/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190904.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, September 4, 2019, Vol. 20, No. 177 Headlines A R G E N T I N A ARGENTINA: S&P Ups Sovereign Credit Rating to CCC-/C, Outlook Neg. BANCO DE GALICIA: S&P Places 'B-' LT ICRs on Watch Neg. CAPEX SA: S&P Cuts Currency Ratings to 'B-', Outlook Neg. COMPANIA LATINOAMERICANA: S&P Cuts ICR to 'CCC', Put on Watch Neg. B R A Z I L BRAZIL: Oil and Natural Gas Production Increased in July BRAZIL: Over 5.4MM People Depend on Income from MEI Companies BRAZIL: Private Pension Investments Have not Grown Since 2016 C O L O M B I A COLOMBIA: To Get $15MM IMF Loan to Strengthen Public Sector Mgmt. D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Footwear -6.5% Sag Leads Free Zones Stumble N I C A R A G U A NICARAGUA: Unemployment, High Cost of Living are Main Problems P U E R T O R I C O SEARS HOLDINGS: As Fees Reach $200M, Suppliers Seek a Stop TECNICENTROS MUNDIAL: Hires Luis Carrasquillo as Accountant TECNICENTROS MUNDIAL: Hires William Vidal as Counsel V E N E Z U E L A PETROLEOS DE VENEZUELA: Crude Exports Fall to Lowest Level in 2019 - - - - - ================= A R G E N T I N A ================= ARGENTINA: S&P Ups Sovereign Credit Rating to CCC-/C, Outlook Neg. ------------------------------------------------------------------ On Aug. 30, 2019, S&P Global Ratings raised its foreign and local currency sovereign credit ratings on Argentina to 'CCC-/C' from 'SD'. The outlook on the long-term ratings is negative. In addition, S&P raised its short-term issue ratings to 'C' from 'D'. S&P also raised the national scale rating to 'raCCC-' from 'SD'. Outlook S&P said, "The negative outlook reflects the prominent downside risks to payment of debt on time and in full per our criteria over the coming months amid very complex political, economic, and financial market dynamics. The Macri Administration may advance a restructuring during its current term in office if it garners support from the Argentine Congress. Alternatively, the outlook reflects risks associated with failure to advance such a restructuring proposal and the prospects for ongoing stressed market dynamics before and after the Oct. 27 national elections, and with it, risk of a missed payment on Argentina's debt obligations. "We could lower the long-term ratings to 'CC' over the coming months if the government advances negotiation with bondholders for a potential debt exchange that could be characterized as a distressed exchange based on our methodology as we see the most likely scenario would be an extension of maturities, which will not be compensated by the issuer. "Alternatively, absent backing for a re-profiling, we could lower the rating should additional economic and financial stresses threaten timely debt service under the current or next administration." Liquidity is extremely tight, and prospects for the fifth disbursement under the IMF Stand-By Arrangement as well as the direction of economic policies post the national elections both remain uncertain. S&P could revise the outlook to stable over the coming months if policy signals and execution start to successfully turn around or stabilize private-sector confidence, market turbulence subsides, and the government regains market access for government financing. Rationale The 'CCC-/C' ratings on Argentina reflect pronounced credit vulnerabilities and heightened risk of non-payment. The government has defaulted for the third time since 2001, under S&P's methodology. The absence of confidence in the financial markets about policy initiatives under the next administration--complicated by the fact elections are several months away and a new administration assumes office only in December-–has severely compromised the ability of the Treasury to roll over commercial debt and the central bank to manage volatility in the peso. Against the backdrop of declining international reserves, an inability to place paper in the market prompted Argentina's recent and possible forthcoming debt re-profiling. The immensely stressed debt dynamics amid a depreciating exchange rate, a likely acceleration in inflation, and a deepening economic recession all weigh on Argentina's credit profile. Marked liquidity pressures have materialized, which, coupled with the risk of not receiving the fifth disbursement from the IMF, weigh on S&P's external and liquidity assessments. Severe challenges confront the ability of both the current administration and the leading presidential candidate to contain market volatility and restore financial and economic stability. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List Upgraded; Outlook Action To From Argentina Sovereign Credit Rating CCC-/Negative/C SD/--/D Ratings Affirmed Argentina Transfer & Convertibility Assessment B- Argentina Senior Unsecured CCC- BANCO DE GALICIA: S&P Places 'B-' LT ICRs on Watch Neg. ------------------------------------------------------- On Sept. 2, 2019, S&P Global Ratings kept its 'B-' long-term issuer credit ratings on Banco De Galicia Y Buenos Aires S.A.U. (Banco Galicia), Banco Patagonia S.A., Banco de la Provincia de Buenos Aires (BAPRO), and Banco Hipotecario S.A. at the same level as the new transfer and convertibility (T&C) assessment. At the same time, S&P placed these ratings on CreditWatch negative. In addition, S&P placed its 'B' short-term issuer credit rating on Banco Patagonia, 'CCC' subordinated debt rating on Banco Galicia, and 'B-' senior unsecured rating on Banco Hipotecario on CreditWatch negative. The CreditWatch negative listing reflects the potential impact that the re-profiling of the sovereign debt, foreign exchange controls, deposit base behavior booth in local and foreign currency, and other developments until the completion of the presidential election could have on banks and on their creditworthiness. S&P could lower the ratings on the entities if these factors erode banks' ability to cover financial obligations. S&P expect to resolve the CreditWatch listing in the upcoming 90 days. BICRA on Argentina S&P said, "We're revising our BICRA on Argentina to group '9' from group '8' and industry risk to '10' from '9', reflecting the rising economic risks for banks, resulting from the weakening in the sovereign's creditworthiness and financial conditions. Nevertheless, the anchor (average risk) for banks operating in the country remains at 'b+'. (We assess BICRAs on a scale that goes from '1' [lowest risk] to '10' [highest risk].) We're revising the economic risk trend to stable and industry risk trend to negative. "In the upcoming quarters, we expect domestic financial institutions to continue operating under very challenging economic conditions, which further deteriorated following the recent market turmoil and developments in the sovereign's debt. These factors are hampering credit growth in real terms, banks' asset quality metrics, and heightening the likelihood of additional credit losses. We consider adequate provisioning, capitalization, and low credit-to-GDP ratio--given banks' focus on formal sectors of the economy--will allow lenders to cope with potential additional losses. Argentine banks have been increasingly providing dollar-denominated loans, but most of these are to borrowers that generate income in the same currency, such as exporters, which alleviates potential risk. The banking system remains profitable, but with a greater share of revenue coming from holdings of central bank securities, which should help offset higher charges for provisions in response to rising delinquency. We will monitor developments and impact on the sector's profitability. "Our industry risk assessment incorporates Argentina's enhanced regulatory framework with the implementation of Basel III and accounting principles that align the domestic financial system more closely with international standards. Nevertheless, risks for banks operating in Argentina are very high, given a weak regulatory track record, historically low confidence of depositors in the system, and the absence of diversified long-term funding. Deposits in the system exhibited volatility since 2018 with declines in May and especially in August (with a 6% decline in the deposit base in dollars). Also, deposits in domestic currency dropped about 4% and those in foreign currency 12% after the primary elections earlier this month, but considering high levels of liquidity and solvency. In addition, in our opinion, the shallow domestic capital market and limited access to foreign capital markets result in a narrow range of funding sources for banks." BICRA trends S&P said, "We're revising the economic risk trend to stable from negative after incorporation of further impacts of persistent economic malaise and heightened risks of credit losses, mitigated by banks' conservative approach to lending. "In addition, we're revising our industry risk trend to negative from stable, incorporating the potential impact that developments in the sovereign could have on the financial system's funding and its credit profile amid the high levels of liquidity and adequate solvency." CAPEX SA: S&P Cuts Currency Ratings to 'B-', Outlook Neg. --------------------------------------------------------- S&P Global Ratings lowered its local and foreign currency ratings on the following companies to 'B-' from 'B'. The outlook on these ratings is negative: -- Aeropuertos Argentina 2000 S.A.; -- CAPEX S.A.; -- Telecom Argentina S.A.; and -- Transportadora de Gas del Sur S.A. (TGS). S&P said, "The downgrade follows the revision of our transfer and convertibility (T&C) assessment on Argentina to 'B-' from 'B', which in turn follows our sovereign's downgrade to 'SD' from 'B-/B'. The downgrade of the sovereign follows