/raid1/www/Hosts/bankrupt/TCR_Public/241014.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 14, 2024, Vol. 28, No. 287
Headlines
31FO LLC: Case Summary & Four Unsecured Creditors
3422 W. CLARENDON: Voluntary Chapter 11 Case Summary
538 MOUNT HOPE: Files Amendment to Disclosure Statement
601W COMPANIES: Lighthouse Named as Receiver for Dayton's Project
68700 DINAH: Case Summary & Six Unsecured Creditors
ABSOLUTE OILFIELD: Case Summary & Two Unsecured Creditors
ACCURIDE CORP: S&P Downgrades ICR to 'D' on Bankruptcy Filing
AIMBRIDGE ACQUISITION: S&P Lowers ICR to 'CCC', Outlook Negative
AMERICAN ROCK: Moody's Rates New $110MM First Lien Term Loans 'B1'
AMERICAN TRADERS: Case Summary & 20 Largest Unsecured Creditors
AMERICARE INC: Elevation Wins Summary Judgment on Counterclaims
APEX COMMERCIAL: Has Interim Cash Collateral Access Until Oct. 15
ARCHDIOCESE OF MILWAUKEE: Court Won't Reopen Chapter 11 Case
ASSETS HOLDING: Updates Several Secured Claims Pay Details
ATHENAHEALTH GROUP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
AUDBEEJ ADVENTURES: Gets Final OK to Use Cash Collateral
AUDBEEJ ADVENTURES: Kathleen DiSanto Named Subchapter V Trustee
AWAD ODEH: Clawback Suit v. Zahdan Goes to Trial
BACKYARD ENVIRONMENTS: Case Summary & 20 Top Unsecured Creditors
BAKER EQUITY: Case Summary & One Unsecured Creditor
BARNES GROUP: Moody's Puts 'Ba3' CFR on Review for Downgrade
BBB FOOD: Seeks 30-Day Extension of Plan Filing Deadline
BDF ACQUISITION: S&P Withdraws 'B' Issuer Credit Rating
BEYOND AIR: Board Schedules Annual Meeting for December 9
BIG BRAND: Case Summary & Six Unsecured Creditors
BIG LOTS: Closes Jacksonville Beach Store Amid Bankruptcy
BIG RIVER: Case Summary & 20 Largest Unsecured Creditors
BIOXCEL THERAPEUTICS: Former CCO to Provide Consulting Services
BROWNIE'S MARINE: Hires Bush to Replace Assurance as Auditor
BYJU'S ALPHA: Lawsuit Says Affiliate Drained Money from U.S. Units
CACI INTERNATIONAL: Moody's Rates New 1st Lien Loan Due 2031 'Ba1'
CANDE HOFFMAN: Case Summary & 16 Unsecured Creditors
CAREERBUILDER LLC: S&P Cuts ICR to 'SD' on Amended Credit Agreement
CELEBRATION COTTAGE: Gets Interim OK to Use Cash Collateral
CELSIUS NETWORK: Court Narrows Claims in Complaint vs PPM
CENTER ETHANOL: Fraudulent Conveyance Claims v. WR Ethanol Tossed
CHOICE MARKET: Bannock Unsecureds Will Get 8.9% of Claims in Plan
CHOICE MARKET: To Stop Operations After Chapter 11 Filing
CLEVELAND-CLIFFS INC: Fitch Rates Proposed Unsecured Notes 'BB-'
CLEVELAND-CLIFFS INC: Moody's Rates New Unsecured Gtd. Notes 'Ba3'
CLOUD BERN: Case Summary & Seven Unsecured Creditors
CONN CORP: Case Summary & 20 Largest Unsecured Creditors
CREDIT LENDING: Gets Interim OK to Use Cash Collateral Until Nov. 7
D.A. RANSOM: Beverly Brister Named Subchapter V Trustee
DEXKO GLOBAL: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
DIOCESE OF ROCHESTER: Wins Suit vs. Continental Insurance
DITECH HOLDING: $18,040 Eckenrod Claim Disallowed
DITECH HOLDING: $35,000 Russell Claim Disallowed
DITECH HOLDING: Court Disallows Kegley Unsecured Claim
DJK ENTERPRISES: Gets OK to Use Cash Collateral Until Nov. 14
DONALD DARNELL: Claimed Exemption Dispute Goes Back to Bankr Court
DYNASTY ACQUISITION: Fitch Hikes LongTerm IDR to 'BB', Outlook Pos.
EATSTREET INC: Case Summary & 20 Largest Unsecured Creditors
EDGEWOOD FOOD: Court Grants Sanctions Against Tort Claimant
EFS COGEN I: Fitch Assigns 'BB-' IDR, Outlook Stable
EMPLOYBRIDGE HOLDING: Fitch Affirms & Withdraws 'CCC+' LongTerm IDR
EMPLOYBRIDGE HOLDING: Fitch Lowers LongTerm IDR to 'CCC+'
ETON STREET: President Not Authorized to File Ch.11, Court Says
FAIRFIELD SENTRY: Julius Baer Must Face Adversary Case in SDNY
FINEST COACHBUILDING: Case Summary & 20 Top Unsecured Creditors
FIRST COAST ROLL OFFS: Gets OK to Use Cash Collateral Until Oct. 28
FREIGHT MASTERS: Case Summary & Three Unsecured Creditors
FTX TRADING: Court Okays Bankruptcy Plan, Customer Repayments
FTX TRADING: Has Cash, Cooperation Agreement With Ellison
GABRIEL CUSTOM: Court Denies Trident's Stay Relief Motion
GATC HEALTH: Macias Gini & O'Connell Raises Going Concern Doubt
GATC HEALTH: Reports $19.6-Mil. Net Loss in H1 2023
GEORGIA EARTH & PIPE: Gets Final OK to Use Cash Collateral
GIRARDI & KESSE: Ex-CFO Inks Embezzlement Plea Deal w/ Prosecutors
GOLD FLORA CORP: Clark Hill's DiBianca Named as Limited Receiver
GREEN PEAK: Receiver to Auction Off Assets Starting Oct. 21
GRESHAM WORLDWIDE: Oct. 24 Hearing on Cash Use, Bid for Trustee
HARVEST MIDSTREAM I: Fitch Affirms BB- LongTerm IDR, Outlook Stable
HAWKERS LLC: Gets Interim OK to Use Cash Collateral
HDC HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
HIJOLE FOODS: Seeks 30-Day Extension of Plan Filing Deadline
HVP FOODS: Seeks 30-Day Extension of Plan Filing Deadline
INTERGROUP CORP: WithumSmith+Brown Raises Going Concern Doubt
ISUN INC: Seeks to Extend Plan Exclusivity to Nov. 30
IYS VENTURES: Suit v. CrossAmerica Dismissed with Leave to Amend
JAMES PINE: Court Rules on Proper Valuation Method for Truck
JEFFERIES FINANCE: Moody's Rates New Senior Secured Bonds 'Ba2'
JOE'S AUTO: Wins Final Approval to Use Cash Collateral
JON MICHAEL SHIBLEY: Directed to Pay SouthState Counsel's Fees
KENDON INDUSTRIES: Gets Final Approval to Use Cash Collateral
KING WINDSHIELDS: Unsecureds to Split $6K Dividend over 60 Months
KLEIN HERSH: Investcorp Marks $11.6MM Loan at 52% Off
KUEHG CORP: S&P Places 'B' ICR on CreditWatch Positive
L AND L CARE: Unsecureds Owed $24K Will Get 100% over 55 Months
LADRX CORP: All Three Proposals Approved at Annual Meeting
LASER INNOVATIONS: Case Summary & 20 Largest Unsecured Creditors
LEO CHULIYA: Gets Interim OK for Continued Use of Cash Collateral
LONE STAR: Unsecureds to Split $154K Dividend over 5 Years
LUMMUS TECHNOLOGY: $150MM Loan Add-on No Impact on Moody's B2 CFR
MACLEOD ALE: Gets Final Approval to Use Cash Collateral
MADDIEBRIT PRODUCTS: May Use Cash Collateral Thru March 2025
MAGNERA CORP: Moody's Rates New $500MM Secured 1st Lien Notes 'B1'
METRO GLASS: Case Summary & 20 Largest Unsecured Creditors
MINIM INC: Asks for Default Judgment in Complaint Versus Nasdaq
MINIM INC: Hikes Series A Preferred Shares to 3 Million
MIP V WASTE: S&P Alters Outlook to Stable, Affirms 'B+' ICR
MKS INSTRUMENTS: Fitch Lowers LongTerm IDR to 'BB', Outlook Stable
MONTE JOHNSTON: Brad Odell of Mullin Named Subchapter V Trustee
NAPC DEFENSE: Financial Strain Raises Going Concern Doubt
NCR ATLEOS: S&P Assigns 'B+' Rating on New $300MM Term Loan A-2
NORTHERN LIGHT: Moody's Lowers Revenue Bonds Rating to Ba3
NV REIT: Reports $109,174 Net Loss in H1 2024
OKLAHOMA APPLE: Receiver Seeks Chapter 11 Bankruptcy Protection
ONEMETA INC: Signs OEM Agreement With inContact
OPGEN INC: Hikes Stock Purchase Agreement With AEI to $9 Million
OPPENHEIMER HOLDINGS: S&P Withdraws 'BB-' LT Issuer Credit Rating
OSAIC HOLDINGS: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
PATRICK INDUSTRIES: Fitch Rates New $400MM Unsec. Notes 'BB'
PATRICK INDUSTRIES: Moody's Rates New Senior Unsecured Notes 'B3'
PERIMETER FOODS: Peter Barrett Named Subchapter V Trustee
PERKINS COMPOUNDING: Gets OK to Use Cash Collateral Until Nov. 20
PHOENIX ENERGY: Case Summary & Two Unsecured Creditors
PIONEER PROJECTS: Case Summary & Two Unsecured Creditors
PLAINS END: Fitch Affirms 'BB+' Rating on Senior Secured Bonds
PLOW UNDERGROUND: Gets Final Approval to Use Cash Collateral
POINT INVESTMENTS: US Judge Won't Hear Falcata Lawsuit
POINTCLICKCARE CORP: Moody's Lowers CFR to B3, Outlook Stable
POWER TEAM: Unsecureds Will Get 100% of Claims over 60 Months
PREMIER HOSPITALITY: Soneet Kapila Named Subchapter V Trustee
RED RIVER: Johnson & Johnson Wins $505M Deal w/ Talc Miners
RED VENTURES: Moody's Affirms 'B1' CFR & Alters Outlook to Stable
REMOND REMODELING: Jill Durkin Named Subchapter V Trustee
RESTORATION HARDWARE: Moody's Alters Outlook on B1 CFR to Negative
RS AIR: Perlman's Counterclaims Against NetJets Tossed
SAHIL PROMOTIONS: Plan Exclusivity Period Extended to Jan. 24, 2025
SCHAFER FISHERIES: Gets OK to Use Cash Collateral Until Oct. 31
SEAGATE TECHNOLOGY: Fitch Alters Outlook on 'BB+' IDR to Stable
SEAWIND LLC: Natasha Songonuga Named Subchapter V Trustee
SKILLZ INC: Board Appoints Anthony Cabot as Director
SMALLHOLD INC: Delaware Judge Clarifies Consensual Plan Releases
SMYRNA READY: Moody's Affirms Ba3 CFR & Alters Outlook to Negative
SOD EXPRESS: Gets Interim OK to Use Cash Collateral Until Nov. 5
SPECIALTY BUILDING: Moody's Rates New $375MM First Lien Notes 'B3'
STATEHOUSE HOLDINGS: Pelorus Backs Bankruptcy to Protect Operations
STEWARD HEALTH: Mass. AG Challenges Malpractice Coverage
SUMMIT MIDSTREAM: Fitch Alters Outlook on 'B-' LongTerm IDR to Pos.
SUPERIOR CONTRACT: Lucy Sikes Named Subchapter V Trustee
TAMPA LIFE: Seeks to Extend Plan Exclusivity to Dec. 2
THOMAS ORTHODONTICS: Wells Fargo's Late Ballot Don't Count
TURKEY LEG & CO: Court Okays Chapter 7 Conversion
VERONA HERON: Linda Leali Named Subchapter V Trustee
VHB FOODS: Seeks 30-Day Extension of Plan Filing Deadline
VIANT MEDICAL: Moody's Hikes CFR to B3 & Alters Outlook to Stable
WALLACE HOUSE: Yann Geron Named Subchapter V Trustee
WALTONIA LLC: Amends Unsecured Claims Pay Details
WAYNE BURT: Chapter 15 Case Summary
WEISS MULTI-STRATEGY: Court Narrows Claims in Suit vs Jefferies
WELCOME GROUP: Cash Collateral Use Extended to Dec. 15
WESCO AIRCRAFT: Seeks to Extend Plan Exclusivity to Dec. 1
WHITE VIOLET: Voluntary Chapter 11 Case Summary
WILLOUGHBY EQUITIES: Case Summary & One Unsecured Creditor
WINSTON DEVELOPMENT: Case Summary & Two Unsecured Creditors
YELLOW CORP: Wants Claims vs. Teamsters Revived
YOUNG TRANSPORTATION: Voluntary Chapter 11 Case Summary
[^] BOND PRICING: For the Week from October 7 to 11, 2024
*********
31FO LLC: Case Summary & Four Unsecured Creditors
-------------------------------------------------
Debtor: 31FO, LLC
47 Sarah Drive
Farmingdale, NY 11735
Business Description: 31FO, LLC was organized in 2018 as a New
York limited liability company to own and
develop real property. The Debtor is the
fee simple owner of real property located
at 31 Fort hill, Lloyd Neck, NY 10073
having an appraised value of $23 million.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 24-73893
Judge: Hon. Robert E Grossman
Debtor's Counsel: Kevin Nash, Esq.
GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP
125 Park Ave
New York, NY 10017-5690
Email: knash@gwfglaw.com
Total Assets: $23,000,000
Total Liabilities: $12,841,948
The petition was signed by David D. DeRosa as managing member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
List of Debtor's Four Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Internal Revenue Service $0
Centralized Insolvency Operations
PO Box 7346
Philadelphia, PA
19101-7346
2. MangoTree Real Unliquidated
Estate Holdings L.P.
c/o Philip J. Campisi, Jr., Esq.
Westerman Ball
Ederer Miller Zucker &
Sharfstein, LLP
1201 RXR Plaza
Uniondale, NY 11556
3. NYC Dept of Finance $0
Legal Affairs
Collection Unit
375 Pearl St, Apt 30
New York, NY 10038
4. NYS Department of Taxation $0
Bankruptcy/Special Procedure
PO Box 5300
Albany, NY 12205
3422 W. CLARENDON: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: 3422 W. Clarendon Ave., LLC
a/k/a Aurora Quality Buildings
14418 Smokey Point Blvd.
Marysville WA 98271
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-34776
Debtor's Counsel: Bennett G. Fisher, Esq.
LEWIS BRISBOIS BISGAARD & SMITH
24 Greenway Plaza
Suite 1400
Houston TX 77046
Tel: (346) 241-4095
Email: bennett.fisher@lewisbrisbois.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ryan Wear as governor (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/BGNW24Q/3422_W_Clarendon_Ave_LLC__txsbke-24-34776__0001.0.pdf?mcid=tGE4TAMA
538 MOUNT HOPE: Files Amendment to Disclosure Statement
-------------------------------------------------------
538 Mount Hope Street LLC submitted an Amended Disclosure Statement
describing Amended Plan dated September 4, 2024.
The Debtor is a single asset entity holding the real property
located at 538 Mount Hope St., North Attleboro, MA. The principal
of the Debtor is Pamela Cavicchio.
The primary business of the LLC is as a rental property. Cavicchio
and her daughter and son-in-law, Lisa and Timothy Sheridan, have
agreed to enter into a lease with the Debtor, upon approval of the
Court, for the amount of $6,000.00 per month, in addition to be
responsible for utilities and the general upkeep of the property.
$6,0000.00 would be paid directly to the Debtor with disbursements
as follows:
* $3,903.70 per month to Fay Servicing, the present mortgage
holder for post petition mortgage payments.
* $2,070.25 per month to Fay Servicing, to pre-petition
arrearage, pursuant to the Amended Plan for Reorganization. Fay
Servicing presents in its amended POC pre-petition arrearage of
$124,214.79.
The Debtor, through its occupants of the property, have the
capacity and ability to maintain post-petition payments to
expenses, as well as make adequate plan payments as set forth in
the Plan. Specifically, Lisa Sheridan works as a Client Advisor for
Gucci and earns approximately $80,000.00 per year. She has worked
at her present job for approximately one year at her present
salary. Pamela Cavicchio's income includes a part-time job where
she earns approximately $10,000.00 per year in addition to social
security benefits of $6,927.00.
The term of the lease would be 5 years which would be commensurate
with the Amended Plan for Reorganization. Thereafter, the Debtor
would continue to pay on the Note or the balance of the term. The
Debtors have been paying the post-petition mortgage payment to Fay
since the filing of the petition and are able to manage as set
forth above the additional $2,070.25.
Presently, the Debtor has no other creditors other than Fay, as the
IRS recently filed an amended proof of claim for $0.00.
The Debtor has operated as a debtor-in-possession since the filing
of its petition. Unable to do a modification with Fay, the Debtor
intends to continue to operate its business, collect income from
its occupants which will cover the ongoing expenses as well as plan
payments.
The Debtor's Plan contemplates repayment of 100% of all allowed
proof of claims. The Debtor maintains one significant creditor, the
holder of the mortgage of the property, Fay Servicing, LLC.
Class One consists of Secured Claims. The Debtor is making full
post petition mortgage payments in the amount of $3,907.70 per
month in addition is making monthly payments for pre-petition
arrears of $124,214.79 as established by Fay's amended proof of
claim over 60 months at the rate of $2,070.25 per month. The Debtor
estimates Fay claim to be approximately $124,214.79. Under the Plan
Fay would receive full payment of their mortgage arrears within 60
months of the Effective Date or when this claim is finally
determined, whichever is later.
The Debtor would continue to pay Fay pursuant to the original Note
on a monthly basis under the original terms of the Note through the
maturity date of 2051. Of note, the Debtor has examined the records
and letters received from Fay, and although Fay received
correspondence where Fay threatened to accelerate the Note, the
Debtor has no information in its possession that Fay actually
notified the Debtor that it had accelerated the Note. Based upon
the foregoing class Fay is impaired.
Like in the prior iteration of the Plan, the Debtor would pay
General Unsecured Claims in full.
A full-text copy of the Amended Disclosure Statement dated
September 4, 2024 is available at https://urlcurt.com/u?l=SYAOqJ
from PacerMonitor.com at no charge.
Counsel to the Debtor:
Edmund L. Myers, Esq.
31 Hastings Street, P.O. Box 163
Mendon, MA 01756
Telephone: (508) 478-2204
Email: elm.esq@comcast.ne
About 538 Mount Hope Street
538 Mount Hope Street, LLC, is a single-asset entity holding
property located 538 Mount Hope St., North Attleboro, MA
(hereinafter "The Property").
The Debtor filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Mass. Case No. 24-10463) on
Mar. 11, 2024, listing up to $1 million in both assets and
liabilities.
Judge Janet E. Bostwick oversees the case.
Edmund L. Myers, Esq., serves as the Debtor's counsel.
601W COMPANIES: Lighthouse Named as Receiver for Dayton's Project
-----------------------------------------------------------------
Kare11.com reports that a judge has appointed Minnesota-based
Lighthouse Management Group as receiver for the building on
Nicollet Mall, owned by New York-based 601W Companies. The report
recounts the building served as a department store for over a
century and was sold in 2017 to 601W Companies, which led the
redevelopment effort called "The Dayton's Project" that was
officially launched in 2021. According to the report, a lender has
accused the current owner of defaulting on mortgage payments.
Kare11.com notes Lighthouse Management decline to comment, but
court filings indicate the firm has the authority to "collect,
control, manage, conserve, and protect" the property. It also has
the ability, with court approval, to "market the Receivership
Property for sale."
Axios.com's Nick Halter reports New York-based Fortress Credit
Corp., the lender for the project, has said in court documents that
it had to put up nearly $4 million to avoid the "termination of
various utilities and essential services." Fortress said in a
complaint that 601W Cos. and its partner, Hightower Initiatives,
have missed mortgage payments and owe $177 million in principal,
interest and advances. The receivership case is pending in
Hennepin County.
According to Axios, the property is presently valued at about $51.4
million. The redevelopment cost is valued at about $350 million,
Axios adds.
About 601W Cos. LLC
The 601W Companies provides real estate services. The Company
acquires, develops, and manages a variety of commercial real estate
properties.
68700 DINAH: Case Summary & Six Unsecured Creditors
---------------------------------------------------
Debtor: 68700 Dinah Shore Dr., LLC
c/o BBM Ltd. Co.
6275 West Plano Pkwy.
Plano, TX 75093
Business Description: 68700 Dinah Shore is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)).
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 24-42412
Judge: Hon. Brenda T Rhoades
Debtor's Counsel: Robert T DeMarco, Esq.
DEMARCO MITCHELL, PLLC
N. Central Expressway Suite 500
Plano, TX 75074
Tel: (972) 991-5591
E-mail: robert@demarcomitchell.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $100,000 to $500,000
The petition was signed by Louie Comella as managing director.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/YX4SVKI/68700_Dinah_Shore_Dr_LLC__txebke-24-42412__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Six Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Philip Racusin Vendor $57,773
Niels Esperson Building
808 Travis Street 23rd fl
Houston, TX 77002
2. Rini O'Neil, PC Vendor $21,218
David O'Neil
2101 L. Street NW Ste. 300
Washington, DC 20037
3. Nigel Dettelbach Vendor $18,000
13870 Harvard Ave
Chino, CA 91710
4. Francis Martin Vendor $14,500
409 E. Olive Ave.
Monrovia, CA 91016
5. J. Stephen Munson II, CPA Vendor $12,850
710 Main Street
Richmond, TX 77469
6. SCF Jake LP Vendor $7,150
c/o Searchers Capital, LLC
1302 Waugh Dr. #831
Houston, TX 77019
ABSOLUTE OILFIELD: Case Summary & Two Unsecured Creditors
---------------------------------------------------------
Debtor: Absolute Oilfield Services, LLC
PO Box 2020
Sour Lake, TX 77659
Business Description: Absolute Oil was founded in 2011 as a small
company that provided general roustabout
services to the oil and gas industry;
supporting the South Texas Eagle Ford Shale
Region.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 24-11263
Judge: Hon. Shad Robinson
Debtor's Counsel: Stehepn W. Sather, Esq.
BARRON & NEWBURGER, P.C.
7320 N. Mopac Expressway 400
Austin, TX 78731
Tel: (512) 649-3243
E-mail: ssather@bn-lawyers.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by James Michael Jackson as CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/DF3ALLQ/Absolute_Oilfield_Services_LLC__txwbke-24-11263__0001.0.pdf?mcid=tGE4TAMA
ACCURIDE CORP: S&P Downgrades ICR to 'D' on Bankruptcy Filing
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating to 'D' from
'CCC+' on Accuride Corp. S&P also lowered its senior secured
first-lien term loan rating to 'D' from 'CCC+'.
Subsequent to the downgrade S&P expects to withdraw all of its
ratings on the company.
The downgrade and withdrawal reflect Accuride's Chapter 11
bankruptcy filing. This follows a deterioration in the company's
operating performance and liquidity as freight demand remained weak
resulting in a corresponding worsening of demand for Accuride's
product offering. Accuride is seeking approval to equitize the
outstanding balance of its first-lien term loan ($294.6 million
outstanding according to documents filed as part of bankruptcy
proceedings) and will keep the asset-based loan in place through
bankruptcy proceedings. Accuride has received a $30 million
debtor-in-possession loan that will be used to support liquidity as
it works through bankruptcy proceedings. The company expects to
emerge from the court-supervised bankruptcy process in 90-100
days.
S&P expects to withdraw our ratings on Accuride within the next 30
days.
Evansville, Ind.-based Accuride manufactures and supplies wheel-end
systems to the global commercial vehicle industry. The company's
products include steel and aluminum commercial vehicle wheels,
wheel-end components and assemblies, and steel wheels for the
European automotive and global agricultural, construction, and
industrial equipment markets. The company is majority owned by
private-equity sponsor Crestview Partners. Accuride is privately
held and does not publicly disclose its financial statements.
AIMBRIDGE ACQUISITION: S&P Lowers ICR to 'CCC', Outlook Negative
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
hotel manager Aimbridge Acquisition Co. Inc. and its issue-level
rating on the company's first-lien debt to 'CCC' from 'CCC+'. The
recovery rating on the debt remains '3', indicating its expectation
for meaningful (50%-70%; rounded estimate: 50%) recovery for
lenders in the event of a payment default.
S&P said, "The negative outlook reflects our expectation that a
restructuring is likely over the next 12 months. This is the result
of our forecast for leverage to remain very high at above 9x
through 2025, the company's thin liquidity position, and the
upcoming maturities of its revolver in February 2025, its
first-lien term loan in February 2026, and its second-lien term
loan in February 2027.
"The downgrade and negative outlook reflect our expectation that
Aimbridge will not be able to refinance its upcoming maturities and
that a distressed restructuring is increasingly likely ahead of its
first-lien term loan maturity due February 2026. We forecast
Aimbridge's adjusted gross debt to EBITDA will remain above 9x
through 2025, which we view as unsustainably high. The company
faces the maturity of its revolver in February 2025 ($21.5 million
outstanding as of June 30, 2024) and its $1.01 billion first-lien
term loan in February 2026. Additionally, we believe the company
will likely need to address the maturity of its $160 million
second-lien debt due in February 2027 at the same time. We believe
it is unlikely the company will be able to refinance at current
market rates given the company's leverage, low forecasted cash
flow, and a higher interest rate environment compared with when the
current capital structure was put in place. Therefore, we expect
the company will enter into a restructuring in some form over the
next 12 months.
"Our base-case forecast for very high leverage, above 9x in 2025,
is predicated on our assumption that revenue per available room
(RevPAR) with grow modestly because of stable group and business
travel demand and still good but softening leisure travel demand.
However, management fee revenues will likely lag RevPAR growth due
to a shrinking rooms base. In our base case, we also assume
approximately 500 basis points (bps) of margin expansion over the
next 12 months driven by comparably lower severance and retention
expenses in 2025.
"Aimbridge will continue to operate with thin liquidity. We view
Aimbridge's liquidity as less than adequate due to minimal free
cash flow and upcoming maturities. As of June 30, 2024, Aimbridge
had a $21.5 million drawn under its revolver and $33.1 million of
cash and cash equivalents. While we believe the company could have
sufficient liquidity to repay its revolver when it matures, it will
operate with minimal cash on its balance sheet thereafter and
generate minimal FOCF as the company's first-lien debt becomes
current. Furthermore, the company has incurred high severance and
retention related expenses throughout 2024, which have reduced
EBITDA generation. Although these costs are not likely to recur at
the heightened levels experienced in 2024, if operating performance
is worse than expected such that these high cash costs persist,
Aimbridge would likely not have sufficient liquidity to repay the
balance on its revolver.
"Macroeconomic factors could pose risks to Aimbridge. We now expect
U.S. RevPAR to be flat to up 2% in 2024, driven by a still-good
business and group travel recovery, partially offset by softening
domestic leisure travel. While we expect Aimbridge's portfolio of
full-service luxury and upper upscale hotels are well positioned to
benefit from the recent travel trends, it still faces significant
macroeconomic risks. While S&P economists currently forecast a soft
landing for the U.S. economy, Aimbridge's RevPAR could deteriorate
if unemployment increases higher than we expect such that
businesses and consumers alike pull back on discretionary travel.
Under this scenario, we believe rate competition, particularly at
luxury and upper upscale hotels, could increase as travelers search
for deals and trade down to lower-priced accommodations.
"We expect interest rate cuts will increase hotel transactions. The
Federal Reserve is shifting from inflation-focused to
employment-focused and began cutting interest rates. S&P economists
anticipate the Federal Reserve to deliver a total of 225 bps of
rate cuts by the end of 2025, which we anticipate will increase the
number of hotel sales. Aimbridge's rooms base has been declining
partly due to hotel sales, and an elevated level of future hotel
transactions poses an increased risk to losing additional
contracts. However, it also creates an opportunity for Aimbridge to
grow its portfolio by making minority investments in hotels to
compete for management contracts, although its investment potential
could be limited by thin short-term liquidity.
"The negative outlook reflects our expectation that a restructuring
is likely over the next 12 months. This is the result of our
forecast for leverage to remain higher than 9x through 2025, the
company's thin liquidity position, and the upcoming maturities of
its revolver in February 2025 and its first-lien term loan in
February 2026.
"We could lower the rating on Aimbridge one or more notches if
liquidity deteriorates and we believe a distressed exchange,
restructuring, or default is imminent."
Although unlikely given S&P's forecast for leverage and Aimbridge's
upcoming debt maturities, S&P could raise the rating if it believes
the company could:
-- Address upcoming maturities without restructuring its debt in
manner we deem as tantamount to default;
-- Substantially improve liquidity; and
-- Generate sustained positive free operating cash flow.
Social factors are negative consideration in our credit rating
analysis of Aimbridge. As of fourth-quarter 2023, the company's
RevPAR had recovered to 2019 levels, driven by significant
increases in ADR that sufficiently offset lower occupancy levels.
While the impact of the COVID-19 pandemic has subsided, and it was
a rare and extreme disruption unlikely to recur, health and safety
factors remain an ongoing consideration in S&P's analysis of
Aimbridge due to its susceptibility to health and safety related
travel disruptions that could depress demand and impair EBITDA,
cash flow and leverage.
Governance factors are also a negative consideration. S&P views
financial sponsor-owned companies with aggressive or highly
leveraged financial risk profiles as demonstrating corporate
decision-making that prioritizes the interests of controlling
owners, typically with finite holding periods and a focus on
maximizing shareholder returns.
AMERICAN ROCK: Moody's Rates New $110MM First Lien Term Loans 'B1'
------------------------------------------------------------------
Moody's Ratings assigned a B1 rating on American Rock Salt Company
LLC's (ARS) issuance of an incremental $110 million first-out
senior secured first lien term loans, of which $50 million has been
funded and an additional $60 million remains available through a
delayed draw facility. The proceeds from the offering will be used
to pay for interest expense obligations, repay the existing GJN
first lien term facility, transaction fees and expenses, as well as
to fund approximately $8 million of cash to the balance sheet.
Moody's also affirmed ARS' Caa2 Corporate Family Rating, Caa3-PD
Probability of Default Rating, Caa2 senior secured first lien term
loan, and Ca senior secured second lien term loan ratings. The
outlook is stable.
Governance considerations under the Moody's ESG framework,
including financial strategy and risk management, were a key driver
of the rating action.
RATINGS RATIONALE
Pro forma for the transaction, which was completed in September
2024, ARS' Moody's adjusted total leverage increased to just over
22x, compared to 20.3x total leverage for the LTM period ending
June 2024 prior to the transaction.
The B1 rating on the new first-out senior secured first lien term
loan reflects its priority claim over the existing first lien
secured term loan as well as its quantum relative to the overall
debt stack. The new first-out senior secured first lien term loan
will have the same maturity date of June 2028 as the existing first
lien senior secured term loan.
Moody's view this transaction favorably from a liquidity
perspective. Due to ARS' weak liquidity and negative cash flow
generation profile, the business was previously unable to meet its
August 2024 interest payment obligations on a timely basis. This
transaction provides ARS over $68 million (including the $8 million
of cash funded to the balance sheet and the $60 million DDTL) in
fresh liquidity, which should provide sufficient runway for the
business to operate for at least the next 12 months. However, this
transaction does not fundamentally address the long term
sustainability of the capital structure. Leverage will likely
remain highly elevated at least within the next two years. Cash
flow generation is expected to remain challenged primarily due to
the high interest expense burden relative to its earnings base and
temporarily elevated capex requirement (through fiscal year 2026)
as the company upgrades its mining equipment.
The company's Caa2 CFR reflects its limited scale with a single
mine, lack of business diversity and weather-dependent business
model that results in volatile credit metrics and cash flow
generation. Factors that support the rating are high barriers to
entry in the rock salt mining industry and cost advantages in the
company's primary markets in western and central New York and
Pennsylvania due to favorable access to truck and rail
transportation and operating one of the lowest cost and the newest
salt mines in the United States. The rating also benefits from the
company's high operating margins, variable cost structure, and
modest normalized capital expenditures.
ARS' Caa3-PD rating reflects Moody's view that the highly levered
capital structure as well as limited cash flow generation profile
in the near term elevate the risk of a distressed exchange or debt
restructuring.
The stable outlook reflects Moody's expectation that the company's
credit metrics will evidence some improvement over the next 12-18
months but will remain very weak.
ESG CONSIDERATIONS
Environmental, social and governance ("ESG") factors are important
considerations in ARS's credit quality and Governance is a driver
of the action. ARS' credit impact score (CIS-5) indicates that the
rating is lower than it would have been if ESG risk exposures did
not exist and that the negative impact is more pronounced than for
issuers scored CIS-4. The company has exposure to governance risks
related to its concentrated private ownership, highly leveraged
capital structure, and challenged liquidity profile. The company
also has exposure to environmental and social risks by the nature
of its business deriving the majority of its revenues from salt
mining, including compliance with stringent health, safety and
environmental regulations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely in the near term given the high gross debt
levels, challenged cash flow generation profile, and volatile
financial performance. However, Moody's would consider an upgrade
if the company achieves and maintains an adequate liquidity profile
through mild winters and pursues a more conservative financial
policy that results in a material reduction in gross debt levels.
Moody's could downgrade the rating if company fails to maintain an
adequate liquidity position or engages in a distressed exchange or
restructuring.
American Rock Salt Company LLC produces highway deicing rock salt.
The company operates a single mine in upstate New York and sells
primarily to state and local government agencies in the
northeastern United States. The firm is a wholly owned subsidiary
of American Rock Salt Holdings LLC, which is closely held by
private investors including some members of management. The company
does not publicly disclose its financial statements. Headquartered
in Retsof, NY, American Rock Salt generated approximately $154
million in revenue for the twelve months ended June 30, 2024.
The principal methodology used in these ratings was Chemicals
published in October 2023.
AMERICAN TRADERS: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: American Traders, Inc.
d/b/a Modesto Hotel/La Casa Modesto
1720 Sisk Road
Modesto, CA 95350
Business Description: The Debtor owns and operates a hotel.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Eastern District of California
Case No.: 24-90602
Judge: Hon. Ronald H Sargis
Debtor's Counsel: Michael Jay Berger, Esq.
LAW OFFICES OF MICHAEL JAY BERGER
9454 Wilshire Boulevard, 6th Floor
Beverly Hills, CA 90212
Tel: (310) 271-6223
Fax: (310) 271-9805
E-mail: michael.berger@bankruptcypower.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Daljeet S. Mann as chief financial
officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/VCUMQWA/American_Traders_Inc__caebke-24-90602__0001.0.pdf?mcid=tGE4TAMA
AMERICARE INC: Elevation Wins Summary Judgment on Counterclaims
---------------------------------------------------------------
Judge Gloria M. Navarro of the United States District Court for the
District of Nevada denied in part and granted in part Elevation
Health, LLC's motion for summary judgment in the case captioned as
ELEVATION HEALTH, LLC, Plaintiff, vs. AMERICARE, INC., et. al.,
Defendants (D. Nev.). Specifically, the Court denies summary
judgment as to Elevation's claims against both Jennifer and Mario
Gonzalez and grants summary judgment as to Americare's
counterclaims.
This case arises out of Elevation's order for over-the-counter
COVID-19 tests from Americare, a healthcare industry "middle-man"
that sources products from suppliers and delivers them to
healthcare providers. Joe Goldsmith, Elevation's CEO, approached
Defendant Mario Gonzalez, Americare's CEO, about a need for
COVID-19 antigen tests for resale over-the-counter distribution to
its United States' customers. Prior to this request, Elevation had
entered into at least two other contracts with Americare to
purchase COVID-19 tests authorized for sale in the United States.
To source the requested tests, Gonzalez contacted Global Health
Supply and Silver Peaks Holdings. GHS informed him that they had
Flowflex COVID-19 tests available that were approved for use by the
United States. On October 20, 2021, Mr. Kasbee, a GHS
representative, sent Gonzalez an email containing several documents
about the "OTC" Flowflex COVID-19 Rapid Antigen Home Test,
including a FDA letter stating that the tests had been approved for
emergency use authorization. The email subject line is "Flowflex
EUA-ACONlab-FlowflexAG-letter, Shipping Data and Specs."
Within an hour, Gonzalez forwarded the email to Goldsmith at
Elevation without any additional text or changes to the original
email from Kasbee.
In September 2022, Elevation initiated the instant action against
Americare, the Gonzalezes. Americare filed an Answer and brought
Counterclaims against Elevation. Americare also filed a Third-Party
Complaint against the GHS defendants based on their representations
that the Flowflex tests bought by Americare could be sold in the
United States and were approved by the DFA. Elevation filed the
instant Motion for Summary Judgment on its claims against
Americare, the Gonzalezes, and Americare's counterclaims. About a
month later, Americare filed a Chapter 11 Notice of Bankruptcy.
Because of the bankruptcy, Elevation dismissed its claims against
Americare, but its claims against Mario and Jennifer Gonzalez, as
well as Americare's counterclaims, were not subject to the
bankruptcy stay remain unstayed.
With respect to the Gonzalezes, Elevation argues that Gonzalez, as
CEO of Americare, made misrepresentations in the email he forwarded
to Goldsmith on October 20, 2021, and in the invoice mailed on
October 22, 2021, because he knew he would be providing the
blue-box COVID-19 tests rather than the FDA approved tests.
Gonzalez responds that neither communication contains information
that is actually false. The Court agrees with Gonzalez. Because
Elevation failed to identify a false misrepresentation, and
otherwise failed to demonstrate scienter, it's Motion for Summary
Judgment is denied as to its claim against Mr. Gonzalez.
Elevation's claim for aiding and abetting fraud, brought against
Mrs. Gonzalez, is similarly denied. Because Elevation failed to
demonstrate fraud by Mr. Gonzalez, the aiding and abetting claim
brought against Mrs. Gonzalez also fails.
Americare's counterclaims are based on a separate transaction.
Americare alleges that it delivered 9,000 Indicaid COVID-19 tests
valued at $41,850 to Elevation, but that Elevation never paid for
them. Americare therefore brought counterclaims for breach of oral
contract, unjust enrichment, and conversion. Claims brought by
Americare are not stayed in the way that claims against Americare
are.
Elevation argues that it did not accept Americare's offer of 9,000
Indicaid tests because a few days after receiving an invoice,
Goldsmith discovered that his separate order of Flowflex tests
could not be resold in the United States. Elevation also states
that there is no evidence of payment or that Americare ever shipped
the Indicaid tests to Elevation. Because Americare did not oppose
the Motion or otherwise provide evidence to demonstrate a genuine
issue of material fact, the Court grants Elevation's Motion for
Summary Judgment as to Americare's counterclaims.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=WvjXqW
About Americare Inc.
Americare Inc., d/b/a Americare Health --
https://www.americarenow.com/ -- manufactures sustainably-sourced
nutrition products, promoting health, fitness and natural beauty.
The Company's supplements and vitamins come from natural sources of
essential proteins, sourced from pasture-raised cows in Brazil and
New Zealand and wild-caught fish in Hawaii.
Americare Inc. sought relief under Subchapter V of Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 23-15688) on
December 23, 2023. In the petition filed by Mario Gonzalez, as
president and CEO, the Debtor reports total assets of $111,380 and
total liabilities of $4,333,402.
The Debtor is represented by Ryan A. Andersen, Esq., at Andersen &
Beede.
APEX COMMERCIAL: Has Interim Cash Collateral Access Until Oct. 15
-----------------------------------------------------------------
Apex Commercial Construction, Inc.'s access to cash collateral is
due to expire October 15, according to an order issued by the U.S.
Bankruptcy Court for the Eastern District of Wisconsin last month.
Following a hearing September 27, the Court approved a stipulation
governing the Debtor's continued temporary use of cash collateral.
The parties to the stipulation are:
-- Apex Commercial Construction, Inc., by and through its
counsel, Krekeler Law, S.C., by Attorney Kristin J. Sederholm;
-- Byline Bank, by and through its counsel, Jellum Law, P.A.,
by Attorney Lindsay W. Cremona;
-- Central Pension Fund of the International Union of
Operating Engineers and Participating Employees and Joseph Shelton
as Chief Executive Officer of Central Pension Fund, by and through
its counsel Attorney Laura M. Finnegan; and
-- Operating Engineers Local 139 Health Benefit Fund,
Wisconsin Operating Engineers Skill Improvement and Apprenticeship
Fund, Operating Engineers Local 139 Defined Contribution Annuity
Fund, Joint Labor Management Work Preservation Fund (d/b/a
Construction Business Group), Trustee Terrance E. McGowan for the
Funds, and International Union of Operating Engineers Local 139, by
Attorney Cynthia L. Buchko.
The debtor must make an adequate protection payment for September
2024 in the amount of $30,627.71 to Byline Bank. Apex must also
provide the bank with monthly operating reports, financial
statements, and access to inspect its books and collateral.
Additionally, Apex is required to maintain insurance on its assets
and comply with various covenants to protect the bank's security
interest.
Apex is prohibited from engaging in transactions outside the
ordinary course of business, creating new liens without the bank's
approval, or selling its collateral without consent. If Apex fails
to comply with these stipulations, the bank can terminate the
debtor's right to use cash collateral and enforce default
penalties, including interest at a higher rate.
The court order also ensures that the Union Funds and Operator's
Funds tied to employee contributions and trust claims are held in
trust accounts and not used as cash collateral. These funds must be
properly managed and paid in the normal course of business,
separate from the collateral used by Apex.
The agreement remains in effect until October 15, 2024, with the
possibility of further discussions between Apex, Byline Bank, and
the other involved parties to negotiate future use of cash
collateral. All parties have reserved their rights under bankruptcy
law and applicable contracts for the ongoing proceedings.
About Apex Commercial Construction
Apex Commercial Construction, Inc., operating under the name Kuehne
Company, is a construction firm involved in various commercial
projects. The company provides construction services, likely
specializing in commercial infrastructure and related operations.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Wsin. Case No. 24-21300)
The Hon. Rachel M. Blise presides over the case.
Krekeler Law, S.C., led by Kristin J. Sederholm, Esq., represents
the Debtor as legal counsel.
Byline Bank is represented by Jellum Law, P.A., led by Lindsay W.
Cremona, Esq.
ARCHDIOCESE OF MILWAUKEE: Court Won't Reopen Chapter 11 Case
------------------------------------------------------------
Chief Judge G. Michael Halfenger of the United States Bankruptcy
Court for the Eastern District of Wisconsin denied the motion filed
by the State of Wisconsin to reopen the Archdiocese of Milwaukee's
Chapter 11 bankruptcy case. The motion for access to sealed filings
is struck from the record as improperly filed in a closed case.
Alternatively, the motion for access is denied on its merits.
The Archdiocese of Milwaukee commenced this case under chapter 11
of the Bankruptcy Code over 13 years ago, after a years-long effort
to resolve numerous sexual abuse claims against it failed. The
debtor's second amended chapter 11 plan was confirmed in November
2015. The court closed the case on June 30, 2016, following full
administration of the bankruptcy estate.
More than seven years after this case was closed, and over twelve
years after the court entered confidentiality orders to protect the
identities and claims of Abuse Survivors in this case, the State of
Wisconsin Department of Justice moved to reopen the case and grant
it access to "hard copies of all Claims of Abuse Survivors,
including the sealed [proofs of] claim[], objections to those
claims, briefings on those objections, and rulings on the
objections." The State seeks access to these sealed filings as part
of its Clergy and Faith Leader Abuse Initiative, launched in 2021
with the proclaimed goal of "provid[ing] victims and survivors with
an independent and thorough review of the sexual abuse committed by
clergy and faith leaders in Wisconsin, no matter when that abuse
occurred." The State asserts that, if the court gives it access to
the sealed filings, "[a] limited number of DOJ staff -- which may
include attorneys, crime victim service professionals, and criminal
investigators -- will review the[m]", and "[i]nformation in the[m]
. . . will be used to assess the accuracy of published lists of
credibly accused faith leaders", though the State may also use the
information in these filings "for investigative leads, such as
determining the identity of an unidentified abuser"; "to help
evaluate commitments made by the Archdiocese in its bankruptcy
plan"; and to "inform the content of the Initiative's final
report".
The Archdiocese objects, pointing out that Abuse Survivors filed
the sealed proofs of claim at issue after the court ordered that
they be received and maintained in the strictest confidence, under
permanent seal, and that access to them be given only to a small
and specified number of individuals who agreed in writing to comply
with detailed confidentiality protocols with respect to the use of
information in those filings, who were subject to the court's
jurisdiction and authority to hold them in contempt for violating
those protocols, and whose review of the proofs of claim was
necessary for assessing and administering the relevant claims
against the bankruptcy estate. The related filings (such as
objections to these claims) are also sealed because they contain
information from these proofs of claim.
The Court says the State's significant delay in seeking to reopen
this case -- especially when combined with both its persistent
failure, for nearly 13 years, to assert or take any action
whatsoever to protect whatever interest it believes it has in
accessing or reviewing the sealed filings at issue and the
resulting costs of and obstacles to giving Abuse Survivors notice
of and an opportunity to be heard on the State's request for access
to those filings -- weighs decisively against reopening this case.
Also weighing against reopening this case is the State's inability
to show that, if the case were reopened, it would be entitled to
the relief it seeks, the Court notes. According to the Court, the
State offers no convincing rationale for granting it relief from
the July 14, 2011 order's Confidentiality Protocol, under which
nearly all of the proofs of claim filed by Abuse Survivors in this
case and filings related to those claims remain under seal.
The State provides no compelling reason for the access it requests:
it essentially asks the court to devote substantial time and other
resources to facilitating an unbounded and roving investigation (or
order the reorganized debtor to do that), for no particular reason
that the court can discern (and certainly not for any reason that
has anything to do with this bankruptcy case), contrary to the
court's assurances and consistent observation of confidentiality
with respect to information provided by the Abuse Survivors that
they could have but nearly unanimously declined to make available
to the public, the Court finds.
Judge Halfenger concludes, "In sum, even if the case were to be
reopened, the State points to no legal authority for the relief it
seeks, which is reason enough to conclude that it is not entitled
to that relief. But, even if such authority did exist, the State
utterly fails to provide the court with any compelling reason to
grant it. The lack of available relief, too, weighs decisively
against reopening the case."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=WUYrkV
About the Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and was
elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The
region served by the Archdiocese consists of 4,758 square miles in
southeast Wisconsin which includes counties Dodge, Fond du Lac,
Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics in
the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse by
priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
The Archdiocese estimated assets and debts of $10 million to $50
million in its Chapter 11 petition.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel.
The Official Committee of Unsecured Creditors in the bankruptcy
case has retained Pachulski Stang Ziehl & Jones LLP as its counsel,
and Howard, Solochek & Weber, S.C., as its local counsel. The
Committee also won approval to retain Paul Finn as abuse claims
reviewer.
* * *
On Nov. 13, 2015, the Bankruptcy Court entered an order confirming
Archdiocese of Milwaukee's Second Amended Chapter 11 Plan of
Reorganization dated Sept. 25, 2015. On Nov. 30, 2015, the
effective date occurred with respect to the Plan.
The Chapter 11 plan of reorganization was made possible by a $21
million settlement with about 350 victims of clergy sex abuse.
A copy of the Second Amended Plan is available for free at:
http://bankrupt.com/misc/Arch_Milw_3313_2nd_Am_Plan.pdf
A copy of the Ballot Report is available for free at:
http://bankrupt.com/misc/Arch_Milw_3309_Ballot_Report.pdf
A copy of the Plan Confirmation Order is available for free at:
http://bankrupt.com/misc/Arch_Milw_3322_Plan_Conf_Ord.pdf
ASSETS HOLDING: Updates Several Secured Claims Pay Details
----------------------------------------------------------
Assets Holding Partnership, Ltd., submitted a Second Amended Plan
of Reorganization for Small Business dated September 4, 2024.
The Debtor will continue to lease the four buses to C&H for
operations. The rental income will be able to provide funds for
this Plan. The rental is approximately 160% of the debt payments.
The Debtor values its assets to be retained at approximately
$409,100. The liquidation value is significantly less. Each of the
buses is subject to the liens and encumbrances of lenders.
The Debtor has debts of approximately $1,105,528, for secured and
unsecured claims plus administrative fees and expenses.
While Frost Bank has filed an objection that the claims involving
related entities might adversely affect the operations of the
Debtor, the Debtor disputes such allegations and contends that
actions involving other entities will not affect the operations of
the Debtor after confirmation.
The Debtor is to be paid rental income. If the income is not paid,
then the Debtor may not be able to make the payments to creditors.
In such case, the secured creditors may take actions to repossess
collateral.
This Plan of Reorganization proposes to pay Debtor's creditors
primarily from future income generated by the business. The Debtor
believes that it will be able to operate its business to fund the
Plan.
Class 6 consists of Frost Bank Claim. The Debtor will retain the
2016 Freightliner. The Debtor values the collateral at $45,000. The
agreement with Frost Bank has a price of $45,000 for the vehicle.
The Debtor will pay the secured value of the collateral (and the
amount owed per Frost Bank for the vehicle) of $45,000 over 36
months from the Effective Date. The claim will be paid at 10.5%
interest per annum. The remaining amount will be an unsecured claim
and will be paid as an unsecured claim in class 9.
Notwithstanding anything to the contrary elsewhere in this Plan or
any Confirmation Order confirming the same, Frost Bank shall retain
its perfected first priority secured interests in and liens on (i)
that certain 2016 Freightliner with License number T85454 with a
certificate of title issued showing Frost Bank as the lien holder
and (ii) all related attachments, accessories, additions,
accessions, parts and supplies, replacements and proceeds
(collectively, the "Collateral") as security for the payment of its
Class 6 Claim pursuant to the terms and conditions set forth in
this Plan.
Class 7 consists of Flagstar Financing & Leasing, LLC Claim. The
Debtor will pay the value of the collateral in Class 7 in full
within 36 months of the Effective Date. The claim will be paid in
approximately equal monthly installments at 10.5% per annum
interest. The Debtor has valued the collateral at $200,000. The
payment of the collateral value shall be deemed full payment of the
claim. Any allowed deficiency amounts shall be treated as an
unsecured claim in Class 9, although the Debtor does not treat any
of the amount as unsecured at this time.
Notwithstanding anything to the contrary elsewhere in this Plan or
any Confirmation Order confirming the same, Flagstar Financing &
Leasing, LLC shall retain its perfected first priority secured
interests in and liens on (i) that certain 2014 Van Hool CX-45
Motor Coach assigned VIN No. YE2XC21BXE3048361, (ii) that certain
2019 Freightliner M2 Tiffany Shuttle Bus assigned VIN No.
3ALACWFC3KDKL6544 and (iii) all related attachments, accessories,
additions, accessions, parts and supplies, replacements and
proceeds (collectively, the "Collateral") as security for the
payment of its Class 7 Claim pursuant to the terms and conditions
set forth in this Plan.
Class 8 consists of IMG Commercial, LLC Claim. The Debtor will pay
the value of the collateral in Class 8 in full within 36 months of
the Effective Date. The claim will be paid in approximately equal
monthly installments at 10.5% per annum interest. The Debtor has
valued the collateral at $150,000. The payment of the $150,000
shall be deemed full payment of the claim. Any allowed deficiency
amounts shall be treated as an unsecured claim in Class 9.
Notwithstanding anything to the contrary elsewhere in this Plan or
any Confirmation Order confirming the same, IMG Commercial, LLC
shall retain its perfected first priority secured interests in and
liens on (i) that certain 2017 Van Hool Motor Coach and (ii) all
related attachments, accessories, additions, accessions, parts and
supplies, replacements and proceeds (collectively, the
"Collateral") as security for the payment of its Class 8 Claim
pursuant to the terms and conditions set forth in this Plan.
Like in the prior iteration of the Plan, the Debtor will pay the
projected disposable income for 36 months following the Effective
Date to creditors in Class 9 Unsecured Creditors with allowed
claims.
A full-text copy of the Second Amended Plan dated September 4, 2024
is available at https://urlcurt.com/u?l=Lj0vUo from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Reese W. Baker, Esq.
Baker & Associates
950 Echo Lane Ste. 300
Houston, TX 77024
Telephone: (713) 869-9200
Facsimile: (713) 869-9100
About Assets Holding Partnership
Assets Holding Partnership, Ltd., is a Texas partnership that owns
transportation vehicles and leases the vehicles.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 24-31741) on April 18,
2024, with $100,001 to $500,000 in assets and liabilities.
Judge Eduardo V. Rodriguez presides over the case.
Reese W. Baker, Esq., at Baker & Associates, is the Debtor's legal
counsel.
ATHENAHEALTH GROUP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on athenahealth Group Inc.
to stable from negative and affirmed its 'B-' rating. The
issue-level ratings and recovery ratings are unchanged.
S&P said, "The stable outlook reflects our expectation the company
will continue to increase revenue at a mid- to high-single-digit
rate, maintain margins of about 36% (with EBITDA burdened by
capitalized software development costs). It also reflects our
expectation the company will generate free operating cash flow
(FOCF) before debt amortization of above $50 million by 2025,
despite leverage above 13x.
"The outlook revision reflects our expectation the company will be
able to produce sustainable free operating cash flow by 2025. We
expect increasing patient utilization, new customer implementations
and upsells, growth in the payer business, and price increases will
support EBITDA growth sufficiently to produce positive free cash
flow for the full year in 2025 for the first time since 2022.
Year-to-date (YTD) free cash flow is lower than our expectations
primarily due to invoicing and collection delays and remediation
costs related to the Change Healthcare cyberattack, as well as the
timing of some other payments. We view these as temporary setbacks.
While we expect the company to continue its cost-cutting
initiatives, we expect those savings will be offset by ongoing
strategic investments in research and development (R&D) and
marketing, rendering EBITDA margins flat from 2024 to 2025. Even
so, we expect the company to cover its fixed costs, including debt
amortization, in 2025. We expect reported EBITDA of about $900
million in 2024 (excluding capitalized software expenses) to
increase to about $950 million in 2025. We expect this to cover
interest expense of approximately $550 million, capital expenditure
(capex) of about $170 million (including capitalized software),
taxes of about $160 million, and debt amortization of about $60
million."
athenahealth's maturity profile and liquidity provides some cushion
for cash flow pressure and some underperformance. The company's
undrawn $1 billion revolving credit facility, approximately $110
million cash on the balance sheet as of June 2024, and the limited
interest expense downside, provide sufficient liquidity to allow
for temporary setbacks or additional investments in revenue cycle
management (RCM) innovation, technology enhancements, or other
investments that could support organic growth.
The 'B-'rating reflects very high leverage and limited cash flow
generation, supported by the company's strong market position and
ability to grow organically, even as it operates in a challenging
competitive environment. S&P said, "While we expect the company to
produce cash flow in 2025, we expect limited cash flow in 2026
given the payment of deferred premiums at the end of the interest
rate cap terms. athenahealth maintains a leading position in the
outpatient segment, with few providers offering integrated electric
health records (EHR), RCM, and workflow management solutions. The
diverse suite of capabilities allows the company to be highly
ingrained in its customers' workflow, allowing it to maintain
strong customer retention rates. As it continues to compete with
other software providers in the ambulatory space, the company may
need to contend with larger and better-financed hospital EHRs, such
as Epic and Oracle (via its acquisition of Cerner) that combined
cover more than 50% of the hospital market. With public and private
payers focused on sending patients to the lower-cost sites of care,
large hospitals, seeking to maintain their patient population and
revenue stream, are rapidly investing in sites located outside
hospital walls, such as urgent care centers, outpatient centers,
and physician groups. While physician groups and outpatient centers
primarily use ambulatory EHRs that are specifically designed to
meet their needs, we expect the hospitals, requiring stronger care
coordination with patients fluidly moving from one site of care to
the other, may implement their own EHR software at their acquired
sites."
According to the Office of the National Coordinator for Health
Information Technology's 2022 Report to Congress, as of 2021,
nearly nine in 10 (88%) of U.S. office-based physicians adopted an
EHR, and nearly four in five (78%) had adopted a certified EHR.
Nevertheless, athenahealth has experienced mid- to high-single
digit percent growth through increased patient utilization as
volume among health care outpatient providers grows, through new
customer implementations and up-sells, and from growth in the payer
and life sciences business. In our opinion, ambulatory providers
remain essential to reducing the overall cost of care, and
athenahealth's integrated clinical and payments platform offers a
wealth of monetizable data and provides opportunities for
development of high-margin solutions, such as population health,
life sciences and pharmaceutical solutions, and payor solutions.
S&P said, "The stable outlook reflects our expectation the company
will continue to increase revenue at a mid- to high-single digit
rate, maintain margins of about 36% (with EBITDA burdened by
capitalized software development costs). It also reflects our
expectation the company will generate FOCF before debt amortization
of above $50 million by 2025, despite leverage above 13x.
"We could consider lowering our rating on athenahealth if we deemed
its capital structure to be unsustainable due to a significant
deterioration in the company's FOCF. This could occur due to more
intense competitive pressures, causing a revenue slowdown and
weakening EBITDA margins. It could also occur because of
significant debt-funded acquisitions and dividends.
"We believe that ratings upside is limited in the near-term because
we anticipate the company will use excess debt capacity to
refinance the preferred equity with cash-paying interest debt. We
could raise the rating if the company continued to generate revenue
and EBITDA growth, maintained EBITDA margins in the high-30% area,
and assuming the preferred equity is converted to debt and pays
cash interest, it produces sustained free cash flow to debt above
3%.
"Governance factors are a moderately negative consideration in our
credit rating analysis. Our assessment of the company's financial
risk profile as highly leveraged reflects corporate decision-making
that prioritizes the interests of the controlling owners, in line
with our view of the majority of rated entities owned by
private-equity sponsors. Our assessment also reflects the generally
finite holding periods and a focus on maximizing shareholder
returns."
AUDBEEJ ADVENTURES: Gets Final OK to Use Cash Collateral
--------------------------------------------------------
Audbeej Adventures, LLC received final court approval to use the
cash collateral of the MCA Companies and the United States Small
Business Administration.
The U.S. Bankruptcy Court for the Middle District of Florida
authorized the use of the lenders' cash collateral for necessary
expenses as outlined in the budget submitted by the company, plus
an amount not to exceed 10% for each line item.
The four-week cash budget showed major expenses that include
payroll, food and beverage, rent, and taxes.
As protection, Audbeej was ordered to grant the lenders a
post-petition lien against the cash collateral, with the same
priority as the pre-bankruptcy lien. The company was also ordered
to maintain insurance coverage for its property.
About Audbeej Adventures
Audbeej Adventures, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-05638) on
September 20, 2024, with $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Judge Catherine Peek Mcewen oversees the case.
The Debtor is represented by:
Scott A. Stichter
Stichter, Riedel, Blain & Postler, P.A.
110 E. Madison St., Suite 200
Tampa, FL 33602-4700
Telephone: 813-229-0144
Email: sstichter.ecf@srbp.com
AUDBEEJ ADVENTURES: Kathleen DiSanto Named Subchapter V Trustee
---------------------------------------------------------------
The U.S. Trustee for Region 21 appointed Kathleen DiSanto, Esq., at
Bush Ross, P.A., as Subchapter V trustee for Audbeej Adventures,
LLC.
Ms. DiSanto will be paid an hourly fee of $350 for her services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Ms. DiSanto declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Kathleen L. DiSanto, Esq.
Bush Ross, P.A.
P.O. Box 3913
Tampa, FL 33601-3913
Phone: (813) 224-9255
Fax: (813) 223-9620
Email: disanto.trustee@bushross.com
About Audbeej Adventures
Audbeej Adventures, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-05638) on
September 20, 2024, with $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Judge Catherine Peek Mcewen presides over the case.
Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Postler, P.A.
represents the Debtor as legal counsel.
AWAD ODEH: Clawback Suit v. Zahdan Goes to Trial
------------------------------------------------
Judge David D. Cleary of the United States Bankruptcy Court for the
Northern District of Illinois denied Awad Odeh and Julia Salamehs's
motion for summary judgment against Ahmad Zahdan.
Plaintiffs have filed an adversary complaint seeking to avoid their
obligations and transfers, including liens and payments, to
Defendant arising from a note and security agreement as fraudulent
transfers and to recover all payments made to Defendant under those
obligations.
Plaintiffs and Defendant are part of a close-knit Palestinian
community in Chicago's south suburbs. In 2019, at the request of
Plaintiff Odeh's brother Ehab, Defendant and his company, AZ SPE
LLC, invested $1,185,000 in North American Refinery NAR Inc.
In August and early September 2019, NAR issued four checks to
re-pay the investment, but none of the four checks were honored by
the bank. NAR was unable to repay the entire amount, so Defendant
tried to hold Ehab personally liable. Ehab also could not pay the
amount owed, so Defendant asked Plaintiff to sign a promissory note
for the amount owed. In Palestinian culture, it is common for
individuals to assume debts that their family members cannot pay.
When Plaintiffs agreed to the Note, they became insolvent as a
result of the Note or were already insolvent at the time of
signing.
In March 2021, Defendant filed a complaint in Cook County, Ill.,
against Plaintiffs, seeking a judgment for the amount owed under
the Note. Defendant obtained a default judgment against Plaintiffs.
The parties do not contest that Plaintiffs made a transfer to
Defendant within the look-back period under the Illinois Uniform
Fraudulent Transfer Act and that the transfer made Plaintiffs
insolvent or that they were insolvent when they made the transfer.
The Court must therefore determine whether there is a material
issue of fact for the remaining issue: whether Plaintiffs received
reasonably equivalent value for the transfer.
According to Judge Cleary, at this point in the adversary
proceeding, the Court cannot find that there is no genuine dispute
of material fact as to whether Plaintiffs received reasonably
equivalent value when agreeing to the Note and the Security
Agreement. To further complicate the issue, the Note itself does
not specify what specific corporate entity the debt relates to.
