/raid1/www/Hosts/bankrupt/TCR_Public/151120.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 20, 2015, Vol. 19, No. 324
Headlines
AC I INV: Has Until Dec. 4 to Propose Chapter 11 Plan
ALLY FINANCIAL: DBRS Assigns BB Rating on $750MM Subordinated Debt
ALON USA: Moody's Cuts Corporate Family Rating to 'B2'
AMERICAN AGENCIES: Taps Fiddler Gonzalez as Tax Attorney
AMERICAN AGENCIES: Taps Ismael Isern Suarez as Appraiser
AMERICAN SPECTRUM: Motion to Stay Texas Action Denied
ARANTEE GROUP: Case Summary & 13 Largest Unsecured Creditors
ARCH COAL: Bondholders Hire Brown Rudnick
ATLANTIC CITY, NJ: Mayor Warns of Insolvency
ATNA RESOURCES: Case Summary & 30 Largest Unsecured Creditors
ATNA RESOURCES: Files Voluntary Chapter 11 Bankruptcy Petition
ATNA RESOURCES: Seeks Joint Administration of Cases
AUTOPARTS HOLDINGS: Moody's Cuts Corporate Family Rating to Caa2
BAHA MAR: Cooley Claims Developer Stiffed on $300,000 Fees
BAKERCORP: S&P Alters Outlook to Neg. on Weak Market Conditions
BIOSENTA INC: Files Restructuring Proposal to Creditors
BOOMERANG TUBE: Judge Sides Unsecured Creditors, Rejects Plan
BOREAL WATER: Terminates Public Accountant Due to Disagreements
BRANTLEY LAND: SB&T Seeks to Dismiss Ch. 11 Case
BROCADE COMMUNICATIONS: S&P Affirms 'BB+' CCR, Outlook Stable
BUNKERS INTERNATIONAL: Committee Taps Greenberg Traurig as Counsel
BUNKERS INTERNATIONAL: Panel Taps GlassRatner as Financial Advisor
CAESARS ENTERTAINMENT: Judge Declines to Set Hearing on Disclosure
CAESARS ENTERTAINMENT: Parties Wants Asset Transfers Resolved
CALEDONIAN BANK: SEC Assailed by Judge for Triggering Collapse
CALIFORNIA MIDAS: High Court Won't Hear $11.7M Alter-Ego Tax Case
CANCER GENETICS: Incurs $5.21 Million Net Loss in Third Quarter
CENTURION VENTURE: Voluntary Chapter 11 Case Summary
CHELSEA CAPITAL: Case Summary & 2 Largest Unsecured Creditors
CONAGRA FOODS: Fitch Ratings Unaffected by Lamb Weston Spin-Off
CURTIS JAMES JACKSON: Garvey Schubert Says $75M Suit Belongs in NY
DANIEL LEE RITZ: Supreme Court Will Hear Bankruptcy Fraud Case
DETROIT COMMUNITY: S&P Removes 'B-' Rating on 2005 Revenue Bonds
DEWEY & LEBOUEF: Trustee Settles Legal Fees Fight with PE Firm LCN
DI PURCHASER: Moody's Cuts Corporate Family Rating to Caa1
DIAMOND RESORTS: S&P Affirms 'B+' CCR on Upsized Term Loan
DJO GLOBAL: S&P Affirms 'B-' CCR & Revises Outlook to Stable
DOMUM LOCIS: Kilroy Settles Disputes With Lloyds TSB Bank
DRAFTKINGS INC: NY AG Schneiderman Seeks Preliminary Injunction
EAST MAIN STREET: Case Summary & 16 Largest Unsecured Creditors
ELBIT IMAGING: InSightec Investigates Use of MR Guided Ultrasound
ENERGY FUTURE: NextEra Statement on Oncor Purchase Off Docket
ENTERGY RHODE: S&P Assigns Prelim. 'BB' Rating on $325MM Loan
ESTERLINA VINEYARDS: Taps Eric Sterling as Responsible Person
ESTERLITA CORTES TAPANG: Court OKs Interest Rate Cram Down
EVANS & SUTHERLAND: Posts $921,000 Net Income for Third Quarter
FAIRCHILD SEMICONDUCTOR: S&P Puts 'BB+' CCR on Watch Negative
FANDUEL INC: NY AG Schneiderman Seeks Preliminary Injunction
FOREST STREET BUILDING: Voluntary Chapter 11 Case Summary
GARY REINERT SR: Dismissal of Ch. 11 Case Upheld
GENAERA CORP: Court Denies Suit for UnderValuing Company Assets
GENESYS RESEARCH: Amends List of Unsecured Creditors
GENESYS RESEARCH: Chapter 11 Trustee Taps Murphy & King as Counsel
GENESYS RESEARCH: DOE Says Use Federal Grant Funds Doesn't Have OK
GENESYS RESEARCH: Mintz Levin Okayed as Special IP Counsel
GRAPEVINE DIAMOND: Judgment in Suit vs. City Bank Affirmed
GUNBOAT INTERNATIONAL: Case Summary & 20 Top Unsecured Creditors
HARGREAVES ASSOCIATES: Case Summary & 20 Top Unsecured Creditors
HII TECHNOLOGIES: Ad Hoc Committee Taps Wist Holland as Co-Counsel
HOWREY LLP: Conversion to Ch. 7 Likely Over Rent Claims Impasse
INTERNATIONAL TECHNICAL: Case Summary & 20 Top Unsecured Creditors
INTERNATIONAL TECHNICAL: Files for Bankruptcy Amid Loan Default
INTERNATIONAL TECHNICAL: Hires Osborn Maledon as Counsel
INTERNATIONAL TECHNICAL: Section 341 Meeting Set for Dec. 22
INTERNATIONAL TECHNICAL: Wants to Use BofA's Cash Collateral
ISOLA USA: S&P Lowers CCR to 'CCC+', Outlook Negative
LTR HOLDCO: S&P Lowers Corp. Credit Rating to 'B-', Outlook Stable
MAIDEN HOLDINGS: S&P Assigns 'BB' Rating on New Preferred Shares
MEMORIAL PRODUCTION: S&P Lowers CCR to 'B', Outlook Stable
NEWALTA CORP: Moody's Cuts Corporate Family Rating to 'B1'
NORTH AMERICAN TUNGSTEN: Stay of CCAA Proceedings Extended
O.W. BUNKER: Court Set to Hear NuStar's Bid to Convert Cases
OASIS OUTSOURCING: S&P Assigns 'B' Rating on $240MM 1st Lien Loan
OHLONE I LLC: Case Summary & 5 Largest Unsecured Creditors
ON SEMICONDUCTOR: S&P Puts 'BB+' CCR on CreditWatch Negative
PACIFIC EXPLORATION: Fitch Cuts LT Issuer Default Ratings to 'B-'
PARALLEL ENERGY: Gets Approval to Tap Part of $9M DIP Financing
POSTROCK ENERGY: Could Default After Borrowing Base Cut
PR EXHIBITS: Case Summary & 9 Largest Unsecured Creditors
PRIMESTAR LENDING: Case Summary & 8 Largest Unsecured Creditors
QUICKSILVER RESOURCES: Creditors Sue Lender Group Over Liens
QUIKSILVER INC: Wants Plan to Retain Key Employees Okayed
QUIRKY INC: Gets Final Approval to Use Cash Collateral
RONALD WILLIAM DEMASI: Wins Favorable Judgment in Gulf Coast Suit
ROTONDO WEIRICH: RW Transport Taps Maschmeyer Karalis as Counsel
ROTONDO WEIRICH: Seeks Nod to Auction RWE/RWI Assets
ROTONDO WEIRICH: Seeks to Sell Misc. Personal Property at Auction
ROTONDO WEIRICH: Taps Comly and CIAI as Auctioneers
SALLY BEAUTY: S&P Assigns BB+ Rating on $750MM Sr. Unsecured Notes
SALLY HOLDINGS: Moody's Rates New $750MM Unsecured Notes 'Ba2'
SAMSON RESOURCES: Departing CEO Barred from $760K Bonus
SEARS HOLDINGS: Fitch Affirms 'CC' Issuer Default Rating
SK FOODS: Distribution of Escrow Funds in Class Suit Ordered
SKOPOS AUTO 2015-2: DBRS Finalizes (P)B(sf) Rating on Cl. D Debt
SKYSTAR BIO-PHARMA: Receives Nasdaq Listing Non-Compliance Notice
ST. JOHN'S RIVERSIDE: S&P Raises Rating on Revenue Debt to BB-
STACY L. DANLEY II: Appeal from Order Staying Suit Denied
STERLING MID-HOLDINGS: S&P Affirms 'B-' ICR, Outlook Negative
SUNOCO LP: S&P Affirms 'BB' CCR & Revises Outlook to Negative
SYNOVUS FINANCIAL: Fitch Raises Subordinated Debt Rating to 'BB+'
TERRAFORM POWER: S&P Lowers CCR to 'B+', Outlook Negative
TRUMP ENTERTAINMENT: Atlantic City Wants to Collect on $12M Taxes
UCI INT'L: Moody's Cuts Corporate Family Rating to 'Caa3'
UNIVITA HEALTH: Judge OKs $2.5M Asset Sale to Integrated Home
US CELLULAR: Moody's Rates Proposed Unsecured Notes Offering Ba1
US CELLULAR: S&P Rates Proposed Sr. Unsecured Notes 'BB'
VALEANT PHARMA: Creditors Spooked by Possibility of Revenue Squeeze
VERSO PAPER: Moody's Lowers CFR to 'Caa2' Over Default Concerns
WALTER ENERGY: Fails to Pay Production Proceeds to Dominion
WIRECO WORLDGROUP: Moody's Cuts Corporate Family Rating to 'Caa1'
XD PLASTICS: Fitch Cuts Long-Term Issuer Default Rating to 'B+'
[*] Akerman Launches National Fraud and Recovery Practice Group
[*] Arnstein & Lehr's Tampa Attorneys Decamp to Burr & Forman
[*] Attorney Faces Up to 5 Years on Charge of Bankruptcy Fraud
[*] Distressed Exchanges Continue to Rise, Moody's Says
[*] Global Regulators Finish Bank 'Bail-In' Proposal
[*] Moody's: Global Spec.-Grade Corp. Default Rate Rose in October
[*] Moody's: Ongoing Midland Litigation Poses Risks to Lenders
[^] BOOK REVIEW: Landmarks in Medicine - Laity Lectures
*********
AC I INV: Has Until Dec. 4 to Propose Chapter 11 Plan
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended AC I Inv Manahawkin LLC, et al.'s exclusive periods to (i)
file a chapter 11 plan until Dec. 4, 2015; and (ii) solicit
acceptances for that plan until Feb. 4, 2016.
As reported by The Troubled Company Reporter on Oct. 8, 2015, this
was the Debtors' sixth request for an extension.
The Debtors submitted they should be granted the requested
extensions of the Exclusive Periods so that they will have
sufficient time to determine an appropriate exit scenario in each
of their cases and, if it is determined that they will proceed by
way of proposed plans of liquidation, be able to confirm a plan of
liquidation based upon the facts and circumstances as set forth
herein.
About AC I Inv Manahawkin
AC I Inv Manahawkin LLC, AC I Manahawkin Mezz LLC and AC I
Manahawkin LLC filed separate Chapter 11 bankruptcy petitions
(Bankr. S.D.N.Y. Case Nos. 14-22791, 14-22792 and 14-22793) on
June 4, 2014. The petitions were signed by David Goldwasser, of
GC Realty Advisors LLC, managing member. The Debtors estimated
assets of $50 million to $100 million and debts of $0 to $50
million. Robinson Brog Leinwand Greene Genovese & Gluck, P.C.,
serves as the Debtors' counsel. Judge Robert D. Drain presides
over the cases.
Affiliates of AC I Inv., et al., have pending bankruptcy cases
before Judge Drain. NY Affordable Housing Albany Assocs. LLC
sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 13-20007)
on July 26, 2013. First Bronx LLC sought bankruptcy protection
(Bankr. S.D.N.Y. Case NO. 14-22047) on Jan. 13, 2014. Ollie Allen
Holding Company LLC sought bankruptcy (Case NO. 14-22204) on
Feb. 18, 2014.
U.S. Trustee was unable to form an official unsecured creditors'
committee.
ALLY FINANCIAL: DBRS Assigns BB Rating on $750MM Subordinated Debt
------------------------------------------------------------------
DBRS, Inc. assigned a Subordinated Debt rating of BB to the $750
million 5.750% Subordinated Debt issuance due November 2025 (the
Notes) of Ally Financial Inc. The trend on the Notes is Positive.
The proceeds from the Notes will be primarily used for the
redemption of the Company's Fixed Rate Cumulative Perpetual
Preferred Shares, Series G.
The Positive trend reflects DBRS's expectations that Ally's
financial performance will continue to improve supported by sound
U.S. auto sales volumes, continued rationalization of the cost
base, and additional actions by the Company to address legacy high
cost debt. DBRS also sees earnings benefiting from the Company's
continuing shift towards a more bank-centric model with increasing
origination volumes financed by Ally Bank's (the Bank) low-cost
deposit base. The Positive trend also considers that Ally's broad
product offering, deep industry knowledge and dealer-focused
business model will allow the Company to successfully execute on
its strategy of growing non-GM/Chrysler origination volumes.
Nevertheless, should the expansion into these growth channels and
new products materially alter the risk profile of the balance
sheet, positive ratings momentum could stall or potentially
reverse. Moreover, the resiliency of the retail direct deposit base
in a rising rate, or otherwise disrupted, environment will be a key
consideration for the ratings over the near-to-medium-term.
ALON USA: Moody's Cuts Corporate Family Rating to 'B2'
------------------------------------------------------
Moody's Investors Service downgraded Alon USA Partners, LP's (ALDW)
Corporate Family Rating (CFR) to B2 from B1. The B2 CFR reflects
ALDW's asset concentration, scale and business profile. The rating
also considers our expectation that ALDW's parent Alon USA Energy,
Inc. will not complete the drop down of its Krotz Springs refinery
into ALDW in the near-term as ALDW pursues organic growth
opportunities. Moody's also withdrew the B2 rating on ALDW's
previously proposed senior notes due 2022. The rating outlook is
stable.
The following summarizes the rating actions.
Alon USA Partners, LP
Downgrades:
-- Corporate Family Rating -- B2 from B1
-- Probability of Default Rating -- B2-PD from B1-PD
Ratings Affirmed
-- Sr Sec Term Loan due 2018 -- B2(LGD4)
-- Speculative Grade Liquidity Rating -- SGL-3
Ratings Withdrawn:
-- $450 million Senior Notes due 2022 -- B2(LGD4)
-- Outlook - Stable
RATINGS RATIONALE
ALDW's B2 CFR reflects the company's risk as a single site refiner,
modest scale, little asset diversification, the inherent volatility
and capital intensity of the refining sector, and the high payouts
associated with its MLP corporate structure. The company's modest
scale and lack of diverse sources of cash flow are limiting factors
for the rating, despite its low leverage and robust profit margins.
ALDW's parent had announced its intention to transfer its Krotz
Springs refinery to ALDW, but subsequently opted not to move
forward with the transaction. Another refinery would provide
additional scale, diversification and a modest amount of protection
against the risk of unplanned downtime or operational issues at a
single refinery.
ALDW's high payout MLP corporate structure takes out excess cash on
a regular basis, preventing the buildup of large cash balances that
have traditionally been used by refiners as reserve cushions in the
inherently volatile refining business for both growth and
regulatory spending during sector downturns. However, unlike
traditional MLPs, Moody's believes Alon USA Partners, as an
independent refiner, is likely to pursue a modest growth profile
and maintain moderate financial leverage.
The rating is supported by the Big Spring refinery's operational
track record over the past five years and favorable geographic
location in the Permian Basin. ALDW's Big Spring refinery benefits
from access to local discounted West Texas Sour (WTS) crude and
West Texas Intermediate (WTI) crude and has generated strong profit
margins.
ALDW's SGL-3 Speculative Grade Liquidity Rating reflects its
adequate liquidity profile. Although ALDW's liquidity profile is
constrained by the volatility and cyclicality of the refining
business and its MLP business model, Moody's expects that ALDW will
have adequate cash flow to cover its growth capital expenditures in
2016. As of September 30, 2015, ALDW had $135 million of cash on
its balance sheet. Additionally, the company has a $240 million
secured borrowing base revolving credit facility which matures in
May 2019. We expect ALDW will remain in compliance with its
financial covenants with meaningful headroom, thus allowing
accessibility to its revolving credit facility.
Alon USA Partners' stable outlook assumes that it will continue to
demonstrate consistent operating performance and remain moderately
leveraged. The stable outlook also assumes that any potential
acquisition or major growth capital expenditures are adequately
funded with equity.
ALDW's MLP business model, small scale, and asset concentration
limit ratings upside given that any unforeseen prolonged downtime
and the company's high payout model could have a significant impact
on sufficient cash flow to service debt and capital needs. The
rating could be upgraded if ALDW were to acquire additional assets
such as the Krotz Springs refinery that diversified its sources of
cash flow and improved its scale. ALDW's ratings could be
downgraded if leverage rises materially to above 3x debt to EBITDA
or liquidity weakens due to a prolonged period of unplanned
downtime, debt funding of an acquisition, working capital needs,
capital spending requirement or excessive distributions, or a
prolonged period of margin softness.
Alon USA Partners, LP is controlled and majority owned by Alon USA
Energy, Inc., and is headquartered in Dallas, Texas. It operates a
single refinery in Big Spring, Texas with a crude oil throughput
capacity of 73,000 bpd.
AMERICAN AGENCIES: Taps Fiddler Gonzalez as Tax Attorney
--------------------------------------------------------
American Agencies Co. Inc., asks the U.S. Bankruptcy Court for the
District Of Puerto Rico for permission to employ Fiddler, Gonzalez
& Rodriguez, PSC, as tax attorney.
The firm will provide counseling and assessment regarding tax and
law matters.
According to the Debtor, the fees of the firm's personnel are
confidential.
To the best of the Debtor's knowledge, the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
American Agencies Co., Inc. and New Steel, Inc., manufacturers of
steel structures, filed Chapter 11 bankruptcy petitions (Bankr. D.
P.R. Case Nos. 15-07088 and 15-07090, respectively) on Sept. 15,
2015. The petition was signed by Omir Mendez as president.
The Debtors cases are substantive consolidated under Lead Case
15-07088.
C. Conde & Associates represents the Debtors as counsel. Doris
Barroso Vicens, CPA, at RSM ROC & Company, serves as the Debtors'
accountant.
AMERICAN AGENCIES: Taps Ismael Isern Suarez as Appraiser
--------------------------------------------------------
American Agencies Co., Inc., and New Steel, Inc., ask the U.S.
Bankruptcy Court for the District of Puerto Rico for permission to
employ Ismael Isern Suarez from I.S. Appraiser Group, PSC as
appraiser.
Mr. Suarez will perform an appraisal for the Debtor's (i) furniture
and office equipment located at Urb. El Caribe, Sector El Cinco,
1554 Ponce de Leon Avenue, Bo. Monacillos, IN San Juan, Puerto
Rico; and (ii) small tools equipment located at the Debtor's field
office in Carolina, Puerto Rico.
The Debtors will pay flat fee of $3,000,000. Additionally,
appearance at the Court, meeting, etc., will be billed as needed at
the rate of $125.
To the best of the debtors' knowledge, Mr. Suarez is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About American Agencies
American Agencies Co., Inc. and New Steel, Inc., manufacturers of
steel structures, filed Chapter 11 bankruptcy petitions (Bankr. D.
P.R. Case Nos. 15-07088 and 15-07090, respectively) on Sept. 15,
2015. The petition was signed by Omir Mendez as president.
The Debtors cases are substantive consolidated under Lead Case
15-07088.
C. Conde & Associates represents the Debtors as counsel. Doris
Barroso Vicens, CPA, at RSM ROC & Company, serves as the Debtors'
accountant.
AMERICAN SPECTRUM: Motion to Stay Texas Action Denied
-----------------------------------------------------
ASR 2620-2630 Fountainview, LP, Fountain View Park Plaza, LLC, and
ASRP Investments, LLC, filed a motion to lift the automatic stay
and for an order requiring an accounting of funds held in a
segregated account, and for production of documents filed jointly
by American Spectrum Realty, Inc. and non-debtors American Spectrum
Realty Operating Partnership L.P., American Spectrum Realty
Management, LLC, and ASR 2620-2630 Fountainview GP, LLC.
In an Order and Memorandum Decision dated November 5, 2015, which
is available at http://is.gd/sox70sfrom Leagle.com, Judge Scott C.
Clarkson of the United States Bankruptcy Court for the Central
District of California, Santa Ana Division, granted the Motion for
Relief From Stay but only to allow the Texas Action to proceed to
judgment. The Plaintiffs may not setoff against the Debtor's
counterclaims in the Texas Action without further order of the
Court.
The case is In re American Spectrum Realty, Inc., Chapter 11,
Debtor and Debtor in Possesion, CASE NO. 8:15-BK-10721-SC (Bankr.
C.D. Calif.).
American Spectrum Realty Inc., a Maryland Corporation, Debtor,
represented by Jeannie Kim, Esq. -- jkim@winthropcouchot.com --
Winthrop Couchot PC, Peter W. Lianides, Esq. --
plianides@winthropcouchot.com -- Winthrop Couchot PC, Robert E.
Opera, Esq. -- ropera@winthropcouchot.com -- Winthrop Couchot PC.
D&A Daily Mortgage Fund III, LP, Petitioning Creditor, represented
by James C. Bastian Jr, Esq. -- EShulman Hodges & Bastian LLP,
Melissa Davis Lowe, Esq. -- EShulman Hodges & Bastian LLP.
About American Spectrum Realty
American Spectrum Realty, Inc. -- http://www.asrmanagement.com/--
is a real estate investment company that owns, through an operating
partnership, interests in office, industrial/commercial, retail,
self-storage, retail, multi-family properties and undeveloped land
throughout the United States. American Spectrum Management Group,
Inc., a wholly-owned subsidiary of the Company, manages and leases
all properties owned by American Spectrum Realty, Inc. well as for
third-party clients, totaling 7 million square feet in multiple
states. American Spectrum Realty was formed in 2000 and began
publicly trading on the New York Stock Exchange in 2001.
Alleged creditors -- namely, D&A Daily Mortgage Fund III, L.P.,
D&A Semi-Annual Mortgage Fund III, L.P., and D&A Intermediate-Term
Mortgage Fund III, L.P. -- filed an involuntary Chapter 11
petition for American Spectrum in Santa Ana, California, on
Feb. 13, 2015 (Bankr. C.D. Cal. Case No. 15-10721).
The involuntary case was assigned to Judge Scott C. Clarkson.
James C. Bastian, Jr., Esq., and Melissa Davis Lowe, Esq., at
Shulman Hodges & Bastian LLP, in Irvine, California, serve as
counsel to the Petitioning Creditors.
On May 1, 2015, the Court entered an order for relief against the
Debtor under Chapter 11 of the U.S. Code.
American Spectrum has affiliates that have pending bankruptcy
cases. One of them is Verdugo, LLC, a single asset real estate
that filed a Chapter 11 bankruptcy petition (Bank. C.D. Cal. Case
No. 15-10701) on Feb. 12, 2015. Judge Scott C. Clarkson presides
over the case.
American Spectrum disclosed assets of $6,381,000 - $13,381,000 and
liabilities of $6,558,235 as of the Chapter 11 filing.
ARANTEE GROUP: Case Summary & 13 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Arantee Group, LLC
dba 6 Lounge
247 S Meridian St., Ste. 100
Indianapolis, IN 46225
Case No.: 15-09560
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Southern District of Indiana (Indianapolis)
Judge: Hon. Jeffrey J. Graham
Debtor's Counsel: KC Cohen, Esq.
KC COHEN, LAWYER, PC
151 N Delaware St Ste 1106
Indianapolis, IN 46204
Tel: 317-715-1845
Fax: 317-916-0406
Email: kc@esoft-legal.com
Total Assets: $63,479
Total Liabilities: $1.73 million
The petition was signed by Ravi Chopra, managing member.
A list of the Debtor's 13 largest unsecured creditors is available
for free at http://bankrupt.com/misc/insb15-09560.pdf
ARCH COAL: Bondholders Hire Brown Rudnick
-----------------------------------------
Jodi Xu Klein and Laura J. Keller, writing for Bloomberg Brief -
Distress & Bankruptcy, reported that a battle among Arch Coal Inc.
creditors is intensifying as the miner prepares for a potential
bankruptcy filing.
The Bloomberg report related that a group of middle-tier
bondholders hired law firm Brown Rudnick LLP to help protect their
investments as the miner moves toward restructuring its $5.1
billion of debt in court proceedings, according to a person with
knowledge of the matter. The creditors hold the miner's $350
million of 8 percent second-lien bonds, which stand behind
investors that hold $1.9 billion of first-lien loans, said the
person, according to the report.
About Arch Coal
Arch Coal, Inc.'s primary business is the production of thermal
and
metallurgical coal from surface and underground mines located
throughout the United States, for sale to utility, industrial and
steel producers both in the United States and around the world.
The Company currently operates mining complexes in West Virginia,
Maryland, Virginia, Illinois, Wyoming and Colorado.
Arch Coal reported a net loss of $558 million in 2014, a net loss
of $642 million in 2013 and a net loss of $684 million in 2012.
As
of June 30, 2015, the Company had $8 billion in total assets, $6.6
billion in total liabilities and $1.4 billion in total
stockholders' equity.
* * *
The Troubled Company Reporter, on Oct. 29, 2015, reported that
Fitch Ratings has taken the following rating actions on Arch Coal,
Inc. (Arch Coal; NYSE: ACI) in connection with the expiration of
the company's debt exchange offers:
-- Issuer Default Rating (IDR) affirmed at 'C';
-- Senior secured revolving credit facility downgraded to
'CCC-/RR2' from 'B-/RR2';
-- Senior secured term loan downgraded 'CCC-/RR2' from 'B-/RR2';
-- Second lien secured notes affirmed at 'C/RR6';
-- Senior unsecured notes affirmed at 'C/RR6'.
Roughly $5.4 billion in principal amount of debt and commitments
are affected by this action.
The Troubled Company Reporter, on July 8, 2015, reported that
Fitch Ratings has downgraded the Issuer Default Rating of Arch
Coal, Inc. to 'C' from 'CCC'. The downgrade follows Arch Coal's
announcements of exchange offers which Fitch considers Distressed
Debt Exchanges in accordance with Fitch's Distressed Debt Exchange
criteria.
The TCR, on May 6, 2015, reported that Moody's Investors Service
downgraded the corporate family rating of Arch Coal to 'Caa3' from
'Caa1' and the probability default rating to 'Caa3-PD' from
'Caa1-PD'. The downgrade follows the continued stress on the coal
sector, and the resulting deterioration in the company's credit
metrics. At the same time, Moody's downgraded the ratings on the
senior secured term loan and bank revolving facility to 'Caa1'
from
'B2', the second lien notes to Caa3 from Caa1, and all unsecured
notes to 'Ca', from 'Caa2'. Moody's also affirmed the Speculative
Grade Liquidity rating of SGL-3. The outlook is negative.
As reported by the TCR on July 9, 2015, Standard & Poor's Ratings
Services said it lowered its corporate credit rating on Arch Coal
to 'CC' from 'CCC+'. Standard & Poor's Ratings Services said it
lowered its corporate credit rating on Arch Coal to 'CC' from
'CCC+'. The rating action reflects Arch Coal's July 3, 2015,
announcement of a private debt exchange offer for its senior
unsecured debt.
ATLANTIC CITY, NJ: Mayor Warns of Insolvency
--------------------------------------------
Romy Varghese and Terrence Dopp, writing for Bloomberg Brief -
Distress & Bankruptcy, reported that Atlantic City, the distressed
New Jersey gambling hub that's under state oversight, will run out
of money by the end of April if bills aimed at bolstering its
finances aren't enacted, Mayor Don Guardian said.
"Cash flow runs out April 29," Guardian told reporters on Nov. 18
during the New Jersey State League of Municipalities conference in
Atlantic City, according to the report.
Governor Chris Christie conditionally vetoed legislation that would
have redirected a portion of casino revenue to the city, which was
counting on the money to help close a $101 million deficit this
year, the report related. He requested changes that steps up the
state's power over the funds, the report further related.
* * *
The Troubled Company Reporter, on Aug. 5, 2015, reported that
Standard & Poor's Ratings Services said that it lowered its rating
on Atlantic City, N.J.'s general obligation (GO) debt three notches
to 'B' from 'BB' and is keeping it on CreditWatch with negative
implications, where it was placed on Jan. 27, 2015.
"The downgrade reflects continued uncertainty regarding the
long-term fiscal stability and recovery of the city as it responds
to increasing liabilities from tax appeals and an eroding tax
base," said Standard & Poor's credit analyst Timothy Little.
ATNA RESOURCES: Case Summary & 30 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor affiliates filing separate Chapter 11 bankruptcy petitions:
Debtor Case No.
------ --------
Atna Resources, Inc. 15-22848
14142 Denver West Parkway, Suite 250
Golden, CO 80401
Canyon Resources Corporation 15-22849
CR Briggs Corporation 15-22850
CR Montana Corporation 15-22851
CR Kendall Corporation 15-22852
Atna Resources Ltd 15-22853
Horizon Wyoming Uranium, Inc. 15-22854
Type of Business: Mining
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Colorado (Denver)
Debtors' Counsel: Stephen D. Lerner, Esq.
SQUIRE PATTON BOGGS (US) LLP
221 E. Fourth St., #2900
Cincinnati, OH 45202
Tel: 513-361-1200
Fax: 513-361-1201
Email: stephen.lerner@squirepb.com
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
The petition was signed by Rodney D. Gloss, vice president & chief
financial officer.
List of Debtor's 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Small Mine Development, LLC Mining $5,170,107
Keith Jones Contracts
2550 Industrial Way
Battle Mountain, NV 89820
kjones@undergroundmining.com
AFCO Insurance $460,732
4501 College Blvd, Ste. 320
Leawood, KS 66211
Royal Gold Inc. Accounts Payable $224,846
SC Fuels Utilities $193,373
Department of Conservation/OMR Taxes $157,331
Quality Transportation, Inc. Service $123,518
Agreements
Montana Departmet of Taxes $117,446
Environmental Quality
Cutting Edge Supply Accounts $89,895
Payable
Road Machinery LLC Accounts $76,238
Payable
Great Basin Unified Air Taxes $75,000
TOTAL Specialties USA, Inc. Accounts $62,428
Payable
AmeriGas Propane LP Utilities $60,486
Western Mining Services, Inc. Accounts $57,806
Payable
Anthem Blue Cross Blue Sheild Insurance $51,284
GE Betz, Inc. Accounts $48,622
Payable
Alpha Explosives Accounts $47,454
Payable
Elwood Staffing Accounts $46,564
Payable
Thiessen Team USA, Inc. Accounts $45,795
Payable
Maga Trucking and Repair, Inc. Accounts $43,809
Payable
Ramco Accounts $43,500
Payable
Barrick Turquoise Ridge Inc. Mining $42,663
Contracts
Aggreko LLC Accounts $41,299
Payable
GCR Tire Centers Accounts $41,111
Payable
NV Energy Utilities $37,732
213-Praxair Distribution Inc. Accounts $32,631
Payable
Quinn Company Accounts $27,530
Payable
Cashman Equipment Rental Company, LLC Accounts $25,167
Payable
Atlas Copco CMT USA, LLC Accounts $22,564
Payable
Silver State Fire Safety Service Accounts $20,935
Payable
Airgas Specialty Products, Inc Accounts $20,728
Payable
ATNA RESOURCES: Files Voluntary Chapter 11 Bankruptcy Petition
--------------------------------------------------------------
Atna Resources Ltd. on Nov. 19 disclosed that the Company and
certain of its direct and indirect subsidiaries filed voluntary
petitions for relief under chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of Colorado.
Simultaneously with the chapter 11 filings, Atna will seek
ancillary relief in Canada pursuant to the Companies' Creditors
Arrangement Act in the Supreme Court of British Columbia in
Vancouver, Canada.
The Company intends to restructure its business by attempting to
sell assets, resolving various challenges relating to Atna's main
assets, and seeking to modify its capital structure. Atna
continues to be engaged in a process to explore various
restructuring alternatives, and believes that additional time and
resources are necessary to successfully maximize value. In its
restructuring, Atna will be able to explore alternatives to
strengthen the Company, while addressing the challenges Atna has
faced.
"The low gold prices in 2015, the continued indifference in the
market for gold company equities, a lack of capital in the mining
sector, a lack of development capital and operating issues
resulting in a significant shortfall in third quarter gold
production at the Pinson mine, and a depressed market for the sale
of idled mining equipment all negatively impacted the Company's
outlook and led to the Company's current liquidity problems,"
stated James Hesketh, President and CEO.
Atna will continue to operate its business as a "debtor in
possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code
and the orders of the Bankruptcy Court.
The Company and Waterton Precious Metals Fund II Cayman, L.P.,
Atna's pre-petition lender under a secured facility, have
negotiated a consensual use of the Company's cash and have entered
into a debtor-in-possession financing arrangement which, upon
approval by the Bankruptcy Court, will allow the Company to
maintain business-as-usual operations during the restructuring
process. The Company believes its current and anticipated cash
resources will be sufficient to pay its expenses and maintain its
business operations during the pendency of its chapter 11 cases.
As a result the timing of the Company's filing of its voluntary
petition which falls approximately on due date for the Company to
file its financial results and accompanying management discussion
and analysis for the third quarter ended September 30, 2015, the
Company has delayed its third-quarter filing to ensure that, once
the filing is made, it will include complete disclosure of the
Bankruptcy Court proceedings and related events. The Company
expects that, its third-quarter filing will be completed by
November 19, 2015.
The Company has filed customary "First Day Motions" with the
Bankruptcy Court, which, if granted, will help ensure a smooth
transition to chapter 11. The motions are expected to be addressed
promptly by the Bankruptcy Court.
Atna's legal counsel is Squire Patton Boggs (US) LLP, its financial
advisor is Ernst & Young LLP, and its investment banker is Maxit
Capital LP.
Headquartered in Lakewood, Colorado, Atna Resources Ltd. --
http://www.atna.com-- is engaged in all phases of the mining
business, including exploration, preparation of Pre-Feasibility and
Feasibility studies, permitting, construction and development,
operation and final closure of mining properties. The Company owns
or controls various properties with gold resources. The Company's
production property includes Briggs Mine California and Pinson Mine
Property, Nevada. The Company's development properties include Mag
Pit at Pinson; Columbia Project, Montana and Briggs Satellite
Projects, California. Its exploration properties include Sand
Creek Uranium Joint Arrangement, Wyoming; Blue Bird Prospect,
Montana and Canadian Properties, Yukon and British Columbia. Its
Closure Property is Kendall, Montana. The Briggs mine is located
on approximately 156 unpatented claims, including approximately 15
mill site claims, covering over 2,890 acres. The Company's Pinson
Mine Property is located in Humboldt County, Nevada, over 30 miles
east of Winnemucca.
ATNA RESOURCES: Seeks Joint Administration of Cases
---------------------------------------------------
Atna Resources Inc., Canyon Resources Corporation, CR Briggs
Corporation, CR Montana Corporation, CR Kendall Corporation, Atna
Resources Ltd., and Horizon Wyoming Uranium, Inc., ask the
Bankruptcy Court to jointly administer their cases under Lead Case
No. 15-22848.
Bankruptcy Rule 1015(b) provides, inter alia, that the court may
order a joint administration of estates where two or more petitions
are pending in the same court by a debtor and an affiliate. Fed. R.
Bankr. P. 1015(b). The Debtors assert they are "affiliates" as
defined in Section 101(2) of the Bankruptcy Code.
The Debtors relate that joint administration will benefit them, the
Bankruptcy Court, the Office of the Clerk, the U.S. Trustee, and
all other interested parties. They anticipate that many of the
motions, applications, notices, orders, and other documents that
will be filed and entered in their cases will relate to and affect
all of them collectively.
"Using a single, general case docket will relieve all parties --
including the Court -- of the burden and related expense of
filing and entering duplicative documents in each of the
above-captioned cases and monitoring multiple dockets to stay
apprised of developments in the above-captioned cases before the
Court," says Stephen D. Lerner, Esq., at Squire Patton Boggs (US)
LLP, counsel for the Debtors.
He adds the Debtors will also realize substantial cost savings and
reduced administrative burdens by sending a single set of notices
to a single creditor matrix and Bankruptcy Rule 2002 list, as
opposed to utilizing multiple sets of notices to multiple notice
lists.
The Debtors assure the Court that the rights of creditors and other
interested parties will not be prejudiced or otherwise affected in
any way by the entry of an order directing the joint
administration of the above-captioned cases because this is not a
motion for substantive consolidation of the Debtors' estates. An
order of joint administration relates solely to the routine
procedural administration of a case, the Debtors maintain.