its continued inability to place short-term paper with private-sector market participants, and the government decision to unilaterally extend the maturity of all short-term paper on August 28. "The T&C reflects our perception of the risk of the sovereign interfering with the ability of domestic companies to access, convert, and transfer money abroad, which is essential for the affected companies to service their financial obligations, many of which are denominated in foreign currency, particularly dollars. Aeropuertos Argentina, CAPEX, TGS, and Telecom Argentina bear some form of currency mismatch due to their large proportion of foreign currency denominated debts and a significant portion of the cash flows in domestic currency. A relatively low leverage among these entities and manageable short-term debt maturities, together with considerable cash holdings in foreign currency, mitigate these currency risks. "Nevertheless, we lowered the ratings on these entities in line with the new T&C level, because we continue to believe that none of them would be able to continue honoring their foreign currency obligations under potential restrictions on access to foreign currency and/or restrictions on the ability to transfer money abroad." The outlook on these entities remains negative, reflecting the potential further deterioration in their credit quality because of the worsening business environment, greater volatility in exchange rate, and the consequences of the sovereign's debt restructuring on the domestic economy. Furthermore, either potential restrictions to access and/or transfer funds abroad, because these entities' obligations are mostly cross border, could increase drastically S&P's perception of risk. The latter could result from a deeper recession, along with increasing inflation, which could in turn reduce the companies' ability to generate enough revenue in domestic currency to convert into the needed funds for servicing the foreign currency obligations. S&P could raise the ratings if its perception of the T&C risk diminishes. S&P said, "Most of the Argentine companies we rate now have ratings higher than the foreign currency rating on Argentina. That is because we believe they're likely to remain current on their obligations, while the sovereign proceeds with its debt restructuring. Therefore, we kept the ratings on the companies listed below unchanged. However, the ratings on these entities will remain at the same level as Argentina's T&C assessment, which we identify as the most relevant source of risk to them, in the near future." -- AES Argentina Generacion S.A; -- Compania de Transporte de Energia Electrica en Alta Tension TRANSENER S.A.; -- Compania General de Combustibles S.A.; -- Empresa Distribuidora Y Comercializadora Norte S.A.; -- IRSA Propiedades Comerciales S.A.; -- IRSA Inversiones y Representaciones S.A.; -- Pampa Energia S.A.; -- Petroquimica Comodoro Rivadavia S.A.; -- YPF Energia Electrica S.A.; and YPF S.A. S&P will continue to closely monitor how the further erosion of macroeconomic and credit conditions would impact the cash generation ability and refinancing risk of rated corporate and infrastructure entities in Argentina. COMPANIA LATINOAMERICANA: S&P Cuts ICR to 'CCC', Put on Watch Neg. ------------------------------------------------------------------ On Sept. 2, 2019, S&P Global Ratings lowered its issuer credit and issue-level ratings on Argentine conglomerate CLISA - Compania Latinoamericana de Infraestructura y Servicios S.A. (CLISA) to 'CCC' from 'B-' and placed the ratings on CreditWatch with negative implications. S&P said, "The downgrade reflects our opinion that CLISA faces high refinancing risks over the next 12 months and may not be able to meet its obligations on time if Argentina's (CCC-/Negative/C) economy continues to weaken and the Argentine peso depreciates further. The rating also reflects that we expect CLISA's revenues and cash flows to continue eroding due to Argentina's worsening economic conditions that have reduced CLISA's construction business and increased its debt and interest burden, because 80% of its debts are denominated in foreign currency while its cash flows are in pesos." Additionally, Argentina is two months away from holding presidential elections, and the political scenario is turbulent, with a high chance that the opposition candidate, Mr. Alberto Fernandez, could win the election. The potential change in presidency may slower public spending and make collections more difficult, a real threat to CLISA because roughly 80% of its revenues are with public counterparties. The CreditWatch negative reflects that CLISA has to refinance around ARS3.3 billion ($60 million, including $11 million of factoring transactions with recourse) in the next six months, including a single maturity in October for $17.6 million and interest for about $15 million, amid