan of the United States Bankruptcy Court for the Northern District of Texas granted K&J's motion for leave to designate a former principal of the Debtor as a responsible third party that might share in any ultimate liability imposed upon the law firm is granted. In his lawsuit, the Chapter 7 Trustee argues K&J received constructively fraudulent transfers from the debtor and also knowingly participated in breaches of fiduciary duty committed by Mark Plummer, Texas E&P's former principal. Plummer sold unregistered private placement interests in various oil and gas drilling joint ventures. The Debtor -- which changed names several times during its existence -- was the purported operator-entity for his ventures. It purportedly conducted and had full control of drilling operations for each of the ventures and paid upfront expenses in such development and operations. Under operating agreements, the joint ventures (i.e., the investors therein) agreed to reimburse the Debtor for their respective share of the operating expenses. By mid-2017, these ventures and various affiliated businesses, including the Debtor were suffering from, among other things, losses from two expensive and unsuccessful oil wells in Anderson County, Texas; the weight of dozens of lawsuits by creditors and investors; and the 2016 expulsion of Plummer from the Financial Industry Regulatory Authority. Facing increasing financial stress and rapidly accumulating litigation, the Debtor -- but not the affiliated Plummer Entities --- filed for Chapter 11 bankruptcy on November 29, 2017. On January 18, 2018, the late Jason Searcy was named the Debtor's Chapter 11 trustee at the request of the Official Committee of Unsecured Creditors that was appointed in the case. The UCC had expressed concern that Plummer had conflicts of interest. Then a few months later, Searcy moved to convert the Bankruptcy Case to a Chapter 7, citing no prospects for a reorganization. Searcy, thereafter, served as the Chapter 7 trustee following conversion on July 27, 2018. Unfortunately, Searcy died unexpectedly during the Bankruptcy Case (on January 16, 2019), and Robert Yaquinto, Jr. was thereafter appointed as successor trustee on January 23, 2019. For many years in the past, including the four-year period before the Petition Date (i.e., from November 29, 2013 until November 28, 2017), K&J provided legal services for not just the Debtor but for the Plummer Entities more generally. On November 27, 2019, the Trustee filed this Adversary Proceeding, originally seeking to avoid and recover 21 payments totaling $472,158.42 which were made by the Debtor to the Defendant in the roughly 34 months leading up to the Debtor's Petition Date. The Trustee sought to avoid and recover the Transfers under these statutes, and also reserved "the right to (i) supplement the information regarding the Transfers and any additional transfers, and (ii) seek recovery of such additional Transfers." On June 9, 2022, Plummer was indicted by a grand jury in Collin County, Texas, for theft, money laundering, and securities fraud in connection with three drilling ventures -- due to evidence suggesting that, from May 1, 2015 through September 18, 2020, he engaged in a "scheme and continuing course of conduct" to defraud more than 170 investors out of more than $10 million. On December 9, 2022, the Trustee filed his First Amended Complaint, which included the Plummer criminal indictments and added numerous additional transfers, aggregating to an additional $517,736.50. In the First Amended Complaint, the Trustee was for the first time -- approximately five years after the Petition Date -- seeking the avoidance and recovery of $989,894.92 of total Transfers (54 Transfers in all) -- up from the original $472,158.42 Transfers (i.e., 21 Transfers) identified in the Original Complaint. Perhaps more significantly, the Trustee added four new state-law causes of action that certainly altered the entire tone of the Adversary Proceeding. The new state-law claims were as follows: (1) money had and received and/or unjust enrichment (obtained by fraud, duress, or the taking of an undue advantage of the Debtor); (2) aiding and abetting/knowing participation in Plummer's breach of fiduciary duty to the Debtor; (3) professional negligence and/or malpractice; and (4) negligent retention and/or supervision. The Trustee also, for the first time in the First Amended Complaint, referred to K&J as an "insider." The Trustee for the first time alleged that "Debtor has suffered losses in the millions that were proximately caused by K&J's wrongful conduct described herein." The Trustee also sought punitive damages against the Defendant. In summary, the Adversary Proceeding morphed, in three-plus years, from a $472,158.42 avoidance action into a multi-faceted, multimillion-dollar lawsuit, essentially seeking to hold the Debtor's former law firm accountable for representing a troublesome client -- i.e., one that they allegedly had reason to know was a fraudster. K&J filed a Rule 12(b)(6) motion to dismiss the First Amended Complaint. The Court ruled, in a 46-page Memorandum Opinion and Order, dated April 19, 2023, that some of the newly added avoidance actions against Defendant should survive, and some were time-barred. The Court also ruled that three of the four newly added state-law claims should be dismissed as time-barred. Specifically, the Court allowed the "aiding and abetting/knowing participation in Plummer's breach of fiduciary duty to the Debtor" to survive. In this Adversary Proceeding, the issue boils down to this key undisputed fact, the Court notes. The Debtor paid