About Atna Resources
Atna Resources, Inc., et al., filed Chapter 11 bankruptcy petitions
(Bankr. D. Colo. Proposed Lead Case No. 15-22848) on Nov. 18, 2015.
The petition was signed by Rodney D. Gloss as vice president &
chief financial officer. The Debtors estimated assets in the range
of $10 million to $50 million and liabilities of $50 million to
$100 million. Squire Patton Boggs (US) LLP represents the Debtors
as counsel.
The Company's business is to explore, acquire, develop, and mine
precious metals, uranium and other mineral properties.
AUTOPARTS HOLDINGS: Moody's Cuts Corporate Family Rating to Caa2
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Autoparts
Holdings Limited -- Corporate Family and Probability of Default
Ratings, to Caa2 and Caa2-PD, from Caa1 and Caa1-PD, respectively,
as 2015 operating results have failed to meet our expectations and
lag the already weak results of 2014. In a related action Moody's
downgraded the rating of the company's senior secured first lien
bank credit facilities to Caa1 from B3, and affirmed the rating of
the senior secured second lien term loan at Caa3. The rating
outlook remains negative.
The following ratings were lowered:
Autoparts Holdings Limited:
Corporate Family Rating, to Caa2 from Caa1;
Probability of Default Rating, to Caa2- PD from Caa1-PD
Fram Group Holdings Inc./Prestone Holdings Inc./Fram Group (Canada)
Inc., as co-borrowers:
US$50MM Senior Secured First Lien revolving credit facility
due July 2016, to Caa1 (LGD3) from B3(LGD3);
US$483.6MM (remaining amount) Senior Secured First Lien Term
Loan due July 2017, to Caa1 (LGD3) from B3(LGD3)
The following rating was affirmed:
Fram Group Holdings Inc./Prestone Holdings Inc./Fram Group (Canada)
Inc., as co-borrowers:
US$105MM (remaining amount) Senior Secured Second Lien Term
Loan due January 2018, at Caa3 (LGD5)
RATINGS RATIONALE
The downgrade of Autoparts' Corporate Family Rating to Caa2
incorporates the company's weak operating performance, the looming
maturity of the $50 million revolving credit facility, and the
ongoing strategic review announced in September of last year.
Credit metrics have further deteriorated with Autoparts' LTM
EBITA/Interest as of September 30, 2015 dropping to 1.2x from 1.6x
in the prior year period (inclusive of Moody's adjustments) and
debt/EBITA increasing to 7.7x (6.0x excluding factored accounts
receivables) from 6.3x. The company's performance was negatively
impacted by a drop in revenue (by 6.6%), and higher manufacturing
and materials costs. However, Moody's does note that while
Autoparts' metrics have deteriorated from the prior-year period,
operating performance has gradually improved on a sequential
quarterly basis in 2015.
The Caa2 rating also considers that the July 2016 termination date
of the revolving credit facility has become a current maturity and,
with the strategic reviewongoing, poses a refinancing risk. The
refinancing of the revolving credit facilities also will need to
address the maturities of the first and second lien term loans. In
addition, the resolution of this review may be challenged by cost
sharing and manufacturing arrangements with UCI International,
LLC.(a subsidiary of UCI Holdings Ltd, also owned by an affiliate
of the Rank Group).
The negative outlook reflects the ongoing strategic review, weak
covenant cushions under the secured credit facility, and the
near-term maturity of the revolving credit facility.
Favorably, the company's near-term liquidity profile continues to
be adequate supported by cash on hand and expected free cash flow
generation the next 12- 18 months. As of September 30, 2015, cash
and equivalents were approximately $76 million with about $21.5
million held in non-U.S. subsidiaries. Autoparts' free cash flow
generation over the near-term is expected to be modest with free
cash flow/debt in low-single digits. Yet, the liquidity is weighed
by the near-term July 2016 maturity of the $50 million revolving
credit facility which will likely need to also address the first
and second lien term loan facilities. As of September 30, 2015,
availability under the $50 million senior secured revolving credit
facility was about $49.3 million after $0.7 million of letters of
credit outstanding. Financial covenants under the senior secured
facilities include a net leverage ratio test and an interest
coverage test. Given, the company's recent and expected
performance, cushions under these covenants are anticipated to be
weak. Alternative liquidity is limited as essentially all of the
company's domestic assets secure the bank credit facilities.
An important aspect of Autopart's liquidity profile is its ability
to factor receivables. As of September 30, 2015, company sold
$159.5 million of receivables. While we recognize this is a common
practice among automotive aftermarket parts retailers and their
suppliers, we also consider this amount as a potential short-term
funding risk if markets are not available to enter into further
factoring arrangements.
Future events that could drive Autoparts' ratings lower include
further deterioration in profit margins, EBITA/interest at 1x, or
the inability address the termination date of the revolving credit
facility.
Future events that could potentially improve the company's ratings
include: improvement the company's revenue and profit trends
combined with a favorable resolution of the company's strategic
business review, and an extension in the maturities of the
company's bank credit facilities.
Autoparts Holdings Limited ("Autoparts"), headquartered in Lake
Forest, IL, is a leading manufacturer of high quality,
non-discretionary products for the automotive and heavy-duty
aftermarket. The company's brands include FRAM®, Prestone® and
Autolite®. For the LTM period ending September 30, 2015, the
Autoparts had sales of approximately $823 million. The company is
owned by an affiliate of Rank Group Ltd, a New Zealand based
private equity firm.
BAHA MAR: Cooley Claims Developer Stiffed on $300,000 Fees
----------------------------------------------------------
Jonathan Randles at Bankruptcy Law360 reported that Cooley LLP and
Whiteford Taylor & Preston LLC, which represented the unsecured
creditors committee in the bankruptcy of the embattled
$3.5 billion Bahamanian resort Baha Mar, are claiming that the
project's developer, Sarkis Izmirlian, has stiffed them on more
than $300,000 in legal fees and costs.
In a letter to Izmirlian that was filed with the U.S. bankruptcy
court in Delaware, the firms say they will take action if the real
estate tycoon does not pay the fees "forthwith."
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The bankruptcy cases are assigned to Judge Kevin J. Carey. The
Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz,
Esq.,and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in New York. The Debtors' Delaware counsel are Laura
Davis Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson,
Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones
LLP, in Wilmington, Delaware. The Debtors' Bahamian counsel is
Glinton Sweeting O'Brien. The Debtors' special litigation counsel
is Kobre & Kim LLP. The Debtors' construction counsel is Glaser
Weil Fink Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime
Clerk LLC.
* * *
In September 2015, Judge Carey dismissed the Chapter 11
Proceedings filed in the Delaware court by Baha Mar chief
executive officer Sarkis Izmirlian, ruling in favor of the
contractor on the project, China Construction America (CCA), and
its financier, the China Export-Import Bank (CEXIM); but denied
the motion to dismiss Northshore Mainland Services, Inc.'s
bankruptcy case.
BAKERCORP: S&P Alters Outlook to Neg. on Weak Market Conditions
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it has revised its
outlook on Plano, Texas-based BakerCorp to negative from stable and
affirmed its 'B' corporate credit rating on the company.
At the same time, S&P affirmed its 'B' issue-level ratings on
BakerCorp International Inc.'s $45 million revolving credit
facility due 2018 and its $417.2 million term loan due 2020. The
'3' recovery ratings on the debt are unchanged, indicating S&P's
expectation of meaningful (50%-70%; higher end of the range)
recovery in a default.
In addition, S&P affirmed its 'CCC+' issue-level rating on
BakerCorp's $240 million senior unsecured notes due 2019. The '6'
recovery rating is unchanged, indicating S&P's expectation for
negligible (0%-10%) recovery in a default.
"We revised our outlook on BakerCorp because we believe that the
company's leverage could remain in excess of 6.5x through
fiscal-year 2017, which ends in January 2017," said Standard &
Poor's credit analyst Sarah Wyeth. "The company has been
experiencing weaker-than-expected market conditions caused by
declining investment in the upstream oil and gas markets."
The negative outlook on BakerCorp reflects S&P's view that the
company could face further challenges in the oil and gas markets in
fiscal-year 2017 that could cause its debt-to-EBITDA metric to
remain above 6.5x.
S&P could lower its rating on BakerCorp if S&P expects the
company's leverage to remain above 6.5x through fiscal-year 2017.
This could occur if the oil and gas markets weaken further, or if
U.S. industrial activity is weaker than S&P expects, leading to
lower demand for BakerCorp's tanks. S&P could also lower the
rating if the company's capital expenditures cause its cash flow to
turn negative for an extended period, or if the company adopts a
more aggressive financial policy (which may include
larger-than-expected acquisitions or distributions to its sponsor).
This could weaken the company's liquidity position and increase
the risk that the leverage covenant on its revolving credit
facility would apply.
S&P could revise its outlook on BakerCorp to stable if the
company's operating performance improves such that its
debt-to-EBITDA metric falls below 6.5x and will likely remain
there.
BIOSENTA INC: Files Restructuring Proposal to Creditors
-------------------------------------------------------
Biosenta Inc. on Nov. 19 disclosed that it has filed a
restructuring proposal to creditors. The Proposal is made under
the Canadian Bankruptcy and Insolvency Act. The Proposal has been
approved by the board of the Company, which has appointed Farber
Financial Group as the trustee.
Under this Proposal, eligible creditors will be given the choice of
receiving either up to 50% of the eligible claim amount in cash
(with 15% up front, subject to proration if aggregate payments
thereunder would exceed $215,000, and 35% payable contingent on
there being sufficient cash flow over time) or in common shares
(based on approximately 18,248 shares per $1,000.00 of eligible
claim amount, or approximately $0.05 per share, assuming that 30%
of unsecured creditors accept equity) as full and final settlement
of claims.
A 30% acceptance of equity rate by unsecured creditors would result
in the issuance of approximately 52.34 million shares for a price
of approximately $0.05 per share. If 100% of unsecured creditors
accepted equity, which is not expected, approximately 655.5 million
shares would be issued for a price of approximately $0.0095 per
share.
Secured creditors that have either invested or expressed a
willingness to invest up to $800,000 in total on a secured basis to
help finance the Company while it pursues the Proposal, have
entered into general security agreements which include all assets
of the Company as security. If the Proposal succeeds, it is
expected that they would also receive shares on the same basis
described above.
In addition to the up to $300,000 loan to the Company announced on
Nov. 2, 2015, a third party,
New South Biolabs LLC, has expressed interest in funding up to
$500,000 on similar terms, contingent on progress with the
Proposal. More particularly, upon the Proposal being confirmed by
the Trustee as having been accepted by the requisite eligible
creditors, the third party proposes to subscribe for $500,000 in
aggregate worth of 1%, secured (2nd ranking), 6 month term to
maturity (subject to early maturity on bankruptcy), no covenant,
convertible debentures, on the following subscription schedule:
On the business day following such completion, $150,000;
30 days following such completion (or the next business day, if it
is not a business day), $150,000;
60 days following such completion (or the next business day, if it
is not a business day), $100,000; and
90 days following such completion (or the next business day, if it
is not a business day), $50,000.
They would be mandatorily converted into Biosenta common shares
(based on the same conversion ratio as applies to unsecured
creditors) immediately following the entry into effectiveness of
the Proposal (with court approval). If the Proposal becomes
effective before the date of proposed issuance of any of the
convertible debentures, then the applicable common shares would be
issued in lieu of the convertible debentures on the same
timetable.
In addition, it is proposed that the Company and New South Biolabs
LLC ("NSB") would mutually agree to terminate all obligations of
both parties under their existing agreement dated March 2013, and
irrevocably release each other from any and all claims against each
other in connection therewith, and that, in exchange for past
financial contributions, NSB would receive an additional common
shares of the Company. Assuming that 30% of unsecured creditors
accept equity, NSB would hold approximately 18.39 million shares or
13.57% of the total issued and outstanding shares in the event that
the Proposal is successfully completed.
All common shares issued as described above would be subject to a
minimum 4 month hold period. It is unclear whether the Company
will be able to maintain its current stock exchange listing, and it
may well be delisted.
By virtue of a court order, legal proceedings against the Company
have been stayed at this time.
A meeting of eligible creditors is scheduled for December 7, 2015
at 2:00 p.m. (Toronto time) at the Trustee's offices, which are
located at Suite 1600, 150 York St Toronto, Ontario, Canada M5H
3S5.
The board of the Company has approved the Proposal, as the Company
is unable to pay creditors in full in a timely manner. Management
of the Company has made every effort to raise funds over the past
10 months, without success, most probably as a consequence of the
effects of the possible improprieties and breaches of fiduciary
duty that may have been committed by former directors, as reported
in a press release on March 26, 2015.
While there can be no assurance of success, the Company is
confident that, if the restructuring proposal is successfully
completed, it will be in a much better position to achieve success
with its disinfectant products. In particular, the Company intends
to launch its disinfectant in the U.S. in early 2016 and seek
approvals of its Tri-Filler(TM) industrial product, which has been
tested with potential customers, as soon as possible. With new
funding and an improved balance sheet, the Company is aiming to be
cash flow positive in 2016.
About Biosenta Inc.
Biosenta Inc. develops and manufactures a range of chemical
compounds for household and industrial applications using advanced
nanotechnology. The household disinfectants and cleaners possess
similar levels of efficacy as traditional disinfectants with
significantly lower concentrations of active ingredients resulting
in lower toxicity. These disinfectants and cleaners will kill 100%
of potentially deadly mold, fungi, bacteria and viruses on contact
and prevent re-growth. These disinfectants are very safe due to
the very low toxicity. The industrial compounds are embedded to
protect various materials, including drywall, plastics and resins,
from microbe formation. These compounds remain active for decades
and protect the drywall of buildings, objects such as resin
furniture, and carpet which contain plastic or resin, as well as
textiles and paper from mold, fungi, bacteria and viruses. Both the
household and industrial products are environmentally safe and
biodegradable.
BOOMERANG TUBE: Judge Sides Unsecured Creditors, Rejects Plan
-------------------------------------------------------------
Matt Chiappardi at Bankruptcy Law360 reported that a Delaware
bankruptcy judge rejected oil and gas pipe maker Boomerang Tube
LLC's Chapter 11 plan on Nov. 9, 2015, siding with protesting
unsecured creditors who argued that the enterprise value of the
company did not jibe with a reorganization strategy that left them
with practically no recovery.
Ruling from the bench during a hearing in Wilmington, U.S.
Bankruptcy Judge Mary F. Walrath said the evidence offered by the
official committee of unsecured creditors that valued Boomerang in
the neighborhood of $350 million was more credible that
valuations.
About Boomerang Tube
Boomerang Tube, LLC, is a manufacturer of welded Oil Country
Tubular Goods ("OCTG") in the United States. OCTG are used by
drillers in exploration and production of oil and natural gas and
consist of drill pipe, casing and tubing. Boomerang has corporate
offices in Chesterfield, Missouri and manufacturing facilities in
Liberty, Texas, strategically located near major steel production
centers and end-user markets. With a 487,000 square foot plant
that houses two mills and heat treat lines and a contingent 119
acres, these facilities constitute the second largest alloy OCTG
mill in North America. Access Tubulars, LLC, owns 81% of the
equity interests in Boomerang.
Boomerang Tube and its subsidiaries BTCSP LLC and BT Financing
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
15-11247) on June 9, 2015, with a deal with lenders on a balance
sheet restructuring that would convert $214 million of debt to
100% of the common stock of the reorganized company.
The cases are assigned to Judge Mary F. Walrath.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP, as
attorneys; Lazard Freres & Co. LLC, as financial advisor; and
Donlin, Recano & Co., Inc., as claims and noticing agent.
* * *
Boomerang Tube secured approval of its Amended Disclosure
Statement in support of its Prearranged Chapter 11 Plan.
Judge Mary F. Walrath on Sept. 21, 2015, began the hearing to
consider confirmation of the Debtors' Amended Joint Prearranged
Chapter 11 Plan filed Sept. 4, 2015. The Debtors anticipate that
the confirmation hearing will take multiple days over a few weeks,
given the Court's and parties' calendars.
BOREAL WATER: Terminates Public Accountant Due to Disagreements
---------------------------------------------------------------
Boreal Water Collection, Inc.'s current registered independent
public accountant for the fiscal year ending Dec. 31, 2015, Patrick
D Heyn, was dismissed on Nov. 4, 2015, according to a Form 8-K
filed with the Securities and Exchange Commission.
Mr. Heyn was engaged by the Company pursuant to an engagement
letter dated July 24, 2015. During the past two years, the
accountant's report on the financial statements did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles.
The Company's Board of Directors (consisting of one director, Mrs.
Francine Lavoie) approved of the dismissal.
During the time of Mr. Heyn's employment, there were disagreements
with Mr. Heyn on matters of accounting principles or practices,
financial statement disclosure, or auditing scope or disclosure.
Mr. Heyn was preceded by Mr. Terry Johnson as the Company's auditor
-- who was suspended by the SEC on Oct. 6, 2015, from practicing as
an accountant for entities regulated by the SEC. Previously, in an
8-K dated Sept. 25, 2015, the Company had stated that it was no
longer relying on audit reports and previously issued financial
statements that Mr. Johnson was involved in for fiscal years 2012
and 2013 and were investigating whether the Company could rely on
the same for fiscal year 2014. The Company terminated Mr. Heyn in
part because the Company was not able to obtain a comprehensible,
definitive answer from him on how to proceed regarding the problems
caused by Mr. Johnson; and in that regard, the Company was not
satisfied with his explanation of the scope, cost and procedure for
re-audits to bring the Company compliant. There were disagreements
on the valuation of stock issued for management compensation as
well as for convertible debt. The Company also was not satisfied
with the scheduling and what the Company perceived to be a lack of
speed and priority involved in Mr. Heyn's work for the Company.
About Boreal Water
Kiamesha Lake, N.Y.-based Boreal Water Collection, Inc., is a
personalized bottled water company specializing in premium custom
bottled water.
Boreal Water reported a net loss of $886,000 on $2.41 million of
sales for the year ended Dec. 31, 2014, compared with net income of
$613,000 on $2.15 million of sales for the year ended Dec. 31,
2013.
As of March 31, 2015, the Company had $3 million in total assets,
$2.68 million in total liabilities, and $314,000 in total
stockholders' equity.
Terry L. Johnson, CPA, in Casselberry, Florida, issued a "going
concern" qualification on the consolidated financial statements for
the year ended Dec. 31, 2014. The accounting firm noted that the
Company has incurred a deficit of approximately $3.6 million and
has used approximately $800,000 of cash due to its operating
activities in the two years ended Dec. 31, 2014. The Company may
not have adequate readily available resources to fund operations
through Dec. 31, 2015. This raises substantial doubt about the
Company's ability to continue as a going concern.
BRANTLEY LAND: SB&T Seeks to Dismiss Ch. 11 Case
------------------------------------------------
State Bank and Trust Company filed a motion to dismiss the
bankruptcy case of Brantley Land & Timber Company, LLC, alleging
that there is no useful bankruptcy purpose served by the Chapter 11
case.
SB&T asserts that the Debtor now owns no lots in a development of
over twelve hundred, that SB&T's assigned mortgage payments are
diminishing, and that SB&T's remaining cash collateral is being
rapidly consumed by professional fees.
In the alternative, SB&T asks the Court to modify the Automatic
Stay regarding SB&T’s remaining security interests in the real
estate development property securing its loan and regarding its
cash collateral pursuant to the loan documents and applicable
non-bankruptcy law in effect as of the date this Court orders
modification of the automatic stay, including but not limited to
foreclosure of SB&T’s interests therein, determination of any
deficiency, the filing of appropriate claims, and other rights and
remedies available to SB&T under both bankruptcy and non-bankruptcy
law;. There is no available equity in SB&T’s collateral for the
benefit of the estate and the bank is not adequately protected.
SB&T also asks the Court for permission to file an amended
unsecured claim in the bankruptcy case.
Further, SB&T requests that all unearned and unawarded funds
currently in the Chapter 11 Trustee attorney's account on retainer
should be returned to the Trustee's Account, and that the Chapter
11 Trustee then disburse all funds in the Trustee's Account to
SB&T.
State Bank and Trust Company, Movant is represented by:
Douglas D. Ford, Esq.
QUIRK & QUIRK, LLC
300 CENTURY SPRINGS WEST
6000 LAKE FORREST DRIVE, NW
ATLANTA, GA 30328
Phone: (404) 252-1425
Email: DDF@QUIRKLAW.COM
-- and --
C. James McCallar, Jr., Esq.
Tiffany E. Caron, Esq.
MCCALLAR LAW FIRM
P.O.Box 9026
Savannah, GA 31401
Email: mccallar@mccallarlawfirm.com
tiffany.caron@mccallarlawfirm.com
About Brantley Land
Brantley Land & Timber Company, LLC, a real estate developer in
Brantley County, Georgia, has filed a Chapter 11 bankruptcy
petition (Bankr. S.D. Ga. Case No. 15-20584) in Brunswick,
Georgia,
on July 16, 2015.
The Debtor, which is controlled by the receiver, tapped McCallar
Law Firm as counsel.
The U.S. Trustee for Region 21 is not attempting to form a
committee of unsecured creditors in the Chapter 11 case of the
Debtor, at this time.
BROCADE COMMUNICATIONS: S&P Affirms 'BB+' CCR, Outlook Stable
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit rating on San Jose, Calif.-based Brocade Communications
Systems Inc. The outlook is stable.
At the same time, S&P affirmed its 'BB+' rating on the company's
unsecured notes. The '3' recovery rating is unchanged and reflects
S&P's expectation for meaningful recovery (50% to 70%, at the high
end of the range) in the event of payment default.
"The rating on Brocade incorporates the company's leading market
position in the storage area networking market, good profitability
and cash flow, and strong credit protection measures," said
Standard & Poor's credit analyst Christian Frank.
The stable outlook reflects S&P's expectation that Brocade will
maintain its market position in its core markets and that it
generates good free operating cash flow, allowing the company to
incur leverage of as much as 3x for opportunistic acquisitions or
shareholder returns without any rating impact.
BUNKERS INTERNATIONAL: Committee Taps Greenberg Traurig as Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
case of Bunkers International Corp., Inc., asks the U.S. Bankruptcy
Court for the Middle District of Florida for permission to retain
the law firm of Greenberg Traurig, P.A., as its counsel.
Greenberg Traurig will, among other things:
a) assist the Committee in requesting the appointment of a
trustee or examiner, should such action become necessary;
b) assist and advise the Committee as to its communications to
the general creditor body regarding significant matters in this
case; and
c) represent the Committee at all hearings and other
proceedings.
The hourly rates applicable to the principal attorneys and
paralegals proposed to represent the Committee are:
John B. Hutton $680
Ari Newman $430
Maribel R. Fontanez $275
To the best of the Committee's knowledge, Greenberg Traurig does
not hold or represent any interest adverse to the Debtor or its
chapter 11 estate.
About Bunkers International
Based in Lake Mary, Florida, Bunkers International trades and
provides fuel for ships at sea. It provides physical supply,
trading, and brokering services from a number of global locating
including those in the U.S., Singapore, Greece, and the United
Kingdom, and says it is the largest marine fuel supplier in
Colombia through its BunkersOil Colombia joint venture with
Vanoil, S.A. The Company started in Colombia in 1995.
Bunkers International Corp. and three affiliates sought Chapter 11
bankruptcy protection (Bankr. M.D. Fla. Proposed Lead Case No.
15-07397) on Aug. 28, 2015. The petition was signed by John T.
Canal as president/CEO. The Debtors estimated assets of $10
million to $50 million and liabilities of at least $10 million.
Latham, Shuker, Eden & Beaudine, LLP represents the Debtors as
counsel.
BUNKERS INTERNATIONAL: Panel Taps GlassRatner as Financial Advisor
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Bunkers International Corp., et al., asks the U.S.
Bankruptcy Court for the Middle District of Florida for permission
to retain GlassRatner Advisory & Capital Group LLC and Susan Smith,
as its financial advisor and forensic accountant.
GlassRatner will, among other things:
a. trace cash receipts and disbursements to the appropriate
source/asset and advise the Committee on issues related to the
segregation of cash;
b. review the Debtor's cash flow forecasts and underlying
support and scrutinize cash receipts and disbursements on an
on-going basis; and
c. develop a periodic monitoring report to enable the Committee
to effectively evaluate the Debtor's performance and operating
activities on an ongoing basis.
GlassRatner will coordinate all tasks with Greenberg Traurig, P.A.,
the Committee's lead counsel, to achieve case efficiencies and
avoid duplication of efforts.
The current standard hourly rates for GlassRatner are:
Principal $575
Senior Managing Director $375 - $450
Director $275 - $325
Associates $200 - $300
Support Staff $125
The rates for the GlassRatner professionals anticipated to be
assigned to the engagement are:
Susan Smith $375
James Fox $575
Glass Ratner has agreed with the Committee in the case that its
blended rate would not exceed $375/hour.
Susan M. Smith, a business and financial advisor and the senior
managing director at GlassRatner with offices located at 142 W.
Platt Street, Suite 118, Tampa, Florida.
Ms. Smith assures the Court that GlassRatner is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Bunkers International
Based in Lake Mary, Florida, Bunkers International trades and
provides fuel for ships at sea. It provides physical supply,
trading, and brokering services from a number of global locating
including those in the U.S., Singapore, Greece, and the United
Kingdom, and says it is the largest marine fuel supplier in
Colombia through its BunkersOil Colombia joint venture with
Vanoil, S.A. The Company started in Colombia in 1995.
Bunkers International Corp. and three affiliates sought Chapter 11
bankruptcy protection (Bankr. M.D. Fla. Proposed Lead Case No.
15-07397) on Aug. 28, 2015. The petition was signed by John T.
Canal as president/CEO. The Debtors estimated assets of $10
million to $50 million and liabilities of at least $10 million.
Latham, Shuker, Eden & Beaudine, LLP represents the Debtors as
counsel.
CAESARS ENTERTAINMENT: Judge Declines to Set Hearing on Disclosure
------------------------------------------------------------------
Janan Hanna and Steven Church, writing for Bloomberg Brief -
Distress & Bankruptcy, reported that Caesars Entertainment
Operating Co. was denied a quick hearing on an outline of its
reorganization proposal, which would have been the first step in a
protracted courtroom showdown between the casino company and
low-ranking creditors.
It's too early to hold a hearing on whether the plan description
contains enough information for creditors to decide how to vote on
the proposal, U.S. Bankruptcy Judge Benjamin Goldgar said on Nov.
18 in a hearing in Chicago, according to the report.
The company's so-called disclosure statement "has blanks in it,"
Judge Goldgar said, the report related. As one reason for denying
approval, he cited an investigation into allegations that Caesars'
parent stripped the company of valuable assets before the company
filed bankruptcy, the report said.
About Caesars Entertainment
Caesars Entertainment Corp., formerly Harrah's Entertainment Inc.,
is one of the world's largest casino companies. Caesars casino
resorts operate under the Caesars, Bally's, Flamingo, Grand
Casinos, Hilton and Paris brand names. The Company has its
corporate headquarters in Las Vegas. Harrah's announced its
re-branding to Caesar's in mid-November 2010.
In January 2015, Caesars Entertainment and subsidiary Caesars
Entertainment Operating Company, Inc., announced that holders of
more than 60% of claims in respect of CEOC's 11.25% senior secured
notes due 2017, CEOC's 8.5% senior secured notes due 2020 and
CEOC's 9% senior secured notes due 2020 have signed the Amended
and Restated Restructuring Support and Forbearance Agreement,
dated
as of Dec. 31, 2014, among Caesars Entertainment, CEOC and the
Consenting Creditors. As a result, The RSA became effective
pursuant to its terms as of Jan. 9, 2015.
Appaloosa Investment Limited, et al., owed $41 million on account
of 10% second lien notes in the company, filed an involuntary
Chapter 11 bankruptcy petition against CEOC (Bankr. D. Del. Case
No. 15-10047) on Jan. 12, 2015. The bondholders are represented
by Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor
LLP.
CEOC and 172 other affiliates -- operators of 38 gaming and resort
properties in 14 U.S. states and 5 countries -- filed Chapter 11
bankruptcy petitions (Bank. N.D. Ill. Lead Case No. 15-01145) on
Jan. 15, 2015. CEOC disclosed total assets of $12.3 billion and
total debt of $19.8 billion as of Sept. 30, 2014.
Delaware Bankruptcy Judge Kevin Gross entered a ruling that the
bankruptcy proceedings will proceed in the U.S. Bankruptcy Court
for the Northern District of Illinois.
Kirkland & Ellis serves as the Debtors' counsel. AlixPartners is
the Debtors' restructuring advisors. Prime Clerk LLC acts as the
Debtors' notice and claims agent. Judge Benjamin Goldgar presides
over the cases.
The U.S. Trustee has appointed seven noteholders to serve in the
Official Committee of Second Priority Noteholders and nine members
to serve in the Official Unsecured Creditors' Committee.
The U.S. Trustee appointed Richard S. Davis as Chapter 11
examiner.
On Feb. 5, 2015, U.S. Trustee Patrick Layng appointed nine
creditors to the Debtors' official committee of unsecured
creditors. Two of these creditors -- the Board of Levee
Commissioners for the Yazoo Mississippi Delta and MeehanCombs
Global Credit Opportunities Master Fund LP -- resigned from the
committee following their appointment. They were replaced by the
National Retirement Fund and Relative Value-Long/Short Debt, a
Series of Underlying Funds Trust.
* * *
Caesars Entertainment Operating Company, Inc., a subsidiary of
Caesars Entertainment Corporation on Oct. 8 disclosed that it has
filed an Amended Plan of Reorganization, an accompanying
Disclosure
Statement and a motion to further extend exclusivity through March
15, 2016. The filings were made with the United States Bankruptcy
Court for the Northern District of Illinois.
The Amended Plan provides for a comprehensive restructuring
transaction that is supported by holders of more than 80 percent
of
CEOC's First Lien Bank Debt and First Lien Notes pursuant to
restructuring support agreements CEOC has entered into with both
creditor groups. Importantly, the Amended Plan also provides for
enhanced recoveries to CEOC's junior creditors.
CAESARS ENTERTAINMENT: Parties Wants Asset Transfers Resolved
-------------------------------------------------------------
Jacqueline Palank at Dow Jones & Company, Inc. reported that
Caesars Entertainment Operating Co .'s bid to move forward with its
restructuring is premature and unlikely as long as an investigation
into major asset transfers remains unresolved, according to the
casino company's creditors and the federal government.
In court papers filed on Nov. 10, 2015, several creditor groups and
a Justice Department bankruptcy watchdog urged a judge to deny
CEOC's request for a crucial court hearing on its disclosure
statement -- the document outlining its plan to slash some
$10 billion of its $18 billion debt load -- to be held by late
January.
About Caesars Entertainment
Caesars Entertainment Corp., formerly Harrah's Entertainment Inc.,
is one of the world's largest casino companies. Caesars casino
resorts operate under the Caesars, Bally's, Flamingo, Grand
Casinos, Hilton and Paris brand names. The Company has its
corporate headquarters in Las Vegas. Harrah's announced its
re-branding to Caesar's in mid-November 2010.
In January 2015, Caesars Entertainment and subsidiary Caesars
Entertainment Operating Company, Inc., announced that holders of
more than 60% of claims in respect of CEOC's 11.25% senior secured
notes due 2017, CEOC's 8.5% senior secured notes due 2020 and
CEOC's 9% senior secured notes due 2020 have signed the Amended
and
Restated Restructuring Support and Forbearance Agreement, dated as
of Dec. 31, 2014, among Caesars Entertainment, CEOC and the
Consenting Creditors. As a result, The RSA became effective
pursuant to its terms as of Jan. 9, 2015.
Appaloosa Investment Limited, et al., owed $41 million on account
of 10% second lien notes in the company, filed an involuntary
Chapter 11 bankruptcy petition against CEOC (Bankr. D. Del. Case
No. 15-10047) on Jan. 12, 2015. The bondholders are represented
by
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP.
CEOC and 172 other affiliates -- operators of 38 gaming and resort
properties in 14 U.S. states and 5 countries -- filed Chapter 11
bankruptcy petitions (Bank. N.D. Ill. Lead Case No. 15-01145) on
Jan. 15, 2015. CEOC disclosed total assets of $12.3 billion and
total debt of $19.8 billion as of Sept. 30, 2014.
Delaware Bankruptcy Judge Kevin Gross entered a ruling that the
bankruptcy proceedings will proceed in the U.S. Bankruptcy Court
for the Northern District of Illinois.
Kirkland & Ellis serves as the Debtors' counsel. AlixPartners is
the Debtors' restructuring advisors. Prime Clerk LLC acts as the
Debtors' notice and claims agent. Judge Benjamin Goldgar presides
over the cases.
The U.S. Trustee has appointed seven noteholders to serve in the
Official Committee of Second Priority Noteholders and nine members
to serve in the Official Unsecured Creditors' Committee.
The U.S. Trustee appointed Richard S. Davis as Chapter 11
examiner.
* * *
The Troubled Company Reporter, on April 27, 2015, reported that
Fitch Ratings has affirmed and withdrawn the Issuer Default Ratings
(IDR) and issue ratings of Caesars Entertainment Operating Company
(CEOC). These actions follow CEOC's Chapter 11 filing on Jan. 15,
2015. Accordingly, Fitch will no longer provide ratings or
analytical coverage for CEOC.
In addition, Fitch has affirmed the IDR and issue rating of Chester
Downs and Marina LLC (Chester Downs) and the ratings have been
simultaneously withdrawn for business reason.
CALEDONIAN BANK: SEC Assailed by Judge for Triggering Collapse
--------------------------------------------------------------
Bob Van Voris, writing for Bloomberg Brief - Distress & Bankruptcy,
reported that a U.S. judge criticized the Securities and Exchange
Commission for freezing assets of Caledonian Bank Ltd. and causing
its collapse, saying the case gives the regulator "fertile ground
for agency self-examination."
"Bureaucratic siloing and missed opportunities" ensured the failure
of the 45-year-old Cayman Islands-based bank, U.S. District Judge
William Pauley in Manhattan said, according to the Bloomberg
report. Judge Pauley also blamed the bank for agreeing to the
regulator's freeze on $76 million -- more than three times its
capital, the report related.
"This case reveals the dire consequences that flow when the SEC
fails to live up to its mandate and litigants yield to the
government's onslaught," the Bloomberg report cited Judge Pauley as
saying.
The report noted that the SEC sued Caledonian and three other firms
Feb. 6 claiming they sold worthless penny stocks in several
pump-and-dump schemes, profiting from the illicit proceeds.
The case is Securities and Exchange Commission v. Caledonian Bank
Ltd., 15-cv-00894, U.S. District Court, Southern District of New
York (Manhattan).
About Caledonian Bank
Caledonian Bank Limited is a wholly-owned subsidiary of Caledonian
Global Financial Services, Inc., a well-known specialized
financial
services provider in the Cayman Islands. Caledonian Bank was
incorporated in the Cayman Islands in 2007, and its registered
office and headquarters is located in Georgetown, Grand Cayman,
Cayman Islands.
On Feb. 10, 2015, the sole shareholder of the Debtor, CGFSI,
passed
resolutions placing the Debtor into voluntary liquidation under
the
Companies Law (2013 Revision) and appointing Gordon MacRae and
Eleanor Fisher of Zolfo Cooper (Cayman) Limited as the joint
voluntary liquidators ("JVLs") of Caledonian Bank.
On Feb. 11, 2015, the JVLs filed a petition with the Cayman Court
seeking, among other relief, court authorization to control the
affairs of, and court supervised liquidation of, the Debtor.
Keiran Hutchison and Claire Loebell of Ernst & Young Ltd., as the
joint controllers ("Petitioners"), filed a Chapter 15 petition
(Bankr. S.D.N.Y. Case No. 15-10324) for Caledonian Bank Limited in
Manhattan in the United States on Feb. 16, 2015. The case is
assigned to Judge Martin Glenn.
As of Jan. 31, 2015, Caledonian Bank had assets of $585 million,
$388 million of which was cash on deposit with other financial
institutions or liquid fixed income investments, and liabilities
of
$560 million, $520 million of which was repayable to depositors on
demand.
Geoffrey T. Raicht, Esq., at Proskauer Rose LLP, serves as counsel
in the U.S. case.
Caledonian Bank estimated $500 million to $1 billion in assets and
debt.
CALIFORNIA MIDAS: High Court Won't Hear $11.7M Alter-Ego Tax Case
-----------------------------------------------------------------
Hannah Sheehan at Bankruptcy Law360 reported that the U.S. Supreme
Court refused on Nov. 9, 2015, to review a ruling that held the
married former owners of several California Midas Inc. franchises
liable for an $11.7 million tax bill racked up through a former
employee's fraud by naming them as alter egos of their company.