very negative market conditions for Argentine entities. To meet those obligations, CLISA has $40 million in cash and an internal cash flow generation of between $16.5 million and $17.0 million, which means the company would need to refinance some $15 million in the local market. While under normal conditions such refinancing needs would be fairly manageable, current credit restrictions may force the company to restructure or to temporarily stop paying its obligations. S&P will monitor CLISA's refinancing strategies in the next few weeks and resolve the CreditWatch once it has more clarity on those strategies. Macroeconomic assumptions -- Argentina's real GDP decreases by 2.3% in 2019 and increases 0.5% in 2020, shrinking CLISA's construction backlog by 42% for 2020; -- Inflation of about 55% in 2019 and 35% in 2020, which affects the company's cost structure through price adjustment clauses in contracts that are triggered after a fixed period of time or upon cost increases from 5% to 7%, depending on the contract; and -- A year-end exchange rate of ARS63.0 to $1 in 2019 and ARS75.0 to $1 in 2020, generating financial losses due to foreign currency variations in CLISA's dollar denominated-debt. Company-specific assumptions -- The construction business (which contributed 40% of EBITDA in the six months ended in June 30, 2019) will have revenues of about ARS21.6 billion in 2019 and ARS16.8 billion in 2020, while S&P assumes EBITDA margins of 8%-10%, supported by a backlog that approached $18.12 billion as of June 30, 2019; -- At the waste management business (50% of consolidated EBITDA), S&P expects revenues of about ARS17.7 billion in 2019 and ARS24.0 billion in 2020, while it assumes EBITDA margins of 20%-21%; -- Stable EBITDA margin of 7% in CLISA's transportation division (5% of consolidated EBITDA). S&P assumes the concession will terminated in March 2020; -- The water distribution unit (5% of consolidated EBITDA) to increase revenues to about ARS3.2 billion in 2019 and ARS4.5 billion in 2020 with an EBITDA margin of 11%, mainly due to tariff adjustments and a recent update of the company's revenue base because of a cadastral survey; -- Capital expenditures (capex) of approximately ARS800 million in 2019 and ARS600 million to ARS650 million in 2020; -- Adjusted financial debt of ARS25.3 billion in 2019 and ARS28.8 billion in 2020, which includes about ARS1.5 billion from fiscal liabilities (tax moratorium); -- Interest payments increase to about ARS3.2 billion per year, mainly due to higher peso depreciation and higher interest rates under Argentina's struggling economy; and -- No dividend payments in the next two years. In S&P's base-case scenario, it expects the following credit figures and metrics in the next two years: -- Consolidated EBITDA margin of 14%-15%; -- Debt to EBITDA of 3.5x-4.5x; -- Funds from operations (FFO) to debt of 4%-9%; and -- Negative free operating cash flow (FOCF) to debt of about 2.5% in 2019 and turning slightly positive in 2020. S&P said, "We assess CLISA's liquidity as weak, under our assumption that the company will face cash shortfalls in the next 12 months. Additionally, we believe the company may encounter delays in collection, and financing alternatives may narrow in the future due to sluggish economic conditions in Argentina." Also, the company may not be able to comply with financial covenants that mandate leverage ratios below 3.5x for net debt to EBITDA and coverage ratios above 2.0x for EBITDA to net interest expense, further limiting its financial flexibility to incur new debt. Moreover, exposure to currency fluctuations and the lack of hedges represent a high risk, given that 80% of CLISA's financial obligations are denominated in foreign currency, mainly the senior unsecured bond due in 2023. Principal Liquidity Sources: -- Cash and liquid investment sources of ARS2.4 billion as of June 30, 2019 (excluding restricted cash held at Aguas Cordobesas subsidiary that operates drinking water supply services); and -- FFO of between ARS1.7 billion and ARS1.8 billion in the next 12 months. Principal Liquidity Uses: -- Debt amortization of ARS5.8 billion (including ARS2.9 billon of factoring transactions with recourse) in the next 12 months; -- Working capital needs approaching ARS800 million-ARS900 million in the next 12 months; -- Capex of ARS300 million-ARS400 million in the next 12 months; and -- No dividend payments in the next 12 months. CLISA was in compliance with all applicable covenants as of June 30, 2019. However, we believe the company may not be able to comply with financial covenants over the next 12 months. CLISA is subject to financial covenants that limit its ability to incur new debt if the EBITDA to net interest expense ratio is below 2.0x or net debt to EBITDA is above 3.5x. Based on our projections, the EBITDA interest coverage ratio will stay above