for legal services not simply provided to it but also provided to Plummer and other Debtor insiders or affiliates. K&J's contention that the Debtor received reasonably equivalent value for legal services is partially rooted in the argument that the Debtor received an indirect benefit from legal services provided to Plummer and his related non-debtor entities. K&J asserts that it is entitled to summary judgment because the legal services provided to affiliated entities (non-debtor affiliates and Plummer) were within the Debtor's "common enterprise." Thus, K&J asserts that payments were essentially made to reduce an antecedent debt of the Debtor to K&J. The Court notes K&J has offered no summary judgment evidence other than the Court's CBS Radio Adversary findings and conclusions to establish that it is entitled to judgment on the Trustee's constructive fraudulent transfer claims. These do not establish that there is no genuine issue of disputed material fact such that it is entitled to judgment as a matter of law, the Court holds. Accordingly, the Trustee's constructive fraudulent transfer claims will move forward to trial The First Amended Complaint (filed with leave on October 12, 2022), in contrast to the Original Complaint (filed November 27, 2019), asserted for the first time the state-law claim that K&J knowingly participated in Plummer's breach of fiduciary duty to the Debtor and that K&J is liable for injuries for the same. In K&J's earlier motion to dismiss, it argued that this claim was time-barred as a matter of law. The Court extensively analyzed this argument, providing a detailed timeline of relevant dates, and ultimately decided the claim should not be deemed time-barred. In short, the Court considered many factors, including that the original trustee in this bankruptcy case had unexpectedly died several months into his tenure; that the Trustee also was not given access to K&J's files for a lengthy period of time, due to COVID-19 closures; and that there was also a brief period with a tolling agreement in place. In its analysis, the Court noted that Sec. 108 of the Bankruptcy Code was of no particular relevance to the facts before the Court, and that Texas law would generally provide for a four-year statute of limitations, after the cause of action accrued, for bringing a claim for knowing participation in a breach of fiduciary duty. Accordingly, K&J's motion for summary judgment on this claim must be denied as this claim is not deemed time-barred as a matter of law. Next, the Court turns to the Trustee's request for summary judgment, pursuant to Bankruptcy Rule 7056, on certain affirmative defenses asserted by K&J. The Trustee seeks a declaration as a matter of law that K&J's attorney-immunity and litigation-privilege defenses do not apply to the knowing participation claim. Notably, K&J is no longer pressing the litigation-privilege defense -- it only argues under the attorney-immunity doctrine. K&J claims the attorney-immunity defense applies to the Trustee's claims as a matter of law because K&J is comprised of licensed attorneys, which K&J contends gives it immunity from civil claims by other parties for any actions or omissions K&J took representing the Debtor and its affiliates (or Plummer). The Trustee argues that the attorney-immunity defense is unavailable when an attorney participates in a fraudulent business scheme with his client. In addition, the Trustee asserts that the attorney-immunity defense is inapplicable here because the Trustee is not in the role of a non-client third party. The Court agrees with the Trustee -- the attorney-immunity defense is not available to K&J. The Trustee's motion for summary judgment on the affirmative defenses is granted. With the only relevant (undisputed) fact being that the Debtor was K&J's former client, the Trustee has met his summary judgment burden of showing that neither the attorney-immunity nor the litigation-privilege defenses are available to K&J. Accordingly, K&J's affirmative defenses discussed herein fail, and the Trustee's knowing participation claim for breach of fiduciary duty will proceed to trial. The Court now addresses the third motion presented, which raises an issue pertaining to "proportionate responsibility" for tort liability under Texas law and how it might apply to the Trustee's state-law claim for knowing participation in breach of fiduciary duty. The Trustee asks the Court to deny K&J's Motion to Designate under a single theory: that the Proportionate Responsibility Statute does not apply to its aiding and abetting / knowing participation in breach of fiduciary duty claim. According to the Court, the reason for the Trustee's resistance is obvious from an economic standpoint -- the Trustee would much prefer that K&J bear full responsibility for any liability and damages that the Court might ultimately determine, for any "knowing participation" in a breach (or at least bear joint and several liability with Plummer) -- and not merely bear some reduced percentage of overall liability/damages. According to the Court, the Proportionate Responsibility Statute creates a mechanism for a defendant to designate a third party as allegedly responsible in whole or in part for a tort. Assuming the statute applies to a particular tort, this type of motion should only be denied where it is untimely or if some other statutory pleading requirement is not met, the Court explains. Granting a motion to designate a responsible third party "does not by itself impose liability" on the third party, and may not be used in a later proceeding by collateral estoppel. It merely designates a third party that is potentially responsible to some proportionate degree, complying with notice and due process demands, the Court says. Again -- assuming that knowing participation in breach of fiduciary duty is a tort encompassed by the Statute (a subject addressed at length later, infra Section VII(B)) -- the Court says it must grant K&J's Motion to Designate for two reasons: 1. Courts lack discretion to deny these motions when the motion lacks a procedural defect as defined by the Statute. 