The high court's decision leaves undisturbed a 2014 Ninth Circuit
ruling, which concluded that the Internal Revenue Service may
recover RAJMP Inc.'s debts from its former owners, Joan and Robert
Politte, because they had been able to borrow profits.
CANCER GENETICS: Incurs $5.21 Million Net Loss in Third Quarter
---------------------------------------------------------------
Cancer Genetics, Inc., filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $5.21 million on $4 million of revenue for the three months
ended Sept. 30, 2015, compared to a net loss of $4.79 million on
$3.22 million of revenue for the same period during the prior
year.
For the nine months ended Sept. 30, 2015, the Company reported a
net loss of $14.5 million on $12.6 million of revenue compared to a
net loss of $11.5 million on $6.16 million of revenue for the same
period last year.
As of Sept. 30, 2015, the Company had $36.0 million in total
assets, $13.7 million in total liabilities and $22.3 million in
total stockholders' equity.
A full-text copy of the Form 10-Q is available for free at:
http://is.gd/OvXxwO
About Cancer Genetics
Rutherford, N.J.-based Cancer Genetics, Inc., is an early-stage
diagnostics company focused on developing and commercializing
proprietary genomic tests and services to improve and personalize
the diagnosis, prognosis and response to treatment (theranosis) of
cancer.
Cancer Genetics reported a net loss of $16.6 million in 2014, a net
loss of $12.4 million in 2013 and a net loss of $6.66 million in
2012.
CENTURION VENTURE: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Centurion Venture Group, LLC
88 E. San Fernando Street, Unit 1801
San Jose, CA 95113
Case No.: 15-53648
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Northern District of California (San Jose)
Judge: Hon. Stephen L. Johnson
Debtor's Counsel: Jeffrey D. Schreiber, Esq.
THE SCHREIBER LAW FIRM
4275 Executive Drive #200
La Jolla, CA 92037
Tel: (858) 643-9011
Email: jschreiber@theschreiberlawfirm.com
Total Assets: $1.25 million
Total Liabilities: $810,416
The petition was signed by Bryan M. Holmes, managing member.
The Debtor did not include a list of its largest unsecured
creditors when it filed the petition.
CHELSEA CAPITAL: Case Summary & 2 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Chelsea Capital Partners, LLC
2253 Grady Ridge Trail
Duluth, GA 30097
Case No.: 15-72195
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Northern District of Georgia (Atlanta)
Debtor's Counsel: Frank B. Wilensky, Esq.
MACEY, WILENSKY & HENNINGS, LLC
Suite 4420, 303 Peachtree Street, NE
Atlanta, GA 30308
Tel: (404) 584-1200
Fax: 404-681-4355
Email: smcconnell@maceywilensky.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by R. C. Patel, manager.
A list of the Debtor's two largest unsecured creditors is available
for free at http://bankrupt.com/misc/ganb15-72195.pdf
CONAGRA FOODS: Fitch Ratings Unaffected by Lamb Weston Spin-Off
---------------------------------------------------------------
There is no rating implication to ConAgra's 'BBB-' Long-term Issuer
Default Rating following the announcement that the company will
spin off its Lamb Weston business on a tax-free basis. Post the
spin off of the Lamb Weston business and the closing of the
recently announced sale of its private business to Treehouse, Fitch
estimates the remaining consumer food business will have pro-forma
sales of $8.9 billion and EBITDA of $1.4 billion for the fiscal
year ended May 31, 2015.
Assuming debt paydown in the range of $3.7 billion to $4.6 billion
-- with $2 billion to $2.3 billion of the reduction expected with
the proceeds of the sale of its Private Brand business -- Fitch
expects pro-forma leverage for the remaining business to be in the
low 3x range.
ConAgra Foods, Inc. will separate into two independent public
companies. One company will be the existing consumer brands
business and the other will be its Lamb Weston business, a
foodservice provider of potato products. The transaction is
expected to be completed in the fall of 2016 pending board
approval, receipt of an opinion from tax counsel and other
customary approvals. This follows ConAgra's announcement on
Nov. 2, 2015, that it will sell its Private Brand business to
TreeHouse Foods, Inc. for $2.7 billion.
The company reported that Lamb Weston accounted for the significant
majority of the Commercial Foods segment's fiscal 2015's $570
million in operating profit before corporate expenses. Lamb
Weston's EBITDA and margin is likely in the $458 million and 16%
range, respectively, which is higher than the corporate average at
fiscal year ended May 31, 2015. With this transaction and the
Private Brands sale, total EBITDA removed from the overall
enterprise could be in the $760 million range.
While the capital structure and capital allocation policy for Lamb
Weston had not been finalized, ConAgra reiterated its commitment to
an investment grade profile following the separation. Fitch
expects that similar to other spin transactions, the appropriate
amount of debt would be placed on the entity to be spun off and a
dividend made to the parent. Fitch estimates the amount of
dividends that would need to be upstreamed and applied to debt
reduction at the remaining consumer products level concurrent with
the spin to be in the $1.4 billion range in order to maintain
leverage at the consumer foods business in the 3x to 3.2x level.
Private Brand Business Sale
ConAgra announced on Nov. 2, 2015 that it has reached a definitive
agreement to sell its private label operations to TreeHouse Foods
for approximately $2.7 billion in cash and use the proceeds
primarily for debt reduction. The transaction is expected to close
in the first quarter of 2016.
Profitability in the company's private brands business had been
weak with EBITDA margins down more than 500 basis points (bps) to
9% in fiscal 2015 due to a highly competitive bidding environment,
combined with service-related issues and execution shortfalls,
which had negatively impacted results and near term expectations
for volume, pricing and margins. The sale of the private brand
business improves pro forma EBITDA for the remaining business
(including Weston) to the mid-17% range versus 15.5% in fiscal
2015.
Focus on Core Consumer Branded Business
Volumes in its consumer foods business have been in the negative 1%
to 3% range for the last five years, offset by only a modest
improvement in pricing/mix effect in the 1% range. While early,
revenue growth in consumer brands was nearly flat in the first
quarter of fiscal 2016. Modest declines were driven by exiting low
margin SKU's however, brand support activities on faster growing
SKU's will continue.
The company will need to drive productivity improvements in SG&A,
supply chain and trade spending to support future investments in
marketing, infrastructure, innovation, and acquisitions. In
October 2015, CAG announced that it expects to realize at least
$300 million of efficiency benefits within the next three years
through a combination of reductions in SG&A and enhancements to
trade spend processes and tools.
In addition, similar to its industry peers, the company will have
to reposition its branded portfolio over the next few years to exit
low to negative growth brands and invest in health and wellness
brands given shifting consumer preferences.
As a result, Fitch expects modest volume declines will continue but
EBITDA is expected to be flat to modestly higher given a sense of
urgency around cost controls. Continued progress on this front
will be needed to maintain the Stable Outlook.
KEY ASSUMPTIONS
-- Leverage after the Lamb Weston spin transaction and the sale
of its private brand business remains in the low 3.0x range.
-- Fitch expects flat to modest volume declines will continue
in its core businesses but EBITDA is expected to be flat to
modestly higher given cost control initiatives.
RATING SENSITIVITIES
Future developments that may, individually or collectively, lead to
a negative rating action include:
-- If weak top line and operating trends continue without
material offset from debt reduction, such that gross
leverage (total debt-to-operating EBITDA) in the low 3.0x
range is unsustainable. Deteriorating free cash flow (FCF)
or a sizeable leveraged transaction would also support a
downgrade.
Future developments that may, individually or collectively, lead to
a positive rating action include:
-- A positive rating action is not anticipated in the near term
unless there are other strategic portfolio shifts that
improve the business and its prospects further.
-- In the long term, a positive rating action could be
supported by substantial and growing FCF generation,
consistent positive volume growth in all segments
demonstrating that operational issues have been resolved,
along with maintaining leverage in the mid-2x range.
LIQUIDITY
Ample Liquidity, Manageable Maturities: ConAgra maintains an
undrawn $1.5 billion revolving credit facility expiring Sept. 14,
2018 that provides backup to its commercial paper (CP) program. The
company had $114 million in cash at Aug. 30, 2015. The revolving
credit facility contains covenants that consolidated debt must not
exceed 65% of consolidated capital during the first four quarters
commencing Jan. 29, 2014 and the company's fixed charge coverage
ratio must be greater than 1.75x on a rolling four quarter basis.
ConAgra's long-term debt maturities primarily consist of $1 billion
due in fiscal 2016 and approximately $550 million due in fiscal
2017.
Fitch currently rates ConAgra Foods, Inc.'s:
-- Long-term Issuer Default Rating (IDR) 'BBB-';
-- Senior unsecured notes 'BBB-';
-- Bank credit facility 'BBB-';
-- Subordinated notes 'BB+';
-- Short-term IDR 'F3';
-- Commercial paper 'F3'.
Ralcorp Holdings, Inc.
-- Long-term IDR 'BBB-';
-- Senior unsecured notes 'BBB-'.
The Rating Outlook is Stable.
CURTIS JAMES JACKSON: Garvey Schubert Says $75M Suit Belongs in NY
------------------------------------------------------------------
Kali Hays at Bankruptcy Law360 reported that Garvey Schubert Barer
urged a Connecticut bankruptcy court on Nov. 9, 2015, to transfer a
$75 million malpractice suit brought by rapper 50 Cent over
allegedly botched licensing deals and arbitration with a headphones
maker he'd invested in, saying the case belongs in New York, where
the work took place years before his recent bankruptcy.
The firm and attorneys Hillary Hughes, Paul Trinchero, R. Bruce
Beckner and Je Jun Moon said not only does the malpractice case
have "nothing to do" with the rapper's bankruptcy case.
Curtis James Jackson, III, aka 50 Cent, filed for Chapter 11
bankruptcy protection (Bankr. D. Conn. Case No. 15-21233) on July
13, 2015.
DANIEL LEE RITZ: Supreme Court Will Hear Bankruptcy Fraud Case
--------------------------------------------------------------
Stephanie Cummings, writing for Bloomberg Brief - Distress &
Bankruptcy, reported that the U.S. Supreme Court agreed to hear its
first bankruptcy case of the October 2015 term, and will decide
whether or not "actual fraud" under the Bankruptcy Code requires a
false representation.
According to the report, the appeal comes from the U.S. Court of
Appeals for the Fifth Circuit, which said
barring discharge of a debt for "actual fraud" requires a false
representation by the debtor. This ruling was at odds with a
Seventh Circuit case from 2000 which held that fraudulent conduct
can be enough to constitute "actual fraud" even if no false
representation is made, the report noted. Shortly after the Fifth
Circuit's decision, the First Circuit also weighed in on this issue
and adopted the Seventh Circuit's approach, the report pointed
out.
The debtor in this case transferred funds from a manufacturing
company to several other entities that he controlled for less than
"reasonably equivalent value," the report related. Creditor Husky
International Electronics, Inc. sued to have the debt it was owed
declared nondischargeable, the report added.
The case is Husky Int'l Elecs., Inc. v. Ritz (In re Ritz), U.S.,
No. 15-cv-00145, cert. granted11/6/15).
DETROIT COMMUNITY: S&P Removes 'B-' Rating on 2005 Revenue Bonds
----------------------------------------------------------------
Standard & Poor's Ratings Services removed its 'B-' rating on
Detroit Community Schools (DCS), Mich.'s series 2005 public school
academy revenue bonds from CreditWatch, where it was placed with
negative implications on Sept. 10, 2015. S&P removed the rating
from CreditWatch as the school has since provided sufficient
information to maintain S&P's rating. The outlook is stable.
"The stable outlook reflects our view of DCS' stabilizing
enrollment and improved operating performance in fiscal 2015," said
Standard & Poor's credit analyst Avani Parikh, "with maximum annual
debt service (MADS) coverage right at 1x and a weak, but steady
liquidity position." S&P understands the school remains in
violation of its fund balance covenant, but is retaining the
necessary funds toward meeting requirements, and the violation is
not considered an event of default nor have bondholders taken any
action at this time. In S&P's view, as DCS' financial metrics
remain slim, the school must demonstrate a sustained trend of
headcount and operational stability, with continued progress toward
resolving the covenant violation, to maintain the rating.
"The 'B-' rating further reflects our view of the school's
significant enrollment decline since fall 2010 due to managerial
instability and an economically challenged service area," she
added, "though headcount for fall 2015 is up 1.6% and may indicate
early signs of stabilization." Other factors include:
-- Limited liquidity that has necessitated a continued and
increased degree of short-term cash-flow borrowing;
-- Testing outcomes that have placed both DCS' elementary and
high school among the lowest-performing schools in Michigan
historically, although last available results for the high
school show improvement;
-- Limited financial oversight due to significant turnover in
the business office;
-- Challenging state and local economy; and
-- Inherent uncertainty associated with charter renewals given
that the bonds' final maturity exceeds the duration of the
existing charter.
Partly offsetting the aforementioned weaknesses, in S&P's view, are
the school's:
-- History of balanced operations generating sufficient 1x MADS
coverage, aside from the sizable fiscal 2014 deficit which
produced coverage of only 0.2x;
-- Manageable MADS burden; and
-- Limited capital needs and subsequent lack of near-term plans
to issue new debt.
DCS is a grade K-12 charter school serving just under 800 students
in Southfield.
"We could consider a negative rating action within the outlook
period if enrollment declines from current levels, operations or
coverage are pressured, or liquidity falls below the current 15
days' cash on hand," added Ms. Parikh. In addition, if the school
fails to make progress toward bond covenant compliance, with
resulting bondholder action or potential acceleration, S&P could
lower the rating.
If the school can successfully grow enrollment, academics continue
to improve, operations are sustained to cover debt service by at
least 1x, liquidity improves, and the unrestricted fund balance
achieves compliance with bond covenants, S&P could consider a
positive rating action over time.
DEWEY & LEBOUEF: Trustee Settles Legal Fees Fight with PE Firm LCN
------------------------------------------------------------------
Jonathan Randles at Bankruptcy Law360 reported that the trustee
overseeing the liquidation of Dewey & LeBouef said on Nov. 11,
2015, in New York court that it has resolved a dispute with private
equity firm LCN Capital Partners LLC over allegedly unpaid legal
fees, resolving a year-old lawsuit stemming from the law firm's
epic 2012 collapse.
In a letter to U.S. District Judge Paul Engelmayer, FTI Consulting
Inc. in its capacity as Dewey's secured lender trustee said it has
"reached a settlement" with LCN and preparing papers for the court
to review.
About Dewey & LeBoeuf
Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 12-12321) to complete the wind-down of its operations.
The firm had struggled with high debt and partner defections.
Dewey disclosed debt of $245 million and assets of $193 million in
its chapter 11 filing late evening on May 29, 2012.
Dewey & LeBoeuf LLP operated as a prestigious, New York City-
based, law firm that traced its roots to the 2007 merger of Dewey
Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird
-- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in
1929. In recent years, more than 1,400 lawyers worked at the firm
in numerous domestic and foreign offices.
At its peak, Dewey employed about 2,000 people with 1,300 lawyers
in 25 offices across the globe. When it filed for bankruptcy,
only 150 employees were left to complete the wind-down of the
business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for
$6 million. The Pension Benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel. The Former Partners hired
Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt &
Winters, LLP, as counsel.
FTI Consulting, Inc. was appointed secured lender trustee for the
Secured Lender Trust. Alan Jacobs of AMJ Advisors LLC, was named
Dewey's liquidation trustee. Scott E. Ratner, Esq., Frank A.
Oswald, Esq., David A. Paul, Esq., Steven S. Flores, Esq., at
Togut, Segal & Segal LLP, serve as counsel to the Liquidation
Trustee.
Dewey's liquidating Chapter 11 plan was approved by the bankruptcy
court in February 2013 and implemented in March. The plan created
a trust to collect and distribute remaining assets. The firm
estimated that midpoint recoveries for secured and unsecured
creditors under the plan would be 58.4 percent and 9.1 percent,
respectively.
DI PURCHASER: Moody's Cuts Corporate Family Rating to Caa1
----------------------------------------------------------
Moody's Investors Service downgraded DI Purchaser, Inc.'s ("DI")
Corporate Family Rating to Caa1 from B3 and its Probability of
Default Rating to Caa1-PD from B3-PD. These actions reflect
operating performance below Moody's expectations, resulting in
deteriorated credit metrics, as well as Moody's belief that DI's
credit profile will remain weak over the next 12 to 18 months. The
rating outlook is stable.
The following is a summary of Moody's actions taken for DI
Purchaser, Inc.:
-- Corporate Family Rating, downgraded to Caa1 from B3;
-- Probability of Default Rating, downgraded to Caa1-PD from B3-
PD;
-- Senior Secured Term Loan due 2021, downgraded to Caa1 (LGD4)
from B3 (LGD3);
-- Second Lien Senior Secured Term Loan due 2022, downgraded to
Caa3 (LGD5) from Caa2 (LGD5);
-- Rating outlook, remains stable.
RATINGS RATIONALE
The downgrade of DI's Corporate Family Rating to Caa1 from B3
results from a deterioration of key credit metrics and operating
performance below Moody's expectations to levels supportive of
lower ratings. Inclusive of Moody's standard operating lease and
rent expense adjustments, Moody's projects adjusted debt-to EBITDA
approaching 8.0x and adjusted interest coverage (measured as
(EBITDA-CapEx)-to-interest expense) remaining slightly above 1.0x
over the next 12 to 18 months. As of June 30, 2015, DI's pro forma
adjusted debt leverage was about 8.75x and its pro forma adjusted
interest coverage was about 1.1x (ratios incorporate Moody's
standard operating lease and rent expense adjustments along with
full-year earnings from recent acquisitions). Both metrics breached
our previously identified downgrade triggers. DI has faced a
challenging operating environment in 2015. Low oil prices, less
activity in oil sands, a flat Canadian commercial construction
market, and a stronger US dollar have all contributed to DI's
declining performance. It is Moody's expectation that the oil and
gas segment will continue to underperform over the next 12 to 18
months.
DI's liquidity profile is adequate at this time, and the company
could be challenged to fund its basic cash requirements and debt
service payments over our time horizon. Borrowings under the
company's revolving credit facility are elevated, which limits the
ability for DI to use the facility to support basic cash
requirements in the event of a shortage in cash from operations. DI
continues to grow partially through bolt-on acquisitions, which are
funded from cash, ownership equity, and borrowings under the
revolver if necessary. The use of cash and potential revolver
borrowings for these transactions limits the company's ability to
permanently reduce balance sheet debt, and could cause debt
leverage metrics to rise if the target company underperforms or
cost synergies are not realized. Offsetting some of these concerns
is the DI's extended maturity window, with no debt maturities until
its revolving credit facility expires in 2019.
The stable rating outlook reflects our view that DI's key credit
metrics and operating performance will remain in line with the
current ratings over the next 12 to 18 months.
A rating downgrade could ensue if operating performance fails to
improve, resulting in the following:
-- Debt-to-EBITDA remains near 9.0x (pro forma 8.75x as of 2Q15)
-- (EBITDA-CapEx)-to-interest expense is sustained below 1.0x
(pro forma 1.1x for LTM 2Q15)
-- Further deterioration in the company's liquidity profile,
including excessive usage of the revolving credit facility for
acquisitions and/or significant levels of dividends
A rating upgrade for DI is not likely at this time. However, a
positive rating action could occur if DI's operating performance
exceeds our expectations, resulting in the following:
-- Debt-to-EBITDA remains below 6.5x
-- (EBITDA-CapEx)-to-interest expense is sustained above 1.5x
-- A better liquidity profile, supported by revolver availability
and free cash flow used for permanent reduction of balance
sheet debt
DI Purchaser, Inc., operating as Distribution International ("DI"),
is a distributor and fabricator of insulation and related products
in North America. The company is headquartered in Houston, Texas
and primarily serves the industrial, commercial, and marine end
markets. Affiliates of Advent International Corporation are the
primary owners of DI. Historical revenues over the twelve months
through June 30, 2015 totaled approximately $511 million.
DIAMOND RESORTS: S&P Affirms 'B+' CCR on Upsized Term Loan
----------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'B+'
corporate credit rating on Las Vegas-based Diamond Resorts
International Inc. The outlook is stable.
At the same time, S&P affirmed its 'B+' issue-level rating on
subsidiary borrower Diamond Resorts Corp.'s upsized aggregate $620
million senior secured credit facility (consisting of a $25 million
revolver due 2019 and an upsized $595 million term loan due 2021).
S&P's recovery rating on the credit facility remains '3',
indicating its expectation for meaningful (50%-70%; lower half of
the range) recovery for lenders in the event of a payment default.
The additional secured debt in the capital structure does not
impair recovery prospects for lenders primarily because S&P raised
its emergence enterprise value on Diamond to reflect recent
acquisitions.
Diamond plans to use proceeds from the proposed add-on for general
corporate purposes, including replenishing cash balances used to
acquire Gold Key Resorts in October 2015.
"Although the proposed $150 million senior secured term loan add-on
modestly increases our base-case forecast for consolidated leverage
in 2015, the rating affirmation reflects our expectation that good
anticipated organic EBITDA growth this year and a full year's
EBITDA contribution from the Gold Key acquisition in 2016 will
result in consolidated debt to EBITDA (including securitization
debt) of about 4x and FFO to debt in the mid-teens area through
2016," said Standard & Poor's credit analyst Shivani Sood.
Although these credit measures might otherwise be aligned with an
improved financial risk score, S&P believes that high potential
EBITDA volatility over the economic cycle translates to its
"aggressive" financial risk assessment. This is largely because
S&P believes Diamond has shifted its sales strategy over the past
several years to raise the average sales price per timeshare
transaction partly by extending a higher level of financing to its
customers. S&P also believes this will have the effect of making
Diamond more reliant over time on external financing to achieve
sales budgets. During periods of economic stress, external sources
of capital to finance timeshare sales can become costly and
constrained for a period of time, resulting in the need to reduce
sales to preserve liquidity and the potential for EBITDA
volatility. Diamond's resort management fee business, which
represented about 25%% of revenue in the first nine months of 2015,
provides a more stable, higher-margin revenue source and partly
mitigates anticipated high profit volatility.
The stable outlook reflects S&P's belief that EBITDA growth should
offset additional consolidated debt balances (to finance timeshare
notes receivables originations) through 2016, enabling Diamond to
sustain debt to EBITDA below 5x, FFO to total debt above 12%, and
EBITDA coverage of interest expense above 5x.
S&P could downgrade the company because of a deterioration in
operating performance or increased leverage as a result of
acquisitions or increased capital returns to shareholders that
results in adjusted debt to EBITDA above 5x or FFO to total debt
below 12%. Additionally, S&P would also consider a lower rating if
access to external liquidity sources meaningfully deteriorates over
the intermediate term.
S&P would consider raising the rating if it was confident that
Diamond could comfortably sustain adjusted consolidated debt to
EBITDA below 4x and FFO to debt above 20%, incorporating a high
level of anticipated profit volatility over the economic cycle.
DJO GLOBAL: S&P Affirms 'B-' CCR & Revises Outlook to Stable
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit rating on DJO Global Inc. and revised the outlook to stable
from positive.
Medical device manufacturer DJO Global Inc. announced plans to wind
down its Empi product line (including transcutaneous electrical
nerve stimulation [TENS], Neuromuscular Electrical Nerve Stimulator
[NMES], and other products), given continued reimbursement
pressures.
"We reduced our 2016 forecast to reflect the absence of this
product line, as well as our expectation for some incremental
one-time wind-down costs over the next couple of quarters," said
Standard & Poor's credit analyst David Kaplan. S&P also revised
its growth assumptions (aside from Empi) modestly lower than its
prior forecast.
The stable outlook reflects S&P's view that the company will only
be able to generate nominal levels of free cash flow in 2016 and
2017, following the loss of EBITDA from the Empi product line.
DJO's business risk profile reflects significant pricing pressure
and reimbursement risks from third-party payors, including the risk
that insurance payors may be unwilling to cover expenditures for
certain of DJO products. The company's EBITDA margins are below
average, relative to other medical product companies.
S&P views DJO's products as more vulnerable to pricing pressures
from payors than the leading high-tech health care equipment
companies and the company's profitability margins of around 20%,
which are weaker than peers, support that conclusion. The
company's margins have also been less stable than those peers.
The business risk also incorporates DJO's solid competitive
position in its orthopedic product markets and significant
diversity of products. Demand for the company's products is helped
by, the aging population and increasing incidence of obesity, which
contribute to the prevalence of arthritis and diabetes. In S&P's
assessment, the company's business risk profile is "weak".
The company's very high leverage is a dominant factor in S&P's
assessment of the company's financial risk profile, with debt
leverage of 9.2x as of Sept, 30, 2015. S&P expects leverage will
rise to 9.9x for 2015, and to 10.6x for 2016, driven by the loss of
the Empi product line. With DJO's heavy debt burden, S&P expects
EBITDA coverage of interest to remain thin, near 1.5x. Furthermore,
the company reported a cash flow deficit in 2013 and 2014.
S&P's rating outlook on DJO Global Inc. is stable, reflecting S&P's
expectation of continued very high leverage, low-single-digit
annual organic revenue growth (excluding the impact of Empi)
broadly in line with growth for the markets DJO serves, and
negligible free operating cash flow generation.
S&P could consider a downgrade if it expects EBITDA margins to
narrow by about 200 basis points, in which case EBITDA would not be
sufficient to cover interest and capital expenditures, and the
company would need to use the revolver to fund operations. S&P
could also lower the rating if covenant cushions fall below 10% or
availability of the revolver is substantially reduced, resulting in
impaired liquidity.
S&P could raise its rating if EBITDA margins widen 200 basis
points, which would enable DJO to consistently generate annual free
operating cash flow in excess of $25 million, and to sustain
adjusted debt leverage below 7.5x.
DOMUM LOCIS: Kilroy Settles Disputes With Lloyds TSB Bank
---------------------------------------------------------
Domum Locis LLC is asking the U.S. Bankruptcy Court for the Central
District of California to approve, pursuant to Rule 9019 of the
Federal Rules of Bankruptcy Procedure, a compromise and settlement
between the Debtor, Michael J. Kilroy, the Debtor's principal and
sole managing member, on the one hand, and Lloyds TSB Bank, plc, on
the other hand.
The Settlement is a compromise of lawsuits, claims, cross-claims,
and disputes that have spanned four years across two California
state cases, two federal bankruptcy cases, and appeals to the
Bankruptcy Appellate Panel and, now, the Ninth Circuit Court of
Appeals. The Debtor and Lloyds have been embroiled in costly
litigation as to whether, among other things, certain real
properties are property of the estate since the Petition Date.
Prior to the bankruptcy filing, the Debtor and Lloyds have been
embroiled in litigation as to, among other things, whether the
Strand, the North Flores, and Vista Chino properties are property
of the estate. Lloyds filed two motions for relief from stay, the
Debtor filed motions to utilize cash collateral and approve certain
leases and commenced an adversary proceeding for, among other
things, declaratory relief that the properties are property of the
estate. Since the Petition Date, the receiver has maintained
control of the properties and the rents generated by the
properties.
In summary, the Settlement fixes the amount of Lloyds' six secured
claims against the Properties and three other properties owned by
Kilroy and provides Lloyds with a general unsecured claim for
$1,500,000 for its attorneys' fees and costs. The Settlement
provides for the removal of the state-court appointed receiver and
allows the Kilroy Parties to take control of their properties,
manage them through a professional management company, and
refinance or market them for sale. The Kilroy Parties will have
until April 29, 2016, to payoff Lloyds' secured claims as to the
respective properties or otherwise relinquish the properties to
Lloyds by way of grant deeds.
The terms of the Settlement are set forth in greater detail in the
Motion filed by the Debtor. A copy of the Motion is available for
free at:
http://bankrupt.com/misc/Domum_Locis_265_M_Settle_Lloyds.pdf
About Domum Locis
Domum Locis LLC owns real properties more commonly known and
described as (i) the "Strand Property" located at 1614-1618 The
Strand, Hermosa Beach, California, (ii) the "North Flores
Property," located at 1308 N. Flores Street, West Hollywood,
California, and (iii) the "Vista Chino Property," located at 424 W.
Vista Chino, Palm Springs, California.
Domum Locis LLC filed a Chapter 11 bankruptcy petition (Bankr. C.D.
Cal. Case No. 14-23301) on July 11, 2014. Judge Robert N. Kwan
presides over the case. Michael J. Kilroy, the managing member,
signed the petition.
On April 13, 2015, Mr. Kilroy commenced his bankruptcy case by
filing a voluntary petition under chapter 11 of the Bankruptcy
Code. Kilroy owns three real property assets and interests in
several partnerships and limited liability companies that, in turn,
own real estate. More specifically, Kilroy owns these real
properties, all of which are subject to liens held by Lloyds: (i)
the "2175 Southridge Drive Property" in Palm Springs, comprised of
two parcels with one house on it; (ii) the "2203 Southridge Drive
Property" in Palm Springs, comprised of one parcel with one house
on it and an adjacent second parcel that is a vacant lot; and (iii)
the "2212 Southridge Drive Property" in Palm Springs, comprised of
one parcel with one house on it and an adjacent second parcel that
is a vacant lot.
Domum Locis tapped Cypress LLP as general bankruptcy counsel.
Domum Locis reported $14.6 million in assets and $11.04 million in
liabilities.
DRAFTKINGS INC: NY AG Schneiderman Seeks Preliminary Injunction
---------------------------------------------------------------
Attorney General Eric Schneiderman filed an enforcement action in
New York State Supreme Court in the County of New York, seeking a
preliminary injunction against DraftKings and FanDuel. The
Attorney General's suit details alleged violations of law by
DraftKings and FanDuel.
The Attorney General's memorandum of law and complaint against
DraftKings can be found at:
http://www.ag.ny.gov/pdfs/DK_MOL.pdf
http://www.ag.ny.gov/pdfs/DK_Complaint.pdf
A copy of the memorandum of law and complaint against FanDuel can
be found at:
http://www.ag.ny.gov/pdfs/FD_MOL.pdf
http://www.ag.ny.gov/pdfs/FD_Complaint.pdf
The following are excerpts of the memorandum of law filed by the
Office of the Attorney General:
The New York State Constitution has prohibited bookmaking and other
forms of sports gambling since 1894. Under New York law, a wager
constitutes gambling when it depends on either a (1) "future
contingent event not under [the bettor's] control or influence" or
(2) "contest of chance." So-called Daily Fantasy Sports ("DFS")
wagers fit squarely in both these definitions, though by meeting
just one of the two definitions DFS would be considered gambling.
DFS is nothing more than a rebranding of sports betting. It is
plainly illegal.
Yet FanDuel and DraftKings insist that DFS is not gambling because
it involves skill. But this argument fails for two clear reasons.
First, this view overlooks the explicit prohibition against
wagering on future contingent events, a statutory test that
requires no judgment of the relative importance of skill and chance
-- they are irrelevant to the question. Second, the key factor
establishing a game of skill is not the presence of skill, but the
absence of a material element of chance. Here, chance plays just
as much of a role (if not more) than it does in games like poker
and blackjack. A few good players in a poker tournament may rise
to the top based on their skill; but the game is still gambling.
So is DFS.
FanDuel and DraftKings' current denials about DFS constituting
gambling are belied by how the sites depicted themselves in the
past and how they portray themselves behind closed doors.
FanDuel's DFS contests were designed by a veteran of the legal
online betting industry in the United Kingdom, Nigel Eccles. The
company admitted to an early investor that its target market is
male sports fans who "cannot gamble online legally."
DraftKings depicts itself to investors in a similar fashion. For
example, in one investor presentation, DraftKings pitched itself to
a prospective investor by noting the "Global opportunity for online
betting," pointing to the massive revenue of the "global online
poker market," and making direct comparisons throughout the
presentation to poker and sports wagering.
The CEO of DraftKings previously spoke openly about DraftKings as a
gambling company. He called DFS a "mash[-]up between poker and
fantasy sports," suggested that DraftKings operates in the
"gambling space," and described its revenue model as "identical to
a casino."
The rejection of the gambling label by the DFS sites is
particularly hard to square with the overt strategy of recruiting
gamblers. For FanDuel, this has meant hiring a former top
executive from Full Tilt, the online poker company, and affiliating
with gambling industry stalwarts like "Vegas Insider" and BetVega,
a sports betting and handicapping website. For DraftKings, this
has meant aligning itself closely and negotiating sponsorships with
other gambling ventures, like the World Series of Poker and the
Belmont Stakes.
DraftKings has also embedded gambling keywords into the programming
code for its website. Some of these keywords include "fantasy golf
betting," "weekly fantasy basketball betting," "weekly fantasy
hockey betting," "weekly fantasy football betting," "weekly fantasy
college football betting," "weekly fantasy college basketball
betting," "Fantasy College Football Betting," "daily fantasy
basketball betting," and "Fantasy College Basketball Betting."
This increases the likelihood that search engines, like Google,
will send users looking for gambling straight to the DraftKings
site.
FanDuel's advertisements commonly showcase testimonials from
ostensibly ordinary DFS players (g.,"Zack from Fairfield,
California"), and play up the ease of playing and of winning huge
cash prizes . . . The reality is that like poker, blackjack, and
horseracing, a small percentage of professional gamblers use
research, software, and large bankrolls to extract a
disproportionate share of DFS jackpots. With poker and DFS,
professional players, known as "sharks," profit at the expense of
casual players, known as "minnows." The numbers show that the vast
majority of players are net losers, losing far more money playing
on the sites than they win. DraftKings data show that 89.3% of DFS
players had an overall negative return on investment across 2013
and 2014.
While irresponsibly denying their status as gambling companies, the
DFS Sites pose precisely the same risks to New York residents that
New York's anti-gambling laws were intended to avoid. Experts in
gambling addiction and other compulsive behaviors have identified
DFS as a serious and growing threat to people at risk for, or
already struggling with, gambling-related illnesses.
Jeffrey L. Derevensky, Director of the International Centre for
Youth Gambling Problems and High-Risk Behavior at McGill
University, notes that, among other things, false or misleading
representations of the skill involved in DFS "can lead players to a
preoccupation with DFS, chasing of losses, and developing symptoms
and behaviors associated with a gambling disorder."
EAST MAIN STREET: Case Summary & 16 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: East Main Street Building 57, LLC
40 Mechanic Street
Marlborough, MA 01752
Case No.: 15-42224
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Judge: Hon. Christopher J. Panos
Debtor's Counsel: John M. McAuliffe, Esq.
MCAULIFFE & ASSOCIATES, P.C.
430 Lexington Street
Newton, MA 02466
Tel: (617) 558-6889
Email: john@jm-law.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by David Depietri, manager.
A list of the Debtor's 16 largest unsecured creditors is available
for free at http://bankrupt.com/misc/mab15-42224.pdf
ELBIT IMAGING: InSightec Investigates Use of MR Guided Ultrasound
-----------------------------------------------------------------
Elbit Imaging Ltd. announced that it was informed by InSightec
Ltd., that it is investigating the use of MR Guided Focused
Ultrasound technology to temporarily open the blood brain barrier.
The human body has a protective barrier that restricts the passage
of substances from the bloodstream into the brain, protecting it
from toxic chemicals. This barrier also prevents the delivery of
essential medication to reach the brain.
In a current study, Researchers in Health Sciences Centre in Canada
have succeeded to non-invasively open the blood-brain barrier
("BBB"), using the Exablate Neuro platform, to allow a more
effective delivery of life-saving therapies, such as chemotherapy,
into a patient’s malignant brain tumor.
This patient treatment is part of a pilot study to investigate the
feasibility, safety and preliminary efficacy of focused ultrasound
to temporarily open the BBB to deliver chemotherapy to brain
tumors.
Up to 10 patients are participating in the study and they were
already scheduled for traditional neurosurgery to remove parts of
their brain tumors.
Funding for the study has been provided by The Focused Ultrasound
Foundation and InSightec is its regulatory sponsor.
The Company holds approximately 86.2% of the share capital of Elbit
Medical Technologies Ltd. (on a fully diluted basis) which, in
turn, holds approximately 29.6% of the share capital in InSightec
(on a fully diluted basis).
About Elbit Imaging
Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF)
holds investments in real estate and medical companies. The
Company, through its subsidiaries, also develops shopping and
entertainment centers in Central Europe and invests in and manages
hotels.
Since February 2013, Elbit has intensively endeavored to come to
an arrangement with its creditors. Elbit has said it has been
hanging by a thread for more than five months. It has encountered
cash flow difficulties and this burdens its day to day activities,
and it certainly cannot make the necessary investments to improve
its assets. In light of the arrangement proceedings, and
according to the demands of most of the bondholders, as well as an
agreement that was signed on March 19, 2013, between Elbit and the
Trustees of six out of eight series of bonds, Elbit is prohibited,
inter alia, from paying off its debts to the financial creditors
-- and as a result a petition to liquidate Elbit was filed, and
Bank Hapoalim has declared its debts immediately payable,
threatening to realize pledges that were given to the Bank on
material assets of the Company -- and Elbit undertook not to sell
material assets of the Company and not to perform any transaction
that is not during its ordinary course of business without giving
an advance notice to the trustees.