There is no description of any investment or any existing date
beyond the one between Plaintiffs and Defendant memorialized by the
Note.
Judge Cleary says, "A genuine issue of whether reasonably
equivalent value was received -- a material fact -- exists. On the
current record, summary judgment must be denied. It will be best
for the court's analysis of the evidence to hear the testimony
directly from the parties and subject to cross examination by
opposing counsel. At a trial, the burden of proof will be on
Plaintiffs to show by a preponderance of the evidence that they did
not receive equivalent value in exchange for their obligations
under the Note and any transfers."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=pZChen
Awad Odeh and Julia Salameh filed for Chapter 11 bankruptcy
protection (Bankr. N.D. Ill. Case No. 23-05875) on May 3, 2023,
listing under $1 million in both assets and liabilities. The
Debtors are represented by Jeffrey Paulsen, Esq.
BACKYARD ENVIRONMENTS: Case Summary & 20 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Backyard Environments LLC
4451 Dale Earnhardt Way, D1
Roanoke, TX 76262
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 24-43689
Debtor's Counsel: Robert T DeMarco, Esq.
DEMARCO MITCHELL, PLLC
500 N. Central Expressway Suite 500
Plano, TX 75074
Tel: (972) 991-5591
Email: robert@demarcomitchell.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Billy Sullivan 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/4URYVJI/Backyard_Environments_LLC__txnbke-24-43689__0001.0.pdf?mcid=tGE4TAMA
BAKER EQUITY: Case Summary & One Unsecured Creditor
---------------------------------------------------
Debtor: Baker Equity, LLC
268 S. Almont Drive
Beverly Hills, CA 90211
Business Description: Baker Equity is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section
101(51B)). The Debtor is the fee simple
owner of the real property located at
268 S. Almont Drive, Beverly Hills, CA
90211 valued at $4.6 million.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Central District of California
Case No.: 24-18314
Judge: Hon. Sheri Bluebond
Debtor's Counsel: Stella Havkin, Esq.
STELLA HAVKIN
5950 Canoga Avenue, Suite 400
Woodland Hills, CA 91367
Email: shavkinesq@gmail.com
Total Assets: $4,600,000
Total Liabilities: $2,265,000
The petition was signed by Jila Youshaei as managing member.
The Debtor listed the Los Angeles County Treasurer & Tax Colletor,
P.O. Box 54110 Los Angeles, CA, 90054 as its sole unsecured
creditor holding a claim of $15,000 for property taxes.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OCHWKVI/Baker_Equity_LLC__cacbke-24-18314__0001.0.pdf?mcid=tGE4TAMA
BARNES GROUP: Moody's Puts 'Ba3' CFR on Review for Downgrade
------------------------------------------------------------
Moody's Ratings placed Barnes Group Inc.'s Ba3 Corporate Family
Rating, Ba3-PD Probability of Default Rating and Ba3 senior secured
bank credit facility debt rating on review for downgrade.
Previously, the outlook was stable.
The review for downgrade is prompted by the announcement on October
7, 2024, that Barnes, a publicly-traded company, has entered into a
definitive agreement to be acquired by funds managed by affiliates
of Apollo Global Management, Inc. (Apollo) for $3.6 billion. The
review for downgrade reflects Moody's expectation that Apollo will
maintain more aggressive financial policies, a higher tolerance for
financial risk, and a more highly leveraged capital structure. The
transaction is subject to customary closing conditions and is
expected to close before the end of the first quarter of 2025.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The ratings review will focus on the details of the financing that
will be used to fund the buyout. These details include the sources
of funding, financial leverage, and ultimate capital structure.
Financial policy under new sponsor ownership will also be
considered. The company's forward liquidity position, business
strategy, and deleveraging plans will also be key considerations.
Upon the repayment of the company's existing rated senior secured
debt, Moody's will withdraw the ratings.
Barnes benefits from its strong and defendable market position as a
provider of a wide range of engineered products. Barnes' products
are sold across a diverse set of industrial and aerospace end
markets globally. The acquisition of MB Aerospace in 2023 has
helped the company achieve strong revenue growth from robust demand
in the commercial aerospace sector at strong margins. Nonetheless,
Barnes' leverage remains elevated following the MB Aerospace
acquisition and commercial aerospace related supply chain
challenges have affected free cash generation in 2024.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
Barnes Group Inc., headquartered in Bristol CT, is a global
provider of highly engineered products, differentiated industrial
technologies and innovative solutions, serving a wide range of end
markets and customers. End markets served include health care,
automation, packaging, aerospace, mobility and manufacturing
sectors. Revenue for the twelve months ended June 2024 was
approximately $1.6 billion.
BBB FOOD: Seeks 30-Day Extension of Plan Filing Deadline
--------------------------------------------------------
BBB Food Corp. asked the U.S. Bankruptcy Court for the District of
Puerto Rico to extend its period to file a plan and disclosure
statement for 30 days.
On July 31, 2024, the Court granted debtor an extension of time to
file Disclosure Statement and Plan.
The debtor claims that it is still actively pursuing settlement
agreements with various of the creditors in the present case.
The debtor explains that it is in the final stage of negotiations,
reason why the company is requesting additional 30 days to present
a confirmable plan and disclosure statement.
BBB Food Corp. is represented by:
Juan Carlos Bigas Valedon, Esq.
Juan C. Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About BBB Food Corp
BBB Food Corp sought protection for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D.P.R. Case No. 24-00152) on Jan. 19, 2024,
listing $500,001 to $1 million in assets and liabilities.
Juan C Bigas Valedon, Esq. at Juan C Bigas Law Office represents
the Debtor as counsel.
BDF ACQUISITION: S&P Withdraws 'B' Issuer Credit Rating
-------------------------------------------------------
S&P Global Ratings withdrew its 'B' issuer credit rating on BDF
Acquisition Corp. and the 'B+' issue rating on the company's $150
million senior secured term loan, which has been repaid. S&P
withdrew the ratings at the issuer's request.
The outlook on the issuer credit rating was stable at the time of
the withdrawal.
BEYOND AIR: Board Schedules Annual Meeting for December 9
---------------------------------------------------------
Beyond Air, Inc., disclosed in a Form 8-K filed with the Securities
and Exchange Commission that on Oct. 9, 2024, the Board of
Directors of the Company determined that the Company's 2025 Annual
Meeting of Stockholders will be held on Dec. 9, 2024. The time and
location of the 2025 Annual Meeting will be set forth in the
Company's definitive proxy statement for the 2025 Annual Meeting to
be filed with the SEC.
Any stockholder proposal intended to be considered for inclusion in
the Company's proxy materials for the 2025 Annual Meeting in
accordance with Rule 14a-8 or pursuant to the Company's Amended and
Restated Bylaws must be delivered to, or mailed to and received at,
the Company's principal executive offices at 900 Stewart Avenue,
Suite 301, Garden City, NY 11530, Attention: Secretary, on or
before the close of business on Oct. 19, 2024. Additionally, any
stockholder who intends to submit a director nomination or who
intends to submit a proposal regarding any other matter of business
at the 2025 Annual Meeting other than in accordance with Rule 14a-8
or otherwise must similarly make sure that such nomination or
proposal is delivered to, or mailed and received at, the Company's
principal executive offices on or before the close of business on
Oct. 19, 2024.
In addition to complying with this deadline, stockholder proposals
intended to be considered for inclusion in the Company's proxy
materials for the 2025 Annual Meeting must also comply with all
applicable Securities and Exchange Commission rules, including Rule
14a-8, Delaware law and the Company's Bylaws. Any proposal
submitted after the above deadlines will be considered untimely and
not properly brought before the 2025 Annual Meeting.
About Beyond Air
Headquartered in Garden City, N.Y., Beyond Air, Inc. --
www.beyondair.net -- is a commercial-stage medical device and
biopharmaceutical company developing a platform of nitric oxide
("NO") generators and delivery systems (the "LungFit platform")
capable of generating NO from ambient air. The Company's first
device, LungFit PH, received premarket approval from the FDA in
June 2022. The NO generated by the LungFit PH system is indicated
to improve oxygenation and reduce the need for extracorporeal
membrane oxygenation in term and near-term (34 weeks gestation)
neonates with hypoxic respiratory failure associated with clinical
or echocardiographic evidence of pulmonary hypertension in
conjunction with ventilatory support and other appropriate agents.
East Hanover, New Jersey-based Marcum LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated June 24, 2024, citing that the Company has incurred
significant losses and needs to raise additional funds to meet its
obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
BIG BRAND: Case Summary & Six Unsecured Creditors
-------------------------------------------------
Debtor: Big Brand Management Ltd. Co.
c/o BBM Ltd. Co.
6275 West Plano Pkwy.
Plano, TX 75093
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 24-42411
Judge: Hon. Brenda T Rhoades
Debtor's Counsel: Robert T DeMarco, Esq.
DEMARCO MITCHELL, PLLC
500 N. Central Expressway Suite 500
Plano, TX 75074
Tel: (972) 991-5591
E-mail: robert@demarcomitchell.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Louie Comella as managing director.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/YDM62NY/Big_Brand_Management_Ltd_Co__txebke-24-42411__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Six Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Gregg Goldstein Vendor $92,000
717 E. 8th 1/2 St.
Houston, TX 77007
2. Philip Racusin Vendor $57,773
Niels Esperson Building
808 Travis Street 23rd fl
Houston, TX 77002
3. Rini O'Neil, PC Vendor $21,218
David O'Neil
2101 L. Street NW Ste. 300
Washington, DC 20037
4. Nigel Dettelbach Vendor $18,000
13870 Harvard Ave
Chino, CA 91710
5. Francis Martin Vendor $14,500
409 E. Olive Ave.
Monrovia, CA 91016
6. J. Stephen Munson II, CPA Vendor $12,850
710 Main Street
Richmond, TX 77469
BIG LOTS: Closes Jacksonville Beach Store Amid Bankruptcy
---------------------------------------------------------
Monty Zickuhr of Jacksonville Daily Record reports that bankrupt
discount retailer Big Lots Inc. is closing its store in
Jacksonville Beach as it shuts down hundreds of locations across
the U.S.
The store is at 14333 Beach Blvd., No. 18, in the Pablo Station
shopping center. According to the Big Lots website, the store is
open daily 9 a.m. to 9 p.m. for its closing sale.
No final closing date is given.
That will leave the chain with four stores in Northeast Florida
comprising three in Jacksonville and one in St. Augustine. It
already closed its store in Orange Park in the South Blanding
Village shopping center in August.
Big Lots announced September 9, 2024 it filed for Chapter 11
bankruptcy and entered into an agreement to sell all its assets and
ongoing business operations to Nexus Capital Management LP.
Columbus, Ohio-based Big Lots said its stores and website will
remain open during the bankruptcy.
According to its website, there are now 1,244 Big Lots locations
open but some of those are in the closing process.
USA Today reported Oct. 4 that the retailer plans to close more
than 340 stores, a number that has grown from about 300 in August.
Big Lots sells furniture, decor, pantry items, kitchenware, pet
supplies and more.
"Though the majority of our store locations are profitable, we
intend to move forward with a more focused footprint to ensure that
we operate efficiently and are best positioned to serve our
customers," Big Lots CEO Bruce Thorn said in a news release
announcing the bankruptcy in September.
The sale to Nexus is expected to close in the fourth quarter.
The company has created a website about the bankruptcy at
bigstepforbiglots.com.
About Big Lots
Big Lots (NYSE: BIG) -- http://www.biglots.com/-- is one of the
nation's largest closeout retailers focused on extreme value. The
Company is dedicated to being the big difference for a better life
by delivering bargains to brag about on everything for the home,
including furniture, decor, pantry and more. It fulfills its
mission to help customers "Live BIG and Save LOTS" with sourcing
strategies to grow extreme bargains through closeouts,
liquidations, overstocks, private labels, and value-engineered
products. The Big Lots Foundation, together with the Company's
customers, associates, and vendors, has delivered more than $176
million of philanthropic support to critical needs in hunger,
housing, healthcare, and education. On the Web: http://biglots.com/
On Sept. 9, 2024, Big Lots, Inc. and each of its subsidiaries
initiated voluntary Chapter 11 proceedings (Bankr. D. Del. Lead
Case No. 24-11967). The case is being administered by the Honorable
J. Kate Stickles.
Davis Polk & Wardwell LLP is serving as legal counsel, Guggenheim
Securities, LLC, is serving as financial advisor, AlixPartners LLP
is serving as restructuring advisor, and A&G Real Estate Partners
is serving as real estate advisor to the Company. Kroll is the
claims agent.
Kirkland & Ellis is serving as legal counsel to Nexus.
BIG RIVER: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Big River Contractors LLC
627 FM 468
Cotulla, TX 78014
Business Description: The Debtor offers oil field maintenance and
repair services.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 24-52028
Judge: Hon. Craig A Gargotta
Debtor's Counsel: Robert C. Lane, Esq.
THE LANE LAW FIRM
6200 Savoy Dr Ste 1150
Houston TX 77036-3369
Tel: (713) 595-8200
E-mail: notifications@lanelaw.com
Total Assets: $940,619
Total Debts: $1,838,548
The petition was signed by Jeffery Green as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/SCQESHY/Big_River_Contractors_LLC__txwbke-24-52028__0001.0.pdf?mcid=tGE4TAMA
BIOXCEL THERAPEUTICS: Former CCO to Provide Consulting Services
---------------------------------------------------------------
BioXcel Therapeutics, Inc., disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on Oct. 8, 2024, the
Company entered into a Consulting Agreement with Commercial
Science, LLC, a limited liability company managed by Matthew Wiley
(formerly senior vice president and chief commercial officer of the
Company), pursuant to which Mr. Wiley will provide consulting and
advisory services to the Company following the Separation Date at
an hourly rate of $330 plus out-of-pocket expenses. The Consulting
Agreement will expire on Dec. 31, 2024, unless earlier terminated
pursuant to its terms.
On Sept. 19, 2024, Mr. Wiley and the Company agreed that Mr. Wiley
would cease his employment with the Company, effective Oct. 2, 2024
and would serve as a consultant for a period of time thereafter.
In connection with Mr. Wiley's separation, on Oct. 3, 2024, the
Company entered into a Separation Agreement and General Release
with Mr. Wiley pursuant to which Mr. Wiley will be entitled to the
severance payments and benefits under his employment agreement with
the Company, which include (i) a pro-rated portion of any annual
bonus earned for 2024; (ii) base salary continuation for nine
months; and (iii) reimbursement for COBRA premium payments for nine
months. Mr. Wiley's receipt of the severance payments and benefits
is subject to his execution and non-revocation of a release of
claims in favor of the Company.
About BioXcel Therapeutics
Headquartered in New Haven, Conn., BioXcel Therapeutics, Inc., is a
biopharmaceutical company utilizing artificial intelligence to
develop transformative medicines in neuroscience and, through the
Company's wholly owned subsidiary, OnkosXcel Therapeutics LLC,
immuno-oncology. The Company is focused on utilizing cutting-edge
technology and innovative research to develop high-value
therapeutics aimed at transforming patients' lives. The Company
employ various AI platforms to reduce therapeutic development costs
and potentially accelerate development timelines.
Stamford, Conn.-based Ernst & Young LLP, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated March 22, 2024, citing that the Company has suffered
recurring losses from operations, has used significant cash in
operations, and has stated that substantial doubt exists about the
Company's ability to continue as a going concern.
BROWNIE'S MARINE: Hires Bush to Replace Assurance as Auditor
------------------------------------------------------------
Brownie's Marine Group, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that effective as of Oct. 4,
2024, the Company engaged Bush & Associates CPA, LLC to serve as
the Company's independent registered public accounting firm to
audit its financial statements, replacing the Company's previous
audit firm, Assurance Dimensions, LLC. The change to the Company's
auditors was approved by the Company's board of directors.
The reports of Assurance Dimensions on the financial statements of
the Company for the fiscal years ended Dec. 31, 2023 and Dec. 31,
2022, did not contain any adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope
or accounting principles, except that such reports included an
explanatory paragraph with respect to the Company's ability to
continue as a going concern.
During the fiscal years ended Dec. 31, 2023 and Dec. 31, 2022, and
the subsequent interim period through Oct. 9, 2024, there were no
(a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation
S-K) with Assurance Dimensions on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to
Assurance Dimension's satisfaction, would have caused Assurance
Dimensions to make reference to the subject matter thereof in
connection with its reports for such years; or (b) reportable
events, as described under Item 304(a)(1)(v) of Regulation S-K.
During the Company's two most recent fiscal years, and through
Oct. 9, 2024, neither the Company nor anyone on its behalf has
previously consulted with Bush regarding either (a) the application
of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a
written report was provided nor oral advice was provided to the
Company that Bush concluded was an important factor considered by
the Company in reaching a decision as to the accounting, auditing
or financial reporting issue; or (b) any matter that was either the
subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of
Regulation S-K and the related instructions thereto) or a
reportable event (as described in paragraph 304(a)(1)(v)) of
Regulation S-K).
About Brownie's Marine
Headquartered in Pompano Beach, Florida, Brownie's Marine Group,
Inc., through its wholly owned subsidiaries, designs, tests,
manufactures, and distributes tankless dive systems, rescue air
systems, and yacht-based self-contained underwater breathing
apparatus ("SCUBA") air compressor and nitrox generation fill
systems. The Company also acts as the exclusive distributor in
North and South America for Lenhardt & Wagner GmbH ("L&W")
compressors in the high-pressure breathing air and industrial gas
markets. The Company is the exclusive United States and Caribbean
distributor for Chrysalis Trading CC, a South African manufacturer
of fitness and dive equipment, which is doing business as Bright
Weights, of a dive ballast system produced in South Africa.
Margate, Florida-based Assurance Dimensions, the Company's auditor
since 2022, issued a "going concern" qualification in its report
dated May 9, 2024, citing that the Company had a net loss of
approximately $1,248,115 and cash used in operating activities of
approximately $374,827 for the year ended Dec. 31, 2023, as well as
an accumulated deficit of approximately $17,685,610 as of Dec. 31,
2023. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
BYJU'S ALPHA: Lawsuit Says Affiliate Drained Money from U.S. Units
------------------------------------------------------------------
Steven Church and Jonathan Randles of Bloomberg News report that a
software company controlled by Indian entrepreneur Byju Raveendran
drained cash from US affiliates in violation of US bankruptcy
rules, according to a lawsuit filed Tuesday, October 8, 2024, in
federal court in Delaware.
Money that should be used to repay creditors was instead siphoned
off to Whitehat Education Technology, a court-approved trustee for
the affiliates said in court papers. The trustee, bankruptcy
attorney Claudia Springer, sued to get back nearly $700,000 that
was moved from entities under her control.
About BYJU's Alpha
BYJU's Alpha, Inc., designs and develops education software
solutions.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case No. 24-10140) on Feb. 1, 2024. In the
petition signed by Timothy R. Pohl, chief executive officer, the
Debtor disclosed up to $1 billion in assets and up to $10 billion
in liabilities.
Judge John T. Dorsey oversees the case.
Young Conaway Stargatt & Taylor, LLP and Quinn Emanuel Urquhart &
Sullivan, LLP serve as the Debtor's legal counsel.
GLAS Trust Company LLC, as DIP Agent and Prepetition Agent, is
represented in the Debtor's case by Kirkland & Ellis LLP, Pachulski
Stang Ziehl & Jones, and Reed Smith.
CACI INTERNATIONAL: Moody's Rates New 1st Lien Loan Due 2031 'Ba1'
------------------------------------------------------------------
Moody's Ratings assigned a Ba1 rating to CACI International, Inc.'s
("CACI") new senior secured first lien term loan B due 2031. The
issuance does not impact other ratings of CACI, including its Ba1
corporate family rating. The ratings outlook is stable.
Proceeds from the new $750 million term loan due 2031 are expected
to be used to fund the proposed $1.27 billion acquisition of
Virginia-based Azure Summit Technology (AST). AST is a provider of
high-performance radio frequency (RF) hardware, firmware and
software products and systems to the defense end market. As Moody's
previously commented, although the acquisition will increase
debt/EBITDA to 3.5x, Moody's expect CACI to de-lever following the
transaction, as it has with past acquisitions. Debt/EBITDA for the
fiscal 2024 (ended June 30, 2024) was 2.2x, providing some
financial flexibility. Additionally, because of its repayment of
prepayable debt and EBITDA growth, Moody's expect CACI will reduce
financial leverage back to below 3x over the next 18-24 months.
The proposed $750 million senior secured first lien term loan is
being issued by CACI International, Inc. with guarantees from
material direct and indirect domestic subsidiaries. The Ba1 rating
on the term loan is in line with the CFR given the preponderance of
first lien debt in the company's debt structure.
RATINGS RATIONALE
The Ba1 CFR reflects CACI's large scale and good track record in
integrating acquisitions within the defense services sector. The
company has a strong track record of deleveraging following
acquisitions. The variable cost nature of the business helps
sustain strong free cash flow even as demand fluctuates. CACI is
well positioned to benefit from the current spending priorities
within the US Department of Defense.
At the same time, the ratings are constrained by the entirely
secured nature of the company's debt capital structure. The ratings
also reflect the company's acquisitive nature and Moody's
expectation that CACI will likely increase financial leverage to
effectuate M&A transactions. The company is highly exposed to the
US Department of Defense (DoD), with limited diversification from
foreign governments, federal civilian agencies and commercial end
markets.
The stable outlook reflects Moody's expectation of continued
improvement in earnings with adjusted debt/EBITDA improving to
below 3.0x and very good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Ratings could be upgraded if the company transitions to an
unsecured debt capital structure and successfully integrates recent
acquisitions including the sizable AST acquisition. CACI's ratings
could also be upgraded if debt/EBITDA is sustained below 3x while
free cash flow remains robust.
Ratings could be downgraded if contract execution problems exert
pressure on the company's revenue or EBITDA margin. A
meaningfully more aggressive financial policy, such that
debt/EBITDA is sustained above 4.0x, could also pressure ratings.
Weakening liquidity can also result in a ratings downgrade.
The principal methodology used in this rating was Aerospace and
Defense published in October 2021.
CACI International, Inc. ("CACI"), based in Reston, Virginia,
provides information technology ("IT") services and solutions for
the US Department of Defense ("DoD"), federal civilian agencies and
the government of the UK. Revenue for the fiscal year ended June
30, 2024 was $7.7 billion.
CANDE HOFFMAN: Case Summary & 16 Unsecured Creditors
----------------------------------------------------
Debtor: CandE Hoffman Holdings Inc.
812 W. Monterey Ln.
Mequon, WI 53092
Business Description: The Debtor is a franchise owner of hair
salons.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Eastern District of Wisconsin
Case No.: 24-25415
Judge: Hon. Beth E Hanan
Debtor's Counsel: Jerome R. Kerkman, Esq.
KERKMAN & DUNN
839 N. Jefferson St., Ste. 400
Milwaukee, WI 53202-3744
Tel: 414-277-8200
Email: jkerkman@kerkmandunn.com
Total Assets as of August 21, 2024: $710,919
Total Liabilities as of August 21, 2024: $1,090,460
The petition was signed by Eric J. Hoffman as president.
A copy of the Debtor's list of 16 unsecured creditors is available
for free at PacerMonitor. com at:
https://www.pacermonitor.com/view/TIHGS6Q/CandE_Hoffman_Holdings_Inc__wiebke-24-25415__0004.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/TG4LT3Y/CandE_Hoffman_Holdings_Inc__wiebke-24-25415__0001.0.pdf?mcid=tGE4TAMA
CAREERBUILDER LLC: S&P Cuts ICR to 'SD' on Amended Credit Agreement
-------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on software and
talent acquisition services provider CareerBuilder LLC to 'SD'
(selective default) from 'CCC-' and its issue-level rating on its
secured debt to 'D' from 'CCC+'.
S&P said, "We plan to raise our issuer credit rating on
CareerBuilder as soon as practical, likely in the next several
days, to a level that reflects the ongoing risk of a selective or
conventional default.
"We view this amendment as a distressed exchange and tantamount to
default under out criteria because it occurred in the context of
financial distress and lenders received less than their original
promise. The company is required to make a minimum cash payment of
SOFR + 2.5% each quarter and will have the option to pay the
remainder in PIK. The company has elected to partially PIK (pay in
kind) the interest payments due since the amendment was put in
place on June 28, 2024. Additionally, the amendment provided the
company with financial covenant relief including changing the
liquidity and EBITDA covenants to allow time for the company to
achieve synergies related to the Monster merger. Given that there
was no adequate offsetting compensation for debtholders, we
conclude investors are receiving less than originally promised.
"We expect to review our issuer credit rating on CareerBuilder in
the coming days. Our review will focus on our forward-looking view
of its creditworthiness, which includes the company's capital
structure, liquidity, and the ability to achieve synergies related
to the Monster Merger. We expect the issuer credit rating will
remain in the 'CCC' category."
CareerBuilder provides software and services for hiring and
managing employees. Most of the company's revenue is
subscription-based and sticky. CareerBuilder generated about 80% of
its revenue from subscription services and 20% from transactional
revenue in fiscal year 2023. The company is majority-owned by
global alternative investment manager firm Apollo Global Management
Inc.
CELEBRATION COTTAGE: Gets Interim OK to Use Cash Collateral
-----------------------------------------------------------
The Celebration Cottage AB, LLC received interim court approval to
use the cash collateral of BIP Canton, LLC.
BIP Canton, a secured creditor, holds a deed of trust on one of the
rental properties in Carteret County operated by the company. The
revenue generated from these properties constitutes BIP Canton's
cash collateral.
The interim order penned by Judge Joseph Callaway of the U.S.
Bankruptcy Court for the Eastern District of North Carolina
approved the use of the rental proceeds to pay the company's
operating expenses.
To safeguard BIP's interests, Celebration Cottage AB will make
payments from the rental income and grant its creditor replacement
liens on cash collateral equivalent to the amounts held prior to
the bankruptcy filing.
A subsequent hearing is scheduled for Oct. 24 to further examine
the motion and the objections raised by BIP.
About Celebration Cottage AB
Celebration Cottage AB, LLC owns four properties in Morehead City
and Atlantic Beach, N,C., with an aggregate value of $7.02
million.
Celebration Cottage AB sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D.N.C. Case No. 24-01991) on June 14,
2024, with total assets of $7,023,000 and total liabilities of
$1,527,257. Joseph Frost, Esq., serves as Subchapter V trustee.
Judge Joseph N. Callaway oversees the case.
George Mason Oliver, Esq., at The Law Offices of Oliver & Cheek,
PLLC is the Debtor's bankruptcy counsel.
CELSIUS NETWORK: Court Narrows Claims in Complaint vs PPM
---------------------------------------------------------
Chief Judge Martin Glenn of the United States Bankruptcy Court for
the Southern District of New York granted the motion filed by
Priority Power Management, LLC to dismiss Counts IV and V of Barber
Lake Development LLC's adversary complaint with prejudice.
Barber Lake is the successor to debtor Celsius Mining LLC under a
letter of intent pursuant to a Master Conveyance Agreement between
Celsius Mining and Ionic Digital Treasury Inc. dated as of January
31, 2024.
Pursuant to the Master Conveyance Agreement, Celsius Mining
"conveyed the outstanding legal claims and ultimate settlements and
recoveries related to the Barber Lake Site to Plaintiff." Moshin Y.
Meghji manages Celsius Mining and has assigned the "Chapter 5
Claims asserted [therein] to Plaintiff."
BARBER LAKE DEVELOPMENT LLC, Plaintiff, v. PRIORITY POWER
MANAGEMENT, LLC, Defendant, Adv. Proc. No. 24-04010 (MG), Case No.
22-10964 (MG) (Bankr. S.D.N.Y.), centers on a dispute between
non-debtor Barber Lake, successor-in-interest to debtor Celsius
Mining, and PPM concerning certain payments Celsius Mining made to
PPM. Celsius Mining, managing member of Barker Lake, engaged in
cryptocurrency mining, which involves the use of "mining rigs" or
"sophisticated hardware devices . . . to verify new blockchain
transactions and allow new cryptocurrency assets to enter the
market." Both Celsius Mining and Barber Lake are
Delaware-incorporated entities. Meanwhile, PPM is a Texas-based
"independent energy management services and consulting firm that,
among other things, develops and builds energy infrastructure for
its clients."
In connection with its mining business, Celsius Mining contracted
with PPM to "develop several sites for the construction of virtual
currency mining facilities." One of these sites, which serves as
the basis for this adversary proceeding, is located in Mitchell
County, Texas within the Electric Reliability Council of Texas West
Loan Zone in the certificated service area of Oncor Electric
Delivery Company. PPM acquired the Barber Lake Site in November
2021 "with the intention of working with a Bitcoin miner to develop
the site and ultimately earn the fees from such miner's use of
[it]."
On February 17, 2022, Celsius Mining and PPM entered into the LOI
that set forth the "basic terms and conditions pursuant to which
[PPM] and [Celsius Mining] would enter into one or more agreements
governing the proposed development by PPM of one or more sites for
the construction of virtual currency mining facilities . . . for
Celsius [Mining]."
Following Celsius Mining's entry into the LOI, Celsius Mining paid
PPM the Barber Lake Fees in the aggregate total of $17,147,242 in
connection with the LOI and the Barber Lake Project as well as the
$500,000 Exclusivity Fee.
On July 15, 2024, Barber Lake filed the Complaint against PPM,
seeking the return of the Barber Lake Fees on grounds that such
amounts are refundable, which PPM has "wrongfully refused to
return."
Celsius Mining alleges that PPM's refusal to refund the Development
Fee and Refundable Payments constitutes a breach of PPM's binding
obligations in sections C and D of the LOI. And, as a result of
such breach, Celsius Mining has been damaged in an amount no less
than $17,147,242, the amount PPM refuses to refund to Celsius
Mining. In addition, Celsius Mining also disputes PPM's assertion
that the
April 1, 2022 email of Amir Ayalon, the former Chief Executive
Officer at Celsius Mining, constitutes a "valid release of all
claims for the Development Fee and Refundable Payments under the []
LOI." Finally, Celsius Mining contends it was "insolvent at all
times relevant to the Complaint" such that, even if the April 1,
2022 email constituted a release of its claims under the LOI, such
release was a "constructive fraudulent transfer avoidable by
[Celsius Mining]."
The Complaint asserts five causes of action:
Count I – A breach of contract claim for PPM's failure to
refund the Barber Lake Fees in connection with the LOI that seeks
damages in the amount to be proven at trial of no less than
$17,147,242.
Count II – A claim for declaratory judgment that the April
1, 2022 email from Celsius Mining to PPM does not constitute a
release of any claims under the LOI.
Count III – To the extent such a release exists, a claim for
the avoidance of such a purported release as a constructive
fraudulent transfer pursuant to sections 544(b)(1) or
548(a)(1)(B) and recovery of the value pursuant to 550 of the
Bankruptcy Code.
Count IV – A claim that seeks the imposition of a
constructive trust and recovery of any proceeds or revenues
generated from the Barber Lake Site as restitution or, in the
alternative, damages for PPM's unjust enrichment in an amount to be
proven but no less
than $17,147,242.
Count V – A claim seeking entry of an order requiring PPM to
turn over Celsius Mining's equitable interest in the Barber Lake
site and any proceeds or revenue generated from the same pursuant
to section 542(a) of the Bankruptcy Code.
The Motion seeks dismissal of Counts IV and V of the Complaint with
prejudice on grounds that Celsius Mining has failed to state a
plausible claim of either restitution, constructive trust, or
unjust enrichment under state law or turnover pursuant to section
542(a) of the Bankruptcy Code.
With respect to Count IV, which alleges that PPM was unjustly
enriched with its continued development of the Barber Lake Site and
entitles Celsius Mining to the "equitable remedies of a
constructive trust or restitution," PPM argues that dismissal of
this Count is appropriate. In support, PPM first contends that
Celsius Mining's quasi-contract claims are barred as a matter of
law because the Complaint asserts a breach of contract claim based
on the same facts, and a valid contract otherwise exists between
the parties that is the subject of this dispute. Additionally, PPM
argues that Celsius Mining is not
entitled to any benefits of the Barber Lake Site because the
Complaint itself concedes that Celsius Mining elected to not
proceed with the Barber Lake Project. Relatedly, Barber Lake, PPM
maintains, also fails to state a claim that would entitle it to a
constructive trust because (i) the unjust enrichment claim is
implausible on its face, and (ii) Barber Lake fails to allege a
"close and personal relationship of trust and confidence" between
PPM and Celsius Mining.
As for Count V, which asserts a claim for turnover pursuant to
section 542(a) of the Bankruptcy Code, such claim must be
dismissed, PPM asserts, because Celsius Mining is not entitled to
any equitable interest in the Barber Lake Site that would allow it
to state a claim for turnover. Celsius Mining elected to not
proceed with the Barber Lake Site and, in so doing, PPM contends,
relinquished any interest it held in the development of the Barber
Lake Site or proceeds generated from it.
The Court notes both New York and Texas recognize that a claim for
unjust enrichment is unavailable when a valid contract governing
the particular subject matter exists. Barber Lake contends that
this is not the case here since the subject matter underlying Count
IV extends beyond the LOI.
Barber Lake asserts that:
(i) the LOI "does not cover the entire dispute at issue in the
Complaint," and
(ii) it is entitled to a constructive trust as a remedy because
PPM retained the benefit of the improvements to the Barber Lake
Site.
Barber Lake focuses on the language in the Complaint in paragraph
43 that states that the payments at issue include the payment of
"certain expenses incurred by PPM after the execution of the [LOI]
in connection with the development of the Barber Lake Site in
addition to the Development Fee and Refundable Payments." Barber
Lake asserts that these payments, therefore, were
"noncontractual."
However, the Court finds, the Complaint states only that these
payments were made "in addition to the Development Fee and
Refundable Payments" and makes no mention that the payment of these
expenses were non-contractual, on what basis they were made, and
how they fall outside the scope of the LOI. A review of the binding
provisions of the LOI also supports the notion that the parties
contemplated that Celsius Mining would pay for PPM's expenses.
At the September 18, 2024 hearing, counsel to Barber Lake conceded
that, subject to certain conditions, the binding terms of the LOI
permitted PPM to deduct the reasonable and documented expenses it
incurred.
Therefore, as there are provisions in the LOI that contemplate
Celsius Mining paying for costs in addition to the Development Fee
and the Reimbursable Payments, the Complaint has not pled
sufficient factual allegations to support a plausible claim that
such payments were non-contractual, the Court concludes.
Judge Glenn says, "These same binding provisions also provide
Celsius Mining with the option to not proceed with the Barber Lake
Site, which the parties do not dispute was the path Celsius Mining
ultimately chose. The LOI, therefore, covers the dispute at hand,
and Barber Lake's assertion that it holds an equitable interest in
the Barber Lake Site that would entitle it to any related proceeds
and revenue cannot survive dismissal. Accordingly, Barber Lake has
failed to allege sufficient facts that show that the LOI, which it
does not otherwise dispute is a valid contract, does not actually
cover the entire matter at hand. The Court, therefore, need not
reach whether the Complaint has adequately pled the elements of
unjust enrichment under either New York or Texas law."
Given that Barber Lake has failed to adequately plead a claim for
unjust enrichment, its claim for restitution and the imposition of
a constructive trust also cannot survive dismissal, the Court
holds.
The Court also points out the remedy of a constructive trust is
contingent upon the finding of, among other things, unjust
enrichment. Barber Lake does not dispute this.
Contrary to Barber Lake's argument then, the Court concludes the
contract claim encompasses all of the relief sought by Barber Lake.
Under these circumstances, the unjust enrichment claim cannot
survive.
Accordingly, the Court dismisses Count IV with prejudice. While
the Complaint does not make clear the source of the equitable
interest that serves as the basis for Count V, the Opposition Brief
suggests that it is Count IV.
But, as the Court has ruled, Count IV must be dismissed with
prejudice. In light of that result, Count V cannot survive.
Therefore, the Court also grants the motion and dismisses Count V
with prejudice.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=bbtkPr
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Celsius helps over a million customers worldwide to find the path
towards financial independence through a compounding yield service
and instant low-cost loans accessible via a web and mobile app.
Celsius has a blockchain-based fee-free platform where membership
provides access to curated financial services that are not
available through traditional financial institutions.
The Celsius Wallet claims to be one of the only online crypto
wallets designed to allow members to use coins as collateral to get
a loan in dollars, and in the future, to lend their crypto to earn
interest on deposited coins (when they're lent out).
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network, LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtors estimated assets and liabilities between $1
billion and $10 billion.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankrupty counsels; Fischer (FBC & Co.) as
special counsel; Centerview Partners, LLC as investment banker; and
Alvarez & Marsal North America, LLC as financial advisor. Stretto
is the claims agent and administrative advisor.
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. The committee tapped White & Case, LLP as
its bankruptcy counsel; Elementus Inc. as its blockchain forensics
advisor; M3 Advisory Partners, LP as its financial advisor; and
Perella Weinberg Partners, LP as its investment banker.
Shoba Pillay, Esq., is the examiner appointed in the Debtors'
Chapter 11 cases. Jenner & Block, LLP and Huron Consulting
Services, LLC, serve as the examiner's legal counsel and financial
advisor, respectively.
* * *
On November 9, 2023, the Bankruptcy Court entered the Findings of
Fact, Conclusions of Law, and Order Confirming the Modified Joint
Chapter 11 Plan of Celsius Network LLC and Its Debtor Affiliates.
The Effective Date of the Plan occurred January 31, 2024.
CENTER ETHANOL: Fraudulent Conveyance Claims v. WR Ethanol Tossed
-----------------------------------------------------------------
Judge Rodney W. Sippel of the United States District Court for the
Eastern District of Missouri granted the motion filed by WR
Ethanol, LLC to dismiss Total Grain Marketing, LLC's fraudulent
conveyance claims for lack of personal jurisdiction. The defendant
is dismissed from the case without prejudice.
This case arises out of a contract between Total Grain and Center
Ethanol for the delivery and sale of up to 500,000 bushels of corn.
Total Grain alleges that between May 14, 2019, and May 24, 2019, it
made shipments to Center Ethanol totaling $693.166.05, and that
Center Ethanol failed to pay for the shipments.
On July 12, 2022, Center Ethanol filed for Chapter 11 bankruptcy in
the U.S. Bankruptcy Court for the Eastern District of Missouri.
Center Ethanol filed a "Statement of Financial Affairs" indicating
that on October 1, 2021, Center Ethanol transferred $266,670 to WR
Ethanol, an Arizona limited liability company, for debt repayment,
along with four $1 transfers for purchase of WR Ethanol's
membership interests in various entities.
Total Grain filed this lawsuit against Center Ethanol and WR
Ethanol on June 9, 2023, in the Circuit Court of St. Louis County,
alleging:
-- claims for breach of contract and quantum meruit against
Center Ethanol, for failing to pay the amounts due for the bushels
of corn; and
-- two counts of fraudulent conveyance against Center Ethanol
and WR Ethanol, based on the Alleged Transfer.
Total Grain's only allegations involving WR Ethanol pertain to the
Alleged Transfer. WR Ethanol removed the case to federal court on
January 12, 2024. WR Ethanol then filed a motion to dismiss for
lack of personal jurisdiction.
Judge Sippel says, "Based on the allegations in Total Grain's
complaint and the evidence in the record, WR Ethanol is an Arizona
limited liability company with its principal place of business in
Arizona and its members domiciled in Arizona. Total Grain does not
allege continuous and systematic contacts with Missouri. As result,
there is no general jurisdiction over WR Ethanol in Missouri."
Total Grain argues that the basis for personal jurisdiction is that
WR Ethanol crafted a "complex business relationship" with at least
four Missouri entities. Total Grain argues WR Ethanol's ownership
in Missouri entities that loaned Center Ethanol millions of dollars
resulted in activities directed at Missouri and related to Total
Grain's fraudulent conveyance claim.
According to WR Ethanol, Total Grain mischaracterizes its
connection to Missouri.
Judge Sippel explains, "The only alleged contact between WR Ethanol
and Missouri is WR Ethanol's former interests in the entities,
which were each sold for one dollar, and the Alleged Transfer
received by WR Ethanol from a Missouri company. Total Grain does
not allege that the contracts were made in Missouri or that WR
Ethanol had any other activity in Missouri. As a result, these
allegations do not provide sufficient contacts to Missouri to
result in personal jurisdiction."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=3naqNY
About Center Ethanol Company
Center Ethanol Company LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. E.D. Miss. Case No. 22-42087) on
July 12, 2022. In the petition filed by Adam R. Parker, as manager,
the Debtor estimated assets between $1 million and $10 million and
liabilities between $50 million and $100 million.
A. Thomas DeWoskin, Esq., at Danna McKitrick, P.C., is the Debtor's
counsel.
On September 16, 2022, the Court granted the request of the U.S.
Trustee to dismiss the case, denying its request to convert the
case from Chapter 11 to 7.
CHOICE MARKET: Bannock Unsecureds Will Get 8.9% of Claims in Plan
-----------------------------------------------------------------
Choice Market Holdings, Inc., and Choice Market Bannock, LLC filed
with the U.S. Bankruptcy Court for the District of Colorado a Joint
Plan of Reorganization dated September 4, 2024.
Michael Fogarty founded the Choice Market enterprises in October
2017 through the creation of Craft, LLC with the goal of providing
fresh, local, and healthy food in a convenient, small footprint
retail locations throughout Denver, Colorado and aspirations for
nationwide expansion.
The first Choice Market location opened at 1770 N. Broadway in late
2017 and experienced significant initial growth with a large number
of returning customers. The positive growth in the first store led
to significant outside investments funding the overall expansion
which resulted in the formation of a number of additional Choice
Market locations and the creation of Holdings to act as the
corporate center for all of the stores.
Over the next 7 years, Choice expanded significantly, opening an
additional four stores over time with its sixth store in
development in the RiNo district of downtown Denver. With the
expansion in new stores also came the expansion into technology
based solutions intended to drive development and growth while
limiting costs. The overall growth of Holdings and the respective
Choice stores continued steadily until the COVID-19 pandemic caused
significant disruptions to the Debtor's operations.
When the Debtors filed their bankruptcy case, a third entity,
Choice Market Uptown, LLC ("Uptown") filed as well. Post-petition,
the Debtors continued to struggle from a lack of cash resources
available, resulting in Uptown closing temporarily while the
Debtors worked to rebuild cash resources in order to restock the
store and reopen. The Debtors were unable to build the resources to
do so, and Uptown remained closed. As a result, on September 3,
2024, Uptown filed a motion to reject its lease, and on September
4, 2024, sought to terminate the joint administration and dismiss
the Uptown case.
Post-petition, Bannock has also temporarily closed while the
Debtors complete their reorganization. The Debtors have continued
to reduce their overall overhead expenses, including reducing the
overall size of Holdings' staff and expenses. Through the
reorganization, the Debtors intend to maintain their small
footprint stores and expand on a network of "mini-mart" style
stores, with the reorganization efforts funded by a post-petition
loan to be funded upon confirmation of the Plan in order to repay
creditors more than they would otherwise receive in a Chapter 7 and
allow the Debtors to continue as a going concern.
Class 5 consists of General Unsecured Claims Against Holdings. On
the Effective Date of the Plan, Holdings shall make a single pro
rata distribution of Loan Proceeds in the amount of $75,000 to
Class 5 Claimants. Based on the amount of Class 5 Claims, Holdings
anticipates that Class 5 creditors will receive approximately 1.6%
on account of their claims. No further distributions shall be made
to Class 5 Claimants beyond the initial distribution of Loan
Proceeds.
Class B4 consists of General Unsecured Claims Against Bannock. On
the Effective Date of the Plan, Bannock shall make a single pro
rata distribution of Loan Proceeds in the amount of $100,000 to
Class B4 Claimants. Based on the amount of Class B4 Claims, Bannock
anticipates that Class B4 creditors will receive approximately 8.9%
on account of their claims. No further distributions shall be made
to Class B4 Claimants beyond the initial distribution of Loan
Proceeds.
Class 6 consists of the Interests in Holdings held by pre-petition
shareholders. Class 6 is unimpaired under the Plan. On the
Effective Date of the Plan, all Class 6 Interests will be retained
by the pre-petition interest holders.
Class B5 consists of the Interests in Bannock held by Holdings.
Class B5 is unimpaired under the Plan. On the Effective Date of the
Plan, all Class B5 Interests will be retained by the pre petition
interest holders.
The Debtors' Plan is premised on a capital infusion through a
post-petition loan in the anticipated amount of $1 million, which
loan would be made in the form of a convertible debenture. In
accordance with the Letter of Interest attached hereto as Exhibit
E, the exit financing provided by the prospective lenders would be
in the amount of $1 million, and would bear interest at a rate of
1.25% per month, requiring interest only payments during the term
of the loan. The loan term is anticipated to be 2 years, and will
have a pre-payment penalty in the first 6 months.
Post-confirmation, the Debtors will retain the same lean economic
focus implemented over the last year to maintain financial
stability following confirmation of the Plan. A portion of the Loan
Proceeds will be used to reinvest in Bannock and rebuild inventory
levels while also expanding into additional mini-mart locations. As
the Debtors' projections demonstrate, use of Loan Proceeds to
reinvest in the stores will allow the Debtors to return to
profitability and continue to operate successfully going forward.
A full-text copy of the Joint Plan dated September 4, 2024 is
available at https://urlcurt.com/u?l=erAyUS from PacerMonitor.com
at no charge.
Attorneys for the Debtors:
Keri L. Riley,, Esq.
Kutner Brinen Dickey Riley, PC
1660 Lincoln Street, Suite 1720
Denver, CO 80264
Telephone: (303) 832-2910
Email: klr@kutnerlaw.com
About Choice Market Holdings
Choice Market Holdings, Inc. owns and operates Choice Market
grocery and convenience store locations in Denver, Colo.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Case No. 24-12394) on May 6, 2024.
In the petition signed by Michael Fogarty, as president, manager,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Joseph G. Rosania Jr. oversees the case.
Jeffrey S. Brinen, Esq., at Kutner Brinen Dickey Riley, PC,
represents the Debtor as legal counsel.
CHOICE MARKET: To Stop Operations After Chapter 11 Filing
---------------------------------------------------------
Brett Dworski of C-Store Dive reports that Choice Market is
stopping its operations.
The Denver-based retailer filed for Chapter 11 bankruptcy in May
and initially intended to restructure. That plan fell through, CEO
Mike Fogarty announced Monday, October 7, 2024.
After debuting in late 2017, Choice grew to five stores last year,
and was even dabbling in autonomous, small-format Mini Mart
locations that attracted millions in funding.
As it battled bankruptcy, the company intended to offload all but
one of its full-format convenience stores and mainly focus on these
small-format locations. Operations were expected to get back up
and running within the next six to nine months, Fogarty recently
said in an interview.
It's unclear why that plan failed, but the reorganization will not
go through. According to its bankruptcy filing, Choice was
"plagued by the rising costs of goods and labor as inflation drove
prices up," and the company couldn't recover.
In his announcement on Monday, October 7, 2024, Fogarty thanked
Choice's employees and suppliers, as well as his friends and family
members, for their support.
"The past seven years have been some [of] the most challenging and
yet rewarding of my life," he said. "I am hopeful that Choice made
our industry think differently about what it means to push
boundaries and innovate for the next generation who values quality,
health, and convenience."
Convenience retailers that dabbled in the urban format in recent
years have struggled. Kum & Go and QuikTrip both shuttered
fuel-less c-stores earlier this year, while Chicago-based Foxtrot
abruptly ceased operations in April before filing for bankruptcy
and reopening under new ownership.
About Choice Market Holdings
Choice Market Holdings, Inc., owns and operates Choice Market
grocery and convenience store locations in Denver, Colo.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Case No. 24-12394) on May 6, 2024.
In the petition signed by Michael Fogarty, as president, manager,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Joseph G. Rosania Jr. oversees the case.
Jeffrey S. Brinen, Esq., at Kutner Brinen Dickey Riley, PC,
represents the Debtor as legal counsel.
CLEVELAND-CLIFFS INC: Fitch Rates Proposed Unsecured Notes 'BB-'
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' with a Rating Recovery of 'RR4'
rating to Cleveland-Cliffs Inc.'s (Cliffs) proposed $800 million
senior unsecured guaranteed notes due 2029 and $800 million senior
unsecured guaranteed notes due 2033. Proceeds will be used for
general corporate purposes.
Key Rating Drivers
Stelco Acquisition Near-Term Neutral: Fitch believes Cleveland
Cliffs' proposed $2.5 billion acquisition of Stelco Holdings Inc.
(Stelco) is neutral to Cliffs' credit profile through 2025 given
the initial increase in EBITDA leverage. Cliffs expects the
acquisition to close in 4Q24, subject to approval by Stelco
shareholders and other customary closing conditions. Fitch views
the transaction as increasing Cliff's scale and diversification as
well as yielding synergies and efficiencies over time. The
transaction could eventually have a positive impact with sustained
margin improvement and deleveraging.
The Stelco assets will include its low-cost Lake Erie Works
integrated flat-rolled operations. This will enhance Cliffs'
position as the largest flat-rolled steel producer in North
America, increase its exposure to service centers and spot sales,
and allow margin expansion through optimized production across
Cliffs' operations. The transaction also includes Stelco's Hamilton
Works downstream finishing and cokemaking facility. The Stelco
assets will increase Cliff's annual net shipments by about 15%.
Significant Debt Repayment: Cliffs benefitted from a period of
highly elevated steel prices in 2021-2023, which led to over $9.5
billion in EBITDA and roughly $4.9 billion in FCF, combined over
the three-year period. The company used cashflow primarily for debt
repayment, paying down roughly $2.8 billion as of 2Q24 from YE
2020. Fitch expects EBITDA leverage, 2.5x at June 30, 2024, to be
slightly elevated in the near-term given the primarily debt-funded
acquisition of Stelco, but to remain below 3.5x through 2027.
Declining Profitability: Fitch expects EBITDA margins to average
roughly 10% through 2027 given the acquisition of Stelco and its
steel price and cost expectations. However, profitability could
outperform expectations, particularly if average realized steel
prices are higher than anticipated. EBITDA margins declined to
around 8% in 2023 compared with a peak since becoming a steel
manufacturer of around 24% in 2021 in line with lower steel prices
and higher costs. Over the past six quarters from 1Q23-2Q24,
margins have averaged around 7% compared to the previous six
quarters from 3Q21-4Q22, which averaged around 17%.
Fitch views Cliffs' lower margins as offset by Fitch's expectation
for continued positive FCF, in addition to solid liquidity given
the company has approximately $3.6 billion of availability under
its $4.75 billion ABL credit facility due 2028. On April 22, 2024
Cliffs' board authorized a new $1.5 billion share repurchase
program with no expiration date. As of June 30, 2024, Cliffs had
approximately $1.4 billion in repurchases remaining under its
current authorization.
High-Value Add Focus: Cliffs is the largest supplier of steel to
the automotive sector and one of a few North American steel
producers capable of producing some of the most sophisticated
grades of advanced high-strength steels and value-added
stainless-steel products. The company is also the only producer of
grain-oriented electrical steel in the U.S., which is used in the
production of transformers and can facilitate the modernization of
the electrical grid. Cliffs is one of only two producers of
non-oriented electrical steel in the U.S., a critical component of
motors used in hybrid/electric vehicles.
Cliffs produces steel grades critical to automotive light-weighting
steel trends and is well positioned longer-term to benefit from the
auto recovery and the transition to electric cars. Fitch believes
U.S. auto demand is supported by consumers' post-pandemic
preference for personal modes of transportation over mass transit,
the average vehicle age at around 12.5 years, low unemployment and
growing electric vehicle demand longer-term.
Solid Operational Profile: Cliffs has significant size and scale as
the largest flat-rolled steel producer and largest iron ore pellet
producer in North America. Fitch views Cliffs' vertically
integrated business model and self-sufficiency in iron ore
requirements as benefiting margins. In addition, Cliffs has a 1.9
million tonne hot briquetted iron (HBI) facility, which produces a
high-quality and low carbon intensive HBI product that can be used
in Cliffs' facilities as a premium scrap alternative.
Fitch believes the Stelco acquisition will benefit overall margins
given Stelco's Lake Erie Works facility is low cost and has higher
margins than Cliffs' collective facilities' margins. Cliffs also
benefits from a higher proportion of fixed price contracts,
typically 40%-45% of volumes, leading to less price volatility
compared with other players in the industry. Fitch views the
company's focus on higher value-added products, which have barriers
to entry and are higher priced, as also benefiting margins.
Pension Obligation Improvement: Through the AM USA acquisition,
Cliffs acquired a significant amount of pension obligations.
However, Cliffs reduced its net pension and other post-employment
benefits (OPEB) liabilities by roughly $3.6 billion since the AM
USA acquisition in 2020. Pension obligations were underfunded by
approximately $275 million at YE 2023 and Cliffs expects
pension/OPEB cash needs to be approximately $190 million in 2024.
Fitch views the liability reduction positively and views cash needs
as manageable currently. However, the associated fixed costs can
wear on cash flow and can be particularly detrimental during low
points in the cycle.
Derivation Summary
Cliffs is comparable in size but less diversified compared with
integrated majority blast furnace steel producer United States
Steel Corporation (BB/Rating Watch Positive). Cliffs is larger
compared with electric arc furnace (EAF) long steel producer
Commercial Metals Company (BB+/Positive) in terms of steel
capacity, although Cliffs has historically had less favorable
credit metrics. Cliffs is also larger in terms of annual capacity,
although has less favorable credit metrics compared with EAF
producer Steel Dynamics, Inc. (BBB+/Stable) and smaller with weaker
credit metrics compared with EAF steel producer Nucor Corporation
(A-/Stable).
Key Assumptions
- Stelco acquisition closes in 4Q24;
- Annual steel shipments of around 19 million tons on average,
including Stelco shipments, through 2027;
- Relatively flat average steel prices;
- EBITDA margins average roughly 10% through 2027;
- Capex of $850 million in 2024, increasing thereafter partially in
connection with Stelco capex;
- No additional acquisitions.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA margins sustained above 10%;
- Mid-cycle EBITDA leverage expected to be sustained below 2.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA leverage sustained above 3.5x;
- EBITDA margins sustained below 8.5%;
- Significantly weaker steel fundamentals, resulting in materially
lower-than-expected FCF generation.
Liquidity and Debt Structure
Solid Liquidity: As of June 30, 2024, Cliffs had $110 million in
cash and cash equivalents and approximately$3.6 billion available
under its $4.75 billion ABL credit facility due 2028. The ABL
credit facility matures June 9, 2028, or 91 days prior to the
stated maturity date of any portion of existing debt if the
aggregate amount of existing debt that matures on the 91st day is
greater than $100 million. The next meaningful maturity is $556
million due in 2027.
The ABL credit facility is subject to a springing 1.0x minimum
fixed-charge coverage covenant when availability is less than the
greater of (i) 10% of the lesser of (a) the maximum ABL amount
(currently $4.75 billion) and (b) the borrowing base; and (ii) $250
million.
Issuer Profile
Cleveland-Cliffs is a majority blast furnace producer of steel
which also has some EAF production. The company is the largest
flat-rolled steel producer and largest producer of iron ore pellets
in North America.
Date of Relevant Committee
06 March 2024
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ --------
Cleveland-Cliffs Inc.
senior unsecured LT BB- New Rating RR4
CLEVELAND-CLIFFS INC: Moody's Rates New Unsecured Gtd. Notes 'Ba3'
------------------------------------------------------------------
Moody's Ratings assigned a Ba3 rating to Cleveland-Cliffs Inc.'s
proposed senior unsecured guaranteed notes. The company plans to
issue two tranches of notes at about $800 million each with
maturities of 5 years and 8.5 years with the proceeds used to fund
a portion of the acquisition of Stelco Inc. (unrated). Cliffs' Ba2
Corporate Family Rating, Ba2-PD Probability of Default Rating, Ba3
guaranteed senior unsecured notes rating, B1 senior unsecured note
rating, its Speculative Grade Liquidity Rating (SGL) of SGL-1 and
its stable outlook remain unchanged.
RATINGS RATIONALE
Cliffs' Ba2 corporate family rating reflects its exposure to
cyclical end markets and volatile iron ore and steel prices and
Moody's expectation for a relatively weak operating performance in
2024. It also presumes the company will maintain moderate financial
leverage and ample interest coverage in a normalized steel price
environment even as it pursues more shareholder friendly actions
and potential debt funded growth opportunities. The rating is
supported by its large scale and strong market position as the
largest flat-rolled steel producer in North America. The rating
also reflects the benefits of Cliffs' position as an integrated
steel producer from necessary raw materials through the steel
making and finishing processes. Nevertheless, it also reflects the
carbon transition risks related to iron ore and coal mining, coke
making and its reliance on the higher emitting blast furnace and
basic oxygen furnace steelmaking process. Although, Cliffs does
have a strong position in the North American iron ore markets, and
its HBI facility, scrap processing capabilities and the potential
addition of Stelco's coke production enhances its vertical
integration in raw materials and enables it to have lower carbon
emissions than other global integrated steel producers. Cliffs'
rating also reflects the benefits of its contract position,
particularly with the automotive industry, which provides a good
earnings base. Its performance will benefit on a lagged basis
during rising steel price environments due to the nature of the
contracts and renegotiation periods, but this does temper the
downside during periods of declining steel prices.
The notes issuance will temporarily increase the company's
financial leverage but will have no pro forma impact on its credit
metrics after the acquisition is completed. While Cliffs is paying
a full price for Stelco Inc., this transaction is credit positive
since it will enhance its scale, geographic diversity, margin
profile and cash generating potential. The incremental cash flow
will enable Cliffs to pay down the debt funding this deal and
maintain a credit profile that supports its ratings.
Moody's expect Cliffs to produce about $1.3 billion of adjusted
EBITDA in 2024 which will result in a leverage ratio (debt/EBITDA)
of about 3.0x. Moody's estimate pro forma leverage including
synergies at about 3.1x on an LTM basis for the period ended June
2024 and around 3.6x using Moody's 2024 projected EBITDA of about
$1.85 billion for the combined company.
This acquisition will likely raise Cliffs' leverage slightly above
Moody's ratings downgrade guidance of 3.5x, but this deal will
enhance Cliffs' cash generating potential. Moody's estimate free
cash flow of more than $500 million based on Moody's 2024 projected
pro forma adjusted EBITDA and anticipate the company will use this
free cash to pay down debt. This acquisition enhances Cliffs' scale
as the largest flat rolled steel producer in North America and
provides geographic diversification into Canada. In addition, it
adds higher margin integrated steel assets which benefit from about
$900 million of upgrades and investments over the past 6 years and
from a favorable iron ore supply agreement, and low healthcare and
energy costs.
Cliffs' Speculative Grade Liquidity Rating of SGL-1 reflects the
company's very good liquidity profile, which is supported by its
unrated $4.75 billion asset-based lending facility (ABL) and
Moody's expectation for strong pro forma free cash flow. The
company had $110 million of cash and $3.634 billion of borrowing
availability on this facility which had $370 million of borrowings
and $46 million of letters of credit issued as of June 30, 2024.
The Ba3 rating on Cliffs' senior unsecured guaranteed notes
reflects their position in the capital structure relative to its
unrated $4.75 billion ABL which is ranked ahead of the notes, and
the company's sizeable unsecured debt and underfunded pension
liabilities. The senior unsecured guaranteed notes still benefit
from a more favorable position relative to the senior unsecured
notes whose B1 rating reflects their junior position in the capital
structure.
The stable ratings outlook incorporates Moody's expectation for
Cliffs to have a somewhat weak operating performance in 2024 but
for the company to maintain credit metrics that support the current
ratings.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Cliffs' ratings could be considered for an upgrade if steel prices
and metal spreads remain above historical averages and the company
demonstrates a clearly defined and more conservative financial
policy and pursues further debt reduction. Quantitatively, if
Cliffs sustains a leverage ratio of no more than 2.5x and CFO less
dividends in excess of 35% of its outstanding debt through varying
steel price points, then its ratings could be positively impacted.
Cliffs' ratings could be downgraded should leverage be sustained
above 3.5x or CFO less dividends below 25% of its outstanding debt
or it fails to maintain a good liquidity profile.
Headquartered in Cleveland, Ohio, Cleveland-Cliffs Inc. is the
largest iron ore and flat-rolled steel producer in North America
with approximately 27 million gross tons of annual iron ore
capacity and about 20 million tons of crude steelmaking capacity.
The company also has the capacity to produce 1.9 million metric
tons of hot briquetted iron (HBI) and the capability to process
about 3 million tons of scrap at 22 scrap collection and processing
facilities. For the twelve months ended June 30, 2024, Cliffs had
revenues of about $21.0 billion.
The principal methodology used in these ratings was Steel published
in November 2021.
CLOUD BERN: Case Summary & Seven Unsecured Creditors
----------------------------------------------------
Debtor: Cloud Bern LLC
d/b/a Furniture Central
3362 Summer Ave.
Memphis, TN 38122-5135
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Western District of Tennessee
Case No.: 24-25010
Debtor's Counsel: Toni Campbell Parker, Esq.
LAW FIRM OF TONI CAMPBELL PARKER
45 N. BB KIng Blvd., Ste. 201
Memphis, TN 38103
Tel: 901-483-1020
Fax: 866-489-7938
E-mail: tparker002@att.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Reed Herrmann as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/Z65VGIA/Cloud_Bern_LLC__tnwbke-24-25010__0001.0.pdf?mcid=tGE4TAMA
CONN CORP: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Conn Corp LLC
d/b/a Thompson Nursery
d/b/a Thompson
d/b/a Thompson Nursery, Inc.
d/b/a Thompson Power Equipment
810 Carter St.
Rocky Mount, NC 27804
Business Description: Conn Corp is a professional landscaping
company that offers irrigation systems,
hardscapes, landscaping, tree and stump
removal, and turf maintenance services.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Eastern District of North Carolina
Case No.: 24-03563
Judge: Hon. Pamela W Mcafee
Debtor's Counsel: C. Scott Kirk, Esq.