2. The current litigation is not yet in the apportionment of liability phase, so the Trustee's arguments are premature. On the first point, the Court explains the clear, mandatory language in the Statute dictates that this Court lacks discretion to deny a timely filed, properly pled motion to designate a responsible third party. The defendants made a timely request to designate their attorneys as responsible third parties, alleging that the attorneys breached their duty of care to their clients, the Court finds. A copy of the Court's decision dated July 19, 2024, is available at https://urlcurt.com/u?l=qnAzv0 About Texas E&P Operating Based in Richardson, Texas, the Texas E&P group of companies -- http://texasepgroup.com/-- offered direct investment opportunities in its oil and natural gas projects in the Southwestern United States. From the initial investment to the production of each well, the Group oversaw each phase of development. Texas E&P Operating was an independent oil and natural gas operator, with specialties in developing new and existing oil fields since 1994. Texas E&P Funding managed a diverse offering of oil and natural gas investments. Texas E&P Well Service was in the well workover and completion industry, with dedication to safety and innovation. Texas E&P Operating, Inc., f/k/a Chestnut Exploration and Production, Inc., filed for Chapter 11 bankruptcy protection (Bankr. N.D. Tex. Case No. 17-34386) on Nov. 29, 2017. In the petition signed by Mark A. Plumber, president, the Debtor estimated its assets and liabilities at between $10 million and $50 million. Judge Stacey G. Jernigan presided over the case. John Mark Chevallier, Esq., at McGuire, Craddock & Strother, P.C., served as the Debtor's bankruptcy counsel. The Office of the U.S. Trustee appointed an official committee of unsecured creditors' in the Debtor's case. The Committee retained Okin Adams LLP as its legal counsel. On Jan. 19, 2018, Jason Searcy was appointed as the Debtor's Chapter 11 trustee. The trustee hired Searcy & Searcy, P.C., as bankruptcy counsel. Snow Spence Green LLP, was the special counsel. At the request of the U.S. Trustee, on July 27, 2018, the Debtor's case was converted to Chapter 7. Mr. Searcy served as the Chapter 7 trustee. Robert Yaquinto, Jr. was appointed as successor trustee on January 23, 2019. TITAN PURCHASER: $50MM Term Loan Add-on No Impact on Moody's B1 CFR ------------------------------------------------------------------- Moody's Ratings said Titan Purchaser, Inc.'s B1 corporate family rating, B1-PD probability of default rating and the B2 rating on the senior secured term loan remain unchanged following the company's announcement that it will upsize its term loan by $50 million. Also, Titan recently increased its undrawn and unrated asset based lending (ABL) facility to $195 million from $150 million. The outlook remains stable. Proceeds from the upsized term loan and available cash will fund a $100 million dividend to private equity sponsor, Monomoy Capital Partners (Monomoy). Monomoy acquired Titan, parent company of operating subsidiary Waupaca Foundry, Inc. (Waupaca) in March 2024. While the transaction increases leverage on a pro forma basis to approximately 4x, it is within the expected range for the rating. However, Moody's note that this transaction reflects a more aggressive financial policy than Moody's had anticipated at the time of the rating assignments in January of this year. Titan's ratings reflect Waupaca's competitive position as a manufacturer of iron casting components in North America serving diverse end-markets including automotive, industrial and agriculture. Titan's business model includes a highly variable cost structure with commodity cost pass-through mechanisms to mitigate volatility. The company has made progress in reducing costs as well as improved working capital over the last few months. This has improved both operating margin and liquidity. However, Titan's challenges include customer concentration, cyclicality in its end-markets and customers' looking for less heavy alternatives to iron castings over the long term. Waupaca Foundry Inc. is a manufacturer of engineered cast iron components for use in the automotive vehicle, off-highway vehicle, industrial, rail and oil & gas markets. The company supplies gray and ductile iron castings to light trucks (Class 1-3), heavy trucks (Class 4-8) and passenger vehicles as well as the agriculture and construction markets. Products include brackets, rotors, cases, housings, automotive brake discs and larger heavy truck/off-highway castings and commercial vehicle brake drums. Revenue for the twelve months ended March 2024 was approximately $1.8 billion. TNC SRQ: Claims Will be Paid from Property Sale/Refinance --------------------------------------------------------- TNC SRQ, LLC, filed with the U.S. Bankruptcy Court for the Middle District of Florida a Disclosure Statement describing Plan of Reorganization dated July 15, 2024. The Debtor is engaged in the business of real estate investment, and rehabilitation and sale of real estate properties. Currently, the Debtor's