/raid1/www/Hosts/bankrupt/TCR_Public/170908.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, September 8, 2017, Vol. 21, No. 250
Headlines
241 MAIN STREET: Taps Irving Shechtman as Appraiser
241 MAIN STREET: Taps Sinel Wilfand as Accountant
5 STAR INVESTMENT: Trustee Selling Elkhart Property for $85K
6420 ROSWELL: To Pay Wiggins $350 Per Hour for Legal Services
68 YACHT CLUB: Unsecured Creditors to be Paid 1.11% Over 5 Years
AJUBEO LLC: Green House to Open October Auction With $1.95M Offer
APPLIED SYSTEMS: Moody's Rates Proposed $1.08BB 1st Lien Loans B1
APPLIED SYSTEMS: S&P Cuts CCR to 'B-' on Debt-Funded Dividend
BERNARD L. MADOFF: Trustee Recoups $687 Million From Irish Fund
BLACKRIDGE TECHNOLOGY: Incurs $3.7 Million Net Loss in 2nd Quarter
BOART LONGYEAR: Moody's Affirms Caa2 Corporate Family Rating
BOD ENTERPRISES: Case Summary & 16 Unsecured Creditors
BRIAR HILL: Wants to Use Huntington National's Cash Collateral
BROOK INVESTMENTS: Taps Strouse as Counsel in Foreclosure Suit
BURNETT FAMILY: MSSY Buying All Personal Property for $75K
CAVALIER REAL ESTATE: Taps Crowley Liberatore as Legal Counsel
CHICAGO PARK: Moody's Confirms Ba1 General Obligation Debt Rating
CLEVELAND BIOLABS: Incurs $5.64 Million Net Loss for 2nd Quarter
CLIFFS NATURAL: Will Hold 'Say-on-Pay' Votes Annually
CONA RESOURCES: S&P Affirms Then Withdraws 'B' Corp Credit Rating
CONIFER VETERINARY: Taps Dennis & Company as Accountant
COSTA DORADA: Taps Ivonne Olmo Rios as Legal Counsel
CREATIVE REALITIES: Incurs $1.85M Net Loss for Second Quarter
CROSIER FATHERS: Dec. 15, 2017 Bar Date Set for Clergy Abuse Claims
CS MINING: Pure Nickel Receives Royalty Payment from Milford
CYTORI THERAPEUTICS: Offers Stockholders Subscription Rights
CYTORI THERAPEUTICS: Will Reduce Workforce by 50% to Cut Costs
DELTA MECHANICAL: Taps Sonoran Capital as Financial Advisor
DELUXE CORP: S&P Affirms Then Withdraws 'BB' Corp Credit Rating
DENVER SELECT: Taps Weinman & Associates as Legal Counsel
DIGICERT PARENT: Fitch Assigns 'BB-' Longterm Issuer Default Rating
DOAKES ENTERPRISES: Taps Michael J. Rose as Legal Counsel
DR. LUIS A. VINAS: Taps William G. Shofstall as Special Counsel
EAGLETREE-CARBIDE HOLDINGS: S&P Assigns 'B' CCR, Outlook Stable
EAST BAY DRY: Hearing on Plan Confirmation Moved to Sept. 28
ENERGY FUTURE: Bankruptcy Court Approves Sempra Merger Agreement
EXACT HOLDING: S&P Assigns 'B-' Corp Credit Rating, Outlook Stable
EXACT HOLDINGS: Moody's Assigns 1st Time B3 CFR; Outlook Stable
FIELDPOINT PETROLEUM: Posts $1.74 Million Net Income in 2nd Quarter
FLOWORKS INTERNATIONAL: S&P Cuts Then Withdraws 'SD' CCR
FORESIGHT ENERGY: Reports $16.3M Net Loss for Second Quarter
FYNDERS INC: May Use Cash Collateral Through Oct. 27
GENERAL MOTORS: Gas Tank Defect Suit Against New Co. Not Allowed
GENERAL WIRELESS: Breached WARN Act, Former Workers Claim
GENERAL WIRELESS: Defends Plan Outline
GENON ENERGY: Taps Credit Suisse Securities as Financial Advisor
GLOBAL ENERGIES: Shareholder Says Former Partners Forced Bankruptcy
HARRIET WEISS: Berris Buying New York Property for $1.3 Million
HHGREGG INC: Taps M. Soto as Workers Comp Claims Counsel
HOAG URGENT: Taps Baker & Hostetler as Legal Counsel
HUDSON HOSPITALITY: Hires Keen-Summit as Real Estate Advisor
IDDINGS TRUCKING: Petey Buying 2015 Mac Trailer for $45K
IMAGE GRAPHICS: Taps Unico Financial as Accountant
INTERNATIONAL RENTALS: To Hire Augustus Curtis of Cohen Baldinger
IRON MOUNTAIN: Moody's Rates New $750MM Senior Notes Due 2027 Ba3
IRON MOUNTAIN: S&P Affirms 'BB-' CCR, Outlook Remains Stable
JUMIO INC: Trust Says Ex-Executives Part of Accounting Scheme
KNIGHT ENERGY: Committee Taps Baker Donelson as Legal Counsel
LA PALOMA GENERATING: U.S. Trustee Forms 3-Member Committee
LADDER CAPITAL: Fitch Affirms 'BB' IDR & Sr. Unsecured Note Ratings
MAIN STREET CAFE: Taps Johnson Runkel as Accountant
MAXELWAY LLC: Hires Nicholas Bressi Law as Bankruptcy Counsel
MF GLOBAL: Appeals Court Order on Allied World Dispute
MIDWEST ASPHALT: May Use Cash Collateral Through Sept. 30
MILNER DISTRIBUTION: Taps Weinman & Associates as Legal Counsel
MITEL NETWORKS: Moody's Assigns B2 Corporate Family Rating
NATIONAL TRUCK: Hires Roger Gibbons as Counsel in Hulsey Dispute
NORWEGIAN CRUISE: Court Wants Input on Decision for Fuel Dispute
OAKS OF PRAIRIE: Cunat Buying Lake in the Hills Property for $475K
OM SHANTI: Taps Wade Kelly as Legal Counsel
OPTIMA SPECIALTY: Works on Consummating Reorganization Plan
PACKARD SQUARE: Ann Arbor Project in Ch. 11 to Ward Off Receiver
PACKARD SQUARE: Arranges $22-Mil. DIP Financing From Ardent
PACKARD SQUARE: Seeks to Compel Receiver to Give Back Project
PBA EXECUTIVE: New Plan Cuts SC's Payment to $1,681 Per Month
PENNSVILLE 8 URBAN: Plan Outline Okayed, Plan Hearing on Sept. 28
PETROLEUM SPECIALTY: Taps Darnall Sikes as Accountant
PIKE CORP: S&P Rates New $630 Million First-Lien Term Loan 'B'
PIONEER NURSERY: Taps Fear Waddell as Legal Counsel
PITNEY BOWES: Moody's Lowers Senior Unsecured Debt Rating to Ba1
PLYMOUTH PLACE: Fitch Alters Outlook to Neg, Affirms BB+ on Bonds
POINTE PROPERTIES: Taps Steven P. Taylor as Legal Counsel
POSTO 9 LAKELAND: Case Summary & 20 Largest Unsecured Creditors
PUERTO RICO: Ambac Cleared of Allegations of Misleading Investors
PUERTO RICO: GO Group Seeks to Look Into Fiscal Plan Projections
PUERTO RICO: NPFGC Says Board Not Giving Basic Financial Info
QUINTILES IMS: Moody's Rates New $750MM Term Loan B Due 2025 'Ba1'
RECESS HOLDINGS: Moody's Assigns First Time B3 Corp. Family Rating
REES ASSOCIATES: Arthur J. Gallagher Joins Creditor's Committee
REHOBOTH MCKINLEY: Fitch Cuts Rating on 2007A Hospital Bonds to CCC
ROBERT TAYLOR: Selling 1994 Toyota Tacoma to Father for $5K
RS LEGACY: Court Dismisses F. Toscano's Complaint as Time-Barred
RS LEGACY: F. Toscano's Late Claims Subject to Applicable Bar Dates
SAI FAMILY TRUST: Taps Sean M. Patrick as Legal Counsel
STANFORD INT'L: Hunton & Williams Ends Ponzi Scheme Allegations
STEEL DYNAMICS: Moody's Raises Sr. Unsecured Notes Rating to Ba1
STEEL DYNAMICS: S&P Rates New $350MM Senior Unsecured Notes 'BB+'
STEFANOVOUNO LLC: Wants to Use Charbel Realty's Cash Collateral
SUNEDISON INC: Wants Over $23M Coverage Split Between Insurers
SUSTAINABLE AQUACULTURE: Taps Markarian & Hayes as Legal Counsel
TAKATA CORP: Court Approves Frankel as Future Claimants Rep
TAKATA CORP: OEM Customer Group Balks at Ch.11 Notice Cost
TGP HOLDINGS III: Moody's Assigns B3 CFR; Outlook Stable
TGP HOLDINGS III: S&P Gives B- Corp Credit Rating, Outlook Positive
THO VAN PHAN: Huynh Buying Fountain Valley Property for $865K
TOYS "R" US: Hires Restructuring Lawyers as $400M Debt Looms
TOYS 'R' US: Fitch Affirms CCC Issuer Default Ratings
TROY'S DELI: Court Sets Oct. 6, 2017 as Claims Bar Date
TRUE RELIGION: Unsecureds to be Paid Up to 7.7% in Latest Plan
TTM TECHNOLOGIES: Moody's Affirms B1 CFR, Outlook Stable
TTM TECHNOLOGIES: S&P Raises CCR to 'BB', Outlook Stable
TULARE LOCAL: Fitch Cuts Rating on $13.65MM 2007 Bonds to CC
UNITED MOBILE: Selling Lubbock Properties to All Cellular for $250K
VANTIV LLC: S&P Alters Outlook to Negative & Affirms 'BB+' CCR
WALLACE RUSH: Disclosure Statement Hearing Set for Oct. 6
WASTE INDUSTRIES: S&P Puts 'BB-' CCR on CreditWatch Negative
WRANGLER BUYER: S&P Assigns 'B' Corp Credit Rating, Outlook Stable
WTE S&S AG: Disclosure Statement Hearing Set for Oct. 3
YOSI SAMRA: Fold-Up Flats Maker Seeks Chapter 11 for "Fresh Start"
[*] Moody's B3 Neg. & Lower Corp. Ratings List Ticks up in August
[*] PwC's Bid to Stay $2-Bil. Suit Over Mortgage Fraud Denied
[*] Regulators to Have 48 Hrs. to Move Instruments to Another Bank
[^] BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
*********
241 MAIN STREET: Taps Irving Shechtman as Appraiser
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241 Main Street, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Rhode Island to hire an appraiser.
The Debtor proposes to employ Irving Shechtman & Company, Inc., to
conduct an appraisal of its furniture, fixtures and equipment.
Dean Ponte, a licensed auctioneer and appraiser employed with the
firm, will be the one providing the services.
The Debtor has agreed to compensate Irving Shechtman for its
services and reimburse the firm for its expenses in the amount of
$500.
Mr. Ponte and other employees of the firm are "disinterested
persons" as defined in section 101(14) of the Bankruptcy Code,
according to court filings.
Irving Shechtman can be reached through:
Dean M. Ponte
Irving Shechtman & Company, Inc.
141 Power Road
Pawtucket, RI 02860
Phone: 401-728-9100
Email: auctionsri@aol.com
About 241 Main Street Inc.
241 Main Street, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. R.I. Case No. 17-11392) on August 10,
2017. Scott Parker, manager, signed the petition. At the time of
the filing, the Debtor disclosed that it had estimated assets of
less than $50,000 and liabilities of less than $500,000.
Judge Diane Finkle presides over the case. Peter M. Iascone &
Associates, Ltd. represents the Debtor as legal counsel.
241 MAIN STREET: Taps Sinel Wilfand as Accountant
-------------------------------------------------
241 Main Street, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Rhode Island to hire an accountant.
The Debtor proposes to employ Sinel, Wilfand & Vinci CPAs, Inc. to,
among other things, assist in reviewing its operations and
prospective sale proposals; prepare tax returns and monthly
operating reports; and assist in valuation and insolvency
analysis.
Wayne Wilfand, a certified public accountant employed with Sinel,
disclosed in a court filing that he and other members of the firm
are "disinterested persons" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Wayne L. Wilfand
Sinel, Wilfand & Vinci CPAs, Inc.
1150 New London Avenue, Suite 130
Cranston, RI 02910
About 241 Main Street Inc.
241 Main Street, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. R.I. Case No. 17-11392) on August 10,
2017. Scott Parker, manager, signed the petition. At the time of
the filing, the Debtor disclosed that it had estimated assets of
less than $50,000 and liabilities of less than $500,000.
Judge Diane Finkle presides over the case. Peter M. Iascone &
Associates, Ltd. represents the Debtor as legal counsel.
5 STAR INVESTMENT: Trustee Selling Elkhart Property for $85K
------------------------------------------------------------
Douglas R. Adelsperger, Trustee of 5 Star Investment Group, LLC,
and affiliates, asks the U.S. Bankruptcy Court for the Northern
District of Indiana to authorize the private sale of real estate
commonly known as 27654 Cobblestone Way, Elkhart, Elkhart County,
Indiana, to Mary L. Hayford for $85,000.
Prior to the Petition Date, Debtor 5 Star Investment Group V, LLC,
was the sole owner of the Real Estate. The Real Estate is subject
to a tax lien for delinquent real estate taxes that have accrued
for 2015 through 2016 and real estate taxes that will accrue for
2017. It also subject to a first priority investor mortgage in
favor of Glen Riegsecker dated Jan. 27, 2012. The Investor
Mortgage was recorded on Feb. 10, 2012 in the Office of the
Recorder of Elkhart County, Indiana, as Instrument No.
2012-002946.
On Aug. 29, 2017, pursuant to the sole efforts of the Tiffany
Group, the Trustee entered into the Purchase Agreement for the sale
of the Real Estate to the Purchaser for the total purchase price of
$85,000. The Purchase Agreement provides for the sale of the Real
Estate, free and clear of all liens, encumbrances, claims and
interests. It also provides that any portion of the Tax Lien that
represent delinquent real estate taxes, including real estate taxes
that have accrued for 2015 through 2016, will be paid in full at
closing. In addition, the Purchase Agreement provides that any
portion of the Tax Lien that represents real estate taxes for 2017
will be prorated as of the date immediately prior to the date of
closing. Further, it provides that any other special assessment
liens, utilities, water and sewer charges and any other charges
customarily prorated in similar transactions will be prorated as of
the date immediately prior to the date of closing.
A copy of the Purchase Agreement attached to the Motion is
available for free at:
http://bankrupt.com/misc/5_Star_Investment_949_Sales.pdf
Although the Trustee is still in the process of liquidating the
assets of the Consolidated Bankruptcy Estate, it appears that the
assets will fall short of paying the plethora of claimants.
Unfortunately, under these circumstances, no distribution method
can possibly compensate all the investors/creditors fully for their
losses. In order to ensure the fair and equitable treatment of all
investors/creditors in these bankruptcy cases, the Trustee proposes
to sell all real estate free and clear of investor mortgages, with
the liens to attach to the proceeds until further order of the
Court.
The Trustee anticipates that the resolution of how the funds should
be distributed will be raised in the future pursuant to either a
chapter 11 plan and/or separate actions. At such time, all parties
can be heard on how the proceeds from the sale of the Real Estate
secured by the Investor Mortgages should be distributed.
The Trustee submits that the proposed sale pursuant to the Purchase
Agreement will accomplish a "sound business purpose" and will
result in the maximized value for the Real Estate. The Trustee
believes, based on the advice of the Tiffany Group, that the
purchase price of $85,000 reflects the combined fair market value
of the Real Estate, and it therefore maximizes recovery.
Accordingly, the Trustee asks the Court to enter an Order
authorizing him, on behalf of the Consolidated Bankruptcy Estates,
to (i) sell the Real Estate to the Purchaser pursuant to the terms
and conditions of the Purchase Agreement free and clear of all
liens, encumbrances, claims and interests; (ii) disburse from the
sale proceeds, first to pay the costs and expenses of the sale
including the commission owed to Tiffany Group (approximately
$4,250), second to pay all real estate taxes and assessments
outstanding and unpaid at the time of the sale, including the Tax
Lien, and third to pay the prorated portions for any other special
assessment liens, utilities, water and sewer charges and any other
charges customarily prorated in similar transactions; and (iii)
retain the excess proceeds from the sale until further order of the
Court.
The Trustee asks the Court to waive the requirements of Bankruptcy
Rule 6004(h) in order to allow the Trustee to timely and
expeditiously consummate the proposed sale.
The Purchasers can be reached at:
Mary L. Hayford
P.O. Box 2613
Elkhart, IN 46515
About 5 Star Investment Group
On Nov. 5, 2015, the U.S. Securities Exchange Commission ("SEC")
filed a complaint against Earl D. Miller, 5 Star Capital Fund, LLC
and 5 Star Commercial, LLC, in the United States District Court for
the Northern District of Indiana, Hammond Division ("SEC Action").
In its complaint, the SEC alleged that Miller, 5 Star Capital Fund,
and 5 Star Commercial defrauded at least 70 investors from whom
they raised funds of at least $3,900,000. Additionally, on Nov. 5,
2015, the SEC obtained an ex parte temporary restraining Order,
asset freeze and other emergency relief in the SEC Action.
5 Star Investment Group and its 10 affiliates owned by Eardl D.
Miller sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. N.D. Ind. Lead Case No. 16-30078) on Jan. 25, 2016. 5 Star
estimated its assets at up to $50,000 and its liabilities between
$1 million and $10 million. The Debtors' counsel was Katherine C.
O'Malley, Esq., at Cozen O'Connor, in Chicago, Illinois.
The cases are assigned to Judge Harry C. Dees, Jr.
On Feb. 29, 2016, Douglas R. Adelsperger was appointed as Chapter
11 trustee in each of the bankruptcy cases.
On March 23, 2016, the Court entered an order consolidating the
bankruptcy cases for purposes of administration only.
On June 24, 2016, the Court entered its agreed order granting the
Trustee's Motion for substantive consolidation, substantively
consolidating the Debtors' bankruptcy cases for all postpetition
matters and purposes, effective as of the Petition Date, and
deeming that all assets and liabilities of the bankruptcy cases to
be consolidated into one bankruptcy estate, to be administered in
accordance with the Bankruptcy Code under the jurisdiction of the
Court ("Consolidated Bankruptcy Estate").
On July 21, 2016, the Court entered order granting application to
employ Tiffany Group Real Estate Advisors, LLC, as the bankruptcy
estates' broker.
The Trustee tapped Rubin & Levin, P.C., as counsel.
6420 ROSWELL: To Pay Wiggins $350 Per Hour for Legal Services
-------------------------------------------------------------
6420 Roswell Road Inc. has filed an amended application seeking
approval from the U.S. Bankruptcy Court for the Northern District
of Georgia to hire The Wiggins Law Group LLC as its special
counsel.
The firm will represent the Debtor in all litigation concerning the
operation of its adult entertainment business. Wiggins will charge
an hourly fee of $350.
Wiggins Law Group does not represent or hold any interest adverse
to the interest of the Debtor's estate, and is "disinterested" as
defined in section 101(14) of the Bankruptcy Code.
About 6420 Roswell Road, Inc.
6420 Roswell Road Inc. filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. 17-56753) on April 12, 2017, disclosing
less than $50,000 in assets and less than $500,000 in liabilities.
The petition was signed by Harry J. Freese, president.
Howard P. Slomka, Esq., at Slipakoff and Slomka, PC, represents the
Debtor as bankruptcy counsel. The Debtor hired Polay & Clark as
its accountant.
68 YACHT CLUB: Unsecured Creditors to be Paid 1.11% Over 5 Years
----------------------------------------------------------------
A U.S. bankruptcy judge ordered that no action will be taken
regarding 68 Yacht Club Land Trust's proposed restructuring plan in
light of the pending evidentiary hearing on the motion to dismiss
its Chapter 11 case.
The motion filed by Marina Harbour Association, Inc. is based in
part on the trust's failure to file a disclosure statement and plan
by two separate deadlines previously set by the court. The hearing
on the motion is scheduled for September 22.
68 Yacht Club on August 22 filed a plan of reorganization that
proposes to pay general unsecured creditors 1.11% of their allowed
claims.
Under the plan, 68 Yacht Club will pay $200 per month over 60
months to Class 26 general unsecured creditors or a total of
$12,000. The total amount of unsecured claims, which includes all
deficiencies of secured creditors whose claims have been stripped
or valued, is $1,082,017.11.
68 Yacht Club will utilize the rental income stream from the real
property it owns and currently rents to fund the plan, according to
its disclosure statement.
A full-text copy of the disclosure statement is available for free
at https://is.gd/yalTAl
About 68 Yacht Club Land Trust
68 Yacht Club Land Trust is a land trust organized under the laws
of the State of Florida. Since August 2016, the Debtor has been in
the business of managing real property located in Palm Beach
County, Florida. The Debtor's trustee is Hermine Hanna.
The Debtor was created to hold ownership to real property, which
was purchased by third parties from foreclosure sales conducted in
the Fifteenth Judicial Circuit in and for Palm Beach County,
Florida, by homeowner's associations.
The Debtor filed a Chapter 11 bankruptcy petition (Bankr. S.D. Fla.
Case No. 17-11976) on Feb. 17, 2017, disclosing under $1 million in
both assets and liabilities.
Barry S. Mittelberg, Esq., at Barry S. Mittelberg, P.A., serves as
the Debtor's bankruptcy counsel.
On August 22, 2017, the Debtor filed a disclosure statement, which
explains its proposed Chapter 11 plan of reorganization.
AJUBEO LLC: Green House to Open October Auction With $1.95M Offer
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Ajubeo, LLC, asks the U.S. Bankruptcy Court for the District of
Colorado to authorize the bidding procedures in connection with the
sale of substantially all assets to Green House Data, Inc., for
$1,945,798, subject to overbid at a proposed auction in October.
Ajubeo in August 2016 engaged the investment bank RCG, LLC (now
Drake Star Partners, LLC) to market the business for sale. On Jan.
31, 2017, the Debtor signed an Letter of Intent ("LOI") with Green
House for the sale of substantially all of the Debtor's assets.
Prior to and after signing the January LOI, the Debtor suffered the
loss or nonrenewal of key customers, shortened renewal timeframes
from a key customer, and diminished prospects for new customer
additions. This deterioration in business performance dampened the
Stalking Horse Bidder's interest in a transaction, and both parties
terminated their LOI in March 2017.
In July 2017, the Debtor reestablished dialogue with Green House
regarding a sale of the Debtor's assets, and signed a second LOI
with Green House on Aug. 10, 2017. While the Debtor was in the
process of negotiating a definitive asset sale agreement with Green
House, one of the equipment lessors filed a lawsuit seeking, inter
alia, to seize the server equipment leased to the Debtor. An
"order to show cause" hearing was scheduled for Aug. 25, 2017 at
10:00 a.m. (MT). In order to prevent the lessors from seizing the
critical equipment and to preserve the going concern value of the
business, the Debtor filed for chapter 11 protection on the
Petition Date.
Following the Petition Date, the Debtor and Green House resumed
negotiations regarding a potential sale. On Sept. 5, 2017 the
parties finalized the APA, pursuant to which the Debtor will sell
the Purchased Assets to Green House, subject to the competitive
bidding and auction process proposed. The APA with Green House
does not prohibit the Debtor from marketing its assets pending
approval of the Motion.
The Debtor's assets consist primarily of accounts receivable, cash,
and intangible assets. As of the Petition Date, the Debtor's
accounts receivable totaled $656,000 and its cash balance was
$6,500. As of the date of the Motion, its accounts receivable
total $885,000 and its cash balance is $11,600. The Debtor does
not own any real property.
The Debtor's assets also include certain server equipment purchased
from Hewlett-Packard Financial Services Co. pursuant to three
"Enterprise Business Lease Agreements" dated as of Sept. 3, 2015,
March 30, 2016, and June 23, 2016. The HP Financing Agreements are
disguised security instruments rather than true leases, as, among
other reasons, each includes a nominal $1 buyout option upon
expiration of the "lease." Accordingly, the equipment is property
of the Debtor, subject to HP's security interest, if any. HP
failed to file a UCC financing statement naming the Debtor as
debtor, and thus its security interest, if any, in the equipment is
unperfected.
As of the Petition Date, the Debtor's liabilities consisted
primarily of (i) the secured claims of Silicon Valley Bank ("SVB")
and Integrity Capital Income Fund, Inc.; (ii) arrearages on
equipment leases; and (iii) unsecured trade debt. Additionally, it
will shortly seek Court approval of a DIP Loan in the amount of
$298,000.
SVB holds a secured claim in the approximate amount of $630,000,
secured by substantially all assets of the Debtor (excluding
intellectual property) pursuant to that certain Loan and Security
Agreement, dated as of May 12, 2014 (as amended), and perfected
with a UCC Financing Statement filed on May 13, 2014.
Integrity also holds a secured claim against the Debtor. Integrity
holds a claim in the approximate amount of $915,000, secured by
substantially all assets of the Debtor (excluding intellectual
property) pursuant to that certain Loan and Security Agreement,
dated as of Nov. 17, 2014 (as amended), and perfected with a UCC
Financing Statement filed on Dec. 17, 2014.
Pursuant to a Subordination Agreement by and among SVB, Integrity,
and the Debtor, Integrity has subordinated any security interest or
lien that it may have in any property of the Debtor to the security
interest or lien of SVB, notwithstanding the respective dates of
attachment or perfection of SVB's and Integrity's respective
security interests or liens.