SCOTT KIRK
1025C Director Court
Greenville, NC 27858
Tel: (252) 689-6249
Email: scott@csklawoffice.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Maria Conn 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/33VYRJA/Conn_Corp_LLC__ncebke-24-03563__0001.0.pdf?mcid=tGE4TAMA
CREDIT LENDING: Gets Interim OK to Use Cash Collateral Until Nov. 7
-------------------------------------------------------------------
Credit Lending Services, Inc. received interim approval from the
U.S. Bankruptcy Court for the Central District of California to use
the cash collateral of The Park National Bank until Nov. 7.
The use of cash collateral is limited to necessary expenses
outlined in the court-approved budget.
To protect PNB's interests, the court granted the secured creditor
a continuing non-avoidable replacement security interest in the
company's accounts receivable. In addition, the court required
Credit Lending Services to make monthly interest payments of
$47,000 to PNB.
The next hearing is scheduled for Nov. 7.
About Credit Lending Services
Credit Lending Services, Inc. is a provider of auto loans in
California specializing in the purchase and servicing of auto loans
through its network of automobile dealers who have non-prime
customers purchasing new and used vehicles.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Calif. Case No. 24-12182) on March 21,
2024, with $9,008,914 in assets and $10,521,125 in liabilities.
Chad Spindler, shareholder, signed the petition.
Judge Julia W. Brand presides over the case.
Tamar Terzian, Esq., at Hanson Bridgett, LLP, is the Debtor's legal
counsel.
D.A. RANSOM: Beverly Brister Named Subchapter V Trustee
-------------------------------------------------------
The Acting U.S. Trustee for Region 13 appointed Beverly Brister,
Esq., a practicing attorney in Benton, Ark., as Subchapter V
trustee for D.A. Ransom Company LLC.
Ms. Brister will be paid an hourly fee of $300 for her services as
Subchapter V trustee. Should travel be required outside of Saline
or Pulaski Counties, the Subchapter V trustee will seek a
compensation rate of $100 per hour for actual travel time
incurred.
Ms. Brister declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Beverly I. Brister, Esq.
Attorney at Law
212 W. Sevier
Benton, AR 72015
Phone: 501-778-2100
Email: bibristerlaw@gmail.com
About D.A. Ransom Company
D.A. Ransom Company LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Ark. Case No. 24-13098) on
September 23, 2024, with up to $50,000 in assets and up to $100,000
in liabilities.
Judge Phyllis M. Jones presides over the case.
DEXKO GLOBAL: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
-------------------------------------------------------------------
Moody's Ratings affirmed the ratings of DexKo Global, Inc.,
including its B3 corporate family rating, B3-PD probability of
default rating, B2 senior secured bank credit facilities rating and
the Caa2 senior unsecured notes rating. The outlook has been
changed to negative from stable. Moody's also affirmed the B2
senior secured bank credit facility of AL-KO Vehicle Technology
Group (AL-KO). AL-KO's outlook was also changed to negative from
stable.
The negative outlook reflects Moody's expectation that the
company's earnings will likely weaken further in 2025. Furthermore,
Moody's expect financial leverage will remain very high amidst
pressure from weaker volumes and soft economic and market
conditions. DexKo's operating performance remains pressured
following the decline in spending on RVs and utility vehicles that
peaked in 2022 as inflationary pressures impact household finances.
Therefore, Moody's expect 2024 will end with debt-to-EBITDA around
8.0x.
RATINGS RATIONALE
DexKo's ratings reflect the company's very high financial leverage
and exposure to cyclical end markets like industrial and consumer.
Moody's expect revenue will decline in 2024 amidst sluggish demand
for its towing related products in industrial and recreational
vehicle end markets. Revenue is expected to be down in the
mid-single digits in 2024. DexKo's EBITA margin has decreased from
13.8% in 2022 to 12.3% for the twelve months ended June 30, 2024
and Moody's anticipate that debt-to-EBITDA will remain around 8.0x
through 2025. With a continued focus on cost cutting and about $30
million in new business wins, Moody's expect free cash flow to
remain solid. Furthermore, the aftermarket and distribution
products segment is anticipated to contribute positively to both
revenue and margins in 2025. DexKo's capacity to adjust its highly
variable cost structure during lean periods and its prudent
management of working capital are noteworthy.
Liquidity is expected to remain good over the next 12 months. The
company's liquidity is primarily supported by its $30 million cash
position, its $200 million revolving credit facility ($193 million
available at June 30, 2024, net of $7 million in letters of credit)
and approximately $215 million available on its $275 million ABL
facility with $60 million drawn as of June 30, 2024. Moody's expect
DexKo to generate free cash flow of over $75 million for 2024
driven by stable capital expenditures at around 3% of revenue.
However, DexKo's interest burden is high with approximately $235
million in interest payments per year.
The negative outlook reflects Moody's expectation that leverage
will remain very high over the next 12-18 months. While Moody's
expect liquidity will be good, sluggish demand will continue to
challenge the ability to improve operating results.
FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE OF THE RATINGS
The ratings could be downgraded if EBITDA erodes and liquidity
weakens resulting in reliance on the revolving credit facility.
EBITA-to-interest expense below 1.5x or an inability to sustain
debt-to-EBITDA below 7x could also result in a downgrade.
The ratings could be upgraded if debt-to-EBITDA is maintained under
6x and free cash flow-to-debt is consistently above 5%. Maintenance
of good liquidity would also be required for a rating upgrade.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
DexKo Global, Inc., headquartered in Novi, Michigan, is a global
manufacturer and distributor of engineered components for towable
and related applications primarily in North America and Europe. The
company offers a broad suite of axle assemblies, hydraulic
components, chassis, tow bars and aftermarket parts serving a
variety of markets including agriculture, commercial, construction,
general industrial, livestock, landscaping, marine, military,
energy, residential, recreation vehicle and other specialized end
use segments. In 2021, Brookfield Business Partners L.P. acquired a
majority equity stake in DexKo. Revenue for the twelve months ended
June 30, 2024 was $2.3 billion.
DIOCESE OF ROCHESTER: Wins Suit vs. Continental Insurance
---------------------------------------------------------
Evan Ochsner of Bloomberg Law reports that a potential settlement
between the bankrupt Diocese of Rochester and Continental Insurance
Co. wasn't a valid contract because it wasn't signed, a judge
ruled, dismissing the insurer's breach of contract suit.
Continental accused the diocese of filing a proposed restructuring
plan that violated a $63.5 million settlement agreement. The
diocese submitted the restructuring proposal alongside a committee
of sex abuse claimants after it had previously agreed to the deal
with Continental, the insurer said in a suit filed in the US
Bankruptcy Court for the Western District of New York.
About The Diocese of Rochester
The Diocese of Rochester in upstate New York provides support to 86
Roman catholic parishes across 12 counties in upstate New York. It
also operates a middle school, Siena Catholic Academy. The diocese
has 86 full-time employees and six part-time employees and provides
medical and dental benefits to an additional 68 retired priests and
two former priests.
The diocese generated $21.88 million of gross revenue for the
fiscal year ending June 30, 2019, compared with a gross revenue of
$24.25 million in fiscal year 2018.
The Diocese of Rochester filed for Chapter 11 bankruptcy protection
(Bankr. W.D.N.Y. Case No. 19-20905) on Sept. 12, 2019, amid a wave
of lawsuits over alleged sexual abuse of children. In the petition,
the diocese was estimated to have $50 million to $100 million in
assets and at least $100 million in liabilities.
Bond, Schoenec & King, PLLC and Bonadio & Co. serve as the
diocese's legal counsel and accountant, respectively. Stretto is
the claims and noticing agent.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the diocese's Chapter 11 case. Pachulski
Stang Ziehl & Jones, LLP and Berkeley Research Group, LLC serve as
the committee's legal counsel and financial advisor, respectively.
DITECH HOLDING: $18,040 Eckenrod Claim Disallowed
-------------------------------------------------
The Honorable James L. Garrity, Jr. of the United States Bankruptcy
Court for the Southern District of New York entered a Memorandum
Decision and Order sustaining the objection of the Consumer Claims
Trustee in the bankruptcy case of Ditech Holding Corporation to,
and disallowing, the proof of claim filed by Katherine M.
Eckenrod.
Katherine M. Eckenrod timely filed Proof of Claim No. 21059 as an
unsecured claim in the amount of $18,040.11 against Ditech Holding
Corporation (f/k/a Walter Investment Management Corp.).
On February 7, 2003, Claimant executed a promissory note in favor
of Heritage Mortgage, Inc. in the amount of $204,000.00. The Note
was secured by a mortgage on real property located at 11304
Nutwood Cove, Austin, Texas 78726.
Claimant complains of unwarranted and undocumented escrow charges
on her account as reflected in the 2017 Escrow Statement.
The Consumer Claims Trustee filed her Second Omnibus Objection
seeking to disallow certain claims, including the Claim, that she
contends do not contain sufficient information or documentation to
establish their underlying merits.
The Court finds that the Claim fails to state plausible claims for
relief against Ditech. Judge Garrity says, "Under the terms of the
Mortgage, Ditech was permitted to require funding of the escrow
account and Claimant was obligated to keep the account liquid and
current. Nothing on the face of the 2017 Escrow Statement reflects
any errors or supports Claimant’s assertion that she was being
overcharged. Rather, the calculations are consistent with RESPA
requirements when considering the balance on the account as of
April 2016 was more than negative $10,000. While the Claimant did
make some payments, they were insufficient to overcome the
arrearage and Claimant has not alleged any facts that the balance
as of April 2016 was inaccurate. Claimant has also failed to
provide any support that she performed under the Mortgage or for
her contention that Ditech failed to perform its obligations. As
such, Claimant cannot maintain a breach of contract claim against
Ditech.
He adds, "Even had Claimant adequately pleaded that she performed
and Ditech breached the Mortgage, she nonetheless fails to state a
claim for relief because she has not alleged facts demonstrating
that she suffered any damages. To recover contract damages,
Claimant must show a pecuniary loss as the result of a breach.
Attaching the escrow statement alone does little to illustrate
damages proximately caused by Ditech’s breach."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=qX44a8
About Ditech Holding Corporation
Fort Washington, Pennsylvania-based Ditech Holding Corporation and
its subsidiaries -- http://www.ditechholding.com/-- are
independent servicer and originator of mortgage loans.
Ditech Holding and certain of its subsidiaries, including Ditech
Financial LLC and Reverse Mortgage Solutions, Inc., filed voluntary
Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 19 10412) on
Feb. 11, 2019, after reaching terms with lenders of a Chapter 11
plan that will reduce debt by $800 million.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel,
Houlihan Lokey as investment banker and AlixPartners LLP as
financial advisor. Epiq Bankruptcy Solutions LLC served as claims
and noticing agent.
Kirkland & Ellis LLP and FTI Consulting Inc. served as the
consenting term lenders' legal counsel and financial advisor,
respectively.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Debtors' cases on Feb. 27, 2019. The
creditors' committee tapped Pachulski Stang Ziehl & Jones LLP as
its legal counsel and Goldin Associates, LLC, as its financial
advisor.
On May 2, 2019, the U.S. trustee appointed an official committee of
consumer creditors. The consumers committee tapped Quinn Emanuel
Urquhart & Sullivan, LLP, as counsel and TRS Advisors LLC, as
financial advisor.
On Sept. 26, 2019, the Bankruptcy Court confirmed Ditech's Chapter
11 bankruptcy plan, which became effective four days later. A
Consumer Claims Trustee has been appointed in the case and is
represented by Richard Levin, Esq., at Jenner & Block, LLP.
DITECH HOLDING: $35,000 Russell Claim Disallowed
------------------------------------------------
The Honorable James L. Garrity, Jr. of the United States Bankruptcy
Court for the Southern District of New York entered a Memorandum
Decision and Order sustaining the objection of the Plan
Administrator and Consumer Claims Trustee in the bankruptcy case of
Ditech Holding Corporation to, and disallowing, the proof of claim
filed by Nicholas T. Russell.
On May 31, 2019, Nicholas T. Russell filed Proof of Claim No. 1991
as a priority claim in the amount of $35,000 against the Debtors in
these Chapter 11 Cases. Claimant asserts that the Claim is based
upon "Money Loaned" and is entitled to priority under 11 U.S.C.
Sec. 507(a) because Ditech "messed up [his] payments.
On February 21, 2020, the Plan Administrator and Consumer Claims
Trustee filed their Thirty-Eighth Omnibus Objection to Proofs of
Claim, in which they sought to disallow and expunge certain claims,
including the Claim, that lack merit or fail to provide a
sufficient basis to support the claim's validity in the amount or
priority asserted.
On September 11, 2007, Claimant executed a promissory note in favor
of Bank of America, N.A., in the amount of $318,624.00 with a term
of 30 years at a fixed interest rate of 6.875%. The Note was
secured by a mortgage on real property located at 39615 Potomac
Avenue, Leonardtown, Maryland 20650. On November 26, 2012, the Loan
was assigned to Green Tree Servicing LLC, Ditech's predecessor.
On February 18, 2013, Green Tree offered Claimant an opportunity to
modify the Note through a so-called "Trial Period Plan". The TPP
Offer required Claimant to make a down payment of $10,000 by March
11, 2013, and then make three trial payments of $2,525.30 by the
first of April, May, and June 2013.
Claimant alleges that he made the three requisite payments and
confirmed with Green Tree's representatives over the telephone that
all three payments were received. He also alleges that he made a
$10,000 payment on March 11, 2013. In a letter to Claimant, Green
Tree stated that he never made a payment for May 1, 2013, and thus,
the Trial Period Plan was cancelled.
According to the Court, Claimant has plausibly alleged that Green
Tree breached its obligation to offer a permanent modification
after Claimant fulfilled the requirements under the TPP Offer. By
cancelling the TPP Offer even though Claimant pleaded his
satisfaction of its terms, Claimant has plausibly alleged that
Green Tree breached the terms of the TPP Offer. However, Claimant
has no remedy for the breach, the Court says. According to the
Court, Claimant's breach of contract claim is barred by the statute
of limitations. In general, under Maryland law, "[a] civil action
at law shall be filed within three years from the date it
accrues."
Judge Garrity says, "The limitations period is clear from
Claimant's factual allegations, and his Claim exceeds it. At the
latest, Claimant learned that he was not entitled to the TPP Offer
in September 2013. Thus, the limitations period was three years
from this date. Claimant does not claim to have filed an action for
Green Tree's breach of the TPP Offer by September 2016. Therefore,
the Claim is time-barred."
The Court finds the Claim fails to state a claim to relief against
Ditech.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=INmnif
About Ditech Holding Corporation
Fort Washington, Pennsylvania-based Ditech Holding Corporation and
its subsidiaries -- http://www.ditechholding.com/-- are
independent servicer and originator of mortgage loans.
Ditech Holding and certain of its subsidiaries, including Ditech
Financial LLC and Reverse Mortgage Solutions, Inc., filed voluntary
Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 19 10412) on
Feb. 11, 2019, after reaching terms with lenders of a Chapter 11
plan that will reduce debt by $800 million.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel,
Houlihan Lokey as investment banker and AlixPartners LLP as
financial advisor. Epiq Bankruptcy Solutions LLC served as claims
and noticing agent.
Kirkland & Ellis LLP and FTI Consulting Inc. served as the
consenting term lenders' legal counsel and financial advisor,
respectively.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Debtors' cases on Feb. 27, 2019. The
creditors' committee tapped Pachulski Stang Ziehl & Jones LLP as
its legal counsel and Goldin Associates, LLC, as its financial
advisor.
On May 2, 2019, the U.S. trustee appointed an official committee of
consumer creditors. The consumers committee tapped Quinn Emanuel
Urquhart & Sullivan, LLP, as counsel and TRS Advisors LLC, as
financial advisor.
On Sept. 26, 2019, the Bankruptcy Court confirmed Ditech's Chapter
11 bankruptcy plan, which became effective four days later. A
Consumer Claims Trustee has been appointed in the case and is
represented by Richard Levin, Esq., at Jenner & Block, LLP.
DITECH HOLDING: Court Disallows Kegley Unsecured Claim
------------------------------------------------------
The Honorable James L. Garrity, Jr. of the United States Bankruptcy
Court for the Southern District of New York entered a Memorandum
Decision and Order sustaining the objection of the Consumer Claims
Trustee in the bankruptcy case of Ditech Holding Corporation to,
and disallowing, the proof of claim filed by David Kegley.
On April 7, 2019, David Kegley filed Proof of Claim No. 20466 as an
unsecured claim in an undetermined amount against Ditech Holding
Corporation (f/k/a Walter Investment Management Corp.). On June 12,
2020, the Consumer Claims Trustee filed her Twenty-Fifth Omnibus
Objection to Proofs of Claim. In the Objection, the Consumer Claims
Trustee seeks to disallow proofs of claim, including the Kegley
Claim, that do not state a sufficient legal basis to establish
liability on the part of Ditech.
On September 20, 1999, Kegley executed a Manufactured Home Retail
Installment Contract and Security Agreement for the purchase of a
manufactured home, which sits on real property located at 1011
Walker Hill Way, Newport, Tennessee 37821. Green Tree Financial
Corp.-Alabama financed the Purchase Contract, which had a principal
balance of $29,114.64.
The Claim includes a letter Claimant addressed to Green Tree's
successor, Ditech Financial, dated July 12, 2017, disputing the
balance of his account. The thrust of Claimant's complaint is that
he financed only $26,950.00 in 1999, made payments on that loan for
nearly 18 years, but his account balance reflected that he still
owed $27,064.08 in 2017. The letter annexes an amortization
schedule generated by Green Tree as of August 8, 2012, which states
that after the first payment, the balance was $29,114.64, which he
claims is higher than the amount a Truth in Lending Act disclosure
on the Purchase Contract shows he had financed. Claimant suggests
that his initial balance should have been only $26,950.00. The
Claim does not identify the amount by which Claimant believes he
was overcharged, but it is clear that Claimant disputes at least
the $2,164.64 difference between the $29,114.64 amount that is
shown on the amortization schedule and the $26,950.00 that Claimant
says he financed.
Claimant has not plausibly alleged that Ditech violated the Truth
in Lending Act, the Court finds. According to the Court, even if
Claimant had otherwise plausibly alleged that Ditech violated TILA,
a claim for damages ordinarily must be asserted no later than one
year from the date of the violation. Under TILA, most closed-end
credit disclosures and other obligations are required before the
date of consummation. Claimant filed the Claim in April 2019, far
later than the Purchase Contract's September 2000 consummation.
Therefore, any claim that Claimant may have had under TILA is
time-barred. 15 U.S.C. Sec. 1640(e), the Court concludes.
The Court finds Claimant has not plausibly alleged that Ditech
breached the Purchase Agreement by charging monthly installments of
$293.89. Claimant's breach of contract claim also fails because the
facts he alleges in support of the Claim do not show that he
suffered damages, the Court states. The Claim fails to state a
plausible claim to relief against Ditech, the Court holds.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=TRSdXJ
About Ditech Holding Corporation
Fort Washington, Pennsylvania-based Ditech Holding Corporation and
its subsidiaries -- http://www.ditechholding.com/-- are
independent servicer and originator of mortgage loans.
Ditech Holding and certain of its subsidiaries, including Ditech
Financial LLC and Reverse Mortgage Solutions, Inc., filed voluntary
Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 19 10412) on
Feb. 11, 2019, after reaching terms with lenders of a Chapter 11
plan that will reduce debt by $800 million.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel,
Houlihan Lokey as investment banker and AlixPartners LLP as
financial advisor. Epiq Bankruptcy Solutions LLC served as claims
and noticing agent.
Kirkland & Ellis LLP and FTI Consulting Inc. served as the
consenting term lenders' legal counsel and financial advisor,
respectively.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Debtors' cases on Feb. 27, 2019. The
creditors' committee tapped Pachulski Stang Ziehl & Jones LLP as
its legal counsel and Goldin Associates, LLC, as its financial
advisor.
On May 2, 2019, the U.S. trustee appointed an official committee of
consumer creditors. The consumers committee tapped Quinn Emanuel
Urquhart & Sullivan, LLP, as counsel and TRS Advisors LLC, as
financial advisor.
On Sept. 26, 2019, the Bankruptcy Court confirmed Ditech's Chapter
11 bankruptcy plan, which became effective four days later. A
Consumer Claims Trustee has been appointed in the case and is
represented by Richard Levin, Esq., at Jenner & Block, LLP.
DJK ENTERPRISES: Gets OK to Use Cash Collateral Until Nov. 14
-------------------------------------------------------------
DJK Enterprises, LLC received interim approval to use the cash
collateral of Effingham Asset Funding, LLC to pay its operating
expenses.
The interim order penned by Judge Laura Grandy of the U.S
Bankruptcy Court for the Southern District of Illinois approved the
use of the lender's cash collateral from Oct. 4 to Nov. 14 in
accordance with the budget submitted by the company.
As detailed in the budget, DJK's financial projections for the
period from September to November estimate total operating costs of
$1.6 million. The company can exceed individual budget items by up
to 10%.
Effingham holds a lien on DJK's real property in Effingham, Ill.,
on account of its secured loan under an agreement originally made
with St. Louis Bank, which was later assigned to the lender. DJK
owes its lender approximately $10.8 million.
In exchange for the use of its cash collateral, Effingham will
receive first-priority replacement liens on DJK's assets, a monthly
payment of $50,000, and administrative priority claims in case of
any decrease in the value of the collateral.
The next hearing is scheduled for Nov. 14. Any objections must be
submitted by Nov. 8.
About DJK Enterprises
DJK Enterprises, LLC operates in the traveler accommodation
industry. It conducts business under the names Thelma Keller
Convention Center, Holiday Inn Effingham and TK Grille Restaurant.
The company is based in Effingham, Ill.
DJK sought relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Ill. Case No. 24-60126) on August 9, 2024, with $10
million to $50 million in both assets and liabilities. Chris
Keller, DJK president and member, signed the petition.
Judge Laura K. Grandy oversees the case.
The Debtor is represented by Larry E Parres, Esq., at Lewis Rice,
LLC.
DONALD DARNELL: Claimed Exemption Dispute Goes Back to Bankr Court
------------------------------------------------------------------
The Honorable Shalina D. Kumar of the United States District Court
for the Eastern District of Michigan remanded debtor Donald C.
Darnell's appeal from the order of the U.S. Bankruptcy Court for
the Eastern District of Michigan granting the objections of Mark H.
Shapiro, Chapter 7 Trustee, to the Debtor's claimed exemption for
membership interests in 8080 Grand, LLC.
Darnell originally filed a voluntary petition under Chapter 11 of
the Bankruptcy Code. Unable to confirm a Chapter 11 plan, Darnell
voluntarily stipulated to convert the case to one under Chapter 7.
Darnell claimed an exemption for membership interests in 8080
Grand, LLC, which he asserted were held with his wife as tenants by
the entireties, from the bankruptcy estate under 11 U.S.C. Sec.
522(b)(3)(B), M.C.L. 600.6023a, M.C.L. 450.4504(1), M.C.L.
450.4507, and Michigan common law.
According to Darnell's statement of the case, the Trustee
enumerated six objections to Darnell's claimed exemption for
membership interests in 8080 Grand:
(1) membership interest was not actually entireties property;
(2) 11 U.S.C. Sec. 522(b)(3)(B) does not provide an independent
basis for exemption from the bankruptcy estate;
(3) M.C.L. 600.6023a only exempts entireties property that is
real property or property expressly listed in M.C.L. 557.151, which
LLC membership interests are not;
(4) M.C.L. 450.4504(1) does not protect property from judgment
creditors in bankruptcy;
(5) M.C.L. 450.4507 does not exempt membership interests from
process; and
(6) Michigan common law, namely Sanford v. Bertram, 169 N.W. 880
(1918), which holds that entireties property is protected from all
but joint creditors, only applies to real property.
The Trustee and the IRS believe the factual determination of
whether the membership interest in 8080 Grand is or is not
entireties property should precede the District Court's review of
the bankruptcy court's legal determination that the 8080 Grand
membership interest is not exempt as entireties property. The
District Court agrees and remands the matter to the bankruptcy
court for that factual determination.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=DmLewa
Donald C. Darnell filed for Chapter 11 bankruptcy protection
(Bankr. E.D. Mich. Case No. 22-41803) on March 10, 2022, listing
under $1 million in both assets and liabilities. Darnell later
voluntarily stipulated to convert the case to one under Chapter 7
and Mark H. Shapiro was named Chapter 7 Trustee.
DYNASTY ACQUISITION: Fitch Hikes LongTerm IDR to 'BB', Outlook Pos.
-------------------------------------------------------------------
Fitch Ratings has upgraded Dynasty Acquisition Co. Inc.'s Long-Term
Issuer Default Rating (IDR) to 'BB' from 'B+'. Fitch has also
upgraded the company's asset-based lending (ABL) revolver to 'BBB-'
with a Recovery Rating of 'RR1' from 'BB+'/'RR1', and first-lien
secured revolver and first-lien term loan to 'BB+'/'RR2' from
'BB'/'RR2'. Fitch has in addition assigned a 'BB' Long-Term IDR to
StandardAero, Inc. (SA; NYSE: SARO). The Rating Watch Positive was
removed. The Rating Outlook is Positive.
The upgrade reflects the company's completion of over $1.2 billion
equity offering and subsequent repayment of the $475.5 million
senior unsecured notes and pay down of over $725.5 million of its
Term Loan B issuances. Fitch's rating case forecasts SA's EBITDA
leverage will be approximately 3.7x at YE 2024 consistent with 'BB'
rating tolerances.
The Positive Outlook considers management's investments to expand
capacity and build out engine maintenance capabilities to meet
aerospace engine demand growth and capture engine platform share,
particularly the CFM56 and LEAP. Fitch recognizes operational and
cost execution risks remain. Fitch could upgrade the rating as the
company realizes growth expectations by increasing CFM56 shop
visits and maintenance share and de-risking initial LEAP
operational and cost risks, while establishing a financial policy
and M&A track record maintaining EBITDA leverage in the 3x-3.5x
range.
Key Rating Drivers
Equity Offering Reduces Debt: SA sold 60 million common shares
resulting in net proceeds of over $1.2 billion before expenses. The
company redeemed all senior unsecured notes outstanding and repaid
approximately $523.7 million and $201.9 million of its Term Loan
B-1 and B-2, respectively. Gross debt declined to about $2.3
billion from around $3.5 billion, including $200 million issued in
early September 2024 to fund the acquisition of Aero Turbine, Inc.
Fitch's rating case EBITDA leverage improved from Fitch's
pre-initial public offering (IPO) expectations to approximately
3.7x at YE 2024 consistent with 'BB' rating tolerances.
Certifications Support Strong Market Position: SA's market position
is strong and defensible. It is one of the largest independent
commercial aviation maintenance, repair and overhaul (MRO)
companies in the world and has longstanding relationships with the
largest aerospace engine original equipment manufacturers (OEMs).
This work requires OEM authorizations and regulatory certifications
for each engine program, which are expensive and take considerable
time for new entrants to acquire.
The company's wide range of program certifications and strong OEM
relationships are major differentiators from its peers and create a
defensible barrier against competition. Most of its contracts span
more than 10 years and often last through the life of an engine. SA
has been able to renew all of its contracts due to consistent
execution and longstanding customer relationships.
LEAP Award: SA was awarded a license to perform MRO services for
CFM International's LEAP engine in 2023. Fitch believes the LEAP
engine strongly supports SA's positive trajectory, providing
revenue visibility, diversification, growth and stability. The
engine will remain in service for several decades on two of the
largest and growing aircraft programs: The Boeing Company's
(Boeing; BBB-/Negative) 737MAX aircraft and Airbus SE's
(A-/Positive) A320neo family, as well as The Commercial Aircraft
Corporation of China, Ltd.'s (Comac) C919.
Fitch does not anticipate the program will represent a significant
proportion of SA's total revenue until around 2025. However, it
will likely quickly become and remain the company's largest program
through at least the end of the current decade.
Requirements, Diversification Support Revenue: SA's revenue profile
is supported by predictable, highly regulated aircraft and engine
maintenance requirements during a normal operating environment and
diversified mix of end markets, customers and engine platforms.
This visibility was temporarily disrupted during the pandemic, when
airlines grounded a significant proportion of their fleets and
delayed external maintenance by using more spare parts. However,
visibility into customer needs has significantly improved.
Operational Execution Risks Remain: Fitch believes continued
operational execution is a priority for SA. In Fitch's view,
instances of poor execution would likely diminish the company's
currently strong reputation and could result in customers switching
to SA's competitors. However, SA does not have a history of
material contract cancellations in recent years. It also has an
experienced management team with a good track record, who Fitch
believes would be capable of navigating potential challenges.
Acquisition Strategy: Management views M&A as a core tenant of its
value creation opportunity set. Fitch expects SA will continue to
supplement organic growth with incremental bolt-on acquisitions.
The transition to a publicly traded company could result in a shift
in the size, timing, and funding of acquisitions relative to its
previous, private company track record. The company has
historically drawn on its ABL facility to fund transactions.
However, Fitch believes the company will continue to actively
pursue transactions that provide additional certifications or
improve diversification.
Derivation Summary
SA's IDR is supported by the company's lesser degree of cyclicality
compared with OEMs and its stable and relatively predictable
revenue stream, which Fitch believes compares favorably with 'BB'
category peers. The company's leverage and financial structure are
important rating factors and have improved toward historical levels
since the pandemic grounded air traffic.
SA's leading market position was also a consideration in deriving
the rating and is reinforced by the company's portfolio of
certifications, including the LEAP certification, and
diversification. SA is well positioned as the largest independent
MRO provider in the world, although competition exists from OEMs
and inhouse airline MRO operations.
No country ceiling or operating environment factors were in effect
for these ratings. A parent-subsidiary linkage exists between SA
and Dynasty with a stronger subsidiary, weaker parent relationship
given the organizational structure and proximity to
assets/operations. Fitch equalized the IDRs of SA and Dynasty
following assessment of legal ring-fencing and access & control.
Key Assumptions
- Revenue continues to grow by double digits per year between 2024
and 2026, as air traffic and flight capacity improves and the
company begins to ramp LEAP engine work;
- EBITDA margins expand modestly from scale and operational
efficiencies;
- Cash outflows from working capital continue as the company builds
inventory back up to meet demand and revenue growth;
- Capex trends towards 1.0%-1.5% of revenue over the next few years
following one-time investments in 2023 and 2024;
- No material M&A transactions but ongoing bolt-on acquisitions;
- No dividends are projected in the near term.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Realization of growth expectations and de-risking CFM56 and LEAP
operational performance and cost risks;
- Demonstrated track record of financial policy and M&A strategy
leading to EBITDA leverage sustained below 3.5x;
- Maintenance of financial flexibility, including (CFO-Capex)/Debt
around 10%.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Material contract cancellations caused by weakened reputation or
inability to secure certifications on future engine programs;
- EBITDA leverage sustained above 4.0x;
- Reduced financial flexibility, including (CFO-Capex)/Debt
approaching 5%.
Liquidity and Debt Structure
Adequate Liquidity: Cash and equivalents totaled over $60 million
as of June 30, 2024. The company also has access to a $150 million
secured revolving credit facility (no borrowings as of June 30,
2024) and $400 million ABL credit facility (approximately $75
million and $18 million of borrowings and letters of credit
outstanding, respectively, as of June 30, 2024). Fitch views the
company's current liquidity and forecasted FCF as adequate to cover
near-term expenses such as working capital growth, debt
amortization and capex.
The company's capital structure includes a senior secured ABL
facility, a senior first lien revolver and a senior first lien term
loan B.
Issuer Profile
StandardAero, Inc. is the world's largest independent provider of
MRO services for the commercial, business jet, and military
aviation markets.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Fitch has revised the company's ESG Relevance Score to '3' from '4'
for Financial Transparency following completion of its IPO
positioning the timing and disclosure of its financial statements
generally consistent with other U.S.-based publicly-traded
companies.
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
----------- ------ -------- -----
Dynasty Acquisition
Co., Inc. LT IDR BB Upgrade B+
senior secured LT BBB- Upgrade RR1 BB+
senior secured LT BB+ Upgrade RR2 BB
StandardAero, Inc. LT IDR BB New Rating
EATSTREET INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: EatStreet, Inc.
44 E. Mifflin Street
Suite 400
Madision WI 53703
Business Description: EatStreet is an independent online and
mobile food ordering delivery service in the
United States, based in Madison, Wisconsin.
The Company provides online food ordering
and contracted food delivery services to
general consumers.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Western District of Wisconsin
Case No.: 24-12061
Judge: Hon. Catherine J Furay
Debtor's Counsel: Justin M. Mertz, Esq.
MICHAEL BEST & FRIEDRICH LLP
790 N. Water Street, Suite 2500
Milwaukee WI 53202
Tel: 414-225-4972
E-mail: jmmertz@michaelbest.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Steve Anastasi as CEO.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/VOWFCUI/EatStreet_Inc__wiwbke-24-12061__0004.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/U3MBKGI/EatStreet_Inc__wiwbke-24-12061__0001.0.pdf?mcid=tGE4TAMA
EDGEWOOD FOOD: Court Grants Sanctions Against Tort Claimant
-----------------------------------------------------------
In the case captioned as LAMAR LESTER, Plaintiff, v. EDGEWOOD FOOD
MART, INC., AMIN PANJWANI, 400 EDGEWOOD, LLC, AND TRUIST BANK,
Defendants (Adv. Pro. NO. 24-05009-LRC) (N.D. Ga.), Judge Lisa
Ritchey Craig of the United States Bankruptcy Court for the
Northern District of Georgia granted the Motion for Sanctions
Pursuant to Fed. R. Bankr. P. 9011 filed by Edgewood Food Mart,
Inc. against Mr. Lester.
Defendant operates a gas station and food mart on property located
at 400 Edgewood Avenue, S.E., Atlanta, Georgia, which it leases
from 400 Edgewood, LLC. Both Defendant and 400 Edgewood are owned
by Amin Panjwani, Defendant's principal. Defendant operated without
issue until a shooting occurred on or near the Premises. Plaintiff
was injured in the shooting and sued Defendant, Mr. Panjwani, 400
Edgewood, and others in state court. He obtained a $2,375,000
judgment against Defendant and is the largest creditor in
Defendant's bankruptcy case. When Plaintiff garnished Defendant's
bank account, Defendant filed a voluntary petition under Subchapter
V of Chapter 11 of the Bankruptcy Code.
In the Bankruptcy Case, Plaintiff filed two motions seeking to
recover alleged preferential payments, which Defendant opposed. On
December 22, 2023, the Court denied the Preference Motions without
prejudice, finding that Plaintiff, "as a creditor, absent a grant
of derivative standing, lacks the statutory authority to seek
avoidance and recovery of preferential transfers pursuant to Sec.
547 of the Bankruptcy Code."
Defendant seeks sanctions against Mr. Lester and his counsel for
having filed a complaint to determine that Defendant is co-owner of
the realty it leases, to avoid as preferences payments made by
Defendant to 400 Edgewood, LLC, and for attorney's fees. Plaintiff
has failed to file a response, and, therefore, the Rule 9011 Motion
is deemed unopposed.
Defendant provided Plaintiff's counsel notice of the Rule 9011
Motion on February 16, 2024, and filed it with the Court on May 8,
2024.
Debtor argues that the Complaint violates Rule 9011(b)(1) and (2)
and, therefore, asks the Court to evaluate the Complaint for both
frivolousness and improper purpose.
According to Judge Craig, Plaintiff violated Rule 9011(b)(2) and
(b)(1) when he filed the Complaint. Judge Craig explains, "First,
a reasonable attorney would not have refiled the preference claim
without first seeking the Court's permission to bring the claim on
behalf of the bankruptcy estate. For the reasons stated in the
order dismissing the Preference Motions, Plaintiff lacked statutory
authority to bring the preference claims. Whatever its merits may
have been if brought by Defendant or a bankruptcy trustee, the
preference claim, as filed by Plaintiff, was legally deficient and,
therefore, had absolutely no possibility of being successfully
prosecuted by Plaintiff. The Court has no difficulty finding that
Plaintiff's counsel knew that simply refiling the preference claim
in the form of a complaint could not cure the deficiency identified
by the Court in the order dismissing the Preference Motions. Even
if he was legitimately unaware of the legal defect when he filed
the Complaint, any question about that would have been answered
when Defendant provided him with notice of the Rule 9011 Motion.
Yet he failed to dismiss the claim and, in fact, opposed
Defendant's motion to dismiss the Complaint. This conduct further
supports the conclusion that Plaintiff knowingly filed the
Complaint in violation of Rule 9011(b)(2)."
He adds, "Second, the claim seeking a determination that Defendant
owned an interest in the Premises suffered from the same legal
infirmity as the preference claim, and a minimal amount of research
would have confirmed this. The Court finds that Defendant has
established a prima facie case that Plaintiff's counsel knew or
should have known that Plaintiff could not pursue such a claim, and
Plaintiff has failed to present evidence or argument to rebut this
conclusion."
As to the appropriate sanction to impose, Defendant seeks damages
and payment of its attorney's fees in dealing with the Complaint.
Given the fact that Plaintiff has already dismissed the Complaint,
nonmonetary sanctions, such as striking or dismissing the offending
pleading, are not available. Plaintiff has not challenged the type
of sanction or provided any argument as to why a grant of
attorney's fees would be more than necessary to deter him repeating
the inappropriate conduct in the future. Therefore, while there is
no basis to award Defendant its "damages," the Court concludes that
the appropriate sanction is an award of Defendant's reasonable
attorney's fees incurred in responding to the Complaint.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=DLr956
About Edgewood Food Mart
Edgewood Food Mart, Inc., filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
23-61204) on Nov. 10, 2023, with up to $500,000 in assets and up to
$10 million in liabilities. Tamara Miles Ogier, Esq., at Ogier,
Rothschild & Rosenfeld, PC, is the Debtor's legal counsel.
EFS COGEN I: Fitch Assigns 'BB-' IDR, Outlook Stable
----------------------------------------------------
Fitch Ratings has assigned EFS Cogen Holdings I LLC (Linden) a
'BB-' Issuer Default Rating (IDR). Fitch has also rated the
project's senior secured term loans and revolver 'BB-'. The Rating
Outlook is Stable.
RATING RATIONALE
Linden's 'BB-' senior facilities rating reflects a Term Loan B debt
structure with limited amortization, which leads to a substantial
bullet at maturity as is typical for such structures. The bullet
will have to be refinanced by 2031 based on expected merchant
revenues earned in the volatile New York City Zone J capacity and
power markets.
Financial performance is supported by steam and power contracts
with creditworthy offtakers, short-term power and commodity hedges,
and a favorable and sustainable competitive position from lower
fuel costs than in-city peers. Under Fitch's rating case
assumptions during the debt tenor, the minimum project life
coverage ratio (PLCR) of Term Loan B is 1.36x in 2030. This
coincides with the assumed refinancing and is adequate for the
'BB-' rating.
Linden's IDR is equalized with the debt facilities' ratings, given
their equal senior position and lack of other subordinate
liabilities. The IDR indicates an elevated vulnerability to default
risk, particularly in the event of adverse changes in the NYC
capacity and power market conditions over time. However, financial
flexibility exists that supports the servicing of financial
commitments during the term of the debt.
KEY RATING DRIVERS
Operation Risk - Midrange
Proven Technology and Well-Maintained Facility: Linden utilizes
General Electric's (GE) combined cycle gas turbine technology,
known for its commercial reliability and proven track record. The
project maintains a robust inventory of critical spare parts to
minimize outage risks, ensuring continued operation throughout the
debt term and beyond. The independent engineer (IE) has confirmed
that the facility is well-maintained and follows GE's operational
guidelines. NAES Corporation, a reputable provider of comprehensive
operations and maintenance (O&M) services, operates the project
under separate O&M and NERC Services Agreements, ensuring
compliance with regulatory standards.
Major maintenance services for Linden 1-5 are provided by General
Electric International, Inc. under a long-term services agreement
(LTSA), while Power Systems Mfg. LLC services Linden 6 under a
similar arrangement. Although the project does not maintain O&M or
major maintenance reserve accounts, a weaker feature, this risk is
mitigated through the implemented O&M strategy and the availability
of funds from the revolving facility.
Supply Risk - Midrange
Supply Flexibility at Competitive Prices: Linden benefits from
several fuel supply advantages from its strategic location in New
Jersey and direct access to the NYC power market. Unlike other NYC
generators, Linden can source natural gas from TETCO M3 and Transco
Z6 NY at a cost below the NYC market. Both connections meet the
full demand of Linden 1-5 and provide long-term pricing
flexibility.
The project has a short-term commodity price hedge in place,
mitigating commodity price exposure. For Linden 6, a tolling
offtake agreement shifts natural gas supply risk to Phillips 66
Company, the creditworthy owner of Bayway Refinery.
Revenue Risk - Composite - Weaker
Reliance on Predominately Merchant Revenues: Linden will earn
around 20% of revenues from power and steam offtake agreements with
creditworthy counterparties: Phillips 66 Company and Infineum
International Ltd. These agreements will expire in 2032 but include
Linden's options to extend to 2037. The high dependency of the
offtakers on Linden to provide power and steam to their co-located
refinery and chemical plant acts as a mitigant to the risk of the
contracts' expiry within the refinance period.
Most revenue through 2035 is made up of market-based capacity
payments and power and ancillary service revenues primarily in the
NYISO Zone J market, exposing the project to volatile cash flows.
An energy margin hedge provides some short-term revenue
protection.
Debt Structure - 1 - Weaker
Exposure to Variable Market Rates and Refinance Risk: The
seven-year tenor Term Loan B consists of variable-rate senior
secured indebtedness, mandatory amortization each year equal to 1%
of the initial balance and leverage-driven prepayments. The large
amount of debt outstanding at debt maturity introduces significant
refinance risk common for Term Loan B structures. Linden's
financing includes standard lender protections.
While the Term Loan B ranks equally with other facilities in the
cash waterfall, the Super Priority Revolving Facility would be
satisfied on a "first out" basis upon default. Otherwise, the
covenants package includes a backward-looking financial covenant
test of 1.10x and a letter of credit-backed six-month debt service
reserve.
Financial Profile
Fitch's rating case incorporates stresses to the sponsors'
assumptions of merchant revenues, capacity factors and heat rates
for Linden units 1-5, an increase to O&M and major maintenance
costs of the entire facility and Fitch SOFR forecast. A PLCR is a
meaningful indicator of financial performance given the debt
structure and refinance risk. The rating case demonstrates a
minimum PLCR of 1.36x in 2030, the year of assumed refinancing.
PEER GROUP
Midland Cogeneration Venture LP (BB+/Stable) is a mostly contracted
cogeneration plant in Michigan that operates under fixed-price
power purchase agreements (PPA) for the contracted portion of its
generation. Merchant cash flows that could provide additional
support for debt service are excluded from Fitch cases. This
project's operational risk is moderate, reflecting a stable
operating history since 1990s supported by a strong LTSA and
significant equipment redundancy. Its coverage levels under the
rating case average 1.30x.
Plains End Financing LLC (BB+/Stable) is a contracted cogeneration
plant in Colorado that operates under fixed price tolling-style
PPAs. It is a peaking facility with the cash flow profile
susceptible to fluctuations in project dispatch and operating
costs. Its average rating case coverage of 1.28x, but Fitch views
the projected financial profile as acceptable at the current rating
level. Actual performance has historically been above rating case
levels, and management expects future stable operations through the
remaining life of the debt.
Fitch has privately rated other power projects that are heavily
exposed to merchant price risk. Conventional power projects with
partial market-based exposure or merchant tails generally fall in
the 'BB' rating category. Investment grade merchant projects often
include structural features to partially mitigate revenue risk and
typically face less market-based exposure overall. Lower-rated
merchant projects in the 'B' category often participate in less
transparent or more speculative commodity markets and sometimes
combine this exposure with unproven technology.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Deterioration in the operational and financial profile leading to
rating case PLCRs below 1.35x on a sustained basis;
- Inability to achieve merchant revenues as forecast by the
sponsors' market consultant leading to additional stresses in
Fitch's rating case.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Improvement in the operational and financial profile leading to
rating case PLCRs above 1.50x on a sustained basis.
Date of Relevant Committee
17 September 2024
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 Prior
----------- ------ -----
EFS Cogen
Holdings I LLC LT IDR BB- New Rating BB-(EXP)
EFS Cogen
Holdings I
LLC/Project
Revenues & Assets
- First Lien/1 LT LT BB- New Rating BB-(EXP)
EMPLOYBRIDGE HOLDING: Fitch Affirms & Withdraws 'CCC+' LongTerm IDR
-------------------------------------------------------------------
Fitch Ratings has affirmed and subsequently withdrawn the Long-Term
Issuer Default Ratings (IDRs) of EmployBridge Holding Company
(EmployBridge) and QEB Intermediate, Inc. Fitch has also affirmed
and withdrawn EmployBridge's senior secured term loan rating of
'CCC+' with a Recovery Rating of 'RR4'.
Fitch is withdrawing the ratings for commercial reasons and will no
longer provide ratings (or analytical coverage) to EmployBridge or
QEB Intermediate.
Key Rating Drivers
Not applicable, as the ratings have been withdrawn.
RATING SENSITIVITIES
Not applicable, as the ratings have been withdrawn.
Issuer Profile
EmployBridge is one of the largest flexible workforce providers in
the U.S., with a focus on light industrial supply chain jobs
including skilled manufacturing, forklift operators, pickers and
material handlers, assemblers, technicians and other manufacturing
and logistics type roles.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
EmployBridge Holding Co LT IDR CCC+ Affirmed CCC+
LT IDR WD Withdrawn CCC+
senior secured LT CCC+ Affirmed RR4 CCC+
senior secured LT WD Withdrawn CCC+
QEB Intermediate, Inc. LT IDR CCC+ Affirmed CCC+
LT IDR WD Withdrawn CCC+
EMPLOYBRIDGE HOLDING: Fitch Lowers LongTerm IDR to 'CCC+'
---------------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Ratings
(IDRs) of EmployBridge Holding Company (EmployBridge) and QEB
Intermediate Inc to 'CCC+' from 'B'. Fitch has also downgraded the
company's senior secured term loan to 'CCC+' with a Recovery Rating
of 'RR4' from 'B+'/'RR3'.
The downgrades reflect EmployBridge's low margin of safety to
navigate industry weakness given tight liquidity, high leverage and
weak coverage. Fitch expects the company's credit metrics to remain
reflective of 'CCC' category issuers even with some staffing demand
recovery. Continued demand weakness or worsening liquidity could
lead to further downgrades.
Key Rating Drivers
Low Margin of Safety: The company faces a limited buffer to
navigate further industry weaknesses, and an additional performance
shortfall could exhaust remaining headroom. Liquidity relies
heavily on borrowing from credit facilities to fund anticipated
negative FCF, as the company holds only a limited amount of cash. A
sharp industry downturn, high interest rates, and various
restructuring costs aimed at aligning the cost structure to
staffing demand and integrating recent acquisitions have led to
significant cash burn and reduced the company's financial
flexibility.
Weak Coverage and High Leverage: Interest coverage should remain in
the low 1.0x area absent an industry upswing which is highly
uncertain in the near term. Coverage declined to 1.3x in 2023 from
3.3x in 2022. The company's leverage should remain elevated and
outside expectations for ratings in the 'B' category. Fitch
estimates EBITDA leverage will be around 10x at YE 2024. This is a
sharp increase from leverage of 7.8x in 2023 and 5.1x in 2022.
Fitch expects leverage to trend lower once demand recovers and the
company fully realizes expense reduction initiatives, but to remain
solidly within ranges appropriate for 'CCC' category issuers.
Fitch's base case suggests cash flow leverage, measured as
(CFO-capex) to debt is expected to remain negative in 2024 and 2025
and possibly in 2026.
Industry Cyclicality: The highly cyclical nature of the staffing
industry is a key credit consideration. The industry is
experiencing a sharp reduction in staffing demand for manufacturing
and logistics, which has led EmployBridge to post double-digit
revenue contraction in 2023 and so far in 2024. The downturn
follows a period of abnormally high demand that accelerated hiring
in those sectors during 2021 and a part of 2022. Peers in the
staffing space have experienced similar YTD revenue declines. Their
stronger financial position gives them a better ability to weather
the downturn.
Negative FCF and Low EBITDA Margins: Fitch expects FCF to be
negative in 2024 and 2025, and possibly beyond as the company will
need to reinvest in working capital once demand begins to recover.
Staffing demand recovery tends to burst suddenly, and working
capital is significant given the company's large revenue and
accounts receivable base. Negative FCF has been mostly debt-funded
and is expected to be funded with the company's ABL credit
facility. Fitch calculates EBITDA margin in the 3% to 5% range in
recent years, which is below those of certain peers Fitch reviews
in the business services area.
End Market Concentration, Customer Diversification: The company
generates nearly all of its revenue from U.S. staffing solutions
for the light industrial market (e.g., warehouses, distribution
centers, e-commerce fulfillment centers). The focus on these areas
leaves it exposed to higher risk versus other more-diversified
services companies. There is material diversification with no
customer representing more than 3% of revenue.
Fragmented Industry: EmployBridge has meaningful scale among
staffing companies, with approximately $3.0 billion in revenue,
roughly 17,000 customers, and around 450,000 people placed
annually. However, the U.S. staffing industry is highly fragmented
and competitive, which Fitch believes is reflected in the company's
low- to mid-single-digit percentage EBITDA margins. EmployBridge
mainly competes in the light industrial segment of the market where
it is among the largest competitors, but still has less than 15%
market share
Derivation Summary
EmployBridge's ratings reflect credit metrics in line with ratings
in the 'CCC' category. These include EBITDA leverage expected to
remain solidly above 6.5x, EBITDA coverage around mid-1x or lower,
and negative (CFO - capex) to debt.
Staffing peers are significantly stronger financially with much
lower leverage, which positions them well in light of the
industry's cyclicality. Health care staffing provider AMN
Healthcare, Inc. (AMN; BB+/Stable) has also been affected by
reduced demand for recruiting services recently. Fitch expects
AMN's leverage will be above the negative rating sensitivity of
2.5x at YE 2024 but will return below it by YE 2025.
In addition to peers in the staffing space, Fitch compares the
company with a variety of high-yield business services and
technology issuers. Compared with tax and immigration services
solutions, CD&R Galaxy UK Intermediate 3 Limited (Vialto; CCC+),
EmployBridge's business is significantly more cyclical. Both
companies are highly leveraged, with Fitch expecting them to have
negative (CFO-capex)/debt. Vialto's revenue mix is more stable, but
faces execution risk tied to strategic investments and cost
initiatives.
Revenue cycle management software provider FinThrive Software
Intermediate Holdings, Inc. (FinThrive; CCC+) is experiencing
limited liquidity headroom, leading it to tap the revolver to fund
negative FCF, similar to EmployBridge. The company also has similar
leverage in the 10x area, with some prospects of deleveraging.
FinThrive's coverage is expected to remain below 1.5x.
Key Assumptions
Key Assumptions Within Fitch's Rating Case for the Issuer include:
- Revenue declines by just over 10% in 2024, remains flat to low
single-digit growth in 2025, and accelerates to mid-teens growth in
2026;
- EBITDA margins are pressured in 2024 and trend back to historical
levels of 4.5%-5.0% in 2025-2026;
- Capex to revenue of around 1% per year or lower;
- Benchmark interest rates average around 5.0% in 2024, 4.0% in
2025 and 3.5% in 2026;
- Delayed draw term loan (DDTL) is fully utilized to fund the
acquisition of assets (including franchise buybacks).
Recovery Analysis
For entities rated 'B+' and below, where default is closer and
recovery prospects are more meaningful to investors, Fitch
undertakes a tailored, or bespoke, analysis of recovery upon
default for each issuance. The resulting debt instrument rating
includes a Recovery Rating or published 'RR' (graded from RR1 to
RR6), and is notched from the 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.
Fitch assumes EmployBridge would emerge from a default scenario
under the going concern approach versus liquidation. Key
assumptions used in the recovery analysis are as follows:
- A sharp industry downturn coupled with sustained client
defections resulting in a meaningful loss of revenue to the $2.7
billion area.
- Post-bankruptcy margins settle in the 4.5% area.
- Fitch estimates a going-concern EBITDA of roughly $130 million,
which includes a lower baseline of organic revenue with some
operational improvements from cost actions. Fitch also assumes some
incremental M&A from use of the remaining DDTL capacity.
- The borrowing base on the ABL shrinks to a level around 60% of
the total ABL capacity of $520 million as a result of the lower
revenue. This assumption implies roughly a $300 million of
availability and assumes the company fully draws that amount on the
ABL.
- An EBITDA multiple of 6.0x is used to calculate a
post-reorganization valuation, which is validated by comparable
trading multiples in the staffing industry (current and
historical), past M&A transactions in the space and reorganization
multiples Fitch has seen historically.
- Fitch assumed a 10% administrative claim.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA interest coverage sustained above 2.0x
- (CFO-capex)/debt sustained above 0%;
- EBITDA leverage sustained below 6.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Meaningful liquidity deterioration, including continued high FCF
burn;
- A prolonged period of weak staffing demand;
- EBITDA/interest coverage sustaining below 1.5x;
- An expectation of a distressed debt exchange (as defined by
Fitch) or increasing likelihood of default, bankruptcy or
restructuring.
Liquidity and Debt Structure
Tight Liquidity: Liquidity depends largely on borrowing under
credit facilities due to projected negative FCF. Improvement in FCF
hinges on demand stabilization and successful execution of cost
initiatives to lesser extent. Fitch projects EmployBridge's FCF as
a percent of revenue to be negative low-single digits in 2024 and
2025, and possibly beyond.
EmployBridge had $73 million in unused borrowing capacity available
under its ABL facility and $28 million in cash as of 2Q24. The
company has secured alternative letters of credit for $35 million
as of the date of this report. Fitch expects these letters to free
up borrowing capacity on the company's ABL facility by a similar
amount. EmployBridge has small debt amortizations of $9 million
until the ABL facility and term loan mature in 2027 and 2028.
Interest coverage was 1.0x as of 2Q24.
Debt Structure: EmployBridge's debt mainly consists of a $900
million term loan, an ABL facility with a $35 million
first-in-last-out term loan, and $97 million drawn on the revolver
as of 2Q24. The ABL facility has a $160 million letter of credit
facility, of which $136 million was outstanding. Additionally, the
company has $46 million drawn on a $95 million DDTL used to fund
acquisitions. The ABL and DDTL facilities expire in 2027, and the
term loan matures in 2028.
The DDTL is to be utilized for financing the acquisition of assets
(including franchise buybacks) and is secured by a sole lien on the
acquired assets, other than the ABL collateral, which secures the
DDTL on a junior lien basis. All of the company's debt is floating
rate.
Issuer Profile
EmployBridge is one of the largest flexible workforce providers in
the U.S., with a focus on light industrial supply chain jobs
including skilled manufacturing, forklift operators, pickers and
material handlers, assemblers, technicians and other manufacturing
and logistics type roles.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
EmployBridge
Holding Co LT IDR CCC+ Downgrade B
senior secured LT CCC+ Downgrade RR4 B+
QEB Intermediate,
Inc. LT IDR CCC+ Downgrade B
ETON STREET: President Not Authorized to File Ch.11, Court Says
---------------------------------------------------------------
The Honorable Mark A. Randon of the United States Bankruptcy Court
for the Eastern District of Michigan granted the motion filed by
Mary E. Nicholson Trust UAD 1/14/1988 and Michael A. Nicholson
Revocable Living Trust U/A/D 1/14/94 to dismiss Eton Street
Brewery, LLC's chapter 11 (subchapter V) bankruptcy case.
The objecting members move to dismiss on several grounds, including
that unanimous member consent was required to file bankruptcy.
The Debtor was organized on May 20, 2011, under the Michigan
Limited Liability Company Act as a domestic limited liability
company. It is a member-managed company. The initial members were
Bonnie J. LePage, as Trustee of the Bonnie J. LePage Trust UAD
3/17/97, as amended; and the Mary Trust. Each held a 50% membership
interest in Debtor.
On December 16, 2011, the members executed a First Amended and
Restated Operating Agreement of Eton Street Brewery, LLC.
The Operating Agreement also provides that "[t]he Members shall
have the right to vote on . . . the sale, exchange, lease, or other
transfer of all or substantially all of the Company's assets other
than in the ordinary course of business."
The Operating Agreement was amended on December 1, 2017. This
amendment first recognized that Michael A. Nicholson became the
Trustee of the Mary Trust. It also indicated that Michael A.
Nicholson, Trustee of the Michael A. Nicholson Revocable Living
Trust U/A/D 1/14/94 would be admitted as a member. As of January 1,
2017, the Bonnie Trust had a 50% membership interest in the Debtor,
the Mary Trust had a 40% membership interest, and the Michael Trust
had a 10% membership interest.
The Mary Trust and the Michael Trust seek to dismiss this
bankruptcy for cause under 11 U.S.C. Sec. 1112(b).
Under 11 U.S.C. Sec. 1112(b)(1), "[o]n request of a party in
interest, and after notice and a hearing, the court shall convert a
case under this chapter to a case under chapter 7 or dismiss a case
under this chapter, whichever is in the best interests of creditors
and the estate, for cause[.]" If the Court finds that "those who
purport to act on behalf of the corporation have not been granted
authority by local law to institute the proceedings, it has no
alternative but to dismiss the petition."
The Operating Agreement is silent as to whether the Debtor's
President may unilaterally place the Debtor in bankruptcy. The
Debtor argues that section 6.2 of the Operating Agreement is
unambiguous because the plain language "broadly empowers the
President 'to do all things necessary or convenient to carry out
the Company's business and affairs, including the power to . . .
(9) begin, prosecute, or defend any proceeding in the Company's
name . . . .'"
The Court agrees with the Debtor in one respect -- section 6.2 of
the Operating Agreement is unambiguous and must be enforced
according to its terms.
Judge Randon explains, "Although on its face, section 6.2(1) gives
the President the power to buy 'any' real or personal property,
section 6.3(1) expressly limits 'any' to 'significant and material
purchase[s].' Similarly, the apparent authority in 6.2(2) to sell
'any' real or personal property, is expressly limited in 6.3(2) to
those sales that do not involve 'all or substantially all of the
assets and property of the Company.' The clear intent of section
6.2 is to limit the unilateral authority of Debtor's President to
those ordinary and usual decisions and those customary actions
necessary and convenient to carry out its business, including the
filing, and defense of, any ordinary or usual legal proceedings.
Otherwise -- as in the case of placing Debtor in chapter 11
(subchapter V) bankruptcy -- the 'unanimous consent of all Members'
is required. Although bankruptcy is not explicitly mentioned in
section 6.3, as requiring unanimous member approval, the following
acts are: 6.3(2) the sale of all or substantially all of the assets
and property of the Company; 6.3(6) any matter that could result in
a change in the amount or character of the Company's capital;
6.3(7) any change in the character of the business and affairs of
the Company; 6.3(8) the commission of any act that would make it
impossible for the Company to carry on its ordinary business and
affairs; and 6.3(9) any act that would contravene any provision of
the Articles, Operating Agreement, or the Act. Despite Debtor's
protestations, the Court finds these provisions individually or
collectively required unanimous member consent to place it in
bankruptcy."
Because: (1) the Debtor's operating agreement unambiguously limits
its President's power to the "ordinary and usual decisions
concerning the business" -- and bankruptcy is neither; and (2) the
Debtor's Manager and President's unilateral, prepetition decision
to retain a company to market for sale, and prepare an insider's
$2.1 million stalking-horse bid, violated the express provisions of
the operating agreement, the Court grants the motion and dismisses
the Debtor's bankruptcy.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=cWFx4G
About Eton Street Brewery, LLC
Eton Street Brewery, LLC is a brewery and distillery company in
Birmingham, Mich., offering beer, spirits, vodka and soda and hard
cider.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 24-47188) on July 26,
2024, with $10 million to $50 million in assets and $1 million to
$10 million in liabilities. Bonnie LePage, manager and president,
signed the petition.
The Debtor tapped Brendan G. Best, Esq., at Varnum, LLP as legal
counsel; and Pagac & Company, PC as accountant.
FAIRFIELD SENTRY: Julius Baer Must Face Adversary Case in SDNY
--------------------------------------------------------------
The Honorable John P. Mastando III of the United States Bankruptcy
Court for the Southern District of New York denied Bank Julius Baer
& Co. Ltd.'s motion to dismiss the Fifth Amended Complaint filed by
liquidators of Fairfield Sentry et al. for lack of personal
jurisdiction. The case is captioned as FAIRFIELD SENTRY LTD. (In
Liquidation), et al., Plaintiffs, v. ABN AMRO SCHWEIZ AG a/k/a AMRO
(SWITZERLAND) AG, et al., Defendants, Adv. Pro. No. 10-03636 (JPM)
(Bankr. S.D.N.Y.).
This adversary proceeding was filed on September 21, 2010. Kenneth
M. Krys and Greig Mitchell, in their capacities as the duly
appointed Liquidators and Foreign Representatives of Fairfield
Sentry Limited (In Liquidation), Fairfield Sigma Limited (In
Liquidation), and Fairfield Lambda Limited (In Liquidation) filed
the Amended Complaint on August 12, 2021, seeking the imposition of
a constructive trust and recovery of over $1.7 billion in
redemption payments made by Sentry, Sigma, and Lambda to various
entities known as the Citco Subscribers. Of that amount, Defendant
allegedly received over $22.7 million through redemption payments
from its investment in Sentry and Sigma.
This adversary proceeding arises out of the decades-long effort to
recover assets of the Bernard L. Madoff Investment Securities LLC.
The Citco Subscribers allegedly invested, either for their own
account or for the account of others, into several funds --
including Sentry, Sigma, and Lambda -- that channeled investments
into BLMIS.
Fairfield Sentry was a direct feeder fund in that it was
established for the purpose of bringing investors into BLMIS,
thereby allowing Madoff's scheme to continue.
The Amended Complaint alleges that investors received payments on
account of their shares in the Fairfield Funds based on a
highly-inflated Net Asset Value. The Citco Subscribers and the
beneficial shareholders were allegedly such investors. To calculate
the NAV, administrators used statements provided by BLMIS that
showed "securities and investments, or interests or rights in
securities and investments, held by BLMIS for the account of
Sentry." In fact, no securities were ever bought or sold by BLMIS
for Sentry, and none of the transactions on the statements ever
occurred. The money sent to BLMIS by the Fairfield Funds for
purchase of securities was instead used by Bernard Madoff to pay
other investors or was "misappropriated by Madoff for other
unauthorized uses." The NAVs were miscalculated, and redemption
payments were made in excess of the true value of the shares. The
Fairfield Funds were either insolvent when the redemption payments
were made or were made insolvent by those payments.