principal asset is an investment property located at 5174 Sandy Cove Avenue, Sarasota, Florida. Pre-petition, the Debtor entered into a Home Builder agreement with Tidewater Builders, Inc., for the build of a 3,685 square foot residential home on the real property. The Debtor intends on selling its real property either during or after the completion of the build. As of the Petition Date, the Debtor's property has a Pre-Construction (to be built) listing price on the MLS at $4,300,000.00. The Debtor filed the instant case on March 19, 2024, due to a pending summary judgment hearing in the foreclosure case. The Debtor filed this case to preserve the substantial equity in the real property. Post-petition, the Debtor, Everythings Jake, LLC, SRQ Ventures Land Trust, and Tidewater Builders, Inc. entered into a Settlement Agreement that resolves Everythings Jake, LLC's Motion to Dismiss Chapter 11 Case or Alternatively for Relief from the Automatic Stay, the state court foreclosure litigation, and also sets forth the terms of a Chapter 11 plan. The Debtor filed its Motion to Approve Compromise of Controversy, which the Court granted. Pursuant to the approved Settlement Agreement between TNC SRQ, LLC, Everythings Jake, LLC, SRQ Ventures Land Trust, and Tidewater Builders, Inc., the Debtor has 19 months from the Effective Date of the Settlement Agreement to obtain a certificate of occupancy from Sarasota County and pay the allowed secured claim of Everythings Jake, LLC in full. Accordingly, the Debtor anticipates selling its real property on or before the expiration of the 19-month period. In the event the Debtor is unable to sell its real property, the Debtor may choose to refinance its loan and pay its creditors. The Plan will be funded from the combination of capital contributions from the principals of the Debtor while the residential home is being built on the Debtor's real property and either the sale proceeds from the sale of Debtor's real property located at 5174 Sandy Cove Avenue, Sarasota, Florida 34242 or the Debtor’s refinancing of its loan. Unsecured creditors holding allowed claims, if any, will receive payment in full of their allowed claims upon the sale of the Debtor's property or the Debtor's refinancing of its loan. The Plan is based upon the Debtor's belief that it will provide a better repayment to general unsecured creditors than they would otherwise receive in a liquidation. A full-text copy of the Disclosure Statement dated July 15, 2024 is available at https://urlcurt.com/u?l=eKUlSj from PacerMonitor.com at no charge. The firm can be reached at: Buddy D. Ford, Esq. Jonathan A. Semach, Esq. Heather M. Reel, Esq. Buddy D. Ford, P.A. 9301 West Hillsborough Avenue Tampa, FL 33615-3008 Telephone: (813) 877-4669 Facsimile: (813) 877-5543 Email: All@tampaesq.com Email: Jonathan@tampaesq.com Email: Heather@tampaesq.com About TNC SRQ, LLC TNC SRQ, LLC is engaged in the business of real estate investment, and rehabilitation and sale of real estate properties. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-03902) on Sept. 5, 2023, with $1 million to $10 million in both assets and liabilities. Troy Jenkins, manager, signed the petition. Judge Catherine Peek McEwen oversees the case. Benjamin G. Martin, Esq., at the Law Offices of Benjamin Martin, is the Debtor's bankruptcy counsel. URGENTPOINT INC: U.S. Trustee Wants Chapter 11 Converted to Ch. 7 ----------------------------------------------------------------- Emlyn Cameron of Law360 Bankruptcy Authority reports that the U.S. Trustee's Office requested that a Delaware bankruptcy judge convert healthcare provider UrgentPoint's Chapter 11 case to a Chapter 7 liquidation, saying the debtor is or shortly will be unable to meet its administrative obligations and put its ability to care for patients at risk. About UrgentPoint Inc. UrgentPoint, Inc. is a multi-specialty medical group that practices an integrated care approach for chronic conditions. UrgentPoint, Inc. and UrgentPoint Medical Group, PC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-11044) on May 20, 2024. In the petitions signed by Joe Chauvapun, M.D., chief executive officer, UrgentPoint disclosed $7,922,122 in assets and $6,941,998 in liabilities. Judge Laurie Selber Silverstein oversees the cases. Thomas J. Francella, Jr., Esq., at Whiteford, Taylor & Preston LLC, represents the Debtors as counsel. VERITEXT: Fitch Affirms 'B' LongTerm IDR, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed VT Topco, Inc.'s (Veritext; dba as Veritext Legal Solutions) Long-Term Issuer Default Rating (IDR) at 'B' and its first lien senior secured debt at 'B+'/'RR3'. The Rating Outlook is Stable. Veritext's IDR reflects the company's scale and leading position in the relatively niche and fragmented court reporting industry. The ratings also reflect the company's ability to grow its revenue organically and through acquisitions, and its diversified customer base. Veritext's private equity ownership will likely prioritize growth and ROE optimization over debt reduction. As a result, the ratings anticipate leverage to be maintained close to current levels, in the 5.0x-5.5x range. Key Rating Drivers Large Player in Highly Fragmented Industry: Veritext's scale as the largest court reporting firm and its national presence, brand recognition, technology capabilities, and breadth of services, relative to thousands of local competitors, should position it well to continue to consolidate its highly fragmented market. Although barriers to entry into the market are low, scale and technology capabilities should provide benefits for servicing customers. Limited