The Debtor will shortly file a motion asking approval of a
postpetition financing agreement between the Debtor, as borrower,
and Green House, as lender. If such agreement is approved by the
Court, Green House will provide postpetition financing in the
amount of up to $298,000.
The Debtor leases servers from Farnam Street Financial, Inc., HP,
Data Sales Co., Inc., and CSC Leasing Co. ("CSC"). As of the
Petition Date, the approximate arrearages owed to Farnam, HP, Data
Sales, and CSC under their respective equipment leases are
$886,823, $122,942, $17,501, and $63,391, respectively.
As of the Petition Date, the Debtor owed $415,000 to various
vendors and other trade creditors. The Debtor's equity interests
are owned by Infrastructures Investors, LLC and Tom Whitcomb, who
own 2,000,000 Class A interests and 100,000 Class A interests,
respectively.
Terms Reached With Stalking Horse
The Debtor proposes to sell substantially all of the Debtor’s
assets to Green House Data or to a competing bidder that submits a
higher and better offer in accordance with the proposed bidding
procedures.
Green House Data has agreed to acquire the Debtor's assets on these
terms:
a. Stalking Horse Bidder: Green House Data, Inc.
b. Purchase Price: $1,945,798, subject to adjustment based on
the Closing AR Amount and the November Revenue Amount, as set forth
in the APA
c. Purchased Assets: Substantially all assets of the Debtor,
excluding the "excluded assets."
d. Assumed Liabilities: (i) All Liabilities for Cure Costs,
(ii) the obligations of the Seller relating to the ownership or
operation of the Purchased Assets accruing after the Cut Off Time.
e. Contracts to Be Assumed and Assigned: The Debtor will assume
and assign to the Stalking Horse Bidder the contracts listed on
Schedule 1.2(a) to the APA, subject to the Buyer's rights under the
APA to exclude any Assumed Contract until the Closing Date.
f. Closing: If the 14-day stay of the Sale Order is waived, the
closing will occur within three business days after entry of the
Sale Order, or at such other time and place as the parties may
agree.
g. Deposit: None
h. Break-up Fee: 3% of the Purchase Price
i. Expense Reimbursement: The Stalking Horse Bidder will be
reimbursed for its reasonable Professional Fees, up to a cap of
$50,000.
j. Representations and Warranties: Except as specifically set
forth in the APA, the Stalking Horse Bidder will accept the
Purchased Assets at Closing on an "as is, where is" basis.
k. Termination: The Buyer will have the right to terminate the
APA if the Closing does not occur by the Outside Date. The Buyer's
obligation to close the Sale is conditioned on, inter alia, the
absence of any Material Adverse Change.
The Bidding Procedures are intended to permit an expedited sale
process to ensure that there is no disruption in the Debtor's
operations pending closing of the sale, while simultaneously
fostering an orderly and fair sale process. The salient terms of
the Bidding Procedures are:
1. Bid Deadline: Oct. 23, 2017 at 5:00 p.m. (PMT)
2. Overbidder's Deposit: $100,000
3. Auction: The Auction will be conducted at the offices of
Brownstein Hyatt Farber Schreck LLP, 410 17th Street, Suite 2200,
Denver, Colorado on Oct. 27, 2017 at 9:00 a.m. (PMT).
4. The bidding will start at the amount of the highest bid
submitted by a Qualified Overbidder, as determined by the Debtor.
5. Bid Increments: $50,000
6. If the Stalking Horse Bidder makes a Court-approved
postpetition loan ("DIP Loan") to the Debtor, then the Stalking
Horse will have the right to credit-bid any and all obligations
outstanding under the DIP Loan. If the Stalking Horse Bidder is not
the Successful Bidder, then all sale proceeds received by the
Debtor will be used first to repay the DIP Loan, if any, in full
prior to making any other payments or distributions on account of
any other claims or obligations.
7. Sale Hearing: Oct. 30, 2017
To facilitate the sale of the Purchased Assets, the Debtor asks
authorization to sell the Purchased Assets free and clear of any
and all liens, encumbrances, and other interests, other than as
provided in the Motion and in the APA.
A copy of the APA and the Bidding Procedures attached to the Motion
is available for free at:
http://bankrupt.com/misc/Ajubeo_LLC_42_Sales.pdf
The Stalking Horse Bidder has standing and is deemed to be a party
in interest with standing to be heard on any motion, hearing or
other matter related to the APA or any bid or other sale of the
Purchased Assets. Except with respect to the Successful Bidder,
all Overbidder's Deposits will be returned within three business
days after the Auction concludes, or, if no Auction is held, within
three days after the Sale Hearing.
The Debtor asks authority to assume and assign the Assumed
Contracts to the Stalking Horse Bidder (or, in the event that the
Stalking Horse Bidder is not the Successful Bidder, such other
contracts and leases as are designated in the Successful Bidder's
bid). The Debtor will, within two business days after the entry of
the Bidding Procedures Order, file and serve on each of the
non-debtor counterparties to the Contracts the Assignment Notice.
Objections, if any, to the proposed Cure Costs, or to the proposed
assumption and assignment of the Contracts must be file no later
than five business days prior to the Bid Deadline. Within 24 hours
after the conclusion of the Auction, the Debtor will file the
Notice of Successful Bidder and Assumed Contracts. The Debtor
will, within two business days of the entry of the Bidding
Procedures Order, serve upon all Notice Parties.
The Debtor asks the Court to waive the 14-day under the Bankruptcy
Rules 6004(h) and 6006(d).
The Purchaser:
GREEN HOUSE DATA, INC.
340 Progress Circle
Cheyenne, W 82007
Attn: T. Shawn Mills
E-mail: smills@greenhousedata.com
The Purchaser is represented by:
Matthew S. Rork, Esq.
FAIRFIELD AND WOODS PC
1801 California Street
26th Floor
Denver, CO 80202
E-mail: mrork@fwlaw.com
About Ajubeo, LLC
Ajubeo, LLC -- https://www.ajubeo.com/ -- is a privately held
provider of internet infrastructure software and equipment.
Founded in 2011 and headquartered in Greater Denver Area in
Boulder, Colorado, Ajubeo serves clients all over the world with
datacenter hubs in Denver, New Jersey, Frankfurt, and Dusseldorf
Germany.
Ajubeo, LLC, filed a Chapter 11 petition (Bankr. D. Colo. Case No.
17-17924) on Aug. 25, 2017. The petition was signed by Jeff Kuo,
chairman of the Board of Managers.
At the time of filing, the Debtor estimated $1 million to $10
million both in assets and liabilities.
Joshua M. Hantman, Esq., at Brownstein Hyatt Farber Schreck, LLP,
serves as counsel to the Debtor.
APPLIED SYSTEMS: Moody's Rates Proposed $1.08BB 1st Lien Loans B1
-----------------------------------------------------------------
Moody's Investors Service affirmed Applied Systems, Inc.'s B3
Corporate Family Rating (CFR) and B3-PD Probability of Default
Rating (PDR) following the company's announced plan to pursue a
dividend recapitalization. Concurrently, Moody's assigned a B1
rating to the company's proposed $50 million first-lien revolver
and $1,030 million first lien term loan and a Caa2 rating to the
company's proposed $495 million second lien term loan. The ratings
outlook is stable.
Proceeds totaling $1,525 million from the proposed debt issuance
along with $50 million of balance sheet cash will be used to fund a
$372 million dividend to the company's private equity owners as
well as to refinance existing debt including the $50 million first
lien revolver that expires in 2019 (no borrowings outstanding),
first lien term loan due 2021 ($791 million outstanding as of June
30, 2017), and the second lien term loan due 2022 ($386 million
outstanding as of June 30, 2017), and to fund transaction related
fees and expenses.
"Applied Systems' extremely high pro forma financial leverage and
aggressive financial policies are mitigated by the company's solid
market positioning, strong customer retention rates, a range of
achievable growth prospects, and a business model that is highly
profitable and has a sizable proportion of recurring revenue," said
Prateek Reddy, Moody's Analyst. "The stable outlook reflects
Moody's expectations that the company will reduce leverage through
a combination of good earnings growth and some debt repayment from
excess free cash flow," added Reddy.
Ratings for the existing first-lien revolver, first-lien term loan,
and second-lien term loan remain unchanged but the ratings will be
withdrawn post closing of the proposed new debt issuances.
The ratings are:
Corporate Family Rating, Affirmed at B3
Probability of Default Rating, Affirmed at B3-PD
$50 Million Senior Secured First Lien Revolving Credit Facility
due 2022, Assigned at B1 (LGD3)
$1,030 Million Senior Secured First Lien Term Loan due 2024,
Assigned at B1 (LGD3)
$495 Million Senior Secured Second Lien Term Loan due 2025,
Assigned at Caa2 (LGD5)
Outlook, Maintained at Stable
RATINGS RATIONALE
Applied Systems' B3 CFR incorporates the company's very aggressive
financial policies underpinned by sizable debt-funded dividend
distributions and a long history of financial sponsor ownership.
The rating reflects the company's very high leverage
(Moody's-adjusted Debt-to-EBITDA of over 9.5 times), small scale
and concentrated business profile. Applied Systems is a niche
provider of software services to a single end market, the property
and casualty (P&C) insurance distribution industry. The company's
leverage on a Debt-to-EBITDA basis is very high and on the surface
is more indicative of a Caa rating, particularly given its small
scale. However, Applied Systems' strong business characteristics
and good liquidity profile provide strong support to the B3 rating.
The company has a strong market position, being one of only two
main software providers in the P&C space. The niche presence has
enabled high barriers to entry given the complexity of products and
insulates Applied Systems from any change in the competitive
landscape. The company also benefits from good growth prospects,
including the ability to gain new customers as evidenced by the
success of its cloud based Epic platform, conversions of existing
customers to Epic, international growth in newly acquired markets,
and cross-selling of higher-value-add services to its existing
customers. Applied Systems' solid market share and high barriers to
entry support its ability to consistently raise prices and maintain
a solid margin profile. Its highly diversified and sticky customer
base supports strong retention rates of about 95% and a high
proportion of recurring revenue of about 85%.
The stable outlook reflects Moody's expectation that Applied
Systems will maintain its strong market position, grow revenue in
the high-single-digit percentage range and use a portion of the
free cash flow generated to reduce the current elevated debt
balances.
The proposed $50 million first-lien revolver and the $1,030 million
first-lien term loan are each rated B1 (LGD3), two notches above
the B3 CFR, reflecting the facilities' first-priority claim on the
company's assets, their seniority to the second-lien term loan and
the debt cushion provided by the same. The second-lien secured term
is rated Caa2 (LGD5), two notches below the B3 CFR, reflecting the
lien subordination to the first-lien facilities and a lack of any
material junior debt cushion. The B3-PD Probability of Default
Rating is in line with the CFR, reflecting the
two-class-secured-debt structure, as well as Moody's expectation of
an average family recovery in a distress scenario.
Ratings could be downgraded if market share is lost to competitors
or revenue and earnings growth slows down to the low-single-digit
percentage levels. Interest coverage ((EBITDA less
capex)-to-Interest) falling below 1.5 times or free cash
flow-to-debt sustained below 3% could also result in ratings being
downgraded.
Ratings could be upgraded if sustained revenue and earnings growth
in the high-single-digit percentage range contribute to
Moody's-adjusted Debt-to-EBITDA sustaining below 7 times and free
cash flow-to-debt sustaining above 8%.
Applied Systems, headquartered in University Park, IL, is a
provider of software solutions to the P&C and benefits insurance
industry, with a focus on insurance brokers and agencies, in the
US, Canada, the UK and Ireland. For the twelve-month period ended
June 30, 2017, the company's reported revenue was $343 million. The
company is owned by private equity investors, Hellman & Friedman
(majority) and JMI Equity (minority).
The principal methodology used in these ratings was Software
Industry published in December 2015.
APPLIED SYSTEMS: S&P Cuts CCR to 'B-' on Debt-Funded Dividend
-------------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating to 'B-' from
'B' on University Park, Ill.-based Applied Systems Inc. The outlook
is stable.
At the same time, S&P assigned its 'B' issue-level rating and '2'
recovery rating to the company's $1.08 billion first-lien credit
facility, consisting of a $50 million revolving credit facility due
2022 and a $1.03 billion first-lien term loan due 2024. The '2'
recovery rating indicates S&P's expectation of substantial
(70%-90%; rounded estimate 70%) recovery in the event of a default.
In addition, S&P assigned its 'CCC' issue-level rating and '6'
recovery rating to the company's $495 million second-lien term loan
due 2025. The '6' recovery rating indicates our expectation of
negligible (0%-10%; rounded estimate 5%) recovery in the event of a
default.
"The rating action reflects our anticipation that leverage will
exceed the 8x downside threshold for the next 18 months," said S&P
Global Ratings credit analyst Geoffrey Wilson.
The stable outlook on University Park, Ill.-based Applied Systems
Inc. reflects S&P Global Ratings' expectation that the company will
maintain its good market position in the insurance broker
management software industry.
BERNARD L. MADOFF: Trustee Recoups $687 Million From Irish Fund
---------------------------------------------------------------
Irving H. Picard, the Securities Investor Protection Act (SIPA)
Trustee for the liquidation of Bernard L. Madoff Investment
Securities LLC (BLMIS), filed a motion Sept. 6, 2017, in the United
States Bankruptcy Court for the Southern District of New York,
seeking approval of a settlement agreement with Thema International
Fund plc.
An approval hearing for the agreement has been set for Oct. 25,
2017 at 10 a.m.
Thema International is an Irish fund that invested substantially
all of its assets with BLMIS. The $687 million payment represents
100 percent of the transfers from BLMIS to Thema International
during the six years prior to the collapse of BLMIS plus 19.26% of
the withdrawals beyond the six year period. The agreement, reached
through mediation, represents a good faith, complete settlement of
all disputes between the SIPA Trustee and Thema International. The
SIPA Trustee will allow the net equity claim of Thema International
upon receipt of the payment.
"The Thema International settlement is the latest in a series of
highly successful negotiations and mediations," said BakerHostetler
partner Oren J. Warshavsky. "The Trustee settled with the Lagoon
and Thema Funds earlier this year. Together, the three settlements
deliver an aggregate benefit of more than $1 billion to the BLMIS
Customer Fund."
"The Thema International settlement is another outstanding
achievement by the SIPA Trustee and his team, and will be part of a
significant, additional distribution by year-end to both direct and
indirect investors in BLMIS," said Stephen P. Harbeck, President
and Chief Executive Officer of SIPC. "This excellent result will
bring a virtually immediate benefit to the customers of BLMIS. As
with prior funds collected by the SIPA Trustee, every cent will go
directly to victims. All expenses of this massive case are paid by
SIPC."
The SIPA Trustee's motion can be found on the United States
Bankruptcy Court's website at http://www.nysb.uscourts.gov/--
Bankr. S.D.N.Y., No. 08-01789 (SMB) / Adv. Pro. No. 09-01364
(SMB).
The motion -- as well as further information on recoveries to date,
other legal proceedings, further settlements, and general
information -- can also be found on the SIPA Trustee's website:
http://www.madofftrustee.com/
Messrs. Harbeck and Picard, and David J. Sheehan, Chief Counsel to
the SIPA Trustee, would like to thank the Securities Investor
Protection Corporation's Josephine Wang and Kevin Bell, as well as
BakerHostetler attorneys Oren J. Warshavsky, Geoffrey A. North,
Gonzalo S. Zeballos, Robertson D. Beckerlegge, Michelle R. Usitalo,
Peter B. Shapiro, Eric B. Hiatt, Carrie A. Longstaff, Tatiana
Markel, Dominic A. Gentile, and Anat Maytal, who assisted with the
work on the matter and settlement.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of New
York granted the application of the Securities Investor Protection
Corporation for a decree adjudicating that the customers of BLMIS
are in need of the protection afforded by the Securities Investor
Protection Act of 1970. The District Court's Protective Order (i)
appointed Irving H. Picard, Esq., as trustee for the liquidation of
BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and
(iii) removed the SIPA Liquidation proceeding to the Bankruptcy
Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr.
Picard has retained AlixPartners LLP as claims agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The petitioning creditors -- Blumenthal &
Associates Florida General Partnership, Martin Rappaport Charitable
Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven
Morganstern -- assert US$64 million in claims against Mr. Madoff
based on the balances contained in the last statements they got
from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later
transferred to Manhattan. In June 2009, Judge Lifland approved the
consolidation of the Madoff SIPA proceedings and the bankruptcy
case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to 150
years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has commenced distributions to victims. As of Aug. 25,
2017, the SIPA Trustee has recovered, from pre-litigation and other
settlements, nearly $12.029 billion -- more than 66% of the
currently estimated principal amount lost in the Ponzi scheme by
those who filed claims. Following the eight distribution of $252
million on Feb. 2, 2017, the Trustee has made total distributions
of $9.725 billion, with 1,336 BLMIS accounts fully satisfied. The
1,336 fully satisfied accounts represent nearly 60% of accounts
with allowed claims.
BLACKRIDGE TECHNOLOGY: Incurs $3.7 Million Net Loss in 2nd Quarter
------------------------------------------------------------------
Blackridge Technology International, Inc., filed with the
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing a net loss of $3.73 million on $8,961 of revenues
for the three months ended June 30, 2017, compared to a net loss of
$1.67 million on $55,035 of revenues for the three months ended
June 30, 2016.
For the six months ended June 30, 2017, the Company reported a net
loss of $6.02 million on $37,702 of revenues compared to a net loss
of $3.39 million on $57,578 of revenues for the six months ended
June 30, 2016.
As of June 30, 2017, BlackRidge had $7.83 million in total assets
against $22.59 million in total liabilities.
At June 30, 2017, the Company had total current assets of $1.431
million, including cash of $1.218 million, and current liabilities
of $21.99 million, resulting in working capital deficit of $20.56
million. The Company's current assets and working capital included
inventory of $14,731 and prepaid expenses of $197,629.
In addition, as June 30, 2017, the Company had a total
stockholders' deficit of $14,758,048. As the Company has worked
toward its acquisition and new product launches, the Company has
primarily financed recent operations, the development of
technologies, and the payment of expenses through the issuance of
its debt, common stock, preferred stock and warrants.
Based on the Company's current business plan, the Company
anticipates that its operating activities will use approximately
$175,000 in cash per month over the next twelve months, or $2.1
million. Currently the Company does not have enough cash on hand
to fully implement its business plan, and will require additional
funds within the next year. The Company believes that its
operations will not begin to generate significant cash flows until
the fourth quarter of 2017.
"In order to remedy this liquidity deficiency, we are actively
seeking to raise additional funds through the sale of equity and
debt securities, and ultimately plan to generate substantial
positive operating cash flows. Our internal sources of funds will
consist of cash flows from operations, but not until we begin to
realize substantial revenues from sales. If we are unable to raise
additional funds in the near term, we may not be able to fully
implement our business plan, and it is unlikely that we will be
able to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/KGcW3C
About BlackRidge
BlackRidge Technology International, Inc., was incorporated under
the laws of the State of Nevada on March 15, 2004 under the name
"Grote Molen, Inc." The Company sells identity based network
security to protect hybrid cloud and mainframe workloads from
cyber-attacks and insider threats.
On Sept. 6, 2016, the Company entered into an agreement and plan of
reorganization with BlackRidge Technology International, Inc., a
Delaware corporation, and Grote Merger Co., a Delaware corporation
providing for the Company's acquisition of BlackRidge in exchange
for a controlling number of shares of the Company's preferred and
common stock pursuant to the merger of Grote Merger Co. with an
d into BlackRidge, with BlackRidge continuing as the surviving
corporation. The transaction contemplated in the agreement closed
on Feb. 22, 2017.
On July 2, 2017, the Company filed a Certificate to Accompany
Restated Articles or Amended and Restated Articles with the
Secretary of State of Nevada to, among other things, change the
Company's name to BlackRidge Technology International, Inc.
Grote Molen reported a net loss of $259,447 for the year ended Dec.
31, 2016, compared to a net loss of $52,120 for the year ended Dec.
31, 2015.
Pritchett, Siler & Hardy, P.C., in Farmington, Utah, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2016, noting that Grote
Molen, Inc. has incurred losses and negative cash flows from
operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern.
BOART LONGYEAR: Moody's Affirms Caa2 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has appended a limited default
designation (LD) to Boart Longyear's Probability of Default (PDR)
rating Caa2-PD/LD. Moody's affirmed Boart Longyear's Caa2 Corporate
Family Rating (CFR), and the Caa1 senior secured and Caa3 senior
unsecured ratings at Boart Longyear Management Pty Limited. Boart
Longyear's SGL-3 speculative grade liquidity rating is unchanged.
The outlook is negative. The LD designation will be removed within
3 business days and the PDR will be Caa2-PD.
Moody's Investors Service Moody's views the exchange of the senior
unsecured notes, (Caa3), interest reduction and PIK election to
maturity (2022) as a distressed exchange and limited default under
Moody's definition of default. Similarly, the higher interest rate
and maturity extension (to 2022) on the senior secured notes as
well as payment in kind (PIK) option to December 2018 is also
viewed as a distressed exchange.
The following summarizes rating action:
Outlook Actions:
Issuer: Boart Longyear Limited
-- Outlook, Remains Negative
Issuer: Boart Longyear Management Pty Limited
-- Outlook, Remains Negative
Affirmations:
Issuer: Boart Longyear Limited
-- Probability of Default Rating, Affirmed Caa2-PD /LD (/LD
appended)
-- Corporate Family Rating, Affirmed Caa2
Issuer: Boart Longyear Management Pty Limited
-- Senior Secured Regular Bond/Debenture, Affirmed Caa1 (LGD 3)
-- Senior Unsecured Regular Bond/Debenture, Affirmed Caa3 (LGD 5)
RATINGS RATIONALE
While Boart Longyear has been able to extend maturities, reduce
cash interest expense and improve it's near term liquidity, and its
financial performance is evidencing improving trends, the company's
metrics remain weakly positioned at the Caa2 CFR. However, should
the improved mining environment and increasing exploration and
development trends continue, and Boart continue to evidence
strengthening in its earnings and cash flow generation, its metrics
are expected to strengthen to levels appropriate for its Caa2 CFR.
Headquartered in Salt Lake City, Utah, Boart Longyear Limited is
incorporated in Australia and listed on the Australian Securities
Exchange Limited. The company provides drilling services and
complimentary drilling products and equipment, principally to the
mining and metals industries. The company's performance in recent
years has been severely impacted by the steep downturn in
exploration and development activity within the industry. Revenues
for the twelve months ended June 30, 2017 were $688 million.
Boart Longyear is owned 54.3% (following the recapitalization and
pre-warrants) by Centerbridge Partners, L.P.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
BOD ENTERPRISES: Case Summary & 16 Unsecured Creditors
------------------------------------------------------
Debtor: BOD Enterprises, LLC
dba Caribbean Car Wash
dba Bull Dog Car Wash
dba Skiatook Boat Storage
dba The Shack
2065 West 154th Place North
Skiatook, OK 74070
Case No.: 17-11777
Business Description: BOD Enterprises is a small business Debtor
as defined in 11 U.S.C. Section 101(51D)
categorized under the automotive repair and
maintenance industry. It is an affiliate of
Bodley Investments, LLC, which sought
bankruptcy protection on Aug. 28, 2017
(Bankr. N.D. Okla. Case No. 17-11722).
Chapter 11 Petition Date: September 6, 2017
Court: United States Bankruptcy Court
Northern District of Oklahoma (Tulsa)
Judge: Hon. Terrence L. Michael
Debtor's Counsel: Karen Carden Walsh, Esq.
RIGGS, ABNEY, NEAL, TURPEN, ORBISON & LEWIS
502 West 6th Street
Tulsa, OK 74119-1019
Tel: (918) 587-3161
Fax: (918) 587-9708
Email: kwalshattorney@riggsabney.com
Total Assets: $1.91 million as of Aug. 31, 2017
Total Liabilities: $2.48 million as of Aug. 31, 2017
The petition was signed by Scott Bodley, member/manager.
A list of the Debtor's 16 largest unsecured creditors is available
for free at http://bankrupt.com/misc/oknb17-11777.pdf
BRIAR HILL: Wants to Use Huntington National's Cash Collateral
--------------------------------------------------------------
Briar Hill Foods, LLC, Bias Realty, Ltd., Jack Coffy, LLC, Thorne
Management, Inc. and CPW Properties, Ltd, ask the U.S. Bankruptcy
Court for the Northern District of Ohio to use cash collateral of
The Huntington National Bank, N.A.
The Debtors need to be able to use cash collateral in order to
maintain operations pending a sale of the properties. The Debtors
are in immediate need of cash to pay necessary business expenses,
to continue their operations and to avoid immediate and irreparable
harm to their bankruptcy estates. It is imperative that the
Debtors obtain authority to use the cash collateral in order to
continue to operate their businesses and to fund the costs
associated with such operations and the administration of the
Chapter 11 case and in accordance with the budget.
Other than the Thorne Management collections, which are minimal,
the Debtors are not operating. In addition to the collection and
use of the Thorne Management receivables, the Debtors seek to use
the amounts remaining under the Advance in order to maintain
operations, including for payment of the necessary expenses set
forth in the budget.
As adequate protection for the Debtors' use of cash collateral, the
Debtors will grant Huntington replacement security interests and
liens subject to the carve-out (to the same extent, validity,
enforceability, perfection and priority as the security interests
and liens that Huntington had immediately preceding the Petition
Date) and to the extent of diminution in the value of their
collateral in and to the following property of the Debtors and
their bankruptcy estate, whether acquired prior to, on, or
subsequent to the Petition Date: accounts, accounts receivable,
contract rights, chattel paper, inventory, general intangibles,
machinery, equipment, furniture and fixtures, including proceeds of
the foregoing.