BJB is a "corporate entity organized under the laws of Switzerland"
with a registered address in Zurich, Switzerland. BJB allegedly
invested into and redeemed shares of Sentry and Sigma through Citco
Bank Nederland N.V., Citco Bank Nederland N.V. Dublin, Citco Global
Custody N.V., and Citco Global Custody (N.A.) N.V. Citco Bank and
Citco Global Custody were organized under the laws of either
Curacao or the Netherlands.
The Amended Complaint alleges that the Citco Subscribers, including
the purported agents of BJB, "had knowledge of the Madoff fraud,
and therefore knowledge that the Net Asset Value was inflated" when
the redemption payments were made. The Amended Complaint further
asserts that, while receiving redemption payments, the Citco
Subscribers "uncovered multiple additional indicia that Madoff was
engaged in some form of fraud" but "turned a blind eye, [and]
accept[ed] millions of dollars while willfully ignoring or, at the
very least, recklessly disregarding the truth in clear violation of
the law of the British Virgin Islands . . . ." These indicia
included verification that there was no "independent confirmation
that BLMIS-held assets even existed," Madoff's failure to segregate
duties, and BLMIS's "employing an implausibly small auditing firm"
rather than a reliable auditor. In the face of red flags such as
these, the Citco Subscribers and other Citco entities purportedly
"quietly reduced [their] own exposure to BLMIS through the Funds,
and significantly increasing its Custodian fees to offset the
risk."
The Amended Complaint alleges that the defendants, including BJB as
a beneficial shareholder of certain accounts, purposefully availed
themselves of the laws of the United States and the State of New
York by "investing money with the Funds, and knowing and intending
that the Funds would invest substantially all of that money in New
York-based BLMIS."
Defendant moved to dismiss the Amended Complaint for lack of
personal jurisdiction, arguing that the Amended Complaint has not
sufficiently alleged minimum contacts with the forum to establish
personal jurisdiction over Defendant and that exercising personal
jurisdiction would be unreasonable.
Liquidators argue that exercising jurisdiction over Defendant would
be reasonable and that Defendant's contacts with the United States,
through its own actions and those of its purported agent, in
knowingly and intentionally investing in Sentry, using U.S.
correspondent accounts to invest in and receive payments from
Sentry, and conducting other business activities support personal
jurisdiction.
Liquidators argue that BJB exercised significant control over the
Citco Subscriber's subscription and redemption-related activities
and had knowledge of and consented to those activities such that
BJB was the principal with respect to those transactions and
exercised the requisite control over the Citco Subscriber as its
agent. BJB entered into a custodian agreement with the Citco
Subscriber in October 2000, pursuant to which BJB appointed the
Citco Subscriber to act as custodian for its investments. Under
this agreement, the Citco Subscriber could execute subscriptions
and redemptions only upon receipt of specific instructions from
BJB. The custodian agreement also required the Citco Subscriber to
issue preliminary and final order confirmations to BJB and to issue
a "pre-advice" statement for each subscription or redemption. Based
on the foregoing and the lack of allegations that BJB objected to
these actions or instructed the Citco Subscriber to act
differently, the Plaintiffs have sufficiently alleged BJB's consent
to the Citco Subscriber's actions, the Court concludes.
Plaintiffs point to BJB's choice of correspondent accounts, through
its agent, as sufficient to establish minimum contacts with the
United States. Plaintiffs allege that BJB, through the Citco
Subscriber, its purported agent, deliberately selected and used
U.S. correspondent accounts at the Citco Subscriber's U.S.
correspondent account at HSBC Bank USA, N.A. to effectuate the
redemption payments that form the harms for which Plaintiffs seek
redress.
The Court finds Liquidators have provided support for the
allegation that the Citco Subscriber, acting as agent of the
Defendant, chose to use a correspondent account in New York to
receive payments from Sentry. Judge Mastando says, "While foreign
options existed, the redemption forms show that Defendant selected
and used a U.S.-based correspondent bank receive payments from
Sentry. BJB's repeated receipt of millions of dollars of redemption
payments for its investments in Sentry through U.S. correspondent
accounts demonstrates its purposeful availment of the banking
system of New York and the United States."
Liquidators assert that BJB "intentionally invested in BLMIS feeder
funds Sentry and Sigma knowing that the Funds were designed to
subsequently invest that money in New York-based BLMIS. BJB is
subject to this Court's jurisdiction with respect to its Sentry and
Sigma redemptions as a result of that conduct."
The Court finds the Plaintiffs have supplied further support for
the allegations of contacts. Exhibits indicate that BJB was
informed of the relationship between the Fairfield Funds and BLMIS
in New York through due diligence performed by BJB, its affiliate,
and its alleged agent, during the relevant period, the Court
notes.
The Court finds that the allegations and documentation provided by
the Plaintiffs through jurisdictional discovery, taken together,
sufficiently demonstrate facts supporting continuous and systemic
contacts with the forum.
The Court finds that Defendant's selection and use, through its
agent, of U.S. correspondent accounts, due diligence, and
communications with FGG concerning investments with BLMIS in New
York support the Court's exercise of jurisdiction over the claims
for receiving redemption payments from the Fairfield Funds with the
knowledge that the NAV was wrong. According to Judge Mastando,
"The contacts are not random, isolated, or fortuitous. The contacts
demonstrate BJB's purposeful activities aimed at New York in order
to effectuate transfers from Sentry. The Plaintiffs have thus
provided allegations and supporting documentation that sufficiently
support a prima facie showing of jurisdiction over the Defendant."
Defendant argues that the claims are "wholly unrelated to the
Funds' investments in, or redemptions from BLMIS." However, the
Liquidators seek imposition of a constructive trust on funds
received with knowledge that the NAV was inflated. The Court finds
the Defendant's contacts with the United States, in investing in,
in communications with, and redemptions from the Fairfield Funds,
form a "sufficiently close link" between the defendant, the forum
and the litigation concerning Defendant's activities in the forum.
Defendant argues that "the interests of the United States in this
dispute are at best minimal. This is an 'ancillary' Chapter 15 case
in which the Court is acting 'to aid foreign jurisdictions in
administering bankruptcies . . . ."
Defendant argues that the "location of the losses and the alleged
wrongdoing are both foreign" and that "there is nothing convenient
about this forum for any of the parties."
Defendant has not established that the Court's exercise of personal
jurisdiction over it would be unreasonable. Furthermore, BJB is
represented by U.S. Counsel and the United States has a strong
interest in ensuring the integrity of its financial systems. The
Court thus finds that exercising jurisdiction over the Defendant is
reasonable and comports with "traditional notions of fair play and
substantial justice . . . ."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=UHm0hK
Attorneys for Defendant, Bank Julius Baer & Co. Ltd.:
Eric B. Halper, Esq.
Hal M. Shimkoski, Esq.
MCKOOL SMITH, P.C.
1301 Avenue of the Americas, 32nd Floor
New York, NY 10019
E-mail: ehalper@mckoolsmith.com
hshimkoski@mckoolsmith.com
Attorneys for the Plaintiffs, Joint Liquidators:
Jeffrey L. Jonas, Esq.
David J. Molton, Esq.
Marek P. Krzyzowski, Esq.
BROWN RUDNICK LLP
Seven Times Square
New York, NY 10036
E-mail: jjonas@brownrudnick.com
dmolton@brownrudnick.com
mkrzyzowski@brownrudnick.com
About Fairfield Sentry
Fairfield Sentry Limited is being liquidated under the supervision
of the Commercial Division of the High Court of Justice in the
British Virgin Islands. It is one of the funds owned by the
Fairfield Greenwich Group, an investment firm founded in 1983 in
New York. Fairfield Sentry and other Greenwich funds had among the
largest exposures to the Bernard L. Madoff fraud.
Fairfield Sentry became the subject of a BVI liquidation, and a BVI
court appointed Kenneth M. Krys and Greig Mitchell as Liquidators
and Foreign Representatives of Fairfield Sentry and Fairfield Sigma
under BVI law. The Liquidators then sought recognition of the BVI
liquidation as a foreign main proceeding by filing petitions under
Chapter 15 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
10-13164) on June 14, 2010 in the Southern District of New York.
The Bankruptcy Court entered an order granting recognition of the
Fairfield Sentry case on July 22, 2010, enabling the Liquidators to
use the U.S. Bankruptcy Court to protect and administer Fairfield
Sentry's assets in the U.S.
FINEST COACHBUILDING: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Finest Coachbuilding Group LLC
d/b/a Radford Motors
3161 Red Hill Ave
Costa Mesa, CA 92626
Business Description: Radford specializes in the creation of
bespoke, luxury vehicles.
Court: United States Bankruptcy Court
District of Delaware
Case No.: 24-12327
Judge: Hon. John T. Dorsey
Debtor's Counsel: Thomas J. Francella, Jr., Esq.
RAINES FELDMAN LITTRELL LLP
1200 N. Broom Street
Wilmington, DE 19806
Tel: (302) 772-5805
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Daniel Bednarski as CFO/COO.
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/KPQ6IJI/Finest_Coachbuilding_Group_LLC__debke-24-12327__0001.0.pdf?mcid=tGE4TAMA
FIRST COAST ROLL OFFS: Gets OK to Use Cash Collateral Until Oct. 28
-------------------------------------------------------------------
First Coast Roll Offs, LLC received interim court approval to use
the cash collateral of the United States of America Small Business
Administration.
The interim order penned by Judge Jacob Brown of the U.S.
Bankruptcy Court for the Middle District of Florida allows the
company to use the lender's cash collateral to pay operating
expenses while prohibiting payments for pre-bankruptcy expenses,
officer salaries, and professional fees without further court
approval.
As protection, the SBA will receive a replacement lien and a
monthly payment of $3,500 starting Oct. 1.
As of the petition date, First Coast Roll Offs owed approximately
$802,000 to the SBA.
The final hearing is scheduled for Oct. 28.
About First Coast Roll Offs
First Coast Roll Offs, LLC is a waste management company based in
St. Augustine, Fla., specializing in providing roll-off dumpster
rental services.
First Coast Roll Offs filed a petition under Chapter 11, Subchapter
V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-02476) on
August 19, 2024, with total assets of $1,717,750 and total
liabilities of $2,613,527. L. Todd Budgen, Esq., a practicing
attorney in Longwood, Fla., serves as Subchapter V trustee.
Judge Jacob A. Brown oversees the case.
Bryan K. Mickler, Esq., at the Law Offices of Mickler & Mickler,
LLP is the Debtor's bankruptcy counsel.
FREIGHT MASTERS: Case Summary & Three Unsecured Creditors
---------------------------------------------------------
Debtor: Freight Masters USA
1400 Marlborough
Riverside, CA 92507
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Central District of California
Case No.: 24-16080
Judge: Hon. Scott H Yun
Debtor's Counsel: Andrew Bisom, Esq.
LAW OFFICE OF ANDREW S. BISOM
300 Spectrum Center Drive, Ste. 400
Irvine, CA 92618
Tel: (714) 643-8900
E-mail: abisom@bisomlaw.com
Total Assets: $1,267,200
Total Liabilities: $414,584
The petition was signed by Antonio Martinez, Jr. as CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/NUEBHSI/Freight_Masters_USA__cacbke-24-16080__0001.0.pdf?mcid=tGE4TAMA
FTX TRADING: Court Okays Bankruptcy Plan, Customer Repayments
-------------------------------------------------------------
BLOCKHEAD reports that FTX has received approval from a US court
for its bankruptcy plan to repay customers. The ruling will allow
the fallen cryptocurrency exchange to use the $16.5 billion it
managed to recover.
US Bankruptcy Judge John Dorsey praised FTX's plan as a "model case
for how to deal with a very complex Chapter 11 bankruptcy
proceeding."
FTX will prioritise its customers in the repayment strategy, ahead
of creditors and government agencies. Customers who held $50,000 or
less on the platform will receive 98% of their assets within 60
days after the plan's effective date, which is still to be
determined.
Between $14.7 billion and $16.5 billion will be used to repay
customers, which is enough to repay at least 118% of their account
values based on FTX's estimates.
Repayment will be based on 2022 cryptocurrency values, leaving some
customers disgruntled because prices have surged since then.
Bitcoin has risen from $16,000 in November 2022, when the exchange
collapsed, to over $63,000 on October 8, 2024.
FTX financial adviser, Steve Coverick, testified on Monday that it
would be "exorbitantly expensive" to repurchase the missing crypto
to return to customers.
"Today's achievement is only possible because of the experience and
tireless work of the team of professionals supporting this case,
who have recovered billions of dollars by rebuilding FTX's books
from the ground up and from there marshaling assets from around the
globe," FTX CEO John Ray said in a statement on Monday.
FTX is also still negotiating with the U.S. Department of Justice
regarding $1 billion in funds seized during Sam Bankman-Fried's
(SBF) prosecution, with shareholders possibly receiving a portion
of those funds.
Last month, Caroline Ellison, former Alameda Research CEO and
ex-girlfriend of SBF was sentenced for her role in the collapse of
FTX. Ellison had faced a maximum sentence of 110 years but was only
given two years in prison.
Judge Lewis Kaplan believed that the 29-year-old was "genuinely
remorseful" and that she was exploited by SBF.
About FTX Trading Ltd.
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10 showing FTX had $13.86
billion in liabilities and $14.6 billion in assets. However, only
$900 million of those assets were liquid, leading to the cash
crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent, maintaining the page
https://cases.ra.kroll.com/FTX/Home-Index
The official committee of unsecured creditors tapped Paul Hastings
as bankruptcy counsel; Young Conaway Stargatt & Taylor, LLP as
Delaware and conflicts counsel; FTI Consulting, Inc. as financial
advisor; and Jefferies, LLC as investment banker.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FTX TRADING: Has Cash, Cooperation Agreement With Ellison
---------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Caroline Ellison has agreed
to transfer nearly all of her available cash and assets to FTX
Trading Ltd. to settle a bankruptcy court lawsuit and further
extricate herself from Sam Bankman-Fried's former cryptocurrency
empire.
Ellison, who served as CEO of FTX-related hedge fund Alameda
Research Ltd. and had been romantically involved with Bankman-Fried
before FTX collapsed, agreed to hand over substantially all she can
to the company and its creditors, according to papers filed Monday
in the US Bankruptcy Court for the District of Delaware.
The deal settles litigation filed last year to recover about $30
million in payments and FTX securities that were transferred to
Ellison before the company's collapse in November 2022. The
agreement was filed the same day that the defunct crypto exchange
won bankruptcy court approval of plan to repay customers whose
digital assets had been trapped on the platform.
Ellison, who last month was sentenced to serve two years in prison
for her role in a multibillion dollar scheme that hid looted
customer funds, was a star witness against Bankman-Fried and has
been lauded for pleading guilty and cooperating with federal
prosecutors.
As part of her deal with FTX, Ellison will hand over the bulk of
what she has left following federal government forfeitures and
legal payments. She also agreed to cooperate with professionals
winding down the estate and help generate more value for creditors,
according to the agreement.
"Following the settlement, Ellison will have no remaining assets
other than certain physical personal property," FTX said in its
request for court approval of the deal.
"Significantly, Ellison has also committed to cooperating with the
Debtors in ongoing investigations and litigation—a benefit that
the Debtors would not be able to obtain even if they prevailed at
trial against Ellison."
A hearing is scheduled for November 20, 2024.
FTX, Alameda and related entities have been under the control of
CEO John J. Ray III since the bankruptcy began.
FTX is represented by Sullivan & Cromwell LLP and Landis Rath &
Cobb LLP. Ellison is represented by Wilmer Cutler Pickering Hale
and Dorr LLP.
The case is In re FTX Trading Ltd., Bankr. D. Del., No. 22-11068,
motion filed 10/7/24.
About FTX Trading Ltd.
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10 showing FTX had $13.86
billion in liabilities and $14.6 billion in assets. However, only
$900 million of those assets were liquid, leading to the cash
crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent, maintaining the page
https://cases.ra.kroll.com/FTX/Home-Index
The official committee of unsecured creditors tapped Paul Hastings
as bankruptcy counsel; Young Conaway Stargatt & Taylor, LLP as
Delaware and conflicts counsel; FTI Consulting, Inc. as financial
advisor; and Jefferies, LLC as investment banker.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
GABRIEL CUSTOM: Court Denies Trident's Stay Relief Motion
---------------------------------------------------------
Judge Ashley Austin Edwards of the United States Bankruptcy Court
for the Western District of North Carolina denied Trident Realty
Investments, LLC's Motion for In Rem Relief from Automatic Stay
Pursuant to 11 U.S.C. Sec. 362(d)(4) and Reservation of Rights
Pursuant to 11 U.S.C. Sec. 362(e) in the bankruptcy case of Gabriel
Custom Homes, LLC. The Debtor's Motion to Disqualify Counsel is
denied as moot.
The schedules and statements attached to the Debtor's chapter 11
petition show that Trident is the Debtor's largest creditor,
holding approximately 97% of the Debtor's total liabilities. That
liability arises out of a promissory note the Debtor executed on
July 21, 2021, for a loan to the Debtor in the amount of $164,350.
The Note is secured by a deed of trust on the Debtor's real
property located at 1064 Salisbury Ridge Road, Winston-Salem, NC
27127. The Deed of Trust shows that Trident held a security
interest in the Note.
Trident alleges that it attempted to foreclose on the Property
under the Deed of Trust again. Trident alleges that the substitute
trustee held a foreclosure sale on the Property on April 5, 2024,
where Trident purchased the Property pursuant to a credit bid. On
April 15, 2024, the day before Trident alleges the upset bid period
concluded, the Debtor filed a petition under chapter 11 of the
Bankruptcy Code. Less than a month later, on May 10, 2024, Trident
filed a motion for relief from the automatic stay.
On September 13, 2024, the Debtor filed the Disqualification
Motion, in which the Debtor argued that (a) the Stay Relief Motion
should be denied because the Debtor "is able to provide adequate
protection to Trident" for "its interest in" the Property and (b)
the motion failed to satisfy the Court's Local Rule 4001-1. The
Debtor also sought to disqualify Trident's counsel in this matter
for representing both Trident and "the Substitute Trustee under the
Deed of Trust.
Keith Johnson, Esq., appeared on behalf of the Debtor, and John
Sperati, Esq., appeared on behalf of Trident at the September 24,
2024, hearing on the motions.
At the hearing, the Debtor acknowledged that (a) the exclusivity
period for the Debtor to file a plan of reorganization under
section 1121 of the Bankruptcy Code expired 120 days after the
chapter 11 petition was filed (i.e., August 13, 2024); (b) the
Debtor had not yet filed a disclosure statement, plan of
reorganization, or taken other actions towards resolution of this
case; and (c) the issue of whether to disqualify Trident's counsel
would be moot if the Stay Relief Motion was denied. The Debtor and
Trident both acknowledged that the Debtor had made the payments
required by the Creditor Payment Order from June through September
2024 and was current on payments.
Judge Edwards says, "For the Stay Relief Motion, Trident has failed
to meet its burden to prove the elements of section 362(d)(4).
There were multiple factual issues that the parties raised at the
hearing, including, but not limited to, (1) the Debtor's domicile,
(2) whether there was a prior proposed sale of the Property, (3)
the relationship between the Debtor and the Property's tenant, (4)
whether the tenant has paid rent, (5) information pertaining to the
current lease on the Property, and (6) whether a scheme had
occurred to delay, hinder, or defraud Trident. Neither party
provided evidence in support of any argument. While the Court may
take judicial notice of the pleadings in the multiple foreclosure
actions and prior bankruptcy action in the Middle District of North
Carolina, the Court cannot assume facts not admitted into evidence.
While Trident has not met its burden in this instance, this ruling
should not be construed as a finding as to whether the filing of
the petition was part of a scheme to defraud, delay, or hinder any
creditor. Instead, the Court acknowledges that it has insufficient
evidence but does not preclude any party from raising any issue
related to relief from stay in the future and presenting evidence
at the appropriate time regarding the Debtor's purpose in filing
the case."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=oBmRXo
About Gabriel Custom Homes
Gabriel Custom Homes, LLC sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D.N.C. Case No.
23-50410) in June 23, 2023, with $100,001 to $500,000 in both
assets and liabilities.
Samantha K. Brumbaugh, Esq., at Ivey, McClellan, Siegmund,
Brumbaugh & McDonough, LLP, is the Debtor's counsel.
GATC HEALTH: Macias Gini & O'Connell Raises Going Concern Doubt
---------------------------------------------------------------
GATC Health Corp. disclosed in a Form 1-K Report filed with the
U.S. Securities and Exchange Commission for the fiscal year ended
December 31, 2022, that its auditor expressed substantial doubt
about the Company's ability to continue as a going concern.
Irvine, Calif.-based Macias Gini & O'Connell, LLP, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated September 30, 2024, citing that the Company has
suffered recurring losses from operations and has had negative cash
flows from operations for each of the two years ended December 31,
2022. This raises substantial doubt about the Company's ability to
continue as a going concern.
The Company had an accumulated deficit of $35,226,899 and
$21,948,336 at December 31, 2022 and 2021, respectively, had
working capital of $2,939,813 and $3,318,350 at December 31, 2022
and 2021, respectively, had a net loss of $14,249,900 and
$17,382,285 for the years ended December 31, 2022 and 2021,
respectively, and net cash used in operating activities of
approximately $5,956,549 and $3,994,775 for the years ended
December 31, 2022 and 2021, respectively, with limited revenue
earned since inception, and a lack of operational history.
While the Company is attempting to expand operations and generate
revenues, the Company's cash position may not be significant enough
to support the Company's daily operations. Management intends to
raise additional funds by way of a private offering. Management
believes that the actions presently being taken to further
implement its business plan and generate revenues provide the
opportunity for the Company to continue as a going concern. While
management believes in the viability of its strategy to generate
revenues and in its ability to raise additional funds, there can be
no assurances to that effect or on terms acceptable to the Company.
The ability of the Company to continue as a going concern is
dependent upon the Company's ability to further implement its
business plan, raise necessary capital, and generate revenues.
A full-text copy of the Company's Form 1-K is available at:
https://tinyurl.com/4jucffaa
About GATC Health Corp.
GATC Health Corp, a Wyoming corporation incorporated on May 16,
2020, is engaged in the business of providing products and services
for the gathering of human genome DNA, sequencing, and processing
that sequence through artificial intelligence, and in developing a
novel drug discovery platform utilizing artificial intelligence
applied to the human genome. The Company has one majority-owned
subsidiary, GATC Rx Corp.
As of December 31, 2022, the Company had $4,519,094 in total
assets, $3,256,115 in total liabilities, and $1,262,979 in total
stockholders' equity.
GATC HEALTH: Reports $19.6-Mil. Net Loss in H1 2023
---------------------------------------------------
GATC Health Corp. Inc. filed with the U.S. Securities and Exchange
Commission its Semiannual Report on Form 1-SA reporting a net loss
of $19,634,104 on $31,250 of net revenues for the six-month period
ending June 30, 2023, compared to a net loss of $8,472,563 with no
reported revenues for the six-month period ending June 30, 2022.
The Company had an accumulated deficit of $54,509,682 and
$35,226,899 as of June 30, 2023 and December 31, 2022,
respectively, had working capital of $2,686,062 and $2,939,813 as
of June 30, 2023 and December 31, 2022, respectively, and net cash
used in operating activities of $3,838,642 and $1,987,796 for the
six months ended June 30, 2023 and 2022, respectively, with limited
revenue earned since inception, and a lack of operational history.
While the Company is attempting to expand operations and generate
revenues, the Company's cash position may not be significant enough
to support the Company's daily operations. Management intends to
raise additional funds by way of a private offering. Management
believes that the actions presently being taken to further
implement its business plan and generate revenues provide the
opportunity for the Company to continue as a going concern. While
management believes in the viability of its strategy to generate
revenues and in its ability to raise additional funds, there can be
no assurances to that effect or on terms acceptable to the Company.
As of June 30, 2023, the Company had $5,020,036 in total assets,
$4,124,071 in total liabilities, and $895,965 in total
stockholders' equity.
A full-text copy of the Company's Form 1-SA is available at:
https://tinyurl.com/5xnzccps
About GATC Health Corp.
GATC Health Corp, a Wyoming corporation incorporated on May 16,
2020, is engaged in the business of providing products and services
for the gathering of human genome DNA, sequencing, and processing
that sequence through artificial intelligence, and in developing a
novel drug discovery platform utilizing artificial intelligence
applied to the human genome. The Company has one majority-owned
subsidiary, GATC Rx Corp.
Irvine, Calif.-based Macias Gini & O'Connell, LLP, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated September 30, 2024, citing that the Company has
suffered recurring losses from operations and has had negative cash
flows from operations for each of the two years ended December 31,
2022. This raises substantial doubt about the Company's ability to
continue as a going concern.
GEORGIA EARTH & PIPE: Gets Final OK to Use Cash Collateral
----------------------------------------------------------
Georgia Earth and Pipe, LLC received final court approval to use
the cash collateral of its lenders to fund critical operations.
The lenders' cash collateral consists of revenue from the company's
business operations.
The final order penned by Judge James Sacca of the U.S. Bankruptcy
Court for the Northern District of Georgia approved the use of cash
collateral in the ordinary course of business, with an allowed
variance of 5% per month.
A budget outlining the revenue and cash requirements for the next
six months has been submitted to the court.
To protect lenders, the bankruptcy judge granted them a replacement
lien on all property acquired by the company after the petition
date.
About Georgia Earth and Pipe
Georgia Earth and Pipe, LLC is a site preparation contractor in
Dawsonville, Ga.
Georgia Earth and Pipe sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-21100) on Sept. 9,
2024, with up to $50,000 in assets and up to $10 million in
liabilities. Lanny P. Limburg, president of Georgia Earth and Pipe,
signed the petition.
Judge James R. Sacca oversees the case.
The Debtor is represented by:
Will Geer, Esq.
Rountree Leitman Klein & Geer, LLC
Century Plaza I
2987 Clairmont Road Suite 350
Atlanta GA 30329
Tel: 404-584-1238
Email: wrountree@rlkglaw.com
wgeer@rlkglaw.com
GIRARDI & KESSE: Ex-CFO Inks Embezzlement Plea Deal w/ Prosecutors
------------------------------------------------------------------
Lauren Berg of Law360 reports that Girardi Keese's former Chief
Financial Officer Christopher K. Kamon reached a plea agreement
Tuesday, October 8, 2024, with Los Angeles federal prosecutors, who
allege he spearheaded a "side fraud" that bilked millions of
dollars from the embattled law firm's accounts behind disbarred
attorney Tom Girardi's back.
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
GOLD FLORA CORP: Clark Hill's DiBianca Named as Limited Receiver
----------------------------------------------------------------
Gold Flora Corporation said the Court of Chancery of the State of
Delaware has issued an order dated October 4, 2024, regarding a
motion for sanctions filed against the Company by former directors
of Left Coast Ventures, a subsidiary of Gold Flora. The Order holds
both the Company and LCV accountable for certain legal fees tied to
advancement orders related to LCV's indemnification obligations to
its former directors. Currently, the Company's indemnification
obligations under this Order are estimated to be around $1.65
million. Importantly, the Order does not establish a full general
receivership for the Company.
On March 30, 2021, former directors and shareholders of Left Coast
Ventures filed a complaint in court against several parties,
including three former directors of LCV, alleging business torts
such as breaches of duty to LCV and its shareholders. The
plaintiffs amended their complaint to include new defendants,
including TPCO Holding Corp. and a former TPCO director.
On July 7, 2023, the Company completed a business combination with
TPCO, leading to the amalgamation of TPCO, Gold Flora, LLC, and
Stately Capital Corporation. This merger resulted in the Company
assuming LCV and TPCO's indemnification obligations concerning the
defendant directors.
Under the Order, the Court has designated Molly DiBianca of Clark
Hill PLC as a limited purpose receiver. DiBianca is empowered to
take actions she deems appropriate to ensure that the Company and
LCV fulfill their obligations under the Order. This may involve
accessing financial records and negotiating a payment plan with the
former directors (the "Charge") in line with Title 8, Section 322
of the Delaware General Corporation Law ("Section 322").
The Limited Receiver's appointment is restricted to overseeing the
Charge, and she will not have authority over the Company beyond
this matter. The Limited Receiver will possess all powers typically
granted to a receiver under Section 322, but only in relation to
the Charge. According to the Order, the Limited Receiver is
expected to first seek to resolve the Charge using operating cash
flow. The initial term for the Limited Receiver will last for 59
days from the date of the Order.
About Gold Flora Corporation
Gold Flora Corporation is a female-led, vertically-integrated
cannabis leader that owns and operates multiple premium indoor
cannabis cultivation facilities, 16 retail dispensaries in
strategic geographies, a distribution business selling first party
and third party brands into hundreds of dispensaries across
California, and a robust portfolio of 8 cannabis brands, including
Gramlin, one of the fastest growing brands in the state. The
Company's retail operations include Airfield Supply Company,
Caliva, Coastal, Calma, King's Crew, Varda, Deli, and Higher Level
dispensaries, and its distribution company operates under the name
Stately Distribution.
GREEN PEAK: Receiver to Auction Off Assets Starting Oct. 21
-----------------------------------------------------------
NCV Newswire reports that Gene R. Kohut of Trust Street Advisors,
LLC, the court-appointed receiver for Green Peak Industries, Inc.,
District Bay, LLC, The District Park, LLC, and GPIMD Corp. --
collectively referred to as "Skymint" -- is overseeing an auction
for the sale of specific cannabis equipment and personal property
assets owned by Skymint.
Skymint operates an extensive network of cannabis provisioning
centers throughout Michigan.
An auction for Skymint's equipment and personal property will begin
on Monday, October 21, 2024, at 10:00 a.m. (Eastern Time) and will
end on Friday, October 25, 2024, at 4:00 p.m. (Eastern Time). The
auction will be conducted online at Skymint.hibid.com. Interested
participants must register as qualified bidders at
Skymint.hibid.com by the auction closing date. All sales will be
governed by the terms and conditions outlined in the auction
registration process. This auction will be exclusively online.
Interested parties will have the opportunity to inspect the auction
assets from 1:00 p.m. to 4:00 p.m. (Eastern Time) on October 16 and
17. All items will be on display at Skymint's facility located at
1340 South Waverly Street, Lansing, Michigan 48917. While
appointments are not necessary, a government-issued photo ID will
be required for entry during these hours.
For further information about the auction and the sale of Skymint's
assets, please reach out to Doug McLeod via email at
doug.mcleod@tyndallco.com.
About Green Peak Industries LLC
Green Peak Industries LLC, doing business as Skymint, is a
Michigan-based vertically integrated cannabis company and the
state's largest medical & recreational license holder, enlisted TAP
Innovations to provide integration from Ascentis employee data
management solution to a leading HR and payroll services platform.
GRESHAM WORLDWIDE: Oct. 24 Hearing on Cash Use, Bid for Trustee
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona entered a
fourth interim order authorizing Gresham Worldwide, Inc., to
continue using cash collateral through October 25, 2024.
The Court's third interim order permitted the Debtor to use cash
collateral through October 4 for necessary expenditures.
The Court scheduled an evidentiary final hearing via
videoconference for October 24 at 8:00 a.m. before Judge Scott H.
Gan to consider these pending requests:
1. The Debtor's motion to use cash collateral;
2. The Debtor's motion to obtain secured postpetition
financing with superpriority over administrative expenses; and
3. Arena Investors LP's emergency motion to appoint chapter 11
trustee.
The Third and Fourth Interim Cash Collateral Orders include the
provision of valid and perfected security interests and liens to
lenders Arena and Ault Lending on any property acquired
post-petition. A copy of the Court's Fourth Interim Order is
available at https://urlcurt.com/u?l=RS2udu
The Debtor's updated cash collateral budget for each week in
October. The budget shows total payroll expenses of $58,090 for
the week ending October 18, and $14,704 for the week ending October
25; total regular payments, including security, internet, and
insurance costs, of $3,261 for the week ending October 18, and $916
for the week ending October 25; and total other obligations,
including US Trustee fees and travel, of $15,475 for the week
ending October 18 and $2,000 for the week ending October 25.
The Debtor must continue to provide cash flow reports and
expenditure details to Arena, U.S. Trustee, Ault Lending, and the
Official Committee of Unsecured Creditors, ensuring transparency
throughout the process.
The Debtor is also seeking authorization to enter into
post-petition financing from Ault Lending as DIP lender, in the
form of an unsecured credit facility of up to an aggregate
principal amount of $1,250,000 and subject to the terms and
conditions of a Debtor-in-Possession Loan Agreement, as modified
and filed with the Court. Arena, which is the agent for senior
secured noteholders, has objected to the Debtor's DIP Motion and
certain other first day
pleadings filed by the Debtor. The United States Trustee also
raised certain concerns with respect to the DIP Motion and the DIP
Facility proposed by the Debtor.
On September 24, 2024, the Court commenced a Final Hearing to
consider approval of the proposed DIP Loan and, at the conclusion
of the first day of hearings, granted the Debtor's request for
interim approval of the DIP Loan to borrow $80,000 in order to
facilitate sustained operations and expenses to and through October
4. On October 4, the Court conducted a continued hearing on the
Motion, at the conclusion of which the Debtor requested the
approval of limited additional financing to facilitate sustained
operations and expenses to and through October 25, at which time
the Court is expected to conclude its hearings on the Motion.
On October 9, the Court entered a Second Interim permitting the
Debtor to borrow $75,000 from Ault to fund certain budgeted
expenses. A copy of the Court's Order is available at
https://urlcurt.com/u?l=39NrOb
The Court retains jurisdiction to enforce the order's terms and
safeguard the rights of all parties involved. This includes
preserving the ability of Arena to seek additional adequate
protection for its interests.
As reported by the Troubled Company Reporter, Arena sought
appointment of a trustee to take over the Debtor's Chapter 11 case.
Arena raised the need to appoint an independent trustee to manage
the case, saying the company's board of directors and management
are "too conflicted to remain in control of the estate." "This
case is not presently being run by [Gresham], or for the benefit of
[Gresham's] estate. It is being run by, and for, Ault," Arena's
attorney, Anthony Pirraglia, Esq., said, referring to Gresham's
controlling shareholder and lender Ault Alliance, Inc. and Ault
Lending, LLC.
About Gresham Worldwide
Gresham Worldwide, Inc. designs, manufactures, and distributes
purpose-built electronics equipment, automated test solutions,
power electronics, supply and distribution solutions, as well as
radio, microwave, and millimeter wave communication systems and
components for a variety of applications with a focus on the
global
defense industry and the healthcare market.
Gresham Worldwide sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ariz. Case No. 24-06732) on Aug. 14,
2024. In the petition filed by Lutz P. Henckels, chief financial
officer, the Debtor disclosed $32,859,000 in assets and $39,786,000
in liabilities as of June 30, 2024.
Judge Scott H. Gan oversees the case.
Patrick A. Clisham, Esq., at Engelman Berger, PC serves as the
Debtor's counsel.
The U.S. Trustee appointed an official committee of unsecured
creditors in this Chapter 11 case. The committee tapped Stinson LLP
as legal counsel.
HARVEST MIDSTREAM I: Fitch Affirms BB- LongTerm IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed Harvest Midstream I, L.P.'s (HMI)
Long-Term Issuer Default Rating (IDR) at 'BB-' and the senior
unsecured notes at 'BB-'/'RR4'. The Rating Outlook is Stable.
The ratings reflect HMI's geographic, commodity and business line
diversity, as well as its modest leverage. This is balanced by the
partnership's reliance on acquisitions for growth, declining
revenue in its two largest regions, limited size and scale, and
significant counterparty concentration. Unhedged commodity price
exposure could also increase cash flow volatility in the event of
unfavorable price spreads movement.
Key Rating Drivers
Diversified Portfolio Stabilizes Cash Flow: Fitch views HMI's
diversity as supportive of its credit quality. HMI is one of the
few small-cap companies with a well-diversified portfolio in the
capital-intensive midstream sector. By diversifying across regions,
services and commodities, HMI has maintained relatively stable
profitability in different market conditions. Declines in revenue
from core areas such as Four Corners and Alaska were offset by
growth in Texas, Louisiana and North Dakota for the last two
years.
HMI has also benefitted from a more oil-focused portfolio while
natural gas prices have been at a record low thus far in 2024.
HMI's LNG manufacturing facility now under construction aims to
commercialize natural gas in North Slope and further diversify the
partnership's service offerings.
Increasing Commodity Price Exposure: HMI's commodity price exposure
has increased in recent years as fee-based revenue accounted for
about 77% of HMI's 2Q24 LTM net revenue, down from 82% in 2023 and
89% in 2022. The significant expansion of its marketing business in
Texas and Louisiana has raised the price spreads exposure. While
improved keep-whole margins in 2024 have stabilized HMI's
performance in the Four Corners region, they also increase the
partnership's exposure to commodity price risk. Fitch expects HMI's
commodity price exposure to decline slightly with higher fee-based
revenue from Alaska and Four Corners in the forecast years.
Growth Strategy: HMI has relied on acquisitions to increase its
modest size and scale, partially due to the partnership's
substantial presence in mature or lower-growth basins. Fitch notes
that HMI management has successfully executed multiple acquisitions
of various sizes over the partnership's history. These acquisitions
have expanded HMI's footprint into new geographic regions and
enhanced customer diversification. Larger debt-financed
acquisitions could potentially increase leverage going forward.
However, management generally prioritizes debt reduction after the
acquisitions and aims to maintain leverage at a modest level. Fitch
will monitor acquisitions on a case-by-case basis, including
expected post-acquisition deleveraging plans.
Financial Policy: Fitch considers HMI's adherence to a conservative
financial policy to be an important credit factor due to the
partnership's acquisitive strategy, concentrated customer exposure
and presence in mature basins. Management has previously cut or
reduced distributions when leverage exceeded its target range of
3.0x-3.5x. Post-dividend FCF has been positive, and Fitch expects
this trend to continue. Fitch forecasts EBITDA leverage to be about
3.7x in 2024, positioning the company strongly in its rating
category. Fitch expects future acquisitions to be financed in a
balanced manner.
Affiliate Relationship: HMI's risk profile remains closely linked
to its E&P affiliate, Hilcorp Energy I, L.P. (Hilcorp; not rated),
which contributed about 47% of HMI's 2023 net revenue, down from
70% in 2021. As the largest privately held oil and gas producer in
the U.S., Hilcorp shares common ownership with HMI under CEO
Jeffery Hildebrand. HMI's operations are strategically important to
Hilcorp's production, particularly in the Alaska and Four Corners
regions. Fitch expects continued operational alignment between the
two companies while HMI diversifies its customer base and seeks
growth opportunities with third-party customers.
Volumetric Risk: Fitch notes significant volumetric risk in HMI's
contract framework, given minimal volume assurances. This risk is
partially alleviated by low production decline rates in mature
basins like North Slope and San Juan. Larger volume declines in
recent years mainly stem from contract expirations on TAPS pipeline
and producers permitting issues in San Juan, and Fitch does not
anticipate them to continue. HMI is mitigating the volumetric risk
by incorporating minimum volume commitments in some new contracts.
Derivation Summary
Howard Midstream Energy Partners, LLC (Howard; BB-/Stable) serves
as a comparable peer to HMI due to its geographic diversification.
Howard's assets are located in South Texas, the Texas Gulf Coast,
Oklahoma and Pennsylvania. Compared to HMI, Howard is smaller in
size, with EBITDA expected in the $300 million range. It faces much
lower volumetric risk, as nearly 50% of its revenue is expected to
come from volume assurance type contracts. Both companies are
exposed to oil and natural gas; however, Howard is more focused on
natural gas, of which historical prices have been more volatile
compared to crude oil. With over 90% of its EBITDA generated from
fixed-fee contracts, Howard also has lower commodity price
exposure.
Howard's leverage was elevated around 4.2x in 2023 but Fitch
expects it to decline to 3.5x-4.0x in the forecast period. Both
companies have modest leverage compared to many other midstream
issuers in the same rating category.
HMI and Howard are rated the same given that Howard's lower
volumetric and commodity price risks are balanced by its smaller
size.
Key Assumptions
- Fitch price deck for West Texas Intermediate (WTI) oil price of
$75/bbl in 2024, $65/bbl in 2025, $60/bbl in 2026-2027, and $57/bbl
thereafter;
- Fitch price deck for Henry Hub prices of $2.25/Mcf in 2024,
$3.00/Mcf in 2025-2026, and $2.75/Mcf thereafter;
- Capex and distributions for 2024 in line with management
guidance;
- Fitch assumes periodic acquisition activities in the forecast
period;
- Base interest rates applicable to the partnership's outstanding
variable rate debt obligations reflect the Fitch Global Economic
Outlook.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Change to cash flow stability profile in terms of greater
proportion of EBITDA derived from more prolific basins, and/or
decreased volumetric and commodity price exposure;
- Meaningful improvement to counterparty credit profile and an
increase in scale, with EBITDA leverage expected to sustain below
3.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA leverage above 4.5x on a sustained basis;
- Increases in capital spending and/or funding for acquisitions
beyond Fitch's expectation that have negative consequences for the
credit profile (e.g., if not funded with a balance of debt and
equity);
- An event that has a material negative effect on Hilcorp's credit
profile or operations;
- Material change to contractual arrangement and operating
practices that negatively affect HMI's cash flow or earnings
profile;
- Impairment to liquidity.
Liquidity and Debt Structure
Sufficient Liquidity: The partnership had a total liquidity of
approximately $756 million as of June 30, 2024. HMI had
approximately $11 million in cash on its balance sheet and $745
million available on its $850 million first-lien secured credit
facility. The revolving facility includes an $120 million sublimit
for letters of credit (LCs). As of June 30, 2024, there were no
outstanding LCs under the facility. The credit facility has a
maturity date of Sept. 19, 2027.
Covenants in the credit facility permit a maximum net secured
leverage ratio of 3.50x and total leverage ratio of 5.25x. They
also require the partnership to maintain a minimum interest
coverage ratio of 3.00x. As of June 30, 2024, HMI was in compliance
with its covenants. Fitch expects HMI to generate FCF and maintain
compliance with its covenants in the forecast period.
The required term loan amortization payment of $25 million has been
eliminated through the third amendment to the credit agreement. The
term loan matures on Sept. 19, 2026 and Fitch expects HMI to roll
the unpaid term loan balance of about $100 million into the
revolving credit facility at maturity. HMI also has an $800 million
senior unsecured note maturing on Sept. 1, 2028 and $500 million
maturing on May 15, 2032.
Issuer Profile
HMI is a privately held midstream services partnership involved in
oil and natural gas pipelines, gas processing and treating plants,
and related equipment. It operates in Alaska, Four Corners (San
Juan basin in Colorado and New Mexico), Louisiana, Eagle Ford
(Texas) and Bakken (North Dakota).
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Harvest Midstream I, L.P. has an ESG Relevance Score of '4' for
Governance Structure due to related party transactions with
affiliate companies, which has a negative impact on the credit
profile, and is relevant to the rating[s] in conjunction with other
factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Harvest Midstream I,
L.P. LT IDR BB- Affirmed BB-
senior unsecured LT BB- Affirmed RR4 BB-
HAWKERS LLC: Gets Interim OK to Use Cash Collateral
---------------------------------------------------
Hawkers, LLC and its affiliates received interim approval from the
U.S. Bankruptcy Court for the Middle District of Florida to use
cash collateral until Oct. 15.
The interim order authorized the companies to use cash collateral
for court-approved payments including U.S. Trustee fees and
administrative expenses in accordance with the budget that allows
for a 10% variance.
As protection, the companies will grant replacement liens to ABC
Funding, LLC and four other creditors with interest in the cash
collateral.
The companies will also grant their creditors access to management
to assess business operations and financial stability.
The next hearing is scheduled for Oct. 15.
About Hawkers LLC
Hawkers, LLC is a restaurant and food service company known for its
vibrant and innovative culinary offerings, often focusing on a
fusion of Asian street food with modern American flavors. The
company operates multiple locations across the United States,
providing a diverse menu that includes various dishes, such as bao
buns, rice bowls, and shareable plates.
Hawkers and its affiliates filed Chapter 11 petitions (Bankr. M.D.
Fla. Lead Case No. 24-05079) on September 23, 2024. The petitions
were signed by Kaleb C. Harrell as manager.
At the time of the filing, Hawkers reported $10 million to $50
million in both assets and liabilities
Judge Lori V. Vaughan oversees the cases.
R. Scott Shuker, Esq., at Shuker & Dorris, P.A. represents the
Debtor as legal counsel.
HDC HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: HDC Holdings II, LLC
Channel Control Merchants
Dirt Cheap
Treasure Hunt
Dirt Cheap Building Supplies
6892 US Hwy 49 North,
Hattiesburg, MS 39402
Business Description: The Debtors are providers of secondary
merchandise which serves a loyal customer
base of treasure hunters and value
seekers in underserved secondary and
tertiary retail markets. The Debtors brands
include Dirt Cheap, Treasure Hunt, and Dirt
Cheap Building Supplies. Through these
business lines, the Debtors sell a variety
of merchandise, including apparel and
footwear, building supplies, toys and
electronics, furniture, seasonal items,
and health and beauty products, among
others. The Company focuses on addressing
the retail needs of its consumer customers
through wholesale brick and mortar retail
locations located throughout the southern
United States, primarily in Mississippi and
Louisiana.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
District of Delaware
Nineteen affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
HDC Holdings II, LLC (Lead Case) 24-12307
CAL Support Services, LLC 24-12325
CCM Capital Assets, LLC 24-12309
CCM Support Services, LLC 24-12312
CCM Wholesale, LLC 24-12323
CCM Wholesale SE, LLC 24-12313
Channel Control Merchants, LLC 24-12310
Channel Control Merchants of California, LLC 24-12324
Channel Control Merchants of Texas, LLC 24-12314
Creative Sales Solutions, LLC 24-12315
Dirt Cheap Arkansas, LLC 24-12316
Dirt Cheap Building Supplies, LLC 24-12317
Dirt Cheap I, LLC 24-12311
Dirt Cheap of Georgia, LLC 24-12318
Dirt Cheap of Louisiana, LLC 24-12319
Dirt Cheap SE, LLC 24-12320
Dirt Cheap Tennessee, LLC 24-12321
HDC Holdings III, LLC 24-12308
Treasure Hunt, LLC 24-12322
Judge: Hon. Thomas M Horan
Debtors'
Bankruptcy
Counsel: Andrew L. Magaziner, Esq.
Michael R. Nestor, Esq.
S. Alexander Faris, Esq.
Kristin L. McElroy, Esq.
Andrew M. Lee, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Tel: (302) 571-6600
Fax: (302) 571-1253
Email: mnestor@ycst.com
amagaziner@ycst.com
afaris@ycst.com
kmcelroy@ycst.com
alee@ycst.com
Debtors'
Notice,
Claims,
Solicitation &
Balloting
Agent and
Administrative
Advisor: EPIQ CORPORATE RESTRUCTURING, LLC
Estimated Assets
(on a consolidated basis): $100 million to $500 million
Estimated Liabilities
(on a consolidated basis): $100 million to $500 million
The petitions were signed by Jeffrey Martin as chief restructuring
officer.
A full-text copy of the Lead Debtor's petition is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/XBAPEGY/HDC_Holdings_II_LLC__debke-24-12307__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Target Corp. Salvage Dept. Trade Debt $15,621,621
1000 Nicollet Mall TPN-1301
Minneapolis, MN 55403
Contact: Maggie Henderson
Phone: (612) 978-3610
Email: CORPORATERESPONSIBILITY@TARGET.COM
2. Amazon.com Services LLC Trade Debt $5,484,663
410 Terry Ave N
Seattle, WA 98109
Contact: Andrew Devore
Tel: (206) 266-1000
Fax: (206) 266-1821
Email: ADEVORE@AMAZON.COM
3. The Recon Group LLC Trade Debt $799,621
20200 W. Dixie Hwy, Suite 1005
Aventura, FL 33180
Contact: Jennifer Maver
Phone: (786) 231-6685
Email: IMAVER@GOTRG.COM
4. Minglewood Properties Ltd Trade Debt $756,957
205 North Washington Avenue
Marshall, TX 75670
Contact: Jacob Williamson
Phone: (901) 356-9513
Email: JWILLIAMSON@CRAWFORDSQ.COM
5. Macys-Bloomingdales Trade Debt $499,703
301 Governors Highway
South Windsor, CT 06074
Contact: Chief Financial Officer
Email: SUPPLIERDIVERSITY@MACYS.COM
6. Salesforce.com Inc. Trade Debt $429,492
415 Mission St, 3rd Floor
San Francisco, CA 94105
Contact: Austin Greene
Tel: (253) 861-2288
Fax: 415-901-7040
Email: AUSTIN.GREENE@SALESFORCE.COM
7. Ernst & Young US LLP Trade Debt $335,007
55 Ivan Allen JR Blvd NW
Suite 1000
Atlanta, GA 30308
Contact: Trevor Dostie
Tel: (212) 773-3000
Fax: 404 -817-4301
Email: TREVOR.DOSTIE@EY.COM
8. Academy Sports Outdoors, Inc. Trade Debt $310,739
1800 North Mason Rd
Katy, TX 77449
Contact: Steve Lawrence
Phone: (281) 646-5200
Email: CUSTOMERSERVICE@ACADEMY.COM
9. Classic Brands LLC Trade Debt $277,543
8901 Snowden River Parkway
Columbia, MD 21046
Contact: Chief Financial Officer
Tel: (301) 953-1133
Fax: 888637-1943
10. Corporate Billing, LLC Trade Debt $270,009
239 Johnston St SE
Decatur, AL 35601
Contact: Justin Lunday
Tel: (662) 268-2827
Fax: 256-584-3680
Email: JLUNDAY@BIGM.COM
11. Sunset Forest Products, Inc. Trade Debt $258,829
5573 SW Arctic Dr Building C
Beaverton, OR 97005
Contact: Clara Shannon
Phone: (661) 271-3188
Email: RECEIVABLES@SUNSETFOREST.COM
12. Viking Forest Products LLC Trade Debt $257,072
7480 Flying Cloud Dr
Suite 400
Eden Prairie, MN 55344
Contact: Trent Palm
Phone: (952) 567-7827
Email: TRENT@VIKINGBUILDINGPRODUCTS.COM
13. Nordstrom, Inc. Trade Debt $243,336
1700 7th Avenue
Seattle, WA 98101
Contact: Greg Underwood
Tel: (206) 628-2111
Fax: (206) 628-1795
Email: GREG.UNDERWOOD@NORDSTROM.COM
14. Kenco Label & Tag Co. LLC Trade Debt $214,827
6543 N. Sidney Place
Milwaukee, WI 53209
Contact: Dee Felix
Tel: (414) 269-2263
Fax: (414) 352-6533
Email: DEE@KENCOLABEL.COM
15. Dicks Sporting Goods, Inc. Trade Debt $208,109
345 Court Street
Coraopolis, PA 15108
Contact: Mark Rudolph
Tel: (724) 273-1516
Fax: 412 788-8140
Email: MARK.RUDOLPH@DCSG.COM
16. Lowes Trade Debt $206,123
1000 Lowes Blvd
Mooresville, SC 28117
Contact: Laura Chartrand
Tel: (262) 623-7556
Fax: 704-426-5889
Email: LAURA.CHARTAND@LOWES.COM
17. Inmar Supply Chain Solutions, LLC Trade Debt $198,000
635 Vine Street
Winston-Salem, NC 27101
Contact: Spencer Baird
Tel: (336) 770-3530
Fax: (336) 770-3520
Email: SPERNCERBRAD@INMAR.COM
18. Concord USA LLC Trade Debt $191,690
509 2nd Ave South
Hopkins, MN 55343
Contact: Jeanell Krupnick
Tel: (952) 241-1090
Email: JEANELL.KRUPNICK@CONCORDUSA.COM
19. Schneider National Carriers, Inc. Trade Debt $166,726
3300 International Park DR SE
Atlanta, GA 30316
Contact: Austin Carl
Phone: (920) 357-4421
Email: CARLA@SCHNEIDER.COM
20. CSS Inc. Trade Debt $154,187
35 Love Lane
Netcong, NJ 07857
Contact: Michell Benson
Phone: (973) 364-1118
Email: MICHELE@CSSINCUSA.COM
21. 24/7 Shop At Home Inc. Trade Debt $129,877
20450 Business Pkwy
City of Industry, CA 91789
Contact: Chief Financial Officer
Phone: (626) 363-9307
Email: CUSTOMERSERVICE@247SHOPATHOME.COM
22. Blue Mountain Indusrial Park, LLC Trade Debt $129,173
Hudson Pointe
Monsey, NY 10952
Contact: Allen Fischer
Phone: (929) 441-0300
Email: AI.LANDMARKREALTY@GMAIL.COM
23. Home Depot Trade Debt $103,967
2455 Paces Ferry Rd SE
Atlanta, GA 30339
Contact: Jorge Valarezo
Tel: (404) 394-4314
Fax: 770-384-5552
Email: JORGERVALAREZO@HOMEDEPOT.COM
24. Fixture Zone, Inc. Trade Debt $101,560
251 E. University Drive
Phoenix, AZ 85004
Contact: Charles Sacks
Email: CHARLES@THEFIXTUREZONE.COM
25. Total Quality Logistics LLC Trade Debt $101,509
125 S Clark St Suite 500
Chicago, IL 60603
Contact: Maggie Mercado
Email: MMERCADO@TQL.COM
26. AFCO Trade Debt $100,987
310 Grant St 1600
Pittsburgh, PA 15219
Contact: Rolin Salinas
Tel: (800) 288-6901
Fax: 412-402-3878
Email: RSALINAS@AFCODIRECT.COM
27. ON Partners Trade Debt $96,350
102 First Street, Suite 201
Hudson, OH 44236
Contact: Greg Kleeh
Phone: (404) 945-4135
Email: GREG@ONPARTNERS.COM
28. Staples 960 Trade Debt $95,730
500 Staples Dr
Framingham, MA 01702
Contact: John Lederer
Phone: (508) 253-5000
Fax: (508) 253-8951
Email: SUPPORT@ORDERS.STAPLES.COM
29. Synergy IT Solutions of NYS, Inc. Trade Debt $91,513
452 Sonwil Drive
Cheektowaga, NY 17427
Contact: Tim Gekas
Phone: (716) 250-3200
Email: CONTACTUS@SYNERGYITS.COM
30. OmniVeillance Trade Debt $82,833
4201 Vienna Dr
Pilot Hill, CA 95664
Contact: Chief Financial Officer
HIJOLE FOODS: Seeks 30-Day Extension of Plan Filing Deadline
------------------------------------------------------------
Hijole Foods Bistro, Corp., asked the U.S. Bankruptcy Court for the
District of Puerto Rico to extend its period to file a plan and
disclosure statement for 30 days.
On July 31, 2024, the Court granted debtor an extension of time to
file Disclosure Statement and Plan.
The debtor claims that it is still actively pursuing settlement
agreements with various of the creditors in the present case.
The debtor explains that it is in the final stage of negotiations,
reason why the company is requesting additional 30 days to present
a confirmable plan and disclosure statement.
Hijole Foods Bistro, Corp. is represented by:
Juan Carlos Bigas Valedon, Esq.
Juan C. Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About Hijole Foods Bistro, Corp.
Hijole Foods Bistro, Corp., sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-0015)
on Jan. 19, 2024, listing $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Juan C. Bigas Valedon, Esq., at Juan C. Bigas Law Office,
represents the Debtor as counsel.
HVP FOODS: Seeks 30-Day Extension of Plan Filing Deadline
---------------------------------------------------------
HVP Foods Corp. asked the U.S. Bankruptcy Court for the District of
Puerto Rico to extend its period to file a plan and disclosure
statement for 30 days.
On July 31, 2024, the Court granted Debtor an extension of time to
file Disclosure Statement and Plan.
The Debtor claims that it is still actively pursuing settlement
agreements with various of the creditors in the present case.
The Debtor explains that it is in the final stage of negotiations,
reason why the company is requesting additional 30 days to present
a confirmable plan and disclosure statement.
HVP Foods Corp. is represented by:
Juan Carlos Bigas Valedon, Esq.
Juan C. Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About HVP Foods, Corp.
HVP Foods Corp. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-00878)
on March 5, 2024, listing $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Juan Carlos Bigas Valedon, Esq., at Juan C Bigas Law Office, is the
Debtor's counsel.
INTERGROUP CORP: WithumSmith+Brown Raises Going Concern Doubt
-------------------------------------------------------------
The InterGroup Corporation disclosed in a Form 10-K Report filed
with the U.S. Securities and Exchange Commission for the fiscal
year ended December 31, 2023, that its auditor expressed
substantial doubt about the Company's ability to continue as a
going concern.
East Brunswick, N.J.-based WithumSmith+Brown, PC, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated September 30, 2024, citing that the outstanding
balance as of June 30, 2024, of the hotel's mortgage notes payable
consists of a senior mortgage loan and mezzanine loan totaling
$100,783,000, net of debt issuance costs amounting to $679,000.
Both loans matured on January 1, 2024, and were subsequently
extended to January 1, 2025 through forbearance agreements. In
addition, the Company has recurring losses and has an accumulated
deficit. These factors and the Company's ability to successfully
refinance the debt on favorable terms in the current lending
environment raise substantial doubt about the Company's ability to
continue as a going concern within the next 12 months.
The Hotel financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. As of
June 30, 2024, the outstanding balance consists of a senior
mortgage loan and mezzanine loan totaling $100,783,000 net of debt
issuance costs amounting to $679,000. Both loans matured on January
1, 2024 and were extended to January 1, 2025 on April 29, 2024
through Forbearance Agreements. In addition, the Hotel has
recurring losses and has an accumulated deficit of $117,102,000
which includes a $64,100,000 increase adjustment made in December
2013 as a result of the partnership redemption.
Due to these factors and the Hotel's ability to successfully
refinance the debt on favorable terms in the current lending
environment gives rise to substantial doubt about the Hotel's
ability to continue as a going concern for one year after the
financial statement issuance date.
On January 4, 2024, the Hotel was made aware of a notice of default
issued by its senior loan special servicer LNR Partners, LLC to
Justice Operating Company, LLC which is the wholly owned subsidiary
of Portsmouth Square, Inc. The Notice states that the lender has
rights as a result of such defaults, including, but not limited to,
acceleration of the loans, foreclosure on collateral and other
rights and remedies under the loan documents and otherwise
available under the law. On January 10, 2024, the Company filed the
required Form 8-K with the Securities and Exchange Commission.
During the entire life of the outstanding debt, the Company has
made all mortgage payments timely as of the date of maturity and as
of June 30, 2024, there were no delinquent amounts due to the
senior or mezzanine lenders. On April 29, 2024, the Company entered
into forbearance agreements with its senior and mezzanine lenders
which establishes, among other customary terms, the new maturity
date of January 1, 2025. While the Company successfully entered
into the aforementioned forbearance agreements, we continue our
efforts to place a longer term refinancing solution to its current
senior mortgage and mezzanine debt with potential lenders. As such,
there can be no assurance that the Company will be able to obtain
additional liquidity when needed or under acceptable terms, if at
all.
The Hotel has successfully completed its full guest-rooms
renovation over the last 2 years along with public space, fitness
center, corridors, and meeting space. With newly renovated rooms in
its Competitive Set of hotels and will allow the hotel to continue
to drive rate and grow RevPAR over the market and its CompSet. The
hotel recently received its annual Quality Assurance inspection
from Hilton and received the highest score at least in the hotel's
last decade at 94.45% which is an "Outstanding" ranking by Hilton.
Even during the renovation that took out between 2-4 floors or
50-100 guest rooms of inventory at a time, the Hotel maintained an
index of over 100%. At the end of the renovation in June 2024, the
Hotel's trailing 12-month index was 109.6%. During the fiscal year
ending June 30, 2024, the Hotel's CompSet achieved a RevPAR of
$161.47 while the Hotel had a RevPAR of $176.99. An excellent
achievement for our property while it had roughly 13%-18% of its
inventory unavailable over this time period. Since the completion
of the renovation, the Hotel has increased its lead in RevPAR on
the CompSet dramatically. In the two months since completing the
renovation, the Hotel has achieved an average RevPAR index of over
150% for both months. While the CompSet has lost over 15% RevPAR;
in these two months, the Hotel has grown over 15% in this metric.
A full-text copy of the Company's Form 10-K is available at:
https://tinyurl.com/e9r8p46f
About InterGroup
The InterGroup Corporation is a Delaware corporation formed in
1985, as the successor to Mutual Real Estate Investment Trust, a
New York real estate investment trust created in 1965. The Company
has been a publicly held company since M-REIT's first public
offering of shares in 1966. The Company was organized to buy,
develop, operate, rehabilitate, and dispose of real property of
various types and descriptions, and to engage in such other
business and investment activities as would benefit the Company and
its shareholders. The Company was founded upon, and remains
committed to, social responsibility.
As of June 30, 2024, the Company had $107,811,000 in total assets,
$214,278,000 in total liabilities, and $106,467,000 in total
stockholders' deficit.
ISUN INC: Seeks to Extend Plan Exclusivity to Nov. 30
-----------------------------------------------------
iSun, Inc., and affiliates asked the U.S. Bankruptcy Court for the
District of Delaware to extend their exclusivity periods to file a
plan of reorganization and obtain acceptance thereof to November
30, 2024 and January 29, 2025, respectively.
The Debtors explain that this is the first extension that they
sought. Since filing these Chapter 11 Cases, the Debtors have made
tremendous progress on a relatively tight timeline. The Debtors
have worked diligently and in good faith towards the Sale Closing,
and then to expeditiously file, solicit, and confirm the Plan,
which provides for an orderly wind-down of the estates and
establishes a post-confirmation liquidation trust for the benefit
of general unsecured creditors.
The Debtors claim that the companies and their advisors continue to
work collaboratively with the Creditors' Committee and prepetition
secured lender ("Decathlon") to confirm and consummate the Plan.