the limit, although given the company's currency mismatch the ratio is highly sensitive to foreign exchange rate variations, reducing financial flexibility. =========== B R A Z I L =========== BRAZIL: Oil and Natural Gas Production Increased in July -------------------------------------------------------- Xiu Ying at Rio Times Online reports that the National Agency of Petroleum, Natural Gas, and Biofuels (ANP) released information on September 2nd, that the production of oil and natural gas increased in July compared to the previous month and the same period last year. Oil production was 2.775 million barrels per day (bbl/d), up 8.5 percent compared to June and 7.8 percent compared to July 2018, according to Rio Times Online. A total of 124 million cubic meters of natural gas were produced per day (m3/d), up 11.7 percent over the previous month and 7.1 percent over July 2018, the report notes. Rio Times says Oil and gas production totalled 3.556 million barrels of oil equivalent per day (boe/d), 61.4 percent of which (1.732 million boe/d) came from offshore pre-salt fields. As reported in the Troubled Company Reporter-Latin America on May 27, 2019, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. BRAZIL: Over 5.4MM People Depend on Income from MEI Companies ------------------------------------------------------------- Richard Mann at Rio Times Online reports that the income obtained as an individual micro-entrepreneur (MEI) is the only source of resources for 1.7 million families, as per the 6th MEI Profile survey, conducted by the Brazilian Micro and Small Business Support Service (Sebrae). According to the survey, this means that 5.4 million people in Brazil, considering four people per family, depend on the income of a MEI, the report notes. Rio Times notes that according to the data, 61 percent of all registered MEI's were were attracted by the benefits of registration (having a formal company, the possibility of issuing invoices, being able to make cheaper purchases), 25 percent because of social security benefits, and 14 percent for other reasons. As reported in the Troubled Company Reporter-Latin America on May 27, 2019, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. BRAZIL: Private Pension Investments Have not Grown Since 2016 ------------------------------------------------------------- Lachlan Williams at Rio Times Online reports that the progress of the welfare reform, that has as one of its changes the reduction in the value of retirement pensions, did not serve to elevate the number of Brazilians who invest in private welfare plans. Rio Times Online notes that there are about 13 million investors in private plans, the same number as in 2016, according to Fenaprevi. Experts emphasize that everyone should have resources to save, but this does not happen because financial education is low and also because of the economy, notes the report. Since 2015, the crisis has led people to have to withdraw money instead of saving, the report adds. As reported in the Troubled Company Reporter-Latin America on May 27, 2019, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =============== C O L O M B I A =============== COLOMBIA: To Get $15MM IMF Loan to Strengthen Public Sector Mgmt. ----------------------------------------------------------------- Colombia will advance in the modernization of public management through the implementation of an innovative Government Center (Smart Delivery Unit) that will incorporate cutting-edge technologies to support evidence-based decision-making processes with a $15 million loan approved by the Inter-American Development Bank (IDB) The project will contribute to improve the effectiveness in managing government priorities by strengthening the planning, monitoring and evaluation capacities of the central government. Additionally, it is expected to have a positive impact on the provision of priority public goods and services for the citizens of Colombia. This program marks a milestone in the Government Centers initiative as it is the first IDB loan focused exclusively on the implementation of Delivery units. The program complements the traditional model of the Government Center (CoG) with the incorporation of sophisticated cutting-edge technologies such as artificial intelligence that will generate data and project scenarios in order to support timely decision-making in those strategic programs for the country. The project will be directly managed by the Presidency of the Republic of Colombia, which through this program will acquire strategic information and processes for decision-making, and the public sector institutions. The IDB loan has a repayment term of 15 years, a grace period of 15 years and an interest rate based on LIBOR. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Footwear -6.5% Sag Leads Free Zones Stumble --------------------------------------------------------------- Dominican Today reports that free zone activity stumbled -1.1% in the first half of the year, after the value of their exported products decreased -0.2%, to close at US$3.1 billion. "The result contrasts with the jump this sector took last year. In the first half of 2018, free zones had grown 10.4%," the Central Bank said on its website, according to Dominican Today. "The highest incidence of the fall registered in the first half of the year has focused on sectors that are quite representative of the activity, such as textiles, footwear and pharmaceutical and medical equipment, which account for half of the exports from free zones." In the case of footwear, the report said the drop in shipments abroad was -6.5%, from US$174.4 million in the first half of 2018 to US$163 million in the first half of 2019, the report relays. "Meanwhile, shipments of medical equipment fell -2.4% in one year, from US$749.3 million to 731.3 million between 2018 and 2019, while shipments of textile apparel abroad fell -0.8%, from about US$530.9 million in the first half of last year to US$526.7 million in the same period this year, the report adds. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). ================= N I C A R A G U A ================= NICARAGUA: Unemployment, High Cost of Living are Main Problems -------------------------------------------------------------- EFE News reports that unemployment, the high cost of living and the political crisis are Nicaragua's main problems as identified by 80.2 percent of its citizens, according to a survey published Sept. 2. The study by the Nicaraguan firm M&R Consultants indicates that 31.7 percent of those questioned believe that unemployment is the biggest problem facing the country, according to EFE News. As reported in the Troubled Company Reporter Latin America on Jan. 29, 2019, Moody's Investors Service has changed the outlook to negative from stable on the Government of Nicaragua's long-term issuer ratings and affirmed the ratings at B2. ===================== P U E R T O R I C O ===================== SEARS HOLDINGS: As Fees Reach $200M, Suppliers Seek a Stop ---------------------------------------------------------- A group of creditors of Sears Holdings Corp. is asking the bankruptcy court to halt payments to the law firms and financial advisers of Sears and the official creditors' committee. Suppliers of the Debtors -- namely, Mien Co. Ltd., Helen Andrews, Strong Progress Garment Company, Ltd., Samil Solutions, Shanghai Fochier, Purcell Murray, A&A HK Industrial, Mingle Fashion, want the Court to stop payments to the advisors until and unless the Debtors establish "administrative insolvency" and all administrative claims are reconciled. Since the beginning of this case, retained professionals have billed $161.4 million in fees and $6.395 million of expenses. Of that amount, $130.1 million plus expenses of $3.809 million have already been approved on an interim basis per the Court's order of June 28, 2019. The professionals recently filed 14 more fee applications, requesting more than $31.31 million in professional fees and $2.586 million of expenses. In other words, close to $200 million in professional fees and expenses have been incurred in these cases. Additionally, the Court's orders dated Nov. 30, 2018 and Dec. 28, 2018 are unclear as to the amount of the cap on the carve-out for these professional fees. Unlike other cases where carve-outs are from a secured creditor's collateral, the funds in this carve-out are directly impacting the recovery of all claimants, including all similarly situated 503(b) administrative claimants, as well general unsecured creditors. The Objecting Parties request that no further professional fees should be paid at this time, especially since there has been no showing that the estate is administratively solvent. "In fact, to the contrary, what we do know at this point is it appears that the estate may in fact be administratively insolvent," says Joseph E. Sarachek, counsel to the Objecting parties. "Based on the clear language of the Code, all administrative expense claims under section 503(b) of the Code are of the same priority and shall be paid pro rata." "If the Debtors fail to establish administrative solvency, and this case is ultimately converted to one under Chapter 7, then professionals' fees approved on a final basis subsequent to the conversion may have priority over the Chapter 11 503(b) claims. As a result, regardless of the language of the Carve-out, until the Debtors establish administrative solvency and reconcile administrative claims, there should be no additional payments made by the estate to estate professionals." Mien Co. Ltd., et al.'s attorneys: THE SARACHEK LAW FIRM Joseph E. Sarachek 101 Park Avenue, 27th Floor New York, NY 10178 Telephone: (646) 517-5420 Facsimile: (646) 861-4950 E-mail: joe@saracheklawfirm.com Pearl Global Industries, Ltd., the Debtors' largest vendor in India and the world's third largest supplier of women's apparel, filed a joinder to the objection. "Vendors who supplied goods post-petition, as well as Sec. 503(b)(9) claimants, are no less deserving of payment than the professionals. Yet, the Debtors are no longer paying administrative claims even if there is no objection to such claims," said attorneys for Pearl Global, which asserts a Sec. 503 administrative claim of $1.5 million. Attorneys for Pearl Global: David H. Wander, Esq. DAVIDOFF HUTCHER & CITRON LLP 605 Third Avenue New York, NY 10158 Tel: (212) 557-7200 E-mail: dhw@dhclegal.com Niagara Bottling, LLC, which has administrative expense claims totaling $257,600 on account of bottled water products supplied to the Debtors, also filed a joinder to the objection. Niagara Bottling's attorneys: Caroline R. Djang, Esq. BEST BEST & KRIEGER LLP 18101 Von Karman Ave., Suite 1000 Irvine, CA 92612 Telephone: (949) 263-2600 E-mail: caroline.djang@bbklaw.com About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as investment banker; DLA Piper LLP as real estate advisor; and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors, including the Pension Benefit Guaranty Corp., and landlord Simon Property Group, L.P., to serve on the official committee of unsecured creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel; FTI Consulting as financial advisor; and Houlihan Lokey Capital, Inc. as investment banker. The U.S. Trustee for Region 2 on July 9, 2019, appointed five retirees to serve on the committee representing retirees with life insurance benefits in the Chapter 11 cases. TECNICENTROS MUNDIAL: Hires Luis Carrasquillo as Accountant ----------------------------------------------------------- Tecnicentros Mundial, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ CPA Luis Carrasquillo & CO. P.S.C., as financial consultant to the Debtor. Tecnicentros Mundial requires Luis Carrasquillo to: -- assist the Debtor in the financial restructuring of its affairs by providing advice in strategic planning; -- prepare the Debtor's Plan of Reorganization, Disclosure Statement and business plan; and -- participate in negotiations with the Debtor's creditors. Luis Carrasquillo will be paid at these hourly rates: Partners $175 Senior CPAs $85 to $125 Administrative Support $45 Luis Carrasquillo will be paid a retainer in the amount of $20,000. Luis Carrasquillo will also be reimbursed for reasonable out-of-pocket expenses incurred. Luis R. Carrasquillo, a partner at CPA Luis R. Carrasquillo & Co., assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Luis Carrasquillo can be reached at: Luis R. Carrasquillo CPA LUIS R. CARRASQUILLO & CO., P.S.C. 28th Street, TI-26 Caguas, PR 00725 Tel: (787) 746-4555 Fax: (787) 746-4564 E-mail: luis@cpacarrasquillo.com About Tecnicentros Mundial Based in San Juan, Puerto Rico, Tecnicentros Mundial, Inc., a distributor of tires and tubes for passenger and commercial vehicles, filed a voluntary Chapter 11 petition (Bankr. D.P.R. Case No. 19-04471) on Aug. 6, 2019. In the petition signed by Jacklin Tirado Rivera, vice-president, the Debtor had total assets of $3,459,283 and total liabilities of $8,891,276. The case is assigned to Hon. Enrique S. Lamoutte Inclan. William Vidal Carvajal, Esq., in San Juan, Puerto Rico, is the Debtor's counsel. Luis Carrasquillo, CPA, is the financial advisor. TECNICENTROS MUNDIAL: Hires William Vidal as Counsel ---------------------------------------------------- Tecnicentros Mundial, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ William Vidal Carvajal Law Offices, as counsel to the Debtor. Tecnicentros Mundial requires William Vidal to represent and provide legal services to the Debtor in the Chapter 11 bankruptcy proceedings. William Vidal will be paid at the hourly rate of $300. William Vidal will also be reimbursed for reasonable out-of-pocket expenses incurred. William Vidal Carvajal, partner of William Vidal Carvajal Law Offices, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their/its estates. William Vidal can be reached at: William Vidal Carvajal, Esq. WILLIAM VIDAL CARVAJAL LAW OFFICES MCS Plaza, Suite 801 255 Ponce De Leon Ave Suite 801 San Juan, PR 00918 Tel: (787) 764-6867 Fax: (787) 764-6496 E-mail: william.m.vidal@gmail.com About Tecnicentros Mundial Based in San Juan, Puerto Rico, Tecnicentros Mundial, Inc., a distributor of tires and tubes for passenger and commercial vehicles, filed a voluntary Chapter 11 petition (Bankr. D.P.R. Case No. 19-04471) on Aug. 6, 2019. In the petition signed by Jacklin Tirado Rivera, vice-president, the Debtor had total assets of $3,459,283 and total liabilities of $8,891,276. The case is assigned to Hon. Enrique S. Lamoutte Inclan. William Vidal Carvajal, Esq., in San Juan, Puerto Rico, is the Debtor's counsel. Luis Carrasquillo, CPA, is the financial advisor. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Crude Exports Fall to Lowest Level in 2019 ------------------------------------------------------------------ Marianna Parraga and Mircely Guanipa at Reuters report that overall exports of crude and refined products by state-run oil company Petroleos de Venezuela (PDVSA) and its joint ventures declined last month to some 770,000 barrels per day (bpd) from 992,565 bpd in July and 1.13 million bpd in June, according to revised data. Reuters says Venezuela's oil exports fell in August to their lowest level in 2019, internal reports and Refinitiv Eikon data showed, hurt by a halt in purchases by the nation's second largest customer, China National Petroleum Corp (CNPC), following tougher U.S. sanctions. Last month, China's state-run CNPC canceled loadings of Venezuelan crude it had scheduled for August, after Washington issued an executive order that froze Venezuelan government property on U.S. soil and warned foreign companies they also could face sanctions for doing business with PDVSA, according to Reuters. PDVSA is responsible for delivering oil to Chinese firms to repay billions of dollars loaned to Venezuela. The United States has been ratcheting up efforts to oust President Nicolas Maduro, whose 2018 re-election is deemed illegitimate by most western nations, the report notes. The drop comes even as a number of shipments are moving on tankers that are not turning on their signaling transponders while approaching or leaving Venezuelan waters, according to Refinitiv Eikon vessel tracking data, the report relays. This has made it difficult to fully measure exports and confirm their delivery destination, the report discloses. Since the suspension, Russia's state-run oil company Rosneft has increased its share of Venezuelan oil, with China as primary destination. Rosneft lifted 65% of PDVSA's total exports in August versus 49% in July, according to internal PDVSA trade reports, the report notes. The second-largest destination of Venezuelan oil last month was Europe, where Spanish oil firm Repsol has continued swapping refined products for Venezuelan crude, the report relays. No. 3 was Cuba, Maduro's closest political ally. Shipments to India, previously a preferred market for Venezuelan crude, fell to a single 1-million-barrel cargo, the data showed, the report discloses. Silent Running Between June and July, very large crude carrier (VLCC) Marina M stopped signaling as it approached to pick up a cargo at Venezuela's Jose terminal, according to independent service TankerTrackers.com and satellite images by Planet Labs Inc seen by Reuters. The Malta-flagged tanker loaded Venezuelan crude on July 12. Its transponder was picked up after completing a trip to Sikka port in India, the report relays. The vessel is now waiting to discharge, according to Refinitiv Eikon. "It was a big satellite data gap, geographically speaking," said Samir Madani, a cofounder of TankerTrackers.com, the report discloses. International law requires ships at sea to have a satellite tracking device on board. However, a ships' master has discretion to turn off the device on safety grounds with the permission of the vessel's flag state, the report notes. From August through early September, two other vessels disappeared from vessel tracking while in Venezuelan waters. Tanker Patmos I stopped signaling its location while performing a trans-shipment maneuver at Amuay port in Venezuela, and the Princess Mary did the same while loading at Jose port, according to vessel tracking data. Both have a Liberia flag, the report says. The Marina M and the Princess Mary were chartered by Rosneft. Tipco Asphalt chartered the Patmos I, according to the PDVSA's documents, the report adds. About Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. Standard and Poor's long- and short-term foreign currency sovereign credit ratings for Venezuela stands at 'SD/D' (November 2017). S&P's local currency sovereign credit ratings on the other hand are 'CCC-/C'. The May 2018 outlook on the long-term local currency sovereign credit rating is negative, reflecting S&P's view that the sovereign could miss a payment on its outstanding local currency debt obligations or advance a distressed debt exchange operation, equivalent to default. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook (March 2018). Fitch's long term issuer default rating for Venezuela was last set at RD (2017) and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* 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-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2019. All rights reserved. ISSN 1529-2746. 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 Latin America subscription rate is US$775 per half-year, delivered via e-mail. 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