A copy of the court order is available at:
http://bankrupt.com/misc/ohnb17-61892-4.pdf
About Briar Hill Foods
Briar Hill Foods, LLC, and several affiliates filed separate
voluntary petition for reorganization under Chapter 11 (Bankr. N.D.
Ohio Case No. 17-61892) on August 5, 2017. The other debtors are
Bias Realty, Ltd. (Bankr. N.D. Ohio Case No. 17-61893); Jack Coffy,
LLC (Bankr. N.D. Ohio Case No. 17-61894); CPW Properties, Ltd.
(Bankr. N.D. Ohio Case No. 17-61895); Thorne Management, Inc.
(Bankr. N.D. Ohio Case No. 17-61896).
Judge Russ Kendig presides over the cases. The Debtors are
represented by Marc B. Merklin, Esq. at Brouse McDowell, LPA, as
their bankruptcy counsel.
At the time of filing, Briar Hill's estimated assets are $1 million
to $10 million and estimated debt is $10 million to $50 million.
Bias Realty's estimated assets are $500,000 to $1 million and
estimated debt is $1 million to $10 million.
BROOK INVESTMENTS: Taps Strouse as Counsel in Foreclosure Suit
--------------------------------------------------------------
Brook Investments Global Ltd. seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Wisconsin to hire
legal counsel in connection with its Chapter 11 case.
The Debtor proposes to employ Strouse Law Offices to, among other
things, file a case against the City of Milwaukee to recover a
property lost to tax foreclosure, and prepare a bankruptcy plan.
Paul Strouse, Esq., the attorney who will be handling the case,
will charge an hourly fee of $200. Associates and paralegals will
charge $150 per hour and $100 per hour, respectively.
The firm and its attorneys are "disinterested persons" as defined
in section 101(14) of the Bankruptcy Code, according to court
filings.
Strouse Law Offices can be reached through:
Paul A. Strouse, Esq.
Strouse Law Offices
413 N. 2nd Street, Suite 150
Milwaukee, WI 53203
Tel: (414) 390-0820
Fax: (414) 220-5115
Email: strouselawoffices@gmail.com
About Brook Investments Global Ltd.
Brook Investments Global Ltd., a company based in Milwaukee,
Wisconsin, sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Wisc. Case No. 17-27418) on July 28, 2017. Fan
Zhang, agent and shareholder, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets of $1 million to $10 million and liabilities of
less than $500,000.
Judge Brett H. Ludwig presides over the case.
BURNETT FAMILY: MSSY Buying All Personal Property for $75K
----------------------------------------------------------
Burnett Family Farms, LLC, asks the U.S. Bankruptcy Court for the
Central District of California to authorize the sale of
substantially all personal property to Maverick Saloon SY, LLC
("MSSY") for $75,000, subject to overbid.
A hearing on the Motion is set for Sept. 27, 2017 at 1:30 p.m.
Objections, if any, must be filed not less than 14 days from the
date of notice of the Motion.
The Debtor operates the Maverick Saloon, a bar, restaurant and
cabaret, on real property owned by Sagunto at Unit "D" and "E" of
3687 Sagunto Street, Santa Ynez, California ("Premises"). The rent
that the Debtor owes is set forth in the Stipulation for Judgment
and Judgment per Stipulation entered March 17, 2017 in the Santa
Barbara County Superior Court. That amount is $318 per day. The
Debtor last paid rent through June 30, 2017. So, the
administrative rent is owed from July 1, 2017 to the present.
The Debtor does not have a liquor license to sell alcohol at the
Maverick Saloon. That license is owned by Jon Travis Burnett
("Burnett"), its managing member. In an order entered on July 28,
2017, the Court granted Sagunto relief from the automatic stay to
enforce its remedies to obtain possession of the Premises,
including lockout and eviction proceedings. Sagunto has commenced
those eviction proceedings and the Sheriff has posted an eviction
notice on the Premises.
Postpetition, Greg Morris was interested in acquiring the Property
and Burnett's liquor license so Morris could operate the Maverick
Saloon and on July 17, 2017, he entered into a letter of intent
with the Debtor. On Aug. 1, 2017, Burnett entered into an
agreement to sell his liquor license to Morris for $100,000. This
was part of an offer that Morris had made that included $25,000 for
the Debtor's assets, a two-year consulting contract for Mr. Burnett
at $50,000 per year, and $100,000 in lease consideration for
Sagunto.
Morris and Burnett also discussed the purchase by Morris of the
Debtor's assets, and on Aug. 9, 2017, Morris filed the trademark
application known as Serial Number 87561345 for the word mark,
"Maverick Saloon Santa Ynez California."
Morris also needed to reach an agreement with Sagunto for a new
lease so that he could operate the Maverick Saloon at the Premises.
That license was issued years ago when the Santa Ynez Valley was
much less developed, and is not now obtainable for someone who
plans to open a business like the Maverick Saloon at a different
location. Morris was not successful in his efforts to enter into a
new lease with Sagunto.
During this time, MSSY was negotiating with the Debtor to purchase
its assets and with Burnett to purchase his liquor license. The
initial offer was $125,000 for the Debtor's assets, and $200,000
for Mr. Burnett's liquor license. MSSY also made an offer of a 10%
interest ownership interest in MSSY to one of Sagunto's
principals, Andrew Gombiner, who will, therefore, have an interest
in the Maverick Saloon.
Later, in response to Mr. Burnett's request that MSSY reconfigure
the $325,000 offer so that more money was allocated to the liquor
license, the offer was modified so that $75,000 would be paid for
the Debtor's assets and $250,000 would be paid for the liquor
license. Negotiations resulted in the purchase agreement. There
are several contingencies to MSSY's offer, three of which are (i)
the Court approving the sale of the Property to MSSY on the terms
set forth; (ii) approval by the California Alcoholic Beverage
Control of the transfer of the liquor license from Burnett to MSSY;
and (iii) MSSY entering into a lease of the Premises with Sagunto
on terms satisfactory to MSSY.
A fourth contingency concerns the current agreement between Morris
and Burnett for the sale of the liquor license and Morris' pending
trademark application for the name Maverick Saloon Santa Ynez
California. MSSY has agreed to pay Morris $25,000, contingent upon
Morris entering into rescission agreements. MSSY is in the process
of negotiating a lease for the Premises with Sagunto.
The Debtor's originally filed Schedule D lists no secured
creditors; however, a UCC search revealed two tax liens: one in
favor of the Employment Development Department ("EDD"), which was
recorded first and is the senior lien, and one in favor of the
Internal Revenue Service. The State Board of Equalization was
levying the Debtor's bank accounts pre-petition, but according to
the UCC search it does not have a lien on any of the Debtor's other
assets. According to the Debtor’s Schedule E/F, the Debtor owes
the EDD $23,459. The IRS filed Claim No. 1, as amended, seeking
$24,469 in secured taxes and $128,814 in unsecured priority taxes.
The California Department of Tax and Fee Administrative (formerly
known as, "SBOE"), filed Claim No. 2, seeking payment of $597,760
in unsecured priority taxes. The $75,000 purchase price will pay
the $23,459 senior EDD lien and the junior IRS $24,469 lien in
full. The sale is free and clear of the EDD and IRS liens.
Any party wishing to overbid will deposit a cashier's check for
$75,000 made payable to "Burnett Family Farms, LLC, Debtor and
Debtor in Possession" with the Debtor's counsel no later than 5:00
p.m. (PST) on the day prior to the hearing. The initial minimum
overbid will be $25,000 (i.e., to be a qualified overbid, the
initial overbid must be at least $100,000). Subsequent overbids
will be in minimum increments of $5,000.
If one or more qualified overbids are received by 5:00 p.m. (PST)
on the date immediately prior to the scheduled hearing, an auction
of the Property will be held at 1:30 p.m. (PST) on the date that is
scheduled for the hearing on approval of the Motion. At the
conclusion of the auction, the Debtor will ask the Court to confirm
the results of the auction and to approve the sale of the Property
to the highest bidder. The successful bidder at the auction will
open escrow within three business days following the hearing on the
Motion and the approval of the Motion by the Court.
Sagunto has the right to lockout and to evict the Debtor. Sagunto
is willing to postpone its exercise of that right upon the
following conditions to allow the sale of the Property to close:
(i) the payment of administrative rent in the amount of $318 per
day from July 1, 2017 to the date that the Debtor relinquishes
possession of the Premises; (ii) the administrative rent owed from
July 1, 2017 to the date the court enters its order approving the
payment of administrative rent will be paid within two calendar
days of the entry of the administrative rent order; (iii)
administrative rent that accrues after the entry of the
administrative rent order will be paid on the first day of the
month and if not paid by the fifth day of the month then the Debtor
will be in default and Sagunto may exercise all of its rights under
its judgment for unlawful detainer, relief from stay order, and
writ of possession; and (iv) by accepting the payment of
administrative rent, Sagunto will not waive any of its rights under
the its judgment for unlawful detainer; relief from stay order and
writ of possession.
The Debtor asks the Court to waive the 10-day period provided for
in Federal Rule of Bankruptcy Procedure 6004(h).
The Purchaser:
Demetrios Loizides,
MAVERICK SALOON SY, LLC
100 W Broadway, Ste 1200
Long Beach, CA 90802
The Purchaser is represented by:
Sandra K. McBeth, Esq.
2236 So. Broadway, Suite J
Santa Maria, California 93454
- and -
Travis C. Logue, Esq.
ROGERS, SHEFFIELD & CAMPBELL, LLP
427 East Carrillo St.
Santa Barbara, CA 93101
The Managing Member:
J. Travis Burnett
BURNETT FAMILY FARMS, LLC
1559 Edison St.
Santa Ynez, CA 93460
About Burnett Family Farms
Burnett Family Farms, LLC, operates the Maverick Saloon, a bar,
restaurant and cabaret, on real property owned by Sagunto at Unit
"D" and "E" of 3687 Sagunto Street, Santa Ynez, California.
Burnett Family Farms sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 17-11154) on June 26,
2017, estimating under $1 million in both assets and liabilities.
The Debtor is represented by the Law Offices of Louis J. Esbin.
CAVALIER REAL ESTATE: Taps Crowley Liberatore as Legal Counsel
--------------------------------------------------------------
Cavalier Real Estate, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Virginia to hire Crowley,
Liberatore, Ryan & Brogan, P.C. as its legal counsel.
The firm will, among other things, give legal advice to the Debtor
regarding the administration of its Chapter 11 case; investigate
other assets of the estate; negotiate with creditors; and prepare a
plan of reorganization.
Crowley was paid $700 for its pre-bankruptcy services and holds a
retainer in the sum of $4,300 paid by the Debtor for services it
will provide after the petition date. David Messmore, the Debtor's
principal, reimbursed Crowley the $1,717 filing fee.
Karen Crowley, Esq., disclosed in a court filing that her firm is a
"disinterested person" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Karen M. Crowley, Esq.
Crowley, Liberatore, Ryan & Brogan, P.C.
Town Point Center, Suite 300
150 Boush Street
Norfolk, VA 23510
Tel: (757) 333-4500
Fax: (757) 333-4501
About Cavalier Real Estate LLC
Cavalier Real Estate, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Va. Case No. 17-72997) on August 21,
2017. Judge Frank J. Santoro presides over the case.
CHICAGO PARK: Moody's Confirms Ba1 General Obligation Debt Rating
-----------------------------------------------------------------
Moody's Investors Service has confirmed the Ba1 rating on the
outstanding general obligation debt (GO) of the Chicago Park
District, IL. The rating applies to $430 million of general
obligation unlimited tax (GOULT) and general obligation limited tax
(GOLT) bonds. On July 7, Moody's placed the district's rating under
review for possible downgrade. This action concludes that review.
The Ba1 is largely based on the close political and governance
relationship the park district maintains with the City of Chicago
(Ba1 negative) and extensive leverage of the district's tax base
considering debt and unfunded pension liabilities of overlapping
governments. Given the close ties between the city and park
district, increased credit pressures on the city could weaken the
park district's credit quality. Pronounced revenue needs of
overlapping governments could also limit the capacity of the tax
base to support new revenue for the park district. These credit
challenges are balanced by the large and diverse economic base
served by the park district as well as the district's strong
liquidity and moderate direct debt burden.
The GOULT rating is based upon the district's authority to levy
taxes unlimited as to rate or amount to pay debt service, though
the district also pledges certain alternate revenue to the payment
of some GOULT bonds. The GOLT bonds are rated the same as the GOULT
bonds based upon the district's authorization to levy a tax
unlimited as to rate to pay debt service on outstanding GOLT bonds.
The GOLT bonds are specifically secured by a dedicated levy limited
only in amount by the value of the district's annual debt service
extension base (DSEB). The DSEB amount provides sufficient coverage
of debt service on the district's outstanding GOLT debt.
Rating Outlook
The negative outlook, like the rating, reflects the close political
and governance relationship the park district shares with the City
of Chicago, which also carries a negative outlook.
Factors that Could Lead to an Upgrade
Moderation of the significant debt and pension burden on Chicago's
tax base
Factors that Could Lead to a Downgrade
Substantial reduction in the district's fund balance or liquidity
Sustained or intensified fiscal pressure at the City of Chicago or
CPS that risks credit contagion
Legal Security
Debt service on outstanding GOULT bonds is secured by the
district's pledge and authorization to levy property taxes
unlimited as to both rate and amount. The district has also pledged
certain alternate revenue to repayment of certain GOULT bonds. Debt
service on outstanding GOLT bonds is secured by the district's
pledge and authorization to levy a dedicated tax that is unlimited
as to rate but limited to the annual amount of the district's
DSEB.
Use of Proceeds
Not applicable.
Obligor Profile
The Chicago Park District was created in 1934 by the Park
Consolidation Act. The district is coterminous with the City of
Chicago and is the largest municipal park manager in the nation.
Methodology
The principal methodology used in this rating was US Local
Government General Obligation Debt published in December 2016.
CLEVELAND BIOLABS: Incurs $5.64 Million Net Loss for 2nd Quarter
----------------------------------------------------------------
Cleveland Biolabs, Inc., filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $5.64 million on $206,156 of revenues for the three months ended
June 30, 2017, compared to a net loss of $1.88 million on $575,025
of revenues for the same period a year ago.
For the six months ended June 30, 2017, Cleveland Biolabs reported
a net loss of $7.34 million on $781,130 of revenues compared to a
net loss of $2.55 million on $1.38 million of revenues for the six
months ended June 30, 2017.
"We have incurred cumulative net losses and expect to incur
additional losses related to our R&D activities," said the Company
in the report. "We do not have commercial products and have
limited capital resources. At June 30, 2017, we had cash, cash
equivalents and short-term investments of $11.5 million which,
along with the active government contracts ... are expected to fund
our projected operating requirements for at least 12 months beyond
the filing date of this Quarterly Report on Form 10-Q. However,
until we are able to commercialize our product candidates at a
level that covers our cash expenses, we will need to raise
substantial additional capital, which we may be unable to raise in
sufficient amounts, when needed and at acceptable terms.
"Our plans with regard to these matters may include seeking
additional capital through debt or equity financing, the sale or
license of drug candidates, or obtaining additional research
funding from the U.S. or Russian governments. There can be no
assurance that we will be able to obtain future financing on
acceptable terms, or that we can obtain additional government
financing for our operations. If we are unable to raise adequate
capital and/or achieve profitable operations, future operations
might need to be scaled back or discontinued."
Revenue for the second quarter of 2017 decreased to $0.2 million
compared to $0.6 million for the second quarter of 2016. The net
decrease was primarily attributable to reduced revenue from the
Company's development contracts with MPT which completed in 2016
and reduced revenue due to completion of manufacturing activities
from its Joint Warfighter Medical Research Program contract from
the Department of Defense for the continued development of the
entolimod as a medical radiation countermeasure.
Research and development costs for the second quarter of 2017
decreased to $1.2 million compared to $1.3 million for the second
quarter of 2016. The reduction in research and development costs
is due to completion of a clinical study of the safety and
tolerability of entolimod as a neo-adjuvant therapy in
treatment-naïve patients with primary colorectal cancer and
completion of associated preparatory research studies, offset by an
increase in entolimod for biodefense applications for continued
preclinical development along with drug manufacturing activities
associated with the Company's JWMRP contract and expenses
associated with our regulatory activities in support of filing a
Marketing Authorization Application with EMA.
General and administrative costs for the second quarter of 2017
decreased to $0.6 million compared to $0.8 million for the second
quarter of 2016. This decrease was primarily attributable to
reductions in personnel and other operating costs in connection
with cost savings efforts to streamline operations.
As of June 30, 2017, Cleveland Biolabs had $12.23 million in total
assets, $2.35 million in total liabilities and $9.87 million in
total stockholders' equity.
As of June 30, 2017, the Company had $11.5 million in cash, cash
equivalents and short-term investments, which, based on the
Company's current operational plan, is expected to fund operations
for at least one year beyond the filing date of our Form 10-Q.
Yakov Kogan, Ph.D., MBA, chief executive officer, stated, "The
pursuit of approval by the EMA and FDA and commercialization for
entolimod as a medical radiation countermeasure remains our top
priority."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/I9etje
About Cleveland BioLabs
Cleveland BioLabs, Inc. -- http://www.cbiolabs.com/-- is a
biopharmaceutical company developing novel approaches to activate
the immune system and address serious medical needs. The Company's
proprietary platform of Toll-like immune receptor activators has
applications in radiation mitigation, immuno-oncology, and
vaccines. The Company's most advanced product candidate is
entolimod, which is being developed as a medical radiation
countermeasure for the prevention of death from acute radiation
syndrome, an immunotherapy for oncology and other indications. The
Company conducts business in the United States and in the Russian
Federation through a wholly-owned subsidiary, BioLab 612, LLC, and
a joint venture with Joint Stock Company RUSNANO, Panacela Labs,
Inc. The company maintains strategic relationships with the
Cleveland Clinic and Roswell Park Cancer Institute.
Cleveland Biolabs reported a net loss of $2.59 million for the year
ended Dec. 31, 2016, following a net loss of $13.04 million in
2015.
CLIFFS NATURAL: Will Hold 'Say-on-Pay' Votes Annually
-----------------------------------------------------
At the Annual Meeting, in a non-binding advisory vote on the
frequency of the advisory vote on the compensation paid to Cliffs
Natural Resources Inc.'s named executive officers, the Company's
shareholders voted in favor of holding say-on-pay votes annually.
In accordance with this result and its previous recommendation, the
Board of Directors determined that the Company will hold advisory
say-on-pay votes on named executive officer compensation on an
annual basis until the next required vote on the frequency of such
say-on-pay votes or until the Board determines that it is in the
best interest of the Company to hold such vote with a different
frequency.
About Cleveland-Cliffs Inc.
Founded in 1847, Cleveland-Cliffs Inc., formerly known as Cliffs
Natural Resources Inc. -- http://www.clevelandcliffs.com/-- is a
mining and natural resources company in the United States. It is a
major supplier of iron ore pellets to the North American steel
industry from its mines and pellet plants located in Michigan and
Minnesota. Additionally, the Company operates an iron ore mining
complex in Western Australia. By 2020, Cliffs expects to be the
sole producer of hot briquetted iron (HBI) in the Great Lakes
region with the development of its first production plant in
Toledo, OH.
On Jan. 27, 2015, Bloom Lake General Partner Limited and certain of
its affiliates, including Cliffs Quebec Iron Mining ULC commenced
restructuring proceedings in Montreal, Quebec, under the Companies'
Creditors Arrangement Act (Canada). The initial CCAA order will
address the Bloom Lake Group's immediate liquidity issues and
permit the Bloom Lake Group to preserve and protect its assets for
the benefit of all stakeholders while restructuring and sale
options are explored.
Cliffs reported net income attributable to common shareholders of
$174.1 million for the year ended Dec. 31, 2016, compared to a net
loss of $788 million in 2015.
As of June 30, 2017, Cliffs Natural had $2.03 billion in total
assets, $2.69
billion in total liabilities and a total deficit of $666.7
million.
* * *
In February 2017, Moody's Investors Service upgraded Cliffs'
Corporate Family Rating and Probability of Default Rating to 'B2'
and 'B2-PD' from 'Caa1' and 'Caa1-PD', respectively, and assigned a
'B3' rating to the new senior unsecured guaranteed notes. The
upgrade follows the company's announcement of a $500 million senior
unsecured guaranteed note issuance and an approximate $590 million
equity issuance.
Also in February 2017, S&P Global Ratings said it raised its
long-term corporate credit rating on Cliffs to 'B' from 'CCC+'
after the company announced a $591 million equity issuance and the
tender offer for high-cost debt. The outlook is stable.
CONA RESOURCES: S&P Affirms Then Withdraws 'B' Corp Credit Rating
-----------------------------------------------------------------
On Sept. 6, 2017, S&P Global Ratings affirmed its ratings on Cona
Resources Ltd., including its 'B' corporate credit rating on the
company. The outlook is stable.
Subsequently, S&P Global Ratings withdrew its ratings on the
company at the issuer's request.
S&P said, "The affirmation reflected our expectation that Cona will
sustain fairly stable operating cash flow and associated cash flow
metrics, with two-year, weighted-average funds from
operations-to-debt ratio remaining at about 20%, despite our
expectation of relatively low production levels through 2018. Our
business risk profile assessment of the company continued to
reflect Cona's exposure to highly volatile heavy oil price
differentials, weak profitability, and limited diversity (both in
terms of geography and product mix), which the company's low
geological risk associated with reserves and production partially
offset."
The ratings withdrawal followed Cona fully redeeming its senior
unsecured notes.
CONIFER VETERINARY: Taps Dennis & Company as Accountant
-------------------------------------------------------
Conifer Veterinary Hospital Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to hire an
accountant.
The Debtor proposes to employ Dennis & Company, P.C. to prepare
periodic reports such as financial statements and monthly operating
reports, and provide other accounting services.
Mark Dennis, a certified public accountant, is expected to provide
the vast majority of work at the rate of $210 per hour. David
Dennis, another accountant employed with Dennis & Company, will
provide oversight as necessary for $250 per hour. Meanwhile, the
firm will charge an hourly fee of $100 for administrative support
services.
The Debtor has agreed to pay the firm a retainer in the sum of
$2,500.
Dennis & Company is a "disinterested person" as defined in section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Mark Dennis
Dennis & Company, P.C.
8400 East Crescent Parkway, Suite 600
Greenwood Village, CO 80111
Phone: (720) 528-4087
Email: dave@denniscocpa.com
Email: mark@denniscocpa.com
About Conifer Veterinary Hospital Inc.
Privately-held Conifer Veterinary Hospital Inc. owns an animal
hospital at 10903 U.S. Highway 285, Conifer, Colorado.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 17-17810) on August 22, 2017. David
Palmini, president, signed the petition.
At the time of the filing, the Debtor disclosed $1.41 million in
assets and $904,805 in liabilities.
Judge Michael E. Romero presides over the case. Buechler & Garber
LLC represents the Debtor as bankruptcy counsel.
COSTA DORADA: Taps Ivonne Olmo Rios as Legal Counsel
----------------------------------------------------
Costa Dorada Apartments Corp. seeks approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to hire legal
counsel.
The Debtor proposes to employ Ivonne Olmo Rios, Esq., to give legal
advice and file a motion requesting voluntary dismissal of its
Chapter 11 case. The proposed attorney will charge an hourly fee
of $125.
Olmo Rios is a "disinterested person" as defined in section 101(14)
of the Bankruptcy Code, according to court filings.
Olmo Rios maintains an office at:
Ivonne Olmo Rios, Esq.
P.O. Box 6400
Cayey, PR 00737
Tel: (787) 955-7096
Email: pianomagico@hotmail.com
About Costa Dorada Apartments
Costa Dorada Apartments Corp. is based in Isabela, Puerto Rico.
The Debtor filed a Chapter 11 petition (Bankr. D. P.R. Case No.
15-04474) on June 12, 2015. At the time of the filing, the Debtor
estimated assets and debts to be between $1 million to $10
million.
MRO Attorneys at Law, LLC represents the Debtor as bankruptcy
counsel.
On February 20, 2017, the Debtor filed a disclosure statement,
which explains its Chapter 11 plan of reorganization.
CREATIVE REALITIES: Incurs $1.85M Net Loss for Second Quarter
-------------------------------------------------------------
Creative Realities, Inc., filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
attributable to common shareholders of $1.85 million on $3.56
million of total sales for the three months ended June 30, 2017,
compared to net income attributable to common shareholders of
$6,000 on $3.02 million of total sales for the three months ended
June 30, 2016.
For the six months ended June 30, 2017, Creative Realities reported
a net loss attributable to common shareholders of $1.54 million on
$9.98 million of total sales compared to a net loss attributable to
common shareholders of $1.95 million on $5.46 million of total
sales for the six months ended June 30, 2016.
The Company's balance sheet as of June 30, 2017, showed $28.16
million in total assets, $20.66 million in total liabilities, $3.67
million in convertible preferred stock, and $3.82 million in total
shareholders' equity.
The Company has incurred net losses and negative cash flows from
operating activities for the years ended Dec. 31, 2016, and 2015.
As of June 30, 2017, the Company had cash and cash equivalents of
$6,080,000 and a working capital deficit of $(8,049,000).
In August 2017, Slipstream Communications, LLC, a related party,
extended the maturity date of the Company's term loan to Aug. 17,
2018, and extended the maturity date of its promissory notes to
Oct. 15, 2018. Management believes that due to the extension of
these debt maturity dates, the Company's current cash balance and
its operational forecast and liquidity projection for 2017, it can
continue to meet its obligations and operate as a going concern
through at least August 2018.