Accountant Rony Elroy has been appointed as expert for examining
the debt arrangement in the Company.
In July 2013, Elbit Imaging's controlling shareholders, Europe-
Israel MMS Ltd. and Mr. Mordechay Zisser, notified the Company
that the Tel Aviv District Court has appointed Adv. Giroa Erdinast
as a receiver with regards to the ordinary shares of the Company
held by Europe Israel securing Europe Israel's obligations under
its loan agreement with Bank Hapoalim B.M. The judgment stated
that the Receiver is not authorized to sell the Company's shares
at this stage. Following a request of Europe-Israel, the Court
also delayed any action to be taken with regards to the sale of
those shares for a period of 60 days. Europe Israel and
Mr. Zisser have also notified the Company that they utterly reject
the Bank's claims and intend to appeal the Court's ruling.
As of June 30, 2015, the Company had NIS 2.8 billion in total
assets, NIS 2.5 billion in total liabilities and NIS 338.3 million
in shareholders' equity.
ENERGY FUTURE: NextEra Statement on Oncor Purchase Off Docket
-------------------------------------------------------------
Peg Brickley, writing for Dow Jones' Daily Bankruptcy Review,
reported that NextEra Energy's statement that it is still
interested in buying Energy Future Holdings Corp.'s valuable
transmissions business was stricken from the docket of Energy
Future's chapter 11 case.
"The docket is not a place for statements," said Judge Christopher
Sontchi, granting a request from creditors that are part of Energy
Future's chosen group to buy its Oncor unit to remove NextEra's
"untimely" filing from the official record of Energy Future's
chapter 11 case before the U.S. Bankruptcy Court in Wilmington,
Del., the DBR report related.
About Energy Future Holdings Corp.
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a Portfolio
of competitive and regulated energy businesses in Texas.
Oncor, an 80 percent-owned entity within the EFH group, is the
Largest regulated transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
On April 29, 2014, Energy Future Holdings and 70 affiliated
companies sought Chapter 11 bankruptcy protection (Bankr. D. Del.
Lead Case No. 14-10979) after reaching a deal with some key
financial stakeholders to keep its businesses operating while
reducing its roughly $40 billion in debt.
The Debtors' cases have been assigned to Judge Christopher S.
Sontchi (CSS). The Debtors are seeking to have their cases
Jointly
administered for procedural purposes.
As of Dec. 31, 2013, EFH Corp. reported assets of $36.4 billion in
book value and liabilities of $49.7 billion. The Debtors have $42
billion of funded indebtedness.
EFH's legal advisor for the Chapter 11 proceedings is Kirkland &
Ellis LLP, its financial advisor is Evercore Partners and its
restructuring advisor is Alvarez & Marsal. The TCEH first lien
lenders supporting the restructuring agreement are represented by
Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor,
and Millstein & Co., LLC, as financial advisor.
The EFIH unsecured creditors supporting the restructuring
agreement
are represented by Akin Gump Strauss Hauer & Feld LLP, as legal
advisor, and Centerview Partners, as financial advisor. The EFH
equity holders supporting the restructuring agreement are
represented by Wachtell, Lipton, Rosen & Katz, as legal advisor,
and Blackstone Advisory Partners LP, as financial advisor. Epiq
Systems is the claims agent.
Wilmington Savings Fund Society, FSB, the successor trustee for
the
second-lien noteholders owed about $1.6 billion, is represented by
Ashby & Geddes, P.A.'s William P. Bowden, Esq., and Gregory A.
Taylor, Esq., and Brown Rudnick LLP's Edward S. Weisfelner, Esq.,
Jeffrey L. Jonas, Esq., Andrew P. Strehle, Esq., Jeremy B. Coffey,
Esq., and Howard L. Siegel, Esq.
An Official Committee of Unsecured Creditors has been appointed in
the case. The Committee represents the interests of the unsecured
creditors of ONLY of Energy Future Competitive Holdings Company
LLC; EFCH's direct subsidiary, Texas Competitive Electric Holdings
Company LLC; and EFH Corporate Services Company, and of no other
debtors. The Committee has selected Morrison & Foerster LLP and
Polsinelli PC for representation in this high-profile energy
restructuring. The lawyers working on the case are James M. Peck,
Esq., Brett H. Miller, Esq., and Lorenzo Marinuzzi, Esq., at
Morrison & Foerster LLP; and Christopher A. Ward, Esq., Justin K.
Edelson, Esq., Shanti M. Katona, Esq., and Edward Fox, Esq., at
Polsinelli PC.
ENTERGY RHODE: S&P Assigns Prelim. 'BB' Rating on $325MM Loan
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'BB'
preliminary ratings and '1' preliminary recovery ratings to Entergy
Rhode Island State Energy L.P.'s $325 million senior secured term
loan B due 2022 and $50 million senior secured revolving credit
facility due 2020. The term loan will be repaid through the
minimal 1% mandatory amortization that is typical of a term loan B
and a 75% excess cash flow sweep that is subject to increase based
on a target debt balance. The '1' recovery rating indicates S&P's
expectation of very high (90% to 100%) recovery of principal if a
payment default occurs.
S&P's expectation is that final documentation will be consistent
with its published criteria on project financings and limited
purpose entities. Ratings are preliminary, subject to
documentation review that includes, among others, a
non-consolidation opinion between the project and the sponsor
funds.
The entity that will initially issue the debt is Entergy Rhode
Island Energy Center L.P. This entity will undergo a name change
to Rhode Island State Energy Center L.P. RISEC will be a limited
purpose, bankruptcy-remote entity that owns a 583-MW natural
gas-fired power plant in Johnston, R.I. S&P's preliminary 'BB'
rating primarily reflects the project's merchant exposure to ISO-NE
SEMA/RI energy and capacity markets, and the limitation of being a
single asset. These risks are partially offset by Entergy Rhode
Island's strong positioning in the ISO-NE SEMA/RI and operating
track record since it reached commercial operations in November
2002.
The stable outlook reflects S&P's expectation that Entergy Rhode
Island will continue its strong operational performance, and take
advantage of its positioning in the constrained ISO-NE SEMA/RI
region to pay down a significant portion of the debt during the
term loan.
ESTERLINA VINEYARDS: Taps Eric Sterling as Responsible Person
-------------------------------------------------------------
Esterlina Vineyards & Winery, LLC, asks the U.S. Bankruptcy Court
for the Northern District of California for permission to designate
Eric Sterling as its responsible person.
Mr. Sterling may be reached at:
Eric Sterling
Esterlina Vineyards
435 W. Dry Creek Road
Healdsburg, CA 95448
Tel: (707) 481-7355
About Esterlina Vineyards & Winery, LLC
Esterlina Vineyards & Winery, LLC filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Calif. Case No. 15-10841) on Aug. 12, 2015.
Eric Sterling signed the petition as president. The Debtor
disclosed total assets of $12,759,291 and total liabilities of
$8,288,420. The Law Offices of Provencher & Flatt LLP
serves as the Debtor's counsel. The case is assigned to Judge
Thomas E. Carlson.
ESTERLITA CORTES TAPANG: Court OKs Interest Rate Cram Down
----------------------------------------------------------
In a Chapter 11 case, the United States Bankruptcy Court for the
Northern District of California has been asked to determine whether
to cram down the interest rate on a loan pertaining to real
property located at 523 Burlingame Avenue in Capitola, California
for plan confirmation purposes.
In a decision issued on December 17, 2014, after briefing by the
parties, a judge ruled that while Debtor Esterlita Cortes Tapang
bears the overall burden of proof to show that the confirmation
requirements are met, The Creditor bears the burden of proof on the
appropriate risk factors to be applied. The Creditor has failed to
meet its burden in establishing any relevant risk factors which
would support a greater rate of interest than what Debtor has
proposed.
In a Memorandum Decision dated November 5, 2015, which is available
at http://is.gd/8hen2Ifrom Leagle.com, Judge Charles Novack of the
United States Bankruptcy Court for the Northern District of
California ruled that a 5% interest rate, consisting of a 3.25%
prime rate plus a 1.75% risk premium, is appropriate for the loan
on the Property for plan purposes and sufficiently compensates
Creditor for any risks present.
The case is In re: ESTERLITA CORTES TAPANG, Chapter 11, Debtor,
CASE NO. 11-59479 CN.
Esterlita Cortes Tapang, Debtor, represented by:
Francisco J. Aldana, Esq.
LAW OFFICES OF FRANCISCO JAVIER ALDANA
600 B Street 21st Floor - Suite 2130
San Diego, California 92101-4512
Phone: 619-236-8355
Toll Free: 888-222-5864
Extension 85
FaX: 888-222-5864
EVANS & SUTHERLAND: Posts $921,000 Net Income for Third Quarter
---------------------------------------------------------------
Evans & Sutherland Computer Corporation filed with the Securities
and Exchange Commission its quarterly report on Form 10-Q
disclosing net income of $921,000 on $9.37 million of sales for the
three months ended Oct. 2, 2015, compared to net income of $639,000
on $7.65 million of sales for the three months ended Sept. 26,
2014.
For the nine months ended Oct. 2, 2015, the Company reported a net
loss of $1.67 million on $27.66 million of sales compared to a net
loss of $780,000 on $20.04 million of sales for the nine months
ended Sept. 26, 2014.
As of Oct. 2, 2015, the Company had $26.11 million in total assets,
$26.4 million in total liabilities, and a $308,000 total
stockholders' deficit.
A full-text copy of the Form 10-Q is available for free at:
http://is.gd/6I5UwU
About Evans & Sutherland
Salt Lake City, Utah-based Evans & Sutherland Computer Corporation
in conjunction with its wholly owned subsidiary, Spitz Inc.,
creates innovative digital planetarium systems and cutting-edge,
fulldome show content. E&S has developed Digistar 5, the world's
leading digital planetarium with fulldome video playback, real-
time computer graphics, and a complete 3D digital astronomy
package fully integrated into a single theater system. This
technology allows audiences to be immersed in full-color, 3D
computer-generated interactive worlds. As a full-service system
provider, E&S also offers Spitz domes, hybrid planetarium systems
integrated with Digistar and a full range of theater systems from
audio and lighting to theater automation. E&S markets include
planetariums, science centers, themed attraction venues, and
premium large-format theaters. E&S products have been installed
in over 1,300 theaters worldwide.
Evans & Sutherland reported a net loss of $1.30 million on $26.5
million of sales for the year ended Dec. 31, 2014, compared with
net income of $1.17 million on $29.6 million of sales for the same
period in 2013.
FAIRCHILD SEMICONDUCTOR: S&P Puts 'BB+' CCR on Watch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services said it placed its 'BB+'
corporate credit rating on San Jose, Calif.-based semiconductor
manufacturer Fairchild Semiconductor International Inc. on
CreditWatch with negative implications.
"The CreditWatch placement follows Fairchild's announcement that it
will be acquired by ON Semiconductor Corp.," said Standard & Poor's
credit analyst Tuan Duong. "Following the close of the
transaction, we will withdraw our rating on Fairchild," he added.
S&P will resolve the CreditWatch status once the transaction
closes.
FANDUEL INC: NY AG Schneiderman Seeks Preliminary Injunction
------------------------------------------------------------
Attorney General Eric Schneiderman filed an enforcement action in
New York State Supreme Court in the County of New York, seeking a
preliminary injunction against DraftKings and FanDuel. The
Attorney General's suit details alleged violations of law by
DraftKings and FanDuel.
The Attorney General's memorandum of law and complaint against
DraftKings can be found at:
http://www.ag.ny.gov/pdfs/DK_MOL.pdf
http://www.ag.ny.gov/pdfs/DK_Complaint.pdf
A copy of the memorandum of law and complaint against FanDuel can
be found at:
http://www.ag.ny.gov/pdfs/FD_MOL.pdf
http://www.ag.ny.gov/pdfs/FD_Complaint.pdf
The following are excerpts of the memorandum of law filed by the
Office of the Attorney General:
The New York State Constitution has prohibited bookmaking and other
forms of sports gambling since 1894. Under New York law, a wager
constitutes gambling when it depends on either a (1) "future
contingent event not under [the bettor's] control or influence" or
(2) "contest of chance." So-called Daily Fantasy Sports ("DFS")
wagers fit squarely in both these definitions, though by meeting
just one of the two definitions DFS would be considered gambling.
DFS is nothing more than a rebranding of sports betting. It is
plainly illegal.
Yet FanDuel and DraftKings insist that DFS is not gambling because
it involves skill. But this argument fails for two clear reasons.
First, this view overlooks the explicit prohibition against
wagering on future contingent events, a statutory test that
requires no judgment of the relative importance of skill and chance
-- they are irrelevant to the question. Second, the key factor
establishing a game of skill is not the presence of skill, but the
absence of a material element of chance. Here, chance plays just
as much of a role (if not more) than it does in games like poker
and blackjack. A few good players in a poker tournament may rise
to the top based on their skill; but the game is still gambling.
So is DFS.
FanDuel and DraftKings' current denials about DFS constituting
gambling are belied by how the sites depicted themselves in the
past and how they portray themselves behind closed doors.
FanDuel's DFS contests were designed by a veteran of the legal
online betting industry in the United Kingdom, Nigel Eccles. The
company admitted to an early investor that its target market is
male sports fans who "cannot gamble online legally."
DraftKings depicts itself to investors in a similar fashion. For
example, in one investor presentation, DraftKings pitched itself to
a prospective investor by noting the "Global opportunity for online
betting," pointing to the massive revenue of the "global online
poker market," and making direct comparisons throughout the
presentation to poker and sports wagering.
The CEO of DraftKings previously spoke openly about DraftKings as a
gambling company. He called DFS a "mash[-]up between poker and
fantasy sports," suggested that DraftKings operates in the
"gambling space," and described its revenue model as "identical to
a casino."
The rejection of the gambling label by the DFS sites is
particularly hard to square with the overt strategy of recruiting
gamblers. For FanDuel, this has meant hiring a former top
executive from Full Tilt, the online poker company, and affiliating
with gambling industry stalwarts like "Vegas Insider" and BetVega,
a sports betting and handicapping website. For DraftKings, this
has meant aligning itself closely and negotiating sponsorships with
other gambling ventures, like the World Series of Poker and the
Belmont Stakes.
DraftKings has also embedded gambling keywords into the programming
code for its website. Some of these keywords include "fantasy golf
betting," "weekly fantasy basketball betting," "weekly fantasy
hockey betting," "weekly fantasy football betting," "weekly fantasy
college football betting," "weekly fantasy college basketball
betting," "Fantasy College Football Betting," "daily fantasy
basketball betting," and "Fantasy College Basketball Betting."
This increases the likelihood that search engines, like Google,
will send users looking for gambling straight to the DraftKings
site.
FanDuel's advertisements commonly showcase testimonials from
ostensibly ordinary DFS players (g.,"Zack from Fairfield,
California"), and play up the ease of playing and of winning huge
cash prizes . . . The reality is that like poker, blackjack, and
horseracing, a small percentage of professional gamblers use
research, software, and large bankrolls to extract a
disproportionate share of DFS jackpots. With poker and DFS,
professional players, known as "sharks," profit at the expense of
casual players, known as "minnows." The numbers show that the vast
majority of players are net losers, losing far more money playing
on the sites than they win. DraftKings data show that 89.3% of DFS
players had an overall negative return on investment across 2013
and 2014.
While irresponsibly denying their status as gambling companies, the
DFS Sites pose precisely the same risks to New York residents that
New York's anti-gambling laws were intended to avoid. Experts in
gambling addiction and other compulsive behaviors have identified
DFS as a serious and growing threat to people at risk for, or
already struggling with, gambling-related illnesses.
Jeffrey L. Derevensky, Director of the International Centre for
Youth Gambling Problems and High-Risk Behavior at McGill
University, notes that, among other things, false or misleading
representations of the skill involved in DFS "can lead players to a
preoccupation with DFS, chasing of losses, and developing symptoms
and behaviors associated with a gambling disorder."
FOREST STREET BUILDING: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: Forest Street Building 165, LLC
40 Mechanic Street
Marlborough, MA 01752
Case No.: 15-42221
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Judge: Hon. Christopher J. Panos
Debtor's Counsel: John M. McAuliffe, Esq.
MCAULIFFE & ASSOCIATES, P.C.
430 Lexington Street
Newton, MA 02466
Tel: (617) 558-6889
Email: john@jm-law.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by David P. Depietri, manager.
The Debtor did not include a list of its largest unsecured
creditors when it filed the petition.
GARY REINERT SR: Dismissal of Ch. 11 Case Upheld
------------------------------------------------
In a Memorandum Opinion dated November 5, 2015, which is available
at http://is.gd/C5t2mgfrom Leagle.com, Judge Arthur J. Schwab of
the United States District Court for the Western District of
Pennsylvania upheld the March 12, 2015 Order of the Bankruptcy
Court dismissing Gary Reinert, Sr.'s Chapter 11 case with
prejudice.
The case is GARY L. REINERT, SR, Appellant, v. ROGER BOULD, OWEN W.
KATZ, ROBERT SHEARER, P.C., and FRED MCMILLEN, Appellees, NO.
15CV0542.
GARY L. REINERT, SR., Appellant, Pro Se.
ROGER BOULD, Appellee, represented by Roger M. Bould, Esq, --
Keevican Weiss Bauerle & Hirsch LLC.
OWEN W. KATZ, Appellee, represented by Bethann R. Lloyd, Esq. --
blloyd@grogangraffam.com -- Grogan Graffam.
ROBERT SHEARER, P.C., Appellee, represented by Robert B. Shearer
FRED MCMILLEN, Appellee, represented by Anthony E. Patterson, Esq.
-- AEPLAWFIRM@AOL.COM -- Anthony E. Patterson & Associates.
GENAERA CORP: Court Denies Suit for UnderValuing Company Assets
---------------------------------------------------------------
Alex Wolf at Bankruptcy Law360 reported that a Pennsylvania federal
judge on Nov. 10, 2015, dismissed a proposed class action alleging
defunct biotechnology firm Genaera Corp. shortchanged shareholders
by undervaluing company assets sold through a liquidating trust,
finding the majority of the revived claims don't show company
directors breached duties owed to investors.
U.S. District Judge Berle M. Schiller's order dismissing investor
Alan Schmidt's class action over actions taken by the directors and
officers before Genaera's June 2009 dissolution marks the second
time he has tossed the suit.
GENESYS RESEARCH: Amends List of Unsecured Creditors
----------------------------------------------------
Genesys Research Institute, Inc., filed with the U.S. Bankruptcy
Court for the District of Massachusetts Amended Summary of
Schedules, including Amended Schedule F.
Copies of the schedules are available for free at
http://bankrupt.com/misc/GenesysResearch_128_Sept28ASAL_F.pdf
http://bankrupt.com/misc/GenesysResearch_129_128_ASAL_F.pdf
About GeneSys Research Institute, Inc.
GeneSys Research Institute, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D. Mass Case No. 15-12794) on July 14, 2015. The
petition was signed by Robert Stemple, clerk and treasurer. Parker
& Associates serves as the Debtor's counsel. The Debtor estimated
assets of $10 million to $50 million and liabilities of at least $1
million. The case is assigned to Judge Joan N. Feeney.
GENESYS RESEARCH: Chapter 11 Trustee Taps Murphy & King as Counsel
------------------------------------------------------------------
Harold B. Murphy, the Chapter 11 trustee of the bankruptcy estate
of Genesys Research Institute, Inc., asks the U.S. Bankruptcy Court
for the District of Massachusetts for permission to employ the law
firm of Murphy & King, Professional Corporation, as his counsel.
M&K will, among other things:
a. consultation with the trustee concerning all matters relating
to the administration of the Debtor's estate;
b. provide assistance to the trustee in preparing the motions,
notices, complaints, and any other pleadings, plan, and documents
that must be prepared or reviewed by an attorney and which are
necessary to the administration of the case; and
c. represent the trustee at all hearings and matters pertaining
to his role as trustee of the Debtor's estate.
According to the trustee, any compensation of M&K for services
performed in the matter will be subject to the provisions of
Section 330 of the Bankruptcy Code and MLBR 2016.
Andrew G. Lizotte, a shareholder of the law firm of M&K, assures
the Court that M&K is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
M&K can be reached at:
Christopher M. Condon
MURPHY & KING
Professional Corporation
One Beacon Street
Boston, MA 02108
Tel: (617) 423-0400
E-mail: cccondon@murphyking.com
About GeneSys Research Institute, Inc.
GeneSys Research Institute, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D. Mass Case No. 15-12794) on July 14, 2015. The
petition was signed by Robert Stemple, clerk and treasurer. Parker
& Associates serves as the Debtor's counsel. The Debtor estimated
assets of $10 million to $50 million and liabilities of at least $1
million. The case is assigned to Judge Joan N. Feeney.
GENESYS RESEARCH: DOE Says Use Federal Grant Funds Doesn't Have OK
------------------------------------------------------------------
The United States of America, on behalf of the Department of
Energy, supplemented its statement in connection with interested
party Dr. Christine Briggs' motion to remove Lynch, Brewer, Hoffman
& Fink LLP as special counsel to Genesys Research Institute, Inc.
According to the U.S. Government, the parties raised additional
issues relating to federal funding requirements. At the conclusion
of the hearing, the Court asked the Massachusetts Office of the
Attorney General to provide an opinion on whether the Debtor had
violated federal funding requirements in connection with its
prepetition expenditures.
For the sake of completeness, DOE provides these supplemental
information on specific questions posed by the Court, among other
things:
1. The Debtor did not seek prior approval to use federal grant
funds on organization costs. Accordingly, any expenditures for
organization costs (or other unallowable costs) violate federal
funding regulations if the Debtor's only source of revenue is
federal grant funding.
2. If the Debtor had no source of revenue other than federal
grants, then the only way it could have spent any money on
organization costs is by using federal funds, which it cannot do.
In a separate filing, the U.S. Government also filed a statement in
connection with Dr. Christine Briggs' motion to remove Lynch,
Brewer, Hoffman & Fink LLP as special counsel to the Debtor.
The U.S. Government said that to the extent that any claimed costs
submitted for payment included such organization costs, the costs
are unallowable and would constitute the basis for a claim against
the Debtor.
Dr. Briggs submitted additional documents pertaining to the motion
to remove Lynch Brewer as special counsel.
The Debtor has opposed to the removal motion, stating that the
arguments are without merit because, LBHF has no interests adverse
to GRI in defending GRI in the Enayo MCAD complaint proceeding, and
LBHF is not required to meet the "disinterested" standard of
Section 327(a) since it is retained as special counsel per Section
327(e).
As reported by the Troubled Company Reporter on Aug. 19, 2015, the
Debtor sought permission to employ Lynch Brewer, Hoffman & Fink,
LLP as special counsel to assist the Debtor with certain corporate
and litigation matters.
The Debtor requires Lynch Brewer to:
(a) assist with various aspects of the Debtor's business
operations including compliance with federal and state laws
and regulation related to the operation of a biomedical
research facility;
(b) represent the Debtor in connection with any pending federal
or state civil action in which the Debtor is named as a
defendant or respondent, including but not limited to
Hlatky v. GRI, et al., Suffolk Superior Court, SUCV2014-
03733-BLS, Weremowicz v. GRI and Briggs v. GRI/Horowitz;
(c) represent the Debtor in connection with pending claims in
the Massachusetts Commission Against Discrimination, MCAD;
and
(d) perform any and all other general, corporate, or litigation
legal services that may be required from time to time in
the ordinary course of the Debtor's business during the
administration of the Estate.
Lynch Brewer will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Lynch Brewer is not holding a retainer but there are funds due the
firm by the insurer for outstanding legal fees in the sum of
$34,721 through June 30, 2015, which the Debtor is responsible if
the insurer fails to pay. In addition, the Debtor owes the Firm
the sum of $41,743 for legal services rendered through June 30,
2015 prior to the Petition Date which are not to be paid by
insurance.
John P. Dennis, partner of Lynch Brewer, 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 estates.
About GeneSys Research Institute, Inc.
GeneSys Research Institute, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D. Mass Case No. 15-12794) on July 14, 2015. The
petition was signed by Robert Stemple, clerk and treasurer. Parker
& Associates serves as the Debtor's counsel. The Debtor estimated
assets of $10 million to $50 million and liabilities of at least $1
million. The case is assigned to Judge Joan N. Feeney.
GENESYS RESEARCH: Mintz Levin Okayed as Special IP Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
authorized Genesys Research Institute, Inc., to employ Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as special
intellectual property counsel.
On Sept. 28, 2015, the Debtor objected to the motion of Philip J.
Hahnfeldt to remove Mintz Levin, stating that the Court must (a)
sustain its objection and deny the motion; and (b) require Mr.
Hahnfeldt to meet and confer with the Debtor on all non-emergency
matters prior to filing further motions with the Court.
According to the Debtor, the motion has no merit because Mr.
Hahnfeldt jumps to incorrect conclusions and erroneously states
that Mintz Levin should be disqualified as special intellectual
property counsel to the Debtor because the firm failed to disclose
its historical representation of Steward Health Care LLC in matters
not adverse to the Debtor.
The Debtor also stated that there is no basis to determine the
motion on an expedited basis. The Debtor filed its application on
July 29.
The remainder of the motion raises mere speculation and conjecture
with respect to the Debtor's historical dealings with interested
party Steward Health Care System LLC and its affiliate Steward St.
Elizabeth's Medical Center of Boston, Inc., none of which are
relevant to the firm's current representation of the Debtor as
special intellectual property counsel, the Debtors assert.
Steward, in its response to the motion, said that Mintz Levin and
its special counsel representative Atty. Adrienne Walker, did not
declare connection between the firm and Steward, a debtor-declared
insider as required, nor did they deny in Atty. Walker's response
that there were numerous prior connections to Stweard.
Steward, in a prior response, stated that it takes no position on
the relief requested. Steward requested that the Court take notice
of the objections and factual inconsistencies, and grant further
relief as it deems appropriate.
Mr. Hahnfeldt, in its motion to remove Mintz Levin, said that there
is a significant conflict of interest since the firm failed to
disclose in its application the central role Mintz Levin and Atty.
Walker are currently serving with respect to steering the course of
the case, not only with respect to IP issues but other bankruptcy
matters.
As reported by the Troubled Company Reporter on Aug. 19, 2015,
Mintz Levin is expected to, among other things:
(a) handle prosecution of the Company's patent applications
around the world;
(b) monitor the Company's issued patents throughout the world,
including payment of various countries' monitoring fees and
charges to local counsel; and
(c) perform any and all other legal services as requested by
the Debtor or its bankruptcy counsel, Parker & Associates
that may be required from time to time in the ordinary
course of the Debtor's business during the administration
of the estate.
Mintz Levin will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Mintz Levin is not holding a retainer or other property of the
Debtor. In addition, the Debtor owes Mintz Levin the approximate
sum of $200,953 for legal services and expenses rendered prior to
the Petition Date.
Adrienne K. Walker, member of Mintz Levin, 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 estates.
About GeneSys Research Institute, Inc.
GeneSys Research Institute, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D. Mass Case No. 15-12794) on July 14, 2015. The
petition was signed by Robert Stemple, clerk and treasurer. Parker
& Associates serves as the Debtor's counsel. The Debtor estimated
assets of $10 million to $50 million and liabilities of at least $1
million. The case is assigned to Judge Joan N. Feeney.
GRAPEVINE DIAMOND: Judgment in Suit vs. City Bank Affirmed
----------------------------------------------------------
City Bank loaned Grapevine Diamond L.P. money to purchase real
property in Grapevine, Texas, from Jonathan Aflatouni. Youval Zive
guaranteed the debt, and Aflatouni retained a second lien.
After Grapevine Diamond defaulted, City Bank foreclosed and sued
Zive on his guaranty for the deficiency. Subsequent third-party
defendants Grapevine Diamond and Aflatouni asserted cross-claims
against City Bank for wrongful foreclosure. The parties filed
cross-motions for summary judgment. The trial court ultimately
denied Appellants Grapevine Diamond, L.P., Jonathan Aflatouni, and
Youval Zive's motions, granted City Bank's motions, and rendered
judgment for City Bank.
In a Memorandum Opinion dated November 10, 2015, which is available
at http://is.gd/h2wPB2from Leagle.com, the Court of Appeals of
Texas, Fifth District, Dallas, affirmed the trial court's judgment.
City Bank will recover its costs of the appeal from Grapevine
Diamond, L.P., Jonathan Aflatouni, and Youval Zive.
Because summary judgment was proper dismissing all of Grapevine
Diamond and Aflatouni's claims against City Bank, they may not
recover damages, punitive damages, or attorney's fees, the Court
ruled.
The case is GRAPEVINE DIAMOND, L.P., JONATHAN AFLATOUNI, and YOUVAL
ZIVE, Appellants, v. CITY BANK, Appellee, NO. 05-14-00260-CV.
GUNBOAT INTERNATIONAL: Case Summary & 20 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Gunboat International, Ltd.
fdba Pure Yachting, Ltd
fdba Gunboat Company
829 Harbor Road
Wanchese, NC 27981
Case No.: 15-06271
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Eastern District of North Carolina
(Greenville Division)
Judge: Hon. David M. Warren
Debtor's Counsel: Laurie B. Biggs, Esq.
STUBBS & PERDUE, PA
9208 Falls of Neuse Road, Suite 111
Raleigh, NC 27615
Tel: 919 870-6258
Fax: 919 870-6259
Email: efile@stubbsperdue.com
- and -
Trawick H Stubbs, Jr., Esq.
STUBBS & PERDUE, P.A.
P. O. Drawer 1654
New Bern, NC 28563
Tel: 252 633-2700
Fax: 252 633-9600
Email: efile@stubbsperdue.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Peter Johnstone, president.
A list of the Debtor's 20 largest unsecured creditors is available
for free at http://bankrupt.com/misc/nceb15-06271.pdf
HARGREAVES ASSOCIATES: Case Summary & 20 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Hargreaves Associates Incorporated
970 Tennessee Street
San Francisco, CA 94107
Case No.: 15-31441
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Northern District of California (San Francisco)
Debtor's Counsel: Mark J. Romeo, Esq.
LAW OFFICES OF MARK J. ROMEO
235 Montgomery St. #400
San Francisco, CA 94104
Tel: (415) 395-9315
Email: romeolaw@msn.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by George Hargreaves, CEO.
A list of the Debtor's 20 largest unsecured creditors is available
for free at http://bankrupt.com/misc/canb15-31441.pdf
HII TECHNOLOGIES: Ad Hoc Committee Taps Wist Holland as Co-Counsel
------------------------------------------------------------------
The Ad Hoc Committee of Creditors of Apache Energy Services LLC,
asks permission from the U.S. Bankruptcy Court for the Southern
District of Texas for attorney Kirk Kennedy and the Kennedy Firm to
be substituted by Joan Kehlhof and the law firm of Wist Holland &
Kehlhof.
The Ad Hoc Committee notes that Ms. Kehlhof will co-counsel with
Mr. Leonar Simon who is lead counsel for the Ad Hoc Committee.
About HII Technologies
HII Technologies, Inc., Apache Energy Services, LLC, Aqua Handling
of Texas, LLC, Hamilton Investment Group, Inc., and Sage Power
Solutions, Inc., filed Chapter 11 bankruptcy petitions (Bankr.
S.D.
Tex. proposed lead case No. 15-60070) on Sept. 18, 2015. Judge
David R Jones is assigned to the cases.
HII Technologies (HIITQ) is a publicly-traded oilfield services
company which entered the hydraulic fracturing water management
business via acquisition of Apache Energy Services dba AES Water
Solutions in September 2012.
HII Technologies currently has only one employee, its CEO, Matt
Flemming.
HII Technologies reported assets of $17.6 million and liabilities
of $26.5 million as of July 31, 2015.
The Debtors tapped McKool Smith P.C. as counsel, and Stout Risius
Ross, Inc. for management and restructuring services.
Judy A. Robbins, U.S. for Region 7, appointed three persons to
serve in the Official Committee of Unsecured Creditors. The
Committee tapped Locke Lord LLP as its counsel.
HOWREY LLP: Conversion to Ch. 7 Likely Over Rent Claims Impasse
---------------------------------------------------------------
Jonathan Randles at Bankruptcy Law360 reported that a California
bankruptcy judge has indicated he will grant a request to convert
Howrey LLP's bankruptcy case into a Chapter 7 liquidation later
this week after the trustee overseeing the shuttered law firm and
its creditors told the court that he couldn't reach a deal related
to former landlords' rent claims.
In a tentative ruling issued on Nov. 7, 2015, U.S. Bankruptcy Judge
Dennis Montali said he will grant the trustee and creditors' motion
to convert the case to a Chapter 7 on Nov. 6, "unless a
party-in-interest adequately explains.
About Howrey LLP
Three creditors filed an involuntary Chapter 7 petition (Bankr.
N.D. Cal. Case No. 11-31376) on April 11, 2011, against the
remnants of the Washington-based law firm Howrey LLP. The filing
was in San Francisco, where the firm had an office. The firm
previously was known as Howrey & Simon and Howrey Simon Arnold &
White LLP. The firm at one time had more than 700 lawyers in 17
offices. The partners voted to dissolve in March 2011.
The firm specialized in antitrust and intellectual-property
matters. The three creditors filing the involuntary petition
together have $36,600 in claims, according to their petition.
The involuntary chapter 7 petition was converted to a chapter 11
case in June 2011 at the request of the firm. In its schedules
filed in July, the Debtor disclosed assets of $138.7 million and
liabilities of $107.0 million.
Representing Citibank, the firm's largest creditor, is Kelley
Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton &
Garrison. Representing Howrey is H. Jason Gold, Esq., a partner
at Wiley Rein.
The Official Committee of Unsecured Creditors is represented in
the case by Bradford F. Englander, Esq., at Whiteford, Taylor And
Preston LLP.
In September 2011, Citibank sought conversion of the Debtor's case
to Chapter 7 or, in the alternative, appointment of a Chapter 11
Trustee. The Court entered an order appointing a Chapter 11
Trustee. In October 2011, Allan B. Diamond was named as Trustee.
He is represented by Andrew Baxter Ryan, Esq., and Stephen Todd
Loden, Esq., at Diamond McCarthy LLP as counsel.
INTERNATIONAL TECHNICAL: Case Summary & 20 Top Unsecured Creditors
------------------------------------------------------------------
Debtor: International Technical Coatings, Inc.
c/o Warren J. Stapleton
Osborn Maledon, PA
2929 N Central Ave Ste 2100
Case No.: 15-14709
Type of Business: Steel Wire Manufacturing
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Hon. Madeleine C. Wanslee
Debtor's Counsel: Warren J. Stapleton, Esq.
OSBORN MALEDON, P.A.
2929 N. Central Avenue, Suite 2100
Phoenix, AZ 85012
Tel: 602-640-9354
Fax: 602-640-2088
Email: wstapleton@omlaw.com
Estimated Assets: $50 million to $100 million
Estimated Debts: $10 million to $50 million
The petition was signed by John Caldwell, chairman.
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
TATA International Metals Trade Debt $2,610,199
(Americas) Ltd
475 N. Martingale Road
Suite 400
Schaumburg, IL 60173
Performance Steel Trade Debt $1,423,846
817 South 7th St.
Las Vegas, NV 89101
Ideal Welding Systems, LP Trade Debt $1,135,630
P.O. Box 6287
Rockford, IL 61125
EVRAZ Rocky Mountain Steel Trade Debt $668,025
CF&I Steel
P.O. Box 845877
Dallas, TX 75284
C&F International Trade Debt $667,786
Incorporated
16510 North Chase Drive
Houston, TX 77060
King Steel Corporation Trade Debt $341,647
P.O. Box 72034
Cleveland, OH 44192
Minute Men Inc. Trade Debt $151,023
Roehrenbeck Electric, Inc. Trade Debt $102,789
Pacesetter Finishing Systems, Inc. Trade Debt $101,675
Team Eagle Logistics, Inc. Trade Debt $92,161
Keystone Consolidated Industries Trade Debt $85,994
Quinlan Law Firm Professional $80,136
Fees
Vitracoat America, Inc. Trade Debt $68,032
Stream Logistics Trade Debt $52,050
Integrated Logistic Services, Inc. Trade Debt $47,955
Hope Timber Pallet and Trade Debt $41,416
Recycling, Inc.
Traxit LLC Trade Debt $40,709
Enrolls S.P.A. Trade Debt $38,089
Gulf AZ Packing Corp. Trade Debt $35,242
Valley Plating Works Trade Debt $34,961
INTERNATIONAL TECHNICAL: Files for Bankruptcy Amid Loan Default
---------------------------------------------------------------
Phoenix, Arizona-based steel wire manufacturer International
Technical Coatings, Inc., sought Chapter 11 bankruptcy protection
in Arizona to restructure its debt obligations -- primarily those
owing to Bank of America. The Company said it owes the Bank
approximately $25.7 million as of the Petition Date. According to
the Company, its inability to reach an agreement with the Bank
prompted the bankruptcy filing.