Although the Debtors expect that the Plan will be approved by the
requisite creditors by the Proposed Voting Deadline and
subsequently confirmed at the Proposed Confirmation Hearing, the
additional time requested herein affords the Debtors time to make
any revisions to the Plan this Court may require in connection with
confirmation and to consummate confirmation of the Plan.
The Debtors assert that they have paid undisputed administrative
expenses as they come due and will work to continue to do so. The
Debtors continue to monitor their liquidity position closely and
are confident that sufficient cash will be available to satisfy
their post-petition payment obligations during the requested
extension of the Exclusive Periods.
In sum, the Chapter 11 Cases are moving towards a successful
conclusion as the Debtors diligently work to confirm and consummate
the Plan. The requested extension of the Exclusive Periods will
allow this process to continue in an efficient manner, preserve
enterprise value, and provide the Debtors with a fair and
reasonable opportunity to liquidate their business for the benefit
of all stakeholders. Under these circumstances, the Debtors
respectfully submit that ample cause exists to grant the reasonable
extension of the Exclusive Periods requested herein.
Counsel for the Debtors:
Michael Busenkell, Esq.
Amy D. Brown, Esq.
Michael Van Gorder, Esq.
Gellert Seitz Busenkell & Brown, LLC
1201 N. Orange Street Suite 300
Wilmington, DE 19801
Tel: (302) 425-5812
Fax: (302) 425-5814
Email: mbusenkell@gsbblaw.com
abrown@gsbblaw.com
mvangorder@gsbblaw.com
About iSun, Inc.
iSun, Inc. (d/b/a iSun) is a provider of solar energy services and
infrastructure. The Debtor's services include solar, storage and
electric vehicle infrastructure, design, development and
professional services, engineering, procurement, installation, O&M
and storage.
iSun, Inc. and 11 of its affiliates sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.
24-11144) on June 3, 2024. In the petition signed by Jeff Peck as
president and CEO, iSun, Inc. disclosed $0 to $50,000 in assets and
liabilities.
Judge Thomas M. Horan oversees the cases.
Gellert Seitz Busenkell & Brown LLC represents the Debtors as
general reorganization counsel. England & Debtor represents the
Debtors as investment banker and advisor. EPIQ Corporate
Restructuring LLC serves as the Debtors' claims and noticing agent.
IYS VENTURES: Suit v. CrossAmerica Dismissed with Leave to Amend
----------------------------------------------------------------
In the case captioned as IYS VENTURES, LLC, Plaintiff, v.
CROSSAMERICA PARTNERS LP, LEHIGH GAS WHOLESALE LLC, LGP REALTY
HOLDINGS LP, ERICKSON OIL PRODUCTS, INC., CAP OPERATIONS, INC. and
LEHIGH GAS WHOLESALE SERVICES, INC., Defendants, Adv. Pro. No. 23 A
352 (Bankr. N.D. Ill.), Judge David D. Cleary of the United States
Bankruptcy Court for the Northern District of Illinois granted the
motion filed by the defendants to dismiss IYS's complaint with
leave to amend.
Plaintiff entered into a franchise relationship with Defendants'
predecessor under different ownership and management. That
predecessor was averse to the use of company-operated service
stations and supported the use of dealer-lessee operation of its
stations.
In late 2019, Defendants acquired the predecessor's business.
Almost immediately, the new management started to reverse course to
favor the use of company-operated stations.
In early 2021, the Defendants presented the Plaintiff with "Package
#00005" and "Package #00006" (the "PMPA Franchise Agreements").
Within each package were three documents: (1) Fuel Supply
Agreement; (2) Unitary Lease Agreement; and (3) Proprietary Marks
Agreement. These are "unitary" leases and agreements.
Sometime later, Defendants presented Plaintiff with a Security and
Cross Default Agreement with an effective date of April 1, 2021.
Defendants insisted that the PMPA Franchise Agreements as written
were presented to the Plaintiff on a "take it or leave it" basis as
to the terms and provisions of the agreements and the "unitary"
nature of consolidating all stations into two groups.
The PMPA Franchise Agreements constitute a franchise relationship
between Defendants and Plaintiff through which Plaintiff operated
approximately 49 gasoline stations, including approximately 40
under a leasehold agreement with one or more of the CAP-affiliated
entities.
Of the 49 stations, 35 operate under a trademark owned or
controlled by refiners, namely Marathon, Mobil, BP or Amoco.
Plaintiff operates some stations without a refiner brand.
The Distributor under the Fuel Supply Agreement is Lehigh Gas
Wholesale LLC and Plaintiff is the Franchise Dealer. Lehigh LLC is
also the Rent Designee under the Unitary Lease Agreement.
The Unitary Lease Agreement references a number of entities as the
Landlord including: LGP Realty Holdings LP, Erickson Oil Products,
Inc., CAP Operations, Inc., Lehigh Gas Wholesale Services, Inc.,
and Lehigh LLC.
CAP required Plaintiff to pay it a security deposit in the amount
of $995,000 related to the two PMPA Franchise Agreements which
amount CAP continues to hold in order to indemnify CAP from any
monetary defaults by Plaintiff.
On July 12, 2023, Defendants filed a motion to compel rejection of
the PMPA Franchise Agreements or, alternatively, for relief from
the stay. On September 18, 2023, Plaintiff filed a motion to assume
the PMPA Franchise Agreements.
Following a briefing schedule and a three-day evidentiary hearing,
the court entered an opinion and two orders on April 4, 2024. The
court denied the Motion to Reject and granted the Motion to
Assume.
The Complaint contains four counts:
A. Count I - Petroleum Marketing Practices Act
Plaintiff seeks relief under 15 U.S.C. Sec. 2805. In addition to
requesting (1) a declaration that Plaintiff cannot be terminated or
nonrenewed under the PMPA, Plaintiff seeks a declaration that (2)
the Security and Cross Default Agreement is void and (3) management
of its franchises under the Management Agreements is permitted. It
also prays that the court enter an injunction barring Defendants
from terminating or non-renewing the Plaintiff's franchises and
from dispossessing or attempting to dispossess the Plaintiff from
any of the Plaintiff's stations subject to the PMPA Franchise
Agreements without further order of court.
B. Count II - Minnesota Franchise Law
Plaintiff alleges that certain of the service stations in the
franchise relationship with Defendants are located in Minnesota.
Therefore, Minnesota law applies to those stations. It seeks
declaratory relief that the franchise relationship cannot be
terminated or nonrenewed under Minnesota law because no "good
cause" exists and no notice was provided. It also seeks an
injunction compelling Defendants to maintain the $995,000 security
deposit in an interest-bearing account accruing at least 6%
interest annually, and payable upon termination of the security
deposit.
C. Count III - Wisconsin Franchise Law
Plaintiff alleges that one franchise location operating in
Wisconsin is protected by the Wisconsin Fair Dealership Law, W.S.A.
Sec. 135.01 et seq. Plaintiff also alleges that no good cause
exists for termination, cancellation or substantial change in
competitive circumstances pursuant to W.S.A. Sec. 135.03 and no
notice was provided under W.S.A. Sec. 135.04. Therefore, Plaintiff
seeks declaratory relief that it cannot be terminated or nonrenewed
under Wisconsin law and judicial determinations declaring the
rights of the parties.
D. Count IV - Breach of Contract
Plaintiff requests declaratory relief that it cannot be terminated
or nonrenewed under the PMPA Franchise Agreements, and judicial
determinations declaring the rights of the parties pursuant to
applicable law.
Motion to Dismiss
The Motion to Dismiss argues that the Complaint does not plausibly
allege a claim for relief under any of the counts. According to the
Court, the Motion to Dismiss is granted as to Count I although
Plaintiff will be allowed an opportunity to file an amended
complaint with a revised Count I.
The Court finds under the ordinary meaning of termination, the
Complaint contains no well-pleaded allegations that the franchise
has been terminated or the franchise relationship has not been
renewed. Therefore, to the extent that the Complaint seeks
injunctive relief, Plaintiff failed to plausibly allege a claim for
relief, the Court concludes.
To the extent that the Motion to Dismiss seeks dismissal of Count
II on the grounds that the Motion to Reject did not constitute an
act to terminate or not renew the PMPA Franchise Agreements, it
will be granted, the Court holds. Plaintiff is granted leave to
amend the Complaint accordingly.
To the extent that the Motion to Dismiss seeks dismissal of Count
III on the grounds that the Motion to Reject did not constitute an
act to terminate or not renew the PMPA Franchise Agreements, it
will be granted, the Court further holds. Plaintiff is granted
leave to amend the Complaint accordingly.
According to the Court, Plaintiff has not identified any provision
of the PMPA Franchise Agreements that Defendants breached. Simply
alleging that the PMPA Franchise Agreements "are virtually
coextensive with the PMPA" is insufficient to put Defendants on
notice of a claim for breach of contract, the Court states.
Therefore, the Motion to Dismiss will be granted as to Count IV,
with leave to amend.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=oLBT8u
About IYS Ventures
IYS Ventures, LLC leases, owns and operates gas stations in
Illinois, Minnesota, Michigan, Indiana, Ohio, South Dakota,
Virginia, Wisconsin, and Louisiana.
The Debtor filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 23-06782) on May 23,
2023, with $1 million to $10 million in assets and $10 million to
$50 million in liabilities. Muwafak Rizek, manager and member,
signed the petition.
Judge David D. Cleary oversees the case.
Gregory K. Stern, P.C. is the Debtor's legal counsel.
JAMES PINE: Court Rules on Proper Valuation Method for Truck
------------------------------------------------------------
Judge Jerrold N. Poslusny, Jr. of the United States Bankruptcy
Court for the District of New Jersey ruled that the appropriate
method to determine the value of the truck involved in the claim
dispute between James Pine & Son Trucking LLC and Universal Finance
Corp. is the fair market value, or replacement value.
The Debtor entered into a commercial equipment finance agreement
with Universal on March 7, 2023, to refinance certain equipment.
Universal took a security interest in the equipment, including a
2016 Peterbilt Model 367 Tri-Axle Dump Truck, and the Debtor later
defaulted under the terms of the CEFA.
The Debtor filed a petition for relief under Chapter 11 of the
Bankruptcy Code on October 26, 2023. The Debtor qualified as a
small business debtor and elected to proceed under Subchapter V of
Chapter 11. The Plan calls for the Debtor to retain the Truck and
continue as a going concern.
Universal filed claim number 8 in the amount of $353,961.10 and is
secured up to the value of the equipment, which the Claim asserts
is $276,795. Universal filed a motion for relief to pursue state
law remedies as to all of the equipment covered in the CEFA,
including the Truck.
The motion was initially granted, and the Debtor then filed a
motion to vacate the stay relief order. Following several
additional filings, the Court entered an order which permitted
Universal to repossess and sell all of the equipment covered in the
CEFA, except the Truck and a second piece of equipment of
negligible value.
The Debtor objected to the Claim, specifically, challenging the
total amount of the claim, and the portion of the claim that is
treated as secured. Because Universal repossessed and sold all of
the remaining equipment, the secured portion of the remaining Claim
is limited to the Truck's value. However, the parties dispute the
proper method by which to value the Truck. A valuation hearing is
scheduled for October 31, and the parties both submitted briefs
arguing for their preferred valuation method.
Universal argues that because the Debtor intends to keep the Truck
and use it in its business, the Court should determine its fair
market value or replacement value. In contrast, the Debtor argues
that the liquidation value is the proper method.
In this case, the Plan calls for the Debtor to retain the Truck and
use it to generate income through its business. The Court notes
that in In re Heritage Highgate, Inc., 679 F.3d 132, 140 (3d Cir.
2012), the Third Circuit considered the appropriate valuation
method for collateral when a Chapter 11 debtor elects to use that
collateral to generate an income stream, ruling that in such
circumstances "a Sec. 506(a) valuation based upon a hypothetical
foreclosure sale would not be appropriate." Rather, "the present
value of the income stream would [instead] be equal to the
collateral's fair market value."
In Chapter 11 reorganizations, if the debtor intends to retain the
collateral and use it to generate income, the proper valuation
method is the replacement value, the Court states.
The Debtor offers no argument why the valuation standards under
section 506 are not appropriate in a Subchapter V case, and the
Court is not aware of any. Therefore, Heritage Highgate controls in
Subchapter V cases, and the replacement value is the appropriate
method to determine the value of the Truck.
Judge Poslusny concludes, "Because Heritage Highgate applies in
Subchapter V cases, the value of collateral is evaluated in the
context of the Debtor's intended use of that collateral. Because
the Debtor intends to retain the collateral and use it to generate
an income stream, the fair market value, or replacement value, is
the appropriate method in this case and 1s the valuation method the
Court will consider at the October 31 hearing."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=jjdv86
About James Pine & Son Trucking
James Pine & Son Trucking, LLC filed Chapter 11 petition (Bankr.
D.N.J. Case No. 23-19461) on Oct. 26, 2023, with $100,001 to
$500,000 in assets and $500,001 to $1 million in liabilities. James
Pine, Jr., member, signed the petition.
Judge Jerrold N. Poslusny Jr. oversees the case.
David A. Kasen, Esq., at Kasen & Kasen, PC is the Debtor's legal
counsel.
JEFFERIES FINANCE: Moody's Rates New Senior Secured Bonds 'Ba2'
---------------------------------------------------------------
Moody's Ratings has assigned a Ba2 rating to Jefferies Finance
LLC's (JFIN) new senior secured bonds. Coinciding with the bond
issuance, Moody's downgraded JFIN's senior unsecured bond rating to
B2 from B1. The Ba3 corporate family rating, Ba1 senior secured
revolving credit facilities rating and Ba2 senior secured term loan
rating were affirmed following the announced transaction. JFIN's
outlook remains stable.
The proceeds from JFIN's planned $500 million senior secured bond
offering together with the company's recent $950 million senior
secured term loan and $500 million senior secured revolving
facility issuance are expected to be used to pay off the $250
million subordinated term loan and $1.65 billion senior secured
revolver, with the excess cash to be used for general corporate
purposes including to support underwriting commitments and new loan
frontings.
RATINGS RATIONALE
The assignment of the Ba2 rating to the senior secured bonds
reflects that the bonds are pari passu in the capital structure
with the recently issued senior secured term loan, which is also
rated Ba2. The downgrade of the senior unsecured bonds reflects
their ranking in JFIN's capital structure in a default scenario,
with the addition of more senior secured debt in the capital
structure and the expected extinguishment of the subordinated term
loan.
The transaction coupled with the senior secured term loan and
senior secured revolver issuance announced on 26 September 2024 are
expected to modestly improve JFIN's cost of funds primarily by
extinguishing the higher-cost subordinated term loan, in addition
to providing greater funding flexibility from a higher cash
position. Moody's do not expect the transaction to have a material
impact on JFIN's capitalization and leverage.
The affirmation of JFIN's Ba3 CFR reflects the firm's established
franchise as an underwriter of leveraged loans, its solid
capitalization and its prudent liquidity management. Since it was
formed 20 years ago, JFIN has demonstrated the ability to
underwrite and manage leveraged loan risks through multiple
cycles.
JFIN's financial profile incorporates the benefits to its franchise
of its affiliation with its owners, Jefferies Financial Group Inc.
(JFG, Baa2 senior debt, stable) and Massachusetts Mutual Life
Insurance Company (Mass Mutual, Aa3 insurance financial strength,
stable), which each own 50% of JFIN. JFG originates all of JFIN's
underwriting opportunities and along with MassMutual both provide
liquidity to the underwriting business. Both owners provide support
to JFIN's growing asset management business in the form of
origination from JFG and liquidity from MassMutual.
JFIN's stable outlook reflects the firm's return to profitability
in 2023 after generating a loss in 2022. JFIN operates in a
leveraged finance market that is recovering, and which still faces
uncertainties with respect to transaction activity and loan credit
performance. Moody's expect JFIN to sustain its creditworthiness by
maintaining its underwriting and credit disciplines, controlling
concentrations within its loan portfolio, and continuing to
emphasize first-lien exposures with lower losses given default.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade JFIN's rating if the firm reduces its credit
portfolio concentrations and demonstrates careful management of its
underwriting pipeline and risk appetite throughout the coming
cycle. Growth of larger streams of recurring asset management fees
could also lead to an upgrade.
Moody's could downgrade JFIN's ratings if the firm's liquidity
position significantly deteriorates or if it suffers outsized
credit losses. Changes in the priority and magnitude of capital
structure tranches could lead to changes in instrument ratings.
The principal methodology used in these ratings was Finance
Companies published in July 2024.
JOE'S AUTO: Wins Final Approval to Use Cash Collateral
------------------------------------------------------
Joe's Auto Service, Inc. received final court approval to use the
cash collateral of Byline Bank and other secured creditors.
The final order penned by Judge Jeffrey Graham of the U.S.
Bankruptcy Court for the Southern District of Indiana authorized
the use of cash collateral for payment of expenses in accordance
with the budget submitted by the company.
Expenditures can exceed individual line items by up to 15%,
provided the total cash flow remains above 90% of projected
amounts.
As adequate protection, Joe's Auto Service is required to pay
$15,000 to Byline Bank by Oct. 9 and another $15,000 by Nov. 2. The
company is also required to make monthly payments of $15,000
beginning on Dec. 2 until the effective date of a confirmed Chapter
11 plan of reorganization.
Byline Bank and the other secured creditors will have an allowed
superpriority administrative expense claim. In addition, adequate
protection liens granted to the secured creditors pursuant to the
interim orders previously issued by the court will remain "binding
and fully enforceable."
Byline Bank, the principal secured creditor, holds a first priority
lien on Joe's Auto Service's assets. The bank is owed more than
$1.1 million.
About Joe's Auto Service
Joe's Auto Service, Inc., formerly known as Big O Tires,
specializes in brake repairs, diagnostic procedures, and tackling
automotive issues from battery problems. The company is based in
Noblesville, Ind.
Joe's Auto Service filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. S.D. Ind. Case No. 24-04264) on
August 9, 2024, with $500,000 to $1 million in assets and $1
million to $10 million in liabilities. Joe Peil, president, signed
the petition.
Judge Jeffrey J. Graham presides over the case.
David Krebs, Esq., at Hester Baker Krebs, LLC represents the Debtor
as legal counsel.
Byline Bank, the Debtor's lender, is represented in the case by
Meredith R. Theisen, Esq., at Rubin & Levin, P.C.
JON MICHAEL SHIBLEY: Directed to Pay SouthState Counsel's Fees
--------------------------------------------------------------
Judge Lisa Ritchey Craig of the United States Bankruptcy Court for
the Northern District of Georgia granted SouthState Bank's Motion
for Sanctions against Jon Michael Hayes Shibley, seeking an award
of attorney's fees under Rule 9011 of the Federal Rules of
Bankruptcy Procedure because the Debtor filed a Motion for
Sanctions against the Bank.
On November 5, 2018, the Debtor filed a voluntary petition under
Chapter 11 of the Bankruptcy Code. 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 the Sanctions Motion, filed on March 29, 2024, the Debtor
asserted claims against the Bank for inappropriately adding amounts
for property taxes to its debt balance when, in fact, the Bank had
not advanced those funds, and the Debtor eventually paid the
amounts when he sold the Property. The Bank filed a response on May
8, 2024, denying the Debtor's allegations and raising the defenses
of release and res judicata. The Court agreed with the Bank and
dismissed the Sanctions Motion on both grounds asserted by the
Bank.
The Bank asserts it has "incurred substantial attorney fees and
costs in the numerous, duplicative and frivolous legal matters
involving" the Debtor. In particular, the Bank contends the
Debtor's Sanctions Motion "is another attempt to ignore the prior
settlements, rulings and voluntary dismissals with prejudice and
harass [the Bank] with no valid basis in fact or law." The Bank
argues that the "claims, defenses, and other legal contentions set
forth in [the Sanctions Motion] have no legal basis and are not
warranted by existing law or by a nonfrivolous argument for the
extension, modification, or reversal of existing law or the
establishment of new law in violation of Rule 9011(b)(2)" and that
the Debtor filed the Sanctions Motion in bad faith for the improper
purpose of harassing the Bank.
The Debtor did not address the Bank's arguments or even discuss the
elements of Rule 9011. He simply repeats the arguments made in the
Sanctions Motion, argues that he had a right to raise his issues
with the Bank's conduct, and disparages the Bank and the Court.
According to Judge Craig, the Debtor violated Rule 9011(b)(2) and
(b)(1) when he filed the Sanctions Motion. The Court, along with
the Bank and its counsel, has dealt with litigation regarding the
Property and the Bank's interest in it for six long years. The
Court draws upon this experience to inform its opinions of the
Debtor as a pro se litigant and his knowledge and ability to make
decisions regarding the propriety of filing and pursuing the
Sanctions Motion. The Debtor has shown that he is a "motivated and
capable litigant" and no stranger to conducting legal research and
filing lengthy pleadings and briefs.
The Court finds that no reasonable person with the Debtor's
education, professional experience, and litigation history would
believe that he could legitimately file the Sanctions Motion after
having pursued and dismissed with prejudice the exact same claim in
the 2024 District Court Actions as part of his negotiations to get
the Bank to forebear and to accept less than the amount of its
debt. And if there were any doubt that a layperson with the
Debtor's characteristics would realize the impact of dismissing a
claim with prejudice, the Debtor also previously released all
claims against the Bank as part of his settlement, making it a
certainty the Debtor understood the impact of his actions, the
Court notes.
As to whether the Debtor filed the Sanctions Motion in bad faith
and for an improper purpose, the Court found the Debtor knew the
Sanctions Motion had no legal basis when he filed it and when he
refused to withdraw it, and his response does not even attempt to
provide a legitimate reason for doing so. Based on the Debtor's
prior conduct in this case and in the Adversary Proceeding, the
Court is left with the firm conviction the Debtor filed the
Sanctions Motion in bad faith and out of spite to harass the Bank
and its counsel and to increase the Bank's costs. The Court
concludes the Debtor knew that the Sanctions Motion was frivolous
and, in filing it, he acted deliberately. He had no legitimate
purpose in filing it and no legal excuse for doing so. "He acted
maliciously and in bad faith in an effort to injure" the Bank in
violation of Rule 9011(b)(1).
As to the appropriate sanction to impose, the Bank seeks payment of
its attorney's fees in dealing with the Sanctions Motion. Given the
fact that the Court has already denied the Sanctions Motion, other
types of sanctions, such as striking or dismissing the offending
pleading, are not available. The Debtor has not directly challenged
the type of sanction or provided any argument as to why a grant of
attorney's fees would be more than necessary to deter him from
refiling barred and released claims against the Bank in the future.
The Court finds the appropriate sanction is an award of the Bank's
reasonable attorney's fees incurred in responding to the Debtor's
Sanctions Motion.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=Jw7AO8
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.
KENDON INDUSTRIES: Gets Final Approval to Use Cash Collateral
-------------------------------------------------------------
Kendon Industries, LLC received final approval from the U.S.
Bankruptcy Court for the District of Delaware to use the cash
collateral of the United States Small Business Association.
The SBA holds liens on substantially all of the company's assets,
including cash collateral on account of its senior secured loan.
The company owes the agency $450,600 as of the petition date.
Kendon can use the cash collateral according to the court-approved
budget. However, any variance beyond 10% for individual line items
during any month or 5% in aggregate during the term of the budget
requires court approval. The company must submit bi-weekly variance
reports to the Subchapter V Trustee and the U.S. Trustee.
As protection for its interests, the SBA was granted replacement
liens and a superpriority administrative expense claim over all
other claims, excluding avoidance actions.
About Kendon Industries
Established in 1991, Kendon Industries, LLC is the originator of a
full line of stand-up motorcycle trailers, utility trailers and
motorcycle lifts. Since that first motorcycle trailer, Kendon has
expanded its product line to include a full range of trailers and
lifts for the powersports market. Kendon motorcycle trailers and
lifts are stocked nationwide in multiple Powersports dealerships as
well as distributed internationally in Canada, Mexico, Europe,
China and Australia. Kendon is based in Anaheim, Calif.
Kendon Industries filed its voluntary petition for Chapter 11
protection (Bankr. D. Del. Case No. 24-11923) on September 4, 2024,
listing $3,100,789 in assets and $3,817,530 in liabilities. Randy
Cecola, director, signed the petition.
Judge Laurie Selber Silverstein oversees the case.
Cross & Simon, LLC serves as the Debtor's legal counsel.
KING WINDSHIELDS: Unsecureds to Split $6K Dividend over 60 Months
-----------------------------------------------------------------
King Windshields, Inc., filed with the U.S. Bankruptcy Court for
the District of Arizona an Amended Chapter 11 Plan of
Reorganization dated September 4, 2024.
The Debtor was formed as a Subchapter S Corporation and was founded
by Daniel Frederick and Ronald Craig. King has been in business in
Arizona since it first opened its doors on August 1, 2013. It
removes and replaces autoglass.
Prior to COVID, King was growing each year. King has never had a
negative year however business did slow down quite a bit at the
inception of COVID as less people were driving. King has been
growing back towards its pre-COVID numbers however it has been a
slow process.
Dan and Ron believe in King and its ability to reorganize and pull
through these rough times. Filing this case will give King the
opportunity to get back on its feet. King will make 80% of its
annual profits in the three to four-month span covering the summer
months. King will get back in line with the State and its other
creditors and rebuild from where it is today. It's going to take a
lot of elbow grease and pain but Dan and Ron have complete faith in
each other and their company.
Class 5 consists of General Unsecured Claims. All non-insider
allowed and approved claims under this Class shall be paid their
allowed claims from all funds available for distribution as set
forth in the Disbursement Schedule. The projected dividend of
$6,000.00 is to be paid over a period of sixty months, commencing
in month one of the Plan. This dividend shall be reduced by the
Court approved administrative expense claims of the Debtor's
counsel, Court appointed accounting professional (if any) and the
Chapter 11 Subchapter V Trustee to the extent that said
administrative expense claims exceed the amounts listed in this
Plan.
The Debtor may pre-pay any amounts due any creditor in this Class
prior to the due dates in the Plan of Reorganization without
penalty and without prior notice or Court approval unless otherwise
provided for in the Plan of Reorganization. This Class is
impaired.
Equity Holder shall retain its shareholder/membership interest in
the Debtor and the Debtor shall retain all legal and equitable
interest in assets of this estate as all reconciliation issues have
been met.
This is a sixty-month Plan with a total projected Plan yield of
approximately $932,681.01. The total projected yield includes
payment of Administrative Expenses and Priority Tax Claims. Debtor
agrees that it will make payments of not less than $932,681.01 over
the life of the Plan which represents the Debtor's projected
disposable income for that time period as required under the Code.
A full-text copy of the Amended Plan of Reorganization dated
September 4, 2024 is available at https://urlcurt.com/u?l=hNVoa1
from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Allan D. NewDelman, Esq.
Allan D. NewDelman, PC
80 East Columbus Avenue
Phoenix, AZ 85012
Telephone: (602) 264-4550
Email: anewdelman@adnlaw.net
About King Windshields
King Windshields, Inc., has been in business in Arizona since it
first opened its doors on August 1, 2013. It removes and replaces
autoglass.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ariz. Case No. 24-00998) on Feb. 12,
2024, with up to $500,000 in assets and up to $10 million in
liabilities. Daniel Frederick, president, signed the petition.
Judge Brenda Moody Whinery oversees the case.
The Debtor tapped Allan D. NewDelman, Esq., at Allan D. NewDelman,
PC as legal counsel and Angelo Bellone, CPA, as accountant.
KLEIN HERSH: Investcorp Marks $11.6MM Loan at 52% Off
-----------------------------------------------------
Investcorp Credit Management BDC, Inc has marked its $11,645,948
loan extended to Klein Hersh, LLC to market at $5,581,240 or 48% of
the outstanding amount, according to a disclosure contained in
Investcorp's Form 10-K for the Quarterly Period Ended June 30,
2024, filed with the Securities and Exchange Commission.
Investcorp is a participant in a First Lien Senior Secured Debt (3M
S + 4.63% + 6.45% Payment in Kind (0.50% Floor)) to Klein Hersh,
LLC. The loan matures on April 27, 2027.
Investcorp, Classified the Loan as non-accrual asset.
Investcorp, is a Maryland corporation formed in May 2013, is a
closed-end, externally managed, non-diversified management
investment company that has elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended, and has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code for U.S.
federal income tax purposes. Investcorp is an investment company
and accordingly follows the investment company accounting and
reporting guidance of the Financial Accounting Standards Board
Accounting Standard Codification Topic 946 Financial
Services-Investment Companies.
Investcorp is led by Suhail A. Shaikh, Director, President and
Chief Executive Officer; and Walter Tsin, Chief Financial Officer.
The fund can be reach through:
Suhail A. Shaikh
Investcorp Credit Management BDC, Inc
Maryland, 280 Park Avenue 39th Floor
New York, NY, 10017
Tel: (212) 257-5199
Klein Hersh is a precision executive search firm delivering the
visionary leaders shaping the future of life sciences and
healthcare.
KUEHG CORP: S&P Places 'B' ICR on CreditWatch Positive
------------------------------------------------------
S&P Global Ratings placed its ratings on KUEHG Corp., including its
'B' issuer credit rating, on CreditWatch with positive
implications.
S&P said, "We expect to resolve the CreditWatch placement after the
company reduces its debt balance. We will also review our
expectations for the company's business performance at that time
and assess its financial policy as a public company.
"The CreditWatch placement reflects our expectation that the IPO
could result in KUEHG's S&P Global Ratings-adjusted leverage
declining a full turn on the back of debt repayment, materially
improving credit metrics compared with our current base-case
forecast. We maintain our expectation that EBITDA will be pressured
through 2024 as federal pandemic-related funding rolls off.
However, we expect leverage will materially decline as a result of
the proceeds from the IPO going toward debt repayment, resulting in
S&P-adjusted leverage in the mid- to high-3x range for fiscal 2024,
improved from our expectation of leverage in the mid- to high-4.0x
range.
"The company's full private-equity ownership currently constrains
our view of its financial policy. While Partners Group will remain
the controlling shareholder in the near term, we expect KUEHG will
adopt a more conservative fiscal policy following the IPO. However,
our rating will depend on the long-term leverage target and
communicated financial policy.
"We will seek to resolve the CreditWatch placement after the equity
offering is complete the company repays a portion of its debt, at
which time we will assess the company's future financial policy. We
will also reassess our recovery ratings on the company's debt once
the debt reduction is confirmed. We could raise the ratings by one
or two notches."
L AND L CARE: Unsecureds Owed $24K Will Get 100% over 55 Months
---------------------------------------------------------------
L and L Care Home, LLC, submitted an Amended Combined Chapter 11
Plan of Reorganization and Disclosure Statement dated September 4,
2024.
The company's commitment to reorganizing its debts and securing the
cooperation of the creditor signifies a dedicated effort to emerge
from bankruptcy stronger and better equipped to fulfill its mission
of compassionate care.
The support from both the court and the creditor in the
reorganization efforts underscores a shared belief in the company's
potential to overcome its current challenges and continue providing
essential care to its residents.
L & L Care Home LLC's path to bankruptcy was marked by a series of
financial missteps and external pressures, but through strategic
management and legal recourse, the company is on a trajectory
towards recovery. The collaboration between the debtor and creditor
in structuring a Chapter 11 plan demonstrates a mutual commitment
to L & L Care Home's long-term sustainability and success in
delivering high-quality care to its residents.
Class 2(b) consists of Other General Unsecured Claims. Creditors
will receive 100 percent of their allowed claim in 55 equal monthly
installments, due on the first day of the month, starting September
2024. The allowed unsecured claims total $24,368.82.
Creditors in this class may not take any collection action against
Debtor so long as Debtor is not in material default under the Plan.
This class is impaired and is entitled to vote on confirmation of
the Plan.
On the Effective Date, all property of the estate and interests of
the Debtor will vest in the reorganized Debtor pursuant to Section
1141(b) of the Bankruptcy Code free and clear of all claims and
interests except as provided in this Plan.
A full-text copy of the Amended Combined Plan and Disclosure
Statement dated September 4, 2024 is available at
https://urlcurt.com/u?l=VxDCrJ from PacerMonitor.com at no charge.
Attorney for the Debtor:
Anthony O. Egbase, Esq.
Shana Y. Stark, Esq.
A.O.E. Law & Associates, APC
Bunker Hill Towers
800 W. 1st Street, Suite 400
Los Angeles, CA. 90012
Tel: (213) 620-7070
Email: info@aoelaw.com
About L and L Care Home
L and L Care Home, LLC, established on December 10, 2018, by
Melissa Lipardo, was founded with a mission to provide personalized
care to its residents.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Cal. Case No. 24-40340) on March 11,
2024. In the petition signed by Melissa Lipardo, chief executive
officer, the Debtor disclosed up to $100,000 in assets and up to
$500,000 in liabilities.
Judge Charles Novack oversees the case.
Anthony O. Egbase, Esq., at A.O.E. Law & Associates, APC, is the
Debtor's legal counsel.
LADRX CORP: All Three Proposals Approved at Annual Meeting
----------------------------------------------------------
LadRx Corporation reported in a Form 8-K filed with the Securities
and Exchange Commission that on Oct. 4, 2024, it held its 2024
Annual Meeting of Stockholders at which the stockholders:
(1) elected Jennifer Simpson, Ph.D., as director to serve until
the 2025 Annual Meeting of Stockholders;
(2) ratified the appointment of Weinberg & Company as the
Company's independent registered public accounting firm for the
fiscal year ending Dec. 31, 2024;
(3) approved, on an advisory basis, the compensation of the
Company's named executive officers as disclosed in the Proxy
Statement.
About LadRx Corp
LadRx Corporation -- www.ladrxcorp.com -- is a biopharmaceutical
company developing new therapeutics to treat patients with cancer.
The Company's focus is on the discovery, research and clinical
development of novel anti-cancer drug candidates that employ novel
technologies that target chemotherapeutic drugs to solid tumors and
reduce off-target toxicities.
Los Angeles, Calif.-based Weinberg & Company, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated March 27, 2024, citing that the Company has no recurring
source of revenue, has incurred recurring operating losses and
negative operating cash flows since inception and has an
accumulated deficit at Dec. 31, 2023. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
LASER INNOVATIONS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Laser Innovations, Inc.
d/b/a Innovative Lasers of Houston
7700 San Felipe
Houston TX 77063
Business Description: Innovative Lasers offers a non-invasive
weight loss solution that uses Zerona lasers
to help clients lose weight.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-34781
Judge: Hon. Eduardo V Rodriguez
Debtor's Counsel: Joyce W. Lindauer, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
1412 Main Street, Suite 500
Dallas TX 75202
Tel: (972) 503-4033
Email: joyce@joycelindauer.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Laura Alexis as CEO.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/R2TSAXY/Laser_Innovations_Inc__txsbke-24-34781__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/BCDGFBY/Laser_Innovations_Inc__txsbke-24-34781__0001.0.pdf?mcid=tGE4TAMA
LEO CHULIYA: Gets Interim OK for Continued Use of Cash Collateral
-----------------------------------------------------------------
Leo Chuliya, Ltd. received interim approval from the U.S.
Bankruptcy Court for the Southern District of New York to use the
cash collateral of the United States Small Business Administration
to fund its operations.
The SBA holds a first-priority security interest in the company's
cash and receivables, which constitute its cash collateral.
As protection from any potential diminution in the value of its
collateral, the SBA was granted replacement liens on the company's
personal and real property as well as a superpriority
administrative expense claim.
The final hearing is scheduled for Nov. 7.
About Leo Chuliya Ltd
Leo Chuliya Ltd owns and manages a restaurant specializing in
Szechuan cuisine for over 10 years. It serves wholesome food in a
family style setting.
The Debtor filed for Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 24-22563) before Judge Sean H. Lane, on June 24,
2024, listing under $100,000 in assets and under $500,000 in
liabilities.
The Debtor elected to be treated as a small business under
Subchapter V. Nat Wasserstein serves as the Subchapter V
trustee.
Anne J. Penachio, Esq., at Penachio Malara LLP, is the Debtor's
legal counsel.
LONE STAR: Unsecureds to Split $154K Dividend over 5 Years
----------------------------------------------------------
Lone Star Logistics and Delivery, LLC, filed with the U.S.
Bankruptcy Court for the Eastern District of Texas a Plan of
Reorganization dated September 4, 2024.
The Debtor is a Texas entity, established August 30, 2019, which
currently operates out of Frisco, Texas. The Debtor operates a
"Last Mile Delivery Service Partner" delivering goods purchased
from Amazon.com and its partners to homes and businesses in North
Texas.
The Plan provides for a reorganization and restructuring of the
Debtor's financial obligations.
The Plan provides for a distribution to Creditors in accordance
with the terms of the Plan from the Debtor over the course of 5
years from the Debtor's continued business operations.
Class 2 consists of Allowed Non-Priority Unsecured Claims against
the Debtor. Each holder of an Allowed Unsecured Claim in Class 2
shall be paid by the Reorganized Debtor from an unsecured creditor
pool, which pool shall be funded at the rate of $3,414.36 per month
beginning in month 16 (Quarter 6) of the Plan and ending in month
60 of the Plan.
The Debtor estimates the aggregate of all Allowed Class 2 Claims
does not exceed $153,646.27. This estimate is based upon the
Debtor's review of the Court's claim register, Debtor's bankruptcy
schedules, anticipated Claim objections (if any), and anticipated
deficiency sums.
The Plan provides for a $153,646.27 dividend to all unsecured
creditors over a period of 5 years, which sum is sufficient to pay
all allowed unsecured claims, including estimated deficiency
claims, in full. Debtor contends that the Plan provides for a
greater dividend to all creditors than would a liquidation of
assets under chapter 7.
Class 3 consists of the holders of Allowed Interests in the Debtor.
The holder of an Allowed Class 3 Interest shall retain
his/her/their interests in the Reorganized Debtor.
A full-text copy of the Plan of Reorganization dated September 4,
2024 is available at https://urlcurt.com/u?l=7J6ba9 from
PacerMonitor.com at no charge.
Counsel to the Debtor:
Robert T. DeMarco, Esq.
DeMarco Mitchell, PLLC
12770 Coit Road, Suite 850
Dallas, TX 75251
Telephone: (972) 578-1400
Facsimile: (972) 346-6791
Email: robert@demarcomitchell.com
About Lone Star Logistics and Delivery, LLC
Lone Star Logistics and Delivery, LLC sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Tex. Case No.
24-41357) on June 7, 2024. In the petition signed by Brian Anthony
Blackmire, director and owner, the Debtor disclosed up to $1
million in both assets and liabilities.
Judge Brenda T. Rhoades oversees the case.
Michael S. Mitchell, Esq., at DeMarco Mitchell, PLLC, represents
the Debtor as legal counsel.
LUMMUS TECHNOLOGY: $150MM Loan Add-on No Impact on Moody's B2 CFR
-----------------------------------------------------------------
Moody's Ratings stated that Lummus Technology Holdings V LLC's B2
Corporate Family Rating, B2-PD Probability of Default Rating as
well as the B1 rating on its backed senior secured first lien
revolving credit facility and backed senior secured first lien term
loan, and the Caa1 rating on its senior unsecured notes remain
unchanged. The company is in the process of issuing $150 million
fungible add-on to its backed first lien senior secured term loan.
Net proceeds from the incremental first lien term loan, in
combination with cash on hand, will be used to fund shareholder
distribution up to $300 million. Separately Lummus took
operational control of Chevron Lummus Global joint venture (CLG), a
Joint Venture of Lummus and Chevron, and started consolidating CLG
on July 1st. Proforma the debt issuance and the consolidation of
CLG, Moody's expect Lummus's leverage as measured by Moody's
adjusted debt over EBITDA to remain stable at low 6.0x, compared
with the leverage of 6.2x in 2023, driven largely by its higher
earning offset by debt increase. Given Moody's expectation for
continued strong operating performance supported by its robust
backlog, Moody's expect Lummus's leverage to fall to between
5.5~6.0x in the next 12 to 18 months. The rating outlook is
stable.
Lummus' credit profile reflects its strong technology platform and
business model with high barriers to entry, as evidenced by its
robust backlog that provides a highly visible recurring revenue and
earnings stream. The credit profile is also supported by the
company's strong market share across all segments, high EBITDA
margins compared to many similarly rated chemical companies, and
its asset light business model which requires limited ongoing CapEx
spending.
Lummus' credit profile is constrained by its still high leverage,
including Moody's standard adjustments, which remain close to 6.0x
proforma the incremental term loan issuance and the consolidation
of CLG. The company has relatively small scale compared to its key
competitors which also constrains its rating. The company derives
the majority of its revenue and profits from fixed-priced contracts
which exposes it to project execution risks including delays and
cost overrun, although Lummus has demonstrated good risk management
and has minimal exposure to accruals for losses.
Lummus has been gradually lowering its leverage with its Moody's
adjusted debt/EBITDA falling from more than 7.0x in 2021 to around
6.0x in the LTM end-June 2024, driven by modest debt reduction and
earning's increase despite the overall challenging macro
environment. Performance YTD 2024 was strong. The company generated
total sales of $346 million and Moody's adjusted EBITDA of $107
million in the first six month of the year, a year-over-year
increase of 22% and 23% respectively, led by growth from all
business segments with particular strength from its Services &
Supplies (SnS) segment. With solid new orders, Lummus's total
backlog reached $3.1 billion at the end of June 2024, up from $2.9
billion at same period a year ago, which will provide good
visibility for its revenue and earnings in the next several years.
The company's solid business performance is counterbalanced by its
active spending programs related to shareholder return and business
acquisitions. In addition to the planned shareholder distribution
up to $300 million to be partly funded by the new debt issuance,
Lummus spent $23 million for share repurchase in Q2 2024 to help
consolidate the ownership structure at its parent company level. It
also reached agreement with Chevron to take operational control and
raise its stake in CLG from 50% to 65% for a total of $49.5 million
in cash to be paid out from Q2 2024 to Q1 2025. While Lummus's
metrics will modestly improve driven by earning's increase, Moody's
expect the company will continue to prioritize the deployment of
its free cash flows for shareholder returns and bolt-on
acquisitions instead of debt reduction.
Lummus's rating is also supported by its good liquidity. The
company had total cash on the balance sheet of approximately $173
million and no borrowings under its $175 million revolving credit
facility as of end June 2024. Proforma the new debt issuance and
related shareholder returns, with Moody's expectation of solid free
cash flows, Moody's expect Lummus's total liquidity will be more
than sufficient to cover its modest short-term debts and expected
business acquisition needs over the next 12 months.
Lummus Technology Holdings V LLC, based in Houston, Texas, is a
leading technology licensing, catalyst and equipment supplier for
the refining and petrochemical industries. Through the Chevron
Lummus Global joint venture, it is a leading technology provider
for the production of renewable and conventional transportation
fuels, premium base oils and lubricants. The company is owned by
The Chatterjee Group ("TCG") and Rhône Capital. Lummus reported
revenue of $699 million for the last twelve months ended June 30,
2024.
MACLEOD ALE: Gets Final Approval to Use Cash Collateral
-------------------------------------------------------
A U.S. bankruptcy judge issued a final order authorizing MacLeod
Ale Brewing Company, LLC to use the cash collateral of Ameris Bank
and the U.S. Small Business Administration.
The final order penned by Judge Martin Barash of the U.S.
Bankruptcy Court for the Central District of California also
approved the company's stipulation with the SBA on the use of cash
collateral.
The decision allows the company to utilize the funds to cover both
post-petition and operating expenses in accordance with the budget,
which covers the period through February 2025; and to deviate from
the line items contained in the budget by up to 15%.
To protect the interest of secured creditors, the court granted
Ameris Bank and the SBA replacement liens on MacLeod's personal
property.
About MacLeod Ale Brewing
Established in 2014, MacLeod Ale Brewing Company, LLC offers a huge
selection of craft beer, brewed in Van Nuys, including traditional
British Cask ale.
MacLeod sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. C.D. Calif. Case No. 24-11399) with $1 million to $10
million in both assets and liabilities. MacLeod President Jennifer
A. Febre signed the petition.
Judge Martin R. Barash oversees the case.
Lovee D. Sarenas, Esq., at Dinsmore & Shohl, LLP is the Debtor's
legal counsel.
The Debtor is represented by:
Matthew J Stockl
Dinsmore & Shohl, LLP
550 S. Hope Street, Suite 1765
Los Angeles, CA 90071
Tel: (213) 335-7737
Email: lovee.sarenas@dinsmore.com
MADDIEBRIT PRODUCTS: May Use Cash Collateral Thru March 2025
------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Northern Division, granted MaddieBrit Products, LLC authorization,
on a final basis, to use cash collateral to cover its ordinary and
necessary business expenses from September 24, 2024, to October 6,
2024, and for the period from October 2024 to March 2025, in
accordance with the budget submitted by the debtor. MaddieBrit is
authorized to make monthly adequate protection payments of $57,655
to Bright Plastics, LLC and Brightflow.ai, LLC until a bankruptcy
plan is confirmed or a court order directs otherwise.
The inclusion of line items for professional fees in the Budget
does not constitute a Court order allowing for payment of those
line items. BP has not consented to the payment of such line items
from its cash collateral, and all of BP's
objections in this regard are expressly preserved.
"Permitted Expenses" do not include payment to any professionals
including those identified on the Budget except as consented to by
BP or based upon a prior or future Court Order. Except as to the
Permitted Expenses, the Debtor shall not use any Cash Collateral
without the written consent of BP or an applicable prior or further
Court order, including to pay for professional fees. BP's
pre-petition lien on the debtor's assets is upheld, and a
replacement lien is granted to BP as security for its claim. The
replacement lien is valid and perfected without the need for
further filings or documentation.
The debtor must adhere to the approved budget, with a 10% allowable
variance for expenditures in each category. Weekly financial
reports must be provided to BP, detailing the previous week's
operations and budget compliance. The court emphasized that cash
collateral use is limited to business operations and does not
include payments to professionals unless consented to by BP or
approved by the court.
The court retained jurisdiction to resolve any future issues or
disputes related to the implementation of the order. The order and
protections outlined in previous interim orders remain in full
effect, ensuring that BP's interests are safeguarded as the
bankruptcy process continues.
About Maddiebrit Products
Maddiebrit Products, LLC offers eco-friendly cleaning products that
provide healthier, effective, and safer alternatives to
conventional home cleaning products.
Maddiebrit Products filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
24-10682) on July 18, 2024. In the petition signed by Michael
Edell, chief executive officer, the Debtor disclosed up to $10
million in both assets and liabilities.
Judge Ronald A. Clifford, III oversees the case.
Craig Margulies, Esq., at Margulies Faith, LLP serves as the
Debtor's counsel.
MAGNERA CORP: Moody's Rates New $500MM Secured 1st Lien Notes 'B1'
------------------------------------------------------------------
Moody's Ratings assigned a B1 rating to Magnera Corporation's new
$500 million senior secured first lien notes due 2031. The
company's B1 corporate family rating and all other ratings remain
unchanged. The outlook is stable.
Together with the senior secured first lien term loan B rated in
September, the new notes will be used to repay the existing senior
secured first lien revolving credit facility and the term loan
(unrated) at Glatfelter Corporation, and to pay an approximately $1
billion distribution to Berry Global Group Inc., and fees and
expenses related to the transaction.
The new first lien secured notes will be secured pari passu to the
term loan and the existing $500 million senior unsecured notes at
Glatfelter, which will become secured along with the merger between
Berry Global Group Inc.'s (Ba1 stable) health, hygiene and
specialties nonwovens and films (HHNF) business and Glatfelter
Corporation (Glatfelter, B3 under review for upgrade). The merger
is expected to close in the second half of calendar 2024.
"The B1 rating on the new first lien secured notes, on par with the
CFR, reflects the largest portion of debt in Magnera's debt capital
structure, together with the first-lien term loan announced in
September," said Motoki Yanase, VP - Senior Credit Officer at
Moody's Ratings.
RATINGS RATIONALE
Magnera Corporation's B1 CFR reflects the company's leading market
position for polymer and fiber based products for hygiene, health
care and specialty end markets; geographic diversity with
operations in the Americas, Europe and Asia; long history and
strong R&D partnership with global blue chip consumer packaged
goods companies; and positive free cash flow that Moody's expect
will largely go to debt reduction.
These credit strengths are counterbalanced with the rating
constraints, including elevated financial leverage, which Moody's
expect to trend around 5x for the next 12-18 months after the
merger; lower sales for health care products from their peak during
the pandemic with reduced capacity utilization at the moment;
execution risk to integrate Glatfelter's business and improve
profitability; and intense competition in the end markets in a
fragmented industry.
The stable outlook reflects Moody's expectation that Magnera will
continue to restrain its capital spending to generate free cash
flow, and focus on improving profitability and financial leverage
over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could upgrade Magnera's ratings if the company integrates
both companies' businesses, realizes the planned synergies, and
improves profitability and pays down debt. Specifically, Moody's
could upgrade the ratings if debt/EBITDA leverage is sustained
below 4x, EBITDA/interest expense is above 4x, and free cash
flow/debt improves to above 5%.
Moody's could downgrade the ratings if the company loses its
customers and fails to expand its business, leading to weaker
credit metrics and liquidity. Specifically, Moody's could downgrade
the ratings if debt/EBITDA remains above 5x, EBITDA/interest is
below 3x, and free cash flow remains negative.
The principal methodology used in this rating was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
Magnera Corporation is a manufacturer of specialty materials based
on nonwoven fibers and films. Its major products include sanitary
wipes, diapers for babies and adults, feminine hygiene products,
food and beverage filtration papers, facial masks and filtration
media, medical gowns and drapes, surgical towels, and wall cover.
The company also manufactures specialty products for industrial
usage such as flexible intermediate bulk container (FIBC) bags,
geotextiles and cable wrap. Moody's expect the company to be listed
on New York Stock Exchange. Pro forma revenue for the combined
business for the 12 months that ended June 2024 was about $3.5
billion.
METRO GLASS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Metro Glass, Inc.
560 Lincoln Blvd
Middlesex, NJ 08846
Business Description: Metro Glass is a glass & mirror shop in
Middlesex, New Jersey.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 24-20047
Debtor's Counsel: Justin M Gillman, Esq.
GILLMAN CAPONE LLC
770 Amboy Avenue
Edison NJ 08837
Tel: (732) 661-1664
Fax: (732) 661-1707
E-mail: jgillman@gillmancapone.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by George O'Donnell as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/VWVSAVI/Metro_Glass_Inc__njbke-24-20047__0001.0.pdf?mcid=tGE4TAMA
MINIM INC: Asks for Default Judgment in Complaint Versus Nasdaq
---------------------------------------------------------------
Minim Inc. reported in a Form 8-K filed with the Securities and
Exchange Commission that on Oct. 7, 2024, the Company filed a
motion for a default judgment against The Nasdaq Stock Market.
This Motion is expected to be heard and considered by the State
Court judge on Dec. 19, 2024, or shortly thereafter.
The Company filed for, and on Aug. 20, 2024, was granted a
temporary restraining order ("TRO") by the Supreme Court of the
State of New York, Kings County. The application for the TRO was
filed by the Company in order to prohibit Nasdaq from delisting the
Company's common stock from Nasdaq. The TRO was effective until
Sept. 5, 2024. On Aug. 20, 2024, following the State Court's grant
of the TRO, Nasdaq removed the case to federal court. On Sept. 4,
2024, the U.S. District Court for the Eastern District of New York
remanded the case to the State Court. On Sept. 5, 2024, the
parties entered into a stipulation which was ordered by the State
Court on Sept. 6, 2024, to extend the TRO until Sept. 30, 2024, at
which point oral arguments were to be heard by the State Court.
On Sept. 30, 2024 the State Court heard oral arguments, and
following the hearing, the State Court ruled that the TRO is
extended until such time as the State Court shall rule on the
Company's motion for a preliminary injunction against Nasdaq. No
date has been set for the issuance of the ruling on the Company's
motion for a preliminary injunction.
Minim believes that Nasdaq's deadline to respond to the Company's
complaint was on Oct. 2, 2024, and that Nasdaq defaulted on that
deadline by failing to respond to the Company's Complaint with a
timely written submission to the State Court.
About Minim Inc.
Minim was founded in 1977 as a networking company and now delivers
intelligent software to protect and improve the WiFi connections.
Headquartered in Manchester, New Hampshire, Minim held the
exclusive global license to design, manufacture, and sell consumer
networking products under the Motorola brand until 2023. The
Company's cable and WiFi products, with an intelligent operating
system and bundled mobile app, were sold in leading retailers and
e-commerce channels in the United States. Its AI-driven cloud
software platform and applications make network management and
security simple for home and business users, as well as the service
providers that assist them -- leading to higher customer
satisfaction and decreased support burden.
"At June 30, 2024, we believe our current cash and cash equivalents
may not be sufficient to fund working capital requirements, capital
expenditures and operations during the next twelve months. Our
ability to continue as a going concern will depend on our ability
to obtain additional equity or debt financing, attain further
operating efficiencies, reduce or contain expenditures and increase
revenues. Based on these factors, management determined that there
is substantial doubt regarding our ability to continue as a going
concern. The Company will continue to monitor its costs in
relation to its sales and adjust accordingly," the Company said in
its Quarterly Report for the period ended June 30, 2024.
MINIM INC: Hikes Series A Preferred Shares to 3 Million
-------------------------------------------------------
Minim, Inc., disclosed in a Form 8-K filed with the Securities and
Exchange Commission that on Oct. 8, 2024, the Company filed an
amended and restated certificate of designation increasing its
designated Series A Convertible Preferred Stock from 2,000,000 to
3,000,000. The Company did so in order to have additional equity
available to reduce certain accounts payable.
About Minim Inc.
Minim was founded in 1977 as a networking company and now delivers
intelligent software to protect and improve the WiFi connections.
Headquartered in Manchester, New Hampshire, Minim held the
exclusive global license to design, manufacture, and sell consumer
networking products under the Motorola brand until 2023. The
Company's cable and WiFi products, with an intelligent operating
system and bundled mobile app, were sold in leading retailers and
e-commerce channels in the United States. Its AI-driven cloud
software platform and applications make network management and
security simple for home and business users, as well as the service
providers that assist them -- leading to higher customer
satisfaction and decreased support burden.
"At June 30, 2024, we believe our current cash and cash equivalents
may not be sufficient to fund working capital requirements, capital
expenditures and operations during the next twelve months. Our
ability to continue as a going concern will depend on our ability
to obtain additional equity or debt financing, attain further
operating efficiencies, reduce or contain expenditures and increase
revenues. Based on these factors, management determined that there
is substantial doubt regarding our ability to continue as a going
concern. The Company will continue to monitor its costs in
relation to its sales and adjust accordingly," the Company said in
its Quarterly Report for the period ended June 30, 2024.
MIP V WASTE: S&P Alters Outlook to Stable, Affirms 'B+' ICR
-----------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative on
MIP V Waste LLC's (GreenWaste). At the same time, S&P affirmed all
ratings, including its 'B+' issuer credit rating.
The stable outlook reflects S&P's expectation that contractual
price increases and improved commodity pricing, combined with
improved operating efficiencies would allow GreenWaste to maintain
debt leverage between 4.0x and 5.0x.
S&P said, "The outlook revision follows improved operating results
in the first half of 2024 and our expectation for debt leverage
better than our previous forecast. Following inflationary pressures
and weather disruptions that impaired earnings in late 2022 through
the first half of 2023, GreenWaste has mitigated headwinds and
improved its operating performance with contractual price
increases, favorable commodity prices, and new contract wins. The
company's construction and demolition (C&D) markets will see some
positive momentum as the result of rate cuts, which supports the
stable outlook. On an S&P Global Ratings weighted-average basis, we
expect S&P Global Ratings-adjusted debt to EBITDA to remain 4x-5x,
and we expect the company to remain cash flow positive in 2024."
GreenWaste operates in the highly regulated California market,
focused on landfill diversion. The company has a highly predictable
revenue stream, with more than 60% of its sales locked into
long-term contracts, primarily with California municipalities. The
company's ability to divert more than 70% of waste away from
landfills remains a strength. Through its contracts, GreenWaste can
provide landfill diversion services to more than 320,000
residential customers and more than 6,000 commercial customers.
The company's focus on waste diversion benefits from regulatory and
environmental tailwinds to support future stability and growth. It
has strategically located processing and materials recovery
facilities to support California's increasingly stringent diversion
requirements. Its San Jose material recovery facility (MRF) is
recognized in California for its diversion rates on the west coast
and is California's first, and only, high diversion organic waste
processing facility.
GreenWaste continues to have regionally focused operations in
northern and central California, a high percentage of long-term
contracted revenue, and above-average EBITDA margins. GreenWaste,
which is focused on diversion of waste services, still has
relatively limited scale, scope, and diversity compared to larger
industry peers. S&P expects revenue of $375 million-$400 million in
2024 and $400 million-$425 million in 2025. Such top-line sales are
lower than other more-diversified, regional, municipal solid waste
haulers such as WIN Waste Innovations Holdings Inc.--which is
managed by Macquarie Asset Management (MAM), like GreenWaste--and
Casella Waste Systems Inc.
S&P said, "The stable outlook on GreenWaste reflects our
expectation that revenue growth in collections and processing, as
well as new contracts, will keep leverage below 5x in the next 12
months. We also expect the company to benefit from a pickup in
construction activity over the next 6-12 months. Unlike typical
financial sponsors, we expect MAM-managed funds to retain a longer
holding period and will focus on maintaining relatively
conservative leverage below 5x in the long run."
S&P could lower its ratings over the next 12 months if it expects
the S&P Global Ratings-adjusted debt to EBITDA to increase above 5x
for multiple quarters with no clear prospects for recovery. This
could occur if:
-- The company's operating performance deteriorates;
-- EBITDA margins weaken 300 basis points (bps), possibly because
of increasingly competitive market conditions, failure to renew
service contracts at satisfactory terms, volatile input costs, or
ongoing weakness in its C&D markets; or
-- The company undertakes large debt-funded shareholder rewards or
acquisitions.
Although unlikely, S&P would raise its rating over the next 12
months if the company reduces leverage below 4x on a sustained
basis. This could occur by:
-- Improving EBITDA margins 300 bps due to new contract and
request for proposal (RFP) wins, as well as reduced input costs and
improved efficiencies; and
-- Implementing financial policies that maintain lower leverage
and other credit measures while increasing EBITDA and scale.
MKS INSTRUMENTS: Fitch Lowers LongTerm IDR to 'BB', Outlook Stable
------------------------------------------------------------------
Fitch Ratings has downgraded MKS Instruments, Inc.'s Long-Term
Issuer Default Rating (IDR) to 'BB' from 'BB+'. Fitch has also
affirmed the company's senior secured term loan B rating at 'BBB-'
and has revised their Recovery Rating to 'RR1' from 'RR2'. The
Rating Outlook is Stable.
MKS' rating reflect its critical position in customer's products,
high but cyclically exposed EBITDA margins and Fitch's growing FCF
forecast. The downgrade reflects the softness in MKS' end markets,
which have led to a slower than expected deleveraging pace
following the Atotech Limited acquisition.
Key Rating Drivers
De-levering Period Extended: Fitch forecasts EBITDA leverage of
5.3x at YE 2024, above MKS's 'BB' downgrade sensitivity of 4.0x and
4.4x previously forecast for YE 2024. This leverage increase,
driven by M&A, is not seen as structural. A deleveraging period
will follow. However, continued softness in revenues, mirroring the
broader semi-conductor market, has extended the deleveraging
timeline. Fitch now forecasts leverage will fall below 4.0x by
2026.
Debt Management Actions: Consistent with MKS's stated financial
policy, Fitch anticipates MKS will make discretionary debt
repayments to reduce its gross debt toward its 2.0x long-term gross
debt target. A forecasted annual FCF of about $300 million-$500
million annually from 2024 to 2027 supports these repayments. MKS
has improved its interest costs with multiple opportunistic term
loan repricings and the issuance of 1.5% convertible notes, which
partially repaid higher interest cost term loan B debt.
The $167 million cost of the capped call transaction associated
with the convertible reduced potential cash for debt repayments in
2024. However, the application of about $110 USD equivalent
repayment to the Euro term loan B tranche aligns with MKS's
deleveraging plan.
High, but Cyclically Exposed Profitability: MKS's profitability,
measured by EBITDA margins, which are forecast to be in the mid- to
high-20% range over the rating horizon, are a credit strength for
MKS's credit profile. EBITDA margins, which are over 25% in the LTM
2Q24, remain strong for MKS's rating category. MKS's strong EBITDA
margins benefit its credit profile, but historic cyclical revenue
exposure tempers this advantage. Currently, general market softness
in wafer fab equipment spending impacts revenue.
Semiconductor Industry Exposure: MKS's acquisition of Atotech
Limited reduced its exposure to semiconductor industry cyclicality.
MKS's material solutions division provides direct exposure to
semiconductor manufacturing volumes, in contrast to capital
equipment spending, and markets outside semiconductors. Previous
acquisitions have also diversified MKS into life sciences, advanced
electronics manufacturing, industrial technology, advanced
research, quantum computing and defense. While diversification has
improved, it remains a credit profile consideration.
Beneficial Secular Tailwinds: MKS benefits from increasing
technological intensity and complexity, which drive demand for
precision manufacturing and process control. Secular growth trends
like miniaturization, higher densities, expanded use cases and new
materials across a variety of applications support this demand. Key
applications include printed circuit boards, digital displays,
electronics packaging, solar panels, fiber optics, materials
processing, quantum computing and medical technologies.
Additionally, the growing AI server market and demand for AI chips
provide a supporting tailwind for MKS.
Fitch expects MKS's exposure to secular dynamics to support
mid-cycle organic growth of 4%-6% annually. These dynamics will
also extend MKS's competitive advantages, including technological
capability, breadth of product portfolio and deep partnerships with
customers with on-premise co-location arrangements.
Customer Collaboration: MKS's product offerings are generally
incorporated into customer product designs, reducing
substitutability risk, and in turn leading to increased revenue
visibility and longer-term customer relationships. Revenue
visibility also is supported by MKS's consumables and services
revenue, which is highly recurring and through 1H24 accounted for
42% of MKS's sales mix.