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/LbP1w4
About Creative Realities, Inc.
Creative Realities, Inc., is a Minnesota corporation that provides
innovative shopper marketing and digital marketing technology and
solutions to retail companies, individual retail brands,
enterprises and organizations throughout the United States and in
certain international markets. Creative Realities have expertise
in a broad range of existing and emerging shopper and digital
marketing technologies, as well as the related media management
and distribution software platforms and networks, device
management, product management, customized software service layers,
systems, experiences, workflows, and integrated solutions. Its
technology and solutions include: digital merchandising systems and
omni-channel customer engagement systems, interactive digital
shopping assistants, advisors and kiosks, and other interactive
marketing technologies such as mobile, social media, point-of-sale
transactions, beaconing and web-based media that enable its
customers to transform how they engage with consumers.
Creative Realities reported a net loss attributable to common
shareholders of $6.37 million on $13.67 million of total sales
compared to a net loss attributable to common shareholders of $8.31
million on $11.47 million of total sales for the year ended Dec.
31, 2015.
CROSIER FATHERS: Dec. 15, 2017 Bar Date Set for Clergy Abuse Claims
-------------------------------------------------------------------
In the Chapter 11 cases of Crosier Fathers and Brothers Province,
Inc., Crosier Fathers of Onamia, and The Crosier Community of
Phoenix, the U.S. Bankruptcy Court for the District of Minnesota
set Dec. 15, 2017, as the deadline to file proofs of claim over
alleged sexual or physical abuse by any priest, brother, or other
person connected with the Crosiers, or have any other claim against
the Crosiers.
Additional information is available at crosier.org or call
612-335-1407.
About Crosier Fathers and
Brothers Province Inc.
Crosier Fathers and Brothers Province, Inc. --
https://www.crosier.org -- is a Minnesota non-profit corporation
that is the civil counterpart of the religious entity known as the
Canons Regular of the Order of the Holy Cross Province of St.
Odilia.
Crosier, Crosier Fathers of Onamia and The Crosier Community of
Phoenix sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Minn. Case No. 17-41681 to 17-41683) on June 1, 2017.
The Rev. Thomas Enneking, president, signed the petitions.
Crosier Fathers and Brothers estimated less than $1 million in
assets and less than $500,000 in liabilities. Crosier Fathers of
Onamia and The Crosier Community of Phoenix each estimated under
$10 million in assets. Crosier Fathers of Onamia estimated under
$10 million in liabilities, while The Crosier Community of Phoenix
estimated under $500,000 in debts.
Judge Robert J Kressel presides over the cases.
The Debtors have hired Quarles & Brady LLP as lead counsel and
Larkin Hoffman as local counsel. JND Corporate Restructuring has
been retained as claims and noticing agent.
The Debtors also have hired Keegan, Linscott and Kenon, P.C., as
accountant; Gaskins Bennett Birrell Schupp LLP as special insurance
counsel; Larson King LLP as special litigation counsel in civil
actions filed before the petition date; and Larkin Hoffman Daly &
Lindgren Ltd., as local counsel.
On June 22, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee retained
Stinson Leonard Street LLP as its bankruptcy counsel.
CS MINING: Pure Nickel Receives Royalty Payment from Milford
------------------------------------------------------------
Pure Nickel Inc. (NIC) along with its wholly-owned subsidiary,
Nevada Star Resource Corp. (U.S.), (jointly referred to as "Pure
Nickel" and/or "Company") Sept. 6 reported that it has received a
court approved royalty payment, for previously earned royalties
from the Milford Copper Property, of US $387,810.
Under the original terms of an 2011 agreement reached with CS
Mining LLC ("CS Mining"), Pure Nickel was granted a 1% Net Smelter
Royalty ("NSR") on all properties controlled by CS Mining with
respect to the Milford Copper Property. Pure Nickel's portion of
the royalty is capped at US $5.0 M. CS Mining advanced the property
and informed the Company that production had been achieved but no
royalty payments were made. On June 2, 2016 a group of CS Mining
creditors filed a petition for involuntary Chapter 11 bankruptcy;
subsequently CS Mining converted the involuntary bankruptcy to
voluntary Chapter 11 bankruptcy and a bidding process for the
assets ensued. On August 29, 2017 the successful bidder, Tamra
Mining Company, LLC ("Tamra"), became the owner of the Milford
Copper Property.
The Company looks forward to continued progress and additional
royalty payments from the Milford Copper Property as Tamra takes
over daily operations.
About Pure Nickel Inc.
Pure Nickel is a mineral exploration company with a diverse
collection of nickel, copper and platinum group element exploration
projects in North America.
About CS Mining, LLC
CS Mining, LLC, is a mining and processing company headquartered in
Milford, Utah.
Purported creditors R.J. Bayer Professional Geologist, LLC;
Minerals Advisory Group, LLC; Rollins Construction & Trucking, LLC;
Rollins Machine, Inc.; and Oxbow Sulphur, Inc., filed an
involuntary petition to put the Company into Chapter 11 bankruptcy
(Bankr. D. Utah Case No. 16-24818) on June 2, 2016. Brahma Group,
Inc., subsequently joined the petition.
On Aug. 4, 2016, the Debtor filed a notice indicating its consent
to entry of an order for relief in the Chapter 11 case. Pursuant
to the order for relief, CS Mining continues to operate its
business and manage its properties as a debtor-in-possession
pursuant to Chapter 11 of the Bankruptcy Code.
Judge William T. Thurman presides over the case.
The Petitioners are represented by Martin J. Brill, Esq., at
Levene, Neale, Bender, Yoo & Brill L.L.P and George B. Hofmann,
Esq., at Cohne Kinghorn PC.
CS Mining tapped Snell & Wilmer L.L.P. as local counsel, and Pepper
Hamilton LLP as its legal counsel, nunc pro tunc to June 2, 2016.
FTI Consulting, Inc., is the Debtor's restructuring advisor. Epiq
Bankruptcy Solutions, LLC, is the claims and noticing agent.
The Official Committee of Unsecured Creditors formed in the case
retained Levene, Neale, Bender, Yoo & Brill L.L.P. as lead counsel
and Cohne Kinghorn as local counsel.
CYTORI THERAPEUTICS: Offers Stockholders Subscription Rights
------------------------------------------------------------
Cytori Therapeutics, Inc., is distributing to holders of its common
stock, at no charge, non-transferable subscription rights to
purchase units. Each unit consists of one share of Series B
Preferred Stock and [__] of a warrant. Each whole Warrant will be
exercisable for one share of the Company's common stock.
In the Rights Offering, holders will receive one subscription right
for every [__] shares of common stock owned at 5:00 p.m., Eastern
Time, on , 2017, the record date of the Rights Offering, or the
Record Date. The Series B Preferred Stock and the Warrants
comprising the Units will be separate upon the closing of the
Rights Offering and will be issued separately but may only be
purchased as a Unit, and the Units will not trade as a separate
security. The subscription rights will not be tradable.
Each subscription right will entitle holders to purchase one Unit
at a subscription price per Unit of $[ ]. Each whole Warrant
entitles the holder to purchase one share of common stock at an
exercise price of $ per share from the date of issuance through
its expiration 30 months from the date of issuance.
"If you exercise your Basic Subscription Rights in full, and any
portion of the Units remain available under the Rights Offering,
you will be entitled to an over-subscription privilege to purchase
a portion of the unsubscribed Units at the Subscription Price,
subject to proration and ownership limitations. Each subscription
right consists of a Basic Subscription Right and an
Over-Subscription Privilege."
The Subscription Rights will expire if they are not exercised by
5:00 p.m., Eastern Time, on , 2017, unless the Rights Offering is
extended or earlier terminated by the Company. If the Company
elect to extend the Rights Offering, the Company will issue a press
release announcing the extension no later than 9:00 a.m., Eastern
Time, on the next business day after the most recently announced
expiration date of the Rights Offering. The Company may extend the
Rights Offering for additional periods in our sole discretion.
Once made, all exercises of Subscription Rights are irrevocable.
The Company has not entered into any standby purchase agreement or
other similar arrangement in connection with the Rights Offering.
The Rights Offering is being conducted on a best-efforts basis and
there is no minimum amount of proceeds necessary to be received in
order for us to close the Rights Offering.
A full-text copy of the preliminary prospectus is available for
free at https://is.gd/0SjKd4
About Cytori
Based in San Diego, California, Cytori Therapeutics (NASDAQ: CYTX)
-- http://www.cytori.com/-- provides patients and physicians
around the world with medical technologies, which harness the
potential of adult regenerative cells from adipose tissue. The
Company's StemSource(R) product line is sold globally for cell
banking and research applications.
Cytori reported a net loss of $22.04 million for the year ended
Dec. 31, 2016, compared to a net loss of $18.74 million in 2015.
As of June 30, 2017, Cytori had $32.47 million in total assets,
$21.24 million in total liabilities and $11.23 million in total
stockholders' equity.
BDO USA, LLP, in San Diego, California, issued a "going concern"
qualification on the consolidated financial statements for the year
ended Dec. 31, 2016, stating that the Company has suffered
recurring losses and negative cash flows from operations that raise
substantial doubt about its ability to continue as a going concern.
CYTORI THERAPEUTICS: Will Reduce Workforce by 50% to Cut Costs
--------------------------------------------------------------
Cytori Therapeutics, Inc., announced a corporate restructuring
intended to significantly reduce expenses. The restructuring is
expected to reduce the Company's workforce by approximately 50%.
About Cytori
Based in San Diego, California, Cytori Therapeutics (NASDAQ: CYTX)
-- http://www.cytori.com/-- provides patients and physicians
around the world with medical technologies, which harness the
potential of adult regenerative cells from adipose tissue. The
Company's StemSource(R) product line is sold globally for cell
banking and research applications.
Cytori reported a net loss of $22.04 million for the year ended
Dec. 31, 2016, compared to a net loss of $18.74 million for the
year ended Dec. 31, 2015.
As of June 30, 2017, Cytori had $32.47 million in total assets,
$21.24 million in total liabilities and $11.23 million in total
stockholders' equity.
BDO USA, LLP, in San Diego, California, issued a "going concern"
qualification on the consolidated financial statements for the year
ended Dec. 31, 2016, stating that the Company has suffered
recurring losses and negative cash flows from operations that raise
substantial doubt about its ability to continue as a going concern.
DELTA MECHANICAL: Taps Sonoran Capital as Financial Advisor
-----------------------------------------------------------
Delta Mechanical Inc. sought and obtained approval from the U.S.
Bankruptcy Court for the District of Arizona to hire Sonoran
Capital Advisors, LLC as financial advisor.
The firm will provide these services to the company and its
affiliates in connection with their Chapter 11 cases:
(a) review all transfers that the Debtors made within
90 days prior to their bankruptcy filing to
determine potentially avoidable preferential
transfers;
(b) review books and records of the Debtors to verify
the sources and amounts transferred within 90 days
prior to the filing, and the reasons those
transfers were made;
(c) provide a preliminary analysis to estimate the
total avoidance action pool;
(d) provide a secondary analysis to limit the
avoidance action pool to those transfers most
likely to result in successful avoidance action
recoveries;
(e) if necessary, prepare a report describing the
results of the preliminary and secondary analyses;
(f) assist the Debtors' counsel in identifying how
preference recoveries may impact plan feasibility
and plan projections; and
(g) if asked by the Debtors, provide expert witness
testimony in depositions or trial.
The firm will charge $395 per hour for the services of its managing
directors, $375 per hour for senior advisors, and $195 per hour for
analysts. It will be paid an initial retainer of $10,000.
Sonoran does not hold or represent any interest adverse to the
Debtors or their estates, according to court filings.
The firm can be reached through:
Bryan Perkinson
Sonoran Capital Advisors, LLC
1350 S Greenfield Road, Suite 1107
Mesa, AZ 85206-3563
About Delta Mechanical
Mesa, Arizona-based Delta Mechanical Inc. and its debtor-affiliates
are engaged, generally, in the installation, maintenance, and
repair of plumbing and heating, ventilation, and air conditioning
fixtures and equipment. The Debtors, collectively, operate in 13
states and employ approximately 350 people. Each of the Debtors is
a corporation that is wholly-owned by Todor and Mariana Kitchukov.
The Debtors sought Chapter 11 bankruptcy protection (Bankr. D.
Ariz. Lead Case No. 15-13316) on Oct. 19, 2015. The petitions were
signed by Todor Kitchukov, president. In its petition, Delta
Mechanical estimated $1 million to $10 million in assets, and $10
million to $50 million in liabilities.
Judge George B. Nielsen, Jr., presides over the cases. The Debtors
are represented by John J. Hebert, Esq., Philip R. Rudd, Esq., and
Wesley D. Ray, Esq., at Polsinelli PC.
An official committee of unsecured creditors has been appointed in
the Debtors' cases.
On August 12, 2016, the Debtors and the creditors' committee filed
a joint Chapter 11 plan of reorganization.
On June 2, 2017, the Creditors' Committee filed a First Amended
Joint Plan of Reorganization.
DELUXE CORP: S&P Affirms Then Withdraws 'BB' Corp Credit Rating
---------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' corporate credit rating on
specialty printing and marketing services company Deluxe Corp. The
rating outlook is stable.
S&P subsequently withdrew the corporate credit rating at the
company's request.
DENVER SELECT: Taps Weinman & Associates as Legal Counsel
---------------------------------------------------------
Denver Select Property, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Colorado to hire Weinman & Associates,
P.C. as its legal counsel.
The firm will assist the Debtor in the preparation of a Chapter 11
plan of reorganization and will provide other legal services
related to its bankruptcy case.
Jeffrey Weinman, Esq., the attorney who will be handling the case,
will charge an hourly fee of $475. William Richey and Lisa
Barenberg, the firm's paralegals, will charge $300 per hour and
$250 per hour, respectively.
The firm received a retainer in the sum of $25,000 from the
Debtor.
Mr. Weinman disclosed in a court filing that the firm and its
employees are "disinterested persons" as defined in section 101(14)
of the Bankruptcy Code.
Weinman & Associates can be reached through:
Jeffrey Weinman, Esq.
Weinman & Associates, P.C.
730 17th Street, Suite 240
Denver, CO 80202
Tel: 303-572-1010
Email: jweinman@epitrustee.com
About Denver Select Property LLC
Denver Select Property, LLC is a small business debtor as defined
in 11 U.S.C. Section 101(51D). The Debtor owns in simple interest
a real property located at 3424-3440 Alvarado Road, Lawson,
Colorado, valued at $1.07 million; and a real property located at
291 County Road 308 Dumont, Colorado, valued at $410,000.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 17-18217) on September 1, 2017.
Greg Books, manager, signed the petition.
At the time of the filing, the Debtor disclosed $1.57 million in
assets and $2.68 million in liabilities.
Judge Michael E. Romero presides over the case.
DIGICERT PARENT: Fitch Assigns 'BB-' Longterm Issuer Default Rating
-------------------------------------------------------------------
Fitch Ratings has assigned a first-time 'BB-' Long-Term Issuer
Default Rating (IDR) to DigiCert Parent, Inc. and DigiCert
Holdings, Inc. (collectively DigiCert). The Rating Outlook is
Stable. Fitch has also assigned a first-time 'BB+/RR1' rating to
the $90 million secured revolving credit facility and $1.2 billion
first lien multi-tranche secured term loan; and a first-time
'BB-/RR4' rating to the $300 million second lien secured term loan.
The proceeds will be used for the $950 million acquisition of
Symantec's Website Security Service (WSS) that was announced on
Aug. 2, 2017, and repayment of DigiCert's existing $325 million
debt. A complete list of rating actions follows at the end of this
release. Fitch's rating actions affect $1.59 billion of total debt,
including the $90 million revolving credit facility.
KEY RATING DRIVERS
Merged Entity Has Strong Position In Niche Internet Segment: Fitch
expects the merged DigiCert and Symantec's website security service
to have a leading position in the Certificate Authorities (CA)
industry, and an even stronger position in the core Extended
Validation (EV) and Organizational Validation (OV) segments. The
industry is expected to grow in the high single digits in the near
term, with EV and OV growing at near 10%, and Domain Validation
(DV) declining.
Limited Technology Obsolescent Risks: With increasing information
being exchanged over the internet, the need to ensure data security
will continue to rise. SSL security provides an important layer of
security by verifying and authenticating websites being accessed,
and encrypting data being transported over the internet. Fitch
believes SSL technology will be continuously enhanced by building
on the existing foundations to ensure full backward compatibility
rather than being replaced by new disruptive technologies; this
tends to favor incumbents such as DigiCert.
SSL Technology Benefits From New Access Platforms: While access to
internet data has evolved from browsers to mobile applications, and
increasingly to IoT, SSL technology provides the versatility to
secure data across various access platforms. Fitch expects SSL
technology to continue to grow along with new access platforms and
devices.
Long Browser Lifecycle Results In High Entry Barrier: CAs need to
be embedded into various available browsers which could result in
new CA's being incompatible with outdated browsers as it could take
5-10 years for older browsers to be eliminated from the market.
Without full compatibility with all existing browsers, the value of
certificates issued by new CA's diminish limiting acceptance by
websites that subscribe to CA service. Fitch believes the inability
to be fully compatible is an effective entry barrier.
Highly Recurring Revenue And Strong Profitability: Consistent with
historical revenue trends from the pre-merger entities, the
resulting DigiCert revenue is expected to be 100% subscription
based with 100% net retention rate. This results in a highly
predictable operating profile for the company. Given the
concentrated industry structure and high entry barriers, Fitch
expects DigiCert to sustain strong profitability. Fitch estimates
after completion of integration after 2018, DigiCert will sustain
EBITDA margin of 55%-60% through Fitch forecast period, and free
cash flow (FCF) margin of approximately 30%.
Private Equity Ownership Could Limit Deleveraging: At the
completion of the acquisition, private equity firm Thoma Bravo
would have 50% ownership of DigiCert. While Fitch believes
significant synergy is achievable, private equity ownership is
likely to result in some level of leverage on an ongoing basis to
optimize return on equity. In the near term, Fitch anticipates
DigiCert to focus on integration of Symantec in the next 12 months;
Fitch expects the company to gradually de-lever primarily through
EBITDA growth.
DERIVATION SUMMARY
Fitch's ratings on DigiCert are supported by the resilience and the
predictability of its revenue structure as a result of the
continuing demand for trust over the internet. With the acquisition
of Symantec's WSS unit, DigiCert is poised to solidify a strong
market position in the segment that is illustrated through the
company's operating profile. The merger would also enable DigiCert
to increase its operating efficiency by streamlining the operations
in the combined entity. However, Fitch expects the pace of
deleveraging would be slow as its private equity ownership seeks to
optimize capital structure for maximum equity returns given the
predictable profitability of the business.
DigiCert Holdings, Inc. is a CA that enables trusted communications
between website servers and terminal devices such as browsers and
smartphones. A CA verifies and authenticates the validity of
websites and their hosting entities, and facilitates the encryption
of data on the internet. CA services are typically 100%
subscription based, and generally recurring in nature. The merger
of DigiCert and Symantec's WSS combines DigiCert's technology
platform with Symantec's large customer base. The CA industry is
relatively concentrated with few major competitors including
DigiCert, Symantec, Comodo, Entrust, GoDaddy, and GlobalSign. Post
the merger, Fitch expects DigiCert to have a leading position in
the segment by revenue.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
-- Revenue growth of 0.5%-2% during 2018-2020;
-- EBITDA margin expands from 55.6% in 2018 to 64.5% in 2020 as
cost reduction eventually reaches $75 million;
-- Most of FCF is used for shareholder return starting in 2018
limiting meaningful debt reduction;
-- $75 million one-time stand-up cost incurred through 2018 as
part of the integration efforts;
-- $18 million in one-time restructuring cost incurred through 1Q
2018.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead to
Positive Rating Action:
-- Fitch's expectation of forward total leverage sustaining below
4.5x;
-- FCF margin sustaining above 30%;
-- Revenue growth in high single-digits, implying market share
gain through strong market position.
Future Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
-- Fitch's expectation of forward total leverage sustaining above
5.5x;
-- Sustained negative revenue growth;
-- FCF margin sustaining below 20%.
LIQUIDITY
Given the strong cash generation capabilities, Fitch believes
DigiCert will have solid liquidity. At the completion of the
acquisition, DigiCert will have approximately $160 million cash on
balance sheet. In addition, Fitch forecasts DigiCert to generate
EBITDA of $278 million in 2018, and FCF of $99 million; Fitch
expects FCF to grow to approximately $150 million in 2019 as the
company benefits from integration.
FULL LIST OF RATING ACTIONS
Fitch assigned the following rating:
DigiCert Parent, Inc.
-- Long-term Issuer Default Rating 'BB-'; Outlook Stable.
DigiCert Holdings, Inc.
-- Long-term Issuer Default Rating 'BB-'; Outlook Stable;
-- $90 million Secured Revolving Credit Facility 'BB+/RR1';
-- $1.2 billion multi-tranche 1st lien secured term loan
'BB+/RR1';
-- $300 million 2nd lien secured term loan 'BB-/RR4'.
DOAKES ENTERPRISES: Taps Michael J. Rose as Legal Counsel
---------------------------------------------------------
Doakes Enterprises, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Oklahoma to hire legal counsel in
connection with its Chapter 11 case.
The Debtor proposes to employ Michael J. Rose PC to, among other
things, give legal advice regarding its duties under the Bankruptcy
Code and assist in the preparation of a plan of reorganization.
Michael Rose, Esq., will charge an hourly fee of $350 for his
services.
Mr. Rose disclosed in a court filing that he does not have any
connection with the Debtor or any of its creditors.
The firm can be reached through:
Michael J. Rose, Esq.
Michael J. Rose PC
4101 Perimeter Center Drive, Suite 120
Oklahoma City, OK 73112
Tel: (405) 605-3757
Fax: (405) 605-3758
Email: mrose@coxinet.net
About Doakes Enterprises LLC
Doakes Enterprises, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Okla. Case No. 17-12960) on July 24,
2017. Ternassia Doakes, president, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets and liabilities of less than $50,000.
DR. LUIS A. VINAS: Taps William G. Shofstall as Special Counsel
---------------------------------------------------------------
Dr. Luis A. Vinas, MD PA seeks approval from the U.S. Bankruptcy
Court for the Southern District of Florida to hire William G.
Shofstall, PA as special counsel.
The firm will assist the Debtor in pursuing its counterclaims
against FinPrime, Mauro Brothers, and Sheer Enterprises, Inc.
The hourly rates charged by the firm for the services of its
associates range from $175 to $350. Partners and paraprofessionals
will charge $450 per hour and $125 per hour, respectively.
Shofstall received $2,500 in connection with its employment with
the Debtor.
William G. Shofstall, Jr., Esq., disclosed in a court filing that
he and his firm do not represent any interest adverse to the Debtor
or its estate.
The firm can be reached through:
William G. Shofstall, Jr., Esq.
William G. Shofstall, PA
828 Squire Drive
Wellington, FL 33414-7834
Tel: (561) 641-2600
About Dr. Luis A. Vinas, MD PA.
Dr. Luis A. Vinas, MD PA, is engaged in the health care business
and is 100% owned by Dr. Luis A. Vinas. Dr. Vinas is Board
Certified by The American Board of Plastic Surgery. For over two
decades, Dr. Vinas has been nationally recognized for his surgical
techniques and minimally invasive surgical procedures. Dr. Vinas
is a plastic surgeon specializing in cosmetic and reconstructive
surgery including facelifts, tummy tucks, breast augmentation,
single-stage breast reconstruction, liposuction, body contouring,
and anti-aging procedures.
Dr. Luis A. Vinas, MD PA, filed a Chapter 11 petition (Bankr. S.D.
Fla. Case No. 17-14765) on April 17, 2017. Luis A Vinas, MD,
president and 100% owner, signed the petition. The Debtor
estimated assets of at least $50,000 and liabilities ranging from
$1 million to $10 million. The case is assigned to Judge Paul G.
Hyman, Jr. The Debtor is represented by Nicholas B. Bangos, Esq.,
at Nicholas B. Bangos, P.A.
EAGLETREE-CARBIDE HOLDINGS: S&P Assigns 'B' CCR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' corporate credit rating to
Fremont, Calif.-based EagleTree-Carbide Holdings (Cayman), LP. The
outlook is stable.
S&P said, "At the same time, we assigned our 'B' issue-level rating
and '3' recovery rating to the company's proposed $50 million
revolving credit facility due 2022 and $235 million first-lien term
loan due 2024. The '3' recovery rating indicates our expectation
for meaningful recovery (50-70%; rounded estimate: 65%) in the
event of payment default. The issuers are EagleTree-Carbide
Acquisition Corp., EagleTree-Carbide Acquisition S.a.r.L., and
EagleTree-Carbide Hong Kong Limited.
"We also assigned our 'CCC+' issue-level rating and '6' recovery
rating to the company's proposed $65 million second-lien term loan
due 2025. The '6' recovery rating indicates our expectation for
negligible recovery (0-10%; rounded estimate: 0%) in the event of
payment default. The issuers are EagleTree-Carbide Acquisition
Corp., EagleTree-Carbide Acquisition S.a.r.L., and
EagleTree-Carbide Hong Kong Limited."
The rating reflects EagleTree-Carbide Holdings (Cayman), LP's
(Corsair) narrow focus, small size, short track record at current
scale, and exposure to the volatile memory chip market. The
company's strong revenue growth characteristics and ability to
mitigate memory chip pricing volatility through disciplined
inventory management partly offset these factors. We expect pro
forma adjusted debt to EBITDA to be approximately 5.6x at
transaction close.