On Oct. 28, 2015, the Bank applied for the appointment of a
receiver for ITC after the Bank put ITC into default under a $20
million credit facility. The Maricopa County Superior Court held
an initial hearing on the matter on Nov. 4, 2015. A final hearing
on the appointment of a receiver was scheduled for Wednesday, Nov.
18, 2015. Unable to secure an agreement with the Bank prior to the
scheduled hearing, ITC filed for Chapter 11 protection.
On or about July 14, 2011, ITC borrowed approximately $28.3 million
from the Bank pursuant to three different loans: Facility #1
($20,000,000); Facility #2 ($5,000,000); Facility #3 ($3,300,000).
In August 2012, ITC borrowed $15,000,000 from the Bank - the
Facility #4 loan. In April 2014, ITC borrowed $10,690,000 from the
Bank - the Facility#5 loan - which was used to pay off Facility #2
and Facility #4.
The Facility #1 loan matured on Aug. 15, 2015. The Debtor asserted
it was current on all monthly payments due to the Bank on the loans
-- and continued to make monthly interest payments on Facility #1
even after it matured. Against this backdrop, the Bank put ITC
into default, the Company said in the filing.
Concurrently with the petition, the Debtor filed certain first day
motions seeking authority to use cash collateral, pay employee
obligations, and establish adequate assurance for utilities.
A copy of the declaration in support of the First Day Motions is
available at:
http://bankrupt.com/misc/6_INTERNATIONAL_Declaration.pdf
About International Technical
International Technical Coatings, Inc. filed Chapter 11 bankruptcy
petition (Bank. D. Ariz. Case No. 15-14709) on Nov. 18, 2015. John
Caldwell signed the petition as chairman. The Debtor estimated
assets in the range of $50 million to $100 million and liabilities
of more than $10 million. Osborn Maledon, P.A. represents the
Debtor as counsel. Judge Madeleine C. Wanslee has been assigned
the case.
ITC has facilities located in Phoenix, Arizona and Columbus, Ohio.
ITC's sole shareholder is Johnnie Caldwell.
INTERNATIONAL TECHNICAL: Hires Osborn Maledon as Counsel
--------------------------------------------------------
International Technical Coatings, Inc., asks permission from the
Bankruptcy Court to employ law firm of Osborn Maledon, P.A. to
represent it in all capacities effective as of the Petition Date.
In particular, it is anticipated that Osborn Maledon will, among
other things:
(a) advise the Debtor of its rights, powers and duties;
(b) assist the Debtor in preparation of the Debtor's voluntary
Chapter 11 petition and statements and schedules;
(c) assist the Debtor in the formulation, preparation and
prosecution of a plan of reorganization and related
disclosure statement, as well as agreements, if any, as may
be necessary or proper to implement such plan;
(d) assist the Debtor with regard to litigation and other
matters related to the administration and conduct of the
Debtor's Chapter 11 case;
(e) assist and advise the Debtor in its discussions with
creditors relating to the administration of this case;
(f) assist the Debtor in reviewing claims asserted against it
and in negotiating with claimants asserting those claims;
(g) assist the Debtor in examining and investigating potential
preferences, fraudulent conveyances, and other causes of
action;
(h) represent the Debtor at all hearings and other proceedings;
(i) review and analyze all motions, applications, orders and
other pleadings and papers filed with the Court, and advise
the Debtor with respect thereto;
(j) advise the Debtor concerning, and prepare on behalf of the
Debtor, all motions, applications, complaints, replies,
objections, answers, draft orders, other pleadings, notices
and other documents that may be necessary and appropriate
in furtherance of the Debtor's interests, duties, and
objectives; and
(k) perform other legal services as may be required or
appropriate in accordance with the Debtor's powers and
duties under the Bankruptcy Code.
The Debtor intends to pay Osborn Maledon on an hourly basis in
accordance with the firm's ordinary and customary hourly rates and
to reimburse Osborn Maledon for actual and necessary expenses that
it incurred.
To the best of the Debtor's knowledge, Osborn Maledon has no
connection with it, its creditors, the U.S. Trustee, or any other
party with an actual or potential interest in its Chapter 11 case.
The only exception is that Osborn Maledon occasionally represents
Arizona Public Service Company with respect to certain regulatory
matters. Osborn Maledon does not believe the representation of APS
will adversely affect its ability to represent the Debtor. The
Debtor said it is willing to employ a special counsel should it
become necessary for it to take any position adverse to APS. The
Debtor and APS have consented to this arrangement.
About International Technical
Phoenix, Arizona-based steel wire manufacturer International
Technical Coatings, Inc. filed Chapter 11 bankruptcy petition
(Bank. D. Ariz. Case No. 15-14709) on Nov. 18, 2015. John Caldwell
signed the petition as chairman. The Debtor estimated assets in
the range of $50 million to $100 million and liabilities of more
than $10 million. Osborn Maledon, P.A. represents the Debtor as
counsel. Judge Madeleine C. Wanslee has been assigned the case.
ITC has facilities located in Phoenix, Arizona and Columbus, Ohio.
ITC's sole shareholder is Johnnie Caldwell.
INTERNATIONAL TECHNICAL: Section 341 Meeting Set for Dec. 22
------------------------------------------------------------
A meeting of creditors in the bankruptcy case of International
Technical Coatings, Inc. will be held on Dec. 22, 2015, at 1:00
p.m. at US Trustee Meeting Room, 230 N. First Avenue, Suite 102, in
Phoenix, Arizona.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About International Technical
Phoenix, Arizona-based steel wire manufacturer International
Technical Coatings, Inc. filed Chapter 11 bankruptcy petition
(Bank. D. Ariz. Case No. 15-14709) on Nov. 18, 2015. John Caldwell
signed the petition as chairman. The Debtor estimated assets in
the range of $50 million to $100 million and liabilities of more
than $10 million. Osborn Maledon, P.A. represents the Debtor as
counsel. Judge Madeleine C. Wanslee has been assigned the case.
ITC has facilities located in Phoenix, Arizona and Columbus, Ohio.
ITC's sole shareholder is Johnnie Caldwell.
INTERNATIONAL TECHNICAL: Wants to Use BofA's Cash Collateral
------------------------------------------------------------
International Technical Coatings, Inc., seeks authority from the
Bankruptcy Court to use cash collateral in which Bank of America
has security interest. The Debtor says it currently owes the Bank
approximately $25.7 million under the prepetition credit
facilities.
The Company relates it generates cash by selling its manufactured
wire products and the services that go with those products.
Currently, it has approximately $440,000 cash on hand. The Bank
has a blanket lien on ITC's assets (primed only by the Director of
Development, State of Ohio's lien on certain personal property
located at ITC's Columbus Facility). The Bank's lien covers ITC's
accounts, contract rights, deposit accounts, inventory, machinery,
furniture, fixtures, chattel paper, certificates of deposit,
documents of title, and cash, and the cash that is derived from the
Bank's collateral.
The Company tells the Court that to the extent that the Bank
demonstrates an unavoidable perfected security interest in the Cash
Collateral, then the Bank is entitled to adequate protection in
exchange for ITC's use of the Cash Collateral. In this case, ITC
proposes to provide a replacement lien to the Bank covering the
Cash Collateral. The Replacement Lien will have the same priority
and validity as the pre-petition lien as to which it relates, and
will be capped at the value of the Cash Collateral as of the
Petition Date.
In addition, ITC will continue to pay the Bank the interest due on
all credit facilities at the non-default rate of interest (1.35% +
LIBOR). The payments by the Debtor will be made in accordance with
a budget.
On or about July 14, 2011, ITC borrowed approximately $28.3 million
from the Bank pursuant to three different loans: Facility #1
($20,000,000); Facility #2 ($5,000,000); Facility #3 ($3,300,000).
In August 2012, ITC borrowed $15,000,000 from the Bank - the
Facility #4 loan. In April 2014, ITC borrowed
$10,690,000 from the Bank - the Facility #5 loan – which was used
to pay off Facility #2 and Facility #4.
About International Technical
Phoenix, Arizona-based steel wire manufacturer International
Technical Coatings, Inc. filed Chapter 11 bankruptcy petition
(Bank. D. Ariz. Case No. 15-14709) on Nov. 18, 2015. John Caldwell
signed the petition as chairman. The Debtor estimated assets in
the range of $50 million to $100 million and liabilities of more
than $10 million. Osborn Maledon, P.A. represents the Debtor as
counsel. Judge Madeleine C. Wanslee has been assigned the case.
ITC has facilities located in Phoenix, Arizona and Columbus, Ohio.
ITC's sole shareholder is Johnnie Caldwell.
ISOLA USA: S&P Lowers CCR to 'CCC+', Outlook Negative
-----------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating to 'CCC+' from 'B-' on Chandler, Ariz.-based Isola USA Corp.
The outlook is negative.
At the same time S&P lowered its issue-level rating to 'CCC+' from
'B-' on the company's senior term loan. The recovery rating on
this debt remains '3', indicating S&P's expectations of
"meaningful" (50% to 70%; lower half of the range) recovery in the
event of payment default.
"The rating action is based on our view of the company's continued
weak operating performance and deteriorating liquidity as well as
our anticipation that the company may violate financial covenants
in subsequent quarters," said Standard & Poor's credit analyst
Geoffrey Wilson.
The negative outlook reflects S&P's view that continued market
softness and market share loss as well as covenant stepdowns will
likely require intervention to avert a covenant violation within
the next 12 months.
LTR HOLDCO: S&P Lowers Corp. Credit Rating to 'B-', Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Odessa, Texas-based oilfield services provider LTR Holdco
Inc. to 'B-' from 'B'. The outlook is stable.
At the same time, S&P lowered the ratings on the company's senior
notes to 'B-' (the same as the corporate credit rating) from 'B'.
The recovery rating on the company's senior notes is '3' indicating
S&P's expectation of meaningful (50% to 70%, low end of the range)
recovery in the event of a payment default.
"The downgrade on LTR Holdco Inc. reflects our revised estimates of
the company's increased leverage," said Standard & Poor's credit
analyst Stephen Scovotti.
"It also reflects our re-assessment of the company's financial
policy as 'FS-6', given our view that credit measures are now more
consistent with a "highly leveraged" financial risk profile.
Utilization and pricing for the company's equipment and services
declined in the first nine months of 2015, due to the significant
drop in crude oil and natural gas prices and the decline in
drilling activity, and we expect market conditions to continue to
be weak in 2016. As a result, we expect credit measures to be
elevated in 2016, with funds from operations (FFO) to debt of about
6% and debt to EBITDA of about 7x by year-end, down from about 12%
and 4.5x, respectively, projected at the end of 2015," S&P said.
The ratings on specialty equipment rental and services company LTR
reflect S&P's assessment of the company's "vulnerable" business
risk profile, "highly leveraged" financial risk profile, and
"adequate" liquidity, as defined in S&P's criteria. These
assessments incorporate LTR's limited scale of operations and
limited product diversity and the potential volatility of cash
flows due to its reliance on the cyclical capital spending levels
of the exploration and production industry. Ratings benefit from
the company's good profitability and flexibility to cut back on
capital spending during a downturn.
The stable outlook reflects S&P's expectation that although credit
measures will deteriorate in 2016 in comparison to 2015, the
company will be able to maintain "adequate" liquidity. In 2016 S&P
expects FFO to debt of about 6% in 2016, in comparison to 13% in
2015.
S&P could lower the ratings if FFO to debt deteriorated to well
below 12% on a sustained basis or if liquidity weakened to "less
than adequate." This could occur if industry conditions weakened
further than S&P's current expectations, putting additional
pressure on utilization and pricing for the company's products.
S&P could raise the ratings if the company were able to maintain
FFO to debt above 12% on a sustained basis, while maintaining
"adequate" liquidity. This could occur if industry conditions
recovered such that pricing and utilization for the company's
products improved.
MAIDEN HOLDINGS: S&P Assigns 'BB' Rating on New Preferred Shares
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'BB' preferred stock rating to Maiden Holdings Ltd.'s (NASDAQ:
MHLD) proposed issuance of perpetual noncumulative preferred
stock.
S&P expects Maiden to use the net proceeds for general corporate
purposes, including replacing the mandatorily convertible preferred
shares that convert to common shares in September 2016. The
proposed issuance has no maturity date, is noncumulative, and is
eligible for intermediate equity credit according to S&P's hybrid
capital criteria. S&P includes securities of this nature, up to a
maximum of 15%, in our calculation of total adjusted capital, which
forms the basis of S&P's consolidated risk-based capital analysis
of insurance companies.
S&P expects group's financial leverage to deteriorate slightly to
approximately 42% for year-end 2015 and then improve to about 34%
following conversion of preferred stock to equity. S&P expects
financial leverage and fixed-charge coverage to be less than 40%
and more than 3x, respectively, in the next two years. Based on
Maiden's year-to-date financial results through third-quarter 2015,
the company continues to meet our expectations, including a
combined ratio of 99.1% and net income of $93.7 million.
RATINGS LIST
Maiden Holdings Ltd.
Issuer Credit Rating BBB-/Stable/--
New Rating
Maiden Holdings Ltd.
Perpetual noncumul preferred stock BB
MEMORIAL PRODUCTION: S&P Lowers CCR to 'B', Outlook Stable
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Houston-based Memorial Production Partners L.P. to 'B'
from 'B+'. At the same time, S&P lowered its issue-level rating on
the partnership's senior unsecured debt to 'CCC+' from 'B-'. S&P's
recovery rating on this debt remains '6', reflecting its
expectation of negligible (0% to 10%) recovery in the event of
payment default.
The rating action reflects S&P's expectation of weaker credit
measures than previously anticipated due primarily to a higher
outlook for operating costs. In contrast with most US E&P players
which experienced a 20% decrease in operating costs this year,
MEMP's costs have been higher year over year due to the integration
of the Wyoming assets acquired mid-2014. As a result, S&P has
lowered its expectation of EBITDA generation in 2016 and 2017.
Despite MEMP's strong hedge book and S&P's expectation that the
partnership will reduce capital spending and limit distribution to
unitholders to protect liquidity next year, S&P expects debt ratios
to remain elevated for the next couple of years. The stable
outlook reflects S&P's expectation that MEMP's strong hedge book
will support cash flow stability, and that the partnership will
maintain a conservative policy regarding capital spending,
distributions, and acquisitions in the next few years.
"The stable outlook reflects our expectation that Memorial
Production Partners L.P. will maintain leverage in the 6x-6.5x
range, FFO to debt of about 10%, and 'adequate' liquidity for the
ratings over the next couple of years," said Standard & Poor's
credit analyst Christine Besset. "Although we believe
uncertainties remain about MEMP's cost position, the partnership's
strong hedge book through 2019 supports our current projections,"
said Ms. Besset.
S&P could lower the rating if liquidity deteriorates or leverage
exceeds 7x without a clear path for improvement. This would most
likely occur if commodity prices weaken further or S&P revised its
outlook for costs upward. This could also occur if MEMP makes
debt-financed acquisitions, increases capital spending or
distributions to unitholders significantly.
S&P could raise the rating if MEMP could decrease leverage below 5x
and increase FFO to debt above 12%, while maintaining "adequate"
liquidity.
NEWALTA CORP: Moody's Cuts Corporate Family Rating to 'B1'
----------------------------------------------------------
Moody's Investors Service downgraded Newalta Corporation's
Corporate Family Rating (CFR) to B1 from Ba3, Probability of
Default Rating to B1-PD from Ba3-PD, and its senior unsecured notes
rating to B2 from B1. The stable outlook and the SGL-2 Speculative
Grade Liquidity Rating remains unchanged.
"The downgrade reflects the sharp and sustained decline in
Newalta's EBITDA that will lead to an increase in leverage this
year and next," said Paresh Chari, Moody's Analyst.
Downgrades:
Issuer: Newalta Corporation
-- Probability of Default Rating, Downgraded to B1-PD from Ba3-PD
-- Corporate Family Rating, Downgraded to B1 from Ba3
-- Senior Unsecured Regular Bond/Debenture, Downgraded to
B2(LGD4) from B1(LGD4)
Outlook Actions:
Issuer: Newalta Corporation
-- Outlook, Remains Stable
RATINGS RATIONALE
Newalta Corporation's B1 Corporate Family Rating (CFR) reflects
high leverage (about 4.5x) caused by the impact of poor oilfield
services industry conditions and the company's small size within
the broader oilfield services and waste management industries.
Commodity prices and drilling/completion activity levels have
decreased dramatically in 2015, leading to a 50% decline in EBITDA
for Newalta. However, the rating also considers Newalta's
regulatory permits and technological expertise that provide
competitive advantages and a long-standing customer base.
The SGL-2 Speculative Grade Liquidity rating reflects good
liquidity. At September 30, 2015 Newalta had minimal cash and C$115
million available (after C$20 million in letters of credit) under
its C$175 million secured revolver due July 2018. We expect
positive free cash flow of about C$25 million from September 30,
2015 to December 31, 2016. We expect Newalta will remain well in
compliance with its three financial covenants through this period.
Newalta has no refinancing risk over the next 12 to 18 months.
Alternate liquidity is somewhat limited by the fact that all of the
assets are pledged to the secured revolving credit facility
lenders.
In accordance with Moody's Loss Given Default (LGD) Methodology,
both the C$125 million and C$150 million senior unsecured notes are
rated B2, which is one notch below the B1 Corporate Family Rating
due to the priority-ranking C$175 million secured revolving credit
facility.
The stable outlook reflects Moody's view that leverage will remain
below 4.5x and that Newalta will maintain good liquidity.
The B1 rating could be upgraded if adjusted debt to EBITDA were to
be below 3x on a sustainable basis.
The B1 rating could be downgraded if adjusted debt to EBITDA
appears likely to trend above 4.5x.
Newalta Corporation is a Calgary, Alberta-based oilfield waste
management service provider.
NORTH AMERICAN TUNGSTEN: Stay of CCAA Proceedings Extended
----------------------------------------------------------
North American Tungsten Corporation Ltd. on Nov. 19 disclosed that
the following orders have been made in the Company's proceedings
under the Companies' Creditors Arrangement Act:
a) on November 16, 2015, the Supreme Court of British Columbia made
orders:
i. extending the stay of proceedings to March 31, 2016;
ii. expanding the powers of Alvarez & Marsal Canada Inc., in its
capacity as court appointed monitor; and
iii. authorizing certain equipment financers to take possession of
certain equipment that the Company does not require for its care
and maintenance operations; and
b) on November 17, 2015, the Supreme Court of British Columbia made
an order approving the sale of the Company's property located in
the Selwyn mountain range in an area straddling the territorial
border between Yukon and the Northwest Territories to the
Government of the Northwest Territories.
As has been previously announced, due to liquidity issues, NATC
filed for Court protection under the CCAA on June 9, 2015. In July
2015, the Company sought Court approval of a sale and solicitation
process to market and sell the assets of the Company (as amended,
the "SISP"), as well as an operating plan that involved
transitioning the Cantung mine to care and maintenance if no
purchaser was found through the SISP. As previously reported, the
SISP did not result in a potential transaction and the Monitor
terminated the SISP effective October 21, 2015.
In accordance with the Operating Plan, the mill at the Cantung mine
site was shut down on October 26, 2015, and transition of the
Cantung mine to care and maintenance is expected to be completed on
or about November 18, 2015.
Pursuant to the Order made on November 16, 2015, expanding the
powers of the Monitor, during the extension of the stay of
proceedings, the Government of Canada will fund the Company's
environmental care and maintenance activities at the Cantung mine
site, which will take place under the supervision of the Monitor.
Accordingly, effective November 16, 2015, Kurt Heikkila, Dennis
Lindahl and Ronald Erickson have resigned from the Company's Board
of Directors, Kurt Heikkila has resigned as Chief Executive
Officer, and Dennis Lindahl has resigned as Chief Financial
Officer.
About North American Tungsten
North American Tungsten Corporation Ltd. is a publicly listed Tier
1 Junior Resource Company engaged primarily in the operation,
development, and acquisition of tungsten and other related mineral
properties in Canada. The Company's 100% owned Cantung mine make
it one of the few tungsten producers with a strategic asset in the
western world.
O.W. BUNKER: Court Set to Hear NuStar's Bid to Convert Cases
------------------------------------------------------------
A U.S. bankruptcy court is set to hear a motion filed by NuStar
Energy Services Inc. to convert the Chapter 11 cases of O.W. Bunker
Holding North America Inc. and its affiliates to a Chapter 7
liquidation.
The U.S. Bankruptcy Court for the District of Connecticut will take
up the motion at a hearing on Dec. 10, 2015.
NuStar on Oct. 5 asked the court to convert the cases, saying the
companies are "administratively insolvent."
In its motion, NuStar said the holding company does not have assets
while its two affiliates O.W. Bunker North America Inc. and O.W.
Bunker USA Inc. have no ongoing business to reorganize.
Administrative claims amounting to $21 million also exceed the cash
on hand in both O.W. Bunker affiliates. O.W. Bunker North America
has only $1.19 million in cash while O.W. Bunker USA has only
$21,281 in cash, NuStar said in the filing.
The company also argued that there is "no possibility of plan
confirmation," which warrants the conversion of the bankruptcy
cases.
About O.W. Bunker
OW Bunker AS is a global marine fuel (bunker) company founded in
Denmark. The company declared bankruptcy on Nov. 7, 2014,
following its admission that it had lost US$275 million through a
combination of fraud committed by senior executives at its
Singaporean unit.
The Danish company placed its U.S. subsidiaries -- O.W. Bunker
Holding North America Inc., O.W. Bunker North America Inc. and O.W.
Bunker USA Inc. -- in Chapter 11 bankruptcy (Bankr. D. Conn. Case
Nos. 14-51720 to 14-51722) in Bridgeport, Conn., on Nov. 13, 2014.
The U.S. cases are assigned to Judge Alan H.W. Shiff. The U.S.
Debtors have tapped Patrick M. Birney, Esq., and Michael R.
Enright, Esq., at Robinson & Cole LLP, as counsel. McCracken,
Walker & Rhoads LLP is serving as co-counsel. Alvarez & Marsal is
the financial advisor.
OASIS OUTSOURCING: S&P Assigns 'B' Rating on $240MM 1st Lien Loan
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its issue-level ratings
on West Palm Beach, Fl.-based Oasis Outsourcing Holdings Inc.'s
first- and second-lien debt following the company's term loan
upsize. The rating on the now $240 million first-lien term loan
and $50 million revolver is 'B' with a recovery rating of '3',
indicating S&P's expectation of meaningful (50%-70%, at the high
end of the range) recovery in the event of a payment default. S&P's
rating on the $60 million second-lien term loan is 'CCC+' with a
recovery rating of '6', indicating S&P's expectation of negligible
(0%-10%) recovery in the event of payment default. The upsized
term loan will partially finance the acquisition of A1HR and
Doherty Employer Services. Terms and conditions are consistent the
existing first-lien credit agreement.
S&P's 'B' corporate credit rating and stable outlook on the company
are unchanged.
The ratings on Oasis reflect S&P's expectations that the company
will continue to be highly leveraged and credit metrics will
improve from the closing level as the acquisitions are integrated.
Liquidity is ample and there is no near term maturing debt.
RATINGS LIST
Oasis Outsourcing Holdings Inc.
Corporate credit rating B/Stable/--
Issue Ratings Affirmed; Recovery Ratings Unchanged
Oasis Outsourcing Holdings Inc.
Senior secured
$240 mil. 1st lien term loan due 2021 B
Recovery rating 3H
$50 mil. revolver due 2019 B
Recovery rating 3H
$60 mil. 2nd lien due 2022 CCC+
Recovery rating 6
OHLONE I LLC: Case Summary & 5 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Ohlone I, LLC
32 Peralta Ave
Los Gatos, CA 95030
Case No.: 15-53651
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
Northern District of California (San Jose)
Debtor's Counsel: Robert L. Goldstein, Esq.
LAW OFFICES OF ROBERT L. GOLDSTEIN
100 Bush St. #501
San Francisco, CA 94104
Tel: (415) 391-8710
Email: rgoldstein@taxexit.com
Total Assets: $1.80 million
Total Liabilities: $2.05 million
The petition was signed by Mark Livingston Wainwright, managing
member.
A list of the Debtor's five largest unsecured creditors is
available for free at http://bankrupt.com/misc/canb15-53651.pdf
ON SEMICONDUCTOR: S&P Puts 'BB+' CCR on CreditWatch Negative
------------------------------------------------------------
Standard & Poor's Ratings Services placed all ratings on
Phoenix-based ON Semiconductor Corp., including the 'BB+' corporate
credit rating, on CreditWatch with negative implications.
"The CreditWatch action follows ON's announcement today that it
will acquire Fairchild Semiconductor International Inc. for an
enterprise value of $2.3 billion," said Standard & Poor's credit
analyst Christian Frank.
The company will use $2.4 billion of new term loan proceeds along
with $300 million in cash to fund the transaction, refinance
Fairchild's debt, and pay transaction fees. None of ON's existing
debt will be repaid as part of this transaction, which S&P expects
will close in the second quarter of 2016.
S&P will resolve the CreditWatch listing following its review of
the business and financial impact of the transaction on ON's credit
profile, likely within 90 days.
PACIFIC EXPLORATION: Fitch Cuts LT Issuer Default Ratings to 'B-'
-----------------------------------------------------------------
Fitch Ratings has downgraded Pacific Exploration and Production
Corp. foreign and local long-term Issuer Default Ratings (IDRs) to
'B-' from 'B+'. Fitch has also downgraded to 'B-/RR4' from 'B+/RR4'
its long-term rating on Pacific's outstanding senior unsecured debt
issuances totalling approximately USD4 billion with final
maturities in 2019 through and 2025. These ratings have been placed
on Rating Watch Negative.
KEY RATING DRIVERS
The downgrade reflects Fitch's expectations that the company's
capital structure will continue weakening over the near term as a
result of the agency's slower oil price recovery expectations
published on Nov. 9, 2015. Fitch expects Pacific's leverage as
measure by total debt to EBITDA to be near 6 times (x) in 2016 if
West Texas Intermediate (WTI) oil price averages $50 per barrel
over that period. This would result in Pacific triggering its 4.5x
gross leverage maintenance covenants on approximately $1.3 billion
of bank facilities maturing in 2017. Further, leverage could remain
elevated passed 2016 and the company may have difficulties
servicing its debt maturities, which start in 2017 and average
approximately $1 billion every two years between 2017 and 2025.
Pacific credit metrics have been materially affected by the sharp
decline in oil prices, as well as the company's debt increase
during 2015. Total and net debt/EBITDA for the latest 12 months
(LTM) ended September 2015 have increased to 4.3x and 3.9x, from
1.9x and 1.8x, as of year-end 2014. This was mostly due to due to
the decline in global oil prices as well as Pacific's debt increase
of more than USD600 million during first-half 2015. Positively,
Pacific reported zero short-term debt as of September 2015.
Pacific expects to use its internal cash flow generation to finance
capital expenditures and its liquidity position could improve upon
successful divestitures of none core assets. These divestitures
include its interest in midstream assets and other infrastructure
assets, which the company could sell to improve liquidity without
affecting its operations. Fitch does not expect these sales to
generate enough cash to service the company's debt amortization in
2017. Furthermore, the marked reduction in capital expenditure,
while positively reducing the company's short term cash burn, could
have an impact on the company's long-term production and reserve
replacement.
The Negative Rating Watch reflects the delay in the sale of
none-core assets to bolster liquidity and the potential long-term
negative effects the reduction in capex may have on the company's
ability to replace production. Pacific's ratings could be
downgraded if the company fails to divest interests in non-core
assets to maintain adequate liquidity in a timely fashion. The
decrease in production in light of Fitch's revised price deck could
be more severe than initially anticipated given the capex reduction
Pacific is implementing to preserve liquidity. Fitch expects
Pacific's 2015 capex to be between $800 million to $1 billion, down
from a historical average of approximately of approximately $2
billion per year.
Fitch's base case assumes that Pacific's production declines in
2016 and 2017 as a result of capex reduction and the expiration of
the Pirir-Rubiales field, which today accounts for approximately
35% of Pacific's total production. This field reverts back to
Ecopetrol in June of 2016. At a $50/bbl average price in 2016,
Fitch expects Pacific's EBITDA would be slightly below USD900
million, interest expense approximately USD300 million and total
debt of approximately USD5.2 billion.
Pacific has already hedged approximately 7.6 million barrels, or
approximately 15% of its expected 2016 production at an average
strike price floor and ceiling of $54 and $62 per barrel,
respectively, and expects to hedge the maximum amount of its 2016
production as possible. The company's current hedge position of 15%
is low when compared to that of similar small independent U.S.
exploration and production companies, which on average had hedged
more than 40% of their 2016 expected production since June 2015.
This leaves Pacific with a higher exposure to the potential
continuity of low global oil prices next year.
KEY ASSUMPTIONS
-- Fitch's price deck for WTI oil prices of $50/bbl for 2015 and
2016, recovering to $60/bbl in 2017;
-- Piriri-Rubiales field reverts to Ecopetrol in 2016;
-- Production declines on a year-over-year basis in 2016 and
2017;
-- Company manages to negotiate covenants with banks to avoid
acceleration;
-- Pacific manages to divest non-core assets between 2016 and
2017 and uses a portion of the proceeds to reduce debt.
RATING SENSITIVITIES
A negative rating action would be triggered by any combination of
the following events:
-- A continuous deterioration of the company's capital structure
and liquidity as a result of either a decrease in production
as a result of capex curtailment or persistent low oil prices;
-- Failure to divest interests in non-core assets in a timely
fashion to bolster liquidity;
-- A significant reduction in the reserve replacement ratio could
affect Pacific's credit quality given the current proved
reserve life of approximately 9 years when excluding Pirir-
Rubiales production.
A positive rating action is unlikely in the medium term.
LIQUIDITY
Adequate Liquidity Position: The company's liquidity position as of
Sep. 30, 2015 is adequate, with Pacific reporting $489 million of
cash on hand an zero short-term debt. The company's debt
amortization schedule is spread between 2017 and 2025 with an
average of $1 billion coming due every two years. Pacific's
liquidity could remain relatively stable provided the company
succeeds at running a balanced FCF over the next two years which
would potentially stabilize the credit; break even FCF is possible
with Fitch's new price deck if the majority of the company's capex
is considered discretionary and is cut without further erosion of
production. Liquidity could improve if the company succeeds at
selling some none-core assets.
Fitch has downgraded and placed the following ratings on Rating
Watch Negative:
Pacific Exploration and Production Corp.
-- Foreign and local currency IDRs to 'B-' from 'B+';
-- International senior unsecured bond ratings to 'B-/RR4' from
'B+/RR4'.
PARALLEL ENERGY: Gets Approval to Tap Part of $9M DIP Financing
---------------------------------------------------------------
Matt Chiappardi at Bankruptcy Law360 reported that a Delaware
bankruptcy judge allowed Parallel Energy LP to tap a portion of its
more than $9 million stopgap financing package on Nov. 10, 2015,
allowing the Debtor to kick off a case centered around a quick
stalking horse sale to be completed by January.
During a hearing in Wilmington, U.S. Bankruptcy Judge Kevin Gross
gave interim approval for Parallel's debtor-in-possession financing
package from its main prepetition secured lenders, allowing the
company to tap $5.4 million of the $9.4 million facility to help
fund the case.
About Parallel Energy
Tulsa, Oklahoma-based natural gas producer Parallel Energy LP
formerly known as Parallel Energy Acquisitions LP, and Parallel
Energy GP LLC filed for Chapter 11 protection (Bankr. D. Del Case
Nos. 15-12263 and 15-12264) on Nov. 9, 2015. The petition was
signed by Richard N. Miller, chief financial officer.
The Hon. Kevin Gross presides over the case. Demetra L. Liggins,
Esq., and David M. Bennett, Esq., at Thompson & Knight LLP and
GianClaudio Finizio, Esq., at Bayard, P.A., represent the Debtor as
co-counsel. Alvarez & Marsal North America, LLC serves as
financial advisor. Prime Clerk LLC serves as notice, claims,
solicitation and balloting agent. The Debtor estimated assets and
debts at $100 million to $500 million.
POSTROCK ENERGY: Could Default After Borrowing Base Cut
-------------------------------------------------------
Lisa Allen, writing for The Deal, reported that private
equity-backed PostRock Energy Corp. has been hit with yet another
borrowing base reduction on its revolving credit facility and this
one could force the oil and gas producer to default on it.
According to the report, the Oklahoma City-based company said on
Nov. 17 that its borrowing base was cut to $39 million from $76
million, bad news for the company since $76.18 million is currently
outstanding on the revolver. PostRock has 30 days from Nov. 12 to
provide a written update about how it plans to address the
deficiency, the report related. The company was already carrying
out a plan to address a $10.4 million borrowing base deficiency by
Dec. 22, the report said.
PostRock Energy Corporation is engaged in the acquisition,
exploration, development, production and gathering of crude oil
and
natural gas. This Oklahoma City-based oil and gas company has
interests in the Cherokee Basin in southeastern Kansas and
northeastern Oklahoma, Central Oklahoma, and the Appalachian Basin.
PR EXHIBITS: Case Summary & 9 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: PR Exhibits Manufacturing
PO Box 7820
Lot #5 2 St.
Carolina, PR 00986
Case No.: 15-09144
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtor's Counsel: Fausto David Godreau Zayas, Esq.
LATIMER, BIAGGI, RACHID & GODREAU LLP
PO Box 9022512
San Juan, PR 00902-2512
Tel: 787-724-0230
Email: dgodreau@LBRGlaw.com
Total Assets: $2.07 million
Total Liabilities: $2.16 million
The petition was signed by Karen Uscinowics, president.
A list of the Debtor's nine largest unsecured creditors is
available for free at http://bankrupt.com/misc/prb15-09144.pdf
PRIMESTAR LENDING: Case Summary & 8 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Primestar Lending 2, LLC
2030 Honey Ridge Drive
Reno, NV 89511
Case No.: 15-51555
Chapter 11 Petition Date: November 18, 2015
Court: United States Bankruptcy Court
District of Nevada (Reno)
Judge: Hon. Bruce T. Beesley
Debtor's Counsel: Chris D Nichols, Esq.
MINDEN LAWYERS, LLC
P.O. Box 2860
990 Ironwood Drive, Ste 300
Minden, NV 89423
Tel: (775) 782-3081
Email: nichols@mindenlawyers.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Sherry Buchholz, managing member.
A list of the Debtor's eight largest unsecured creditors is
available for free at http://bankrupt.com/misc/nvb15-51555.pdf
QUICKSILVER RESOURCES: Creditors Sue Lender Group Over Liens
------------------------------------------------------------
Jonathan Randles at Bankruptcy Law360 reported that Quicksilver
Resources' unsecured creditors committee launched a lawsuit on Nov.
9, 2015, in Delaware bankruptcy court challenging representatives
of certain second lien lenders over whether a $625 million term
loan is secured by liens in some of the Debtor's oil and gas
assets. The lawsuit seeks a declaratory judgment that equity in
Quicksilver Resources' subsidiaries, unsecured notes, property,
unencumbered cash and other assets are not subject secondary liens
and security interests.
About Quicksilver Resources
Quicksilver Resources Inc. (OTCQB: KWKA) is an exploration and
production company engaged in the development and production of
long-lived natural gas and oil properties onshore North America.
Based in Fort Worth, Texas, the company claims to be a leader in
the development and production from unconventional reservoirs
including shale gas, and coal bed methane. Following more than 30
years of operating as a private company, Quicksilver became public
in 1999.
The Company has U.S. offices in Fort Worth, Texas; Glen Rose,
Texas; Steamboat Springs, Colorado; Craig, Colorado and Cut Bank,
Montana. The Company's Canadian subsidiary, Quicksilver Resources
Canada Inc., is headquartered in Calgary, Alberta.
On March 17, 2015, Quicksilver Resources Inc. and certain of its
affiliates filed voluntary petitions for relief under Chapter 11 of
title 11 of the United States Code in Delaware. The Debtors are
seeking joint administration under the main case, In re Quicksilver
Resources Inc. Case No. 15-10585. Quicksilver's Canadian
subsidiaries were not included in the chapter 11 filing.
The Company's legal advisors are Akin Gump Strauss Hauer & Feld LLP
in the U.S. and Bennett Jones in Canada. Richards Layton & Finger,
P.A., is legal co-counsel in the Chapter 11 cases. Houlihan Lokey
Capital, Inc. is serving as financial advisor. Garden City Group
Inc. is the claims and noticing agent.
The Company's balance sheet at Dec. 31, 2014, showed $1.21 billion
in total assets, $2.35 billion in total liabilities and total
stockholders' deficit of $1.14 billion.
The U.S. Trustee for Region 3 appointed five creditors of
Quicksilver Resources Inc. to serve on the official committee of
unsecured creditors.