Recovery Rating Revision: Fitch revised MKS's Recovery Rating to
'RR1' from 'RR2' due to its secured gross leverage, which
previously exceeded 5.25x, or 50% greater than the midpoint of 'BB'
category leverage expectations in the technology sector. After MKS
issued convertible notes and used partial proceeds to repay secured
term loan B debt, its gross leverage fell below the 5.25x
threshold. As a result, the 'RR1' recovery rating at MKS' 'BB' IDR
level leads to its senior secured debt being two notches higher at
'BBB-'.
Convertible Notes Treatment: Fitch does not assign any equity
credit to MKS's $1.4 billion of convertible senior unsecured notes.
The assessment under Fitch's "Corporate Hybrid Treatment and
Notching Criteria" characterizes the convertibles this way since
the instrument is optionally convertible rather than mandatorily
convertible and not subordinated to senior debt.
Derivation Summary
The business profiles for both MKS and peer Amkor Technology, Inc.
(BB+/Positive) benefit from their technological leadership
positions and cyclicality with exposure to the semiconductor supply
chain. Amkor's scale measured by revenue is almost twice MKS's;
however FCF is comparable, reflecting MKS's higher margin and lower
capital intensity business. Amkor's leverage of approximately 1.0x
is meaningfully below MKS's heightened leverage following the
Atotech acquisition.
TTM Technologies, Inc. (BB/Stable), Coherent Corp. (BB/Stable) and
Entegris, Inc. (BB/Stable) have credit profiles more affected by
end-market cyclicality than MKS. Similar to MKS, these peers will
benefit from secular trends such as expanding use cases in new end
markets and growing technological complexity. MKS has comparable
EBITDA margins to Coherent and Entegris, while TTM's EBITDA margins
trail the peer group in the mid-teens. Entegris, similar to MKS,
has leverage above its downgrade sensitivity due to its acquisition
of CMC Materials, Inc.
KLA Corporation's (A/Stable) revenue is over $10 billion annually
and has EBITDA margins around mid-40%, resulting in approximately
$2.3 billion in FCF in its most recent fiscal year. This
performance is materially greater than MKS's. KLA benefits from a
significant installed base that drives meaningful recurring service
revenue.
Key Assumptions
- Semiconductor end-market revenue growth begins to improve in 2025
and through 2026, supported by recovering wafer fabrication
equipment spending, with longer-term end-market growth in the
mid-single digits;
- EBITDA margins in forecast for 2H24 over 25%. Modest margin
improvements expected during remainder of forecast improving
operating leverage as revenues improve and continued cost
management;
- FCF and cash held in excess of approximately $900 million is
predominantly used for discretionary debt repayments, in line with
MKS's stated commitment to pay down debt toward its 2.0x long-term
leverage target;
- Capex spending in line with historic spending levels between
3.0%-4.0% of revenue;
- Tuck-in acquisition within the semiconductor end-market segment
closing in 2027, with total cash consideration of $200 million,
completed at 3.5x enterprise value/revenue multiple;
- Base interest rates applicable to the company's outstanding
variable rate debt obligations reflect current SOFR forward curve
declining to 2.8% during forecast period from a 2024 high of
5.15%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Reduced volatility of profitability;
- EBITDA leverage sustained below 3.5x;
- Demonstrated organic revenue growth trend in high single digits.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA leverage sustained above 4.0x;
- Sustained revenue declines, margin compression or decreased
competitive advantage;
- (Cash flow from operations-capex)/debt below 10%.
Liquidity and Debt Structure
Active Maturity Management: MKS's liquidity position at June 30,
2024 consisted of $850 million in cash and equivalents and an
undrawn $675 million revolving credit facility. Stable positive FCF
through Fitch's forecast period is expected to support potential
liquidity needs that would take president over debt repayment.
MKS faces no near-term refinancing risk having in January 2024
effectively extended $744 million of term loan debt from August
2027 to its August 2029 term loan B maturity. Additionally, the May
2024 repayment of approximately $1.2 billion of term loan B debt
from partial proceeds of a convertible note maturing in 2030
modestly improved MKS' maturity profile.
Issuer Profile
MKS provides process control and precision manufacturing solutions.
Primary served markets include semiconductor manufacturing,
industrial technologies, electronics and packaging and specialty
industrial applications.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
MKS Instruments, Inc. LT IDR BB Downgrade BB+
senior secured LT BBB- Affirmed RR1 BBB-
MONTE JOHNSTON: Brad Odell of Mullin Named Subchapter V Trustee
---------------------------------------------------------------
The U.S. Trustee for Region 6 appointed Brad Odell, Esq., at Mullin
Hoard & Brown, LLP, as Subchapter V trustee for Monte Johnston
Building Contractor, LLC.
Mr. Odell will be paid an hourly fee of $350 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Odell declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Brad W. Odell
Mullin Hoard & Brown, LLP
P.O. Box 2585
Lubbock, TX 79408
Direct: 806-712-1238
Office: 806-765-7491
Mobile: 469-449-3690
Email: bodell@mhba.com
About Monte Johnston Building
Monte Johnston Building Contractor, LLC specializes in residential
and commercial construction and remodeling. The company focuses on
delivering quality construction services, relying on cash flow from
ongoing projects to manage operational expenses, such as supplies,
payroll, and insurance.
Monte filed its voluntary petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. N.D. Texas Case No. 24-70274) with
$429,251 in assets and $1,176,029 in liabilities.
Judge Scott W. Everett presides over the case.
Robert C. Lane, Esq., at The Lane Law Firm represents the Debtor as
bankruptcy counsel.
NAPC DEFENSE: Financial Strain Raises Going Concern Doubt
---------------------------------------------------------
NAPC Defense, Inc. disclosed in a Form 10-Q Report filed with the
U.S. Securities and Exchange Commission for the quarterly period
ended July 31, 2024, that there is substantial doubt about its
ability to continue as a going concern.
According to the Company, it has incurred net losses since
inception, which raises substantial doubt about the Company's
ability to continue as a going concern. For the three months ended
July 31, 2024, the Company reported a net loss of $435,863,
compared to a net loss of $258,479 for the same period in 2023.
Based on its historical rate of expenditures, the Company expects
to expend its available cash in less than one month from September
23, 2024. Management's plans include raising capital through the
equity markets to fund operations and, eventually, the generation
of revenue through its business. The Company does not expect to
generate any significant revenues for the foreseeable future. At
July 31, 2024, the Company had a net working capital deficit of
$968,267. The Company is in immediate need of further working
capital and is seeking options, with respect to financing, in the
form of debt, equity or a combination thereof.
Failure to raise adequate capital and generate adequate revenues
could result in the Company having to curtail or cease operations.
The Company's ability to raise additional capital through the
future issuances of the common stock is unknown. Additionally, even
if the Company does raise sufficient capital to support its
operating expenses and generate adequate revenues, there can be no
assurances that the revenue will be sufficient to enable it to
develop to a level where it will generate profits and cash flows
from operations. These matters raise substantial doubt about the
Company's ability to continue as a going concern; however, the
accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. These condensed consolidated financial
statements do not include any adjustments relating to the recovery
of the recorded assets or the classifications of the liabilities
that might be necessary should the Company be unable to continue as
a going concern.
A full-text copy of the Company's Form 10-Q is available at:
https://tinyurl.com/y2djmfsw
About NAPC Defense
NAPC Defense, Inc. (formerly Treasure & Shipwreck Recovery, Inc.)
was incorporated in the State of Nevada on October 24, 2016 as
Beliss Corp. The Company changed its name to Treasure & Shipwreck
Recovery Inc. on June 26, 2019. The Company is in the colonial era
treasure shipwreck recovery business operating salvage crews on the
east coast of Florida. On April 1, 2024, the Company changed its
name to NAPC Defense, Inc. with the State of Nevada, for an
additional direction in the military arms and law enforcement
field.
As of July 31, 2024, the Company had $3,164,231 in total assets,
$2,219,876 in total liabilities, and $944,355 in total
stockholders' equity.
NCR ATLEOS: S&P Assigns 'B+' Rating on New $300MM Term Loan A-2
---------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '3'
recovery rating to NCR Atleos Corp.’s new $300 million term loan
A-2. NCR Atleos will use the net proceeds from the new term loan to
repay a portion of its outstanding senior secured term loan B. It
is also upsizing its existing revolver expiring 2028 to $600
million from $500 million. S&P expects this transaction to be
leverage neutral. All our ratings on NCR Atleos, including our 'B+'
issuer credit rating, are unchanged.
S&P said, "We view positively the company's partial refinancing of
its capital structure to reduce its interest burden and its focus
on deleveraging. We believe it may evaluate refinancing prospects
to further reduce its higher cost of debt, but we anticipate that
will likely occur beyond 2025. Its $1.35 billion senior secured
notes due 2029 carry a 9.5% coupon, and the call premium steps down
beginning Oct. 1, 2026.
"We expect NCR Atleos will increase its revenue 2%-3% in 2024 and
2025 while steadily improving its EBITDA margin to 17.6%-17.9% from
about 15.1% in 2023. This will reduce its debt to EBITDA ratio to
about 4x or below over the next 12-18 months (from about 5x as of
Dec. 31, 2023). The company's free operating cash flow (FOCF) to
debt is likely to approach about 8% in 2025 from about 5% as of
June 30, 2024. We could consider an upgrade if NCR Atleos'
operating performance remains consistent over time and supports
deleveraging comfortably below 4x and FOCF to debt remains above
10%.
"Our rating on NCR Atleos incorporates its exposure to mature
self-service ATM markets and related network transactions. As such,
we expect its recurring revenue growth to come principally from
conversions of its existing install base to ATM-as-a-service
contracts. While contracts typically require NCR Atleos to incur
upfront capital expenditure spending, it benefits from higher
customer lifetime value and improved business visibility over time.
We expect this newer strategy will take time to reach critical mass
because ATM-as-a-service units represent less than 5% of its total
install base."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The secured debt rating is 'B+', with a '3' recovery rating.
-- S&P's analysis reflects obligor and nonobligor split based on
domestic and foreign revenues.
-- The 5.5x multiple reflects NCR Atleos' secular pressures and
hardware exposure relative to pure-play software and services
companies.
-- S&P assumes 85% of its $600 million revolver is drawn at
default.
-- S&P treats its $166 million accounts receivable facility as a
priority claim.
Simulated default assumptions
-- Simulated year of default: 2028
-- EBITDA at emergence: $397 million
-- EBITDA multiple: 5.5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $2.1
billion
-- Valuation split (obligors/nonobligors): 45%/55%
-- Priority claims: $166 million (accounts receivable
securitization facility)
-- Collateral value available to secured creditors: $1.5 billion
-- Total first-lien debt: $3.4 billion
--Recovery expectations: 50%-70% (rounded estimate: 55%)
NORTHERN LIGHT: Moody's Lowers Revenue Bonds Rating to Ba3
----------------------------------------------------------
Moody's Ratings has downgraded Northern Light Health's (NLH) (ME)
revenue bonds ratings to Ba3 from Ba2. The ratings are under review
for further downgrade. Previously, the outlook was stable. NLH had
approximately $620 million of debt outstanding at September 30,
2024.
The downgrade of NLH's rating to Ba3 reflects inability to
stabilize liquidity, use of short-term bank lines, and ongoing cash
flow losses. Persistent labor and capacity challenges elevate
social risk related to human capital. Inability to meet budget
targets and reliance on bank lines contribute to high governance
risk related to financial strategy and track record. These social
and governance risks are key drivers of the downgrade.
The rating is under review for further downgrade as Moody's assess
the risk of additional liquidity drains and cashflow losses, as
well as risks related to line of credit renewals currently under
negotiation.
RATINGS RATIONALE
The Ba3 rating is supported by NLH's dominant market position over
a broad geography and limited competition. Operating performance
remains poor with limited improvement expected in early fiscal 2025
as a result of ongoing labor pressures and other challenges
reducing expenses. Weak cash of 50-60 days is likely to decline
further because of cashflow losses and if NLH is required to repay
bank line draws and/or a large advance from Optum. There is a high
degree of risk related to the outcome of ongoing negotiations with
banks given two out of three bank lines have expired and there will
be covenant breaches at FYE 2024. Labor costs are particularly
challenging at NLH's rural locations and the flagship, where
continued agency usage and wage increases for union nurses have
driven up expenses. Also, the ongoing shift to Medicare Advantage
plans will constrain revenue. Favorably, NLH has identified
opportunities for performance improvement in fiscal 2025, including
potential savings related to its shared services structure,
contract labor, medical group integration, and clinical
efficiencies at the flagship hospital.
RATING OUTLOOK
The rating is under review for further downgrade as Moody's assess
the risks related to renewing bank lines, additional liquidity
declines, and likelihood of operating performance improvement.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Material growth in liquidity absent additional debt
-- Sustained and material improvement in operating performance
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Failure to renew bank lines or unfavorable terms under
renewals
-- Decline or projected decline in cash on hand to below 45 days
(excluding bank line draws)
-- Inability to reverse operating cash flow losses
LEGAL SECURITY
The bonds are secured by a pledge of gross receipts of the
obligated group (represents virtually all system revenue) as well
as a mortgage lien on facilities.
PROFILE
Northern Light Health is comprised of 10 hospitals located across
Maine, including the flagship Eastern Maine Medical Center located
in Bangor. The system employs a large number of physicians and has
the largest geographic footprint in the state.
METHODOLOGY
The principal methodology used in these ratings was US
Not-for-profit Healthcare published in February 2024.
NV REIT: Reports $109,174 Net Loss in H1 2024
---------------------------------------------
NV REIT, LLC filed with the U.S. Securities and Exchange Commission
its Semiannual Report on Form 1-SA reporting a net loss of $109,174
on $166,244 of revenues for the six-month period ending June 30,
2024, compared to a net loss of $97,358 on $24,476 of revenues for
the six-month period ending June 30, 2023.
The Company has an accumulated deficit of $2,582,642 as of June 30,
2024. As of June 30, 2024, the Company has $141,322 in cash and a
working capital deficit of $47,306.
As of June 30, 2024, the Company had $4,320,197 in total assets,
$2,913,304 million in total liabilities, and $1,406,893 in total
members' equity.
The Company's ability to continue as a going concern in the next 12
months is dependent upon its ability to obtain capital financing
from investors sufficient to meet current and future obligations
and deploy such capital to produce profitable operating results. No
assurance can be given that the Company will be successful in these
efforts.
A full-text copy of the Company's Form 1-SA is available at:
https://tinyurl.com/mrch92wh
About NV REIT
Phoenix, Ariz.-based NV REIT LLC engages in the business of
acquiring interests in multifamily real estate assets in and around
metropolitan areas. The Company's business and affairs are overseen
by Neighborhood Ventures, Inc., a Delaware corporation.
Denver, Colo.-based Artesian CPA, LLC, the Company's auditor,
issued a "going concern" qualification in its report dated May 26,
2024, citing that the Company had an accumulated deficit of
$2,418,610 as of December 31, 2023 and incurred net losses of
$213,769 and $43,121 for the years ended December 31, 2023 and
2022, respectively. As of December 31, 2023, the Company had
$28,651 in cash and a working capital deficit of $239,313. These
factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern.
OKLAHOMA APPLE: Receiver Seeks Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
Kirk O'Neill of The Street reports that the receiver for a chain of
14 Applebee's Neighborhood Grill & Bar franchise restaurants in
four states on Oct. 4, 2024, filed for Chapter 11 bankruptcy
protection as a creditor and plaintiff in a lawsuit against a
former franchisee seeks to preserve the assets of its preference
claim.
Michael Goldberg, receiver for franchisee Oklahoma Apple LLC and
affiliates Louisiana Apple LLC, Kentucky Apple LLC, and Mountain
Apple LLC, filed his petition in the U.S. Bankruptcy Court for the
Southern District of Florida listing up to $50,000 in assets and
liabilities.
About Oklahoma Apple LLC
Oklahoma Apple LLC is a restaurant chain operator.
Oklahoma Apple LLC sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 24-20341) on October 4,
2024. In the petition filed by Michael I. Goldberg, receiver of
Oklahoma Apple LLC, listed estimated assets and liabilities up to
$50,000 each.
Luis R Casas, Esq., is the Debtor's counsel.
ONEMETA INC: Signs OEM Agreement With inContact
-----------------------------------------------
OneMeta, Inc., disclosed in a Form 8-K filed with the Securities
and Exchange Commission that on Oct. 8, 2024, it entered into an
OEM Agreement with inContact, Inc., a Delaware corporation.
inContact is an affiliate of NICE Ltd., a customer service company
incorporated in Israel, whose shares are traded on the Tel Aviv
Stock Exchange and whose American Depositary Shares are traded on
the Nasdaq Global Select Market. Pursuant to the Agreement,
inContact will distribute and sell the Company's OEM solutions,
consisting of over-the-phone consecutive AI language translation
solutions to customers and inContact will pay fees to the Company
based on usage of the Company's OEM solutions. The Agreement has
an exclusivity period of 18 months and an initial term of three
years.
About OneMeta
OneMeta Inc. operates to develop artificial intelligence products
that enable companies and individuals to reach their highest
potential by eliminating language barriers in daily communications
by providing high-quality, accurate, and efficient interpretation
and translation services using natural language processing (NLP)
technology. The Company's focus is on developing a proprietary
architecture that is faster and more accurate than any other
company, with a commitment to providing superior quality services
to its customers. The Company intends to serve a wide variety of
markets and customers and will be focused on becoming a leader in
the creation of pragmatic products for the interpretation and
translation industry.
The Woodlands, TX-based M&K CPAS, PLLC, the Company's auditor since
2022, issued a "going concern" qualification in its report dated
April 1, 2024, citing that the company has incurred recurring
losses from operations and had not yet achieved profitable
operations as of December 31, 2023 which raises substantial doubt
about its ability to continue as a going concern.
OPGEN INC: Hikes Stock Purchase Agreement With AEI to $9 Million
----------------------------------------------------------------
OpGen, Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission that on Oct. 3, 2024, the Company and AEI
Capital Ltd., as purchaser, entered into a first amendment to the
Purchase Agreement by: (1) granting the Company the right to sell
two additional tranches of common stock to the Purchaser of $3.0
million each, for an aggregate amount of $9.0 million under the
Purchase Agreement; and (2) extending the Company's ability to sell
shares of common stock to the Purchaser under the Purchase
Agreement until Dec. 31, 2025.
On Aug. 22, 2024, OpGen entered into the Securities Purchase
Agreement with AEI Capital pursuant to which the Company had the
right, in its discretion, to sell to the Purchaser, at any time
prior to Sept. 30, 2024, shares of common stock, par value $0.01
per share, of the Company having an aggregate value of up to $3.0
million.
About OpGen
OpGen, Inc. (Rockville, Md., U.S.A.) -- www.opgen.com --is a
precision medicine company harnessing the power of molecular
diagnostics and bioinformatics to help combat infectious disease.
The Company's innovative approaches to infectious disease
diagnostics consists of highly multiplexed syndromic molecular
panels to address the global threat of antimicrobial resistance
(AMR), improve antibiotic stewardship, and decrease the spread of
multidrug-resistant microorganisms (MDROs).
West Palm Beach, Florida-based Beckles & Co., Inc., the Company's
auditor since 2024, issued a "going concern" qualification in its
report dated June 3, 2024, citing that the Company has incurred
recurring losses from operations since inception and has stated
that substantial doubt exists about the Company's ability to
continue as a going concern.
OPPENHEIMER HOLDINGS: S&P Withdraws 'BB-' LT Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings withdrew its 'BB-' long-term issuer credit
rating on Oppenheimer Holdings Inc. and the 'BB-' issue rating on
the company's $113.5 million senior secured notes, which have been
fully repaid. The ratings were withdrawn at the issuer's request.
The outlook on the issuer credit rating was stable at the time of
the withdrawal.
OSAIC HOLDINGS: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed Osaic Holdings, Inc.'s Long-Term Issuer
Default Rating (IDR) at 'B', senior secured debt rating at 'B+'
with a Rating Recovery of 'RR3'and senior unsecured debt rating at
'CCC+'/'RR6'. The Rating Outlook is Stable.
Key Rating Drivers
Improving Scale: The ratings affirmation reflects Osaic's improving
market position as one of the largest independent financial
advisors in the U.S.; cash-generative business model; relatively
flexible cost base, which should help cushion revenue declines in
downward market environments; solid advisor retention rates,
despite a modest decline resulting from the Journey to One
initiative and recent acquisitions; and continued organic expansion
that, over time, should lead to improved financial metrics.
Relatively Weak Financial Metrics: The ratings are constrained by
elevated leverage levels; weak interest coverage metrics; a
relatively low EBITDA margin; and the highly competitive
environment associated with the independent broker-dealer and
registered investment advisor (hybrid RIA) business model. Osaic's
ratings are also constrained by its private equity ownership, which
introduces a degree of uncertainty over the company's future
financial policies and the potential for more opportunistic growth
strategies.
Flows Remain Negative: In 1H24, Osaic experienced net client
outflows of 1.7% of YE 2023 assets under administration (AUA). This
is in line with the 1.5% average annual outflows between 2020-2023,
which falls within Fitch's 'bbb' category benchmark range of
negative 5% to 5% for investment managers (IMs) charging fees on
net asset value. Advisor and asset attrition have increased
following the Journey to One initiative, which aims to consolidate
the firm's wealth management brands into a single entity, and Fitch
expects this trend to continue in the short term as a result of the
Lincoln Wealth acquisition, which closed in May 2024.
Below Average EBITDA Margins: Osaic's EBITDA margin was 14.4% for
the trailing 12 months (TTM) ended 2Q24 and averaged 10.8% from
2020-2023; which was within Fitch's 'bb' category quantitative
benchmark range of 10%-20% for securities firms with low balance
sheet usage. On a gross revenue basis, margins remain structurally
low due to high production-based payouts to advisors.
However, margins have benefited from higher advisory and commission
revenues due to strong equity market performance and enhanced scale
with the recent Lincoln Wealth acquisition. Fitch expects Osaic's
EBITDA margin, adjusted for non-recurring and non-cash expenses, to
continue to improve, supported by larger operating scale, a growing
proportion of higher fee-generating assets on the proprietary
advisory platform and further cost optimization.
Elevated Leverage: Osaic's leverage (measured by gross debt to
adjusted EBITDA) was 5.4x for the TTM ended 2Q24, down from 5.7x a
year ago, as EBITDA growth from recent acquisitions and strong
market performance outpaced the increase in debt. Fitch expects
Osaic will continue to consider debt-funded acquisitions, which
could yield periodic up-ticks in leverage, but the additional
revenue and potential synergies associated with those transactions
are expected to result in modest de-leveraging over time to around
5.0x.
Weak Interest Coverage: Interest coverage, calculated as adjusted
EBITDA to interest expense, was 2.2x for the TTM 2Q24, in line with
the prior year and within Fitch's 'b' category benchmark range of
1.0x-3.0x for securities firms with low balance sheet usage.
Osaic's relatively low coverage ratio is somewhat mitigated by its
relatively long-term debt maturity profile, with the nearest
maturity in 2027, as well as its cash-generative business model.
Fitch believes interest coverage will improve as recent
acquisitions and organic growth are expected to be accretive to
earnings.
Sound Liquidity Profile: Fitch believes Osaic has a sound liquidity
profile, with unrestricted cash of approximately $540 million at
2Q24 and a $665.3 million secured revolving credit facility, which
is fully undrawn. This compares to approximately $17 million of
annual debt amortization requirements.
Stable Outlook: The Stable Outlook reflects Fitch's expectation
that Osaic will manage its leverage and interest coverage ratios
near current levels, maintain solid operating performance and
continue to grow AUA.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Deterioration in operating results or an inability to achieve
planned synergies from the Lincoln Wealth acquisition that prevent
Osaic from maintaining leverage at-or-below 5.5x;
- A weakened liquidity profile and/or a sustained reduction in
interest coverage below 2.0x;
- Sustained operational losses and a reduction in the EBITDA margin
below 10%;
- Sustained negative AUA flows; and/or
- A material decline in advisor and asset retention rates.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An ability to sustain leverage at-or-below 4.0x through market
cycles;
- Sustained maintenance of interest coverage at-or-above 3x;
- Sustained maintenance of the EBITDA margin approaching 15%;
- Consistently positive AUA flows and the continued shift of assets
onto the advisory platform;
- Maintenance of an adequate liquidity profile; and/or
- An increase in the company's unsecured funding mix.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
Osaic's senior secured debt rating is one notch above the Long-Term
IDR and reflects Fitch's view of above-average recovery prospects
under a stress scenario. The senior unsecured debt rating is two
notches below the IDR and reflects structural subordination and
poor recovery prospects under a stress scenario.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The secured and unsecured debt ratings are primarily sensitive to
changes in Osaic's Long-Term IDR and are expected to move in tandem
with the Long-Term IDR.
ADJUSTMENTS
The Standalone Credit Profile (SCP) has been assigned below the
implied SCP due to the following adjustment reason(s): Weakest Link
- Funding, Liquidity & Coverage (negative).
The Business Profile score has been assigned below the implied
score due to the following adjustment reason(s): Market position
(negative).
The Asset Quality score has been assigned below the implied score
due to the following adjustment reason(s): Concentrations; asset
performance (negative).
The Capitalization & Leverage score has been assigned above the
implied score due to the following adjustment reason(s): Historical
and future metrics(positive).
ESG Considerations
Osaic Holdings Inc. has an ESG Relevance Score of '4' for
Governance Structure due to Private Equity ownership which could
result in more opportunistic financial policies and higher leverage
tolerance which has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Osaic Holdings, Inc. LT IDR B Affirmed B
senior unsecured LT CCC+ Affirmed RR6 CCC+
senior secured LT B+ Affirmed RR3 B+
PATRICK INDUSTRIES: Fitch Rates New $400MM Unsec. Notes 'BB'
------------------------------------------------------------
Fitch Ratings has assigned a 'BB' senior unsecured rating, with a
Recovery Rating of 'RR4' to the proposed $400 million senior
unsecured notes issued by Patrick Industries, Inc. Fitch currently
rates Patrick's Long-Term Issuer Default Rating (IDR) 'BB' and
senior unsecured debt 'BB'/'RR4'. The Rating Outlook is Stable.
Patrick's ratings reflect its position as a leading supplier to the
outdoor enthusiast and housing end markets. The ratings also
reflect the company's variable cost structure, which supports
margins and FCF through the cycle. Additionally, the ratings
reflect Patrick's exposure to the discretionary enthusiast
recreational vehicle (RV) and marine markets. Patrick's low capex
intensity and capital allocation framework supports its financial
flexibility.
Key Rating Drivers
New Notes Rated 'BB': Patrick intends to issue $400 million senior
unsecured notes due 2032 to redeem all of its 7.500% senior notes
due 2027, repay a portion of the borrowings under the senior credit
facility and to pay fees and expenses in connection with the
foregoing. Fitch expects the transaction to be leverage neutral,
and that Patrick's gross EBITDA leverage will continue its
trajectory to 2.5x by 2025 from its current level of about 2.9x as
of 2Q24. The new notes will be guaranteed by all of Patrick's
wholly-owned domestic subsidiaries that guarantee its existing
borrowings under the senior credit facility.
Reliance on Outdoor Enthusiast End Markets: Fitch views Patrick's
reliance on its discretionary outdoor enthusiast markets as a key
revenue and cash flow risk. As of 2Q24, 69% of Patrick's LTM
revenue came from the outdoor enthusiast markets, comprised of
Recreational Vehicle (RV) (45% of LTM revenue), Marine (17%) and
Powersports (7%). These markets have followed a boom-bust cycle
from 2021 to 2023, which resulted in Patrick's 2023 revenues
decreasing 29% to $3.5 billion, down from its $4.9 billion peak in
2022.
However, Fitch believes these end markets have likely passed the
bottom of their cycle, and expects shipments to increase by the
mid-to-high teens in 2025 and 2026, as dealers start restocking
inventory in response to rebounding retail demand.
Flexibility Drives Resilient Margins: Patrick's operational and
cost structures are highly flexible and largely consists of raw
materials and labor. In the event of a sustained downturn, Patrick
has the operational flexibility to quickly adjust output based on
demand fluctuations. Fitch expects the company to preserve its
gross margins in the high-teens and its Fitch-calculated EBITDA
margins in the mid-to-high single digits. The company also carries
limited working capital, with a cash conversion cycle of about 65
days, which helps drive through-the-cycle FCF.
Acquisitions Strengthen Business Profile: Patrick has significantly
grown over the past decade through a series of acquisitions. These
acquisitions have increased its size and scale, bolstering its
business profile, while strategically diversifying its product mix
and end markets. The company reduced its exposure to the RV market
to 43% in 2023 from as high as 75% in 2015. During this time,
Patrick entered the Marine and Powersports markets, which brought
cross-selling and expense synergies through shared infrastructure
for different product categories.
EBITDA Leverage Expected to Decrease: Fitch expects Patrick's gross
EBTIDA leverage to decrease to about 2.5x by 2025 from its current
level of 2.9x as of 2Q24. This is due to improving retail demand
and wholesale unit volume growth. Fitch believes the company will
continue executing bolt-on acquisitions within its existing end
markets, particularly Powersports, to diversify its product mix,
enter new geographies and expand its size and scale. Fitch also
believes the company will rely on its cash on hand and revolver to
accomplish this.
The company has the capacity to flex its share repurchases as it
balances bolt-on acquisitions, strategic capex deployment and
quarterly dividends to stay within its EBITDA 2.25x-2.5x net
leverage target.
Mid-Single-Digit FCF Margins: Fitch expects Patrick's post-dividend
FCF margins to run in the mid-single digits over the next few
years. This will be driven by Fitch-calculated EBITDA margins
stabilizing in the 12%-13% range over the intermediate term. The
company's FCF margins will also be supported by its low capex
requirements and by working capital management. Revenues declined
by 29% in 2023, but the company flexed its receivables, payables
and inventory to generate about $100 million cash. Fitch estimates
Patrick's average FCF conversion rate between 2020 and 2023 was
about 46%.
Derivation Summary
Patrick is a leading component supplier to OEMs in the outdoor
enthusiast and housing markets. Compared to Harley-Davidson, Inc.
(BBB+/Stable), Brunswick Corporation (BBB/Stable) and Polaris Inc.
(BBB/Stable), which are OEMs that manufacture motorsport vehicles,
Patrick's revenue has similar demand risks, while margins are more
stable. This comparative margin resiliency is linked to the
company's ability to pass through changes in its costs to its OEM
customers.
Patrick is more acquisitive than the three OEMs, with mid-cycle
leverage running about 1x-2x higher, leading to some incremental
leverage variability, although the company retains favorable
through-the-cycle financial flexibility.
The Azek Company (BB/Positive) and MasterBrand, Inc. (BB+/Stable)
are suppliers of housing-related products. Each has a leading
market position in its product category and is exposed to
cyclicality in housing construction and remodeling. However, this
volatility tends to be lower than in the outdoor enthusiast market.
Both companies' product offerings are more limited than Patrick's.
Azek is considerably smaller than Patrick, with lower leverage but
also lower margins. MasterBrand is larger than Patrick, with higher
leverage and lower margins.
Key Assumptions
- Production grows at a moderate pace through 2024 as OEMs
demonstrate operating discipline to support elevated, but declining
dealer inventory levels in certain markets particularly marine and
powersports;
- Production rates increase in 2025F and 2026F as retail demand
recovers;
- Moderate cost-linked price increases from 2025F onwards;
- Gross margin remains stable through 2025F due to elevated
material costs, followed by expansion driven by lower labor costs
and overhead as a % of revenue;
- Operating margin expansion driven by tight control of expenses
and automation initiatives, as well as cost synergies from
acquisitions;
- Fitch interest rate assumptions: 5.0% in 2024, 4.5% in 2025, 4.0%
in 2026 and 3.5% in 2027;
- Capex runs at about 2% of revenue throughout the forecast;
- Common dividends issued by company steadily rise through the
forecast;
- Opportunistic share buybacks that remain stable throughout the
forecast;
- Bolt-on acquisitions in 2025 through 2027 funded by a combination
of incremental debt, equity and cash on hand.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- M&A strategy that continues to diversify product-mix within
existing end markets and strengthens the through-the-cycle cash
flow profile;
- Adherence to a balanced capital allocation plan preserving
through-the-cycle financial flexibility, including (CFO-Capex) /
Debt sustained over 18%;
- Mid-cycle EBITDA leverage sustained below 2.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Acquisitions that reduce operational and cost flexibility, and
heighten margin and through-the-cycle FCF variability;
- Material shift in capital allocation plan that reduces
through-the-cycle financial flexibility, including (CFO-Capex) /
Debt sustained below 12%;
- Mid-cycle EBITDA leverage sustained over 3.0x.
Liquidity and Debt Structure
Strong Liquidity: As of June 30, 2024, Patrick has $44 million in
cash and $480 million available under its $775 million revolving
credit facility.
Debt: Patrick's debt structure at June 30, 2024 consisted of $125.6
million outstanding under its term loan, which matures in 2027,
$300 million of 7.50% senior notes due October 2027, $350 million
of 4.75% senior notes due May 2029 and $258.8 million of 1.75%
senior convertible notes that mature December 2028.
The company intends to use the net proceeds from the offering of
the $400 million 2032 notes to redeem all of its 7.500% senior
notes due 2027, to repay a portion of the borrowings under the
senior credit facility and to pay fees and expenses in connection
with the foregoing.
Issuer Profile
Patrick is a leading component solutions provider for the RV,
marine, powersports and housing markets.
Date of Relevant Committee
01 October 2024
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ --------
Patrick Industries, Inc.
senior unsecured LT BB New Rating RR4
PATRICK INDUSTRIES: Moody's Rates New Senior Unsecured Notes 'B3'
-----------------------------------------------------------------
Moody's Ratings assigned a B3 rating to Patrick Industries, Inc.'s
new senior unsecured notes. The company's B1 corporate family
rating, B1-PD probability of default rating and B3 ratings on the
existing senior unsecured notes remain unchanged. The Speculative
Grade Liquidity Rating (SGL) remains unchanged at SGL-1. The
positive outlook also remains unchanged.
The new senior unsecured notes will be pari passu with all the
other senior unsecured debt. Proceeds from the new notes will be
used to refinance the existing senior unsecured notes due 2027.
Ratings on the existing senior unsecured notes due 2027 will be
withdrawn upon repayment of the debt.
RATINGS RATIONALE
The B1 CFR reflects Patrick's good size and scale in the
recreational vehicle, marine, manufactured housing (MH),
powersports, and industrial markets. The company maintains a
conservative balance sheet and Moody's expect debt-to-EBITDA to
remain at or below 3x over the next 12-18 months. Moody's recognize
the growing diversity of Patrick's end markets and the company's
successful track record of generating healthy free cash flow.
These considerations are tempered by the company's exposure to
highly cyclical end markets that are susceptible to economic
downturns and vulnerable to significant earnings volatility.
Patrick's RV business (around 40% of sales) continues to face a
difficult operating environment with LTM June 2024 sales off almost
40% since the end of 2022. Moody's expect these headwinds to remain
in place over the balance of 2024 and into 2025, in the face of
relatively low wholesale shipments, dealer inventory destocking and
reduced consumer demand. Moody's expect Patrick's marine business
(around 20% of sales) to face similar headwinds with retail buyers
and dealers reluctant to purchase high price point discretionary
marine products in a high interest rate environment. Furthermore,
there continues to be risks to the downside in the economic outlook
and uncertainty around achieving a "soft landing", which could
further weigh on earnings.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Patrick's rating could be upgraded if the company maintains a
conservative balance sheet with debt-to-EBITDA sustained below 3x.
Moody's expectations of a more stable operating environment in key
RV and marine markets along with strong liquidity and robust cash
generation could also result in an upgrade.
The rating could be downgraded if end-market demand weakens beyond
Moody's current expectations due to macroeconomic headwinds. A more
aggressive financial policy involving large debt-financed
acquisitions could also result in a downgrade. A ratings downgrade
could also be prompted if adjusted debt-to-EBITDA is sustained
above 3.5x and free cash flow-to-debt falls below 10%.
Patrick Industries, Inc., headquartered in Elkhart, Indiana, is a
leading manufacturer and distributor of components parts in the RV,
marine, powersports, manufactured housing and adjacent industrial
markets primarily serving large OEMs. Revenue for the twelve months
ended June 2024 was $3.6 billion.
The principal methodology used in this rating was Manufacturing
published in September 2021.
PERIMETER FOODS: Peter Barrett Named Subchapter V Trustee
---------------------------------------------------------
The Acting U.S. Trustee for Region 4 appointed Peter Barrett, Esq.,
at Kutak Rock, LLP as Subchapter V trustee for Perimeter Foods,
LLC.
Mr. Barrett will charge $540 per hour for his services as
Subchapter V trustee and will seek reimbursement for work-related
expenses incurred.
Mr. Barrett declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Peter J. Barrett, Esq.
Kutak Rock, LLP
901 East Byrd St., Ste. 1000
Richmond, VA 23219
Phone: (804) 644-1700
Email: Peter.barrett@kutakrock.com
About Perimeter Foods
Perimeter Foods, LLC, doing business as Robert Rothschild Farm
Foods, is a fruit and vegetable preserving and specialty food
manufacturing business.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Va. Case No. 24-50529) on September
23, 2024, with up to $50,000 in assets and up to $10 million in
liabilities. David MacDonald, member and manager, signed the
petition.
Hannah W. Hutman, Esq., at Hoover Penrod, PLC represents the Debtor
as legal counsel.
PERKINS COMPOUNDING: Gets OK to Use Cash Collateral Until Nov. 20
-----------------------------------------------------------------
Perkins Compounding Pharmacy Inc. received interim approval from
the U.S. Bankruptcy Court for the Southern District of Florida to
use cash collateral until Nov. 20.
The interim order authorized the use of cash collateral in
accordance with the approved budget and a variance of up to 10% for
any budget item.
Perkins may increase spending to meet unforeseen customer needs,
provided it leads to increased revenue, according to the order
penned by Judge Erik Kimball.
Any creditor with interest in the company's accounts receivable
will receive replacement liens.
Creditors claiming a disputed lien must appear at the final hearing
to prove their secured status; otherwise, they will be denied
interest in cash collateral.
The final hearing is scheduled for Nov. 20.
About Perkins Compounding Pharmacy
Perkins Compounding Pharmacy, Inc. filed a petition under Chapter
11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
24-19058) on September 4, 2024, with $100,001 to $500,000 in assets
and $500,001 to $1 million in liabilities.
Judge Erik P. Kimball oversees the case.
The Debtor tapped Julianne Frank, P.A as legal counsel.
PHOENIX ENERGY: Case Summary & Two Unsecured Creditors
------------------------------------------------------
Debtor: Phoenix Energy Resources, LLC
1044 Mirical Run Road
Fairview, WV 26570
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Northern District of West Virginia
Case No.: 24-00520
Judge: Hon. David L Bissett
Debtor's Counsel: David M. Jecklin, Esq.
LEWIS GIANOLA PLLC
1714 Mileground
Morgantown, WV 26505
Tel: (304) 291-6300
Fax: (304) 291-6307
E-mail: djecklin@lewisgianola.com
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by John F. Hale, Jr. as managing member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/QDRUQYI/Phoenix_Energy_Resources_LLC__wvnbke-24-00520__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Two Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Applied Health Physics, LLC Business Debt $18,995
2986 Industrial Blvd
Bethel Park, PA
15102
2. Perry M. Palmer, Real Estate Taxes Unknown
Sheriff & Treasurer
Monongalia County
Tax Office
243 High Street -
Room 300
Morgantown, WV
26505
PIONEER PROJECTS: Case Summary & Two Unsecured Creditors
--------------------------------------------------------
Debtor: Pioneer Projects 87 LLC
87 Pioneer Street
Brooklyn, NY 11231
Business Description: The Debtor owns a two-family dwelling
located at 87 Pioneer Street, Brooklyn, NY
11231 valued at $2.8 million.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 24-44221
Judge: Hon. Jil Mazer-Marino
Debtor's Counsel: Steven W. Stutman, Esq.
STEVEN W. STUTMAN, PLLC
560 Broadhollow Rd, Suite 114
Suite B52
Melville, NY 11747
Tel: (631) 393-6001
Email: stevensy58@gmail.com
Total Assets: $2,800,000
Total Liabilities: $2,442,191
The petition was signed by Abigail Coover as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/U5PTV3Q/Pioneer_Projects_87_LLC__nyebke-24-44221__0001.0.pdf?mcid=tGE4TAMA
PLAINS END: Fitch Affirms 'BB+' Rating on Senior Secured Bonds
--------------------------------------------------------------
Fitch Ratings has affirmed Plains End Financing, LLC's senior
secured bonds at 'BB+'. The Rating Outlook is Stable.
RATING RATIONALE
The rating reflects Fitch's expectations of continued stable
operational and cost profiles. Plains End benefits from fixed-price
tolling-style power purchase agreements (PPAs) with an
investment-grade counterparty. However, the cash flow profile is
susceptible to fluctuations in project dispatch and operating
costs. The average rating case debt service coverage ratio (DSCR)
is 1.24x with a minimum of 1.16x in 2027, which is slightly below
indicative thresholds for the current rating, mainly due to Fitch's
projection of slowly rising property taxes and higher insurance
costs in light of recent cost trends.
The projected financial profile is acceptable at the current rating
level given actual performance has been close to base case levels,
a history of property tax settlements, and expectations of future
stable dispatch and major maintenance costs through the remaining
life of the debt.
KEY RATING DRIVERS
Operation Risk - Midrange
Some Cost Volatility
The project consists of two peaking facilities (PEI and PEII)
designed to provide back-up generation for nearby wind projects due
to the intermittency of wind resources. Recent cost volatility has
been driven by fixed operating costs, mainly rising property taxes
and insurance costs, both of which have been adjusted higher in
Fitch's base case. Exposure to major maintenance costs is low given
low actual and expected dispatch.
Supply Risk - Stronger
Low Supply Risk
The tolling-style PPAs are with Public Service Company of Colorado
(PSCo; A-/Stable). Under the contracts, all variable fuel expenses
are passed through to PSCo, subject to heat rate adjustments. The
contracts represent a stronger attribute that limits the fuel
supply risk to the project.
Revenue Risk - Stronger (Revised from Midrange)
Stable Contracted Revenues
The revenue risk assessment has been revised to 'Stronger' from
'Midrange'. The project benefits from stable and predictable
revenues under two 20-year fixed price PPAs with a strong utility
counterparty, PSCo. Under the PPAs, PEI and PEII receive
substantial capacity payments, which constitute nearly 90% of
consolidated revenues. Although energy margins may not sufficiently
cover accelerated overhaul expenses from increased dispatch, Fitch
considers this risk minimal due to the expected low dispatch
profile throughout the remaining debt term.
Debt Structure - 1 - Midrange
Typical Structural Features
Plains End's senior debt has standard structural features,
including a forward- and backward-looking dividend lock-up at 1.20x
consolidated DSCR, a six-month debt service reserve, and is both
fully amortizing and fixed rate.
Financial Profile
Historical average coverage ratios generally align with Fitch's
base case metrics. Fitch's rating case factors in lower
availability and a 5% increase in fixed operating costs above the
base case. As part of its 2024 review, Fitch raised insurance costs
in the rating case by approximately $489,000 annually on average
for the years 2024 to 2027, reflecting 2023 actual insurance costs
and 2024 expectations. The average senior DSCR in the rating case
is 1.24x, with a minimum of 1.16x in 2027. Continued growth of
property taxes (about 27% of expected total costs in 2023) above
Fitch's rating case expectations of 4% per year and insurance costs
could pressure the rating.
PEER GROUP
Midland Cogeneration Venture LP is a comparable peer (MCV;
BB+/Stable). MCV is a mostly contracted cogeneration plant that
operates under two PPAs. MCV's operating profile is similarly
stable with Plains End. Contracted revenues comprise 85% of MCV's
revenues over the rated debt term. The rating case DSCR until debt
maturity in March 2025 is 1.3x.
Tierra Mojada Luxembourg II S.a r.l. (BBB-/Stable) is a mostly
contracted cogeneration plant located in Mexico. Tierra Mojada's
operating profile is more variable than Plains End's, as it is a
baseload plant with some merchant exposure over the medium-term.
Its higher rating is explained by more robust coverage levels under
the rating case, averaging 1.61x with a minimum of 1.33x, which
compensate for its additional risks. Other privately rated projects
with lower ratings typically exhibit higher sensitivity to
operational stresses and have lower rating case coverages.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Continued increases in operating costs (including property taxes
and insurance) above Fitch's expectations that result in DSCRs
below about 1.30x;
- A loss of the property tax assessment appeal and/or continued
property tax litigation without retention of sufficient cash at the
project level to offset expected future expense increases.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Stable operating and financial performance and other material
improvements to cash flow resulting in coverage exceeding 1.40x on
average in the rating case.
SECURITY
Plains End's obligations are jointly and severally guaranteed by
PEI and PEII. The obligations of the issuer and guarantors are
secured by a first-priority perfected security interest in favor of
the collateral agent. The collateral includes all real and personal
property, all project documents and material agreements, all cash
and accounts, and all ownership interests in the issuer and
guarantors.
The collateral will be applied in the following order:
- First, for the benefit of the lenders under the senior bonds and
senior credit facilities until full discharge of any payments and
obligations;
- Second, any excess shall be returned to the issuer, guarantor or
sponsor.
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 Prior
----------- ------ -----
Plains End
Financing, LLC
Plains End
Financing,
LLC/Project
Revenues & Assets
- First Lien/1 LT LT BB+ Affirmed BB+
PLOW UNDERGROUND: Gets Final Approval to Use Cash Collateral
------------------------------------------------------------
Plow Underground Construction, LLC received final court approval to
use the cash collateral of its lenders to fund critical
operations.
The lenders' cash collateral consists of revenue from the company's
business operations.
The final order penned by Judge James Sacca of the U.S. Bankruptcy
Court for the Northern District of Georgia approved the use of cash
collateral in accordance with an approved budget, with an allowed
variance of 5% per month.
Included in the budget is the monthly payment of $1,000 to the
Subchapter V Trustee for attorneys' fees. Payments will be held in
escrow until the court approves such fees.
To protect lenders, the bankruptcy judge granted them a replacement
lien on all property acquired by the company after the petition
date.
About Plow Underground Construction
Plow Underground Construction, LLC is a construction company that
specializes in underground construction services. This includes
services like trenching, tunneling, and other subsurface work
essential for utilities, drainage systems, and other infrastructure
projects.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-21101) with $50,001 to
$100,000 in assets and $500,001 to $1 million in liabilities.
Judge James R. Sacca oversees the case.
The Debtor is represented by:
William A. Rountree, Esq.
Rountree Leitman Klein & Geer, LLC
Century Plaza I
2987 Clairmont Road, Suite 350
Atlanta, GA 30329
Telephone: 404-584-1238
Email: wrountree@rlkglaw.com
wgeer@rlkglaw.com
POINT INVESTMENTS: US Judge Won't Hear Falcata Lawsuit
------------------------------------------------------
Chief Judge Colm F. Connolly of the United States District Court
for the District of Delaware affirmed the two orders of the United
States Bankruptcy Court for the District of Delaware in the case
captioned as FTI GP I, LLC on behalf of FALCATA TECH INVESTMENT
FUND I, L.P., Appellants, v. POINT INVESTMENTS, LTD. {IN
LIQUIDATION), Appellee, Civ. No. 23-630-CFC (Consolidated) (D.
Del.).
This appeal arises in the Chapter 15 ancillary proceeding of Point
Investments, Ltd., a debtor in a foreign main proceeding under the
supervision of the Supreme Court of Bermuda.
The Debtor is a private investment fund incorporated in Bermuda.
The Debtor is the sole limited partner in Falcata Tech Investment
Fund I, L.P., an exempted limited partnership organized under the
laws of the Cayman Islands. It was created to acquire, hold, and
dispose of securities in the emerging technologies industry and is
governed, in part, by the Amended and Restated Exempted Limited
Partnership Agreement dated April 20, 2018.
Following the issuance of a recognition order by the U.S.
Bankruptcy Court for the District of Delaware, recognizing the
Bermuda Proceeding as a foreign main proceeding, appellant FTI GP
I, LLC, on behalf of Falcata Tech Investment Fund I, L.P., filed a
complaint initiating an adversary proceeding against the Debtor,
and subsequently filed a motion seeking a determination that the
adversary proceeding did not violate the automatic stay or,
alternatively, that appellant should be afforded relief from the
automatic stay to pursue the adversary proceeding. The Foreign
Representatives, appointed as liquidators by the Bermuda Court,
moved to enforce the automatic stay.
Following a hearing on May 25, 2023, the Bankruptcy Court ruled
that:
(i) the automatic stay applied and, therefore, the filing of the
Complaint was void; (ii) the "home court" rule sometimes applied
in Chapter 7 and Chapter 11 cases does not apply in Chapter 15
cases "because the foreign main proceeding provides the home
court;" (iii) cause did not exist to modify the automatic stay to
permit the adversary proceeding; and
(iv) the Debtor's foreign main proceeding in Bermuda was the
proper forum for the dispute.
Two Orders issued by the Bankruptcy Court are the subject of this
consolidated appeal:
(1) Amended Order Granting in Part, and Denying in Part, the
Motion of Foreign Representatives for Entry of an Order Enforcing
the Automatic Stay; and
(2) Amended Order Denying Motion of FTI GP I, LLC on Behalf of
Falcata Tech Investment Fund I, L.P. for Determination That There
Is No Automatic Stay.
With respect to the Bankruptcy Court's determination that the
adversary proceeding was void ab initio, Falcata asserts that the
Bankruptcy Court erred in concluding that:
(1) the adversary proceeding violated Sec. 1520(a)(l) of the
Bankruptcy Code,
(2) the adversary proceeding violated Sec. 362(a)(l) of the
Bankruptcy Code, and
(3) the "home court" rule did not otherwise permit the adversary
proceeding.
With respect to the Bankruptcy Court's exercise of its discretion
in determining not to modify the automatic stay to permit the
adversary proceeding, Falcata asserts that the Bankruptcy Court
erred in concluding that:
(1) the declaratory relief claim can be adjudicated in the
Bermuda Proceeding;
(2) it is not prejudicial or violative of United States public
policy to force Falcata to pursue its claims against the Debtor in
the Bermuda Proceeding; and
(3) the Debtor would be prejudiced if it were required to defend
the adversary proceeding in two different courts.
Judge Connolly concludes, "Regarding its contention that the
adversary proceeding violates the automatic stay, Falcata fails to
show how the Bankruptcy Court erred as a matter of law. Regarding
the Bankruptcy Court's exercise of discretion not to modify the
automatic stay to let the adversary proceeding go forward, Falcata
offered no evidence that Bermuda proceeding is unfair or that it
otherwise suffers prejudice based on an absence of forum. On the
other hand, the Bankruptcy Court's determination that the Debtor
would be prejudiced by stay modification finds clear support in the
record. Accordingly, the Bankruptcy Court did not abuse its
discretion."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=NIaCBC
Counsel for Appellant:
Eric D. Schwartz, Esq.
Daniel B. Butz, Esq.
Evanthea Hammer, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 North Market Street, 16th Floor
PO Box 1347
Wilmington, DE 19899-1347
E-mail: eschwartz@morrisnichols.com
dbutz@morrisnichols.com
- and -
Paul Werner, Esq.
A. Jospeh Jay, Esq. III
SHEPPARD MULLIN RICHTER & HAMPTON, LLP
2099 Pennsylvania Avenue, N.W., Suite 100
Washington, DC 20006-6801
E-mail: pwerner@sheppardmullin.com
jjay@sheppardmullin.com
- and -
Edward H. Tillinghast, III
SHEPPARD MULLIN RICHTER & HAMPTON, LLP
30 Rockefeller Plaza
New York, NY 10112
E-mail: etillinghast@sheppardmullin.com
Counsel for Appellee-Foreign Representative:
Jaco R. Kirkham, Esq.
Stephen J. Astringer, Esq.
KOBRE & KIM LLP
Wilmington, Delaware
E-mail: jacob.kirkham@kobrekim.com
stephen.astringer@kobrekim.com
- and -
Adam M. Lavine, Esq.
John G. Conte, Esq.
KOBRE & KIM LLP
800 Third Avenue
New York, NY 10022
E-mail: adam.lavine@kobrekim.com
- and -
Adriana Riviere-Badell, Esq.
Evelyn Baltodano Sheehan, Esq.
KOBRE & KIM LLP
201 South Biscayne Boulevard, Suite 1900
Miami, FL 33131
E-mail: adriana.riviere-badell@kobrekim.com
evelyn.sheehan@kobrekim.com
About Points Investments
Point Investments Ltd. is a private investment fund incorporated in
Bermuda. Point Investments sought Chapter 15 bankruptcy protection
(Bankr. D. Del. Case No. 22-10261) on March 29, 2022, to seek U.S.
recognition of the proceedings in Bermuda. The petition was signed
by Mathew Clingerman of Krys & Associates (Bermuda) Ltd., and
Andrew Childe and Richard Lewis of FFP Ltd., who were appointed as
the joint provisional liquidators for Point Investments.
POINTCLICKCARE CORP: Moody's Lowers CFR to B3, Outlook Stable
-------------------------------------------------------------
Moody's Ratings downgraded PointClickCare Corp.'s (PCC) corporate
family rating to B3 from B2 and probability of default rating to
B3-PD from B2-PD. Moody's also assigned B3 ratings to
PointClickCare Technologies Inc.'s $200MM backed senior secured
first lien revolving credit facility due 2029 and the proposed
$1,625MM backed senior secured first lien term loan B due 2031. The
existing senior secured first lien bank credit facilities have been
reviewed in the rating committee and remain unchanged. The outlooks
for both entities are stable.
As part of a debt funded dividend recapitalization transaction, the
company has launched a $1,625 million Term Loan B due October 2031.
The proceeds from the debt issuance as well as a portion of cash
will be used to fund a $850 million dividend to PCC's owners and
other shareholders, pay transaction-related fees, and repay the
existing term loan. The B2 ratings to the existing term loan and
the revolving credit facility remain unchanged because Moody's
expect a full repayment with transaction proceeds and will withdraw
ratings once this occurs.
The envisaged deal will weaken the company's pro forma adjusted
debt to EBITDA to about 8.2x (YE 2024) from about 4.5x (in July
2024), and will remain elevated (around 7.3x based on Moody's
adjustments which excludes stock-base-compensation) over the next
12-18 months following the debt funded dividend.
The stable outlook reflects Moody's expectation that the company
will continue to demonstrate good operating performance, but
leverage will remain very high, sustained around 7.3x by the end of
2025.
RATINGS RATIONALE
PCC's rating is supported by: 1) favorable nursing and care home
demographics that support revenue and EBITDA growth; 2) a
subscription-based fee model (over 90% of revenues) that add
stability to PCC's revenue; 3) an asset light business model
supporting its ability to generate free cash flow; and 4) solid
revenue and margin growth potential from increased volumes, price
uplifts, and efficiency improvements from ongoing acquisition
integration.
The company's rating is constrained by: 1) high debt-to-EBITDA that
will remain above 7x and interest coverage (defined as (EBITDA –
Capex) / Interest expense) around 1.5x through 2025; 2) aggressive
financial policies highlighted by PCC's willingness to engage in
materially leveraging transactions; and 3) its small size and
narrow focus on the niche end market of software for skilled
nursing facilities and long-term care homes.
Governance considerations include an elevated financial leverage
and higher interest costs that will weigh on free cash flow as well
as a shift to a more aggressive financial policy, including
material debt-funded transactions that elevate financial leverage
periodically. Governance will be supported by the company's strong
organic growth with a long track record in healthcare software.
PCC has good liquidity, with sources of cash around $290 million
over the next four quarters compared to uses of around $16 million.
PCC's sources of liquidity are $93 million of cash as of July 31,
2024, full availability under the company's $200 million revolving
credit facility (expiring 2029). Uses of cash are comprised of
around $16 million of mandatory amortization payments on the
company's first lien term loan debt. The revolver has a springing
net first lien leverage ratio of 6.25x which springs when the
revolver is 35% drawn. Moody's expect PCC would be in compliance
with the covenant if tested. PCC has limited flexibility to
generate liquidity from asset sales, with a fully secured capital
structure and asset mix that is not easy to carve-out for sale
given the nature of its business.
The senior secured first lien revolving credit facility expiring in
2029 and senior secured first lien term loan B due in 2031 are
rated B3, in line with PCC's CFR, because they are the only debt in
the capital structure. The revolver and term loans are pari-passu
and are secured by a first-lien pledge on substantially all the
assets of PCC and its domestic subsidiaries.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if there a consistent growth track
record, debt-to-EBITDA is sustained below 6.5x (over 7.0x expected
through 2025) and interest coverage is sustained above 2.0x, free
cash flow (FCF)-to-debt is sustained above 5%, and if the company
is expected to maintain a more conservative financial strategy.
The ratings could be downgraded if organic revenue or EBITDA
declines or if the company's liquidity profile deteriorates due to
sustained negative free cash flow.
Headquartered in Mississauga, Ontario, PointClickCare Corp.
provides Software as a service (SaaS) platforms that integrate
electronic health records within the critical business functions of
skilled nursing facilities in the US and Canada. The company is
privately owned by a group controlled by the company's initial
founders.
The principal methodology used in these ratings was Software
published in June 2022.
POWER TEAM: Unsecureds Will Get 100% of Claims over 60 Months
-------------------------------------------------------------
Power Team, Inc., filed with the U.S. Bankruptcy Court for the
Northern District of Illinois an Amended Plan of Reorganization
dated September 4, 2024.
The Debtor is an Illinois Corporation formed on March 17, 2009. The
Debtor has extensive experience in the property management industry
and is presently managing 4 buildings.
The debtor also owns, operates, and manages a 4-unit residential
building located at 5235 W. Gladys, Chicago, IL 60644, housing
serval tenants. Due to the COVID-19 global pandemic, and the
general economy the debtor's tenant's fell behind on rents and due
to local restrictions, the debtor was precluded from taking actions
to evict tenants. The debtor now has all units fully occupied, and
all tenants are current on the monthly rental payments.
That the debtor operates its business out of its principal location
at 2532 W. Warren 2nd Floor Chicago, IL 60612. The Debtor continues
in possession of its property and operates and manages its business
as debtor in possession. Robert Handler of FSI Recovery Associates,
LLC was appointed as the Subchapter V Trustee in this Chapter 11
case.
The Debtor has 2 secured creditors, Wilmington Saving Fund Society,
which is serviced by BSI Financial. BSI Financial is secured by
virtue of a mortgage on the debtor's business property located at
5235 W. Gladys Chicago, IL 60644, and has filed a proof of claim
dated July 2, 2024, in the total amount of $528,315.40. FSI shall
receive 100% of its claim at its pre-petition interest rate of
8.99% amortized over 240 months paid out over the life of the plan
in 60 monthly payments of $4,753.05 (P&I), with a balloon payment
on or about July 2029 in the amount of $468,646.99.
The second secured claim is that of the Cook County Treasurer's
Office with a Proof of Claim filed May 1, 2024, in the amount of
$12,705.00. This claim will be paid out in full at 5% interest in
aggregate monthly payments of $222.35.
Class 2 consist of the Unsecured NonPriority claims. The Debtor has
4 creditors holding general unsecured claims in the aggregate
amount of monthly amount of $93,950.59. These creditors will
receive 100% of their claims paid pro-rata without interest over 60
months in the without interest in the monthly amount of $1,565.84
per month.
The debtor will at all times keep the property fully insured and
provide FSI with a Certificate of insurance and will provide proof
of insurance going forward annually or immediately upon request.
Class 3 consists of Shareholder Interest. The Debtor is a closely
held corporation. Rana Mackis the sole shareholder of the Debtor.
Under the plan, Rana Mack will retain her stock interest in the
Debtor. Class 3 is not impaired by the plan.
This Plan is self-executing. The Debtor shall not be required to
execute any newly created documents to evidence the claims, liens
or terms of repayment to the holder of any Allowed Claim.
Furthermore, upon the completion of the payments required under
this Plan to the holders of Allowed Claims, such Claims and any
liens that may support such Claims shall be deemed released and
discharged.
All of these assets of the Debtor and this estate shall vest in the
Debtor upon Confirmation of the Plan subject only to the terms and
conditions of this Plan.
A full-text copy of the Amended Plan dated September 4, 2024 is
available at https://urlcurt.com/u?l=tjeDyR from PacerMonitor.com
at no charge.
The Debtor's:
William E. Jamison, Esq.
Law Office of William E. Jamison & Associates
53 West Jackson Blvd #801
Chicago, IL 60604
Telephone: (312) 226-8500
Email: wjami39246@aol.com
About Power Team Inc.
Power Team Inc. is an Illinois Corporation formed on March 17,
2009.
The Debtor sought protection for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 24-05517) on April 16,
2024, listing $500,001 to $1 million in both assets and
liabilities. William E. Jamison, Jr. at Law Office William E.
Jamison & Associates represents the Debtor as counsel.
PREMIER HOSPITALITY: Soneet Kapila Named Subchapter V Trustee
-------------------------------------------------------------
The U.S. Trustee for Region 21 appointed Soneet Kapila of Kapila
Mukamal as Subchapter V trustee for Premier Hospitality
International, Inc.
Mr. Kapila will be paid an hourly fee of $450 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Kapila declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Soneet R. Kapila
Kapila Mukamal
1000 South Federal Highway, Suite 200
Fort Lauderdale, FL 33316
Tel: (954) 761-1011
Email: skapila@kapilamukamal.com
About Premier Hospitality International
Premier Hospitality International Inc. filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Case No. 24-19763) on September 22, 2024, with $100,001 to
$500,000 in both assets and liabilities.
Judge Corali Lopez-Castro presides over the case.
Rachamin Cohen, Esq., at Cohen Legal Services, P.A. represents the
Debtor as legal counsel.
RED RIVER: Johnson & Johnson Wins $505M Deal w/ Talc Miners
-----------------------------------------------------------
Ben Zigterman of Law360 reports that a Delaware bankruptcy judge
approved a $505 million settlement between a pair of talc producers
and Johnson & Johnson after overruling an objection by a group of
insurers to the deal, which would resolve several ongoing disputes
with J&J over talc injury claims.
About J&J Talc Units
LLT Management, LLC (formerly known as LTL Management LLC) was 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.