S&P said, "The stable outlook reflects our view that
EagleTree-Carbide Holdings (Cayman), LP has adequate cushion at the
rating to absorb swings in operating performance as it faces memory
chip pricing volatility. Our expectation is for the company, as a
focused provider of PC gaming hardware, to grow faster than the
overall hardware market and realize stronger-than-expected revenue
growth. Our base-case expectation for the next year is for adjusted
debt to EBITDA to remain in the low-5x area.
"We could lower the rating over the next year if the company
observes adjusted debt to EBITDA above 6.5x. Such a scenario could
occur if the company loses key distribution partners or there is a
sharp decline in discretionary spending or a general downturn in
the PC gaming hardware market.
"We could raise the ratings in the next year if adjusted debt to
EBITDA falls below 5x and we believe management intends to maintain
leverage at or below this level through acquisitions and business
cycles."
EAST BAY DRY: Hearing on Plan Confirmation Moved to Sept. 28
------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida has
rescheduled the hearing on the confirmation of East Bay Dry
Cleaners, Inc.'s Chapter 11 plan of reorganization for Sept. 28.
All deadlines fixed by the court's prior order that conditionally
approved the company's disclosure statement will be applied to the
rescheduled date for confirmation, according to a court filing.
About East Bay Dry Cleaners
East Bay Dry Cleaners, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. M. D. Fla. Case No. 17-00557) on
January 24, 2017. The petition was signed by Howard Wolfson,
president.
At the time of the filing, the Debtor estimated assets at $100,000
to $500,000 and liabilities at $1 million to $10 million.
Judge K. Rodney May presides over the case. David W. Steen, Esq.,
at David W. Steen, P.A. represents the Debtor as bankruptcy
counsel. The Debtor hired Gilman & Ciocia Tax and Financial
Planning as its accountant.
No official committee of unsecured creditors has been appointed.
On May 15, 2017, the Debtor filed a disclosure statement, which
explains its proposed Chapter 11 plan of reorganization.
ENERGY FUTURE: Bankruptcy Court Approves Sempra Merger Agreement
----------------------------------------------------------------
Sempra Energy on Sept. 6, 2017, disclosed that the U.S. Bankruptcy
Court for the District of Delaware (Bankruptcy Court) has approved
the merger agreement that Energy Future Holdings Corp. entered into
with Sempra Energy on Aug. 21, 2017. This approval is an important
step in Sempra Energy's proposal to acquire Energy Future's
80-percent ownership interest in Oncor Electric Delivery Company,
LLC (Oncor).
"We are pleased that our plan to resolve Energy Future's
long-running bankruptcy proceeding has received approval from the
Bankruptcy Court to move forward," said Debra L. Reed, chairman,
president and CEO of Sempra Energy. "The next step in the approval
process is making our regulatory filing with the Public Utility
Commission of Texas. Oncor is a well-managed, top-tier utility,
operating in one of the strongest U.S. growth markets. We believe
it will be an excellent strategic fit with our portfolio of utility
and energy infrastructure businesses, while opening up a new avenue
for our long-term growth."
Sempra Energy has committed to ensuring that Oncor remains
independent, financially strong and based in Dallas with local
management, while keeping in place the ring-fence measures that
help insulate Oncor from Energy Future's bankruptcy proceedings.
"Sempra Energy is a well-respected and experienced utility operator
with a quality workforce and management team," said Bob Shapard,
CEO of Oncor. "We look forward to working with Sempra Energy,
regulators and other stakeholders as the process unfolds. Oncor
takes great pride in powering the Texas economy, and we wake up
every single day with one mission in mind, keeping the lights on
for more than 10 million Texans."
Oncor and Sempra Energy are expected to file a joint application
with the Public Utility Commission of Texas in October for approval
of the transaction.
Sempra Energy will pay approximately $9.45 billion in cash to
acquire Energy Future and its 80-percent ownership interest in
Oncor. Sempra Energy expects its equity ownership after the
transaction will be approximately 60 percent of Energy Future.
In addition to approving Energy Future's entry into the Sempra
Energy merger agreement, today's Bankruptcy Court's order approved
the Debtors' plan support agreement with Sempra Energy and certain
affiliates of Elliott Capital Management, which hold a majority of
the claims against the debtors. Under the plan support agreement,
the debtors and Elliott have agreed to take all action that is
reasonably necessary to implement the merger agreement, and Elliott
has agreed to support the transaction and to vote its claims to
accept the plan. In a separate order, the Bankruptcy Court also
authorized the debtors to solicit votes on the plan.
The merger agreement remains subject to customary closing
conditions, including further approvals by the Bankruptcy Court,
the Public Utility Commission of Texas, the Federal Energy
Regulatory Commission, and the U.S. Department of Justice under the
Hart-Scott-Rodino Act.
Headquartered in Dallas, Oncor is a regulated electric transmission
and distribution service provider that serves approximately 10
million Texans. Using cutting-edge technology, more than 3,900
employees work to safely maintain reliable electric delivery
service with the largest distribution and transmission system in
Texas; made up of approximately 122,000 miles of lines and more
than 3.4 million meters across the state.
Sempra Energy, based in San Diego, is a Fortune 500 energy services
holding company with 2016 revenues of more than $10 billion. The
Sempra Energy companies' more than 16,000 employees serve
approximately 32 million consumers worldwide.
About Energy Future
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 their businesses operating while
reducing their roughly $40 billion in debt.
The Debtors' cases have been assigned to Judge Christopher S.
Sontchi (CSS).
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.
On May 13, 2014, the U.S. Trustee appointed the Official Committee
of TCEH Unsecured Creditors in the Chapter 11 Cases. The TCEH
Committee is composed of (a) the Pension Benefit Guaranty
Corporation; (b) HCL America, Inc.; (c) BNY, as Indenture Trustee
under the EFCH 2037 Notes due 2037 and the PCRBs; (d) LDTC, as
Indenture Trustee under the TCEH Unsecured Notes; (e) Holt Texas
LTD, d/b/a Holt Cat; (f) ADA Carbon Solutions (Red River); and (g)
Wilmington Savings, as Indenture Trustee under the TCEH Second Lien
Notes. The TCEH Committee retained Morrison & Foerster LLP as
counsel; Polsinelli PC as co-counsel and conflicts counsel; Lazard
Freres & Co. LLC as investment banker; FTI Consulting, Inc. as
financial advisor; and Charles River Associates as an energy
consultant.
On Oct. 27, 2014, the U.S. Trustee appointed the Official Committee
of Unsecured Creditors representing the interests of the unsecured
creditors for EFH, EFIH, EFIH Finance, and EECI, Inc. The EFH/EFIH
Committee is composed of (a) American Stock Transfer & Trust
Company, LLC; (b) Brown & Zhou, LLC c/o Belleair Aviation, LLC; (c)
Peter Tinkham; (d) Shirley Fenicle, as successor-in-interest to the
Estate of George Fenicle; and (e) David William Fahy. The EFH/EFIH
Committee retained Montgomery, McCracken, Walker & Rhodes, LLP as
co-counsel and conflicts counsel; AlixPartners, LLP as
restructuring advisor; Sullivan & Cromwell LLC as counsel;
Guggenheim Securities as investment banker; and Kurtzman Carson
Consultants LLC as noticing agent for both the TCEH Committee and
the EFH/EFIH Committee.
Given the size and complexity of the Chapter 11 Cases, the U.S.
Trustee proposed, and the Debtors and the TCEH Committee agreed, to
recommend that the Bankruptcy Court appoint a committee to, among
other things, review and report as appropriate on fee applications
and statements submitted by the professionals paid for by the
Debtors' Estates. The Fee Committee is comprised of four members:
(a) one member appointed by and representative of the Debtors
(Cecily Gooch, Vice President and Special Counsel for
Restructuring, Energy Future Holdings); (b) one member appointed by
and representative of the TCEH Creditors' Committee (Peter Kravitz,
Principal and General Counsel, Province Capital); (c) one member
appointed by and representative of the U.S. Trustee (Richard L.
Schepacarter, Trial Attorney, Office of the United States Trustee);
and (d) one independent member (Richard Gitlin, of Gitlin and
Company, LLC). The Fee Committee retained Godfrey & Kahn, S.C. as
counsel; and Phillips, Goldman & Spence, P.A. as co-counsel.
* * *
On Aug. 29, 2016, Judge Sontchi confirmed the Chapter 11 exit plans
of two of Energy Future Holdings Corp.'s subsidiaries, power
generator Luminant and retail electricity provider TXU Energy Inc.
(the "T-Side Debtors"). The Plan became effective on Oct. 3,
2016.
On Aug. 20, 2017, Sempra Energy (NYSE: SRE) announced an agreement
to acquire Energy Future Holdings Corp. (Energy Future), the
indirect owner of 80 percent of Oncor Electric Delivery Company,
LLC, operator of the largest electric transmission and distribution
system in Texas. Under the agreement, Sempra Energy will pay
approximately $9.45 billion in cash to acquire Energy Future and
its ownership in Oncor, while taking a major step forward in
resolving Energy Future's long-running bankruptcy case. The
enterprise value of the transaction is approximately $18.8 billion,
including the assumption of Oncor's debt.
EXACT HOLDING: S&P Assigns 'B-' Corp Credit Rating, Outlook Stable
------------------------------------------------------------------
Apax Partners has entered into a definitive agreement to acquire
ECi Software Solutions Inc. -- a U.S.-based enterprise resource
planning (ERP) provider for manufacturing, construction, and
e-commerce distribution industry verticals -- from financial
sponsor Carlyle Group. As part of the transaction, Apax will
acquire primarily U.S.-based operations of the Specialized
Solutions division of Apax portfolio company Exact Software, which
will be merged with ECi Software at transaction close to form
surviving entity and parent borrower Exact Holding North America
Inc. Until transaction close, Exact Merger Sub LLC will be the
borrower on the rated facilities.
The transaction will be funded by $570 million of new credit
facilities, consisting of a $50 million revolving credit facility,
a $380 million first-lien term loan, and a $140 million second-lien
term loan. S&P does not expect the revolver to be drawn at
transaction close.
Given these, S&P Global Ratings assigned a 'B-' corporate credit
rating to Fort Worth, Texas-based Exact Holding North America Inc.
The outlook is stable.
S&P said, "We assigned our 'B' issue-level and '2' recovery ratings
to the borrower's $430 million first-lien credit facilities,
consisting of a $50 million five-year revolving credit facility and
a $380 million seven-year term loan. The '2' recovery rating
indicates our expectation for substantial (70%-90%; rounded
estimate: 70%) recovery in the event of payment default.
"We also assigned our 'CCC' issue-level and '6' recovery ratings to
the borrower's $140 million second-lien eight-year term loan. The
'6' recovery rating indicates our expectation for negligible
(0%-10%; rounded estimate: 5%) recovery in the event of payment
default."
The credit rating is based on preliminary terms and conditions.
S&P said, "The rating is based on the borrower's smaller scale,
elevated leverage profile, and our expectation that the company
will rely on acquisitions to complement modest growth in
subscription revenues, as well as its niche focus within the
fragmented ERP software market on small and midsize business (SMB)
customers within the manufacturing, construction, and e-commerce
distribution industry verticals. Pro forma for the acquisition of
the carve-out of Exact Software, revenues for last 12 months ended
June 2017 were $198 million, and reported EBITDA in the same period
was $55.5 million. We expect trailing-12-months pro forma adjusted
leverage of about 8.5x at close of the transaction, with limited
deleveraging over the next 12 months as the company integrates
Exact Specialized Solutions and restructures to improve
profitability. Over the longer term, we expect modest deleveraging
from EBITDA margin expansion, and debt reduction to be limited to
required annual amortization payments due to the company's track
record of applying free cash flow to acquisitions.
"The stable outlook on the borrower reflects our expectation for
marginal revenue growth from SaaS initiatives undertaken, partially
offset by declining perpetual license sales and SMB customer
attrition, as well as margin expansion through planned cost-saving
initiatives related to the acquisition of Exact U.S., but we
anticipate limited capacity to pay down debt over the next year to
result in adjusted debt to EBITDA remaining above 8x over the next
12 months.
"We could lower the rating on the borrower if challenges to
integrate Specialized Solutions' cost-saving plans and convert to a
subscription revenue stream, accelerated customer attrition, or
elevated product development costs pressure operating metrics such
that negative free cash flow or weakened liquidity and covenant
headroom result in an unsustainable long-term capital structure.
"Although unlikely over the next 12 months, we could consider
raising the rating on the borrower if the company generates
sufficient free cash flow to repay significant outstanding debt,
increase its recurring revenue base without impairing operating
metrics, and maintain adjusted debt to EBITDA below 6.5x."
EXACT HOLDINGS: Moody's Assigns 1st Time B3 CFR; Outlook Stable
---------------------------------------------------------------
Moody's Investors Service assigned a first time B3 Corporate Family
Rating (CFR) and B3-PD Probability of Default Rating (PDR) to Exact
Holdings North America Inc. (initially "Exact Merger Sub LLC," or
"ECi") following the announcement of a leveraged buyout. At the
same time, Moody's assigned a B2 rating to the company's proposed
$430 million senior secured first lien credit facility ($50 million
revolver and $380 million term loan) and a Caa2 rating to the
proposed $140 million senior secured second lien term loan. The
ratings outlook is stable.
Proceeds from the proposed debt financing along with new and
rollover equity will be used to fund a buyout of ECi Software
Solutions by funds advised by financial sponsor Apax Partners LLP
("Sponsor") from Carlyle Group. ECi provides enterprise resource
planning ("ERP") software solutions primarily to small and
medium-sized businesses ("SMB") in the distribution, field service,
building and construction and manufacturing industries. The
proceeds will also be used to buy the US-focused Specialized
Solutions Division ("Exact Specialized Solutions"), which is being
divested from Eiger Acquisition B.V. ("Exact Software"), an
existing Apax portfolio company. Upon close of the transaction,
Exact Specialized Solutions, a provider of ERP software solutions
for SMB manufacturers in the US, will be combined with ECi.
Exact Merger Sub LLC is an acquisition vehicle that will be merged
with and into Exact Holding North America Inc. ("Exact Parent")
upon closings of the transaction, with Exact Parent being the
surviving entity and obligor under the new capital structure. Exact
Parent will be a direct wholly-owned subsidiary of Eclipse
Acquisition LLC, a guarantor under the proposed credit facilities.
"While the transaction involves relatively high level of debt and
leverage for the rating category, the stable business model with
highly recurring subscription-based revenues and strong foothold in
the niche SMB market for ERP software should support good
discretionary cash flow that would allow ECi to deleverage over
time," said Oleg Markin, Moody's lead analyst.
Moody's assigned the following first time ratings:
Issuer: Exact Merger Sub LLC
-- Corporate Family Rating at B3
-- Probability of Default Rating at B3-PD
-- Proposed $50 million first lien senior secured revolving
credit facility due 2022 at B2 (LGD3)
-- Proposed $380 million first lien senior secured first lien
term loan due 2024 at B2 (LGD3)
-- Proposed $140 million second lien senior secured second lien
term loan due 2025 at Caa2 (LGD5)
-- Outlook at Stable
The assignment of ratings remain subject to Moody's review of the
final terms and conditions of the proposed financing and merger
transaction that is expected to close during the third quarter of
2017.
RATINGS RATIONALE
The B3 CFR reflects the company's significant high debt-to-EBITDA
leverage at closing, estimated at around 8.0 times (Moody's
adjusted and excluding future costs savings and synergies not yet
implemented by the company) as of June 30, 2017, execution risk
inherent in acquiring an underperforming carve-out, small scale
with combined annual revenues under $200 million and expectation
for low organic revenue growth. The rating is further constrained
by the company's limited product diversity and customer
concentration in highly cyclical end markets. Moody's expects the
combined company's organic revenue to grow by 1-2% over the next
12-18 months while debt-to-EBITDA (Moody's adjusted) declines to
about 6.5 times driven mainly by realization of cost savings. The
rating favorably considers the mission-critical nature of company's
products and its strong niche position as a provider of ERP
software at the smaller end of the SMB market, a space that is
currently unprofitable for the large players. Furthermore, the
ECi's relatively high customer retention rates, a largely recurring
revenue base and Moody's expectation for positive free cash flow in
the low-single digits also provide support for the rating. Moody's
expects the company to remain acquisitive and purse tuck-in
acquisitions to diversify its product portfolio.
The stable ratings outlook reflects Moody's expectation that
management will successfully integrate both businesses and achieve
planned cost savings, which will be the principal driver of
anticipated deleveraging over the next 12-18 months. Moody's
believes that ECi could capture significant share within the
underserved segment of the SMB market with further introduction of
new cloud products which should drive modest organic growth in the
low-single digits.
The B2 rating assigned to ECi's first lien credit facility
(revolver and term loan), one notch above the company's B3 CFR,
reflects their senior position in the capital structure relative to
the second lien term loan. The first lien credit facility is
secured by a first priority lien on substantially all assets of the
borrower. The Caa2 rating on the second lien term loan, two notches
below the company's B3 CFR, reflects lien subordination to the
first lien term loan. The second lien term loan is secured by a
second priority lien on all assets of the borrower. The revolver,
first and second lien term loans will be supported by guarantees
from Eclipse Acquisitions LLC, an intermediate holding company, and
all material wholly-owned domestic restricted subsidiaries.
Moody's expects ECi's to maintain good liquidity over the next
12-15 months. Sources of liquidity include cash balance of $10
million at the close of the transaction, access to funds under the
new $50 million revolving credit facility (undrawn at closing), and
no financial maintenance covenants. Earnings and cash flows are
expected to be modestly seasonal with strongest results expected in
the fourth quarter of each year. Moody's expects balance sheet cash
and cash from operations to be more than sufficient to cover
working capital needs and capital expenditures over the next twelve
months. The revolver is expected to have a springing first lien
leverage ratio of 7.25x if more than 35% of the revolver is drawn.
The company is not expected to utilize the revolver materially
during the next 12-15 months and is expected to remain well in
compliance with the springing first lien secured leverage covenant.
The company has the ability to issue an unlimited amount of the
first and second lien debt subject to a pro-forma incurrence test.
Moody's could upgrade ECi's ratings if the company builds a track
records of sustained organic revenue growth and margin expansion.
Metrics that could support a higher rating include debt-to-EBITDA
(Moody's adjusted) approaching 6.0 times and free cash flow to debt
in the mid-to-high single digits.
Moody's could downgrade ECi's ratings if revenues decline for an
extended period of time and free cash flow falls to near breakeven
level. The ratings also be downgraded if operating challenges or
more aggressive financial policies leads to debt-to-EBITDA (Moody's
adjusted) sustained above 8.0 times, or liquidity becomes weak.
Headquartered in Fort Worth, Texas, ECi Sofware Solutions is a
leading provider of enterprise resource planning solutions for
small and medium sized businesses, primarily in the manufacturing,
distribution, field service, and building and construction end
markets. Following the completion of the leveraged buyout, ECi will
be majority owned by Apax Partners LLP, with remaining shares held
by management. Pro forma revenues for the combined businesses of
ECi and Exact Specialized Solutions are approximately $200 million
for the twelve months ended June 30, 2017.
The principal methodology used in these ratings was Software
Industry published in December 2015.
FIELDPOINT PETROLEUM: Posts $1.74 Million Net Income in 2nd Quarter
-------------------------------------------------------------------
FieldPoint Petroleum Corporation filed with the Securities and
Exchange Commission its quarterly report on Form 10-Q reporting net
income of $1.74 million on $899,691 of total revenue for the three
months ended June 30, 2017, compared to a net loss of $587,433 on
$780,580 of total revenue for the three months ended June 30,
2016.
For the six months ended June 30, 2017, the Company reported net
income of $1.33 million on $1.73 million of total revenue compared
to a net loss of $1.44 million on $1.36 million of total revenue
for the six months ended June 30, 2016.
FieldPoint incurred a net loss of $2.47 million for the year ended
Dec. 31, 2016, compared to a net loss of $10.98 million for the
year ended Dec. 31, 2015.
As of June 30, 2017, FieldPoint had $8.01 million in total assets,
$7.54 million in total liabilities and $474,239 in total
stockholders' equity.
As of June 30, 2017, and Dec. 31, 2016, the Company has a working
capital deficit of approximately $4.732 million and $6.629 million,
respectively, primarily due to the classification of our line of
credit as a current liability. The line of credit provides for
certain financial covenants and ratios measured quarterly which
include a current ratio, leverage ratio, and interest coverage
ratio requirements. The Company is out of compliance with all
three ratios as of June 30, 2017, and the Company does not expect
to regain compliance in 2017. A Forbearance Agreement was executed
in October 2016.
"We had net income of $1,338,135 for the six months ended June 30,
2017, due to the sale of non-producing and non-economic assets in
Lea County, New Mexico, but continue to have negative operating
cash flow. We incurred a net loss of $1,447,960 for the six months
ended June 30, 2016. We expect that the Company will continue to
experience operating losses and negative cash flow for so long as
commodity prices remain depressed. The audit report of our
independent registered public accountants covering our financial
statements for the fiscal years ended December 31, 2016 and 2015,
include an explanatory paragraph expressing substantial doubt as to
our ability to continue as a going concern."
Hein & Associates LLP, in Dallas, Texas, issued a "going concern"
qualification on the consolidated financial statements for the year
ended Dec. 31, 2016, citing that the Company has suffered recurring
losses, and has a working capital deficit. This raises substantial
doubt about the Company's ability to continue as a going concern.
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/36ZJTX
About FieldPoint Petroleum
FieldPoint Petroleum Corporation (NYSE:FFP) acquires, operates and
develops oil and gas properties. Its principal properties include
Block A-49, Spraberry Trend, Giddings Field, and Serbin Field,
Texas; Flying M Field, Sulimar Field, North Bilbrey Field, Lusk
Field, and Loving North Morrow Field, New Mexico; Apache Field,
Chickasha Field, and West Allen Field, Oklahoma; Longwood Field,
Louisiana; and Big Muddy Field, Wyoming. As of Dec. 31, 2015, the
Company had varying ownership interests in 472 gross wells (113.26
net). FieldPoint Petroleum Corporation was founded in 1980 and is
based in Austin, Texas.
FLOWORKS INTERNATIONAL: S&P Cuts Then Withdraws 'SD' CCR
--------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating on
Houston-based Floworks International LLC to 'SD' from 'CC'. S&P
said, "We also lowered the rating on the company's senior secured
notes due 2019 to 'D' from 'CC'. The recovery rating on the debt is
unchanged. At the same time, we removed the ratings from
CreditWatch, where we had placed them with negative implications on
July 26, 2017.
"Subsequent to these rating actions, we withdrew all our ratings on
Floworks, at the company's request."
The downgrade follows Floworks International LLC's announcement
that it has completed an exchange offer for its existing $250
million 8.75% senior secured notes due 2019 ($220.9 million of
principal outstanding). S&P views this transaction as a distressed
exchange because there is a realistic possibility of a conventional
default without the transaction and participating noteholders
received less than the original amount promised.
S&P is also subsequently withdrawing all its ratings on Floworks at
the company's request.
FORESIGHT ENERGY: Reports $16.3M Net Loss for Second Quarter
------------------------------------------------------------
Foresight Energy LP filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $16.27 million on $207.09 million of total revenues for the
three months ended June 30, 2017, compared to a net loss of $27.67
million on $226 million of total revenues for the three months
ended June 30, 2016.
For the period from April 1, 2017, through June 30, 2017, the
Company recorded a net loss of $16.27 million on $207.09 million of
total revenues. For the six months ended June 30, 2016, the
Company reported a net loss of $69.27 million on $392.08 million of
total revenues.
As of June 30, 2017, Foresight had $2.82 billion in total assets,
$1.94 billion in total liabilities and $872.04 million in total
partners' capital.
"Our primary cash requirements include, but are not limited to,
working capital needs, capital expenditures, and debt service costs
(interest and principal). The consummation of the Restructuring
Transactions on March 28, 2017 required us to use more than $100
million of cash; however, the refinancing substantially extended
our debt maturities, provided us with operating liquidity through a
$170.0 million Revolving Credit Facility and refinanced certain
high effective interest rates. As of June 30, 2017, we had $7.2
million of cash on hand, no borrowings under our Revolving Credit
Facility, and available borrowing capacity under the Revolving
Credit Facility (net of outstanding letters of credit) of $158.5
million."
For the period from Jan. 1, 2017, to March 31, 2017, and for the
period from April 1, 2017, to June 30, 2017, in aggregate, net cash
provided by operating activities was $60.0 million compared to
$73.6 million provided by operating activities for the six months
ended June 30, 2016. Net loss, after adjusting for noncash items
and the financing costs incurred related to the Restructuring
Transactions, improved as compared to the prior year period however
that increase was offset by net unfavorable working capital
variances.
The increase in net cash used in investing activities was primarily
due to a $28.3 million increase in capital expenditures during the
current year period as maintenance capital expenditures were
strictly controlled during the prior year to preserve liquidity.
During 2017, capital expenditures returned to more normalized
levels. Cash from investing activities during the current year
period was also benefited by $3.5 million in cash proceeds from the
early settlement of certain coal derivative contracts and $1.9
million from the sale of property and equipment.
For the period from Jan. 1, 2017, to March 31, 2017, and for the
period from April 1, 2017, to June 30, 2017, in aggregate, net cash
used in financing activities was $121.7 million compared to $34.1
million used in financing activities for the six months ended June
30, 2017. The increased usage of cash for financing fees was due
to the Restructuring Transactions for which the Company incurred
$57.6 million in costs to extinguish the prior debt and $27.3
million of costs to issue the new debt. The $94.2 million net pay
down in overall indebtedness during current year periods was
partially funded by the Murray Investment which was used to redeem,
pursuant to an equity claw redemption provision, $54.5 million of
Prior Second Lien Notes plus the applicable redemption premium and
accrued and unpaid interest.