Expected Deleveraging: Fitch assumes that the company will prioritize shareholder returns rather than seek material deleveraging, and believes a dividend recapitalization could occur at some point. The company's most recent capital return to shareholders, which occurred under different ownership in 2022, took the company's EBITDA leverage slightly above 6x. Fitch forecasts leverage in the low range of 5.0x-5.5x by YE 2024, compared with 5.5x pro forma for acquisitions in 2023, and 6x in 2022, highlighting the company's sound deleveraging capacity. Good Client Retention and Diversification: The company displays solid client retention, which it estimates at a 99% rate (based on clients who have over $50,000 of business), and has contributed to consistent organic growth. Pricing risk is low and mitigated due to court reporting services representing a small percentage of overall litigation costs. A broadly diverse customer base should minimize idiosyncratic risks associated to a single customer and result in low revenue volatility. Service contracts are not widely used in the industry. Managing Revenue Mix: Over the last four years, the company has increased remote depositions and digital reporting services, both of which are more profitable than traditional, in-person, depositions, resulting in higher profitability. Fitch believes that the use of remote services will be sustained to some degree. Managing the evolving mix could be crucial to the rating, as a decline in profitability would leave the company more exposed should it coincide with a period of high debt. Positive Pre-Dividend FCF: The company generates solid FCF, which should be sufficient to fund its inorganic growth strategy of tuck-in acquisitions. Fitch projects Veritext's pre-dividend FCF margin to average in the high single digits through 2026, similar to recent history. Underlying these assumptions is capex intensity of around 2.5%-3.0% of net revenue, with a majority of it attributed to product development, and a moderate reduction in benchmark interest rates. Derivation Summary Veritext is the largest court reporting firm in terms of revenue and one of a handful of firms competing at the national level. It has a large and diversified customer base with no meaningful customer concentration. Financial metrics of national peers are unknown as they are private. Veritext's revenue scale is lower when compared with the median of a subset of business services and technology companies rated by Fitch in the 'B' category, while its EBITDA is close to in line as Veritext is more profitable. Leverage against this subset is broadly in line at around 5.5x. Compared with Fitch-rated business services corporates of similar scale that also act as middle-person businesses, such as staffing firm EmployBridge Holding Company (EmployBridge; B/Negative), Veritext operates in a significantly more stable industry. EmployBridge has a Negative Outlook as the company faces challenges to deleverage to the 4.5x-5.5x range expected for its 'B' rating. The stability of the court reporting industry is similar to that of accounting services firms such as Eisner Advisory Group (B/Stable). Compared with Eisner, which is also private equity-owned, Veritext has a roll-up strategy expected to be funded mostly through FCF. Both companies are expected to sustain EBITDA leverage in the 5x to 6x range. Key Assumptions The following reflect key assumptions in Fitch's base case: - Revenue grows high double digits in 2024 and in the mid to high single-digits in subsequent years as a result of organic growth and acquisitions; - Adjusted EBITDA margins in the 32%-33% range; - Around USD50 million per year continues to be spent in acquisitions; - Capex of around 2.5%-3.0% of net revenue per year; - Excess cash flow after acquisitions returned to shareholders. Recovery Analysis - The recovery analysis assumes that Veritext would be recognized as a going-concern (GC) in bankruptcy rather than liquidated; - Fitch assumed a 10% administrative claim; - Fitch also assumed the revolving facility to be fully drawn. GC Approach - A bankruptcy scenario could occur if Veritext faced some combination of intense competitive price pressure, cost pressures or change in mix that reduce margins to a point that it becomes difficult for the company to service its obligations and continue to execute its business plan. In such scenario, Fitch assumes Veritext's GC EBITDA to fall below USD200 million; - The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation (EV); - An EV multiple of 5.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considers industry M&A transactions, transactions and trading multiples of comparable industries and historical bankruptcy case study exit multiples for Technology companies; - The recovery analysis results in a 'B+'/'RR3' issue and recovery ratings for Veritext secured debt, implying recoveries in the 51%-70% range. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustaining EBITDA leverage solidly below 5.0x; - (Cash flow from operations [CFO]-capex)/debt with sustaining near 7.5%; - Sufficient financial flexibility for the company to pursue strategic actions without significant deviation in credit metrics. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Expectations of EBITDA leverage sustaining above 6.0x due to operational underperformance or capital allocation policy; - EBITDA/interest coverage sustaining below 2x; - (CFO-capex)/debt ratio sustaining below 5%; - Sustained EBITDA margin below 30%; - Erosion in revenue retention rates resulting in revenue decline. Liquidity and Debt Structure Adequate Liquidity: The company's liquidity is supported by expectations of positive pre-dividend FCF which should be more than sufficient to fund the company's tuck-in acquisition strategy. The company faces no meaningful debt maturities until 2030. As of March 31, 2024, the company had $125 million available under its senior secured revolver and held some cash on its balance sheet. Debt Structure: The company's debt consists of USD938 million in a senior secured term loan B due 2030 amortizing at 1%/year, $500 million of senior secured notes due 2030 and the untapped senior secured revolver maturing in 2028. (CFO-Capex)/Debt was 4.4% in 2023 and is forecast to remain at similar levels in 2024 before rising in 2025 to around 6%. Issuer Profile Veritext operates as a court reporting firm providing transcripts of testimony from depositions, arbitrations and other events principally to the legal profession throughout the United States and Canada. 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 ----------- ------ -------- ----- VT Topco, Inc. LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ VICTORY CAPITAL: Moody's Upgrades CFR & Senior Secured Debt to Ba1 ------------------------------------------------------------------ Moody's Ratings has upgraded the corporate family rating and senior secured debt rating of Victory Capital Holdings, Inc. to Ba1 from Ba2. Concurrently, the company's probability of default rating was upgraded to Ba1-PD from Ba2-PD with a stable outlook. Previously, the rating was on review for upgrade. The rating action concludes the review for upgrade initiated on May 1, 2024 and follows the company's announcement that it had signed a definitive agreement to form a strategic partnership with Amundi SA (Amundi). Management expects the transaction to close in late 2024 or early 2025. RATINGS RATIONALE The rating upgrade reflects the immediate benefits of the partnership to Victory's scale, distribution capabilities and overall business diversification. The equity-based consideration of the transaction and projected cost synergies further enhance the company's financial flexibility by reducing Victory's already modest financial leverage. Under the partnership, Victory's managed assets will increase by more than $100 billion and include complementary investment capabilities that diversify its asset under management (AUM) mix. The company will have access to Amundi's global distribution network which includes access to approximately 100 million retail clients that could expand the company's geographic footprint with limited overhead. While persistent net client outflows remains a key credit challenge for Victory, year-to-date net asset flows have been positive for Amundi's US operations, providing some offset to the company's net outflows. The partnership is projected to realize approximately $100 million in net cost savings that would reduce Victory's financial leverage, based on Moody's standard adjustments, to 2x debt-to-EBITDA compared to about 2.9x as of 31 March 2024. Because Victory has a strong track record of integrating new businesses and realizing projected cost synergies for large transactions, Moody's believe the execution risks of the partnership are modest. Victory's Ba1 CFR reflects its modest financial leverage, strong profitability and the benefits of its strategic partnership with Amundi. However, the rating is constrained by persistent asset redemptions, and the company's concentrated exposure to retail channels. The stable outlook on the ratings reflects Moody's expectation that Amundi's US operations will provide incremental earnings that support Victory's strong profitability. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Victory's ratings could be upgraded if asset inflows result in meaningful organic growth that improves the company's asset resiliency scores; or financial leverage, based on Moody's standard adjustments, is sustained below 2.0 times debt-to-EBITDA; or there is a significant improvement to the company's geographic diversification. Conversely, factors that could result in a ratings downgrade include net client redemptions in excess of 2% of managed assets; or financial leverage, based on Moody's standard adjustments, is sustained above 3.0 times debt-to-EBITDA; or a deterioration in profitability such that GAAP pretax income margins fall below 25%. Victory is a publicly traded and integrated multi-boutique asset manager that had approximately $174 billion in total client assets as of June 30, 2024. Amundi, a subsidiary of the Crédit Agricole group, is a leading European based asset manager that currently manages over EUR2 trillion of client assets. The principal methodology used in these ratings was Asset Managers published in May 2024. VITAL ENERGY: Point Energy Deal No Impact on Moody's 'B1' Rating ---------------------------------------------------------------- Moody's Ratings said that Vital Energy, Inc.'s (Vital, B1 stable) plan to acquire the Delaware Basin assets of Point Energy Partners (Point, unrated), a Vortus Investments portfolio company, does not affect its current ratings or stable outlook. Vital agreed to acquire 80% of Point's assets, with Northern Oil and Gas, Inc. (NOG, B1 positive) acquiring the remaining 20%, for a total combined cash consideration of $1.1 billion.