* * *
The Debtors have previously been given exclusive right to file a
bankruptcy plan through October 13, 2015. They are seeking a
further extension of the exclusive plan filing period through
February 1, 2016.
QUIKSILVER INC: Wants Plan to Retain Key Employees Okayed
---------------------------------------------------------
Jonathan Randles at Bankruptcy Law360 reported that sportswear
retailer Quiksilver is seeking a Delaware bankruptcy judge's
approval on a new plan to retain 14 management employees who the
company says are needed to maintain the business during the
court-monitored restructuring.
Quiksilver is seeking approval of a Key Employee Retention Plan, a
common tool in Chapter 11 designed to prevent worker attrition,
that would set aside a pool of $859,559 to make sure certain
managers stay with the company.
About Quiksilver, Inc.
Quiksilver, Inc., designs, produces and distributes branded
apparel, footwear and accessories. The Company's apparel and
footwear brands, inspired by a passion for outdoor action sports,
represent a casual lifestyle for young-minded people who connect
with its boardriding culture and heritage. The Company's
Quiksilver, Roxy, and DC brands have authentic roots and heritage
in surf, snow and skate. The Company's products are sold in more
than 100 countries in a wide range of distribution, including surf
shops, skate shops, snow shops, its proprietary Boardriders shops
and other Company-owned retail stores, other specialty stores,
select department stores and through various e-commerce channels.
For additional information, please visit the Company's brand Web
sites at www.quiksilver.com, www.roxy.com and www.dcshoes.com.
Quiksilver began operations in 1976 as a California company making
boardshorts for surfers in the United States under a license
agreement with the Quiksilver brand founders in Australia. The
Company later reincorporated in Delaware and went public in 1986.
In fiscal year 2014 (ended Oct. 31, 2014), 34% of the Company's
revenue was generated by the Debtors, within the United States.
The remaining 66% is attributable to the Non-Debtor Affiliates
located outside the United States.
Sales at Company retail stores accounted for approximately 28% of
Company revenue during fiscal year 2014. The Company's retail
shops include full-price stores, factory outlet stores, and
"shop-in-shops." At the end of the fiscal year 2014, the Company
had approximately 266 full-price core brand stores, of which 75
are
located in the United States.
Quiksilver, Inc., and its affiliates filed Chapter 11 bankruptcy
petitions (Bankr. D. Del., Case Nos. 15-11880 to 15-11890) on
Sept. 9, 2015. Andrew Bruenjes signed the petition as chief
financial officer. The Debtors disclosed total assets of $337
million and total debts of $826 million.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as the
Debtors' legal advisor, FTI Consulting, Inc. as their
restructuring
advisor, and Peter J. Solomon Company as their investment banker.
Kurtzman Carson Consultants LLC acts as the Debtors' claims and
noticing agent.
The U.S. trustee overseeing the Chapter 11 cases of Quiksilver
Inc. and its affiliates appointed seven members to the official
committee of unsecured creditors.
QUIRKY INC: Gets Final Approval to Use Cash Collateral
------------------------------------------------------
Quirky Inc. received final approval to use the cash collateral of
Comerica Bank to support its operations.
The order, issued by U.S. Bankruptcy Judge Martin Glenn, allowed
the company to use the cash collateral of the bank, which is owed
$29.667 million as of Sept. 22, 2015.
In return for allowing the company to use its cash collateral,
Comerica Bank will have "valid and perfected replacement additional
security interests in and liens" on assets that the company used as
collateral for the $30 million loan.
The bank will also get an administrative claim against the company,
according to the court filing.
About Quirky, Inc.
Headquartered in New York City, Quirky designs and develops various
products ranging from electronics, home and garden, kitchen and
organization and sells those products through big box retailers
like Target and Home Depot and online through its Web site. The
Company sold over 150 different products and a total of 4 million
units, generating over $50 million in revenue from its retail and
consulting businesses in 2014.
Quirky, Inc., Wink, Inc. and Undercurrent Acquisition, LLC filed
Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No.
15-12596) on Sept. 22, 2015, with a deal to sell their assets
related to the Wink business line as a going concern to Flextronics
International USA Inc., for $15 million, absent higher and better
offers.
The petitions were signed by Charles Kwalwasser, the chief
administrative officer.
Judge Martin Glenn is assigned to the jointly administered cases.
Quirky estimated assets in the range of $10 million to $50 million
and liabilities of at least $50 million.
The Debtors have engaged Cooley LLP as counsel, Klestadt Winters
Jureller Southard & Stevens LLP as conflicts counsel, Centerview
Partners LLC as investment bankers, FTI Consulting, Inc., as
financial advisors, Rust Consulting/Omni Bankruptcy as claims and
noticing agent and Hilco IP Services LLC dba Hilco Streambank as
intellectual property disposition consultant to Quirky, Inc.
The U.S. Trustee for Region 2 appointed five members to the
Official Committee of Unsecured Creditors.
RONALD WILLIAM DEMASI: Wins Favorable Judgment in Gulf Coast Suit
-----------------------------------------------------------------
Gulf Coast Endoscopy Center of Venice, LLC, and Anesthesia
Associates of Southwest Florida, LLC -- two medical practices --
allege that Dr. Ronald W. DeMasi, a managing member of both of
them, intentionally concealed their management company's poor
performance to further an undisclosed business interest he had with
the management company or its subsidiary.
In short, the Plaintiff's management company created a subsidiary
to manage, operate, and handle billing for endoscopic ambulatory
surgical centers but the Plaintiffs were the management company's
only endoscopic ambulatory surgical center client. And the
management company could not market itself to new clients if it did
not have an existing one. So, according to the Plaintiffs, Dr.
DeMasi hid the fact that he had a financial interest in the
management company and its subsidiary and that the management
company was doing a poor job handling the Plaintiffs' billing and
collections to keep the Plaintiffs from terminating the management
company.
The Plaintiffs claim Dr. DeMasi's material misrepresentations and
omissions give rise to state law claims for fraud, breach of
fiduciary duty, breach of contract, and breach of the implied duty
of good faith and fair dealing and render the debt they incurred as
a result of Dr. DeMasi's fraud nondischargeable.
In a Findings of Fact and Conclusions dated November 13, 2015,
which is available at http://is.gd/fJTmDPfrom Leagle.com, Judge
Michael G. Williamson of the United States Bankruptcy Court for the
Middle District of Florida, Tampa Division, ruled that the
Plaintiffs failed to prove Dr. DeMasi made any actionable
misrepresentations or concealed any material facts or, if he did,
that the misrepresentations or omissions were the cause of any
injury they suffered.
Because the Plaintiffs' remaining claims largely hinge on their
allegations that Dr. DeMasi made material misrepresentations or
concealed material facts, the Plaintiffs failed to meet their
burden of proof on those claims.
Accordingly, Judge Williamson ruled that Dr. DeMasi is entitled to
judgment in his favor on all counts.
The case is In re: Ronald William DeMasi and Susan J. DeMasi,
Chapter 11, Debtors. Gulf Coast Endoscopy Center of Venice, LLC, et
al., Plaintiffs, v. Ronald W. DeMasi, M.D., Defendant. Anesthesia
Associates of Southwest Florida, LLC, et al., Plaintiffs, v. Ronald
William DeMasi, Defendant, CASE NO. 8:13-BK-08406-MGW, ADV. NO.
8:13-AP-00858-MGW., 8:13-AP-00890-MGW (Bankr. M.D. Fla.).
Anesthesia Associates of Southwest Florida, LLC, Plaintiff,
represented by Heather A. DeGrave, Esq. --
hdegrave@walterslevine.com -- Walters, Levine, Klingensmith &
Thomison, Zala L Forizs, Esq. -- zala@mcintyrefirm.com -- McIntyre,
Panzarella, Thanasides, et al, Stuart J. Levine, Esq. --
slevine@walterslevine.com -- Walters Levine Klingensmith &
Thomison.
Ronald W. DeMasi, M.D., Defendant, represented by Kathleen L
DiSanto, Esq. -- Jennis & Bowen, David S Jennis, Esq. -- Jennis &
Bowen PL, Erik Johanson, Esq. -- Jennis & Bowen, PL.
ROTONDO WEIRICH: RW Transport Taps Maschmeyer Karalis as Counsel
----------------------------------------------------------------
RW Transport, LLC, sole interest holder of the Rotondo Weirich
Enterprises, Inc., et al., and Fontana Automotive, Inc., ask the
U.S. Bankruptcy Court for the Eastern District Of Pennsylvania for
permission to employ Maschmeyer Karalis P.C. as bankruptcy
counsel.
MK will, among other things:
-- advise and assist the Debtors in the negotiation and
documentation of the use of cash collateral and
debtors-in-possession financing, debt restructuring and related
transactions;
-- review the nature and validity of agreement relating to the
Debtors' business and advise the Debtors in connection therewith;
and
-- advise the Debtors concerning the actions they might take to
collect and recover property for the benefit of the estates.
On the Petition Date, MK received a retainer from the Debtors in
the amount of $3,434. The retainer was funded by Fontana
Automotive, Inc.
Aris J. Karalis, Esq., assures the Court that the firm is a
"disinterested person" as that term is defined in Section (101)14
of the Bankruptcy Code.
The firm can be reached at:
Robert W. Seitzer, Esq.
Aris J. Karalis, Esq.
MASCHMEYER KARALIS P.C.
1900 Spruce Street
Philadephia, PA 19103
Tel: (215) 546-4500
About Rotondo Weirich
Rotondo Weirich Enterprises, Inc. and five of its affiliates sought
Chapter protection (Bankr. E.D. Pa. Case Nos. 15-16146 - 15-16151)
on Aug. 27, 2015. The petition was signed by Steven J. Weirich as
president & CEO. The Debtors disclosed total assets of $8,667,885
and total liabilities of $10,452,860. Maschmeyer Karalis P.C.
represents the Debtors.
On Sept. 22, 2015, Andrew Vara, acting U.S. trustee for Region 3,
appointed Grant Brooker, general counsel of Bennett Motor Express
LLC; Brett Smith, business manager of Bragg Companies; and Max
Helser, president of Helser Industries Inc., to serve on the
official committee of unsecured creditors.
On Oct. 15, 2015, another unsecured creditor, Mi-Jack Products Inc.
Vice-President Jack Wepfer, was appointed to serve on the panel.
The unsecured creditors' committee is represented by Reed Smith
LLP.
ROTONDO WEIRICH: Seeks Nod to Auction RWE/RWI Assets
----------------------------------------------------
Rotondo Weirich Enterprises, Inc., and its affiliated debtors ask
the U.S. Bankruptcy Court for the Eastern District of Pennsylvania,
to approve of the sale of the assets of debtors Rotondo Weirich
Enterprises, Inc. and Rotondo Weirich, Inc., and the facilities to
the successful bidder at the auction. The Debtors also seek the
approval of the sale, assumption and/or assignment of the
subcontracts so designated to the successful bidder.
The Debtors relate that three subcontracts have work to be
performed beyond the date of the Auction, will be available for
sale, assumption and/or assignment at the Auction. The
subcontracts that will be available at the Auction to be designated
as contracts that may be purchased, assumed and/or assigned, are:
(a) the Richard J. Donovan Correctional Facility Infill Complex
Level II Dorms, owned by the California Department of Correction &
Rehabilitation, with an original contract amount of $22,450,622;
and (b) Maple Street Correctional Center, owned by the County of
San Mateo, San Mateo County Sheriff's Office, with original
contract amounts of $12,466,099 and $3,160,119.
The Debtors tell the Court that they lack adequate capital and
financing to be able to capitalize on opportunities that are
available in the marketplace for new work. They further tell the
Court that they cannot continue the business as presently
structured and generate sufficient revenue to timely satisfy their
debt obligations. The Debtors determine that a prompt sale of the
Assets as a "going concern" is in the best interest of the Debtors
and their estates.
The Assets available for sale at the Auction are:
(i) All of the business interests and assets of the RWE and
RWI Debtors, including their patent and patented rapid housing
system and molds, inventory, vehicles, machinery, furnitures and
equipment, the RWE trade name, and all interests in the Panama
Housing Project, the Peru Correctional Facility, the Nigeria
Housing Opportunity;
(ii) The subcontracts in connection with the Donovan Project
and/or San Mateo Project, if so designated by a bidder; and
(iii) Each of the Facilities owned by the RW Lederach, LLC, RW
675, LLC, and Three North Pointe Associates, LLC.
The proposed bid procedures contain, among others, the following
terms:
(a) Bid Deadline: Dec. 3, 2015
(b) Auction Date: Dec. 8, 2015
(c) Sale Hearing: Dec. 11, 2015
(d) Closing: Within 30 days after entry of an order
authorizing the sale of the Assets.
Rotondo Weirich is represented by:
Aris J. Karalis, Esq.
Robert W. Seitzer, Esq.
Linda Alle-Murphy, Esq.
MASCHMEYER KARALIS P.C.
1900 Spruce Street
Philadelphia, PA 19103
Telephone: (215)546-4500
Facsimile: (215)985-4175
E-mail: AKaralis@cmklaw.com
RSeitzer@cmklaw.com
Lallemurphy@cmklaw.com
About Rotondo Weirich Enterprises
Rotondo Weirich Enterprises, Inc. and five of its affiliates sought
Chapter 11 protection (Bankr. E.D. Pa. Case Nos. 15-16146 -
15-16151) on Aug. 27, 2015. The petition was signed by Steven J.
Weirich as president & CEO. The Debtors disclosed total assets of
$8,667,885 and total liabilities of $10,452,860. Maschmeyer
Karalis P.C. represents the Debtors.
On Sept. 22, 2015, Andrew Vara, acting U.S. trustee for Region 3,
appointed Grant Brooker, general counsel of Bennett Motor Express
LLC; Brett Smith, business manager of Bragg Companies; and Max
Helser, president of Helser Industries Inc., to serve on the
official committee of unsecured creditors. On Oct. 15, 2015,
another unsecured creditor, Mi-Jack Products Inc. Vice-President
Jack Wepfer, was appointed to serve on the panel.
The unsecured creditors' committee is represented by Reed Smith
LLP.
ROTONDO WEIRICH: Seeks to Sell Misc. Personal Property at Auction
-----------------------------------------------------------------
Debtors RW Motorsports, Inc., RW Transport, LLC, and Fontana
Automotive, Inc., ask the U.S. Bankruptcy Court for the Eastern
District of Pennsylvania to authorize the sale of personal property
free and clear of liens, claims and encumbrances at public
auction.
The personal property which the Debtors seek to sell at public
auction consist of chassis, engines, tools, racing equipment,
machine shop equipment, fasteners, and other miscellaneous personal
property ("Property"). The Property is located at 451 Southpoint
Circle, Suites 100 and 200, Brownsburg, Indiana, which is leased by
RW Motorsports, Inc., and Fontana Automotive, Inc.
The Debtors tell the Court that they seek approval of the sale of
the Property at a public auction on an "AS IS, WHERE IS" basis,
without any warranty, express or implied, with all defects. The
Debtors propose to conduct the public auction of the Property on
Dec. 8, 2015 at 10:00 a.m. The Debtors further tell the Court that
they believe that the Auction will generate the maximum value for
their estates and that the sale of the Property in this manner best
seres the interest of the estates.
Rotondo Weirich Enterprises is represented by:
Aris J. Karalis, Esq.
Robert W. Seitzer, Esq.
MASCHMEYER KARALIS P.C.
1900 Spruce Street
Philadelphia, PA 19103
Telephone: (215)546-4500
Facsimile: (215)985-4175
E-mail: AKaralis@cmklaw.com
RSeitzer@cmklaw.com
About Rotondo Weirich Enterprises
Rotondo Weirich Enterprises, Inc. and five of its affiliates sought
Chapter protection (Bankr. E.D. Pa. Case Nos. 15-16146 - 15-16151)
on Aug. 27, 2015. The petition was signed by Steven J. Weirich as
president & CEO. The Debtors disclosed total assets of $8,667,885
and total liabilities of $10,452,860. Maschmeyer Karalis P.C.
represents the Debtors.
On Sept. 22, 2015, Andrew Vara, acting U.S. trustee for Region 3,
appointed Grant Brooker, general counsel of Bennett Motor Express
LLC; Brett Smith, business manager of Bragg Companies; and Max
Helser, president of Helser Industries Inc., to serve on the
official committee of unsecured creditors.
On Oct. 15, 2015, another unsecured creditor, Mi-Jack Products
Inc.
Vice-President Jack Wepfer, was appointed to serve on the panel.
The unsecured creditors' committee is represented by Reed Smith
LLP.
ROTONDO WEIRICH: Taps Comly and CIAI as Auctioneers
---------------------------------------------------
Rotondo Weirich Enterprises, Inc., et al., ask the U.S. Bankruptcy
Court for the Eastern District of Pennsylvania for permission to
employ Wm. F. Comly & Son, Inc., and Cincinnati Industrial
Auctioneers, Inc., as auctioneers.
The Debtors own various personal property consisting of chassis,
engines, tools, racing equipment, machine shop equipment, fasteners
and other miscellaneous personal property.
The auction group will, among other things:
1. assign an auction manager to coordinate all facts of the
labor process from set up and auction proceedings through
supervision of the removal of the assets for the property located
at 451 Southpoint Circle Suites 100 and 200, Brownburg, Indiana
which space is leased by RW Motorsports, Inc., and Fontana
Automotive Inc.;
2. create and mail pictorial brochure;
3. select regional newspaper and trade publications to
supplement the direct mail program;
4. host a public inspection of the assets prior to the auction
sae on Dec. 8, 2015.
About Rotondo Weirich
Rotondo Weirich Enterprises, Inc. and five of its affiliates sought
Chapter protection (Bankr. E.D. Pa. Case Nos. 15-16146 - 15-16151)
on Aug. 27, 2015. The petition was signed by Steven J. Weirich as
president & CEO. The Debtors disclosed total assets of $8,667,885
and total liabilities of $10,452,860. Maschmeyer Karalis P.C.
represents the Debtors.
On Sept. 22, 2015, Andrew Vara, acting U.S. trustee for Region 3,
appointed Grant Brooker, general counsel of Bennett Motor Express
LLC; Brett Smith, business manager of Bragg Companies; and Max
Helser, president of Helser Industries Inc., to serve on the
official committee of unsecured creditors.
On Oct. 15, 2015, another unsecured creditor, Mi-Jack Products Inc.
Vice-President Jack Wepfer, was appointed to serve on the panel.
The unsecured creditors' committee is represented by Reed Smith
LLP.
SALLY BEAUTY: S&P Assigns BB+ Rating on $750MM Sr. Unsecured Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'BB+'
issue-level rating to Denton, Texas-based Sally Holdings LLC and
Sally Capital Inc.'s $750 million senior unsecured notes due 2025.
The recovery rating is '3', indicating S&P's expectation for
meaningful recovery in the event of a default in the higher end of
the 50% to 70% range. The 'BB+' rating is the same as the 'BB+'
corporate credit rating on Sally Beauty Holdings Inc., the parent
company. The company intends to use net proceeds from this
offering, together with cash on hand and/or additional borrowings,
to refinance its $750.0 million 6.875% senior notes due 2019.
The ratings on Sally reflect S&P's assessment of its business risk
profile as "satisfactory", given its leading position in the
growing yet highly discretionary and fragmented beauty supply
industry, stable historical operating performance, and highly
concentrated supplier base. Sally competes with a wide range of
participants in the beauty products sector, including other
specialty beauty supply stores, salons, mass merchants, drug
stores, and supermarkets. S&P believes Sally's broad range of
merchandise, including its higher margin, exclusive-label products,
provides a unique value proposition to consumers, which has aided
the company's strong historical sales growth.
The company's "significant" financial risk profile reflects S&P's
belief that the company will continue to maintain a moderately
leveraged capital structure and generate significant and stable
cash flows.
RATINGS LIST
Sally Beauty Holdings Inc.
Corporate Credit Rating BB+/Stable/--
New Rating
Sally Holdings LLC
Sally Capital Inc.
$750 million senior unsecured notes due 2025 BB+
Recovery rating 3H
SALLY HOLDINGS: Moody's Rates New $750MM Unsecured Notes 'Ba2'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Sally Holdings
LLC's proposed $750 million senior unsecured note offering and
affirmed all other ratings, including Sally's Ba2 Corporate Family
Rating, Ba2-PD Probability of Default rating, Ba2 ratings on its
existing senior unsecured notes and the SGL-1 Speculative Grade
Liquidity Rating. The ratings outlook is stable.
Proceeds from the proposed note offering, along with cash and/or
additional borrowing, will be used to refinance, through a
redemption, the company's $750 million 6.875% Senior Unsecured
Notes due 2019. The assigned rating is subject to review of final
documentation and closing of the proposed refinancing transaction.
Ratings assigned:
Sally Holdings LLC:
-- $750 million senior unsecured notes due 2025 at Ba2 (LGD4)
-- Senior unsecured shelf at (P)Ba2
Sally Capital, Inc.:
-- Senior unsecured shelf at (P)Ba2
Sally Beauty Holdings, Inc.:
-- Senior unsecured shelf at (P)Ba2
Ratings affirmed:
Sally Holdings LLC:
-- Corporate Family Rating at Ba2;
-- Probability of Default Rating at Ba2-PD;
-- Speculative Grade Liquidity rating at SGL-1
-- $850 million senior unsecured notes due 2022 at Ba2 (LGD4)
-- $200 million senior unsecured notes due 2023 at Ba2 (LGD4)
Ratings affirmed, to be withdrawn at the completion of the
refinancing transaction:
Sally Holdings LLC:
-- $750 million senior unsecured notes due 2019 at Ba2 (LGD4)
The ratings outlook is stable
RATINGS RATIONALE
Sally's Ba2 Corporate Family Rating reflects its solid market
position in the professional beauty supply market, steady
performance through economic cycles, geographic diversity, and
strong merchandising focus which we expect will continue to benefit
the company's margins. Sally's liquidity is very good, supported by
the expectation that operating cash flow and ample revolver
availability will be more than sufficient to cover working capital
and capital spending over the next twelve months. The rating is
constrained by the company's high debt load and continued risk for
a more aggressive financial policy due to increased share
repurchase activity.
The stable outlook reflects the expectation for continued
profitable growth while maintaining a disciplined approach to
shareholder returns and acquisitions.
Ratings could be upgraded with continued profitable growth and
increased global scale, along with willingness to achieve and
maintain adjusted debt to EBITDA around 3.5 times and retained cash
flow-to-net debt above 20%.
Ratings could be downgraded if operating performance were to
sustainably weaken, financial policies were to become more
aggressive, or the company were unable to maintain at least good
liquidity. Specific metrics include adjusted debt to EBITDA
sustained near 5.0 times, adjusted interest coverage below 2.75
times and retained cash flow-to-net debt below 12.5%.
Sally Holdings LLC, based in Denton, Texas, is an international
retailer and distributor of beauty supplies. Its two subsidiaries,
Sally Beauty Supply and Beauty Systems Group, sell and distribute
beauty products to individual retail consumers and salon
professionals. Products are distributed through a network of 4,792
company-operated and 175 franchised stores in 13 countries.
Revenues exceeded $3.8 billion for the fiscal year ended September
30, 2015.
SAMSON RESOURCES: Departing CEO Barred from $760K Bonus
-------------------------------------------------------
Steven Church, writing for Bloomberg Brief - Distress & Bankruptcy,
reported that Samson Resources Corp. tried unsuccessfully to pay a
$760,000 bonus to its departing Chief Executive Officer Randy
Limbacher, even though his decision to quit may hurt the gas
driller's chance of reorganizing in bankruptcy.
According to the report, Samson was barred on Nov. 16 from paying
the bonus by the judge overseeing the company's Chapter 11 case in
Wilmington, Delaware. Instead, Limbacher can file a bankruptcy
claim that has a much lower payment priority than bonus payments,
U.S. Bankruptcy Judge Christopher Sontchi ruled, the report
related.
Samson had argued Limbacher already earned the bonus for work he
did in the third quarter and denying him the money would harm the
morale of rank-and-file workers who are expecting to get paid extra
to stay while Samson tries to reorganize its finances, the report
further related.
About Samson Resources
Samson Resources Corporation, et al., filed Chapter 11 bankruptcy
petitions (D. Del. Lead Case No. 15-11934) on Sept. 16, 2015.
Philip W. Cook signed the petition as executive vice president and
chief financial officer. The Debtors estimated assets and
liabilities of more than $1 billion.
Samson is an onshore oil and gas exploration and production
company
with interests in various oil and gas leases primarily located in
Colorado, Louisiana, North Dakota, Oklahoma, Texas, and Wyoming.
The Operating Companies operate, or have royalty or working
interests in, approximately 8,700 oil and gas production sites.
Samson was acquired by KKR and Crestview from Charles Schusterman
in December 2011 for approximately $7.2 billion. The investor
group provided approximately $4.1 billion in equity investments as
part of the purchase price.
Kirkland & Ellis LLP represents the Debtors as general counsel.
Klehr Harrison Harvey Branzburg LLP is the Debtors' local counsel.
Alvarez & Marsal LLC acts as the Debtors' financial advisor.
Blackstone Advisory Partners L.P. serves as the Debtors'
investment
banker. Garden City Group, LLC serves as claims and noticing
agent
to the Debtors.
Andrew Vara, acting U.S. trustee for Region 3, appointed three
creditors of Samson Resources Corp. and its affiliated debtors to
serve on the official committee of unsecured creditors.
SEARS HOLDINGS: Fitch Affirms 'CC' Issuer Default Rating
--------------------------------------------------------
Fitch Ratings has affirmed the long-term Issuer Default Ratings on
Sears Holdings Corporation and its various subsidiary entities at
'CC'.
KEY RATING DRIVERS
EBITDA Remains Materially Negative: Fitch expects Sears' EBITDA to
be in the negative $600 million range in 2015 and potentially worse
in 2016. Fitch expects a revenue decline of around 20% in 2015 due
to estimated domestic comparable store sales (comps) of negative
10% and ongoing store closings. Fitch expects comps to be in the
negative mid-single digit range in 2016 and 2017 with top line
decline potentially in the high single digit range as Sears
continues to close stores.
Significant Cash Burn: Sears' interest expense, capex and pension
plan contributions are expected to total $750 million-$800 million
annually between 2015 and 2017. Netting this amount from Fitch's
EBITDA expectation - and assuming $200 million-$300 million in net
working capital benefit - leads to cash burn (CFO after capex and
pension contributions) of $1 billion to $1.1 billion in 2015. Cash
burn could potentially worsen in 2016, assuming EBITDA losses
approach $800 million to $1 billion.
Shrinking Assets Fund Operations: Sears injected $3.1 billion in
liquidity through August 2015 with $429 million from real estate
joint ventures related to 31 stores with General Growth Properties,
Simon Properties, and The Macerich Company (collectively 'joint
venture') and $2.7 billion from the sale-leaseback transaction with
Seritage Growth Properties (in which it sold 235 owned properties
and its 50% interest in the joint venture). This is on top of the
$6.8 billion (which includes expense and working capital reductions
and debt financing activities) between 2012 and 2014 to fund
ongoing operations given material declines in internally generated
cash flow.
Further Asset Sales and/or Debt Funding Required Beyond 2015: Based
on current EBITDA expectations, Fitch expects Sears to end 2015
with about $1.8 billion to $2 billion in liquidity. This assumes
no additional asset sales above the $3.1 billion injected through
August or debt issuance. As a result, Sears is likely to require
an additional $1.3 billion to $1.5 billion in annual liquidity in
2016 and 2017 via further real estate transactions and/or higher
borrowings, plus another $0.5 billion to fund annual seasonal
working capital needs.
Below are potential sources of liquidity:
Fitch estimates that Sears still owns approximately 275 (excludes
125 of Sears full line mall stores that are in a bankruptcy remote
vehicle and approximately 22 specialty stores) unencumbered Kmart
discount and Sears full line mall stores. If the unencumbered real
estate was valued at a similar price per square foot as the 235
properties sold under the Seritage transaction, Fitch estimates
Sears could get an additional $2.6 billion in proceeds. However,
the remaining portfolio could be of lower value if they are in
smaller markets or declining malls and there could be restrictions
on the sale of some of these properties. In addition there could
be value in below market leases but the potential proceeds are
difficult to estimate.
The company could also separate its Sears Auto Center business.
Finally, Sears' ability to issue incremental debt secured by
receivables and inventory, which governs the borrowing base that
determines the borrowing capacity on its existing credit facility
(after netting out the first lien term loan and second lien secured
notes, is limited given the significant reduction over the past few
years in working capital.
KEY ASSUMPTIONS
-- Fitch expects domestic comps of around negative 10% in 2015
and negative mid-single digit range in 2016 and 2017.
-- EBITDA is expected to be approximately negative $600 million
in 2015 and potentially worse in 2016 at $800 million to $1
billion.
-- Fitch expects cash burn to be approximately $1 billion to
$1.1 billion in 2015 based on negative EBITDA and $750
million-$800 million total in interest expense, capex, and
pension expense and $200 million-$300 million in net working
capital benefit.
-- Total liquidity is expected to be about $1.8 billion to
$2 billion at the end of 2015. Sears is likely to require
an additional $1.3 billion to $1.5 billion in annual
liquidity in 2016 and 2017 via further real estate
transactions and/or higher borrowings, plus another
$0.5 billion to fund seasonal working capital needs.
RATING SENSITIVITIES
Negative Rating Action: A negative rating action could result if
Sears is unable to inject the needed liquidity to fund ongoing
operations.
Positive Rating Action: A positive rating action could result from
a sustained improvement in comps and EBITDA to a level where the
company is covering its fixed obligations. This is not anticipated
at this time.
LIQUIDITY
Sears had total cash of approximately $1.8 billion and availability
under its credit facility of $1.2 billion as of Aug. 1, 2015, prior
to the pay down of $936 million of second lien notes due October
2018. The borrowing availability of $1.2 billion on the undrawn
$3.275 billion domestic credit facility reflected $657 million of
letters of credit outstanding, the effect of the springing
fixed-charge coverage ratio covenant that caps borrowing to 90% of
the line cap, and another $1.1 billion that was not available due
to the borrowing base limitation. Total liquidity is expected to
be about $1.8 billion to $2 billion at the end of 2015.
Sears addressed the maturity of its $3.275 billion secured credit
facility, which was due to mature on April 8, 2016 by extending
$1.971 billion out of the total $3.275 billion to July 2020. The
remainder will expire in April 2016. The company does not have any
other near-term maturities.
Recovery Considerations for Issue-Specific Ratings
In accordance with Fitch's Recovery Rating (RR) methodology, Fitch
has assigned RRs based on the company's 'CC' Issuer Default Rating
(IDR). Fitch's recovery analysis assumes a liquidation value under
a distressed scenario of approximately $6.5 billion (low seasonal
inventory) to $7 billion (peak seasonal inventory) on domestic
inventory, receivables, and property, plant and equipment.
The $3.275 billion domestic senior secured credit facility, under
which Sears Roebuck Acceptance Corp. (SRAC) and Kmart are the
borrowers, is rated 'CCC+/RR1', indicating outstanding (90%-100%)
recovery prospects in a distressed scenario. Holdings provides a
downstream guarantee to both SRAC and Kmart borrowings, and there
are cross-guarantees between SRAC and Kmart. The facility is also
guaranteed by direct and indirect wholly owned domestic
subsidiaries of Holdings, which own assets that collateralize the
facility.
The facility is secured primarily by domestic inventory, which is
expected to range from an estimated $4.5 billion in January 2016 to
about $5.5 to $5.8 billion around peak levels in the next 12
months, and pharmacy and credit card receivables, which are
estimated to be $0.3 billion-$0.4 billion. The credit agreement
imposes various requirements, including (but not limited to) the
following provisions: if availability under the credit facility is
beneath a certain threshold, the fixed-charge ratio as of the last
day of any fiscal quarter should not be less than 1.0x; a cash
dominion requirement if excess availability on the revolver falls
below designated levels; and limitations on its ability to make
restricted payments, including dividends and share repurchases.
The $983 million first lien senior secured term loan due June 2018
is also rated 'CCC+/RR1', as it is secured by a first lien on the
same collateral and guaranteed by the same subsidiaries of the
company that guarantee the revolving facility. Under the guarantee
and collateral agreement, the revolving lenders will have priority
of payment from the collateral over the $1 billion first lien term
loan lenders.
The remaining $302 million second lien notes due October 2018 at
Holdings, which have a second lien on the same collateral package
as the credit facility and $1 billion term loan, have been upgraded
to 'CCC+/RR1' from 'CCC/RR2' given the significant paydown of these
notes and Fitch's expectation that Sears will not be able to issue
incremental debt secured by receivables and inventory given the
significant decline in borrowing base.
The notes contain provisions that require Holdings to maintain
minimum collateral coverage for total debt secured by the
collateral securing the notes (failing which, Holdings has to offer
to buy notes sufficient to cure the deficiency at 101%) that
provide downside protection. The second lien notes have an
unsecured claim on the company's unencumbered real estate assets,
given the notes are guaranteed by substantially all the domestic
subsidiaries that guarantee the credit facility.
The senior unsecured notes at SRAC are rated 'CC/RR4', indicating
average recovery prospects (31%-50%). The recovery on these notes
are derived from the valuation on the company's unencumbered real
estate assets held at Sears, Roebuck and Co, which provides a
downstream guarantee of SRAC's senior notes and also agrees to
maintain SRAC's fixed-charge coverage at a minimum of 1.1x.
However, should a material portion of the owned real estate be used
to raise additional liquidity, it could adversely affect the
ratings on the unsecured notes. Recovery to the senior unsecured
notes also takes into account potential sizable claims under
operating lease obligations and the company's underfunded pension
plan.
The 8% $625 million unsecured notes due 2019 at Holdings are rated
'C/RR6', given poor recovery prospects (0%-10%).
FULL LIST OF RATING ACTIONS
Fitch has affirmed these ratings:
Sears Holdings Corporation (Holdings)
-- Long-term IDR at 'CC';
-- $302 million second-lien secured notes upgraded to
'CCC+/RR1' from 'CCC/RR2';
-- $625 million unsecured notes 'C/RR6'.
Sears, Roebuck and Co. (Sears)
-- Long-term IDR at 'CC'.
Sears Roebuck Acceptance Corp. (SRAC)
-- Long-term IDR at 'CC';
-- Short-term IDR at 'C';
-- Commercial paper at 'C';
-- $3.275 billion secured bank facilities ($1.304 billion due
April 8, 2016, and $1.971 billion secured bank facility due
July 20, 2020) at 'CCC+/RR1' (as co-borrower);
-- $979 million first lien term loan at 'CCC+/RR1' (as co-
borrower);
-- Senior unsecured notes at 'CC/RR4'.
Kmart Holding Corporation (Kmart)
-- Long-term IDR at 'CC';
Kmart Corporation (Kmart Corp)
-- Long-term IDR at 'CC';
-- $3.275 billion secured bank facilities ($1.304 billion due
April 8, 2016, and $1.971 billion secured bank facility due
July 20, 2020) at 'CCC+/RR1' (as co-borrower);
-- $979 million first lien term loan at 'CCC+/RR1'
(as co-borrower);
SK FOODS: Distribution of Escrow Funds in Class Suit Ordered
------------------------------------------------------------
In an Order dated November 12, 2015, which is available at
http://is.gd/JXleYVfrom Leagle.com, Judge Kimberly J. Mueller of
the United States District Court for the Eastern District of
California ordered that pursuant to a stipulation, Class Counsel in
the case captioned FOUR IN ONE COMPANY, INC., on behalf of itself
and all others similarly situated, Plaintiffs, v. SK FOODS, L.P.,
INGOMAR PACKINGCOMPANY, LOS GATOS TOMATOPRODUCTS, SCOTT SALYER,
STUARTWOOLF and GREG PRUETT, Defendants, NO. 2:08-CV-3017 KJM EFB
(E.D. Calif.), will arrange for the immediate pro rata distribution
of the Escrow Account Funds to the Class members by the claims
administrator under the plan of allocation approved by the Court.
Four in One Company, Inc., Plaintiff, represented by Arthur N.
Bailey, Esq. -- abailey@hausfeld.com -- Hausfeld LLP, Dana Statsky
Smith, PHV, Dsmith@bernlieb.com -- Bernstein Liebhard, LLP, Donald
A. Ecklund, PHV, -- DEcklund@carellabyrne.com -- Carella Byrne Bain
Gilfillan Cecchi Stewart & Olstein, James E. Cecchi, PHV,
JCecchi@carellabyrne.com -- Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart and Olstein, Joey Dean Horton, Esq. --
jdhorton@quinnemanuel.com -- Quinn Emanuel Urquhart and Sullivan
LLP, Ronald J. Aranoff, PHV, Raranoff@bernlieb.com -- Bernstein
Liebhard, LLP, Stanley D. Bernstein, PHV, Sbernstein@bernlieb.com
-- Bernstein Liebhard, LLP, Steig D Olson, PHV,
sdolson@quinnemanuel.com -- Quinn Emanuel Urquhart & Sullivan, LLP,
Stephaine M. Beige, PHV, Sbeige@bernlieb.com -- Bernstein Liebhard,
LLP, Stephen R. Neuwirth, PHV, -- srneuwirth@quinnemanuel.com --
Quinn Emanuel Urquhart Oliver & Hedges, LLP & Tania T. Taveras,
PHV, Ttaveras@bernlieb.comBernstein Liebhard, LLP.