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/hdgeKe
About Foresight Energy
Foresight Energy L.P. mines and markets coal from reserves and
operations located exclusively in the Illinois Basin. As of Dec.
31, 2015, the Company has invested over $2.3 billion to construct
state-of-the-art, low-cost and highly productive mining operations
and related transportation infrastructure. The Company controls
over 3 billion tons of proven and probable coal in the state of
Illinois, which, in addition to making the Company one of the
largest reserve holders in the United States, provides organic
growth opportunities. The Company's reserves consist principally
of three large contiguous blocks of uniform, thick, high heat
content (high Btu) thermal coal which is ideal for highly
productive long-wall operations. Thermal coal is used by power
plants and industrial steam boilers to produce electricity or
process steam.
Foresight reported a net loss of $178.6 million in 2016 following a
net loss of $38.68 million in 2015.
* * *
In March 2017, S&P Global Ratings said it affirmed its 'B-'
corporate credit rating on Foresight Energy L.P. The rating
outlook was revised to stable from negative. "The stable outlook
reflects our expectation that Foresight will operate at an adjusted
debt to EBITDA of just under 5x in the next 12 months and continue
to decline beyond 2017," said S&P Global Ratings credit analyst
Vania Dimova. "We expect the company to improve its EBITDA
generation from export sales."
As reported by the TCR on March 6, 2017, Moody's Investors Service
upgraded Foresight Energy L.P.'s Corporate Family Rating (CFR) to
'B3' from 'Caa1', and its probability of default rating (PD) to
'B3-PD' from 'Caa1-PD'. "The upgrade reflects the improved
industry conditions and the company's solid contracted position,
which drives Moody's expectations that Debt/ EBITDA, as adjusted,
will decline from 5.9x at September 30, 2016 to roughly 4.5x by the
end of 2017," said Anna Zubets-Anderson, the lead analyst for
Foresight.
The TCR reported on March 3, 2017, that Fitch Ratings has assigned
a first-time Long-Term Issuer Default Rating (IDR) of 'B-' to
Foresight Energy LP and Foresight Energy LLC. Foresight Energy
LLC's new senior secured first lien term loan and new revolving
credit facility ratings are 'B+/RR2' and the new second lien notes
rating is 'CCC/RR6'. The facilities are to be
guaranteed by Foresight Energy LP.
FYNDERS INC: May Use Cash Collateral Through Oct. 27
----------------------------------------------------
The Hon. Christopher J. Panos of the U.S. Bankruptcy Court for the
District of Massachusetts has authorized Fynders, Inc., to use the
cash and other collateral claimed by its secured creditors,
including Rockland Trust Company, the SBA, the IRS, the
Massachusetts DOR and the Massachusetts DUA, through Oct. 27,
2017.
The hearing to consider further use of collateral and adequate
protection is scheduled for Oct. 26, 2017, at 11:00 a.m. Any
objections to further use of cash collateral must be filed by 4:30
p.m. on Oct. 24, 2017. By Oct. 19, 2017, at 4:30 p.m., the Debtor
will file with the Court a notice of revised budget and form of
further order, including a form of revised 13-week budget and
proposed order as exhibits to the Notice and serve a copy on the
(a) the Office of the U.S. Trustee; (b) the Debtor's 20 largest
unsecured creditors as reflected in the list filed by Fynders
pursuant to Fed. R. Bankr. P. 1007(d); (c) the Internal Revenue
Service; (d) the Massachusetts Department of Revenue; (e) the
Massachusetts Department of Unemployment Assistance; (f) Rockland
Trust; (g) the SBA; and (h) any other party that has filed a notice
of appearance in this matter.
As adequate protection to the Secured Creditors for the Debtor's
use of assets in which the Secured Creditors claim a security
interest: (a) Fynders will grant the Secured Creditors a continuing
replacement lien and security interest in all assets of the Debtor
in which the Secured Creditors possessed a security interest as of
the Petition Date, to the same validity and extent and priority
that they would have had in the absence of the bankruptcy filing to
secure any diminution in value of its collateral as a result of the
use of cash collateral; and (b) Fynders shall make all adequate
protection payments.
A copy of the Order is available at:
http://bankrupt.com/misc/mab17-40400-108.pdf
About Fynders, Inc.
Fynders, Inc., runs restaurant located in West Boylston,
Massachusetts operating under the name Finders Pub. Finders is
located next door to its affiliated restaurant, Keepers, Inc.,
which does business as Keepers Pub.
On June 23, 2010, Fynders and Keepers filed jointly administered
petitions under Chapter 11 of the Bankruptcy Code, In re Fynders,
Inc., 10-43170 and In re Keepers, Inc., 10-43171. The Court
confirmed the Debtors' Combined Plan of Reorganization and
Disclosure Statement on Dec. 21, 2010.
Due to additional financial difficulties, Fynders, Inc., and
Keepers again sought Chapter 11 protection (Bankr. D. Mass. Case
No. 17-40400) on March 7, 2017. The petitions were signed by
Kathleen McCormick, president.
At the time of filing, Fynders disclosed $139,750 in total assets
and $2.21 million in total liabilities.
The cases are assigned to Judge Christopher J. Panos.
David B. Madoff, Esq., at Madoff & Khoury LLP, is serving as
counsel to the Debtors. Patrick J. Crowley of Hershman Fallatrom &
Crowley, Inc., is the Debtors' accountant.
An official creditors' committee has not been appointed in the
cases.
GENERAL MOTORS: Gas Tank Defect Suit Against New Co. Not Allowed
----------------------------------------------------------------
Cara Salvatore, writing for Bankruptcy Law360, reports that the
U.S. Bankruptcy Court for the Southern District of New York ruled
that punitive damages against General Motors Co. over Kaitlyn
Reichwaldt's catastrophic burn injuries from what she said was a
defectively designed gas tank aren't allowed against New GM.
Law360 relates that the Court directed the parties to take the
entire lawsuit back to the drawing board. Law360 recalls that Ms.
Reichwaldt sustained burns after her non-GM car collided with a
1980s GM pickup.
About Motors Liquidation
General Motors Corporation and three of its affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on
June 1, 2009. The Honorable Robert E. Gerber presides over the
Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq.,
and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP,
assist the Debtors in their restructuring efforts. Al Koch at AP
Services, LLC, an affiliate of AlixPartners, LLP, serves as the
Chief Executive Officer for Motors Liquidation Company. GM is also
represented by Jenner & Block LLP and Honigman Miller Schwartz and
Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing
legal advice to the GM Board of Directors. GM's financial advisors
are Morgan Stanley, Evercore Partners and the Blackstone Group LLP.
Garden City Group is the claims and notice agent of the Debtors.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Unsecured Creditors
Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis
& Frankel LLP served as bankruptcy counsel to the Creditors
Committee. Attorneys at Butzel Long served as counsel on supplier
contract matters. FTI Consulting Inc. served as financial advisors
to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin &
Drysdale, Chartered, represented the Asbestos Committee. Legal
Analysis Systems, Inc., served as asbestos valuation analyst.
The Bankruptcy Court entered an order confirming the Debtors'
Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan
was declared effect on March 31.
On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the
Dissolution Date, pursuant to the Plan and the Motors Liquidation
Company GUC Trust Agreement, dated March 30, 2011, between the
parties thereto, the trust administrator and trustee -- GUC Trust
Administrator -- of the Motors Liquidation Company GUC Trust,
assumed responsibility for the affairs of and certain claims
against MLC and its debtor subsidiaries that were not concluded
prior to the Dissolution Date.
GENERAL WIRELESS: Breached WARN Act, Former Workers Claim
---------------------------------------------------------
Vince Sullivan, writing for Bankruptcy Law360, reports that former
RadioShack employees filed a putative class action complaint
against the Debtor in the U.S. Bankruptcy Court for the District of
Delaware, claiming that the Debtor breached the Worker Adjustment
and Retraining Notification Act by terminating workers on short
notice.
According to Law360, the workers' employment was terminated between
March 1 and May 31. Law360 shares that former employees Calvin
Hoskison and Eric Vanderlip purport to represent the workers.
About General Wireless
Based in Fort Worth, Texas, General Wireless Operations Inc., doing
business as RadioShack -- http://www.RadioShack.com/-- operates a
chain of electronics stores. Its predecessor, RadioShack Corp.,
then with 4,000 locations, sought Chapter 11 protection (Bankr. D.
Del. Case No. 15-10197) in February 2015 and announced plans to
close underperforming stores.
In March 2015, General Wireless, a Standard General affiliate, won
court approval to purchase RadioShack Corp.'s assets, gaining
ownership of around 1,700 RadioShack locations. Two years later,
General Wireless commenced its own bankruptcy case, announcing
plans to close 200 of 1,300 remaining stores.
General Wireless Operations Inc., and its affiliates based in Fort
Worth, Texas, filed a Chapter 11 petition (Bankr. D. Del. Lead Case
No. 17-10506) on March 8, 2017. In its petition, General Wireless
estimated $100 million to $500 million in both assets and
liabilities. Bradford Tobin, SVP and general counsel, signed the
petitions.
The Debtors tapped Pepper Hamilton LLP as legal counsel; Loughlin
Management Partners & Company, Inc., as financial advisor; and
Prime Clerk, LLC, as claims and noticing agent.
On March 17, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee selected
Kelley Drye & Warren LLP as its lead counsel; Klehr Harrison Harvey
Branzburg LLP as local counsel; Bartlit Beck Herman Palenchar &
Scott LLP, as special counsel; and Berkeley Research Group LLC as
financial advisor.
GENERAL WIRELESS: Defends Plan Outline
--------------------------------------
Jeff Montgomery, writing for Bankruptcy Law360, reports that
General Wireless Operations Inc. asked the U.S. Bankruptcy Court
for the District of Delaware to continue its control of the case.
Law360 relates that the Debtor defended its latest Chapter 11
disclosure as sufficient and improving, after objections to the
Disclosure Statement were filed by the Office of the U.S. Trustee
and creditors Kensington Technology Holdings LLC, Expona Global
Sourcing LLC, and Expona Holdings LLC.
About General Wireless
Based in Fort Worth, Texas, General Wireless Operations Inc., doing
business as RadioShack -- http://www.RadioShack.com/-- operates a
chain of electronics stores. Its predecessor, RadioShack Corp.,
then with 4,000 locations, sought Chapter 11 protection (Bankr. D.
Del. Case No. 15-10197) in February 2015 and announced plans to
close underperforming stores.
In March 2015, General Wireless, a Standard General affiliate, won
court approval to purchase RadioShack Corp.'s assets, gaining
ownership of around 1,700 RadioShack locations. Two years later,
General Wireless commenced its own bankruptcy case, announcing
plans to close 200 of 1,300 remaining stores.
General Wireless Operations Inc., and its affiliates based in Fort
Worth, Texas, filed a Chapter 11 petition (Bankr. D. Del. Lead Case
No. 17-10506) on March 8, 2017. In its petition, General Wireless
estimated $100 million to $500 million in both assets and
liabilities. Bradford Tobin, SVP and general counsel, signed the
petitions.
The Debtors tapped Pepper Hamilton LLP as legal counsel; Loughlin
Management Partners & Company, Inc., as financial advisor; and
Prime Clerk, LLC, as claims and noticing agent.
On March 17, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee selected
Kelley Drye & Warren LLP as its lead counsel; Klehr Harrison Harvey
Branzburg LLP as local counsel; Bartlit Beck Herman Palenchar &
Scott LLP, as special counsel; and Berkeley Research Group LLC as
financial advisor.
GENON ENERGY: Taps Credit Suisse Securities as Financial Advisor
----------------------------------------------------------------
GenOn Energy, Inc. seeks approval from the U.S. Bankruptcy Court
for the Southern District of Texas to hire Credit Suisse Securities
(USA) LLC as its financial advisor and investment banker.
The firm will provide these services in connection with certain
transactions, including the potential sale of all or a substantial
portion of the capital stock, assets or businesses of GenOn; and
those sale transactions involving Hunterstown CCGT and other
businesses:
(a) analyzing and evaluating the business, operations,
and financial position of GenOn;
(b) preparing and implementing a marketing plan;
(c) coordinating the data room and the due diligence
investigations of potential purchasers;
(d) evaluating proposals that are received from
potential purchasers;
(e) structuring and negotiating one or more
transactions; and
(f) meeting with the Board of Directors of GenOn to
discuss the proposed transactions.
Credit Suisse will be compensated according to this fee structure:
* A monthly financial advisory fee equal to
$225,000, payable on the first day of each month
commencing August 1, 2017 until the termination of
the engagement agreement.
* A transaction fee, payable upon the closing in
connection with each transaction, equal to 1% of
the "aggregate value."
* In the event an agreement regarding a transaction
is entered into and the transaction contemplated
by such agreement is not consummated, GenOn will
pay Credit Suisse an amount, in cash equal
to the lesser of (i) 20% of the fair market value
(at the time of payment) of any such breakup fee,
and (ii) the transaction fee that would be payable
if the transaction were consummated.
Credit Suisse will also act as lead bookrunner, arranger,
administrative agent and collateral agent for some or all of these
loan facilities:
* up to $150 million of commitments with respect to
a revolving loan facility; and
* up to (i) $900 million of new senior secured notes
issued pursuant to a securities offering to
certain eligible "offerees" or (ii) the Debtors
may elect to substitute one or more alternative
financing arrangements for the securities,
including additional revolving loans, term loans
and letter of credit facilities with one or more
financial institutions.
The firm will be compensation for those services according to this
fee structure:
* An arrangement fee equal to 1.25% of the aggregate
principal amount of the facilities funded on the
closing date.
* A structuring fee equal to 0.35% of the aggregate
principal amount of the Facilities funded on the
closing date.
* GenOn may be required to pay participation fees,
which may take the form of original issue
discount, to the lenders in connection with the
syndication of the facilities but only on the
closing date (if the closing date occurs).
Jonathon Kaufman, managing director of Credit Suisse, disclosed in
a court filing that the firm is a "disinterested person" as defined
in section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jonathon R. Kaufman
Credit Suisse Securities (USA) LLC
11 Madison Avenue
New York, NY 10010
Phone: 1-212-325-2000
Fax: 1-212-538-0774
About GenOn Energy
GenOn Energy, Inc., is a wholesale power generation corporation
with 15,394 megawatts in generating capacity, operating operate 32
power plants in eight states. GenOn is subsidiary of NRG Energy
Inc., which is a competitive power company that produces, sells and
delivers energy and energy services, primarily in major competitive
power markets in the U.S.
GenOn is the product of two mergers since 2010. First, on Dec. 3,
2010, two wholesale power generation companies -- RRI Energy, a
company formerly known as Reliant Energy, and Mirant Corporation --
completed an all-stock, tax-free merger with Mirant becoming RRI's
wholly-owned subsidiary. Following the merger, RRI took its
current name: GenOn.
NRG, through a wholly-owned subsidiary, and GenOn completed a
stock-for-stock merger in a $6 billion deal, with GenOn continuing
as the surviving company on December 14, 2012. NRG, as
consideration for acquiring GenOn's entire equity, issued 0.1216
shares of NRG common stock for each outstanding share of GenOn. In
structuring the merger, NRG "ring-fenced" GenOn's debt, leaving
GenOn's creditors without recourse against NRG's assets in the
event of GenOn's default.
As of March 31, 2017, GenOn Energy had $4.81 billion in total
assets, $4.51 billion in total liabilities and $304 million in
total stockholders' equity.
GenOn Energy, Inc. ("GenOn"), GenOn Americas Generation, LLC
("GAG") and 60 of their directly and indirectly-owned subsidiaries
commenced the Chapter 11 cases in Houston, Texas (Bankr. S.D. Tex.
Lead Case No. 17-33695) on June 14, 2017, to implement a
restructuring plan negotiated with stakeholders prepetition. The
Debtors' cases have been assigned to Judge David R. Jones.
Kirkland & Ellis LLP is the Debtors' bankruptcy counsel. Zack A.
Clement, PLLC, is the local counsel. Rothschild Inc. is the
financial advisor and investment banker. McKinsey Recovery &
Transformation Services U.S. is the restructuring advisor. Epiq
Systems, Inc., is the claims and noticing agent.
Special Counsel to the GAG Steering Committee is Quinn Emanuel
Urquhart & Sullivan, LLP. The Steering Committee of GAG
Noteholders is comprised of Benefit Street Partners LLC, Brigade
Capital Management, LP, Franklin Mutual Advisers, LLC, and Solus
Alternative Asset Management LP, each on behalf of itself or
certain affiliates, and/or accounts managed and/or advised by it or
its affiliates.
Counsel to the GenOn Steering Committee and the GAG Steering
Committee are Keith H. Wofford, Esq., Stephen Moeller-Sally, Esq.,
and Marc B. Roitman, Esq., at Ropes & Gray LLP.
Counsel for NRG Energy, Inc., are C. Luckey McDowell, Esq., and Ian
E. Roberts, Esq., at Baker Botts L.L.P.
GLOBAL ENERGIES: Shareholder Says Former Partners Forced Bankruptcy
-------------------------------------------------------------------
Nathan Hale, writing for Bankruptcy Law360, reports that Joseph
Wortley, a founding shareholder of Global Energies LLC, grilled
veteran bankruptcy attorney Chad P. Pugatch who drafted the
petition. According to Law360, Mr. Wortley claims his former
partners forced the business into bankruptcy to oust him. Law360
relates that the contentious testimony produced opportunities for
the defense to introduce several of its key arguments.
About Global Energies
Chrispus Venture Capital, LLC, which was allegedly owed $1,092,375,
filed an involuntary Chapter 11 petition against Global Energies,
LLC, aka 714 Technologies, LLC, on July 1, 2010 (Case No. 10-28935,
Bankr. E.D. Va.). The case is assigned to Judge Raymond B. Ray.
The Petitioners were represented by Chad P. Pugatch, Esq., in Ft.
Lauderdale, Florida.
HARRIET WEISS: Berris Buying New York Property for $1.3 Million
---------------------------------------------------------------
Harriet Mouchly Weiss and Charles Weiss ask the U.S. Bankruptcy
Court for the Southern District of New York to authorize the sale
of Apartment 9GC located at 415 East 52nd Street, New York, to Jan
Berris for $1,325,044.
A hearing on the Motion is set for Oct. 4, 2017 at 10:00 a.m. (ET).
The objection deadline is Sept. 27, 2017 at 4:00 p.m. (PET).
The Debtors are residents of New York and have been for at least
the past 180 days. They own 1,059 shares in a cooperative housing
corporation known as Sutton House Inc. ("Corporation"), which owns
the building where their apartments 9HC, 9JC and 9GC are located.
The Debtors are lessees under the Corporation's proprietary Lease.
The Debtors reside in Apartments 9HC and 9JC, which are adjoined.
The third apartment, Apartment 9GC, is a single unit that currently
is rented to the Purchaser.
Their need to ask relief was necessitated by the imminent sale of
the Shares in their residence that they pledged to a lender for a
business loan. The Property is the only significant asset that can
be liquidated to satisfy claims against the Debtors. They've
located the Purchaser for Apartment 9GC.
Apartment 9GC is subject to security interests: (i) in favor of 100
Mile Fund, LLC to secure a claim of approximately $1.259 million;
(ii) in favor of the Corporation for unpaid common charges and
other maintenance for the Property totaling approximately $44,786;
and (iii) in favor of World Business Lenders, LLC to secure a claim
of approximately $1.35 million. The claims of creditors
asserting a security interest against Apartment 9GC exceed the
estimated value of Apartment 9GC. The Debtors, however, believe
that the Purchase Price is the highest offer likely to be obtained
for Apartment 9GC.
In cooperation with 100 Mile, the Debtors retained Town Fifth
Avenue, LLC, to market and sell Apartment 9GC. One Aug. 30, 2017,
the Court entered an order authorizing the Debtors to retain Town
as their real estate broker to market and sell Apartment. While
Town has provided some offers to date, the highest and best offer
was provided by the Purchaser. After considering the Purchaser's
offer, the parties have negotiated a Contract of Sale, which
provides for the sale of Apartment 9GC for a purchase price of
$1,325,044, with 25% to be paid in cash and the remainder to be
financed. The Purchaser has agreed to pay a 10% down-payment or
$132,504 upon execution of the Purchase Agreement and will close
within 30 days of execution of the Purchase Agreement.
The material terms of the Purchase Agreement are:
a. Purchase Price: $1,325,044.00 million, with 25% to be paid
in cash and the remainder to be financed; however, there is no
financing contingency.
b. Deposit: $132,504 upon execution of the Purchase Agreement
c. Flip Tax: The Seller will pay the Flip Tax comprised of 60%
of the annual maintenance, totaling $16,696.
d. Apartment 9GC: Apartment 9GC includes the Shares and the
Debtors' rights and interests under the Lease for Apartment 9GC and
all other improvements, structures and fixtures, placed,
constructed or installed therein.
e. Closing Conditions Required by the Purchaser: The
Purchaser's closing conditions include, among other things: (i)
approval by the board of the Corporation of the Purchaser as the
assignee of the Debtors' interest in the Lease, and the ability of
the Debtor to deliver possession of Apartment 9GC at closing free
of liens, claims and encumbrances, as provided in the Purchase
Agreement; (ii) the delivery of customary closing documents; and
(iii) a Sale Order being entered pursuant to Bankruptcy Code
section 363, which Order has not been stayed.
f. Closing Conditions Required by the Debtors: The Debtors'
closing conditions will generally be limited to: (i) the accuracy
of the Purchaser's representatives and warranties; (ii) the
Purchaser's compliance with covenants and performance of agreements
and obligations; and (iii) entry of the Sale Order.
g. No Reliance on Warranties or Representations: Apartment 9GC
will be conveyed by the Debtors to, and accepted by the Purchaser
"as is, where is, without faults," without any express of implied
warranty or representation of any kind.
The extraordinary provisions are:
1. The Debtors do not intend to seek or solicit higher or
better offers on Apartment 9GC. 100 Mile has consented to the
proposed Sale to the Purchaser.
2. The Purchaser, who currently resides in Apartment 9GC, will
continue to reside there pending the Closing Date.
3. The proceeds of the Sale will be used to pay holders of
liens in order of priority.
A copy of the Purchase Agreement attached to the Motion is
available for free at:
http://bankrupt.com/misc/Harriet_Weiss_41_Sales.pdf
The Purchaser:
Jan Berris
415 E 52 St., #9GC
New York, NY 10022
The Purchaser is represented by:
George Mauro, Esq.
10605 Metropolitan Ave.
Forest Hills, NY 11375
Telephone: (718) 793-2328
E-mail: gmauro@lawclosing.com
Harriet Mouchly Weiss and Charles Weiss sought Chapter 11
protection (Bankr. S.D.N.Y. Case No. 17-10562) on March 9, 2017.
The Debtor tapped Gabriel Del Virginia, Esq., at Law Offices of
Gabriel Del Virginia.
HHGREGG INC: Taps M. Soto as Workers Comp Claims Counsel
--------------------------------------------------------
hhgregg, Inc. seeks approval from the U.S. Bankruptcy Court for the
Southern District of Indiana to hire M. Soto Law Office, LLC as
"ordinary course" counsel for the company and its affiliates.
The firm will provide legal services regarding the handling of
workers' compensation claims in Ohio.
Soto's normal billing rate is $145 per hour. As a special
accommodation, the firm has agreed to bill its services at a
discount of $125 per hour but the discount is not applicable to
reimbursement of costs or expenses.
Michael Soto, Esq., disclosed in a court filing that his firm is a
"disinterested person" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Michael Soto, Esq.
M. Soto Law Office, LLC
570 North State Street, Suite 220
Westerville, OH 43082
Phone: +1 614-891-2560
About hhgregg Inc.
Indianapolis, Indiana-based hhgregg, Inc., is an appliance,
electronics and furniture retailer. Founded in 1955, hhgregg is a
multi-regional retailer currently with 220 stores in 19 states that
also offers market-leading global and local brands at value prices
nationwide via http://www.hhgregg.com/
hhgregg Inc., Gregg Appliances Inc. and HHG Distributing LLC sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Ind. Lead Case No. 17-01302) on March 6, 2017. The petitions were
signed by Kevin J. Kovacs, chief financial officer.
At the time of the filing, hhgregg and HHG Distributing estimated
assets and liabilities of less than $50,000. Gregg Appliances
estimated assets and liabilities at $100 million to $500 million.
The Debtors engaged Morgan, Lewis & Bockius LLP and Ice Miller LLP
as counsel; Berkeley Research Group, LLC as financial advisor;
Stifel and Miller Buckfire & Co. as investment banker; Hilco IP
Services as intellectual property advisor; Altus Group US, Inc. as
tax advisor; and Donlin, Recano & Company, Inc. as claims and
noticing agent.
The U.S. Trustee has appointed creditors to serve on the official
committee of unsecured creditors in the case of Gregg Appliances,
Inc., Case No. 17-01303-RLM-11. No official committee has been
appointed in the cases of hhgregg, Inc., No. 17-01302-RLM-11 or HHG
Distributing, LLC, No. 17- 01304-RLM-11.
The Committee hired Cooley LLP and Bingham Greenebaum Doll LLP as
counsel, and ASK LLP as avoidance claims counsel. The Committee
retained Province Inc. as financial advisor.
Counsel to the Agent for the Debtors' prepetition secured lenders
and the lenders providing DIP financing are Sean M. Monahan, Esq.,
at Choate, Hall & Stewart LLP; and Jay Jaffe, Esq., at Faegre Baker
Daniels, LLP.
Counsel to the FILO Agent is Stuart Brown, Esq., at DLA Piper LLP.