In the 2021 case, LTL Management 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.
On Dec. 24, 2021, the U.S. Trustee for Regions 3 and 9
reconstituted the talc claimants' committee and appointed two
separate committees: (i) the official committee of talc claimants
I, which represents ovarian cancer claimants, and (ii) the official
committee of talc claimants II, which represents mesothelioma
claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
Re-Filing of Chapter 11 Petition
On Jan. 30, 2023, a panel of the Third Circuit issued an opinion
directing 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 Sept. 20, 2024, Red River Talc LLC filed a Chapter 11 bankruptcy
petition (Bankr. S.D. Tex. Case No. 24-90505).
Porter Hedges LLP and Jones Day serve as counsel in the new Chapter
11 case. Epiq is the claims agent.
Paul Hastings LLP is counsel to the Ad Hoc Committee of Supporting
Counsel. Randi S. Ellis is the proposed prepetition legal
representative of future claimants.
RED VENTURES: Moody's Affirms 'B1' CFR & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Ratings affirms Red Ventures, LLC's B1 corporate family
rating, B2-PD probability of default rating and B1 rating for the
backed senior secured bank credit facilities. The outlook was
changed to stable from positive.
The change in the outlook to stable from positive reflects the
relatively weak operating performance in recent periods due to
challenging industry conditions that has lead to high leverage
(5.2x pro forma for the CNET sale and including Moody's standard
lease adjustments as of Q2 2024).
The affirmation of the B1 CFR is supported by Moody's expectation
that Red Ventures will maintain good liquidity and benefit from
lower interest rates and management initiatives over the next
twelve to eighteen months. Moody's expect leverage to decrease
below 5x in the next few quarters driven by EBITDA growth and
additional debt repayment with further deleveraging in 2025.
RATINGS RATIONALE
The B1 CFR reflects the company's position as a leading US Internet
publisher of editorial content with online customer acquisition
capabilities designed around a proprietary data and analytics
platform and performance-based revenue model. The company's digital
marketing funnel, buoyed by its owned and operated websites,
delivers high customer traffic and sales conversions. Red Ventures
maintains good adjusted EBITDA margins due to a continuing focus on
cost efficiencies especially during periods of weak topline
performance. The "asset-lite" operating model facilitates good
conversion of EBITDA to free cash flow (FCF) that supports
liquidity and the ability to repay debt. Red Ventures also owns a
50% membership interest in its joint venture with UnitedHealth
Group Incorporated (RVO Health, LLC), which was deconsolidated from
the financial statements in 2022.
The profile also considers Red Ventures' high financial leverage
and acquisitive financial policy that can lead to volatile credit
metrics as well as integration challenges. Red Ventures'
performance is sensitive to search engine algorithm changes and
additional ad inventory such as from ad based streaming services.
Operating performance is also impacted by interest rate changes,
cyclical advertising spending and volatile transaction revenue.
There is moderately high exposure to customer, end market and
geographic concentrations following the RVO Health transaction.
Moody's expect Red Ventures will continue to consider acquisitions
and dividends to its to private equity ownership, although the
sponsors have provided additional equity to partially fund M&A
historically.
Moody's expect Red Ventures will maintain good liquidity over the
next 12-18 months. Given the profitability of the business and
minimal capex and working capital needs, Moody's project free cash
flow (FCF) as a percentage of debt in the high single digit
percentage range and a cash balance of at least $100 million over
the next year (cash totaled roughly $109 million as Q2 2024).
Liquidity is further supported by the $1.02 billion revolving
credit facility (RCF), with $475 million drawn as of Q2 2024, and
which matures in November 2027. Proceeds from the CNET sale which
closed in Q3 2024 were used to repay approximately $150 million of
the RCF balance and decreased the pro forma balance to roughly $325
million.
The term loan is covenant lite, but the RCF is subject to a
springing Maximum First Lien Leverage covenant equal to 7.5x (as
defined in the first-lien credit agreement) that becomes effective
each quarter when more than 35% of the facility is drawn.
Historically, the company has drawn under the RCF, triggering the
covenant, but Moody's expect the outstanding RCF balance to
continue to decline. As of Q2 2024, Red Ventures' First Lien
Leverage Ratio was roughly 3.6x (as defined in the first-lien
credit agreement).
The stable outlook reflects Moody's view that Red Ventures will
improve its operating performance during the second half of 2024
and benefit from lower interest rates that will support improved
results from its Bankrate and other divisions, which will continue
into 2025. Free cash flow as a percentage of debt is expected to be
in the high single digit percentage range and be used in part for
debt reduction going forward and help drive leverage to the mid 4x
range in 2025.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Red Ventures generates consistent
organic revenue growth in the mid single digits with EBITDA margin
expansion leading to increasing FCF generation and a sustained
reduction in total debt to EBITDA below 4x (as calculated by
Moody's). There would also need to be an increase in scale with a
good liquidity profile including FCF as a percentage of debt
remaining in the high single digits. The company would also need to
demonstrate conservative financial policies consistent with a
higher rating.
The ratings could be downgraded if leverage was sustained above 5x
(as calculated by us) or FCF as a percentage of debt declined to
the low single digits. Market share erosion, significant client
losses, sub-par organic revenue growth, or a weakened liquidity
position could also lead to negative rating pressure.
Founded in 2000 and headquartered in Fort Mill, South Carolina, Red
Ventures, LLC ("Red Ventures" or "RV") is a wholly-owned operating
subsidiary of Red Ventures Holdco, LP, which owns a portfolio of
digital businesses that bring consumers and brands together through
integrated e-commerce, strategic partnerships, and proprietary data
across Financial Services, Travel, Commerce (Home), Red Digital
(marketing and tech partnerships), Education and International end
markets. Private equity firms Silver Lake Partners, General
Atlantic and ICONIQ are major investors in the company. Revenue for
the twelve months ended Q2 2024 totaled approximately $1.1
billion.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
REMOND REMODELING: 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 Remond Remodeling
Co., Inc.
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 Remond Remodeling Co.
Remond Remodeling Co., Inc. sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. M.D. Pa. Case No. 24-02390) on
September 23, 2024, with up to $50,000 in assets and up to $500,000
in liabilities.
Judge Mark J. Conway presides over the case.
Jason Paul Provinzano, Esq., at the Law Offices of Jason P.
Provinzano, LLC represents the Debtor as legal counsel.
RESTORATION HARDWARE: Moody's Alters Outlook on B1 CFR to Negative
------------------------------------------------------------------
Moody's Ratings changed Restoration Hardware, Inc.'s ("RH") outlook
to negative from stable. At the same time, Moody's affirmed all of
RH's existing ratings including its corporate family rating at B1,
its probability of default rating at B1-PD. The senior secured
first lien term loan B and senior secured first lien term loan B2
ratings were also affirmed at B1. The speculative grade liquidity
rating ("SGL") was downgraded to SGL-3 from SGL-2.
The change in outlook to negative reflects the deterioration in
RH's operating performance during a difficult consumer spending
environment for home goods coupled with its significant investments
in international growth. Share repurchases of $1.25 billion in 2023
has also reduced RH's excess cash and financial flexibility to
weather the cyclical downturn. RH's credit metrics remain weak for
the B1 rating with LTM leverage of 7.3x and EBITA/ interest of
1.1x. The affirmation reflects that Moody's expect leverage to
improve to 6.3x by the end of fiscal 2024 assuming that the
inflection to improved positive sales trends continues.
RATINGS RATIONALE
RH's B1 CFR reflects its strong home luxury brand, particularly in
furniture, the success of its existing Design Galleries evidenced
by its historically solid operating margins and Moody's belief that
demand is set to recover in the second half of 2024. Nonetheless,
the rating is constrained by the cyclical nature of the home
furnishing industry which could cause consumers to delay, forego or
trade down on purchases in recessionary periods. The rating is also
constrained by its continued investments in international growth
which are significant drag on its profitability. RH is coming off a
period of significant contraction for its products given lower
housing activity and higher interest rates after a period of
outsized demand. The rating is also constrained by its aggressive
business and financial strategies. The company maintains a long
term goal to buildout its brand globally requires significant
capital investment including its continued plans its convert to a
large box gallery styled store concept, its expansion to
international markets, its growth into hospitality as well as
luxury product markets. RH has historically pursued significant
share repurchases with $1 billion completed in 2022 and $1.25
billion in 2023. No share repurchases have been completed in fiscal
2024 as business performance has remained challenged.
RH's speculative grade liquidity rating of SGL-3 reflects the cash
balance of $78 million at the end of Q2 2024 and its $600 million
ABL revolver with $25 million drawn and $499 million of gross
borrowing availability as of Aug 3, 2024. Moody's project RH to
generate slightly positive free cash flow over the next 12-18
months despite its continued capital investments.
The negative outlook reflects RH's elevated leverage and weak
interest coverage as operating performance remains pressured as the
company addresses product availability and continues to make
significant investments. The negative outlook also reflects the
risks associated with RH improving its operating performance and
earnings in a period of challenging consumer demand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if there is a clear articulation and
evidence of conservative financial strategies while maintaining
very good liquidity and solid operating performance including the
successful opening of new galleries. Quantitatively, the ratings
could be upgraded if Moody's adjusted debt/EBITDA is sustained
below 4.5x, adjusted EBIT margins sustained above 20% and
EBITA/Interest sustained above 2.75x.
The ratings could be downgraded if operational performance does not
result in a meaningful improvement of both earnings and credit
metrics in the second half of 2024. The ratings could also be
downgraded if aggressive financial strategies, unsuccessful gallery
openings or operating performance results in Moody's adjusted
debt/EBITDA sustained above 5.5x or EBITA/interest below 1.75x.
Any significant deterioration in liquidity or material restricted
payments including share repurchases before RH's leverage is
sustained below 5.5x would be viewed negatively. The ratings could
also be downgraded should the company expand its operations into
new sectors that increases the risk of its current business
profile.
Headquartered in Corte Madera, California, Restoration Hardware,
Inc. (RH) is a home furnishings company that offers its collection
through its retail galleries, catalog, and online. As of August 3,
2024, the company operated 72 total galleries, including 35 design
galleries and 33 legacy galleries. The company also operates 14
Waterworks Showrooms and 39 outlets. For the twelve months ending
August 3, 2024, RH had approximately $3.0 billion in revenue.
The principal methodology used in these ratings was Retail and
Apparel published in November 2023.
RS AIR: Perlman's Counterclaims Against NetJets Tossed
------------------------------------------------------
Judge James L. Graham of the United States District Court for the
Southern District of Ohio granted NetJets' motion to dismiss the
counterclaims of Stephen G. Perlman in the bankruptcy case of RS
Air LLC.
In the case captioned as NetJets Aviation, Inc., et al.,
Plaintiffs, v. Stephen G. Perlman., et al., Defendants, Case No:
2:22-cv-2417 (S.D. Ohio), NetJets Aviation, Inc., NetJets Sales,
Inc., and NetJets Services, Inc. seek a declaration that defendants
Stephen G. Perlman and the Stephen G. Perlman Revocable Trust are
the alter egos of RS Air, LLC, a bankrupt entity. Mr. Perlman
asserted four counterclaims under federal and state law.
NetJets sells fractional ownership interests in private business
aircraft. In 2001, Mr. Perlman formed RS Air, with himself as sole
member and manager, and used it to purchase a fractional share in a
NetJets aircraft. Over time, RS Air bought shares in two other
aircraft. Under a series of purchase and management agreements, RS
Air was entitled to a certain number of flight hours per year for
each aircraft and had to pay fees for various management and
support services provided by NetJets.
The parties' relationship deteriorated in July 2017 when a Cessna
Citation X aircraft in which RS Air owned a share was involved in a
non-injury incident. The aircraft was damaged and declared a total
loss for insurance purposes. Mr. Perlman believed NetJets concealed
information about the incident and the insurance proceeds, breached
its contractual obligations, and acted in bad faith in attempting
to enter into an aircraft substitution agreement with RS Air.
NetJets maintained that it had fully complied with its contractual
obligations to RS Air and that its substitution offer was fair.
Litigation ensued in Ohio, where NetJets is based, and in
California, where RS Air was based and where Mr. Perlman resides.
Eventually, RS Air filed a Chapter 11 bankruptcy petition in
November 2020 in the Northern District of California. NetJets filed
a proof of claim against RS Air for unpaid amounts under the
management agreements. The bankruptcy court allowed NetJets' claim
in the amount of $1,767,571.15, following a setoff.
NetJets filed this action, invoking the Court's diversity
jurisdiction. NetJets seeks recovery on the allowed bankruptcy
claim, plus interest, from Mr. Perlman and the Trust as alleged
alter egos of RS Air. A third defendant, Rearden LLC, was dismissed
for lack of personal jurisdiction.
One of Mr. Perlman's counterclaims is brought under the Lanham Act
for alleged false representations made by NetJets in advertising
its goods and services. The remaining three counterclaims are
brought in diversity under state law -- one counterclaim under the
Ohio Deceptive Trade Practices Act and two counterclaims under
California law for false advertising and unfair competition.
According to the Court, the factual underpinnings of the
counterclaims relate to alleged misrepresentations which NetJets
made in promoting its private aircraft program. NetJets claimed it
was "the safest name" and had the "finest fleet" in private
aviation, "prioritized safety above all else," and led the industry
"in setting safety standards," among other similar statements.
NetJets also touted the financial benefits of its fractional
ownership program, stating that a participant would experience
"investment security from a financially stable business model" and
would enjoy valuable tax benefits.
Mr. Perlman alleges that in reality NetJets has a "long history of
accidents and incidents involving aircraft in its fractional
ownership plan." This made NetJets' claims about the safety of its
program false. Customers allegedly suffered injury because NetJets
was able to charge higher fees than it would have if the truth
about its safety record had been known. And competitors allegedly
were harmed because NetJets competed unfairly by making false
claims to attract customers.
NetJets' representations about the financial benefits of its
program also were allegedly false. According to the counterclaim
(and echoing RS Air's position in other proceedings), after the
2017 plane incident, NetJets colluded with insurance companies,
brought burdensome litigation against RS Air, and dealt in bad
faith in regard to its contractual obligations. Mr. Perlman alleges
that the representations were false because the financial resources
he has expended to deal with the disputes has outweighed the
financial benefits he received from NetJets.
Lanham Act
The Court finds that the counterclaim fails to state a cause of
action under the Lanham Act. Judge Grahman says, "As an initial
matter, Perlman does not allege that he directly competes with
NetJets in the marketplace for private air travel services. He has
not operated in the past, nor does he presently operate, a business
which provides air transportation services to consumers. The
counterclaim characterizes the technology which Perlman is
developing as being 'competitive' with NetJets, but it does not
allege that the technology is currently competing with NetJets."
He adds, "Perlman's allegations also do not support a reasonable
reference that he has actually suffered an injury to his commercial
reputation or sales. Rather, his allegations outline future plans
for the use of technology he is currently developing."
"It is not NetJets' false advertising practices which have
proximately caused harm to Perlman's business and reputation.
Rather, the alleged cause of harm is NetJets' decision to take the
money it earns from false advertising and spend it on attacking
Perlman and his companies."
The Court thus grants the motion to dismiss the Lanham Act
counterclaim.
ODTPA
The Court finds that the Ohio Deceptive Trade Practices Act claim
fails as a matter of law.
UCL and FAL
Mr. Perlman alleges that NetJets' false advertising about its
fractional aircraft ownership program violates both the California
Unfair Competition and False Advertising Laws. The counterclaim
alleges that Mr. Perlman is both a competitor and a consumer in
relation to NetJets, and it asserts claims based upon both types of
theories.
NetJets argues that the UCL and FAL competitor claims fail for at
least two reasons. First, the counterclaim fails to plead that
Perlman relied upon NetJets' allegedly false statements about the
safety and financial benefits of its program. Second, NetJets
repeats its argument that Perlman has not alleged an injury in
fact.
The Court follows the majority view requiring that competitor
claims must establish reliance upon the alleged false advertising.
Mr. Perlman has not alleged reliance and thus has failed to state a
competitor claim under the UCL and FAL, the Court concludes.
Even if reliance is not an element of a competitor claim, the
plaintiff nonetheless must show
an injury in fact, the Court notes.
Competitor Claims
According to Judge Grahman, "In relation to the Lanham Act claim,
the counterclaim's allegations fail to support an inference that
Perlman suffered any injury to business sales or reputation as a
result of NetJets' alleged false advertising or unfair competition.
The counterclaim does not support an inference that Perlman has
competed with NetJets in the marketplace for private air travel
services or that he has developed technologies which have competed,
or currently compete, with NetJets' program. Thus, the Court finds
that Perlman's competitor claims under the UCL and FAL fail as a
matter of law."
Consumer Claims
The Court finds Mr. Perlman's allegations fail to state a claim
under the UCL or FAL. Judge Graham says, "Simply put, the injury
alleged -- the resources expended in contract and insurance
disputes, litigation, and bankruptcy proceedings -- is too remote
from NetJets' advertising. Perlman does not allege an injury caused
by his reliance on the false advertising."
"It cannot be overlooked that the purpose of the UCL and FAL is to
protect consumers by promoting fair competition. The conduct of
which Perlman complains at its core is breach of contract, bad
faith, and abuse of process by NetJets against RS Air. The
allegedly extreme consequences of the parties' inability to resolve
their post-incident disputes is not what the UCL and FAL were meant
to protect against. the UCL and FAL provide for 'only the equitable
remedies of restitution and injunctive relief.' And restitution
'under the UCL and FAL is limited to money or property that [the
unfair competitor] took directly from a plaintiff.'"
He notes, "Perlman's alleged economic damages are not an overcharge
paid to NetJets at the time of purchase, but amounts expended by RS
Air and Perlman to engage in legal disputes with NetJets and to
find other means of air travel. These amounts were received by
nonparties; they were not taken or acquired by NetJets."
Accordingly, the Court finds that all of Mr. Perlman's consumer
claims under the UCL and FAL regarding NetJets' alleged
representations about financial benefits fail as a matter of law.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=0dDO90
About RS Air LLC
RS Air, LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Cal. Case No. 20-51604) on Nov. 6, 2020, listing
under $1 million in both assets and liabilities. Judge M. Elaine
Hammond presided over the case. Finestone Hayes, LLP and Arch +
Beam Global, LLC served as the Debtor's legal counsel and financial
advisor, respectively.
On October 7, 2021, the Bankruptcy Court confirmed RS Air's Chapter
11 Subchapter V plan over NetJets opposition and objection.
NetJets appealed the Confirmation Order and it was affirmed by the
Ninth Circuit Bankruptcy Appellate Panel.
SAHIL PROMOTIONS: Plan Exclusivity Period Extended to Jan. 24, 2025
-------------------------------------------------------------------
Judge Jacqueline P. Cox of the U.S. Bankruptcy Court for the
Northern District of Illinois extended Sahil Promotions, Inc.'s
exclusive period to file a chapter 11 plan of reorganization and
disclosure statement to January 24, 2025.
As shared by Troubled Company Reporter, on or about July 22, 2024,
the U.S. Trustee filed a motion to convert or dismiss the case or
to appoint a Chapter 11 trustee.
The Debtor requests an extension of the exclusive period to file a
plan and any disclosure statement to and including January 24,
2025. Of course, this request assumes that the Court denies the
motion of the U.S. Trustee to convert or dismiss the case or to
appoint a Chapter 11 trustee.
Sahil Promotions, Inc., is represented by:
Joel A. Schechter, Esq.
Law Offices of Joel A. Schechter
53 W. Jackson Blvd., Suite 1522
Chicago, IL 60604
Telephone: (312) 332-0267
Email: joel@jasbklaw.com
About Sahil Promotions Inc.
Sahil Promotions, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Banr. N.D. Ill. Case No.
24-04740) on April 1, 2024, listing $100,000 to $500,000 in assets
and $1 million to $10 million in liabilities. The petition was
signed by Bhavesh Patel as president.
Judge Jacqueline P. Cox presides over the case.
Joel A. Schechter, Esq., at the Law Offices Of Joel Schechter,
represents the Debtor.
SCHAFER FISHERIES: Gets OK to Use Cash Collateral Until Oct. 31
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
granted the oral motion of Schafer Fisheries Inc. to use the cash
collateral of Newtek Small Business Finance, LLC until Oct. 31.
Schafer Fisheries can use the cash collateral of its senior secured
creditor under the same terms and conditions in the previous court
order dated July 24.
The Bankruptcy Court previously extended Schafer Fisheries'
authority to use cash collateral until Oct. 4 and held a hearing
Oct. 4 regarding the Debtor's continued cash collateral use.
The next hearing is set for Nov. 6.
About Schafer Fisheries
Schafer Fisheries Inc. is a seafood processor and distributor in
Fulton, Ill.
Schafer Fisheries filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 24-80824) on June
20, 2024, with $100,001 to $500,000 in assets and $1 million to $10
million in liabilities. Jennifer Schank of Fuhrman & Dodge, S.C.
serves as Subchapter V trustee.
Judge Thomas M. Lynch oversees the case.
Schafer Fisheries tapped The Golding Law Offices PC and Leibowitz,
Hiltz & Zanzig, LLC as its co-counsel; and Philip Firrek as
consultant to, among others, review the Debtors' cost of
operations.
The Law Offices of Richard N. Golding, PC serves as the Debtor's
counsel.
SEAGATE TECHNOLOGY: Fitch Alters Outlook on 'BB+' IDR to Stable
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' Long-Term Issuer Default
Ratings for Seagate Technology Holdings plc and its wholly-owned
subsidiary, Seagate HDD Cayman. Fitch has also affirmed Seagate HDD
Cayman's senior unsecured rating at 'BB+' and Recovery Rating at
'RR4'. The Rating Outlook has been revised to Stable from
Negative.
The ratings and Outlook reflect stronger than previously expected
revenue and profitability from the historic downturn in 2023.
Additionally, Fitch expects Seagate to focus on more balanced
capital allocation that includes structural debt reduction to
position the company for stronger FCF and credit metrics through
future market cycles.
Key Rating Drivers
Capital Allocation Priority Shift: Fitch expects Seagate will use
FCF and a portion of net proceeds from the divestiture of the
company's system-on-chip business for debt reduction in order to
accelerate the return of credit metrics that are in line with the
'BB+' rating. Before the recent downturn, Seagate committed to
returning at least 70% of pre-dividend FCF to shareholders through
common dividends and stock buybacks. Capital returns exceeded FCF
by roughly 65% on average in the five years from fiscal 2019-2023.
Seagate received $600 million of cash consideration in connection
with the April 13, 2024 sale of intellectual property, equipment
and certain other assets related to its system-on-chip business to
Broadcom. As a result, Fitch forecasts EBITDA leverage of 2.6x
exiting fiscal 2025, versus a Fitch-estimated 7.4x for fiscal 2024.
Fitch also forecasts that reducing debt to almost $5 billion will
position the company to maintain credit metrics below Fitch's
negative rating sensitivities through the forecast period.
Improving Profitability Profile: Fitch expects cost reductions and
a richer product sales mix to strengthen the company's
profitability profile, resulting in Fitch-estimated EBITDA margins
in the 20%-25% range and FCF margins in the mid-single digits
through the forecast period. Over the near term, healthier
inventory levels and tight capacity across the industry should
drive profit margins from record lows in fiscal years 2023-2024 to
near-record highs. As a result, Fitch expects more than $500
million of FCF in fiscal 2025, positioning Seagate with the
flexibility to achieve structurally lower debt target.
Seagate has achieved the $200 million of run-rate operating expense
savings from the cost reduction initiatives aimed at footprint
optimization, which the company initiated in fiscal 2023. Fitch
expects cloud spending and AI infrastructure investments to boost
the share of higher-margin mass capacity products in Seagate's
revenue. These products now account for over 80% of consolidated
revenue, up from three quarters in fiscal 2022 and two-thirds in
fiscal 2021.
Secular Demand: Fitch believes robust demand for storage across
media types provides a path for modest positive organic long-term
revenue growth. AI and 5G-enabled applications across computing
environments will be a significant driver of demand. Fitch expects
the vast majority of data creation will be cool or cold storage on
lower cost hard-disk drive (HDD)-based capacity drives in the
public cloud, driving the bulk of Seagate's long-term revenue
growth. Surveillance penetration and other edge applications should
lead the remainder of top-line growth.
Constructive Industry Conditions: Fitch believes Seagate's nearly
50% capacity drive market share supports constructive supply
conditions that should enable long-term profitable growth and solid
FCF margins. Seagate's intensified capital spending in recent years
and repurposing of existing capacity as legacy revenue declines
should enable it to manage capital spending at structurally lower
levels, including lower near-term capacity additions.
Significant Technology Risk: Fitch believes storage technology and
product risks remain high, with capacity increases required to
offset big pricing pressure to sustain HDD's total cost of
ownership (TCO) advantage over SSDs and keep pace with its chief
competitor, Western Digital Corp. (BB+/Negative Watch). Energy
assist-based drives promise to provide a roughly decadelong roadmap
to drives of more than 50 terabytes, reducing Seagate's technology
risk. Additionally, the breakdown of Moore's Law constrains SSD
makers' ability to close the TCO gap.
Derivation Summary
Fitch believes the pace and strength of recovery from the historic
downturn in 2023 and more balanced capital allocation can
potentially position Seagate in line with the current Long-Term IDR
in the near term. The company's operating profile hinges on its
strong market positions in HDDs, meaningful barriers to entry from
moderate investment intensity required for major market
participation and secular demand for storage solutions supporting
higher-than global GDP long-term revenue increases. Fitch expects
the company to allocate a portion of annual FCF to absolute debt
reduction, strengthening Seagate's financial flexibility and
financial structure factors.
Overall, Fitch believes Seagate's operating profile is in line with
that of HDD competitor, Western Digital, particularly pro forma for
the latter's planned spinoff of its Flash Memory from the disk
drive business. Seagate and Western Digital represent the vast
majority of high-capacity disk drives, markets benefitting from
secular growth dynamics. Until separation, Western Digital's higher
long-term growth prospects, by virtue of its exposure to flash, are
offset by far greater cyclicality, given a less consolidated
industry structure and more commodity-like nature of flash
products.
Fitch expects Seagate and Western Digital to have similar
investment intensities after Western Digital separates its flash
business. Tight supply conditions are likely to support average
selling prices through the forecast period. Fitch considers
Seagate's financial profile comparable to Western Digital's,
despite Western Digital's historically conservative financial
policies, such as suspending dividends and prioritizing FCF for
debt reduction. In contrasts, Seagate has focused on share
repurchases and annual dividends, which consume roughly half of its
average annual FCF, aligning its financial flexibility with the
'bb' category.
Key Assumptions
- Robust revenue growth in fiscal 2025 from base effect and strong
nearline demand;
- The resumption of low- to mid-single digits in fiscal 2026 before
correcting in fiscal 2027;
- EBITDA margins range from 20%-25% through the forecast period;
- Dividends remain roughly flat and capital spending is at the
mid-point of 4%-6% long-term guidance;
- Seagate uses FCF and a substantial portion of net proceeds from
its system-on-chip business sale for debt reduction over the next
couple of years;
- Longer-term, Seagate resumes returning cash flow to shareholder
through dividends and buybacks.
Recovery Analysis
Seagate's debt, excluding debt Fitch attributes to the company's
unrated accounts receivable factoring arrangement, is unsecured.
Fitch's "Corporate Recovery Ratings and Instrument Ratings
Criteria" caps senior unsecured debt at 'RR4'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Downgrade
- Public commitment to manage debt levels for EBITDA leverage
sustainably below 2.5x;
- Expectations for annual FCF margins consistently in the mid to
high single digits while rising revenue, structurally higher market
share and diversifying end market and product exposure.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Upgrade
- Expectations for annual FCF sustained below $500 million or FCF
margins in the low single digits from persistently weaker than
expected revenue trends or profit margins, indicating poor
execution on its technology roadmap;
- Expectations for EBITDA leverage sustainably above 3.0x, from
debt issuance to support debt-funded shareholder returns
persistently in excess of FCF.
Liquidity and Debt Structure
Fitch views Seagate's liquidity as adequate. As of June 28, 2024,
liquidity consisted of $1.4 billion of cash, cash equivalents and
short-term investments, and an undrawn $1.5 billion senior
unsecured revolving credit facility due Oct. 14, 2026. Fitch's
expectations for positive FCF in fiscal 2025 and average annual FCF
of $250 million-$500 million through the forecast period also
support liquidity. Over the nearer term, $600 million of proceeds
from the systems-on-chip business sale supports the company's $479
million of 4.75% senior notes maturing Jan. 1, 2025.
Issuer Profile
Seagate Technology Holdings Plc is a leading provider of data
storage technologies, primarily high capacity disk drives for cloud
service providers and enterprise data centers.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
Seagate Technology
Public Limited Company LT IDR BB+ Affirmed BB+
Seagate HDD Cayman LT IDR BB+ Affirmed BB+
senior unsecured LT BB+ Affirmed RR4 BB+
SEAWIND LLC: Natasha Songonuga Named Subchapter V Trustee
---------------------------------------------------------
The U.S. Trustee for Regions 3 and 9 appointed Natasha Songonuga,
Esq., at VTrustee, LLC as Subchapter V trustee for Seawind, LLC and
Seawind Development Corp.
Ms. Songonuga will be paid an hourly fee of $450 for her services
as Subchapter V trustee and an hourly fee of $185 for paralegal
services. In addition, the Subchapter V trustee will receive
reimbursement for work-related expenses incurred.
Ms. Songonuga declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Natasha Songonuga, Esq.
VTrustee LLC
PO Box 841
Wilmington, DE 19899
Email: Nsongonuga@VTrusteellc.com
About Seawind LLC
Seawind LLC is a Wilmington-based manufacturer of aerospace product
and parts.
Seawind LLC and its affiliate Seawind Development Corp. sought
relief under Subchapter V of Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-12152) on September 17, 2024. In
the petition filed by Estate of Richard Silva by Terry Silva, as
managing member, Seawind LLC reported up to $50,000 in assets and
up to $10 million in liabilities.
Judge J. Kate Stickles handles the case.
The Debtor is represented by Kevin S. Mann, Esq., at Cross & Simon,
LLC.
SKILLZ INC: Board Appoints Anthony Cabot as Director
----------------------------------------------------
Skillz, Inc. reported in a Form 8-K filed with the Securities and
Exchange Commission that on Oct. 4, 2024, the Board of Directors of
the Company appointed Mr. Anthony Cabot to the Board, effective
immediately. Mr. Cabot, 68, held the position of Distinguished
Fellow of Gaming Law at the UNLV Boyd School of Law until May 2023,
overseeing the gaming law program where for over two decades, he
shared his expertise with students, legislators and regulators.
Prior to transitioning to academia full-time in March 2018,
Professor Cabot spent 37 years practicing gaming law. Notably, he
chaired the gaming law practice and served on the executive
committee at Lewis Roca Rothgerber Christie LLP. Additionally, he
is a founding member and former president of the International
Masters of Gaming Law.
Also, on Oct. 4, 2024, the Board appointed Mr. Cabot to the
Nominating and Corporate Governance Committee, effective
immediately. The Board affirmatively determined that Mr. Cabot (i)
is an independent director under the applicable rules of the NYSE
and as such term is defined in Rule 10A-3(b)(1) under the
Securities Exchange Act of 1934, as amended, and (ii) meets all
applicable requirements for membership on the Nominating and
Corporate Governance Committee.
There is no arrangement or understanding between Mr. Cabot and any
other persons pursuant to which Mr. Cabot was appointed as a
director. Furthermore, there are no family relationships between
Mr. Cabot and any other director or executive officer of the
Company and there are no transactions between Mr. Cabot and the
Company that would be required to be reported under Item 404(a) of
Regulation S-K.
Mr. Cabot will receive compensation consistent with the Company's
compensation program for non-employee directors, as described in
the Company's proxy statement, filed with the U.S. Securities and
Exchange Commission on May 1, 2023.
About Skillz Inc.
Las Vegas-based Skillz Inc. -- https://www.skillz.com -- is a
mobile games platform dedicated to fostering competition and
excellence through its technology. The Skillz platform enables
developers to create multi-million dollar franchises by
incorporating social competition into their games. Leveraging its
patented technology, Skillz hosts billions of casual eSports
tournaments for millions of mobile players worldwide, with the goal
of becoming the home of competition for all.
Skillz reported a net loss of $101.36 million in 2023, a net loss
of $438.87 million in 2022, a net loss of $187.92 million in 2021,
and a net loss of $149.08 million in 2020. For the six months
ended June 30, 2024, the Company reported a net loss of $678,000.
* * *
As reported by the TCR in January 2024, S&P Global Ratings retained
its ratings on Skillz Inc., including its 'CCC+' issuer credit
rating, following the assignment of the new management and
governance (M&G) assessment. S&P said, "S&P Global Ratings
assigned a new M&G modifier assessment of negative to Skillz
following the revision to our criteria for evaluating the credit
risks. The terms management and governance encompass the broad
range of oversight and direction conducted by an entity's owners,
board representatives, and executive managers. These activities
and practices can impact an entity's creditworthiness and, as such,
the M&G modifier is an important component of our analysis."
SMALLHOLD INC: Delaware Judge Clarifies Consensual Plan Releases
----------------------------------------------------------------
Judge Craig T. Goldblatt of the United States Bankruptcy Court for
the District of Delaware ruled on the objections of the U.S.
Trustee to the third-party releases in Smallhold Inc.'s plan of
reorganization.
In its recent decision in Purdue Pharma, the Supreme Court held
that the Bankruptcy Code does not authorize bankruptcy courts to
confirm a plan of reorganization that provides for the release of a
creditor's claim against a non-debtor. That holding, however, was
expressly limited to nonconsensual third-party releases. The Court
made clear that "[n]othing in what we have said should be construed
to call into question consensual third-party releases offered in
connection with a bankruptcy reorganization plan[.]"
The Court notes after Purdue Pharma, a third-party release is no
longer an ordinary plan provision that can properly be entered by
"default" in the absence of an objection.
The debtor's founders sold their shares to Monomyth, which had been
a minority investor, in February 2024.
Smallhold filed for bankruptcy, under subchapter V of chapter 11.
The debtor concluded that it had grown its operations -- which
included mushroom farms in Brooklyn, New York; Austin, Texas; and
Los Angeles, California -- faster than customer demand would
support. Over the course of its bankruptcy case, the debtor
rejected several leases and closed a number of its farms. Monomyth
sought to retain its equity interest in the debtor. The debtor,
however, received a competing offer from another entity that
expressed interest in acquiring the debtor out of bankruptcy. The
debtor then received an improved proposal from Monomyth.
After extensive negotiations, which included the debtor's
independent directors and the subchapter V trustee, the debtor
ultimately proposed a third amended plan of reorganization that
reflected the terms of its agreement with Monomyth. Save for the
question of the third-party releases, all parties agree that the
third amended plan is otherwise confirmable under Sec. 1191(b) of
the Bankruptcy Code, as the debtor will be contributing all of its
projected disposable income for a five-year period towards the
repayment of creditors.
Accordingly, the only contested issue at the August 22, 2024
confirmation hearing was the question of the plan's third-party
releases.
At the hearing, the U.S. Trustee raised two issues:
-- The Plan's opt-out mechanism was improper, because the
granting of a third-party release should require the releasing
party affirmatively to express its consent to the release.
-- With respect to class 1, it is improper to provide that a
creditor that votes in favor of a Plan should automatically be
deemed to consent to the third-party release.
The U.S. Trustee objects to three categories of third-party
releases provided for in the debtor's Plan:
(1) the releases deemed granted by unimpaired creditors and
equity holders;
(2) the releases deemed granted by class 2 creditors who did not
"opt out"; and
(3) the release deemed granted by class 1 creditors (the only
one of which appears to be the DIP lender), who would have been
deemed to grant the release on account of voting for the plan,
without being given the opportunity to opt out.
The first question that ought to be considered is whether the U.S.
Trustee should be permitted to object to the opt-out mechanism
provided for in this case (as to any of these three categories)
after it had expressly consented to the entry of the solicitation
order that set forth that mechanism. An argument can certainly be
made that the solicitation order, while an interlocutory order,
should remain binding under the "law of the case" doctrine.
Judge Goldblatt says, "The law has long recognized an exception to
that doctrine, as applied to interlocutory rulings, in
circumstances in which 'controlling authority has since made a
contrary decision of law applicable to such issues.' And at least
as applied to the class 2 creditors and those creditors and equity
holders who were never provided a ballot, the Court is satisfied
that the Purdue Pharma decision is sufficient subsequent
'controlling authority' to warrant reconsideration of the
solicitation order. In view of this Court's decision in In re
Arsenal Intermediate Holdings, LLC, No. 23-10097, 2023 WL 2655592
(Bankr. D. Del. Mar. 27, 2023), there would not have been much
point to objecting to the solicitation procedures on the ground
that they permitted opt-out releases. So, to the extent the U.S.
Trustee seeks to argue that Purdue Pharma requires a
reconsideration of Arsenal, the law-of-the-case doctrine should not
stand as an obstacle to making that argument."
On the central question presented, the Court concludes that its
decision in Arsenal does not survive Purdue Pharma. Judge Goldblatt
explains, "The rationale of Arsenal was that creditors that did not
object to or opt out of a third-party release could essentially be
'defaulted,' with the release being imposed on them, despite their
silence, on that basis. After Purdue Pharma, however, that relief
is no longer appropriate under the ordinary principles that govern
when a default may be entered. Instead, affirmative consent is
required. While a number of courts have reached a contrary
conclusion even after Purdue Pharma, this Court does not find their
reasoning persuasive. Without addressing the limits on courts'
authority to impose a default or providing a basis to distinguish
the third-party release from the college education fund plan, the
rationales of these decisions provide no limiting principle on what
could be accomplished by what they describe as 'consent.'"
He adds, "Applying these principles to this case, the unimpaired
equity holders and creditors whose claims will be paid in full and
thus were not given the opportunity to vote cannot be said to have
consented to the releases. Purdue Pharma left open the question
whether in an appropriate case a nonconsensual release may be
imposed on creditors whose claims are satisfied in full under a
plan. On the undeveloped record here, however, the Court will not
engage that question in this case. These parties therefore cannot
be said to have granted a release."
The Court points out the class 2 creditors who voted on the plan
(whether they voted for or against), however, have taken a
sufficient affirmative step to be deemed to consent to the
third-party releases. These creditors were clearly informed and on
notice of the right to opt-out of the releases before casting their
votes. And because the ballot provided a simple mechanism by which
these creditors could opt out, there is no risk of coercion or
distortion of the plan voting process. Finally, the Court
emphasizes that it is leaving open how it might decide a different
case -- one in which the plan process builds in the protections of
the class action mechanism under Rule 23(b)(3), where an "opt-out"
mechanism is deemed appropriate.
Under the plan at issue in this case, priority creditors are to be
paid in full and are thus deemed to accept the plan. And the
debtors' equity holders were unimpaired, and also presumed to
accept. As such, those parties were not solicited to vote on the
plan and were never given an opportunity to opt out. It is true
that these parties were informed that the plan would operate to
release their claims against third parties. So, under the reasoning
of Arsenal, this Court would have found that it was incumbent on
those parties to raise an objection if they did not in fact consent
to the granting of the third-party release. However, that rationale
does not survive Purdue Pharma, the Court concludes.
And as a matter of ordinary contract law, those parties' silence,
in the face of language in the plan telling them that they would be
giving the third-party release, is insufficient to bind them to it.
The Court accordingly will not find that the creditors who were
not solicited to vote have validly consented to giving the
third-party releases.
The Court finds that regardless of how class 2 creditors voted on
the Plan, the vote is an affirmative step, and coupled with
conspicuous notice of the opt-out mechanism, suffices as consent to
the third-party releases under general contract principles. As to
those creditors in class 2 who voted in favor of the plan and
elected not to opt out, the Court is satisfied that the plan
releases are valid and appropriate as a matter of ordinary contract
law. Creditors who returned their ballots and voted in favor of the
plan after being informed that doing so, unless they checked the
box to opt out, have not been silent. They have taken an
affirmative step. And under ordinary contract principles, what they
have done is sufficient to hold them to the terms of the release.
According to Judge Goldblatt, "Returning a ballot that contains a
vote in favor of the plan after being expressly instructed that
doing so will manifest agreement to a third-party release unless
the creditor checks a box to opt out is no different than clicking
through. That is sufficient, as a matter of general contract
principles, to bind the party to the terms of the release. And
because the creditor had a simple means of opting out, unlike the
form of ballot used in this case for class 1 in which creditors who
voted in favor of the plan were denied that option, there is no
reason to be concerned that this mechanism would discourage
creditors from voting or distort the voting process."
"The same rationale applies to those creditors in class 2 who voted
against the plan and elected not to opt out. They were provided
clear instruction that a vote against the Plan would suffice to
manifest agreement to a third-party release if they did not
affirmatively opt-out by marking the box on the ballot. A vote
against the plan serves as evidence that the creditor was on notice
and actively engaged, and thus has taken an affirmative step such
that consent can be established to bind the party to the terms of
the release."
The Court concludes that the plan's releases for those creditors
who have not voted on the plan cannot be described as consensual,
and therefore are not valid.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=jDcIcv
About Smallhold Inc.
Smallhold, Inc. is a specialty mushroom company based in Brooklyn,
N.Y. It operates indoor mushroom farms in New York City, Austin,
and Los Angeles.
The Debtor filed Chapter 11 petition (Bankr. D. Del. Case No.
24-10267) on February 18, 2024, with $10 million to $50 million in
assets and $1 million to $10 million in liabilities. James Dunn,
chairman, signed the petition.
Judge Craig T. Goldblatt oversees the case.
James C. Barsalona II, Esq., and Joseph C. Barsalona II, Esq., at
Pashman Stein Walder Hayden, P.C. represent the Debtor as legal
counsel.
John D. Elrod, Esq., and Dennis A. Meloro, Esq., at Greenberg
Traurig, LLP, serve as counsel to Monomyth Sponsor Group, LLC, the
DIP lender.
SMYRNA READY: Moody's Affirms Ba3 CFR & Alters Outlook to Negative
------------------------------------------------------------------
Moody's Ratings affirmed Smyrna Ready Mix Concrete, LLC's Ba3
corporate family rating and Ba3-PD Probability of Default Rating.
Moody's affirmed the Ba3 rating on Smyrna's backed senior secured
term loan B and backed senior secured notes. Moody's also changed
the outlook to negative from stable.
The change in outlook to negative from stable reflects the material
contraction in Smyrna's operating performance. Moody's revised
downward Moody's forward views and now project EBITDA margin
slightly above 15.5% for 2024 (19.3% previously expected for 2024).
The integration of past acquisitions is taking longer than
anticipated. Higher material cost increases from its suppliers and
poor weather in early 2024 further negatively impacted LTM Q2 2024
margin performance. Moody's believe that management is taking
actions such as reducing headcount and increasing pricing, but
tangible results to markedly improve operations over the next 12-18
months may be difficult to achieve.
"Smyrna is weakly positioned relative to similarly rated
companies," said Peter Doyle, a Moody's Ratings VP-Senior Analyst.
"Smyrna must execute on its operating plan and exceed Moody's
expectations in order to maintain its Ba3 CFR," added Doyle.
RATINGS RATIONALE
Smyrna's Ba3 CFR reflects Moody's expectation that operating
performance can recover in the next few quarters, with EBITDA
margin improving to around 18%. Meaningful scale as the largest
ready-mix concrete producer in the US, no near-term maturities and
end market dynamics that support long-term growth further enhance
Smyrna's credit profile. However, the company has a leveraged debt
capital structure, with adjusted debt-to-EBITDA of 5.1x at year-end
2025. High cash interest payments, approaching $240 million per
year, and the need for ongoing investment in working capital and
capital expenditures inhibit meaningful free cash flow and
financial flexibility. Further, a growth strategy characterized by
debt financed bolt-on acquisitions has increased Smyrna's fixed
charges. At the same time, Smyrna faces strong competition because
the industry is highly fragmented and very local. Smyrna must
contend with higher input costs, which may not readily be passed on
to customers and adding to earnings volatility.
Moody's project that Smyrna will have adequate liquidity over the
next 18 months, constrained by the ongoing borrowings under the
company's revolving credit facility, reducing availability. Cash on
hand is a minor source of liquidity but ample to meet working
capital needs due to seasonal demands. Smyrna has no material
near-term maturities.
The Ba3 ratings on Smyrna's senior secured term loan and senior
secured notes, the same rating as the corporate family rating,
result from their position as the preponderance of debt in Smyrna's
capital structure. The term loan and secured notes are pari passu.
Each has a first lien on substantially all noncurrent assets and a
second lien on assets securing the company's asset based revolving
credit facility (ABL priority collateral).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could occur if end markets remain supportive of
organic growth such that adjusted debt-to-EBITDA is sustained below
3.5x and adjusted free cash flow-to-debt remains above 7.5%.
Improved liquidity and conservative financial policies would
support upward ratings movement.
A ratings downgrade could occur if adjusted debt-to-EBITDA remains
above 4.5x or adjusted EBITDA margin is trending below 18%.
Negative ratings pressure may also transpire if the company
experiences weakening of liquidity or adopts aggressive
acquisitions.
Smyrna, headquartered in Nashville, Tennessee, is the largest
producer of ready-mix concrete in the United States. The
Hollingshead family owns Smyrna. Smyrna's revenue for the twelve
months ending June 30, 2024 was $3.4 billion.
The principal methodology used in these ratings was Building
Materials published in September 2021.
SOD EXPRESS: Gets Interim OK to Use Cash Collateral Until Nov. 5
----------------------------------------------------------------
Sod Express Nursery Inc. received interim approval from the U.S.
Bankruptcy Court for the Middle District of Florida to use cash
collateral until Nov. 5.
The company can use the cash collateral of ENGS Commercial Finance
Co., a secured creditor, PNC Equipment Finance, LLC and the U.S.
Small Business Administration to pay its expenses in accordance
with the submitted budget.
Additional expenditures require approval from ENGS within 48 hours.
A prompt court hearing can be requested for disputes regarding
proposed expenses.
ENGS, PNC and SBA will be granted a perfected post-petition lien
against cash collateral to the same extent and with the same
validity and priority as the pre-bankruptcy lien.
Sod Express Nursery is required to maintain insurance coverage in
line with its loan agreement with ENGS.
The next hearing is set for Nov. 5.
About Sod Express Nursery
Sod Express Nursery, Inc. provides a full range of landscaping
products and services. It is based in Sanford, Fla.
Sod Express Nursery sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-02676) on May 29,
2024, with up to $50,000 in assets and up to $10 million in
liabilities. Randall A. Nellis, president, signed the petition.
Judge Lori V. Vaughan presides over the case.
Jeffrey S. Ainsworth, Esq., at BransonLaw, PLLC, is serving as the
Debtor's bankruptcy counsel.
SPECIALTY BUILDING: Moody's Rates New $375MM First Lien Notes 'B3'
------------------------------------------------------------------
Moody's Ratings assigned a B3 rating to Specialty Building Products
Holdings, LLC's ("SBP") proposed $375 million backed senior secured
1st lien notes due October 2029. The company's B2 Corporate Family
Rating and all other existing ratings remain unchanged. The outlook
remains stable.
Proceeds from the new senior secured notes will be used to
refinance a portion of the existing $725 million backed senior
secured 1st lien notes due September 2026. The leverage-neutral
transaction will improve SBP's debt maturity profile as the new
notes mature October 2029. The transaction also includes an
extension of the maturity of SBP's existing asset-backed revolving
credit facility now expiring in October 2029. Moody's expect to
withdraw the B3 rating on the existing backed senior secured notes
following close of the transaction.
RATINGS RATIONALE
SBP's B2 CFR reflects its high pro forma leverage of 6.9x adjusted
debt/EBITDA for the last twelve months ended June 30, 2024, which
Moody's expect to remain at similar levels through year-end 2024 as
the company continues its ongoing investment into the business. The
rating also incorporates SBP's acquisitive growth strategy, which
increases integration and execution risk despite adding to scale,
geographic footprint, and product mix. Some products distributed by
SBP are available from other distributors, making it difficult to
increase pricing significantly and maintain current margins. Also,
the deployment of capital for a debt-financed dividend is an
ongoing credit risk.
Good operating performance provides a major offset to the company's
leveraged capital structure and supports cash flow generation.
Moody's forecast adjusted EBITDA margin sustained in the range of
7.5-9%, which is the company's greatest credit strength. Ability to
generate cash flow and diversity of brands and distribution
channels further enhance SBP's credit profile.
Moody's expect SBP to maintain adequate liquidity over the next
12-18 months, supported by its cash flow generation and external
liquidity in the form of a revolving credit facility, which is
mainly used for working capital needs and bolt-on acquisitions.
Excess cash flow generation is expected to be prioritized to reduce
revolver borrowings. The company will have $28 million of cash on
the balance sheet as of June 30, 2024, pro forma for the proposed
transaction. External liquidity is supported by the extended ABL
revolving credit facility expiring in 2029.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could upgrade SBP's ratings if end markets remain
supportive of organic growth and the company reduces leverage such
that adjusted debt-to-EBITDA is near 5.0x. Reduced borrowings under
the revolving credit facility and maintenance of conservative
financial policies would support upwards rating movement.
Moody's could downgrade SBP's ratings if adjusted debt-to-EBITDA
remains above 6.0x and EBITA-to-interest expense remains near 1.5x.
A deterioration in liquidity, an aggressive acquisition or
significant shareholder return activity could result in downward
rating pressure as well.
Specialty Building Products Holdings, LLC, headquartered in Duluth,
Georgia, operates as a two-step distributor, buying and reselling a
large variety of specialty products mostly to national and other
one-step distributors. The Jordan Company, L.P. through its
affiliates, is the owner of Specialty Building Products Holdings,
LLC.
The principal methodology used in this rating was Distribution and
Supply Chain Services published in February 2023.
STATEHOUSE HOLDINGS: Pelorus Backs Bankruptcy to Protect Operations
-------------------------------------------------------------------
Pelorus Fund REIT, LLC., a private mortgage real estate investment
trust and significant owner of debt issued by StateHouse Holdings
Inc., a California-focused, vertically integrated cannabis company,
supports StateHouse's decision to commence Bankruptcy Proceedings
for the Company's Canadian parent entity.
"We are pleased at the progress made since we initially filed our
Receivership complaint in September and to enter into a stipulation
earlier this week with majority holders of the Company's 9.0%
secured notes and the Company for the appointment of a receiver.
That action, combined with today's filing, protects StateHouse
employees, customers, business partners and vendors and preserves
the Company's ongoing operations in the state of California,
enabling it to operate as normal across its production and
distribution footprint in the state. As we have stated since we
initiated these proceedings, we recognize the significant value of
StateHouse's business, employees and operations, and look forward
to continuing to work with the Company and the court-appointed
receiver to ensure it is well positioned with a cleaner, more
efficient and appropriate structure moving forward."
About Pelorus Capital Group and Pelorus Fund
REIT, LLC
Pelorus Capital Group offers a range of innovative transactional
solutions addressing the diverse needs of real estate investors and
portfolio managers. Our flexible acquisition and bridge lending
programs are the direct result of our involvement in more than
4,700 transactions of varying size and complexity. Since 1991, our
principals have participated in more than $1 billion of real estate
investment transactions using both debt and equity solutions. We
draw on our extensive experience to rapidly understand an
opportunity, structure a logical solution and execute a timely
close. For more information, please visit
https://peloruscapitalgroup.com/.
About StateHouse Holdings Inc.
StateHouse, a vertically integrated enterprise with cannabis
licenses covering retail, major brands, distribution, cultivation,
nursery, and manufacturing, is one of the oldest and most respected
cannabis companies in California. Founded in 2006, its predecessor
company Harborside was awarded one of the first six medical
cannabis licenses granted in the United States. Today, the Company
operates 11 dispensaries covering Northern and Southern California,
an integrated cultivation facility in Salinas and manufacturing in
Greenfield, California. StateHouse is a leading brand house in
California by market share, with a diversified product across
multiple brands, form factors, and price points. StateHouse sells
its six popular house brands to over 700 retailers across
California including Kingpen, Dime Bag, Loudpack, Fuzzies, Sublime,
Urbn Leaf and Smokiez line of products. StateHouse is a publicly
listed company, currently trading on the Canadian Securities
Exchange under the ticker symbol "STHZ" and the OTCQB under the
ticker symbol "STHZF". The Company continues to play an
instrumental role in making cannabis safe and accessible to a broad
and diverse community of California and Oregon consumers.
STEWARD HEALTH: Mass. AG Challenges Malpractice Coverage
--------------------------------------------------------
James Nani of Bloomberg Law reports that Massachusetts' attorney
general urged a bankruptcy court to require Steward Health Care
System LLC to maintain adequate workers' compensation and medical
malpractice insurance coverage as it sells off its hospitals in
bankruptcy.
The state highlighted what it said are "serious issues concerning
the availability and adequacy of insurance coverage" in a motion
filed Monday in the US Bankruptcy Court for the Southern District
of Texas.
The coverage is required despite the not-for-profit health system's
recent sale of some of its Bay State hospitals to new owners,
Massachusetts Attorney General Andrea Joy Campbell said in the
filing.
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. Tex. 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.
SUMMIT MIDSTREAM: Fitch Alters Outlook on 'B-' LongTerm IDR to Pos.
-------------------------------------------------------------------
Fitch Ratings has affirmed Summit Midstream Partners, LP's (Summit)
and Summit Midstream Holdings, LLC's (Summit Midstream) Long-Term
Issuer Default Rating (IDR) at 'B-'. Fitch has also affirmed Summit
Midstream's second lien secured notes rating at 'B+' with a Rating
Recovery of 'RR2'. The second lien notes are co-issued by Summit
Midstream Finance Corp. The Rating Outlook has been revised to
Positive from Stable.
The Positive Outlook reflects improved liquidity combined with
Fitch's expectations for continued improvement in Summit's leverage
and interest coverage since it peaked/plummeted in FY22; both of
which are expected to gain positive momentum following the closing
and successful integration of the recently announced acquisition of
Tall Oak Midstream Operating, LLC and its subsidiaries (Tall Oak).
Fitch also sees Summit's business risk modestly improving with the
Tall Oak acquisition due to the expected meaningful increase in
size and diversification into a new region for the company.
Fitch would resolve the Positive Outlook after the Tall Oak
transaction closes, and de-leveraging is thereupon forecasted to
continue to achieve a level commensurate with a higher rating.
Key Rating Drivers
Meaningful Improvement in Financial Profile: Summit plans to
acquire Tall Oak for total consideration of about $450 million, of
which $155 million is expected in cash upfront (excl. the $25
million earnout payable in cash), and the remainder in roughly 7.5
million of class B stock and Summit common units. Summit plans to
draw on its asset-backed lending (ABL) facility to fund the cash
portion, which has adequate availability. Pro forma for the
transaction, Summit's EBITDA leverage and interest coverage are
expected at under 4.0x and over 3.0x, respectively, in 2025 and
beyond. This is a meaningful improvement against Fitch's positive
sensitivity for leverage and interest coverage, both of which are
considered strong for Summit's rating category.
Modest Improvement in Business Risk: The acquisition of Tall Oak is
expected to meaningfully increase Summit's size in terms of EBITDA,
and larger companies generally have greater headroom to bear cash
flow downswings. In addition, this acquisition allows Summit to
diversify its geographic presence into Arkoma Basin, which is a new
region for the company. Tall Oak's dedicated acreage in Arkoma
mostly contains wet gas, which allows for exposure to multiple
commodities including natural gas and NGLs.
Fitch does not expect material integration risks with this
transaction, since Summit does not have an existing asset footprint
in the region, and hence also does not anticipate material
operational synergies being realized. Summit, however, continues to
be a small-scale gathering and processing company with EBITDA
expected in the $200 million to $250 million range.
Volumetric Exposure Largely Unchanged: Tall Oak generates the
majority of its cash flows under long-term fixed-fee acreage
dedicated contracts, without any minimum volume commitments (MVC)
or take-or-pay (TOP) contracts. While the fixed-fee contracts
protect against direct exposure to commodity price volatility, lack
of MVC or TOP contracts exposes it to meaningful volumetric risks.
Pro forma, Summit is expected to generate roughly 85% of its EBITDA
from fixed-fee contracts, and the remainder from commodity price
exposed percentage-of-proceeds contracts. Summit is expected to
have only a modest amount of cash flows derived from MVC contracts
at less than 10%, consistently declining YoY to 5% or under over
Fitch's forecast period.
Exposure to High-Yield Counterparties Remains: The majority of
Summit's cash flows are expected to come from high-yield or small
private companies deemed to be high-yield. For companies that lack
meaningful amount of MVC or TOP contracts, counterparty credit
quality is not a key rating driver, however is a consideration
insofar they have less flexibility to sustain industry downturns
and or commodity price fluctuations, which might impact production
at these customers and subsequently volumes on Summit's systems.
Fitch notes, some of Summit and Tall Oak's customers are single
basin producers, some of which have a sound hedging policy,
favoring continued production during commodity price downturns.
Fitch expects credit quality of most of Summit's customers to
remain intact in the medium-term.
Parent Subsidiary Linkage: There is a parent subsidiary
relationship between Summit (parent) and Summit Midstream Holdings,
LLC (Summit Midstream; subsidiary). Fitch determines Summit's
credit profile based on consolidated metrics and believes Summit
Midstream has the stronger credit profile. Legal ring-fencing is
considered open, due to the absence of regulatory ring-fencing and
only certain limitations on the flow of intercompany funds.
Effective control is evaluated as open, given that Summit Midstream
is wholly owned and controlled by Summit. Funding and cash
management is evaluated as porous due to Summit Midstream's ability
to obtain both internal and external funding. Due to the above
linkage considerations, Fitch rates both entities based on
consolidated credit profile and has assigned the same IDRs.
Derivation Summary
Harvest Midstream I, L.P. (Harvest; BB-/Stable) is a peer
comparable to Summit. Both are G&P companies with presence across
multiple regions, exposure to mature declining basins, and high
volumetric risks, however, Harvest is distinctly bigger in size and
scale. Customer concentration risk is nearly similar,
notwithstanding Harvest's more diverse customer base. Harvest has a
greater portion of revenue coming from its top customer, which is
also considered a supportive affiliate. Both have high exposure to
high-yield counterparties.
Harvest has slightly higher exposure to direct commodity prices at
a little over 20% of its net revenues, compared with Summit's
roughly 10% to 15%. Fitch expects Harvest's leverage to be higher
than expectations at Summit, however interest coverage at Harvest
is expected to be higher, leading to better financial flexibility.
Harvest's bigger size and scale, lower leverage, better financial
flexibility, and a more supportive customer relationship, accounts
for the difference between it and Summit's IDRs.
M6 ETX Holdings II MidCo, LLC (M6; B/Stable), is another G&P peer
with operations concentrated in the Haynesville basin, which is
considered a higher growth region compared to most of the regions
where Summit operates. The Haynesville is expected to benefit from
anticipated demand pull in 2025. Unlike Summit, M6 is a private
company backed by EnCap Flatrock, viewed as a supportive sponsor.
M6's size is comparable to Summit, and both are expected to
generate roughly 10% to 15% of their cash flows from direct
commodity price exposed business. M6, however, has a higher
proportion of ship-or-pay contracts at nearly 25% of EBITDA.
Furthermore, most of M6's ship-or-pay customers have volume exposed
acreage dedicated contracts with M6, hence, incentivizing these
customers to maintain a certain level of volume throughput under
their acreage dedicated contracts.
Therefore, M6 is considered to have a better cash flow profile
compared to Summit. Leverage at M6 is currently elevated due to
near-term headwinds, however, it is expected to improve which would
still be higher than Summit. M6 however, is expected to have
tighter near-term financial flexibility compared to Summit.
M6's presence in a relatively higher growth region and better
contract coverage offsets its currently higher leverage and tighter
financial flexibility compared to Summit.
Key Assumptions
- Successful closing of the Tall Oak transaction consistent with
the proposed terms sometime in and around end-4Q24;
- Fitch's oil and gas price deck;
- Activity levels in the regions where Summit operates consistent
with Fitch's price deck;
- Base interest rate for the ABL facility reflects Fitch's Global
Economic Outlook for interest rates in the U.S.;
- Distributions from the joint venture received in accordance with
the agreements;
- Preferred unit distributions and common dividends remain
suspended in the near term;
- Stable capex spend including maintenance and growth capital that
is somewhat consistent with historical levels;
- No other material growth projects, and or asset sales, and or
M&A.
Recovery Analysis
- For the Recovery Rating, Fitch estimates the company's
going-concern value was greater than the liquidation value. The
going-concern multiple used was a 6.0x EBITDA multiple, which is in
the range of most multiples seen in recent reorganizations in the
energy sector. There have been a limited number of bankruptcies
within the midstream sector;
- Two recent gathering and processing bankruptcies of companies
indicate an EBITDA multiple between 5.0x and 7.0x, by Fitch's best
estimates. In Fitch's recent bankruptcy case study report, "Energy,
Power and Commodities Bankruptcies Enterprise Value and Creditor
Recoveries," published in September 2023, the median enterprise
valuation exit multiple for the 51 energy cases with sufficient
data to estimate was 5.3x, with a wide range of multiples
observed;
- Fitch has updated the going-concern (GC) EBITDA to $185 million
from $145 million, assuming the Tall Oak acquisition successfully
closes. The GC EBITDA has been revised higher from the previous
estimate to reflect the increase in operational size and scale as a
result of acquisition;
- The GC EBITDA reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which it has based the
company's valuation. The GC EBITDA reflects loss of a number of
contracts and customer relationships due to the bankruptcy. As per
criteria, the GC EBITDA reflects some residual portion of the
distress that caused the default;
- Fitch calculated administrative claims to be 10%, and roughly 75%
to 80% drawn ABL facility, which are standard assumptions. The
outcome is a 'B+'/'RR2' rating for the second-lien secured notes,
which corresponds to an expected recovery in the range of 71% to
90%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Should the percentage of total EBITDA coming from high growth
basins and/or MVC contracts be expected to increase significantly
from current levels;
- A demonstrated ability to sustain EBITDA leverage below 5.5x and
EBITDA interest coverage above 2.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Fitch may stabilize the outlook if transaction terms, funding
strategy, or improvements to leverage and interest coverage were to
deviate materially from current expectations;
- EBITDA interest coverage sustained below 1.5x;
- EBITDA leverage expected to sustain above 6.5x;
- Material change to contractual arrangement and operating
practices that negatively impacts cash flow or earnings profile,
including a move away from current majority of revenue being fee
based;
- Meaningful deterioration in customer credit quality or a
significant event at a major customer that impairs cash flows;
- Increases in capital spending beyond Fitch's expectation that
have negative consequences for credit profile (e.g. if not funded
with a balance of debt and equity);
- Reduced liquidity or an imminent failure to adhere to the
covenants on the ABL facility agreement.