Cliffstar Corporation, Plaintiff, represented by Arthur N. Bailey,
Esq. -- Hausfeld LLP, Steig D Olson, PHV, Quinn Emanuel Urquhart &
Sullivan, LLP, Allan Steyer, Esq. -- asteyer@steyerlaw.com --
Steyer Lowenthal Boodrookas Alvarez & Smith LLP, Holly Joy
Stirling, Esq. -- hstirling@steyerlaw.com -- Steyer Lowenthal
Boodrookas Alvarez & Smith, LLP, Lucas E Gilmore, Esq. --
Lucas.Gilmore@blbglaw.com -- Bernstein Litowitz Berger & Grossmann
LLP & Bruce L Simon, Pearson, Esq. -- bsimon@pswlaw.com -- Simon,
Warshaw & Penny.
SK Foods, L.P., Defendant, represented by Paul Robert Griffin, Esq.
-- pgriffin@winston.com -- Winston & Strawn LLP, Robert Bernard
Pringle, Esq. -- rpringle@winston.com -- Winston and Strawn &
Jonathan E Swartz, Esq. -- jswartz@winston.com -- Winston and
Strawn LLP.
Scott Salyer, Defendant, represented by Malcolm S. Segal, Esq. --
Segal & Associates, PC.
Bradley D. Sharp, Chapter 11 Trustee for SK Foods, LP, Defendant,
represented by Gregory C Nuti, Esq. -- gnuti@schnader.com --
Schnader Harrison Segal & Lewis LLP & Kevin W. Coleman, Esq. --
kcoleman@schnader.com -- Schnader Harrison Segal & Lewis LLP.
About SK Foods
SK Foods LP ran a tomato processing facility. It filed for
Chapter 11 bankruptcy protection after being dropped by its
lending group. Creditors filed an involuntary Chapter 11 petition
against SK Foods LP and affiliate RHM Supply/ Specialty Foods Inc.
(Bankr. E.D. Cal. Case No. 09-29161) on May 8, 2009. SK Foods
had said it was preparing to file a voluntary Chapter 11 petition
when the creditors initiated the involuntary case. The Company
later put itself into Chapter 11 and Bradley D. Sharp was
appointed as Chapter 11 trustee. The Debtors were authorized on
June 26, 2009, to sell the business for $39 million cash to a U.S.
arm of Singapore food processor Olam International Ltd. The
replacement cost for the assets is $139 million, according to
Olam.
In February 2010, a federal grand jury returned a seven-count
indictment charging Frederick Scott Salyer, former owner and CEO
of SK Foods, with violations of the Racketeer Influenced and
Corrupt Organizations Act, in connection with his direction of
various schemes to defraud SK Foods' corporate customers through
bribery and food misbranding and adulteration, and with wire fraud
and obstruction of justice.
Salyer supporters launched a Web site which can be accessed from
two addresses: http://www.operationrottentomato.com/and
http://www.scott-salyer.com/
SKOPOS AUTO 2015-2: DBRS Finalizes (P)B(sf) Rating on Cl. D Debt
----------------------------------------------------------------
DBRS, Inc. finalized its provisional ratings on the following
classes issued by Skopos Auto Receivables Trust 2015-2 (Skopos
2015-2):
-- Series 2015-2, Class A rated A (sf)
-- Series 2015-2, Class B rated BBB (sf)
-- Series 2015-2, Class C rated BB (low) (sf)
-- Series 2015-2, Class D rated B (sf)
The ratings are based on a review by DBRS of the following
analytical considerations:
-- Transaction capital structure, proposed ratings and form and
sufficiency of available credit enhancement.
-- The ability of the transaction to withstand stressed cash flow
assumptions and repay investors according to the terms under
which they have invested.
For Skopos 2015-2, the ratings address the payment of timely
interest on a monthly basis and the payment of principal by the
legal final maturity date.
-- The capabilities of Skopos with regards to originations,
underwriting and servicing.
-- DBRS used a proxy analysis in its development of an expected
loss.
-- The legal structure and presence of legal opinions that
address the true sale of the assets to the Issuer, the non-
consolidation of the special-purpose vehicle with Skopos, that
the trust has a valid first-priority security interest in the
assets and the consistency with DBRS's "Legal Criteria for
U.S. Structured Finance" methodology.
SKYSTAR BIO-PHARMA: Receives Nasdaq Listing Non-Compliance Notice
-----------------------------------------------------------------
Skystar Bio-Pharmaceutical Company disclosed that on November 17,
2015, it received a letter from NASDAQ Stock Market indicating that
that Skystar failed to comply with Nasdaq's filing requirement set
forth in Listing Rule 5250(c)(1) because it failed to file its Form
10-Q for the fiscal quarter ended September 30, 2015.
The Company previously disclosed a notification from Nasdaq
informing the Company that is was subject to delisting because it
failed to comply with Nasdaq's filing requirements set forth in
Listing Rule 5250(c)(1) because it failed to file its Form 10-K for
the fiscal year ended December 31, 2014, and Forms 10-Q for the
periods ended March 31, and June 30, 2015. The failure to file the
Quarterly Report constitutes an additional basis for delisting.
The Company also previously disclosed that Nasdaq had notified the
Company of two additional, and separate, bases for delisting under
Listing Rule 5250(b)(1) (failure to disclose material non-public
information) and Listing Rule 5101 (public interest concerns).
The Company has a hearing scheduled for December 3, 2015 for the
hearing panel to review the delisting determination.
About Skystar Bio-Pharmaceutical Company
Skystar -- http://www.skystarbio-pharmaceutical.com-- is a
China-based developer, manufacturer and distributor of veterinary
healthcare and medical care products. Skystar has four product
lines: veterinary medicines, probiotics, vaccines and feed
additives formulated and packaged in house across several modern
manufacturing and distributions facilities. Skystar's distribution
network includes almost 3,000 distribution agents of which 360 are
franchised stores with exclusivity agreements covering 29 provinces
throughout China.
ST. JOHN'S RIVERSIDE: S&P Raises Rating on Revenue Debt to BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on Yonkers
Industrial Development Agency, N.Y.'s revenue debt, issued for
St. John's Riverside (SJRH), one notch to 'BB-' from 'B+'. The
outlook is stable.
The stable outlook reflects Standard & Poor's opinion that despite
the recent weaker operating performance, maximum annual debt
service coverage will likely remain adequate for the rating. The
outlook also reflects the rating service's expectation that
unrestricted reserves will likely improve due to the cash infusion
from a nursing home sale.
"We could revise the outlook to positive or raise the rating over
the longer term if SJRH were to demonstrate sustainable improvement
in operating performance and cash flow and if it were to strengthen
key balance sheet metrics such that they would drive the overall
financial profile to levels we consider more consistent with a
higher rating," said Standard & Poor's credit analyst Margaret
McNamara. "We could lower the rating over the longer term if there
were a material change to SJRH's enterprise, such as a reduction in
market share, or if SJRH's financial profile were to deteriorate,
particularly its debt and liability metrics."
A gross receipt pledge of St. John's and a mortgage on the facility
secure the bonds.
STACY L. DANLEY II: Appeal from Order Staying Suit Denied
---------------------------------------------------------
In a Memorandum Opinion and Order dated November 4, 2015, which is
available at http://is.gd/H7jsdTfrom Leagle.com, Chief Judge W.
Keith Watkins of the United States District Court for the Middle
District of Alabama, Eastern Division, denied Stacy L. Danley, II,
and Stephanie L. Danley's appeal from an order denying their
Emergency Motion to Stay Foreclosure Pending Appeal and Motion for
Expedited Hearing on Emergency Motion to Stay Foreclosure.
The appeal arises from two loans made by Liberty Bank to the
Danleys. One loan was secured by a mortgage on the Danleys'
investment rental property. The other was secured by a mortgage on
the Danleys' personal residence. Since Liberty Bank sent its
initial notice of default with respect to these loans, the Danleys
have initiated four separate bankruptcy actions. As of the date of
this order, the Danleys still owe almost $840,000 to Liberty Bank,
more than $270,000 of which is in arrears.
The Appellants have sought review of the Order granting Liberty
Bank Relief From Automatic Stay and the Order Denying Motion to
Alter and Amend. They request a stay of the impending foreclosure
proceedings pending the outcome of the appeal.
The case is STACY L. DANLEY, II and STEPHANIE L. DANLEY,
Appellants, v. LIBERTY BANK AND TRUST COMPANY, Appellee, CASE NO.
3:15-CV-821-WKW (M.D. Ala.).
Appellants are represented by Lee R. Benton, Esq. --
lbenton@bcattys.com -- Benton and Centeno, LLP, Samuel C. Stephens.
Esq. -- sstephens@bcattys.com -- Benton and Centeno, LLP
Liberty Bank and Trust Company, Appellee, is represented by Leonard
Norman Math, Esq. -- Chambless, Math & Carr, PC.
STERLING MID-HOLDINGS: S&P Affirms 'B-' ICR, Outlook Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Sterling Mid-Holdings Ltd. to negative from stable and affirmed its
'B-' issuer credit rating. At the same time, S&P affirmed its
issue ratings on Sterling's $800 million senior secured notes. The
recovery rating remains '4', indicating S&P's expectation for
average (30%-50%) recovery for lenders in the event of a payment
default. S&P's recovery expectations are in the lower half of the
30%-50% range.
The negative outlook revision reflects Sterling's (formerly DFC
Global Corp.) continued poor financial performance and exposure to
regulatory risk. "We except debt to EBITDA to be about 10x and
EBITDA to interest expense to be about 1x over the next 12 months,
which we view as "highly leveraged," according to our criteria,"
said Standard & Poor's credit analyst Igor Koyfman. Since Lone
Star purchased Sterling in June 2014, most of the senior management
team has been replaced, and the company is now aggressively
repositioning the business. Although financial performance may
improve as the firm has focused on cost structure and compliance,
S&P believes there are significant risks associated with the firm's
evolving business model.
Sterling has product concentration in high-cost small-dollar
lending, which exposes the company to significant regulatory risks.
Regulatory changes in the U.K. have already resulted in a
significant decline in business volume and associated
profitability. Total revenue in the U.K. declined to $187.9
million in fiscal 2015 from $441.1 million in the prior year. The
company is currently unprofitable in the U.K. and is relying on
higher volume to drive improved earnings. Since the U.K.'s
Financial Conduct Authority (FCA) took over regulatory
responsibilities of the consumer credit industry in April 2014, it
has instituted affordability assessments, specific disclosures and
risk warnings, a limitation of two rollovers per customer
(extending a loan term for a fee), and significant changes to the
collection practices. In addition to Sterling's loan volume
declines in the U.K., the company entered an agreement with the FCA
to provide GBP15.4 million to its customers related to deficient
lending and collection practices, composed of a combination of a
cash refund and a loan balance reduction.
In the U.S., Sterling's products have been regulated at the state
level, with a wide variety of state-to-state lending limitations.
However, federal regulations have recently become a greater
concern. In March 2015, the Consumer Financial Protection Bureau
released an outline of proposed regulations for consideration that
focus on loan affordability and reining in collection practices
that typically result in high fees for consumers. S&P expects new
rules to result in reduced profitability for Sterling.
Sterling continues to be profitable in Canada -- a country that
represents the majority of the company's earnings. Regulatory
conditions currently appear somewhat stable in Canada, as six
provinces have enabling legislation for payday loans. In S&P's
view, even though the regulatory framework has been in place for
over five years, it is still relatively untested and will provide
avenues for social policy advocates and others to shape rules and
constraints to which payday lenders are subject.
The negative outlook reflects Sterling's poor operating performance
and significant exposure to regulatory risk. S&P expects revenues
to decline based on lower loan volume and store closings due to
regulatory changes. S&P assumes Lone Star and the new management
team will work toward repositioning the business to become
profitable.
S&P could lower the rating if EBITDA coverage of interest expense
doesn't improve to exceed 1.5x over the next 12-18 months. S&P
could also lower the rating if it expects any new regulations to
weaken Sterling's existing business model.
An upgrade is unlikely over the next 12 months. However, S&P could
revise the outlook to stable if Sterling's profitability improves
and regulatory risk becomes less of a concern.
SUNOCO LP: S&P Affirms 'BB' CCR & Revises Outlook to Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on Sunoco L.P. and revised the outlook to negative
from stable.
At the same time, S&P lowered the issue-level rating to 'BB' from
'BB+' on Sunoco's senior secured debt and revised the recovery
rating to '3' from '2'. The '3' recovery rating reflects S&P's
expectation of meaningful (lower half of the 50%-70% range)
recovery in the event of a default. In addition, S&P lowered the
issue-level rating on the company's senior unsecured debt to 'BB-'
from 'BB' and revised the recovery rating to '5' from '4'. The '5'
recovery rating reflects S&P's expectation of modest (lower half of
the 10%-30% range) recovery in the event of a default.
S&P also assigned its 'BB' issue-level rating and '3' recovery
rating to the company's $2 billion new term loan A. The '3'
recovery rating reflects S&P's expectation of meaningful (lower
half of the 50%-70% range) recovery in the event of a default.
"The outlook revision reflects our view that the company's enhanced
size and scale accomplished from the transaction only partially
offsets our expectation for higher near-term leverage in the range
of 5x-5.5x in 2016," said Standard & Poor's credit analyst Nora
Pickens.
The negative outlook reflects S&P's belief that Sunoco's pro forma
total debt to EBITDA will be elevated in the mid-5x range in 2016.
S&P could lower ratings if Sunoco has difficulties managing its
aggressive growth strategy, faces unexpected operating problems, or
makes a large acquisition such that debt to EBITDA remains above 5x
through 2017.
S&P could revise the outlook to stable if Sunoco maintains
"adequate" liquidity, distribution coverage above 1x, and financial
leverage below 5x for an extended period of time.
SYNOVUS FINANCIAL: Fitch Raises Subordinated Debt Rating to 'BB+'
-----------------------------------------------------------------
Fitch Ratings has upgraded Synovus Financial Corp.'s (SNV) and its
principal subsidiary Synovus Bank's long-term Issuer Default
Ratings (IDRs) to 'BBB-' from 'BB+' and Viability Ratings (VRs) to
'bbb-' from 'bb+'. At the same time, Fitch has upgraded the
companies' short-term IDRs (IDRs) to 'F3' from 'B'. The Rating
Outlook has been revised to Stable from Positive.
KEY RATING DRIVERS
VR, IDR AND SENIOR DEBT
The action reflects SNV's improvements in asset quality, stable
operating performance, along with the maintenance of strong
regulatory capital ratios and the company's solid franchise in
Georgia such that, in Fitch's view, its risk profile is more in
line with other investment grade banks. The Rating Outlook has
been revised to Stable from Positive indicating that further rating
movement upward in the near to medium term is unlikely.
Asset quality, a ratings driver that Fitch had placed higher
emphasis on for SNV, has continued its strong improvement over the
last year and is more in-line with investment grade banks. Fitch
calculates SNV's nonperforming assets (NPAs) at 2.10% at 3Q'15, an
improvement of 145bps year-over-year. Over the same time period,
the dollar volume of NPAs has dropped another 42% as management has
remained successful in working out of problem loans (nonaccrual as
well as accruing troubled debt restructures) and disbursing
foreclosed property.
Furthermore, nonperforming loan (NPL) inflows have normalized
considerably, averaging just $28 million per quarter over the last
five quarters which has also played a role in reducing NPAs over
time. The reduction in NPAs has not come at the cost of
significantly higher credit costs evidenced by year-to-date (YTD)
net charge-offs (NCOs) of 15bps vs. 40bps through the first nine
months of 2014. Fitch's view that asset quality as a whole has
improved such that it has converged with investment-grade peers is
reflected in today's rating action. Moreover, while further asset
quality improvement is likely over time, SNV's level of asset class
concentration in commercial real estate and geographic
concentration within the state of Georgia are seen as rating
constraints in the medium to long term.
SNV's operating performance, another key ratings driver Fitch had
identified in the past as a high influence factor on the company's
overall rating, has remained in-line with other investment grade
peer banks. SNV has been able to generate reasonable returns over
recent periods, primarily due to lower credit-related costs
(provisions, litigations costs, OREO expenses and, etc.) as well as
improved operating efficiencies and a steady level of fee revenue.
Through 3Q15, the company generated a return on average assets
(ROA) of 80bps, a reasonable improvement over SNV's 72bps ROA
through 3Q'14 and 61bps through 3Q13.
Assuming a marginal increase in interest rates into 2016, Fitch
believes SNV's ROA could modestly improve given its disclosed asset
sensitive balance sheet. However, Fitch expects operating
performance to remain below that of higher rated peers over the
near to medium term due to SNV's relatively higher cost structure
and a greater reliance on spread revenue
Fitch views SNV's capital as adequate relative to both its risk
profile and rating. SNV reports one of the highest tangible common
equity (TCE) ratios among its peer group and a strong estimated,
fully phased-in Basel III common equity tier 1 (CET1) ratio of 10%
well above the 7% requirement. The bank has now increased its
quarterly dividend two years in a row due to the above mentioned
earnings improvement and announced a $300 million share buyback
program to be completed over the remainder of 2015 and all of 2016.
This comes on the heels of a $250 million buyback program executed
over the last four quarters. These actions are in line with
Fitch's expectations given SNV's continued improvement in its
financial condition.
Fitch expects that SNV will continue to distribute some of this
capital to shareholders; however, these distributions will be
constrained by regulatory and internal stress testing, and as such,
Fitch expects SNV's capital ratios will likely stay elevated over
the near term. Fitch also observes that SNV has over $200 million
in a disallowed deferred tax asset (DTA) that will continue to
accrete into CET1 going forward, providing additional support to
regulatory capital ratios and capital distributions.
Finally, incorporated into the rating action is Fitch's view that
management has successfully executed on rehabilitating SNV's
financial profile and strengthened risk oversight while maintaining
the bank's solid Southeastern U.S. franchise. SNV continues to
have strong market presence, particularly in rural markets of
southwest Georgia and eastern Alabama. Fitch believes this could
have a net positive impact to funding costs and to the company's
bottom line over time if it is able to successfully lag deposit
pricing in those more isolated markets where it has dominant market
share in a rising rate environment.
SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
SNV's subordinated debt is notched one level below its VR of 'bbb-'
for loss severity. SNV's preferred stock is notched five levels
below its VR, two times for loss severity and three times for
non-performance. These ratings are in accordance with Fitch's
criteria and assessment of the instruments non-performance and loss
severity risk profiles.
LONG- AND SHORT-TERM DEPOSIT RATINGS
The uninsured deposit ratings of SNV are rated one notch higher
than SNV's IDR and senior unsecured debt because U.S. uninsured
deposits benefit from depositor preference. U.S. depositor
preference gives deposit liabilities superior recovery prospects in
the event of default.
HOLDING COMPANY
SNV's IDR and VR are equalized with those of its operating company
(Synovus Bank), reflecting its role as the bank holding company,
which is mandated in the U.S. to act as a source of strength for
its bank subsidiaries. Ratings are also equalized reflecting the
very close correlation between holding company and subsidiary
failure and default probabilities.
SUPPORT RATING AND SUPPORT RATING FLOOR
SNV has a Support Rating of '5' and Support Rating Floor of 'NF'.
In Fitch's view, SNV is not systemically important and therefore,
the probability of support is unlikely. IDRs and VRs do not
incorporate any support.
RATING SENSITIVITIES
VR, IDRs, AND SENIOR DEBT
With the action, further upward movement of the company's ratings
are considered limited in the near to medium term. Fitch expects
earnings and asset quality to improve over the rating time horizon.
This expectation is incorporated into today's rating action.
Fitch could take adverse rating action should earnings and asset
quality improvement not come to fruition as expected evidenced by
flat-to-deteriorating ROA or reversal in AQ trends.
The ratings action also incorporates Fitch's expectation that SNV
will begin to more seriously seek merger and acquisition (M&A)
opportunities in order to build out its franchise and potentially
gain further operating efficiencies. Fitch expects SNV's M&A
activity to be absorbed effectively, reasonable in size, in
geography and within the bank's core competencies. To the extent
that Fitch observes SNV partaking in M&A activity that does not fit
these attributes and/or results in earnings and capital metrics
that are not commensurate with its rating level, Fitch could take
negative rating action.
Moreover, should wholesale funding revert back to the level it was
leading up to the 2007-2009 financial crisis, negative rating
action is likely.
Over the long-term, SNV could see upward rating movement given the
bank's solid franchise in its primary operating markets.
Improvement in SNV's ratings over the long term would be predicated
on the maintenance of sound risk appetite leading to asset quality
metrics more in-line with higher rated peers as well as earnings
performance (both by level and revenue mix)improving to above peer
averages.
SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
The ratings for SNV and its operating companies' subordinated debt
and preferred stock are sensitive to any change to SNV's VR.
LONG- AND SHORT-TERM DEPOSIT RATINGS
The long-and short-term deposit ratings are sensitive to any change
to SNV's long- and short-term IDR.
HOLDING COMPANY
Should SNV's holding company begin to exhibit signs of weakness,
demonstrate trouble accessing the capital markets, or have
inadequate cash flow coverage to meet near-term obligations, there
is the potential that Fitch could notch the holding company IDR and
VR from the ratings of the operating companies.
SUPPORT RATING AND SUPPORT RATING FLOOR
Since SNV's Support and Support Rating Floors are '5' and 'NF',
respectively, there is limited likelihood that these ratings will
change over the foreseeable future.
FULL LIST OF RATING ACTIONS
Fitch has upgraded these ratings:
Synovus Financial Corp.
-- Long-term IDR to 'BBB-' from 'BB+'; Outlook Stable
-- Short-term IDR to 'F3' from 'B';
-- Viability Rating to 'bbb-' from 'bb+';
-- Senior unsecured to 'BBB-' from 'BB+';
-- Subordinated debt at to 'BB+' from 'BB'.
Synovus Bank
-- Long-term IDR to 'BB+' from 'BB';
-- Short-term IDR to 'F3' from 'B'
-- Viability Rating to 'bb+' from 'bb';
-- Long-term deposits to 'BBB' from 'BBB-'.
Fitch has affirmed these ratings:
Synovus Financial Corp.
-- Preferred Stock at 'B'
-- Support '5';
-- Support Floor 'NF'.
Synovus Bank
-- Support '5';
-- Support Floor 'NF'.
-- Short-term deposits at 'F3'.
TERRAFORM POWER: S&P Lowers CCR to 'B+', Outlook Negative
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on TerraForm Power Inc. to 'B+' from 'BB-'. The outlook is
negative. At the same time, S&P lowered the company's senior
unsecured debt rating to 'B+' and revised the recovery rating to
'4' from '3', indicating average (upper half of the 30%-50% range)
recovery for investors in the event of a default.
"We based our ratings action on our view that substantial near-term
purchase commitments related to pending renewable energy
acquisitions including Vivint Solar Inc. and Invenergy Wind Power
LLC could limit TERP's funding flexibility and pressure credit
measures over the next 12-24 months," said Standard & Poor's credit
analyst Nora Pickens.
S&P notes the company has secured bridge financing to backstop all
transactions and is actively pursuing alternative financing options
such as structured facilities and third-party sales to optimize its
capital costs. In S&P's view, however, the likelihood that the
company will fund deals mostly with debt has increased, given
significant market pressures in the yieldco sector. The company
has a limited track record with investors, and the "yieldco"
business model remains unproven and has come under market pressure
in recent months, which further increases refinancing risk. In the
event the company is unable to raise equity to balance its
incremental debt load, leverage and debt service coverage ratios
could weaken materially.
S&P has revised TERP's financial risk profile downward to
"aggressive" from "significant." TERP's business risk profile
remains "weak" and reflects S&P's assessment of its good asset
diversity but aggressive growth strategy. S&P views TERP's
liquidity as "adequate," with sources exceeding uses by about 2.25x
during the next 12 months. The negative outlook reflects S&P's
view that challenging market conditions coupled with meaningful
near-term purchase commitments could limit the company's financial
flexibility and lead to debt to EBITDA above 5x for an extended
period.
S&P could lower the rating depending on the funding mechanisms TERP
ultimately uses to finance pending acquisitions. If forecasted
debt to EBITDA rises above 5x or if the underlying business
underperforms, S&P could lower ratings. In the near term, the
extent of any downgrades will depend on the exact mix of debt and
equity the company uses to fund the pending acquisitions, as well
as the tenor of the debt instruments. A negative rating action
could also occur if S&P revises its view on SUNE's
creditworthiness.
S&P could revise the outlook to stable if TERP adequately addresses
long-term financing issues in a balanced manner, maintains
"adequate" liquidity, and generates debt to EBITDA below 5x for an
extended period.
TRUMP ENTERTAINMENT: Atlantic City Wants to Collect on $12M Taxes
-----------------------------------------------------------------
Kali Hays at Bankruptcy Law360 reported that Atlantic City on Nov.
12, 2015, urged a Delaware bankruptcy court to allow the city to
collect on $12.4 million in property taxes it's owed by Trump
Entertainment's Taj Mahal casino, saying a sale of the tax liens at
an upcoming auction would greatly benefit the city's budget.
The city said potential revenues to be raised by a sale of the
liens it holds against Trump Entertainment Resorts Inc.'s troubled
casino are "vital to the functioning of the city and the health and
safety of its residents."
About Trump Entertainment Resorts
Trump Entertainment Resorts Inc., owner of the Atlantic City
Boardwalk casinos that bear the name of Donald Trump, returned to
Chapter 11 bankruptcy (Bankr. D. Del. Case No. 14-12103) on Sept.
9, 2014, with plans to shutter its casinos.
TER and its affiliated debtors own and operate two casino hotels
located in Atlantic City, New Jersey. TER said it will close the
Trump Taj Mahal Casino Resort by September 2014, and, absent union
concessions, the Trump Plaza Hotel and Casino by November 2104.
The Debtors have sought an order authorizing the joint
administration of their Chapter 11 cases and the consolidation
thereof for procedural purposes only. Judge Kevin Gross presides
over the Chapter 11 cases.
The Debtors have tapped Young, Conaway, Stargatt & Taylor, LLP, as
counsel; Stroock & Stroock & Lavan LLP, as co-counsel; Houlihan
Lokey Capital, Inc., as financial advisor; and Prime Clerk LLC, as
noticing and claims agent.
TER estimated $100 million to $500 million in assets as of the
bankruptcy filing.
Trump Hotels & Casino Resorts, Inc., first filed for Chapter 11
protection on Nov. 21, 2004 (Bankr. D.N.J. Case No. 04-46898
through 04-46925) and exited bankruptcy in May 2005 under the name
Trump Entertainment Resorts Inc. Trump Entertainment Resorts
sought Chapter 11 protection on Feb. 17, 2009 (Bankr. D.N.J. Lead
Case No. 09-13654) and exited bankruptcy in 2010.
The Debtors as of Sept. 9, 2014, owe $285.6 million in principal
plus accrued but unpaid interest of $6.6 million under a first
lien
debt issued under their 2010 bankruptcy-exit plan. The Debtors
also have trade debt in the amount of $13.5 million.
* * *
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of
Delaware on March 12, 2015, confirmed Trump Entertainment Resorts,
Inc., et al.'s Third Amended Joint Plan of Reorganization and
Disclosure Statement pursuant to Section 1129 of the Bankruptcy
Code.
The Debtors filed on January 5, 2015, the Plan and accompanying
Disclosure Statement to, among other things, provide that holders
of General Unsecured Claims will receive Distribution Trust
Interests, which will include $1 million in cash and the proceeds,
if any, of certain avoidance actions. Under the revised plan,
holders of general unsecured claims are estimated to recover 0.47%
to 0.43% of their total allowed claim amount. The Amended Plan
also includes language reflecting the recently-approved $20
million loan from Carl Icahn.
The Effective Date of the Plan has not yet occurred, as certain
conditions precedent to the occurrence of the Effective Date,
including the CBA Order having become a Final Order, have not yet
been met.
UCI INT'L: Moody's Cuts Corporate Family Rating to 'Caa3'
---------------------------------------------------------
Moody's Investors Service downgraded the ratings of UCI
International, LLC (UCI) -- Corporate Family and Probability of
Default, to Caa3 and Caa3-PD, from Caa1 and Caa1-PD, respectively.
UCI is the parent of United Components, Inc. In a related action
Moody's downgraded the ratings on UCI's senior unsecured note to Ca
from Caa2. The rating outlook is changed to stable from negative.
The following ratings were downgraded:
UCI International, LLC
Corporate Family Rating, to Caa3 from Caa1;
Probability of Default Rating, to Caa3 -PD from Caa1-PD;
$400 million guaranteed senior unsecured notes due 2019,
to Ca (LGD4) from Caa2 (LGD4).
RATINGS RATIONALE
The downgrade of UCI's Corporate Family Rating to Caa3 reflects the
continued softness in UCI's businesses, the resulting negative free
cash flow generation, and questionable sustainability of UCI's
capital structure. Results for its ongoing business over the recent
quarters continued to demonstrate lower customer pricing and
volumes, a product mix of lower margin products, and higher
manufacturing and distribution costs. Leverage is expected to
remain in the double digit range (pro forma for the asset sale
below) until operational restructuring, and optimization actions
have been completed.
Following the announcement of a strategic review in August 2014,
UCI completed the sale of its vehicle electronics business (Wells)
for proceeds of $251.4 million on July 1, 2015, subject to certain
adjustments. The net proceeds from the sale ($241.6 million) were
applied to repay the senior secured term loan facility. With this
action, UCI's shareholder (an affiliate of Rank Group Limited) has
indicated that it has concluded the strategic review of UCI and
will be retaining ownership of the remaining businesses. Further,
in September 2015 UCI entered into a $125 million senior secured
asset based credit facility and borrowed $77 million under the
facility to repay in full, and terminate, amounts due and
outstanding under the senior secured credit facilities and pay
certain related fees and expenses. While the above events are
expected to provide UCI additional flexibility, market and customer
pressures are expected to continue. As such, Moody's continues to
believe that UCI's weak credit metrics could result in a distressed
exchange of the senior unsecured notes.
The stable rating outlook reflects Moody's belief that company's
credit metrics and liquidity profile will remain weak at the Caa3
level as the company executes its restructuring and optimization
actions.
UCI liquidity profile is expected to remain weak over the next
12-18 months weighed by weakening cash flow generation and limited
availability under the new asset based credit facility. As of
September 30, 2015 UCI had about $44 million of cash on hand,
largely in its issuer and guarantor subsidiaries. However, as a
result of the company's weakening operating performance, free cash
flow generation on an LTM basis over the near-term is expected to
be around breakeven. If market pressures and costs for
restructuring, optimization, and other actions are not abated,
negative free cash flow generation over the intermediate-term is
likely. At September 30, 2015, asset based credit facility
availability was about $27.2 million, after borrowings of $77.0
million and $5.8 million of outstanding letters of credit. On
October 30, 2015, $12.0 million of borrowings under the asset based
credit facility was repaid. The asset based credit facility matures
on September 30, 2020, provided that the maturity date will be
advanced to November 15, 2018 if the senior notes are not repaid or
refinanced with certain qualified indebtedness prior to such date.
The financial covenant under the asset based credit facility is a
springing fixed charge coverage test when excess availability falls
below the greater of 10% of borrowing base availability or $10
million. Moody's believes there is a risk of this covenant being
triggered over the coming quarters given the company's weak
operating performance.
UCI's accounts receivable factoring program continues to represent
a liquidity risk if these programs are discontinued. UCI sold
$171.5 million of receivables during the nine months ended
September 30, 2015. These factoring arrangements support the
commercial relationships between UCI and certain of its
longstanding customers. As such, these programs are expected to
remain largely in place over the intermediate term.
Future events that could drive UCI's ratings lower include: in
Moody's view, the inability to improve volumes and profitability,
continuance of a weak liquidity profile.
Future events that could potentially improve the company's ratings
include: improvement in revenues and operating margins through
organic growth and the impact of cost savings actions.
Consideration for a higher outlook or rating could arise if any
combination of these factors were to result in EBITA/Interest
sustained above 1x, and leverage approaching 6.0x (excluding
factored receivables).
UCI International LLC. headquartered in Lake Forest, Illinois, is a
leading supplier to the light and heavy-duty vehicle aftermarket
for replacement parts, supplying a broad range of filtration, fuel
delivery systems, and cooling systems products. The company
manufactures under its own proprietary brands such as Airtex, ASC
and Champion, and under other private labels and licensing
arrangements. Revenues for the LTM period ending September 30, 2015
were approximately $1 billion. UCI is a wholly owned subsidiary of
UCI Holdings Limited which is owned by an affiliate of Rank Group
Limited.
UNIVITA HEALTH: Judge OKs $2.5M Asset Sale to Integrated Home
-------------------------------------------------------------
Carolina Bolado at Bankruptcy Law360 reported that a Delaware
bankruptcy judge signed off on Nov. 12, 2015, on the $2.5 million
asset sale of bankrupt home health services provider Univita Health
Inc. to Florida-based home care and medical supply company
Integrated Home Care Investors one day after calling off a planned
bankruptcy auction.
U.S. Bankruptcy Judge Mary Walrath approved the sale of Univita's
assets to Miami Lakes-based stalking horse bidder Integrated Home
Care after Univita Chapter 7 trustee David Carickhoff of Archer &
Greiner PC called off an auction of the business.
About Univita Health
Florida Medicaid manager and health-care provider, Univita Health
Inc., shut down operations on Aug. 12, 2015.
Univita and related entities filed Chapter 7 petitions (Bankr. D.
Del. Lead Case No. 15-11788) on Aug. 28, 2015 to liquidate the
assets.
Univita estimated $50 million to $100 million in assets and debt.
The Debtors tapped Latham & Watkins LLP and Young Conaway Stargatt
& Taylor, LLP, as attorneys.
David W. Carickhoff was named the chapter 7 trustee for the estates
of the Debtors. The Chapter 7 trustee tapped Jennifer L. Dering,
Esq., at Archer & Greiner as counsel.
US CELLULAR: Moody's Rates Proposed Unsecured Notes Offering Ba1
----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to United States
Cellular Corporation ("US Cellular" or "USM") proposed offering of
senior unsecured notes. The company's other ratings and negative
outlook remain unchanged. The company expects to use the proceeds
for general corporate purposes, which may include acquisitions of
additional spectrum.
Moody's has taken these rating actions:
United States Cellular Corporation
Senior Unsecured Notes: Rated Ba1 (LGD3)
RATINGS RATIONALE
USM's Ba1 senior unsecured debt rating benefits from the company's
modest leverage, very good liquidity, a fairly conservative
controlling shareholder and several valuable non-core investments
that could be monetized in order to provide additional financial
flexibility. USM's rating is constrained by its limited scale and
the intense competitive challenges that it faces as a relatively
small regional wireless operator.
The company is amidst an ongoing turnaround which has led to five
consecutive quarters of postpaid subscribers adds, resulting in
193,000 postpaid subscriber adds over that period. US Cellular had
previously endured 18 consecutive quarters of postpaid subscriber
losses. Moody's believes that USM's lack of scale, even with crisp
execution, will limit the company's ability to significantly
improve its margins and cash flows over the next few years.
Since Moody's expects increasing competitive challenges to
constrain USM's ability to grow its earnings and cash flows, a
rating upgrade is unlikely at this time.
The failure to sustain recent positive subscriber trends will have
a negative ratings impact as will additional debt financed
investments. Specifically, if leverage is likely to be above 3.50x
(Moody's adjusted) for an extended period and free cash flow
remains negative, another rating downgrade is likely. Also, a
decision by USM to sell assets (i.e. spectrum, towers) and return
all proceeds to shareholders could also lead to a ratings
downgrade.
The principal methodology used in this rating was Global
Telecommunications Industry published in December 2010.
US CELLULAR: S&P Rates Proposed Sr. Unsecured Notes 'BB'
--------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' issue-level
rating and '3' recovery rating to Chicago-based wireless service
provider United States Cellular Corp.'s proposed senior unsecured
notes. The '3' recovery rating indicates S&P's expectation for
meaningful (50%-70%; upper end of the range) recovery in the event
of a payment default. Although S&P estimates recovery would be
over 70% based on the current capital structure, it generally caps
recovery ratings on unsecured debt issued by companies rated 'BB-'
or higher '3' to account for the greater risk of impairment to
recovery prospects because of incremental debt issuance prior to
default.
S&P expects the company will use the proceeds from the proposed
issuance to partially fund the acquisition of spectrum in the
upcoming broadcast incentive auction.