* * *
When hhgregg filed for Chapter 11 bankruptcy, it had signed a term
sheet with an anonymous party to purchase the Company assets. The
Company said at that time it expected a quick and smooth process
through Chapter 11 with emergence in approximately 60 days. Ten
days later, hhgregg said it has terminated the nonbinding term
sheet with the anonymous party because the Company was unable to
reach a definitive agreement on terms, and said it continues to
work with interested third parties to purchase assets of the
business. hhgregg added it had received strong interest from third
parties interested in buying some or all of the Company's assets.
Subsequently, hhgregg executed a consulting agreement with a
contractual joint venture comprised of Tiger Capital Group, LLC,
and Great American Group, LLC, to conduct a sale of the merchandise
and furniture, fixtures and equipment located at the Company's
retail stores and distribution centers.
In an April order, the Bankruptcy Court approved, at the Company's
request, a plan for the Company to close 132 retail stores and the
Company's distribution centers.
According to a disclosure with the Securities and Exchange
Commission in March, debtors Gregg Appliances, Inc., and HHG
Distributing, LLC, entered into a Consulting Agreement with a
contractual joint venture between Tiger Capital Group and Great
American Group to conduct the sale of the merchandise and
furniture, fixtures and equipment located at the Company's 132
retail stores and the distribution centers.
As of June 8, 2017, the Debtors have completed store closing sales
in all its stories.
The Company has said it does not anticipate any value will remain
from the bankruptcy estate for the holders of the Company's common
stock, although this will be determined in the continuing
bankruptcy proceedings.
HOAG URGENT: Taps Baker & Hostetler as Legal Counsel
----------------------------------------------------
Hoag Urgent Care-Tustin, Inc. seeks approval from the U.S.
Bankruptcy Court for the Central District of California to hire
Baker & Hostetler LLP as legal counsel.
The firm will, among other things, give legal advice to the company
and its affiliates regarding their duties under the Bankruptcy
Code; assist in any potential sale or disposition of their assets;
and prepare a bankruptcy plan.
The hourly rates charged by the firm range from $125 to $575. The
attorneys who will be handling the cases are:
Ashley McDow Partner $575
Michael Delaney Associates $430
Fahim Farivar Associates $410
Baker & Hostetler received a retainer of $100,000 from Dr. Robert
Amster, president and sole interest holder in the Debtors.
Ashley McDow, Esq., disclosed in a court filing that all partners,
associates and employees of the firm are "disinterested" as defined
in section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Ashley M. McDow, Esq.
Michael T. Delaney, Esq.
Fahim Farivar, Esq.
Baker & Hostetler LLP
11601 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025-0509
Tel: 310.820.8800
Fax: 310.820.8859
Email: amcdow@bakerlaw.com
Email: mdelaney@bakerlaw.com
Email: ffarivar@bakerlaw.com
About Hoag Urgent Care-Tustin Inc.
Hoag Urgent Care-Tustin, Inc. and its affiliates operate five
urgent care clinics located throughout Southern California.
The Debtors filed Chapter 11 bankruptcy petitions (Bankr. C.D. Cal.
Case No. 17-13077) on Aug. 2, 2017. The petitions were signed by
Dr. Robert C. Amster, president.
The Debtors disclosed that they had estimated assets and
liabilities of $1 million to $10 million.
Judge Theodor Albert presides over the cases. The Debtors hired
Keen-Summit Capital Partners LLC as investment banker.
HUDSON HOSPITALITY: Hires Keen-Summit as Real Estate Advisor
------------------------------------------------------------
Hudson Hospitality Holdings, LLC seeks authorization from the U.S.
Bankruptcy Court for the District of Connecticut to employ
Keen-Summit Capital Partners, LLC as real estate advisor for the
Debtor.
The Debtor is a Connecticut limited liability company. It owns and
operates a 147- room hotel located in Mystic, Connecticut.
The Debtor requires Keen to:
a. review pertinent documents upon request and consult
with the Debtor's counsel, as appropriate;
b. coordinate with the Debtor to develop due diligence
materials;
c. subject to the Debtor's review and approval, develop
a marketing plan and implement each facet of the
marketing plan;
d. communicate regularly with prospective buyers and
maintain records of those communications;
e. solicit offers for a sale of the Property;
f. assist the Debtor in evaluating, structuring,
negotiating, and implementing the terms and
conditions of a proposed sale;
g. oversee an auction or bidding process in
accordance with Bankruptcy procedures;
h. communicate regularly with the Debtor and its
professional advisors in connection with the
status of its efforts; and
i. work with the Debtor's counsel to review
documents and negotiate and assist in resolving
any potential issues that may arise with the
marketing and sale of the Property.
Pursuant to the Letter Agreement, Keen will be paid:
Advisory Fee: For the review of documents and
creation of a marketing strategy,
the Debtor shall pay Keen an earned,
non-refundable advisory and consulting
fee of $25,000, which shall be set
off against the Transaction Fee.
Transaction Fee: Upon the closing of the sale of the
Property, as the term "Transaction" is
defined in the Letter Agreement, the Debtor
shall pay Keen 5.5% of the "Gross Proceeds"
of the Transaction.
In the event the Property is sold to David Kunal, as interested
pre-petition buyer, Keen has agreed to reduce the Transaction Fee
to 4.5% of the "Gross Proceeds" of the Transaction.
Keen will also be reimbursed for reasonable out-of-pocket expenses
incurred.
Matthew Bordwin, principal and managing director of Keen-Summit
Capital Partners, LLC, assured the Court that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code and does not represent any interest adverse to
the Debtor and its estates.
Keen may be reached at:
Matthew Bordwin
Keen-Summit Capital Partners, LLC
1 Huntington Quadrangle, Suite 2C04
Melville, NY 11747
Tel: (646) 381-9202
Fax: (646) 736-3050
E-mail: mbordwin@keen-summit.com
About Hudson Hospitality Holdings, LLC
Hudson Hospitality Holdings, LLC filed a Chapter 11 bankruptcy
petition (Bankr. D. Conn. Case No. 17-20717) on May 17, 2017. The
Hon. James J. Tancredi presides over the case. Zeisler & Zeisler PC
represents the Debtor as counsel.
In its petition, the Debtor estimated $1 million to $10 million in
both assets and liabilities. The petition was signed by Madeline
Penachio-Konigsberg, sole member.
Hudson Hospitality has employed Matthew J. Walston of Walston &
Ignagni, PC as its Chief Restructuring Officer. The firm also has
been tapped as the Debtor's accountants.
IDDINGS TRUCKING: Petey Buying 2015 Mac Trailer for $45K
--------------------------------------------------------
Iddings Trucking, Inc., filed with the U.S. Bankruptcy Court for
the Southern District of Ohio its fourth notice of its sale of 2015
Mac trailer, Company Trailer No. 200P, SN 558MGAM28FK001051, to
Petey Hatfield Trucking, LLC for $45,000.
Any objection to the proposed sale of property must be filed not
later than 10 days from the date of service of the Notice.
The property will be sold for cash. Where no current lien is
listed on the title, the proceeds will be paid to the IRS on the
basis of its federal tax lien.
The sales prices were determined to be fair based on a November
2016 appraisal of the property. All proceeds of sale will be
disbursed to its secured creditor, First Neighborhood Bank.
A copy of the Buyer's Letter of Intent attached to the Notice is
available for free at:
http://bankrupt.com/misc/Iddings_Trucking_203_Sales.pdf
About Iddings Trucking
Iddings Trucking, Inc., provides commercial trucking services.
Iddings has been in business for more than 50 years; it was founded
in 1966.
Iddings Trucking filed a Chapter 11 petition (Bankr. S.D. Ohio Case
No. 16-58202) on Dec. 30, 2016. The petition was signed by George
C. Loeber, president. The Debtor estimated assets and liabilities
at $1 million to $10 million.
The case is assigned to Judge Kathryn C. Preston.
The Debtor is represented by John W. Kennedy, Esq. and Myron N.
Terlecky, Esq., at Strip Hoppers Leithart McGrath & Terlecky Co.,
LPA. The Debtor employed Mulligan, Topy & Co. as accountant.
No trustee, examiner or statutory committee has been appointed in
the Debtor's case.
IMAGE GRAPHICS: Taps Unico Financial as Accountant
--------------------------------------------------
Image Graphics 2000, Inc. seeks approval from the U.S. Bankruptcy
Court for the Southern District of Florida to hire an accountant.
The Debtor proposes to employ Unico Financial Services Inc. to,
among other things, prepare its tax returns and monthly operating
reports, and assist in the formulation of a bankruptcy plan.
Leslie Arboleda, the accountant who will be providing the services,
will charge $45 per hour.
Ms. Arboleda disclosed in a court filing that she and her firm are
"disinterested persons" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Leslie Arboleda
Unico Financial Services Inc.
7522 Wiles Road, Suite B206
Coral Springs, FL 33607
About Image Graphics 2000 Inc.
Image Graphics 2000, Inc. -- http://igxboatwraps.com/-- provides
graphic design services in Pompano Beach, Florida, and surrounding
areas. Its services include boat wraps, commercial displays,
vehicle wrapping, banners, bulk products, deck graphics and
tournament sponsor wrapping. The company is a small business
debtor as defined in 11 U.S.C. Section 101(51D).
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 17-20585) on August 22, 2017. Wade
Davis, vice-president, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $1 million and liabilities of $1
million to $10 million.
Judge John K. Olson presides over the case. First Legal PA
represents the Debtor as bankruptcy counsel.
INTERNATIONAL RENTALS: To Hire Augustus Curtis of Cohen Baldinger
-----------------------------------------------------------------
International Rentals Corporation has filed an amended application
seeking approval from the U.S. Bankruptcy Court for the District of
Maryland to hire Cohen, Baldinger & Greenfeld, LLC as its legal
counsel.
Specifically, the Debtor proposes to employ Steven Greenfeld, Esq.,
and Augustus Curtis, Esq., both members of the firm, to give legal
advice regarding its duties under the Bankruptcy Code and provide
other legal services related to its Chapter 11 case.
Messrs. Greenfeld and Curtis will charge $435 per hour and $375 per
hour, respectively.
The firm and its members do not represent any interest adverse to
the Debtor or its estate, according to the filing.
About International Rentals Corp
International Rentals Corporation, a single asset real estate,
filed a Chapter 11 petition (Bankr. D. Md. Case No. 17-15505) on
April 20, 2017. Jose A. Reig, president, signed the petition. The
case is assigned to Judge Lori S. Simpson. The Debtor is
represented by Steven H. Greenfeld, Esq., at Cohen, Baldinger &
Greenfeld, LLC. At the time of filing, the Debtor estimated assets
and liabilities between $1 million and $10 million.
IRON MOUNTAIN: Moody's Rates New $750MM Senior Notes Due 2027 Ba3
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Iron Mountain
Incorporated's new $750 million of senior notes maturing in 2027.
All other ratings, including Iron Mountain's Ba3 Corporate Family
Rating (CFR), and the stable rating outlook are not affected. The
company intends to use the proceeds from the new notes offering and
revolver borrowings to retire up to $1 billion of its 6% senior
notes due 2020 through a tender offer.
RATINGS RATIONALE
Iron Mountain's CFR is weakly positioned in the Ba3 category and
reflects its elevated leverage (5.5x, Moody's adjusted total debt
to EBITDA at 2Q 2017) and persistent free cash flow deficits that
are expected to continue through at least 2019. Moody's expects
EBITDA growth from a combination of organic revenue growth of about
2% and synergies from the Recall acquisition to progressively drive
leverage to below 5x over the next 2 to 3 years. The Ba3 CFR is
supported by Iron Mountain's leading market position in the North
America storage and information management market, large base of
recurring storage rental revenues and its expanded geographical
footprint and scale after the acquisition of Recall. Iron
Mountain's strong brand and market share in North America afford
the pricing power that supports its strong EBITDA margins. At the
same time, the company faces mature demand for its services in
developed markets in North America and Western Europe.
The stable outlook reflects Moody's expectations for low single
digit organic revenue growth and progressive modest declines in
leverage.
Moody's could downgrade Iron Mountain's ratings if deterioration in
earnings or changes in financial policy lead Moody's to believe
that total debt to EBITDA (Moody's adjusted) is unlikely to be
reduced to 5x over time. The rating could also be lowered if Iron
Mountain's liquidity weakens materially. Conversely, Moody's could
upgrade Iron Mountain's ratings if the company maintains stable
organic revenue growth and EBITDA margins, and sustains total debt
to EBITDA (Moody's adjusted) below 4.5x (Moody's adjusted) and
retained cash flow to net debt above 10%.
Assignments:
Issuer: Iron Mountain Incorporated
-- New $750 million senior notes due 2027, Ba3 (LGD3)
Iron Mountain is a global provider of information storage and
related services.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
IRON MOUNTAIN: S&P Affirms 'BB-' CCR, Outlook Remains Stable
------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' corporate credit rating on
Boston, Mass.-based global storage and information management
services company Iron Mountain Inc. The rating outlook remains
stable.
S&P said, "At the same time, we assigned our 'BB-' issue-level
rating and '3' recovery rating to the company's proposed $750
million senior unsecured notes. The '3' recovery rating indicates
our expectation for meaningful recovery (50%-70%; rounded estimate:
50%) of principal for debtholders in the event of a payment
default.
"We also assigned our 'BB' issue-level rating and '2' recovery
rating to the company's new $2 billion senior secured credit
facility due 2022, which comprises a $1.75 billion senior secured
revolving credit facility and a $250 million term loan. The '2'
recovery rating indicates our expectation for substantial recovery
(70%-90%; rounded estimate: 75%) of principal for debtholders in
the event of a payment default.
"Additionally, we are withdrawing our ratings on the company's
senior secured credit facility due 2019 and its 6.125% C$200
million senior unsecured notes due 2021 following their repayment.
Our ratings on the company's other debt are unchanged.
"Our corporate credit rating on Iron Mountain reflects the
company's position as the global market leader in the records
management business. The company benefits from low customer
attrition, high switching costs, favorable EBITDA margins, and
long-term storage contracts that provide stable and recurring
revenue. Despite the threat of digital storage, especially in
developed markets, Iron Mountain has exhibited an ability to
increase storage volumes (excluding acquisitions) in these markets.
"The stable rating outlook reflects our expectation that Iron
Mountain will continue to experience mid- to low-single-digit
percentage revenue growth and improve its EBITDA margins through
efficiency initiatives. We also expect lease-adjusted leverage to
moderate to the low-5x area and FOCF to debt to remain above 5%
through 2018.
"We could lower the corporate credit rating if the company isn't
able to successfully integrate the Recall assets and, as a result,
is unable to fully realize the cost efficiencies and benefits of
its increased size and scale. This would likely result in
weaker-than-expected operating performance, leverage above 5.5x
through 2018, and FOCF to debt below 5% on a sustained basis.
"Additionally, we could lower the rating if we don't expect
leverage to decline to the 5x area after 2018 or if the company
materially increases its dividend payouts or undertakes sizeable
debt-financed acquisitions.
"We view an upgrade as unlikely, given the company's status as a
REIT, which reduces its financial flexibility. An upgrade would
also depend on the company maintaining a less aggressive financial
policy such that its lease-adjusted leverage remains at or below
4x. Such leverage reduction will likely entail the company issuing
equity to repay debt or fund acquisitions."
JUMIO INC: Trust Says Ex-Executives Part of Accounting Scheme
-------------------------------------------------------------
Former Jumio Inc. CEO Daniel Mattes, former Chief Operating Officer
Thomas Kastenhofer, and former general counsel and acting Chief
Financial Officer Chad Starkey were part of a scheme that made it
look like the Debtor's revenues were 90% higher, Matt Chiappardi,
writing for Bankruptcy Law360, reports, citing the liquidating
trust set up by the Debtor's Chapter 11 plan. According to Law360,
the liquidating trust launched an adversary action targeting the
former executives for an alleged revenue report padding scheme that
the trust claims sunk the Debtor's fortunes and ultimately drove it
into bankruptcy.
About JMO Wind Down
Known as Jumio Inc. before selling its assets in a bankruptcy
court-sanctioned sale, JMO Wind Down Inc. was an online and mobile
identity management and credentials authentication company.
Headquartered in Palo Alto, California, Jumio had operations in the
United States, Europe and India. Its customers include, among
others, Airbnb, United Airlines, WorldRemit, EasyJet, and
Duolingo.
Jumio Inc. filed a Chapter 11 bankruptcy petition (Bankr. D. Del.
Case No. 16-10682) on March 21, 2016. The petition was signed by
Stephen Stuut, the CFO. The Debtor estimated assets of $1 million
to $10 million and debt of up to $50 million.
Judge Brendan Linehan Shannon is the case judge.
The Debtor tapped Landis Rath & Cobb LLP as bankruptcy counsel;
Ernst & Young, LLP, as financial advisor; Wilmer Hale, LLP ("WH")
as special corporate counsel; and Cooley LLP as special litigation
counsel. Rust Consulting/Omni Bankruptcy is the claims and
noticing agent.
The Official Committee of Equity Holders retained K&L Gates LLP as
general bankruptcy counsel, Pachulski Stang Ziehl & Jones LLP as
co-counsel, and EisnerAmper as financial advisor.
* * *
The Debtor filed a motion to sell the assets for $22.7 million to
Jumio Acquisition, LLC, absent higher and better offers. Jumio
Acquisition is an entity formed by Facebook co-founder Eduardo
Saverin, holder $15.8 million secured debt on account of
prepetition senior secured convertible promissory notes, and who
was invested at least $23 million in the preferred and common
equity of the Debtor.
Unable to resolve issues with Equity Holders, the stalking horse
withdrew the bid. On May 6, 2016, the Court entered an order
authorizing the Debtor to sell the assets to an entity formed by
Centana Growth Partners, Jumio Buyer Inc., for cash equal to
$850,000 less certain agreed cure costs totaling no more than
$300,000 and plus assumption all liabilities of operating the
business from and after May 9, 2016.
The Debtor changed its name to JMO Wind Down Inc., following the
sale.
On July 25, 2016, the Debtor announced a Global Settlement with Mr.
Saverin, and the Equity Committee. The Global Settlement forms the
foundation of the consensual Plan of Liquidation filed by the
Debtor.
As reported by the Troubled Company Reporter on Oct. 21, 2016, Tom
Corrigan, writing for The Wall Street Journal Pro Bankruptcy,
reported that a plan to wind down the estate of Jumio won final
approval from a bankruptcy judge, bringing the contentious chapter
11 case nearer to a close.
KNIGHT ENERGY: Committee Taps Baker Donelson as Legal Counsel
-------------------------------------------------------------
The official committee of unsecured creditors of Knight Energy
Holdings, LLC seeks approval from the U.S. Bankruptcy Court for the
Western District of Louisiana to hire legal counsel.
The committee proposes to employ Baker, Donelson, Bearman, Caldwell
& Berkowitz, PC to, among other things, give legal advice regarding
the administration of the Chapter 11 cases filed by Knight Energy
and its affiliates; investigate the Debtors' financial condition;
advise on the sale or liquidation of their assets; and assist in
the formulation of a bankruptcy plan.
The hourly rates charged by the firm range from $320 to $705 for
shareholders, $215 to $500 for associates, and $170 to $240 for
paralegals. The attorneys who are expected to represent the
committee are:
Edward Arnold III $435
Jan Hayden $485
Susan Mathews $470
John Rowland $465
Ruthie Hagan $345
Dan Ferretti $350
Lacey Rochester $260
Jan Hayden, Esq., disclosed in a court filing that no partner,
associate or member of the firm is a "disinterested person" as
defined in section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Baker
Donelson disclosed that it has not agreed to any variations from,
or alternatives to, its standard or customary billing
arrangements.
Baker Donelson also disclosed that the committee approved the
budget set forth in the court order, which approved the use of cash
collateral.
The firm can be reached through:
Jan M. Hayden, Esq.
Baker, Donelson, Bearman
Caldwell & Berkowitz, PC
201 St. Charles Avenue, Suite 3600
New Orleans, LA 70170
Tel: 504-566-5200
Fax: 504-636-4000
About Knight Energy Holdings
Knight Energy Holdings, LLC, supplies rental equipment and services
for drilling, completion and well control activities, serving a
diverse base of oil and gas operators. It is a multi-basin service
provider with operations in nine states. Its services are
available to clients in the United States, including the Permian,
Eagle Ford, San Juan, Bakken, Cotton Valley, DJ, Haynesville,
Alaska, and the Gulf Coast.
In the past, Knight Energy also provided services internationally
in Norway, the Netherlands, Iraq, UAE, Australia, and Colombia.
There are presently no international operations. Knight Energy
currently employs approximately 330 employees spread throughout the
18 active locations.
Knight Energy, formerly Knight Oil Tools, LLC and its affiliates,
filed Chapter 11 petitions (Bankr. W.D. La. Lead Case No. 17-51014)
on Aug. 8, 2017. The petitions were signed by Kelley Knight
Sobiesk, member, director.
At the time of filing, Knight Energy Holdings had $50 million to
$100 million in estimated assets and $100 million to $500 million
in estimated liabilities.
The cases are assigned to Judge Robert Summerhays.
Heller, Draper, Patrick, Horn & Dabney, LLC serves as bankruptcy
counsel to the Debtors while Opportune, LLP, serves as their crisis
manager. Donlin, Recano & Company, Inc. is the claims, noticing
and solicitation agent.
On August 24, 2017, Henry G. Hobbs, Jr., acting U.S. trustee for
Region 5, appointed an official committee of unsecured creditors.
On August 25, 2017, the Debtors filed their Chapter 11 plan of
reorganization and disclosure statement.
LA PALOMA GENERATING: U.S. Trustee Forms 3-Member Committee
-----------------------------------------------------------
Andrew R. Vara, Acting U.S. Trustee for Region 3, on Sept. 5
appointed three creditors to serve on the official committee of
unsecured creditors in the Chapter 11 case of La Paloma Generating
Co. LLC, et al.
The committee members are:
(1) Argo Chemical, Inc.
Attn: Mark Rodgers
30933 Imperial Street
Bakersfield, CA 93263,
Tel: (661) 322-2222
Fax: (661) 332-2303
(2) PowerFlow Fluid Systems, LLC
Attn: James S. McCain
100 SW Scherer Road
Lee's Summit, MO 64082
Tel: (816) 531-3800
Fax: (816) 531-3806
(3) GE Mobile Water, Inc.
Attn: Chris Scott
4636 Somerton Road
Trevose, PA 19053
Tel: (215) 633-4270
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at a debtor's
expense. They may investigate the debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent.
About La Paloma Generating
La Paloma Generating Company, LLC, a D.C.-based merchant power
generator, and its affiliates La Paloma Acquisition Co, LLC, and
CEP La Paloma Operating Company, LLC, filed Chapter 11 bankruptcy
petitions (Bankr. D. Del. Case Nos. 16-12700 to 16-12702) on Dec.
6, 2016. The petitions were signed by Niranjan Ravindran, as the
Debtors' authorized person.
La Paloma Generating estimated $100 million to $500 million in
assets and $500 million to $1 billion in liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
The Debtors are represented by John J. Rapisardi, Esq., and George
A. Davis, Esq., at O'Melveny & Myers LLP, as lead bankruptcy
counsel; and Mark D. Collins, Esq., Andrew Dean, Esq., and Jason M.
Madron, Esq., at Richards, Layton & Finger, P.A., as Delaware
counsel. Lawyers at Curtis, Mallet-Prevost, Colt & Mosle LLP serve
as conflicts counsel. Jefferies LLC serves as the Debtors'
financial advisor and investment banker, while their claims and
noticing agent is Epiq Bankruptcy Solutions. Alvarez & Marsal
North America, LLC, is the financial advisor.
Maria Aprile Sawczuk has been appointed fee examiner in the
bankruptcy case. On Aug. 2, 2017, the Debtors filed a Chapter 11
Plan and Disclosure Statement.
LADDER CAPITAL: Fitch Affirms 'BB' IDR & Sr. Unsecured Note Ratings
-------------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) and senior unsecured note ratings of Ladder Capital Finance
Holdings LLLP and Ladder Capital Finance Corporation, subsidiaries
of Ladder Capital Corp (collectively Ladder), at 'BB'. The Rating
Outlook is Stable.
KEY RATING DRIVERS - IDRS AND SENIOR DEBT
The rating affirmations reflect Ladder's established platform as a
commercial real estate (CRE) lender and investor; conservative
underwriting culture; granular portfolio; continued adherence to
leverage targets commensurate with the risk profile of its assets;
and access to multiple sources of capital. Rating constraints
include Ladder's focus on the CRE sector, which continues to face
performance pressures in certain sub-sectors; its wholesale funding
profile; the absence of a track record as a standalone entity
through a full credit cycle; and key man risk associated with CEO
Brian Harris.
Ladder's top property exposures in its loan portfolio as of
June 30, 2017 were hotels (34%), multifamily (23%), office (17%),
and retail (12%). Fitch expects U.S. lodging revenue per available
room will decelerate in the second half of 2017 (2H17), but remain
positive, allowing the strongest and second longest recovery since
1987 to endure through at least 2018. Fitch projects healthy and
above average office property fundamentals in 2017, but believes
multifamily has reached a peak in performance. As of June 30, 2017,
the company's loan portfolio totalled $2.8 billion with an average
loan balance of $17 million, limiting individual loss exposures.
Retail property performance is expected to be mixed, with the lack
of new construction offsetting retailer bankruptcies, and
downsizings. As a result, Fitch expects asset quality of CRE loan
portfolios (including Ladder's) to revert to long-term averages in
the coming years, although the pace of asset quality reversion is
in part dependent on the level of interest rates. In terms of
retail, Fitch notes that Ladder tends to be focused on lower risk
investments that do not represent material risks to creditors, such
as highly rated CMBS, loans against necessity-based retail
properties, and to a lesser extent, direct ownership of properties
held under long-term triple net leases.