[1] Vital's acquisition includes 16,300 net acres bolstering its existing Delaware Basin position, with net production of approximately 30 thousand barrels of oil equivalent (boe) per day (67% oil) as of the effective date of April 1, 2024. Closing price adjustments are expected to total approximately $75 million, reducing total consideration to approximately $1.025 billion. Vital Energy expects to fund its $820 million portion, net of anticipated purchase price adjustments, through revolver borrowings under its credit facility with $90 million drawn at June 30, 2024 and expected commitments of $1.5 billion upon closing. This acquisition strengthens Vital's footprint in the Delaware Basin and it should lead to improved capital and cost efficiencies for its expanded operations, but it entails incremental debt and is modestly leveraging, making the transaction credit neutral. The transaction is subject to customary closing conditions and is expected to close by the end of the third quarter of 2024. Vital's expected operating cash flow at current commodity prices should allow for the optimal development of the acquired assets. However, the company's capital allocation will need to be balanced amongst competing priorities of capital spending and acquisition debt repayment as well as any additional acquisitions. Post closing, Vital plans to considerably moderate development activities on the acquired properties compared to Point's recent program. In March 2024, Point turned-in-line a 15-well package, driving the strong recent production rates. With moderating activity levels and natural declines, fourth-quarter 2024 production on the Point assets is expected to average just over 15 thousand boe per day (64% oil). This will modestly increase the oil proportion of the company's overall production mix. The acquired acreage is in Ward and Winkler Counties, adding to the company's current Delaware Basin footprint largely in Reeves County. The company estimates it is acquiring 49 net undrilled locations enhancing future drilling inventory and increasing its Delaware Basin assets by approximately 25% to 84,000 net acres. Vital's gross leverage metrics, such as retained cash flow to debt and interest coverage, are expected to modestly weaken from solid levels, since the acquisition will be debt-funded. Although this acquisition meaningfully increases debt balances, Vital's development of its consolidated acreage position and operational execution could benefit its credit profile in the medium-term if the company is able to pay down the incremental debt at an accelerated pace with cash flow. Vital's pro forma production should exceed 130 thousand boe per day supported by operations in the Midland Basin and Delaware Basin. Vital Energy, Inc. is a Tulsa, Oklahoma based publicly traded independent exploration and production company with primary assets in the Permian Basin. WYATT RESTAURANT: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Wyatt Restaurant Group, LLC 358 N Capitol Pkwy Montgomery, AL 36107-1441 Business Description: The Debtor is a privately held full-service restaurant. Chapter 11 Petition Date: July 31, 2024 Court: United States Bankruptcy Court Middle District of Alabama Case No.: 24-31689 Judge: Hon. Bess M Parrish Creswell Debtor's Counsel: Anthony Brian Bush, Esq. THE BUSH LAW FIRM, LLC 3198 Parliament Cir Ste 302 Montgomery AL 36116 Tel: (334) 263-7733 E-mail: abush@bushlegalfirm.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Stephanie Leigh Wyatt as member. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/J6YJJVI/Wyatt_Restaurant_Group_LLC__almbke-24-31689__0001.0.pdf?mcid=tGE4TAMA [*] Judge Paek Confirmed to Southern District Bankruptcy Bench -------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York announced that Kyu Young (Mike) Paek was confirmed as a Judge to the Southern District Bankruptcy Bench on July 29, 2024 and will sit in the Poughkeepsie divisional courthouse. In addition to matters filed in Poughkeepsie, Judge Paek will be assigned a percentage of Chapter 11 and Chapter 15 cases filed in White Plains. When assigned a Mega Chapter 11 case under Local Bankruptcy Rule 1073-1(f), Judge Paek may be amenable to holding such proceedings in the Manhattan courthouse where he will have a secondary courtroom and chambers. As noted in the previous press release of the United States Court of Appeals for the Second Circuit available, Judge Paek was a court executive for the Southern District Bankruptcy Court prior to his judicial appointment. He has also served as law clerk to Bankruptcy Judges Stuart M. Bernstein (ret.) and James M. Peck (ret.) including being the lead law clerk for the liquidation of Bernard L. Madoff Investment Securities LLC under the Securities Investor Protection Act. Prior to joining the Court, Judge Paek practiced with the law firm of Schulte Roth & Zabel LLP. He was the co-chair of the Commercial Bankruptcy and Restructuring Committee of the Asian American Bar Association of New York and an adjunct professor of bankruptcy law at Fordham University School of Law. Judge Paek is a graduate of Fordham University School of Law and the University of Texas. He succeeds retired Bankruptcy Judge Cecelia G. Morris who is currently continuing service on recall. [] Ganguli Rejoins AlixPartners' Automotive & Industrial Practice ----------------------------------------------------------------- The global consulting firm AlixPartners announced that Neal Ganguli has rejoined the firm as a Partner and Managing Director in the Automotive and Industrial Practice. Mr. Ganguli brings more than 25 years of experience helping automotive and private equity clients across the value chain. His particular areas of focus include automotive strategy and operations in general, as well as the U.S. electric vehicle (EV) and battery supply chains. His experience includes executing strategic and operational transformation programs