The 'BB' corporate credit rating and stable outlook on United
States Cellular and parent Telephone and Data Systems Inc. (TDS)
remain unchanged. Pro forma for the debt raise, S&P expects lease-
and pension-adjusted leverage for TDS to be in the low-3x area in
2015, declining to around 3x in 2016. This compares to S&P's
current 4x downgrade threshold at the 'BB' rating level. Despite
industry-wide pressure, subscriber trends at U.S. Cellular continue
to improve, with churn declining to 1.3%-1.4% and postpaid
subscribers increasing at a low-single-digit percent rate. The
increase in adoption of shared connect plans, greater smartphone
penetration, and improved customer service following a fix in
billing systems issues has contributed to churn returning to more
historical levels, in S&P's view. This, along with a decline in
equipment costs from fewer devices sold and accounting benefits
from installment plans, has resulted in margin expansion to the
high-teen percentage area. Still, with capital expenditures to
revenue of about 15% and growing working capital needs due to
installment plan adoption, S&P expects U.S. Cellular to generate
negative free operating cash flow through 2016.
RATINGS LIST
Telephone and Data Systems Inc.
U.S. Cellular Cellular Corp.
Corporate Credit Rating BB/Stable/--
United States Cellular Corp.
Senior Unsecured Notes BB
Recovery Rating 3H
VALEANT PHARMA: Creditors Spooked by Possibility of Revenue Squeeze
-------------------------------------------------------------------
Michelle F. Davis, writing for Bloomberg Brief - Distress &
Bankruptcy, reported that in the course of a three-year, $23
billion borrowing binge that allowed Michael Pearson to turn
Valeant Pharmaceuticals International Inc. into a drug-industry
juggernaut, he reassured yield-hungry debt investors with this:
lend us the money and watch the cash stream in.
According to the report, Pearson, the chief executive officer, said
in a conference call that Valeant's drug-pricing scandal and the
severing of ties with mail-order pharmacy Philidor Rx Services will
"significantly" disrupt its dermatology and neurology businesses.
Together they account for about 24 percent of company revenue,
according to KDP Investment Advisors Inc., the report related.
The debt market isn't exactly panicking, but many investors have
bailed, the report further related. Concern
is growing that disruption to Valeant's cash flow could heighten
the risk of the company violating lender limits on its debt burden,
the report noted.
* * *
The Troubled Company Reporter, on Nov. 12, 2015, reported that
Moody's Investors Service commented that Valeant Pharmaceutical
International Inc.'s focus on deleveraging is credit positive in
light of challenges facing its dermatology and hospital businesses.
In a conference call with analysts, the company reiterated that
its use of cash flow in the near term will be for debt repayment
and not share repurchases. There is no impact on the existing
ratings including the Ba3 Corporate Family Rating and stable rating
outlook.
VERSO PAPER: Moody's Lowers CFR to 'Caa2' Over Default Concerns
---------------------------------------------------------------
Moody's Investors Service downgraded Verso Paper Holdings LLC's
corporate family rating (CFR) to Caa2 from B3, changed the
probability of default rating (PDR) to Caa2-PD from B3-PD and
assigned an SGL-4 liquidity rating. For Verso and NewPage
Corporation's (which is a non-guarantor restricted subsidiary of
Verso) other debt ratings, refer to the debt list below. Verso's
rating outlook is negative. The rating actions reflect Moody's view
of the increased likelihood that Verso will default on some of its
debt following the company's announcement that it has begun
evaluating potential restructuring alternatives.
Downgrades:
Issuer: NewPage Corporation
-- Senior Secured Bank Credit Facility (Local Currency) Feb 11,
2021, Downgraded to Caa1(LGD3) from B2(LGD3)
-- Issuer: Verso Paper Holdings LLC
-- Probability of Default Rating, Downgraded to Caa2-PD from B3-
PD
-- Corporate Family Rating (Local Currency), Downgraded to Caa2
from B3
-- Subordinate Regular Bond/Debenture, Downgraded to Ca(LGD6)
from Caa2(LGD6)
-- Senior Subordinated Regular Bond/Debenture, Downgraded to
Ca(LGD6) from Caa2(LGD6)
-- Senior Secured ABL Revolving Credit Facility, Downgraded to
B1(LGD1) from Ba3(LGD1)
-- Senior Secured 1st Lien Revolving Credit Facility, Downgraded
to Caa2(LGD4) from B3(LGD4)
-- Senior Secured Notes, Downgraded to Caa3(LGD5) from Caa1(LGD5)
-- Senior Secured 1st Lien Notes, Downgraded to Caa2(LGD4) from
B3(LGD4)
-- Senior Secured Global Notes, Downgraded to Caa2(LGD4) from
B3(LGD4)
-- Senior Secured 2nd Lien Notes, Downgraded to Caa3(LGD5) from
Caa1(LGD5)
Reinstatements:
-- Issuer: Verso Paper Holdings LLC
-- Speculative Grade Liquidity Rating, Reinstated to SGL-4
Outlook Actions:
Issuer: Verso Paper Holdings LLC
-- Outlook, Revised to Negative from Stable
RATINGS RATIONALE
Verso's Caa2 CFR reflects the elevated risk of a default as the
company explores potential restructuring alternatives, the
company's weak liquidity, high leverage (projected adjusted
leverage of about 7x) and the expectation that the company will
continue to face secular demand declines and weak prices for most
of the grades of coated paper it produces. Potential restructuring
alternatives include a distressed debt exchange and/or a chapter 11
filing, if the company is unsuccessful in raising funds through the
sale of assets. The rating also considers the continuing execution
risks in integrating NewPage with Verso and the company's complex
funding structure following their merger earlier this year. The
rating is supported by the company's vertically integrated,
relatively low cost asset base and its leading market position as
the largest producer of higher quality coated paper grades (such as
coated freesheet) in North America.
The company's SGL-4 (Speculative Grade Liquidity) rating signifies
weak liquidity. This reflects Verso and NewPage combined $10
million of cash, $62 million of committed unused availability (at
9/2015) and $40 million of expected free cash flow in the next
year, to fund $72 million of debt maturing over the next 12 months.
While we expect Verso and NewPage together will generate positive
cash flow, we anticipate that the company will require further
borrowing from its facilities to fund debt maturities. With most of
the company's assets secured, Verso has limited alternative
liquidity. As of September 30, 2015, both Verso and NewPage were in
compliance with financial covenants, however without an amendment
or waiver, the company is likely to be in default of one or more of
its covenants over the next 12 months.
The negative rating outlook reflects the increased likelihood of
default should the company proceed with a debt restructuring, which
is now formally being considered.
The ratings could be downgraded if liquidity deteriorates
significantly or if the company restructures its balance sheet such
that bondholders would not recover the full amount of their
holdings.
The ratings could be upgraded if the company is able to refinance
upcoming debt maturities, successfully integrate the operations of
NewPage and improve its ability to cope with the declining coated
paper industry through improved management of operating capacity.
An upgrade would be also contingent upon the maintenance of good
liquidity and debt to EBITDA below 5.5 times.
WALTER ENERGY: Fails to Pay Production Proceeds to Dominion
-----------------------------------------------------------
Dominion Resources Black Warrior Trust on Nov. 19 disclosed that it
had not received any proceeds from Walter Energy, Inc. as of
November 13, 2015, the scheduled date of distribution to the Trust.
Therefore, there will be no distribution to unitholders of record
as of November 30, 2015.
Walter filed a petition for relief under Chapter 11 of the U.S.
Bankruptcy Code on July 15, 2015. For the periods from July 15,
2015 through September 30, 2015, Walter collected the Trust's
portion of the proceeds, totaling $896,583, but continues to forego
paying the Trust's production proceeds.
For the periods from April 1, 2015 through June 30, 2015, Walter
collected the Trust's portion of the proceeds, totaling $983,828,
but did not distribute the Trust's production proceeds claiming
relief under its bankruptcy filing.
For the period from July 1, 2015 through July 15, 2015, Walter
collected the Trust's portion of the proceeds, totaling $164,462,
but did not distribute the Trust's production proceeds claiming
relief under its bankruptcy filing. To date, Walter has withheld
approximately $2.045 million of the Trust's production proceeds.
The Trustee has received no judicial assurances regarding the
status of distributions relating to production for periods after
July 15, 2015.
On the date the bankruptcy was filed -- in a series of "first day
motions" -- the Debtors filed motions relating to the use of cash
collateral and cash management. The motions contend that cash held
by the Debtors and certain other property constitute collateral of
the Debtors' lenders subject to protective liens and permit use of
a "zero balance" cash management system where receipts from
operations including Debtors' gas operations could be swept into
certain concentration or disbursement accounts containing other
cash. The motions do not separately segregate or provide separate
treatment for production proceeds relating to the Trust's
overriding royalty interests. In response, the Trustee filed: (i)
a motion asking the court to reconsider and amend the Debtors' cash
management order to provide for segregation of production proceeds
relating to the Trust's overriding royalty interests, (ii) an
objection to the cash collateral motion seeking protections based
on the Debtors' use of the production proceeds, and (iii) a
separate lawsuit seeking various forms of relief including a
temporary restraining order for segregation of production proceeds
relating to the Trust's overriding royalty interests and judicial
confirmation that such proceeds are not property of the Debtor's
bankruptcy estate.
A hearing was held August 18, 2015 where the court denied the
Trust's motion to reconsider the Debtors' cash management order and
denied the Trust's request for a temporary restraining order.
Subsequently, the Trustee dismissed the lawsuit, but continued to
urge its objections in connection with the Debtors' cash collateral
motion. A hearing on the Trust's objection (and other objections)
to the Debtors' cash collateral motion was held September 2 and 3,
2015. On September 14, 2015, the court issued its ruling on the
Debtors' cash collateral motion and denied the Trustee's request
for protections based on the Debtors' use of the production
proceeds including segregation of the production proceeds and a
requirement for continued distributions of production proceeds to
Dominion in the ordinary course of business.
On November 10, 2015, there was a hearing on Debtor's Motion to
Reject the Executory Contract between the Debtor and the Trust. At
the end of the hearing, the Court requested Findings of Fact and
Conclusions of Law to be submitted on November 20th by 2:00 p.m.
The Trustee continues to seek protection of the royalty payments
and assets of the Dominion Resources Black Warrior Trust.
About Walter Energy
Walter Energy -- http://www.walterenergy.com/-- is a publicly
traded "pure-play" metallurgical coal producer for the global steel
industry with strategic access to steel producers in Europe, Asia
and South America. The Company also produces thermal coal,
anthracite, metallurgical coke and coal bed methane gas. Walter
Energy employs approximately 2,700 employees, with operations in
the United States, Canada and the United Kingdom.
For the year ended Dec. 31, 2014, the Company reported a net loss
of $471 million following a net loss of $359 million in 2013.
Walter Energy, Inc., and its affiliates sought Chapter 11
protection (Bankr. N.D. Ala. Lead Case No. 15-02741) in Birmingham,
Alabama on July 15, 2015, after signing a restructuring support
agreement with first-lien lenders.
Walter Energy disclosed total assets of $5.2 billion and total debt
of $5 billion as of March 31, 2015.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison as
counsel; Bradley Arant Boult Cummings LLP, as co-counsel; Ogletree
Deakins LLP, as labor and employment counsel; Maynard, Cooper &
Gale, P.C., as special counsel; Blackstone Advisory Services, L.P.,
as investment banker; AlixPartners, LLP, as financial advisor, and
Kurtzman Carson Consultants LLC, as claims and noticing agent.
The Bankruptcy Administrator for the Northern District of Alabama
appointed an Official Committee of Unsecured Creditors and an
Official Committee of Retirees. The Creditors Committee tapped
Morrison & Foerster LLP and Christian & Small LLP as attorneys.
The Retiree Committee retained Adams & Reese LLP and Jenner & Block
LLP as attorneys.
The informal group of certain unaffiliated First Lien Lenders and
First Lien Noteholders (the "Steering Committee") retained Akin,
Gump, Strauss, Hauer and Feld LLP as legal advisor, and Lazard
Freres & Co. LLC as financial advisor.
WIRECO WORLDGROUP: Moody's Cuts Corporate Family Rating to 'Caa1'
-----------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating of
WireCo WorldGroup Inc., a global manufacturer and seller of wire
and synthetic ropes, cables, and other related products, to Caa1
from B3 and its Probability of Default Rating to Caa1-PD from
B3-PD. In addition, the rating on the senior secured bank credit
facility was downgraded to B1 from Ba3 and the senior unsecured
notes were downgraded to Caa2 from Caa1. The rating outlook remains
negative.
The following rating actions were taken:
Corporate Family Rating downgraded to Caa1 from B3;
Probability of Default Rating downgraded to Caa1-PD from B3-PD;
Senior Secured Bank Credit Facility due 2017 downgraded to B1,
LGD2 from Ba3, LGD2;
Senior Unsecured Notes due 2017 downgraded to Caa2, LGD5 from
Caa1, LGD5;
Speculative Grade Liquidity rating was affirmed at SGL-3.
The rating outlook is negative.
RATINGS RATIONALE
The downgrade of the Corporate Family Rating to Caa1 from B3
results from on-going weak operating performance, our expectation
that WireCo's key end markets and operating performance will remain
challenged through 2016, and that credit metrics will deteriorate.
All of the company's debt matures in 2017, and Moody's believes
that the company's debt burden could be untenable.
"We anticipate WireCo will remain highly leveraged over the next
year given weak end market demand. Moody's expects both onshore and
offshore oil and gas end markets to remain pressured through 2016.
While much of WireCo's offshore business is contractual, we believe
there is heightened risk for delays and potential cancellations.
Mining remains under pressure, and industrial and infrastructure
end markets are suffering from weakness in global OEM cranes and
softening economic conditions in China, Brazil and Australia. We
project adjusted debt-to-EBITDA will remain over 7.0x. We note that
this metric does not include the value of the company's $425
million Euro swap, at an average exchange rate of 1.22."
Unfavorable foreign currency translation has been a large headwind
for WireCo in 2015. For comparative purposes, we expect FX
translation to be less of an issue for WireCo's 2016 earnings.
WireCo has instituted cost structure initiatives in response to
challenging end market conditions. However, the expected savings
will not be enough to offset the earnings deterioration expected
from soft demand and operational weakness in our view. Adjusted
EBITA-to-interest coverage was less than 1.0x at September 30,
2015. Moody's projects this metric will remain under 1.0x in 2016.
WireCo ratings benefit from its leading market share in providing
high-tension steel and synthetic ropes and wire. The company's
market position as well as its end market, geographical and
customer diversification are credit strengths. We also recognize
WireCo's global footprint as a key credit strength. WireCo derives
approximately 60% of its revenues from outside of the U.S.,
providing geographic diversity and lessening reliance on any single
economy. The oil and gas end market represents approximately 25% of
total revenues and generally contributes a good source of recurring
revenue given the short replacement cycle for rig lines. However,
rig counts have declined sharply, and demand for the required
specialized steel and synthetic ropes has fallen dramatically as
well. Positively, the fishing end market, is strong, especially in
the tuna netting business.
WireCo's SGL-3 speculative grade liquidity rating reflects an
adequate liquidity profile. Liquidity is supported by its $145
million revolving credit facility due February 2017, of which
approximately $89 million was available at September 30, 2015, and
cash balance of approximately $35 million of which $31 million was
held by foreign subsidiaries. Liquidity is also supported by the
value of the company's $425 million Euro swap at an average
exchange rate of 1.22, all of which is available for repatriation
on a tax-free basis. We expect that the company will generate
minimal, if any, free cash flow over the next 12 to 18 months.
Revolver availability should be sufficient to meet any potential
shortfall in operating cash flow to cover its working capital and
capital expenditure needs. Financial covenants in the credit
agreement include a maximum senior secured net leverage ratio and a
minimum consolidated interest coverage ratio. At September 30,
2015, the company was in compliance with these financial covenants.
We expect the cushion in the company's existing financial covenants
to weaken from deteriorating earnings in 2016. All of the company's
debts, including its unsecured notes, mature in 2017.
The negative rating outlook reflects our view that operating
performance will deteriorate in 2016 which will further stress key
credit metrics and reduce WireCo's financial flexibility. It also
reflects our expectation that the cushion in the company's
financial covenants will weaken in 2016. All of the company's debt
matures in 2017, and we believe that the company's debt burden
could be untenable.
A stable outlook would be predicated upon strengthening end markets
that would lead to improved operating performance, adjusted
EBITA-to-interest at approximately 1.0x, and adjusted
debt-to-EBITDA below 7.0x all, on a sustained basis. An upgrade is
unlikely in the near-term. However, the ratings could be upgraded
if operating performance improves, adjusted EBITA-to-interest is
consistently above 1.2X, adjusted debt-to-EBITDA is closer to 6.0x
with the prospect of sustainability, and liquidity improves. An
upgrade would also reflect our expectation WireCo would be
operating with adequate cushion in its financial covenant metrics
and its 2017 debt maturities are addressed.
A rating downgrade could occur should WireCo's operating
performance be strained for a prolonged period which would
negatively impact key credit metrics beyond our current
expectations, if financial covenants are breached, or if WireCo is
unable to refinance its 2017 debt maturities and improve its
liquidity position.
WireCo WorldGroup, Inc., headquartered in Kansas City, MO, is a
leading global manufacturer and seller of wire ropes, high-tech
synthetic ropes, electromechanical cable, and other related
products. The company sells into diverse industries including
infrastructure, industrials, oil and gas, mining, and marine and
fishing. Paine and Partners, LLC, through its respective
affiliates, owns about 85% and management owns the remaining 15% of
WireCo. Revenues for the twelve months ending September 30, 2015,
totaled approximately $782 million.
XD PLASTICS: Fitch Cuts Long-Term Issuer Default Rating to 'B+'
---------------------------------------------------------------
Fitch Ratings has downgraded China XD Plastics Co Ltd's (XD
Plastics) Long-Term Issuer Default Rating (IDR) to 'B+' from 'BB-'.
The Outlook is Stable. Fitch has also downgraded the senior
unsecured rating of the company and the rating on the outstanding
senior unsecured US dollar notes issued by Favor Sea Limited, a
wholly owned company by XD Plastics, to 'B' from 'B+', with a
Recovery Rating of 'RR5'.
The downgrade reflects the company's inability to defend its margin
as demand slows. Fitch believes the company's credit profile is
more consistent with the 'B' rating category, due to its lack of
diversification. However, its strong market position and
comfortable leverage and coverage ratios support its 'B+' rating.
KEY RATING DRIVERS
Pricing Power Deteriorates: XD Plastics has failed to defend its
margin as demand from auto manufacturers slows down and competition
intensifies. EBITDA margin fell to 10% in 3Q15 from 18% in 2014
while revenue fell by 24% yoy in 3Q15 to USD239m. The sharp fall in
EBITDA margin reflects XD Plastics' weak negotiation power against
its customers.
XD Plastics' competitors are adding production capacity
aggressively while domestic auto demand is decelerating. Fitch
expects domestic auto sales to recover slightly in 2016, but this
is likely to be offset by the strong supply coming online, which
will continue to put pressure on margins.
Near-Term Deleveraging Unlikely: New projects in Sichuan (300 kilo
tonnes) and Dubai (16.2 kilo tonnes) would continue to stretch XD
Plastics' balance sheet. The company has total payments of USD298m
due within a year on property, plant and equipment, and Fitch
expects the company will require an additional USD200m of working
capital for the operation of the new facilities. Therefore, the
deleveraging process is unlikely to happen before 2017.
Bumpy Overseas Development: XD Plastics has halted supplies to a
new, direct customer in South Korea that accounted for 12.6% of
total revenue in 2014 because of payment collection issues. The
incident was one of the key reasons for its weak 3Q15 performance.
Without this customer, the top five distributors would account for
about 70% XD Plastics' total revenue, raising concentration risk.
The management has been actively resolving the dispute and believe
they could resume business with the same customer by January 2016
at the latest. In addition, the company is committed to develop its
overseas presence through its investment in a Dubai project.
Comfortable Liquidity and Leverage: Fitch expects the company's
FFO-adjusted net leverage ratio to peak at 3.5x in 2016 when the
Sichuan project comes online, a level that supports its new rating.
XD Plastics had USD243m in cash on hand and USD234m in unused
credit facilities at end September 2015. This, and operating cash
flow, should be sufficient to cover the USD266m of short-term debt
(including long-term debt due within one year) and required capex
of USD300m.
Sichuan Project Key to Deleveraging: Fitch believes XD Plastics'
Sichuan project, which will increase capacity by 77%, is
strategically important to the company. Completion of the plant
will not only enhance XD Plastics' market leadership in China, but
also diversify its operation base, which is now at Harbin. The new
plant's location is much closer to end-clients, which would greatly
reduce transportation costs and improve XD Plastics' competitive
position in the expanding market in south-west China.
If the Sichuan project can reach full capacity in 2017 and achieve
financial performance comparable to the company's existing plant,
the strong cash flow could help XD Plastic to deleverage. However,
should risks commonly associated with new chemical facilities -
including project delays, unstable initial operation and capacity
absorption - materialise, XD Plastics' credit profile would be
negatively affected.
KEY ASSUMPTIONS
Fitch's key assumptions within our rating case for the issuer
include:
-- Revenue to decrease 15% in 2015, and increase 10% in 2016, 50%
in 2017 and 20% in 2018
-- EBITDA margin to recover to 15%-16% in 2015-2018
-- Capex of USD250m and USD200m in 2015 and 2016, respectively
RATING SENSITIVITIES
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- FFO-adjusted net leverage sustained above 3.5x
-- EBITDA margin sustained below 12%
-- Significant cost overruns and/or delays in expansion projects
Fitch does not envisage any positive action until XD Plastics
demonstrates margin stability.
[*] Akerman Launches National Fraud and Recovery Practice Group
---------------------------------------------------------------
Celia Ampel at the Daily Business Review reported that Akerman is
launching a national fraud and recovery practice group led by two
South Florida attorneys, the 548-attorney firm.
Fort Lauderdale partner Michael Goldberg and West Palm Beach
partner David Spector will lead the team, which will litigate fraud
cases, manage settlement funds for fraud victims and help banks,
insurers and retailers detect fraud.
As former chair of the firm's bankruptcy and reorganization
practice group, Goldberg has liquidated assets after some of the
country's largest Ponzi schemes, including the $1.2 billion Scott
Rothstein fraud. Mr. Spector investigates and litigates complex
fraud schemes for insurance companies and self-insured retailers.
"It became apparent to us that combining our groups together to
make a large-scale national practice made good sense," Mr. Spector
said.
The pair said Akerman will seek to hire lawyers across the country
to build the practice group but couldn't specify how many.
Mr. Spector said his practice has mostly focused on Florida and 11
other states, but the new group will aim to serve clients across
the U.S. with particular focus on in the Northeast, West Coast and
Texas.
[*] Arnstein & Lehr's Tampa Attorneys Decamp to Burr & Forman
-------------------------------------------------------------
Alex Wolf at Bankruptcy Law360 reported that Arnstein & Lehr LLP
has seemingly wound down operations in Tampa Bay, Florida, and
removed any online indication of its presence there since the
recent departure of a managing partner and two other bankruptcy
attorneys, whose move to Burr & Forman LLP's Tampa Bay office was
announced on Nov. 9.
Ronald B. Cohn, who previously served as Arnstein & Lehr's office
managing partner and a member of the firm's national executive
committee and co-chair of the firm's banking group, joins Burr &
Forman as a partner.
On Nov. 9, 2015, Burr & Forman LLP announced the arrival of three
attorneys to the firm's Tampa office; Ronald B. Cohn, Edmund S.
Whitson and W. Patrick Ayers.
All three attorneys bolster the firm's Creditors' Rights &
Bankruptcy practice. With these additions, Burr & Forman now has a
total of 22 attorneys in Tampa and over 80 attorneys firm-wide
licensed to practice in the state of Florida.
Mr. Cohn brings more than 30 years of experience representing
national and regional commercial lending institutions, local
community banks and secondary market investors. His practice
focuses on handling commercial foreclosure actions, commercial
landlord-tenant issues, bankruptcy on the side of creditors, and
replevin and business asset recovery matters. He is a founding
member of the Tampa Bay Inn of Court and the Tampa Ferguson-White
Inn of Court. Mr. Cohn earned his undergraduate degree from the
University of Maryland and his law degree from Georgetown
University.
A copy of the report is available for free at http://is.gd/0S6a2O
About Burr & Forman LLP
Burr & Forman LLP -- http:/www.burr.com/ -- has experienced legal
team serving clients with local, national, and international
interests in numerous industry and practice areas, ranging from
commercial litigation and class actions to corporate transactions,
including bankruptcy and restructurings. A Southeast regional firm
with nearly 300 attorneys and nine offices in Alabama, Florida,
Georgia, Mississippi, and Tennessee, Burr & Forman attorneys draw
from a diverse range of resources to help clients achieve their
goals and address their complex legal needs.
[*] Attorney Faces Up to 5 Years on Charge of Bankruptcy Fraud
--------------------------------------------------------------
ABI.org reported that according to KSLA.com, Glay H. Collier II
faces up to 5 years in prison, a $250,000 fine and three years on
supervised release for collecting filing fees from clients without
informing the bankruptcy court.
In a separate report, Pete Brush at Bankruptcy Law360 reported that
longtime personal bankruptcy lawyer Mr. Collier admitted in
Louisiana federal court on to reaping undisclosed fees from clients
in nearly 500 cases.
Mr. Collier, a fixture in bankruptcy courts in Monroe and
Shreveport for decades, pled guilty to one count of bankruptcy
fraud before U.S. Magistrate Judge Karen L. Hayes.
Prosecutors say he pocketed undisclosed $281 filing fees from
clients in 479 cases, despite engaging them in Chapter 13 legal-fee
agreements that were capped.
[*] Distressed Exchanges Continue to Rise, Moody's Says
-------------------------------------------------------
Distressed exchanges are becoming increasingly common in the US,
driven recently by the drag of low oil prices on exploration and
production companies as well as the frequent use of distressed
exchanges by private equity firms for restructuring, says Moody's
Investors Service.
Under the rating agency's definition, a distressed exchange occurs
when a distressed company offers creditors new or restructured
debt, or a new package of securities, cash or assets, that amounts
to a diminished financial obligation relative to the original
obligation. In doing so, a company can avoid a bankruptcy or push
it off until market conditions improve.
"Distressed exchanges surged along with other defaults type in 2009
and have since remained a meaningful share of total defaults," said
David Keisman, a Moody's Senior Vice President. As of Oct. 31,
distressed exchanges accounted for 43.8% of US non-financial
defaults in 2015.
"Barring a second default, distressed exchanges offer the best
recoveries for debt holders. However, if the exchange does not
solve the company's balance sheet issues and it re-defaults,
creditor recoveries will plunge."
Exploration and production companies in particular have seen a rise
in distressed exchanges, with creditors looking to trade up for
payment priority amid a prolonged commodity price slump, according
to the report, "Corporate Defaults and Recoveries -- US: Distressed
Exchanges Remain Frequent Thanks to Oil & Gas, PE Firms."
The main incentive behind current oil and gas distressed exchanges
is not only debt reduction but also an exchange of senior unsecured
debt for smaller amounts of secured debt, which, if successful,
lessens the probability of default for issuers.
Furthermore, companies acquired in LBOs are more likely to default
via a distressed exchange than non-LBOs, especially if they are
backed by top PE firms. Distressed exchanges often allow PE firms
to retain some control in their companies, while regular
bankruptcies do not.
[*] Global Regulators Finish Bank 'Bail-In' Proposal
----------------------------------------------------
Cara Salvatore at Bankruptcy Law360 reported that the Financial
Stability Board issued its final proposal on Nov. 9, 2015, for
rules that would require big banks, including Citigroup Inc. and
Goldman Sachs Group Inc. in the U.S., to hold enough equity capital
and bonds to avoid taxpayer-funded bailouts in times of crisis.
The final rules proposed on Nov. 9, 2015, by the international
body, which was created in 2009, concern rules for total
loss-absorbing capacity, or TLAC, the last major reform left after
the financial crisis.
[*] Moody's: Global Spec.-Grade Corp. Default Rate Rose in October
------------------------------------------------------------------
Moody's trailing 12-month global speculative-grade default rate
finished at 2.7% in October, up from 2.6% in September. The latest
reading came in slightly above the rating agency's year-ago
prediction of 2.4%.
"The energy sector remains the most troubled, accounting for almost
a quarter of the 79 defaults so far this year," said Sharon Ou,
Vice President and Senior Credit Officer of Moody's Credit Policy
Research. "The most recent energy defaults include EXCO Resources
Inc. and Warren Resources Inc., both of which completed distressed
exchanges in October."
Among US speculative-grade issuers, the default rate rose to 2.8%
in October from 2.7% in September. In Europe, the comparable rate
increased to 2.4% from 2.1%.
Moody's default rate forecasting model now predicts that the global
default rate will end 2015 at 3.0% before rising gradually to 3.4%
by Oct. 2016. Moody's expects default rates to be highest in the
Metals & Mining sector in the US, followed by Oil & Gas.
"The credit market has seen some volatility recently, reflecting
investors' concerns about the impact of a potential Fed interest
rate hike on the global economy in addition to ongoing commodity
price deflation," added Ou. If realized, the rate will
nevertheless remain below the historical average of 4.2%, given the
general stable credit trends and moderate refinancing risk among
Moody's-rated speculative-grade issuers.
[*] Moody's: Ongoing Midland Litigation Poses Risks to Lenders
--------------------------------------------------------------
The ongoing Madden v. Midland Funding, LLC litigation poses risks
to marketplace lenders and related asset-backed securities (ABS),
Moody's Investors Service says in a new report detailing the
multi-step legal path ahead. The litigation throws into doubt the
presumed legal benefits of marketplace lenders' use of third-party
partner banks to originate loans.
On May 22, 2015, the US Second Circuit Court of Appeals held that
non-bank debt collectors that purchased written-off credit card
accounts from a bank could not benefit from the bank's federal
preemption of state usury laws. On Nov. 10, the defendants in the
case petitioned the US Supreme Court to review that decision.
"With further court decisions needed to provide more clarity around
the likelihood of losses resulting from the use of the partner bank
origination model, whether the current arrangement remains viable
remains to be seen," says Vice President -- Senior Analyst, Alan
Birnbaum. "As a result, some market participants are already
restricting their exposure to potentially usurious loans from the
three Second Circuit states, namely New York, Connecticut and
Vermont."
In its new report, "Viability of Current Marketplace Lending Model
Depends on Ongoing Litigation, Including Possible Supreme Court
Review," Moody's sets out three possible scenarios: the Supreme
Court declines to hear the case, it hears the case and affirms the
Second Circuit's ruling or it hears the case and overturns the
ruling.
Under the first scenario, the Madden case would remain unresolved
until the US District Court in New York, where it was originally
heard, ruled on remaining issues. Which state law would apply to
the plaintiff's loan remains unclear, but if it is subject to New
York usury laws it could be deemed void. Legal actions affecting
marketplace lenders and potentially also the securitizations backed
by their loans would likely follow.
The second scenario, with the Supreme Court hearing the case and
affirming the Second Circuit's ruling, would be the worst outcome
for marketplace lenders. Under these circumstances, the impact of
the Second Circuit's decision would increase significantly because
the risk of losing preemption of state usury laws would spread to
states other than New York, Connecticut and Vermont.
The third scenario, with the Supreme Court hearing the case and
overturning the Second Circuit's ruling, would be the most positive
outcome for marketplace lenders and related ABS, Birnbaum says. "If
the Supreme Court were to overturn the prior ruling, the Madden
case would be resolved and there would be greater, though not
complete, legal certainty around non-banks' ability to buy loans
from banks to charge and collect interest at the rates set forth in
the loan contracts."
[^] BOOK REVIEW: Landmarks in Medicine - Laity Lectures
-------------------------------------------------------
Introduction by James Alexander Miller, M.D.
Publisher: Beard Books
Softcover: 355 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy today at http://bit.ly/1sTKOm6
As the subtitle points out, the seven lectures reproduced in this
collection are meant especially for general readers with an
interest in medicine, including its history and the cultural
context it works within. James Miller, president of the New York
Academy of Medicine which sponsored the lectures, states in his
brief "Introduction" that this leading medical organization "has
long recognized as an obligation the interpretation of the
progress of medical knowledge to the public." The lectures
collected here succeed admirably in fulfilling this obligation.
The authors are all doctors, most specialists in different areas
of medicine. Lewis Gregory Cole, whose lecture is "X-ray Within
the Memory of Man," is a consulting roentgenologist at New York's
Fifth Avenue Hospital. Harrison Stanford Martland is a professor
of forensic medicine at New York University College of Medicine.
Many readers will undoubtedly find his lecture titled "Dr. Watson
and Mr. Sherlock Holmes" the most engrossing one. Other doctor-
authors are more involved in academic areas of medicine and
teaching. Reginald Burbank is the chairman of the Section of
Historical and Cultural Medicine at the New York Academy of
Medicine. He lectured on "Medicine and the Progress of
Civilization." Raymond Pearl, whose selection is "The Search for
Longevity," is a professor of biology at Johns Hopkins University.
The authors' high professional standing and involvement in
specialized areas do not get in the way of their aim to speak to a
general audience. They are all skilled writers and effective
communicators. As the titles of some of the lectures noted in the
previous paragraph indicate, the seven selections of "Landmarks in
Medicine" focus on the human-interest side of medicine rather than
the scientific or technological. Even the two with titles which
seem to suggest concern with technical aspects of medicine show
when read to take up the human-interest nature of these topics.
"The Meaning of Medical Research", by Dr. Alfred E. Cohn of the
Rockefeller Institute for Medical Research, is not so much about
methods, techniques, and equipment of medical research, but is
mostly about the interinvolvement of medical research, the
perennial concern of individuals with keeping and recovering good
health, and social concerns and pressures of the day. "The meaning
of medical research must regard these various social and personal
aspects," Cohn writes. In this essay, the doctor does answer the
questions of what is studied in medical research and how it is
studied. And he answers the related question of who does the
research. But his discussion of these questions leads to the final
and most significant question "for what reason does the study take
place?" His answer is "to understand the mechanisms at play and to
be concerned with their alleviation and cure." By "mechanisms,"
Cohn means the natural--i. e., biological--causes of disease and
illness. The lay person may take it for granted that medical
research is always principally concerned with finding cures for
medical problems. But as Cohn goes into in part of his lecture,
competition for government grants or professional or public
notoriety, the lure of novel experimentation, or research mainly
to justify a university or government agency can, and often do,
distract medical researchers and their associates from what Cohn
specifies should be the constant purpose of medical research. Such
purpose gives medicine meaning to humankind.
The second lecture with a title sounding as if it might be about a
technical feature of medicine, "X-ray Within the Memory of Man,"
is a historical perspective on the beginnings of the use of x-ray
in medicine. Its author Lewis Cole was a pioneer in the
development of x-rays in the late 1800s and early1900s. He mostly
talks about the development of x-ray within his memory. In doing
so, he also covers the work of other pioneers, notably William
Konrad Roentgen and Thomas Edison. Roentgen was a "pure scientist"
who discovered x-rays almost by accident and at first resented the
application of his discovery to practical uses such as medical
diagnosis. Edison, the prodigious inventor who was interested only
in the practical application of scientific discoveries, and his
co-worker Clarence Dally enthusiastically investigated the
practical possibilities of the discoveries in the new field of
radiation. Dally became so committed to his work in this field
that he shortly developed an illness and died. At the time, no on
knew about the dangers of prolonged exposure to x-rays. But
sensing some connection between his co-worker's untimely death and
his work with x-rays, Edison stopped his own investigations.
Cole himself became involved in work with x-rays during his
internship at Roosevelt Hospital in New York City in 1898 and
1899. His contribution to this important field was in the area of
interpretation of what were at the time primitive x-rays and
diagnosis of ailments such as tuberculosis and kidney stones. Cole
writes in such a way that the reader feels she or he is right with
him in the steps he makes in improving the use of x-rays. He adds
drama and human interest to the origins of this important medical
technology. The lecture "Dr. Watson and Mr. Sherlock Holmes" uses
the popular mystery stories of Arthur Conan Doyle to explore the
role of medicine in solving crimes, particularly murder. In some
cases, medical tests are required to figure out if a crime was
even committed. This lecture in particular demonstrates the
fundamental role played by medicine in nearly all major areas of
society throughout history. The seven collected lectures have
broad appeal. All of them are informative and educational in an
engaging way. Each is on an always interesting topic taken up by a
professional in the field of medicine obviously skilled in
communicating to the general reader. The authors seem almost mind
readers in picking out the most fascinating aspects of their
subjects which will appeal to the lay readers who are their
intended audience. While meant mainly for lay persons, the
lectures will appeal as well to doctors, nurses, and other
professionals in the field of medicine for putting their work in a
broader social context and bringing more clearly to mind the
interests, as well as the stake, of the public in medicine.
*********
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.
*********
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., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2015. 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 or Nina Novak at 202-362-8552.
*** End of Transmission ***