Liquidity and Debt Structure
Sufficient Liquidity: Pro forma for closing of the transaction,
Summit is expected to have a total liquidity of more than $200
million, the majority of which is expected in the form of
availability under its $500 million first lien secured ABL
facility, and modest amount of cash on balance sheet. The ABL
facility has a springing maturity of July 26, 2029, based on the
outstanding amount of second lien secured notes, and total
available liquidity. In case the springing maturity does not apply,
the ABL facility matures on July 31, 2029.
The ABL facility contains a maximum first lien leverage covenant of
2.50x, and minimum interest coverage covenant of 2.0x. Summit was
compliant with covenants on its ABL facility as of the latest
quarter end, and Fitch expects the company to remain compliant over
Fitch's forecast period.
Fitch notes, though Summit is expected to have the aforementioned
amount available under its ABL facility, in case of weakness in
operational performance most, but not all, of the commitment under
the ABL facility will usually be available to draw, because of the
covenants on the credit agreement.
Fitch also acknowledges, Summit's near-term need for liquidity is
somewhat reduced due to the recent refinancing transactions that
extended Summit's debt maturity wall and eased its refinancing
cliff. Furthermore, both Summit and Tall Oak have a fully built out
system with adequate room to accommodate any meaningful increase in
volumes without the need for large expansion capex.
Issuer Profile
Summit is a midstream company with assets across six distinct oil
and gas basins in the U.S. Summit, through its 100% ownership of
Summit Midstream, provides natural gas gathering, compression,
treating, and processing services, plus crude oil and produced
water gathering services.
Summary of Financial Adjustments
The values in the above Sensitivities and other metric values in
this press release are calculated by de-consolidating the
consolidated debt of Summit Permian Transmission Holdco, LLC (for
leverage) and removing the interest expense related to this debt
(for coverage). Further, no material flows related to Double E
Pipeline, LLC are used in the aforementioned metrics.
Fitch's calculation of adjusted EBITDA excludes equity in earnings
from unconsolidated affiliates and includes cash distributions from
those unconsolidated affiliates. Fitch gives 50% equity credit to
Summit's 9.50% Series A Preferred Cumulative Perpetual Units under
Fitch's hybrid methodology, Corporates Hybrids Treatment and
Notching Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
Summit Midstream
Finance Corp.
Senior Secured
2nd Lien LT B+ Affirmed RR2 B+
Summit Midstream
Partners, LP LT IDR B- Affirmed B-
Summit Midstream
Holdings, LLC LT IDR B- Affirmed B-
Senior Secured
2nd Lien LT B+ Affirmed RR2 B+
SUPERIOR CONTRACT: Lucy Sikes Named Subchapter V Trustee
--------------------------------------------------------
The Acting U.S. Trustee for Region 5 appointed Lucy Sikes as
Subchapter V trustee for Superior Contract Cleaning Inc.
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 Superior Contract Cleaning
Superior Contract Cleaning Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. La.
Case No. 24-50807) on September 20, 2024, with up to $50,000 in
both assets and liabilities.
Judge John W. Kolwe presides over the case.
H. Kent Aguillard, Esq., represents the Debtor as legal counsel.
TAMPA LIFE: Seeks to Extend Plan Exclusivity to Dec. 2
------------------------------------------------------
Tampa Life Plan Village, Inc., asked the U.S. Bankruptcy Court for
the Middle District of Florida to extend its exclusivity periods to
file a plan of reorganization and obtain acceptance thereof to
December 2, 2024 and January 31, 2025, respectively.
The Debtor, since filing this Case, has had to focus on relocating
Residents and putting in place the sale process. While the Debtor
has succeeded in relocating all Residents, the sale process is
taking a little longer than originally expected as certain due
diligence items of the real property at issue had not been
completed and interested Bidders have requested additional time to
inspect and for reports on the property to be completed.
The Debtor explains that neither the Debtor nor any other party in
interest will be in a position to formulate, promulgate and build
consensus for a Chapter 11 plan until after the Sale Hearing now
scheduled for October 14, 2024 because this Case revolves around
the proposed sale. The extension of the Exclusive Periods requested
herein will enable the Debtor to formulate a Chapter 11 plan and
present that plan to parties in interest after that date, which in
turn will heavily influence the Debtor's forthcoming plan.
Thus, the extension will not result in a delay of the process to
formulate a Chapter 11 plan. To the contrary, the requested
extension of the Exclusive Periods will permit the plan process to
move forward in an orderly fashion and with better information for
all stakeholders.
The Debtor claims that termination of exclusivity could be very
disruptive to the Debtor's efforts to develop a Chapter 11 plan. At
this time, the Debtor is in the middle of dealing with the sale,
and cannot formulate a plan without knowing what the plan is to
distribute. Moreover, if exclusivity terminates and competing
Chapter 11 plans are filed, resources and energy will necessarily
be diverted from negotiating a consensual Chapter 11 plan to
prosecuting and defending competing Chapter 11 plans.
The Debtor asserts that the requested extensions of the Exclusive
Periods will provide the Debtor and all other parties in interest
an opportunity to develop fully the grounds upon which serious
negotiations toward a Chapter 11 plan can be based. Affording the
Debtor a full opportunity to undertake an extensive review and
analysis of its assets and claims and to complete the sale will
only help the Debtor to formulate a plan and seek consensus with
all parties in interest.
The Debtor further asserts that terminating the Exclusive Periods
before this process is complete, before a sale is completed, and
before the process of negotiation has been developed fully would
defeat the purpose of Section 1121 of the Bankruptcy Code—to
afford the Debtor a meaningful and reasonable opportunity to
negotiate with creditors, complete the sale, and propose and
confirm a consensual Chapter 11 plan.
Accordingly, the Debtor should be granted a full and fair
opportunity to negotiate, propose and seek acceptance of a Chapter
11 plan. The Debtor is seeking a 60-day extension of the Exclusive
Periods. The Debtor believes that the requested extension of the
Exclusive Periods is warranted and appropriate under the
circumstances, particularly since the Motion is the Debtor's second
request for an extension, which comes after the Court has already
extended the sale deadlines in this case to after exclusivity is
set to expire.
Tampa Life Plan Village, Inc., is represented by:
Steven R. Wirth, Esq.
401 East Jackson Street, Suite 1700
Tampa, FL 33602
Phone: (813) 209.5093
Email. steven.wirth@akerman.com
Andrea S. Hartley, Esq.
Three Brickell City Centre
95 Southeast Seventh Street, Suite 1100
Miami, FL 33131
Phone: (305) 982.5682
Email: andrea.hartley@akerman.com
About Tampa Life Plan Village
Tampa Life Plan Village, Inc. d/b/a Unisen Senior Living in Tampa,
Florida, is a not-for-profit lifecare retirement.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-01885) on April 5,
2024. In the petition signed by Ronald Shuck, director, the Debtor
disclosed up to $50 million in assets and up to $500 million in
liabilities.
Judge Roberta A. Colton oversees the case.
Steven R. Wirth, Esq., at Akerman LLP, is the Debtor's legal
counsel.
THOMAS ORTHODONTICS: Wells Fargo's Late Ballot Don't Count
----------------------------------------------------------
Judge Rachel M. Blise of the United States Bankruptcy Court for the
Eastern District of Wisconsin denied the motion filed by Thomas
Orthodontics, S.C., Jess T. Thomas and Brooke A. Thomas to deem
Wells Fargo's late-filed ballot accepting the debtors' chapter 11
plan to be timely. The debtor's motion to deem Wells Fargo to have
accepted the plan by its non-response is also denied.
The debtors in these jointly-administered cases are Thomas
Orthodontics, S.C., Case No. 23-25432, and Dr. Jess Thomas and
Brooke Thomas, Case No. 23-25433. The debtors filed chapter 11
petitions on November 27, 2023 and elected to proceed under
subchapter V of chapter 11. They filed a joint chapter 11 plan on
February 26, 2024. On February 27, the Court entered an order
setting various deadlines related to the chapter 11 plan. The court
set a deadline of April 5 for creditors to return a ballot
accepting or rejecting the plan. The debtors filed a modified plan
on March 4, which was served on all creditors, along with a ballot
to accept or reject the plan. The debtors filed a further modified
plan on April 4, but the modifications did not require
re-balloting.
The plan divided creditors into several classes. Classes 1A through
1C include three creditors holding secured claims against Thomas
Orthodontics; Classes 2A through 2D include four creditors holding
secured claims against the Thomases individually; Class 3A includes
all general unsecured claims against Thomas Orthodontics; and Class
3B includes all general unsecured claims against the Thomases
individually.
The creditors in classes 1A through 1C all voted to accept the
plan. The claim of the creditor in Class 2A is unimpaired, so that
creditor was deemed to have accepted the plan. The creditors in
Classes 2B and 2C voted to accept the plan. The only creditor in
Class 2D, Wells Fargo Bank, N.A., did not vote.
Based on the returned ballots, two impaired classes had not voted
to accept the plan: Class 2D, the claim of Wells Fargo, which did
not return a ballot; and Class 3A, which did not reach the
threshold required under 11 U.S.C. Sec. 1126(c). Because not all
classes of creditors had voted to accept the plan, the plan could
be confirmed, if at all, only under 11 U.S.C. Sec. 1191(b).
The Court held an evidentiary hearing on plan confirmation on July
3, 2024. The Court ordered post-hearing briefing on several issues,
including on the debtors' argument that Class 2D should be deemed
to have accepted the plan, even though Wells Fargo, the only
creditor in the class, did not return a ballot. The upshot of that
argument, according to the debtors, is that the plan can be
confirmed as to the Thomases under 11 U.S.C. Sec. 1191(a), rather
than Sec. 1191(b), because all classes of the Thomases' creditors
would have accepted the plan. Unsecured creditor, Kapitus
Servicing, Inc., which also objected to confirmation, opposed the
debtors' request that Wells Fargo be deemed to have accepted the
plan by its non-response.
Following the hearing, the debtors contacted Wells Fargo and
requested that the creditor return a ballot. Wells Fargo eventually
agreed, and on July 9, 2024, Wells Fargo sent the debtors' counsel
a ballot accepting the plan. On July 24, the debtors filed a motion
to deem Wells Fargo's ballot to be timely.
Kapitus objected to the motion.
Federal Rule of Bankruptcy Procedure 9006(b)(1) allows the court to
extend deadlines imposed by court order under certain
circumstances. If an extension is sought before the deadline
expires, then the deadline can be extended for "cause shown."
After the deadline expires, an extension should be granted only
where the movant shows that "the failure to act was the result of
excusable neglect." The question is whether the standard in Rule
9006(b)(1) for extension of deadlines applies to untimely ballots
in chapter 11 cases.
In Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507
U.S. 380, 385 (1993), the Supreme Court has held that excusable
neglect is an equitable standard, and a court should weigh all
relevant circumstances surrounding the party's omission. In
weighing the circumstances, a court should consider the following
factors:
(1) the danger of prejudice to the opposing party;
(2) the length of the delay and its potential impact on the
proceedings;
(3) the reason for the delay, including whether the delay was
within the reasonable control of the movant; and
(4) whether the movant acted in good faith.
The Court concludes that consideration of these factors weighs
against a finding of excusable neglect, and that Wells Fargo's
untimely ballot therefore should not be counted.
Judge Blise says, "The reason for the delay in returning Wells
Fargo's ballot is not attributable to the debtors as the movants,
but the reason for the 95-day delay is nevertheless relevant. The
record indicates that Wells Fargo made a conscious decision not to
vote either for or against the plan and did so only after prompting
by the debtors' counsel. Under these circumstances, the Court would
not grant a motion by Wells Fargo to have its late ballot counted
because the missed deadline did not result from carelessness or the
like."
The debtors also note that if confirmation is denied and a modified
plan is sent to creditors with new ballots then Wells Fargo likely
will vote for the plan and the debtors will again seek confirmation
under Sec. 1191(a) but with added administrative costs. That may be
a practical reason to allow a late ballot in a different case, but
in this case there are pending objections that the Thomases' plan
does not meet other requirements of Sec. 1129(a), including the
requirement that the plan be proposed in good faith. Therefore, the
lack of creditor consent is not the only thing preventing
confirmation under Sec. 1191(a). Based on the circumstances of this
case as a whole, the Court concludes that extension of the deadline
for Wells Fargo to submit a ballot is not warranted.
Alternatively, the debtors request that the Court deem Wells Fargo
to have accepted the plan by its silence and failure to vote.
Judge Blise concludes, "A creditor's acceptance of a chapter 11
plan, whether under subchapter V or otherwise, must be in writing
and conform to the requirements of Rule 3018. Wells Fargo did not
accept the plan in writing before the ballot deadline. Therefore,
all classes of impaired claims did not vote in favor of the plan,
and the plan cannot be confirmed under Sec. 1191(a)."
A copy of the Court's decision is available at
https://urlcurt.com/u?l=LiHH4p
About Thomas Orthodontics
Thomas Orthodontics, S.C., operates an orthodontics practice at two
offices located in Hartford and Menomonee Falls.
Thomas Orthodontics sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Wisc. Case No. 23-25432) on Nov. 17,
2023. In the petition signed by Jess Thomas, owner, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities. Judge Rachel M. Blise oversees the case. Evan P.
Schmit, Esq., at Kerkman & Dunn, is the Debtor's legal counsel.
TURKEY LEG & CO: Court Okays Chapter 7 Conversion
-------------------------------------------------
Shakari Briggs of the Houston Chronicle reports that Texas judge
converts Turkey Leg Hut's Chapter 11 bankruptcy to Chapter 7,
citing violations of order.
Turkey Leg Hut owner Nakia Holmes' Chapter 11 bankruptcy has
officially been converted to Chapter 7 bankruptcy by order of Chief
U.S. Bankruptcy Judge Eduardo V. Rodriguez.
Filing under Subchapter V of Chapter 11 bankruptcy had allowed
Turkey Leg Hut co-founder Holmes to continue running her business
until all parties involved agreed on a fair and equitable plan to
repay creditors.
Now, that the case has been converted to Chapter 7, the bankruptcy
proceedings will focus on liquidation versus reorganization. In a
Chapter 7 bankruptcy, a trustee sells the debtors' assets to pay
creditors.
After initially denying a request to convert the Chapter 11
bankruptcy case, Rodriguez, of the Southern District of Texas,
ordered the conversion to Chapter 7 bankruptcy. Holmes, formerly
Nakia Price, had filed for bankruptcy back in March 2024 to resolve
nearly $5 million in debt.
In his 17-page opinion, Rodriguez cited multiple violations of the
court's May 3, 2024 order, including failure to file post-petition
tax returns, as reasons for the conversion.
Rodriguez addressed subchapter V trustee Brendon Singh's motion to
convert or dismiss with prejudice based on "five grounds." Singh
had alleged Holmes "grossly mismanaged the estate," "failed to
maintain appropriate insurance that poses a risk to the estate,"
"failed to comply with court orders," "failed to file any of (her)
monthly operating reports timely" and "failed to attend the UST's
first two scheduled initial debtor interviews."
Based on a June 24, 2024 court filing, Holmes planned to pay
"holders of unsecured claims" 56% of the amount of their claims
over five years.
"The payments contemplated in this plan shall be funded from
post-petition operations of the debtor's restaurant," court records
read.
The court required Holmes to provide proof of insurance on assets
that she indicated had a total net book value of $467,891.49.
However, she only provided a "certificate of property insurance"
with a $100,000 limit to losses on "personal property, business
income and extra expense," according to Singh.
Additionally, the court required Holmes to submit proof she filed
federal tax returns for the years 2021-2024 and Rodriguez said she
had yet to do so.
"Debtor waited until its deadline of May 17, 2024, to request a
motion to extend the deadline to file its tax returns, which was
subsequently denied by the court," Rodriguez wrote.
Although Singh requested the case be converted to Chapter 7
bankruptcy, the Texas Comptroller and Texas Workforce Commission
had asked the court to dismiss the case because the "debtor is
delinquent in reporting and paying post-petition sales, mixed
beverage and unemployment taxes," representatives said in court
records.
Per court records, the Texas Comptroller filed an administrative
claim of $35,707.10 for sales taxes while the TWC filed an
administrative claim of $1,434.01 for unemployment taxes -- both
accrued post-petition.
Rodriguez's memorandum opinion also noted Holmes originally filed a
statement of financial affairs stating she hadn’t made payments
to insiders within the past year. But, 52 weeks later she amended
the document to show "Nakia Price, debtor's owner and
representative, was paid $245,806 over the year preceding
bankruptcy."
Additionally, Rodriguez said in the opinion, the trustee claims
Holmes' representative testified in a "May 30 meeting that her
husband, Lyndell Price and the debtor's minority owner, Carl Moore,
received money from the debtor over the past year." The amounts
reportedly transferred to Price and Moore remain were not detailed
in court records.
About Turkey Leg Hut & Company LLC
The Turkey Leg Hut & Company, LLC is a Houston-based restaurant
specializing in turkey legs.
Turkey Leg Hut sought relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Tex. Case No. 24-31275) on March 26, 2024. In
the petition filed by Nakia Price, managing member, the Debtor
estimated assets up to $50,000 and estimated liabilities between $1
million and $10 million.
Judge Eduardo V. Rodriguez oversees the case.
Susan Tran Adams, Esq., at Tran Singh, LLP, serves as the Debtor's
counsel.
VERONA HERON: Linda Leali Named Subchapter V Trustee
----------------------------------------------------
The U.S. Trustee for Region 21 appointed Linda Leali, Esq., as
Subchapter V trustee for Verona Heron Trust.
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 Verona Heron
Verona Heron Trust sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 24-19706) on September
20, 2024, with $1 million to $10 million in both assets and
liabilities.
Judge Scott M. Grossman oversees the case.
VHB FOODS: Seeks 30-Day Extension of Plan Filing Deadline
---------------------------------------------------------
VHB Foods Corp. asked the U.S. Bankruptcy Court for the District of
Puerto Rico to extend its period to file a plan and disclosure
statement for 30 days.
On July 31, 2024, the Court granted debtor an extension of time to
file Disclosure Statement and Plan.
The debtor claims that it is still actively pursuing settlement
agreements with various of the creditors in the present case.
The debtor explains that it is in the final stage of negotiations,
reason why the company is requesting additional 30 days to present
a confirmable plan and disclosure statement.
VHB Foods Corp. is represented by:
Juan Carlos Bigas Valedon, Esq.
Juan C. Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About VHB Foods, Corp.
VHB Foods Corp. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-00875)
on March 5, 2024, listing $100,001 to $500,000 in assets and
$1,000,001 to $10 million in liabilities.
Juan Carlos Bigas Valedon, Esq., at Juan C Bigas Law Office
represents the Debtor as counsel.
VIANT MEDICAL: Moody's Hikes CFR to B3 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Ratings upgraded Viant Medical Holdings, Inc.'s Corporate
Family Rating to B3 from Caa1 and Probability of Default Rating to
B3-PD from Caa1-PD. Concurrently, Moody's assigned a B2 rating to
Viant's proposed new backed senior secured first lien bank credit
facilities (consisting of a new $100 million backed senior secured
first lien revolving credit facility expiring in 2029, new $680
million backed senior secured first lien term loan due 2031, and
new $75 million backed senior secured first lien delayed draw term
loan due 2031). The new $245 million backed senior secured second
lien term loan due 2032 is unrated. The B3 ratings for the existing
backed senior secured first lien revolving credit facility, term
loans and the Caa3 rating on the existing backed senior secured
second lien term loan remain unchanged. At the same time, Moody's
revised Viant's outlook to stable from positive.
Proceeds from the new $680 million first lien term loan and $245
million second lien term loan will be used to fully repay Viant's
existing revolving credit facility, first lien term loans, second
lien term loan and pay related fees and expenses. Upon close of the
transaction, Moody's anticipate withdrawing the B3 ratings on the
existing senior secured first lien revolving credit facility and
term loans and the Caa3 rating on the existing second lien term
loan upon repayment of these obligations.
The upgrade of the CFR to B3 reflects the company's improved
maturity profile resulting from the refinancing. The upgrade also
reflects Viant's ongoing improvement in operating performance,
including substantial new program business wins and strong demand
for its medical device contract manufacturing services. Pro forma
for the refinancing, Moody's estimate debt to EBITDA in the low 7
times range as of June 30, 2024, with continued deleveraging
towards 6 times over the next 12 to 18 months. Moody's anticipate
improved liquidity in the form of $57 million of cash on hand after
the refinancing as well as access to the newly upsized revolver and
the delayed draw term loan. The stable outlook reflects Moody's
expectation that Viant will continue its earnings improvement and
progress towards breakeven free cash flow for full year 2024, with
positive free cash flow in 2025.
Governance considerations were key drivers of the rating action as
it relates to improving financial strategy and risk management
given the refinancing of near-term maturities.
RATINGS RATIONALE
Viant's B3 Corporate Family Rating reflects the company's high
financial leverage in the low-7x area pro forma for the debt
refinancing. Viant faces high customer concentration as three
customers represent more than 40% of revenues. Moody's expect that
financial policies will remain relatively aggressive reflecting
Viant's ownership by private equity investors, notwithstanding
continued improvement in leverage.
The company's rating benefits from a diversified product portfolio
across multiple therapeutic areas and stable demand for contract
manufacturing services. With recent growth propelled by new
business wins, earnings now meaningfully exceed pre-pandemic
levels, underpinned by healthy demand from Viant's end-markets,
including surgical and orthopedic devices. In addition, given
regulatory constraints, the switching costs for the company's
customers is high.
Moody's expect that Viant will maintain adequate liquidity over the
next 12 to 18 months. Liquidity is supported by $57 million of cash
pro forma for the refinancing, as well as access to a $100 million
revolving credit facility and $75 million in delayed draw term
loan. However, negative free cash flow is reflective of high
capital expenditures for growth initiatives. As earnings improve,
Moody's anticipate Viant trending towards positive free cash flow
in FY 2025.
Viant's CIS-4 score (previously CIS-5) indicates that the company's
credit profile is weaker than it would have been if ESG exposures
did not exist. Governance considerations (G-4, previously G-5)
include the company's aggressive financial policies including its
high leverage. This is mitigated by the company's consistent
earnings growth and track record of deleveraging post pandemic and
refinancing of debt which was coming due in the near-term. Social
considerations (S-4) are primarily associated with responsible
production including compliance with regulatory requirements for
the safety of medical devices as well as adverse reputational risks
arising from recalls associated with manufacturing defects. The
score also reflects environmental considerations (E-3) due to the
company's manufacturing footprint in Puerto Rico and Costa Rica,
which is subject to heightened physical climate risk.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company increases in size and
scale through a balanced growth strategy. Additionally, sustaining
positive free cash flow could put upside pressure on the ratings.
Along with the aforementioned factors, the company could be
upgraded if debt/EBITDA is sustained below 5.5x.
Ratings could be downgraded if the company's operating performance
deteriorates, free cash flow turns negative or if liquidity
weakens. A more aggressive stance towards acquisitions or
shareholder returns could lead to a downgrade. Along with the
aforementioned factors, the company could be downgraded if
debt/EBITDA is sustained above 7x.
Marketing terms for the new credit facilities (final terms may
differ materially) include the following:
Incremental first lien debt capacity up to the greater of $187
million and 100% of consolidated EBITDA, plus unlimited amounts
subject to 3.3x first lien net leverage ratio. There is no inside
maturity sublimit. There are no "blocker" provisions which prohibit
the transfer of specified assets to unrestricted subsidiaries.
There are no protective provisions restricting an up-tiering
transaction.
The principal methodology used in these ratings was Medical
Products and Devices published in October 2023.
Headquartered in Foxborough, MA, Viant is an outsourced
manufacturer of medical devices serving a broad range of
therapeutic areas including cardiovascular, orthopedics and
advanced surgical. Viant is owned by affiliates of JLL Partners and
Water Street Healthcare Partners. The company's revenue in the LTM
period ending June 30, 2024 was over $1.1 billion.
WALLACE HOUSE: Yann Geron Named Subchapter V Trustee
----------------------------------------------------
The U.S. Trustee for Region 2 appointed Yann Geron, Esq., at Geron
Legal Advisors, LLC as Subchapter V trustee for Wallace House
Corporation.
Mr. Geron will be paid an hourly fee of $850 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Geron declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Yann Geron, Esq.
Geron Legal Advisors, LLC
370 Lexington Avenue, Suite 1101
New York, NY 10017
Phone: (646) 560-3224
Email: ygeron@geronlegaladvisors.com
About Wallace House
Wallace House Corporation sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 24-11616) on
September 20, 2024, with $100,001 to $500,000 in both assets and
liabilities.
Judge Michael E. Wiles oversees the case.
Lawrence Morrison, Esq., represents the Debtor as legal counsel.
WALTONIA LLC: Amends Unsecured Claims Pay Details
-------------------------------------------------
Waltonia, LLC, submitted an Amended Plan of Reorganization for
Small Business under Subchapter V dated September 4, 2024.
The Debtor asserts that it has significant equity in each of the
Properties and intends to sell the 81 State Hwy Property, the 99
State Hwy Property and the 174 N. 10th Property (collectively, the
"Marketed Properties") in order to pay creditors. The Debtor is in
the process of performing maintenance on the Marketed Properties in
preparation for listing for sale.
The outstanding mortgage loans shall be extended for the applicable
terms, amortized over 15 years, at an annual interest rate of 8%.
The loans shall be paid monthly beginning 30 days after the date of
the Confirmation Order. The Debtor may prepay any of the loans in
whole or in part at any time without penalty. In the event of a
sale of either or both of 81 State Hwy or 99 State Hwy, any sale
proceeds net of the mortgage loan for that certain property, real
estate taxes, broker's commission, and other closing costs will be
applied to the mortgage on the other property, or to the mortgage
loan secured by 171 State Hwy until such loans are paid in full.
If the Marketed Properties are sold, the Debtor will be able to
make the payments required under the Plan and pay all of its
creditors in full, and no further reorganization will be required.
Alternatively, if the Marketed Properties are not sold, the
Properties will generate sufficient net cash flow in order to pay
all creditors in full over time as reflected in the attached
budget.
This Plan of Reorganization proposes to pay creditors of the Debtor
from sale of the Marketed Properties or, alternatively, if the
properties have not sold within the Marketing Period, over the
course of 60 months as to secured creditor Adkinson or over the
course of 48 months as to secured creditor Hancock.
Class 5 consists of All Non-Classified, Non-Priority Unsecured
Claims. This Class includes all general unsecured claims scheduled
by the Debtor and/or timely filed by a Creditor, to the extent such
claim is allowed, unless such claim is paid pursuant to another
provision of this Plan. This Class does not include any claims
scheduled by the Debtor to be disputed, contingent, or unliquidated
and for which no proof of claim was timely filed, unless such claim
is allowed by a non-appealable final order.
Each holder of an allowed Class 5 claim will be paid in full, in
cash, on the later of 120 days from the Effective Date of the Plan,
or the date on which such claim is allowed by a final nonappealable
order, or on such terms set forth in a final non-appealable order,
or on such other terms as may be agreed on by the holder of the
claim and the Debtor.
The City of DeFuniak Springs was scheduled in the unsecured claim
amount of $391.78. This claim has been paid and no further
prepetition amount is due and owing to the City of Defuniak
Springs. No other unsecured claims have been filed or scheduled,
and therefore there are no other allowed unsecured claims.
Class 6 is comprised of all membership interests in the Debtor,
which are owned by Elma Earl Mathews (51%) and Stephen E. Mathews
(49%). Existing members will retain their membership interests in
the Debtor, however, no distributions (except for salaries,
benefits, and pass-through distributions for tax attributable to
income earned by the Debtor to the extent that the Debtor is
operating) will be made to Class 6 until all Class 1 through Class
5 claims have been paid in full.
Payments required under the Plan will be funded from: (i) the
proceeds from the sale of the Marketed Properties, or (ii) from any
other source of revenue as may be related to the Properties.
A full-text copy of the Amended Plan dated September 4, 2024 is
available at https://urlcurt.com/u?l=hhTpp8 from PacerMonitor.com
at no charge.
Attorneys for the Debtor:
Elena Paras Ketchum, Esq.
Jodi Daniel Dubose, Esq.
Stichter Riedel Blain & Postler, P.A.
41 N. Jefferson St., Suite 111
Pensacola, FL 32502
Tampa, FL 33602
Telephone: (850) 637-1836
Email: eketchum@srbp.com
jdubose@srbp.com
About Waltonia LLC
Waltonia, LLC is a Florida limited liability company that was
organized on November 14, 2013, and currently owns and manages
commercial and residential rental properties.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Fla. Case No. 24-30182) on March 8,
2024, with $1 million to $10 million in assets and $100,000 to
$500,000 in liabilities. Stephen E. Mathews, manager, signed the
petition.
Judge Karen K. Specie presides over the case.
Elena Paras Ketchum, Esq., at Stichter, Riedel, Blain & Postler, PA
represents the Debtor as legal counsel.
WAYNE BURT: Chapter 15 Case Summary
-----------------------------------
Chapter 15 Debtor: Wayne Burt Pte. Ltd. (In Liquidation)
47 Changi North Crescent
499623
Singapore
Foreign Proceeding: Singaporean court-ordered winding up of
Wayne Burt Pte. Ltd. (HC/CWU 252/2018)
Chapter 15 Petition Date: October 8, 2024
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 24-19956
Judge: TBA
Foreign Representative: Farooq Ahmad Mann
3 Shenton Way
#03-06C Shenton House 068805
Singapore
Foreign
Representative's
Counsel: Paul R. DeFilippo, Esq.
WOLLMUTH MAHER & DEUTSCH LLP
90 Washington Valley Road
Bedminster NJ 07921
Tel: (212) 382-3300
Email: pdefilippo@wmd-law.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/JBJEVNI/Wayne_Burt_Pte_Ltd_In_Liquidation__njbke-24-19956__0001.0.pdf?mcid=tGE4TAMA
WEISS MULTI-STRATEGY: Court Narrows Claims in Suit vs Jefferies
---------------------------------------------------------------
Chief Judge Martin Glenn of the United States Bankruptcy Court for
the Southern District of New York granted in part and denied in
part Jefferies Strategic Investments, LLC and Leucadia Asset
Management Holdings LLC's partial motion to dismiss the first
amended complaint in the adversary proceeding captioned as GWA,
LLC, WEISS MULTI-STRATEGY ADVISERS LLC, OGI ASSOCIATES, LLC, WEISS
SPECIAL OPERATIONS LLC, and WEISS MULTI-STRATEGY FUNDS LLC,
Plaintiffs, vs. JEFFERIES STRATEGIC INVESTMENTS, LLC and LEUCADIA
ASSET MANAGEMENT HOLDINGS, LLC, Defendants, Adv. Pro. No. 24-01350
(MG) (Bankr. S.D.N.Y.).
From 2018 to 2022, GWA executed several contracts with the
Jefferies Entities, through which it obtained financial support for
the Debtors' business operations in exchange for certain payment
obligations. These agreements include:
(i) a strategic relationship agreement and a related investment
management agreement;
(ii) two note purchase agreements; and
(iii) certain forbearance agreements.
The Debtors commenced the Adversary Proceeding against the
Jefferies Entities in conjunction with the chapter 11 filing.
Pursuant to the First Amended Complaint, the Debtors seek, at the
outset, entry of a judgment against the Defendants for the
avoidance of a 2024 forbearance agreement, including any security
interests and guarantees arising thereunder as preferential or
fraudulent transfers, and the recovery of any property of the
Debtors' estates. Alternatively, they argue that, because the
Debtors entered into the 2024 Forbearance Agreement under duress,
rescission of the 2024 Forbearance Agreement is appropriate.
Lastly, the Debtors believe the Defendants' failure to execute the
2024 Forbearance Agreement and the overall lack of consideration
thereunder and intent to comply warrant a judgment deeming the 2024
Forbearance Agreement null and void and otherwise unenforceable.
The Debtors also seek money judgments relating to (i) $3 million as
an avoidable preferential transfer made within 90-day period prior
to the Initial Debtors Petition Date from January 31, 2024 through
April 29, 2024; and (ii) $20 million in the aggregate in connection
with certain alleged avoidable fraudulent transfers made during the
two years prior to the Initial Debtors Petition Date from April 29,
2022 through April 29, 2024.
The FAC asserts 12 causes of action:
-- Counts I and II respectively seek avoidance of the 2024
Forbearance Agreement as (i) a preferential transfer pursuant to
section 547(b) of the Bankruptcy Code and (ii) a fraudulent
transfer pursuant to section 548(a)(1)(B) of the Bankruptcy Code;
-- Count III seeks avoidance of Security Interests, including
any related UCC-1 filing, and the guarantees arising under the 2024
Forbearance Agreement as (i) a preferential transfer pursuant to
section 547(b) of the Bankruptcy Code and/or (ii) a fraudulent
transfer pursuant to sections 548(a)(1)(B) of the Bankruptcy Code;
-- Counts IV and X respectively seek, for the benefit of the
Debtors' estates pursuant to section 551 of the Bankruptcy Code,
preservation of the interests and obligations incurred and/or
transferred under (i) the 2024 Forbearance Agreement (or value
thereof) and (ii) the Avoidable Transfers;
-- Counts V and XI respectively seek, pursuant to section 550(a)
of the Bankruptcy Code, to (i) avoid the 2024 Forbearance
Agreement, including the Security Interests arising thereunder, and
(ii) recover from Defendants, in an amount to be determined at
trial, at least the amount of the Avoidable Transfers set forth on
Schedule 1 to the FAC plus interest and costs;
-- Count VI seeks the rescission of the 2024 Forbearance
Agreement has having been the product of duress;
-- Count VII seeks judgment holding that the 2024 Forbearance
Agreement is null and void, and unenforceable for the Jefferies
Entities' failure to countersign and the general lack of
consideration thereunder and intent to comply;
-- Count VIII seeks avoidance of the $3 million as a
preferential transfer pursuant to section 547(b) of the Bankruptcy
Code;
-- Count IX seeks avoidance of the Alleged Avoidable Transfers
as fraudulent transfers pursuant to section 548(a)(1)(B) of the
Bankruptcy Code; and
-- Count XII seeks disallowance, pursuant to section 502(d) of
the Bankruptcy Code, of any and all claims of Defendants and their
assignees against the Debtors' estates or the Debtors until the
2024 Forbearance Agreement is deemed null and void and/or the
Defendants pay Debtors all amounts sought for the Alleged Avoidable
Transfers.
The Jeffries Entities state that, as of the commencement of the
Adversary Proceeding, GWA owed to LAM Holdings approximately $52.5
million under a Strategic Relationship Agreement and more than $50
million, plus interest, under certain notes issued pursuant to a
Note Purchase Agreements.
Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure,
made applicable to the Adversary Proceeding by Rule 7012 of the
Federal Rules of Bankruptcy Procedure, the Jefferies Entities seek
dismissal of:
(1) "Counts I, II, and IV through XII of the Complaint in
their entirety," and
(2) "Count III to the extent it asserts a constructive
fraudulent conveyance claim."
At the hearing held on September 11, 2024, counsel to the Jefferies
Entities clarified that Count I, consistent with Count III, would
also survive dismissal "to the extent that it asserts a preference
claim seeking to avoid the granting of security interests."
As a gating matter, the Jefferies Entities contend that the 2024
Forbearance Agreement, as a whole, is neither a transfer of an
interest in the Debtors' property nor an obligation that is
voidable under the Bankruptcy Code. In light of such, Counts I and
II, the Jefferies Entities argue, should be dismissed as there is
no legal basis to support the Debtors' conclusion that the entire
2024 Forbearance Agreement can be avoided as opposed to specific
transfers and obligations.
Additionally, the Jefferies Entities believe that dismissal of
Counts II and III of the FAC is also appropriate given the Debtors'
acknowledgment that the 2024 Forbearance Agreement was entered into
on account of antecedent debts. The Jefferies Entities contend that
the Court should therefore construe any transfers or obligations
incurred under the 2024 Forbearance Agreement as having been made
for reasonably equivalent value.
As for the remainder of the causes of action, the Jefferies
Entities argue that dismissal of (i) Counts VI, VIII, and IX is
appropriate because the Debtors have failed to plead facts that
support or establish elements of these claims; (ii) Count VII
because the 2024 Forbearance Agreement was supported by
consideration, and the Debtors have pled facts that establish that
the Jefferies Entities accepted the 2024 Forbearance Agreement
notwithstanding their failure to countersign the agreement; (iii)
Counts IV, V, X, and XI as they cannot stand as independent causes
of action; and (iv) Count XII as it is premature and procedurally
improper.
The Court ruled that:
-- Counts I, II, VIII, IX, X, and XI are dismissed in their
entirety.
-- Count III is dismissed except to the extent it asserts a
preference claim that seeks to avoid the granting of security
interests under the 2024 Forbearance Agreement pursuant to 11
U.S.C. Sec. 547(b).
-- Counts IV and V are dismissed except to the extent they
relate to the avoidance of security interests and guarantees
arising under the 2024 Forbearance Agreement as preferential
transfers under 11 U.S.C. Sec. 547(b).
-- Count VI is dismissed except to the extent such claim is
asserted against OGI, WSO, and WMSF as is and WSMA with respect to
the Jefferies Entities' threats of clawback litigation and freezing
of bank accounts.
-- Count VII is dismissed except to the extent it seeks a
judgment that the 2024 Forbearance Agreement is null and void for
lack of consideration as to OGI, WSO, and WMSF.
-- Count XII survives dismissal in its entirety.
The Debtors may amend the FAC in accordance with the Court's
ruling.
A copy of the Court's decision is available at
https://urlcurt.com/u?l=0KwWDJ
Attorneys for the Debtors:
Tracy L. Klestadt, Esq.
John E. Jureller, Jr, Esq.
Lauren C. Kiss, Esq.
Stephanie R. Sweeney, Esq.
KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP
200 West 41st Street, 17th Floor
New York, NY 10036
E-mail: tklestadt@klestadt.com
jjureller@klestadt.com
lkiss@klestadt.com
ssweeney@klestadt.com
Attorneys for Jefferies Strategic Investments, LLC, Leucadia Asset
Management Holdings LLC, and Jefferies LLC:
Scott S. Balber, Esq.
Michael P. Jones, Esq.
Daniel Gomez, Esq
HERBERT SMITH FREEHILLS NEW YORK LLP
200 Park Avenue
New York, NY 10166
E-mail: Scott.Balber@hsf.com
michael.jones@hsf.com
daniel.gomez@hsf.com
About Weiss Multi-Strategy Advisers
Weiss Multi-Strategy Advisers LLC, is a New York-based investment
management firm started in 1978. Weiss Multi-Strategy Advisers LLC
filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 24-10743) on April 29,
2024. In the petition signed by George Weiss, manager, the Debtor
disclosed $10 million to $50 million in assets and $100 million to
$500 million in liabilities.
Judge Martin Glenn oversees the case.
The Debtor tapped Tracy L. Klestadt, Esq., at Klestadt Winters
Jureller Southard & Stevens, LLP as counsel and Omni Agent
Solutions, Inc. as claims and noticing agent.
WELCOME GROUP: Cash Collateral Use Extended to Dec. 15
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Ohio,
Eastern Division, entered an agreed order extending the final order
permitting Welcome Group 2, LLC to use cash collateral, from
September 16 through December 15, 2024. The debtors must provide
acceptable documentation for Capex expenditures before using the
cash collateral for these items, ensuring lender protection.
The projected budget outlines operating revenue from the Room
Department, estimating a total of $1.14 million over the given
period. Operational expenses, including room supplies, payroll, and
general expenses, are expected to total $372,800, leaving a room
department income of $763,200. Miscellaneous and undistributed
operating expenses bring the total expenses to $473,500.
Other significant expenses include management fees, insurance,
professional fees, real estate taxes, SBA EIDL loan payments, and
capital expenditures, totaling $501,600. Payments to RSS, the
secured creditor, are included as part of these expenses, alongside
real estate taxes and loan obligations.
About Welcome Group 2, LLC
Welcome Group 2, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S. D. Ohio Case No. 23-53044) on September
1, 2023. In the petition signed by Abhijit Vasani, as president,
InnVite Opco, Inc., sole member, the Debtor disclosed up to $10
million in both assets and liabilities.
Judge C. Kathryn Preston oversees the case.
Denis E. Blasius, Esq., at Thomsen Law Group, LLC, represents the
Debtor as legal counsel.
Creditor RSS WFCM2019-C50 - OH WG2, LLC, is represented by:
Tami Hart Kirby, Esq.
Walter Reynolds, Esq.
Porter Wright Morris & Arthur LLP
One South Main Street, Suite 1600
Dayton, OH 45402-2028
Telephone: (937) 449-6721
Facsimile: (937) 449-6820
E-mail: tkirby@porterwright.com
wreynolds@porterwright.com
WESCO AIRCRAFT: Seeks to Extend Plan Exclusivity to Dec. 1
----------------------------------------------------------
Wesco Aircraft Holdings Inc. and its debtor-affiliates asked the
U.S. Bankruptcy Court for the Southern District of Texas to extend
their exclusivity periods to file a plan of reorganization and
obtain acceptance thereof to December 1, 2024 and February 1, 2025,
respectively.
The Debtors explain that the magnitude and complexity of Incora's
businesses and the uncertainty with respect to its capital
structure have required the Debtors to navigate complex issues in
their reorganization efforts and further substantiate the need for
an extension of the Exclusive Periods. This factor weighs heavily
in favor of extending exclusivity, since the Debtors are on track
to emerge from bankruptcy soon after the confirmation hearing.
The Debtors claim that the Chapter 11 Cases were further
complicated by the need to renegotiate major customer contracts,
revise the long-term business plan, and address the disputed
capital structure, all at the same time. Incora has made
significant progress towards confirming a chapter 11 plan. Incora's
management team has stabilized the business and has successfully
negotiated modifications to nearly every one of Incora's burdensome
customer contracts.
The Debtors cite that the parties have received key rulings in the
2022 Financing Adversary Proceeding. Having completed nearly all of
these tasks, the Debtors are requesting an extension of the
Exclusive Periods so they can finalize the reorganization process
that they have been vigorously pursuing since before the Chapter 11
Cases were filed. Accordingly, the Debtors submit that a final
extension of the Exclusive Filing Period through December 1, 2024,
and a matching extension of the Exclusive Solicitation Period
through February 1, 2025, are warranted.
The Debtors assert that the Debtors are not seeking an extension to
artificially delay the Chapter 11 Cases or to hold creditors
hostage to an unreasonable plan proposal. Indeed, the Debtors have
used the time in bankruptcy efficiently to obtain financing,
advance operational initiatives throughout a vast enterprise, and
develop consensus with many creditor constituencies. The size and
complexities of the Chapter 11 Cases are apparent, and the Debtors
are continuing to work on achieving consensus on a confirmable
plan, so the requested extension will not harm any economic
stakeholder.
The Debtors further assert that the extension of exclusivity will
permit the Debtors to continue to operate as responsible stewards
of their enterprise. The Debtors are paying their bills as they
come due and will continue to do so. Suppliers and customers can
continue to do business with Incora throughout the extended
Exclusive Periods, confident in Incora's ability to perform
services, deliver goods, and pay bills.
Counsel to the Debtors:
Charles A. Beckham, Jr., Esq.
Patrick L. Hughes, Esq.
Kelli S. Norfleet, Esq.
HAYNES AND BOONE, LLP
1221 McKinney Street, Suite 4000
Houston, TX 77010
Telephone: 1 (713) 745-2000
E-mail: Charles.Beckham@HaynesBoone.com
Patrick.Hughes@HaynesBoone.com
Kelli.Norfleet@HaynesBoone.com
- and -
Dennis F. Dunne, Esq.
Samuel A. Khalil, Esq.
Benjamin M. Schak, Esq.
MILBANK LLP
55 Hudson Yards
New York, NY 10001
Telephone: 1 (212) 530-5000
E-mail: DDunne@Milbank.com
SKhalil@Milbank.com
BSchak@Milbank.com
About Incora
Incora -- http://www.incora.com/-- is the trade name for the group
of companies formed by Wesco Aircraft and Pattonair, a provider of
comprehensive supply chain management services to the global
aerospace and other industries. Beginning with a strong foundation
in aerospace and defense, Incora also utilizes its supply chain
expertise to serve industrial manufacturing, marine, pharmaceutical
and beyond. Incora incorporates itself into customers' businesses,
managing all aspects of supply chain from procurement and inventory
management to logistics and on-site customer services. The company
is headquartered in Fort Worth, Texas, with a global footprint that
includes 68 locations in 17 countries and more than 3,800
employees.
Wesco Aircraft Holdings, Inc., doing business as Incora, and 43
affiliates sought Chapter 11 protection (Bankr. S.D. Texas Lead
Case No. 23-90611) on June 1, 2023.
Wesco Aircraft estimated assets and debt of $1 billion to $10
billion as of the bankruptcy filing.
The Debtors tapped Milbank, LLP and Haynes and Boone, LLP as
bankruptcy counsels; PJT Partners, Inc. as investment banker;
Alvarez & Marsal North America, LLC as restructuring advisor; and
Quinn Emanuel Urquhart & Sullivan, LLP as special litigation and
conflicts counsel. Kurtzman Carson Consultants, LLC is the claims
agent.
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped McDermott Will & Emery, LLP and Morrison Foerster,
LLP as its counsel; Piper Sandler & Co. as investment banker; and
Province, LLC as financial advisor.
WHITE VIOLET: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: White Violet Property, LLC
358 Sewall Street
Ludlow, MA 01056
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
District of Massachusetts
Case No.: 24-30554
Debtor's Counsel: William J. Amann, Esq.
AMANN BURNETT, PLLC
757 Chestnut Street
Manchester, NH 03104
Tel: 603-696-5401
Email: wamann@amburlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Paul D. Quinn 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/AOT6CKQ/White_Violet_Property_LLC__mabke-24-30554__0001.0.pdf?mcid=tGE4TAMA
WILLOUGHBY EQUITIES: Case Summary & One Unsecured Creditor
----------------------------------------------------------
Debtor: Willoughby Equities LLC
599 Willoughby Street
Brooklyn, NY 11204
Business Description: Willoughby Equities is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)). The Debtor is the owner
of real property located at 599-601
Willoughby St. valued at $3 million.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 24-44217
Judge: Hon. Jil Mazer-Marino
Debtor's Counsel: Eric Snyder, Esq.
WILK AUSLANDER LLP
825 Eight Avenue
Suite 2900
New York, NY 10019
Tel: 212-981-2300
Fax: 212-752-6380
E-mail: esnyder@wilkauslander.com
Total Assets: $3,000,000
Total Liabilities: $2,864,604
The petition was signed by Abraham Lowenstein as president/sole
member.
The Debtor listed Oved and Oved LLP, Attn: Glen Lenihan, Esq., 400
Greenwich Street, New York, NY as its sole unsecured creditor.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/VKQQ3NQ/Willoughby_Equities_LLC__nyebke-24-44217__0001.0.pdf?mcid=tGE4TAMA
WINSTON DEVELOPMENT: Case Summary & Two Unsecured Creditors
-----------------------------------------------------------
Debtor: Winston Development LLC
709 Montauk Highway
Amagansett, NY 11930
Business Description: The Debtor is part of the residential
building construction industry. The Debtor
is the fee simple owner of the real property
located at 709 Montauk Highway, Amagansett,
NY 11930 having an appraised value of $1.1
million.
Chapter 11 Petition Date: October 10, 2024
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 24-73882
Judge: Hon. Louis A Scarcella
Debtor's Counsel: Mark E. Cohen, Esq.
PRYOR & MANDELUP, LLP
675 Old Country Road
Westbury, NY 11590
Tel: 516-997-0999
Fax: 516-333-7333
Email: mec@pryormandelup.com
Total Assets: $1,100,001
Total Liabilities: $2,151,708
The petition was signed by Winston L. Mitchell as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/3JKUO4A/Winston_Development_LLC__nyebke-24-73882__0001.0.pdf?mcid=tGE4TAMA
YELLOW CORP: Wants Claims vs. Teamsters Revived
-----------------------------------------------
Beverly Banks of Law360 reports that Yellow Corp. called on the
Tenth Circuit to reverse a lower court's dismissal of the company's
$137 million lawsuit against the Teamsters that claimed the union
led the nearly 100-year-old company to shutter, saying the business
wasn't required to exhaust the grievance process under a contract.
About Yellow Corporation
Yellow Corporation -- http://www.myyellow.com/-- operates
logistics and less-than-truckload (LTL) networks in North America,
providing customers with regional, national, and international
shipping services throughout. Yellow's principal office is in
Nashville, Tenn., and is the holding company for a portfolio of LTL
brands including Holland, New Penn, Reddaway, and YRC Freight, as
well as the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow
Corporation had $2,152,200,000 in total assets against
$2,588,800,000 in total liabilities. The petitions were signed by
Matthew A. Doheny as chief restructuring officer.
The Debtors tapped Kirkland & Ellis, LLP as restructuring counsel;
Pachulski Stang Ziehl & Jones, LLP as Delaware local counsel;
Kasowitz, Benson and Torres, LLP as special litigation counsel;
Goodmans, LLP as special Canadian counsel; Ducera Partners, LLC, as
investment banker; and Alvarez and Marsal as financial advisor.
Epiq Bankruptcy Solutions is the claims and noticing agent.
Milbank LLP serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
while White & Case, LLP and Arnold & Porter Kaye Scholer, LLP serve
as counsels to Beal Bank USA and the U.S. Department of the
Treasury, respectively.
On Aug. 16, 2023, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors in the Chapter 11 cases.
The committee tapped Akin Gump Strauss Hauer & Feld, LLP and
Benesch, Friedlander, Coplan & Aronoff, LLP as counsels; Miller
Buckfire as investment banker; and Huron Consulting Services, LLC,
as financial advisor.
YOUNG TRANSPORTATION: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Young Transportation Inc.
1218 West Bankhead Street
New Albany, MS 38652
Business Description: The Debtor is part of the general freight
trucking industry.
Chapter 11 Petition Date: October 11, 2024
Court: United States Bankruptcy Court
Northern District of Mississippi
Case No.: 24-13174
Judge: Hon. Jason D Woodard
Debtor's Counsel: J. Walter Newman, IV, Esq.
NEWMAN & NEWMAN
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: (601) 948-0586
E-mail: stacyplovorn@icloud.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Daniel L. Young as president.
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/SDG5UVI/Young_Transportation_Inc__msnbke-24-13174__0001.0.pdf?mcid=tGE4TAMA
[^] BOND PRICING: For the Week from October 7 to 11, 2024
---------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
2U Inc TWOU 2.250 42.000 5/1/2025
99 Cents Only Stores LLC NDN 7.500 6.280 1/15/2026
99 Cents Only Stores LLC NDN 7.500 7.514 1/15/2026
99 Cents Only Stores LLC NDN 7.500 7.514 1/15/2026
Air Transport
Services Group Inc ATSG 1.125 99.700 10/15/2024
Allen Media LLC / Allen
Media Co-Issuer Inc ALNMED 10.500 45.106 2/15/2028
Allen Media LLC / Allen
Media Co-Issuer Inc ALNMED 10.500 45.003 2/15/2028
Allen Media LLC / Allen
Media Co-Issuer Inc ALNMED 10.500 45.003 2/15/2028
Amyris Inc AMRS 1.500 0.641 11/15/2026
Anagram Holdings
LLC/Anagram
International Inc AIIAHL 10.000 0.750 8/15/2026
Anagram Holdings
LLC/Anagram
International Inc AIIAHL 10.000 0.750 8/15/2026
Anagram Holdings
LLC/Anagram
International Inc AIIAHL 10.000 0.750 8/15/2026
At Home Group Inc HOME 7.125 31.154 7/15/2029
At Home Group Inc HOME 7.125 31.154 7/15/2029
Audacy Capital Corp CBSR 6.750 2.425 3/31/2029
Audacy Capital Corp CBSR 6.500 1.816 5/1/2027
Audacy Capital Corp CBSR 6.750 2.425 3/31/2029
Azul Investments LLP AZUBBZ 7.250 49.811 6/15/2026
Azul Investments LLP AZUBBZ 7.250 49.811 6/15/2026
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Beasley Mezzanine Holdings BBGI 8.625 58.946 2/1/2026
Beasley Mezzanine Holdings BBGI 8.625 59.189 2/1/2026
Biora Therapeutics Inc BIOR 7.250 57.000 12/1/2025
BuzzFeed Inc BZFD 8.500 93.500 12/3/2026
Castle US Holding Corp CISN 9.500 45.942 2/15/2028
Castle US Holding Corp CISN 9.500 45.868 2/15/2028
Citigroup Inc C 6.100 100.000 10/18/2028
CorEnergy Infrastructure
Trust Inc CORR 5.875 70.250 8/15/2025
Curo Oldco LLC CURO 7.500 19.470 8/1/2028
Curo Oldco LLC CURO 7.500 2.980 8/1/2028
Curo Oldco LLC CURO 7.500 2.980 8/1/2028
Cutera Inc CUTR 2.250 15.750 6/1/2028
Cutera Inc CUTR 2.250 30.357 3/15/2026
Cutera Inc CUTR 4.000 16.224 6/1/2029
Danimer Scientific Inc DNMR 3.250 10.885 12/15/2026
Dell International
LLC / EMC Corp DELL 5.850 100.341 7/15/2025
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 5.375 0.480 8/15/2026
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 6.625 0.390 8/15/2027
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 5.375 1.752 8/15/2026
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 6.625 0.376 8/15/2027
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 5.375 0.886 8/15/2026
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 5.375 0.886 8/15/2026
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 5.375 0.370 8/15/2026
Energy Conversion Devices ENER 3.000 0.762 6/15/2013
Enviva Partners LP /
Enviva Partners
Finance Corp EVA 6.500 4.250 1/15/2026
Enviva Partners LP /
Enviva Partners
Finance Corp EVA 6.500 20.750 1/15/2026
Exela Intermediate LLC /
Exela Finance Inc EXLINT 11.500 35.000 7/15/2026
Exela Intermediate LLC /
Exela Finance Inc EXLINT 11.500 35.787 7/15/2026
Federal Farm Credit
Banks Funding Corp FFCB 1.500 99.852 10/16/2024
Federal Home Loan Banks FHLB 0.600 97.989 10/28/2024
Federal Home Loan Banks FHLB 0.625 99.101 10/22/2024
Federal Home Loan Banks FHLB 1.000 99.658 10/18/2024
Federal Home Loan Banks FHLB 0.600 98.679 10/22/2024
Federal Home Loan Banks FHLB 4.800 99.371 10/18/2024
Federal Home Loan Banks FHLB 0.500 98.940 10/17/2024
Federal Home Loan Banks FHLB 0.625 99.194 10/15/2024
Federal Home Loan Banks FHLB 0.900 96.993 11/1/2024
Federal Home Loan Banks FHLB 0.750 93.656 11/8/2024
Federal Home Loan Banks FHLB 0.555 98.732 10/21/2024
Federal Home Loan Banks FHLB 0.550 99.078 10/15/2024
Federal Home Loan Banks FHLB 0.610 99.155 10/18/2024
Federal Home Loan Banks FHLB 4.750 99.366 10/21/2024
Federal Home Loan Banks FHLB 0.600 93.544 10/30/2024
Federal Home Loan Banks FHLB 0.550 92.768 11/1/2024
Federal Home Loan Banks FHLB 0.750 92.751 11/8/2024
Federal Home Loan Banks FHLB 0.500 99.552 10/15/2024
Federal Home Loan Banks FHLB 0.550 99.437 10/15/2024
Federal Home Loan Banks FHLB 0.500 96.998 10/30/2024
Federal Home Loan Banks FHLB 0.470 99.061 10/23/2024
Federal Home Loan Banks FHLB 0.550 91.690 1/7/2025
Federal Home Loan Banks FHLB 0.625 99.200 10/21/2024
Federal Home Loan Banks FHLB 0.650 98.181 10/25/2024
Federal Home Loan Banks FHLB 0.520 99.083 10/23/2024
Federal Home Loan Banks FHLB 0.575 99.110 10/21/2024
Federal Home Loan Banks FHLB 2.625 99.229 10/22/2024
Federal Home Loan Banks FHLB 2.550 99.227 10/22/2024
Federal Home Loan
Mortgage Corp FHLMC 4.000 99.384 10/18/2024
Federal Home Loan
Mortgage Corp FHLMC 5.000 99.793 10/17/2024
Federal National
Mortgage Association FNMA 0.375 99.716 10/16/2024
First Republic Bank/CA FRCB 4.625 1.000 2/13/2047
First Republic Bank/CA FRCB 4.375 2.903 8/1/2046
Florida Power & Light Co NEE 5.078 96.136 11/14/2068
Forbright Inc CGLBNC 5.750 95.202 12/1/2029
Forbright Inc CGLBNC 5.750 95.202 12/1/2029
General Electric Co GE 4.250 99.679 10/15/2024
GoTo Group Inc LOGM 5.500 31.060 5/1/2028
GoTo Group Inc LOGM 5.500 31.515 5/1/2028
Goodman Networks Inc GOODNT 8.000 5.000 5/11/2022
Goodman Networks Inc GOODNT 8.000 1.000 5/31/2022
H-Food Holdings
LLC / Hearthside
Finance Co Inc HEFOSO 8.500 7.722 6/1/2026
H-Food Holdings
LLC / Hearthside
Finance Co Inc HEFOSO 8.500 7.760 6/1/2026
Hallmark Financial
Services Inc HALL 6.250 19.687 8/15/2029
Homer City Generation LP HOMCTY 8.734 38.750 10/1/2026
Inotiv Inc NOTV 3.250 30.875 10/15/2027
Inseego Corp INSG 3.250 79.312 5/1/2025
Invacare Corp IVC 4.250 1.002 3/15/2026
JPMorgan Chase Bank NA JPM 2.000 91.014 9/10/2031
Ligado Networks LLC NEWLSQ 15.500 18.500 11/1/2023
Ligado Networks LLC NEWLSQ 17.500 3.500 5/1/2024
Ligado Networks LLC NEWLSQ 15.500 18.500 11/1/2023
Lightning eMotors Inc ZEVY 7.500 1.000 5/15/2024
Luminar Technologies Inc LAZR 1.250 48.050 12/15/2026
MBIA Insurance Corp MBI 16.178 5.000 1/15/2033
MBIA Insurance Corp MBI 16.178 5.029 1/15/2033
Macy's Retail Holdings LLC M 6.700 86.492 7/15/2034
Mashantucket Western
Pequot Tribe MASHTU 7.350 52.000 7/1/2026
Morgan Stanley MS 4.200 99.827 10/18/2024
Morgan Stanley MS 1.800 80.271 8/27/2036
NanoString Technologies Inc NSTG 2.625 74.250 3/1/2025
Office Properties
Income Trust OPI 4.500 88.343 2/1/2025
Polar US Borrower
LLC / Schenectady
International Group Inc SIGRP 6.750 48.163 5/15/2026
Polar US Borrower
LLC / Schenectady
International Group Inc SIGRP 6.750 45.921 5/15/2026
Porch Group Inc PRCH 0.750 47.500 9/15/2026
Provident Funding
Associates LP /
PFG Finance Corp PROFUN 6.375 100.031 6/15/2025
Rackspace Technology
Global Inc RAX 5.375 30.232 12/1/2028
Rackspace Technology
Global Inc RAX 3.500 27.500 2/15/2028
Rackspace Technology
Global Inc RAX 5.375 29.875 12/1/2028
Rackspace Technology
Global Inc RAX 3.500 28.847 2/15/2028
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Rite Aid Corp RAD 7.700 5.000 2/15/2027
Rite Aid Corp RAD 6.875 3.096 12/15/2028
Rite Aid Corp RAD 6.875 3.096 12/15/2028
RumbleON Inc RMBL 6.750 82.349 1/1/2025
SVB Financial Group SIVB 3.500 59.500 1/29/2025
Sandy Spring Bancorp Inc SASR 4.250 94.875 11/15/2029
Shutterfly LLC SFLY 8.500 47.500 10/1/2026
Shutterfly LLC SFLY 8.500 47.500 10/1/2026
Spanish Broadcasting System SBSAA 9.750 66.297 3/1/2026
Spanish Broadcasting System SBSAA 9.750 66.240 3/1/2026
Spirit Airlines Inc SAVE 1.000 20.872 5/15/2026
Spirit Airlines Inc SAVE 4.750 63.097 5/15/2025
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Toyota Motor Credit Corp TOYOTA 5.531 99.874 10/16/2024
Tricida Inc TCDA 3.500 9.000 5/15/2027
Veritex Holdings Inc VBTX 4.750 91.743 11/15/2029
Veritone Inc VERI 1.750 45.938 11/15/2026
Virgin Galactic Holdings SPCE 2.500 32.000 2/1/2027
Vitamin Oldco Holdings Inc GNC 1.500 0.433 8/15/2020
Voyager Aviation Holdings VAHLLC 8.500 15.557 5/9/2026
Voyager Aviation Holdings VAHLLC 8.500 15.557 5/9/2026
Voyager Aviation Holdings VAHLLC 8.500 15.557 5/9/2026
Vroom Inc VRM 0.750 53.875 7/1/2026
WW International Inc WW 4.500 26.755 4/15/2029
WW International Inc WW 4.500 25.339 4/15/2029
Wesco Aircraft Holdings Inc WAIR 9.000 41.649 11/15/2026
Wesco Aircraft Holdings Inc WAIR 13.125 1.798 11/15/2027
Wesco Aircraft Holdings Inc WAIR 9.000 41.649 11/15/2026
Wesco Aircraft Holdings Inc WAIR 13.125 1.798 11/15/2027
*********
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 ***