at global automotive and commercial OEMs, suppliers, industrial manufacturers, and e-mobility and automotive-technology companies, as well as private equity funds and financial sponsors invested in these sectors. Mr. Ganguli's extensive background spans several leading consulting firms and private equity investors. Most recently, he served as a Senior Managing Director and the Automotive & Industrial Business Transformation Leader at FTI Consulting. In this role, he worked with executive teams at automotive and industrial manufacturers, as well as private equity clients, to achieve significant business-performance improvements. Prior to FTI, Mr. Ganguli held significant roles at Deloitte as a Managing Director, leading that firm's Automotive Supplier consulting practice; and at Cerberus Operations and Advisory Company LLC, where he served as a Private Equity Operations Executive. He also has notable experience from his tenure at AlixPartners earlier in his career, where he first served as a Director, focused on operations. Mr. Ganguli is a recognized thought leader in the automotive supplier industry, and has authored numerous publications and spoken at industry associations such as MEMA and the Center for Automotive Research's (CAR) Management Briefing Seminars. He holds an MBA from the University of Michigan's Ross School of Business and a Bachelor of Technology in Electronics from the Indian Institute of Technology Kharagpur in West Bengal, India. "We look forward to leveraging Neal's vast experience and strategic vision to further enhance the capabilities and growth of our team," said Mark Wakefield, Global Co-leader of the Automotive and Industrial Practice at AlixPartners. "Operationalizing electrification and the future of mobility are of critical importance to our clients. This addition strengthens AlixPartners' reputation as the leading consulting firm on these important topics." About AlixPartners AlixPartners -- http://www.alixpartners.com/-- is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Its clients include companies, corporate boards, law firms, investment banks, private-equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York and has offices in more than 20 cities around the world. [^] BOOK REVIEW: TAKING CHARGE: Management Guide to Troubled ------------------------------------------------------------ TAKING CHARGE: Management Guide to Troubled Companies and Turnarounds Author: John O. Whitney Publisher: Beard Books Softcover: 283 Pages List Price: $34.95 Order a copy today at: http://beardbooks.com/beardbooks/taking_charge.html Review by Susan Pannell Remember when Lee Iacocca was practically a national hero? He won celebrity status by taking charge at a company so universally known as troubled that humor columnists joked their kids grew up thinking the corporate name was "Ayling Chrysler." Whatever else Iacocca may have been, he was a leader, and leadership is crucial to a successful turnaround, maintains the author. Mediagenic names merit only passing references in Whitney's book, however. The author's own considerable experience as a turnaround pro has given him more than sufficient perspective and acumen to guide managers through successful turnarounds without resorting to name-dropping. While Whitney states that he "share[s] no personal war stories" in this book, it was, nonetheless, written from inside the "shoes, skin, and skull of a turnaround leader." That sense of immediacy, of urgency and intensity, makes Taking Charge compelling reading even for the executive who feels he or she has already mastered the literature of turnarounds. Whitney divides the work into two parts. Part I is succinctly entitled "Survival," and sets out the rules for taking charge within the crucial first 120 days. "The leader rarely succeeds who is not clearly in charge by the end of his fourth month," Whitney notes. Cash budgeting, the mainstay of a successful turnaround, is given attention in almost every chapter. Woe to the inexperienced manager who views accounts receivable management as "an arcane activity 'handled over in accounting.'" Whitney sets out 50 questions concerning AR that the leader must deal with -- not academic exercises, but requirements for survival. Other internal sources for cash, including judiciously managed accounts payable and inventory, asset restructuring, and expense cuts, are discussed. External sources of cash, among them banks, asset lenders, and venture capital funds; factoring receivables; and the use of trust receipts and field warehousing, are handled in detail. Although cash, cash, and more cash is the drumbeat of Part I, Whitney does not slight other subjects requiring attention. Two chapters, for example, help the turnaround manager assess how the company got into the mess in the first place, and develop strategies for getting out of it. The critical subject of cash continues to resonate throughout Part II, "Profit and Growth," although here the turnaround leader consolidates his gains and looks ahead as the turnaround matures. New financial, new organizational, and new marketing arrangements are laid out in detail. Whitney also provides a checklist for the leader to use in brainstorming strategic options for the future. Whitney's underlying theme -- that a successful business requires personal leadership as well as bricks and mortar, money and machinery -- is summed up in a concluding chapter that analyzes the qualities that make a leader. His advice is as relevant in this 1999 reprint edition as it was in 1987 when first published. ********* 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 ***