While Fitch notes that Ladder has not yet managed through a full
credit cycle, given that it was founded in October 2008, it has
operated during multiple periods of market volatility since
inception without incurring credit losses. Ladder's average
loan-to-value ratio across all lending programs was 65% as of June
30, 2017, compared to 68% as of Dec. 31, 2015, indicative of the
company's continued conservative underwriting standards.
Ladder's core earnings totalled $82.7 million in 1H17, which is on
pace to exceed 2016 results, but would be below levels achieved in
2013-2015, when gain on sale activity stemming from conduit
securitizations was elevated. Gain on sale of loans and securities,
net of hedge gain (loss) on loans, was 10.6% of net revenues in
1H17, down from 17.6% in 2016 and 26.9% in 2015. Fitch views
Ladder's ability to deliver more stable interest income and
operating lease income as a mitigant to the volatility of the gain
on sale income across market cycles.
Ladder varies its leverage depending on the risk profile of its
portfolio. Its debt-to-equity ratio, excluding the CMBS
consolidated onto Ladder's balance sheet, and including the
securitized mortgage debt on Ladder's real estate investments, was
2.78x as of June 30, 2017, within management's 2.0x-3.0x target
range and viewed as strong for the rating.
Fitch believes that Ladder will continue to execute on a strategy
of expanding unsecured debt. Ladder issued $500 million of 5.25%,
five-year senior notes in March 2017 and used the proceeds to repay
secured and unsecured debt. Unsecured debt increased to 18.5% of
total debt as of June 30, 2017; up from 14.8% as of Dec. 31, 2016.
Ladder's ability to economically access long-term unsecured debt
funding, such that unsecured debt approaches 35% of total debt
would be viewed positively by Fitch.
Ladder adheres to a 1.2x unencumbered assets to unsecured debt
covenant, which should provide protection to bondholders during
periods of market stress. Unencumbered asset coverage of unsecured
notes was 1.5x as of June 30, 2017 on a reported basis but below
1.0x on a stressed basis that excludes unencumbered cash and
contemplates declines in the value of the company's unencumbered
loans, securities and real estate.
Ladder remains reliant on wholesale funding sources, although there
is growing diversity amongst Ladder's sources of capital. At June
30, 2017, the company had five committed loan repurchase
facilities, one committed and multiple uncommitted securities repo
facilities, a corporate credit facility from numerous lending
institutions, mortgage loan borrowings, borrowings from the Federal
Home Loan Bank (FHLB), and access to unsecured notes and public
equity. In 2Q17, Ladder executed its first "Ladder-only"
securitization (Ladder Capital Commercial Mortgage Trust
2017-LC26), selling $626 million of conduit loans and generating a
3.3% profit margin, in line with recent transactions. This
transaction demonstrated that Ladder could directly securitize
fixed rate conduit loans.
Fitch notes the expected loss of FHLB membership by Ladder's
captive insurance subsidiary, effective February 2021, as an
on-going funding consideration. While Ladder has multiple options
at its disposal to either repay FHLB borrowings via securities
sales or new debt arrangements, replacement funding is likely to be
either shorter-term (e.g., reverse repurchase facilities) and/or
higher cost (e.g., additional unsecured notes), which could
introduce incremental funding and liquidity risks and pressures on
profitability. Fitch believes Ladder will introduce more unsecured
funding in the coming years, which would lessen liquidity risk,
improve financial flexibility, and extend funding duration.
Ladder has an adequate liquidity position. As of June 30, 2017,
Ladder had $1.6 billion of excess committed capacity under its debt
facilities and its unencumbered pool could be pledged or liquidated
(subject to applicable haircuts) to support unsecured debt
repayment. Still, Ladder's liquidity position remains constrained
by its REIT tax election as it now retains a lower portion of core
earnings. The REIT conversion did improve Ladder's after-tax core
earnings, but its liquidity profile was weakened by the earnings
distribution requirements.
While the Ladder management team has significant depth and
experience, with an average of 28 years in CRE, Fitch believes
meaningful key man risk continues to reside with CEO Brian Harris,
particularly following the departure of the Chief Investment
Officer in 2015 and the retirement of Michael Mazzei as President
in 2017. The company has sought to mitigate key man risk through
internal promotions, such as the June 2017 promotion of Pamela
McCormack from Chief Operating Officer to President to replace
Mazzei. Mazzei also remains on Ladder's Board of Directors.
The Stable Outlook reflects Fitch's view that Ladder's business
model, portfolio composition and leverage and funding profiles
should provide the company with sufficient cushion, relative to the
assigned ratings, to withstand potential CRE market pressures over
the outlook horizon.
The equalization of the senior unsecured debt rating with Ladder's
IDR reflects the availability of unencumbered assets, which suggest
average recoveries.
RATING SENSITIVITIES - IDRS AND SENIOR DEBT
Demonstrated continued economic access to long-term unsecured debt
funding, such that unsecured debt to total debt approaches 35%;
continued underwriting discipline; a sustained low reliance on gain
on sale income; and strong asset quality performance in the face of
CRE sub-sector pressures could support positive rating momentum
over time. Expanded management depth and succession planning,
particularly in light of the recent departure of Ladder's
President, would also be an important consideration in determining
upward rating momentum.
Conversely, a material reduction in long-term economic sources of
funding; a material weakening of asset quality; a sustained
increase in leverage beyond the company's articulated target of
2.0x-3.0x; a material reduction in liquidity or increased
uncertainty with respect to management depth/stability could lead
to negative pressure on the IDR.
The unsecured debt ratings are sensitive to changes to Ladder's IDR
and the level of unencumbered balance sheet assets relative to
outstanding debt. The unsecured debt ratings could be notched above
the IDR over time should unencumbered asset coverage improve.
Conversely, the unsecured debt ratings could be notched down from
the IDR should secured debt increase and/or the level of
unencumbered assets decrease to such an extent that expected
recoveries on the senior unsecured debt were adversely affected.
Fitch has affirmed the following ratings:
Ladder Capital Finance Holdings LLLP
Ladder Capital Finance Corporation
-- Long-Term IDR at 'BB'; and
-- Unsecured debt at 'BB'.
The Rating Outlook is Stable.
MAIN STREET CAFE: Taps Johnson Runkel as Accountant
---------------------------------------------------
Main Street Cafe Bloomer, LLC seeks approval from the U.S.
Bankruptcy Court for the Western District of Wisconsin to hire an
accountant.
The Debtor proposes to employ Johnson, Runkel & Hazen Inc. and pay
the firm a retainer fee of $490 per month for the preparation of
tax returns and financial statements, and for other accounting
services. The firm will be paid $115 per hour for bankruptcy
–related reporting.
Matt Kraegenbrink, a partner at Johnson Runkel, disclosed in a
court filing that his firm is a "disinterested person" as defined
in section 101(14) of the Bankruptcy Code.
Johnson Runkel can be reached through:
Matt Kraegenbrink
Johnson, Runkel & Hazen Inc.
3707 Hamilton Avenue
Altoona, WI 54720
About Main Street Cafe Bloomer LLC
Main Street Cafe Bloomer, LLC, operates a restaurant at 1418 Main
Street, Bloomer, Wisconsin. It also produces pies, which it sells
to vendors in western Wisconsin.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Wis. Case No. 17-12153) on June 14, 2017. Donald
Stoik, its owner, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $100,000 and liabilities of less than
$500,000.
Judge Catherine Furay presides over the case. Mart W. Swenson,
Esq., at The Swenson Law Group serves as the Debtor's legal
counsel.
MAXELWAY LLC: Hires Nicholas Bressi Law as Bankruptcy Counsel
-------------------------------------------------------------
Maxelway, LLC seeks authority from the U.S. Bankruptcy Court for
the Western District of Texas, Austin Division, to employ Nicholas
S. Bressi as its bankruptcy counsel.
The Debtor needs Mr. Nicholas Bressi to represent it in a lawsuit
to be filed against Mr. John Cree, and all responsible parties,
concerning a real estate project at 611 N. Cuernavaca Drive,
Austin, Texas, 78733. The principal causes of action are breach of
contract and fraud relating to a Joint Development Agreement.
(Adversary No. 17-1061-tmd)
The Debtor says Mr. Bressi has considerable trial experience. Mr.
Bressi will assist Frank B Lyon in trial of the adversary action.
Mr. Bressi attest he has no connection with Maxelway, LLC, its
creditors or any other party in interest herein, or its respective
attorneys, and accountants, the United States Trustee or any person
employed by the Office of the United States Trustee.
Mr. Bressi will charge $400.00 per hour in contingency fee basis
for his services.
The Counsel can be reached through:
Nicholas S. Bressi, Esq.
Law Office of Nicholas Bressi
704 W. 9th Street
Austin, TX 78701
Tel: 512-472-3123
Email: Nick@Bressilaw.com
About Maxelway LLC
Maxelway, LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Tex. Case No. 17-10004) on January 2, 2017. The
petition was signed by Jeanette Ryan, its member.
At the time of the filing, the Debtor estimated assets of less than
$1 million and liabilities of less than $500,000.
MF GLOBAL: Appeals Court Order on Allied World Dispute
------------------------------------------------------
Natalie Olivo, writing for Bankruptcy Law360, reports that MF
Global asked the Hon. Martin Glenn of the U.S. Bankruptcy Court for
the District of New York to reconsider his order requiring the
Debtor to arbitrate in Bermuda a coverage dispute with Allied World
Assurance Co. Ltd., its excess insurer. Law360 says that the
Debtor is urging the Court to take another look at the contention
that its liquidation plan supersedes an arbitration provision.
The Court granted in August the request of Allied World to send the
dispute over a $15 million errors-and-omissions policy to
arbitration in Bermuda, where the insurer is based, Law360
recalls.
About MF Global
New York-based MF Global -- http://www.mfglobal.com/-- was one of
the world's leading brokers of commodities and listed derivatives.
MF Global provides access to more than 70 exchanges around the
world. The firm also was one of 22 primary dealers authorized to
trade U.S. government securities with the Federal Reserve Bank of
New York. MF Global's roots go back nearly 230 years to a sugar
brokerage on the banks of the Thames River in London.
On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA
Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case
Nos. 11-15059 and 11-5058), after a planned sale to Interactive
Brokers Group collapsed. As of Sept. 30, 2011, MF Global had
$41,046,594,000 in total assets and $39,683,915,000 in total
liabilities.
On Nov. 7, 2011, the United States Trustee appointed the statutory
creditors' committee in the Debtors' cases. At the behest of the
Statutory Creditor's Committee, the Court directed the U.S. Trustee
to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy
Court entered an order approving the appointment of Louis J. Freeh,
Esq., of Freeh Group International Solutions, LLC, as Chapter 11
trustee.
On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services
LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions
(Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On
Dec. 27, the Court entered an order installing Mr. Freeh as Chapter
11 Trustee of the New Debtors.
On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr.
Freeh also was installed as its Chapter 11 Trustee.
Judge Honorable Martin Glenn presides over the Chapter 11 case. J.
Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as
bankruptcy counsel. The Garden City Group, Inc., serves as claims
and noticing agent. The petition was signed by Bradley I. Abelow,
Executive Vice President and Chief Executive Officer of MF Global
Finance USA Inc.
The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP,
as investigative counsel; (ii) FTI Consulting Inc., as
restructuring advisors; (iii) Morrison & Foerster LLP, as
bankruptcy counsel; and (iv) Pepper Hamilton as special counsel.
The Official Committee of Unsecured Creditors has retained Capstone
Advisory Group LLC as financial advisor, while lawyers at Proskauer
Rose LLP serve as counsel.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at Hughes
Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of Goldman
Sachs Group Inc., stepped down as chairman and chief executive
officer of MF Global just days after the bankruptcy filing.
In April 2013, the Bankruptcy Court approved MF Global Holdings'
plan to liquidate its assets. Bloomberg News reported that the
court-approved disclosure statement initially told creditors with
$1.134 billion in unsecured claims against the parent holding
company why they could expect a recovery of 13.4% to 39.1% from the
plan. As a consequence of a settlement with JPMorgan, supplemental
materials informed unsecured creditors their recovery was reduced
to the range of 11.4% to 34.4%. Bank lenders will have the same
recovery on their $1.174 billion claim against the holding company.
As a consequence of the settlement, the predicted recovery became
18% to 41.5% for holders of $1.19 billion in unsecured claims
against the finance subsidiary, one of the companies under the
umbrella of the holding company trustee. Previously, the predicted
recovery was 14.7% to 34% on bank lenders' claims against the
finance subsidiary.
MIDWEST ASPHALT: May Use Cash Collateral Through Sept. 30
---------------------------------------------------------
The Hon. William J. Fisher of the U.S. Bankruptcy Court for the
District of Minnesota has entered a stipulated order authorizing
Midwest Asphalt Corporation to use cash collateral through Sept.
30, 2017.
As reported by the Troubled Company Reporter on Aug. 21, 2017, the
Debtor sought authorization to continue to use cash collateral
through Dec. 31, 2017. Of the creditors with secured claims, the
Debtor believes that the only party with a prepetition interest in
cash collateral is Callidus Capital Corporation. Additional
postpetition liens in cash collateral have been granted to MAC
Investment- Chanhassen, LLC and Mr. Gary Welty. All of Debtor's
other secured lenders have liens in only certain specified
equipment and have no liens in cash collateral. As additional
adequate protection, the Debtor proposes: (1) to maintain insurance
on all of the property in which the Callidus Capital (and all other
secured creditors) claim a security interest; (2) to pay all
post-petition federal and state taxes, including timely deposit of
payroll taxes; (3) to provide the Callidus Capital and all other
secured creditors, access for inspection of their collateral and
the Debtor's business records; and (4) that all cash proceeds and
income of the Debtor will be deposited into a Debtor in Possession
Account.
Unless further extended by an order of the Court, the Debtor's
authorization to use cash collateral terminates automatically on
the earlier of: (a) the date that the Welty DIP Facility
terminates; or (b) Sept. 30.
The Debtor will provide to Callidus weekly a report in Excel of the
aged open payables by vendor and individual invoice with the
lienable payables identified. Each line item will include the
vendor name along with the invoice amount under the appropriate
aging category column, invoice date, and reference number.
A copy of the Order is available at:
http://bankrupt.com/misc/mnb17-40075-245.pdf
About Midwest Asphalt
Midwest Asphalt Corporation is a construction company, primarily in
the business of constructing and paving roads. Midwest Asphalt has
been in business since 1968. The Company currently employs
approximately 150 people. The seasonal work begins to grow in
April, reaches its peak in June and July, and is completed in
November each year.
Midwest Asphalt, based in Hopkins, Minnesota, filed a Chapter 11
petition (Bankr. D. Minn. Case No. 17-40075) on Jan. 12, 2017. The
petition was signed by Blair Bury, president. The case is jointly
administered with the case of MAR Farms, LLC (Bankr. D. Minn. Case
No. 17-41371) and Delta Milling, LLC (Bankr. D. Minn. Case No.
17-41372).
The Debtor estimated assets and debt at $10 million to $50 million
at the time of the filing.
The case is assigned to Judge Katherine A. Constantine.
The Debtor is represented by Thomas Flynn, Esq., at Larkin
Hoffman.
Daniel M. McDermott, the U.S. Trustee for Region 12, on Feb. 2,
2017, appointed two creditors of Midwest Asphalt to serve on the
official committee of unsecured creditors. The committee members
are: (1) WD Larson/Allstate Peterbilt; and (2) Tiller Corporation.
The U.S. Trustee, on March 16, 2017, added LSREF2 Cobalt LLC to the
Committee. The Committee retained Matthew R. Burton, Esq., at
Leonard, O'Brien, Spencer Gale & Sayre, Ltd., as legal counsel.
MILNER DISTRIBUTION: Taps Weinman & Associates as Legal Counsel
---------------------------------------------------------------
Milner Distribution Alliance, Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to hire Weinman &
Associates, P.C. as its legal counsel.
The firm will assist the Debtor in the preparation of a Chapter 11
plan of reorganization and will provide other legal services
related to its bankruptcy case.
Jeffrey Weinman, Esq., the attorney who will be handling the case,
will charge an hourly fee of $475. William Richey and Lisa
Barenberg, the firm's paralegals, will charge $300 per hour and
$250 per hour, respectively.
The firm received a retainer in the sum of $18,600 from the
Debtor.
Mr. Weinman disclosed in a court filing that the firm and its
employees are "disinterested persons" as defined in section 101(14)
of the Bankruptcy Code.
Weinman & Associates can be reached through:
Jeffrey Weinman, Esq.
Weinman & Associates, P.C.
730 17th Street, Suite 240
Denver, CO 80202
Tel: 303-572-1010
Email: jweinman@epitrustee.com
About Milner Distribution Alliance
Founded in 2004, Milner Distribution Alliance Inc., which conducts
business under the name Maxx Sunglasses, is a local, family owned
company based out of Monument, Colorado, that owns the Maxx
Sunglasses brand. Today, Maxx Sunglasses has more than 20,000
retail accounts including stores, golf courses, college bookstores,
and MLB stadiums and outlets.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 17-18249) on September 5, 2017.
Richard Milner, president, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $1 million and liabilities of $1
million to $10 million.
Judge Michael E. Romero presides over the case.
The Debtor previously sought Chapter 11 protection (Bankr. D. Colo.
Case No. 14-22962). The case was filed on Sept. 23, 2014.
MITEL NETWORKS: Moody's Assigns B2 Corporate Family Rating
----------------------------------------------------------
Moody's Investors Service assigned ratings to Mitel Networks
Corporation, consisting of a B2 corporate family rating (CFR),
B3-PD probability of default rating (PDR), and B1 senior secured
credit facility ratings. Moody's also assigned an SGL-2 speculative
grade liquidity rating to Mitel. The ratings outlook is stable.
Net proceeds from the new $300 million first lien term loan B
(Mitel's US-based subsidiary, Mitel US Holdings, Inc., is a
co-borrower), along with $140 million in revolving facility
drawings will be used to fund the $426 million acquisition of
ShoreTel Inc., on an enterprise value basis.
Ratings Assigned:
Corporate Family Rating, B2
Probability of Default Rating, B3-PD
$350 million first lien revolving credit facility due 2022, B1
(LGD3)
$150 million first lien term loan A due 2022, B1 (LGD3)
$300 million first lien term loan B due 2023, B1 (LGD3)
Speculative Grade Liquidity Rating, SGL-2
Outlook:
Assigned as Stable
RATINGS RATIONALE
Mitel's B2 CFR reflects Moody's view that leverage (adjusted
Debt/EBITDA) will decline to 5.5x by the end of 2018 after
increasing to 6.6x before synergies because of the acquisition of
ShoreTel, Inc. (not rated; transaction expected to close during
September 2017), execution risks related to the company's
acquisition strategy, vulnerability to competition from larger
players, and related revenue/margin pressures in Mitel's core
premise-based PBX telecom business. Mitel's rating benefits from
sustained demand for its products as small-and-mid-sized businesses
convert to IP-based systems and cloud services, management's
demonstrated commitment to deleveraging, and the company's
improving scale, market position and business diversity following
acquisitions.
The one-notch differential between the B2 CFR and the B3-PD PDR is
consistent with higher recoveries, as per Moody's Loss Given
Default methodology, for debt capital structures comprised of only
first lien bank debt with customary maintenance covenants: Moody's
assumes a higher likelihood of default, and a correspondingly lower
loss-given-default. The first lien facilities are rated B1, one
notch above the B2 CFR, to reflect higher recoveries, their first
priority security interest in assets and the loss absorption
provided by non-debt liabilities.
Mitel has good liquidity (SGL-2 rating). Sources, which exceed $180
million compared to term loan amortization of about $11 million for
the next four quarters, consist of $51 million of cash at Q2/17,
about $100 million of availability under its $350 million revolver
due in March 2022, and Moody's expected free cash flow of at least
$30 million in the next four quarters. Moody's lower free cash flow
expectation is driven mainly by upfront costs required to generate
the ShoreTel synergies, and believes the company has capacity to
generate more than $100 million of annual free cash flow starting
with fiscal 2019. Moody's expects Mitel to maintain headroom of at
least 15% under its lone bank financial covenant (net leverage
test) over the next four to six quarters even with step-downs.
Mitel has limited ability to generate liquidity from asset sales as
its assets are encumbered.
The stable outlook reflects Moody's expectation that Mitel's
leverage will trend towards 5.5x by the end of 2018. The stable
outlook also incorporates Moody's view that the risk of levering up
for another large acquisition before 2019 is low.
The rating could be upgraded if Mitel demonstrates material organic
growth in revenue and EBITDA, maintains good liquidity, and
sustains adjusted Debt/EBITDA below 4x (pro forma 6.6x) and
EBIT/Interest above 2x (currently 1.8x). The rating could be
downgraded if there is a material deterioration in Mitel's top line
or if adjusted Debt/EBITDA was sustained above 6.5x (pro forma
6.6x). Also, the rating could be downgraded if the company's
liquidity position worsened, possibly due to consistent negative
free cash flow generation.
The principal methodology used in these ratings was Diversified
Technology Rating Methodology published in December 2015.
Mitel Networks Corporation, headquartered in Ottawa, Canada,
provides business communication and collaboration software and
services across cloud and premised-based platforms to businesses of
all sizes. Revenue for the twelve months ended July 30, 2017 was
$956 million. Revenue is about $1.3 billion, pro forma for
ShoreTel.
NATIONAL TRUCK: Hires Roger Gibbons as Counsel in Hulsey Dispute
----------------------------------------------------------------
National Truck Funding, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of Mississippi to retain Roger
Gibbons, Esq., as special counsel.
Mr. Gibbons will continue to assist the Debtor in resolving a case
captioned National Truck Funding, LLC v. Hulsey, et al., filed in
the Circuit Court of Miller County, Missouri. The Debtor alleges
claims of civil conspiracy, conversion, and replevin.
The Debtor will pay the attorney an hourly fee of $200. Prior to
the petition date, Mr. Gibbons received a $5,000 retainer.
Mr. Gibbons does not represent or hold any interest adverse to the
Debtor, according to court filings.
Mr. Gibbons maintains an office at:
Roger M. Gibbons, Esq.
2820 Bagnell Dam Blvd., Suite B4
Lake Ozark, MO 65049
About National Truck Funding
Headquartered in Gulfport, Mississippi, National Truck Funding, LLC
-- http://nationaltruckfunding.com/-- retails and rents trucks.
It operates as a subsidiary of American Truck Group, LLC --
http://americantruckgroup.com/.
National Truck and American Truck sought Chapter 11 protection
(Bankr. S.D. Miss. Case Nos. 17-51243 and 17-51244) on June 25,
2017. The petitions were signed by Louis J. Normand, Jr.,
manager.
National Truck estimated its assets and liabilities at $10 million
to $50 million. American Truck estimated its assets and
liabilities at $1 million to $10 million.
Judge Katharine M. Samson presides over the cases. The Debtors
hired Lugenbuhl, Wheaton, Peck, Rankin & Hubbard as bankruptcy
counsel; Wessler Law Firm as local counsel; Lefoldt & Company PA as
accountant; and Chaffe & Associates as restructuring advisor and
investment banker.
NORWEGIAN CRUISE: Court Wants Input on Decision for Fuel Dispute
----------------------------------------------------------------
Joyce Hanson, writing for Bankruptcy Law360, reports that Senior
U.S. District Judge Charles S. Haight Jr. has asked each counsel
for the parties for input on the effect a decision by the English
court in a similar case might have on his own disposition of
Norwegian Cruise Line's bid to block the supplier from seeking
arbitration over payment of a bunker fuel delivery.
Norwegian Cruise Line is a bankrupt marine fuel supplier.
OAKS OF PRAIRIE: Cunat Buying Lake in the Hills Property for $475K
------------------------------------------------------------------
The Oaks of Prairie Point Condominium asks the U.S. Bankruptcy
Court for the Northern District of Illinois to authorize the sale
of the fitness center located at 1300 Cunat Ct., Lake in the Hills,
Illinois, to Cunat Ct, LLC, for $475,000.
The Property serves as collateral for claims asserted against the
Debtor and its property by Illinois State Bank. It is comprised of
a residential building, a recreation/fitness center and common
areas and landscaping.
The Debtor's problems are principally due to payments of a loan
relating to the fitness center. The Lender asserts a senior
position mortgage lien and claim against the Property which
purportedly secures a senior mortgage indebtedness of approximately
$1,175,000. In addition to its mortgage lien on the Property, the
Lender asserts a security interest in and lien upon the assessments
being generated at the Property. The Debtor is not asking to sell
off the property, but only the Fitness Center on the terms and
conditions set forth in the Real Estate Contract.
In order for the Debtor to continue to operate its business and
manage its financial affairs, and effectuate a reorganization, it
is essential that the Debtor be authorized to sell the Fitness
Center. To that extent the Debtor has had the Fitness Center
listed for sale for well over two years and the offer is the only
offer to date. The Debtor and the Broker made numerous inquiries
with the Lake in the Hills Park District about the possible
purchase of the Fitness Center to no avail. Additionally the
Broker marketed the Property nationally to various fitness
companies, but because of the location of the Fitness Center none
showed any interest in buying the Fitness Center.
The Fitness Center will be sold for $475,000. The closing will be
Sept. 29, 2017. The Buyer will pay $5,000 earnest money within
five days of approval of the sale by the Court. In exchange for
the Lender's approval the proceeds, less expenses associated with
the closing, will be paid to Lender, reducing but not waving its
claim.
Unless it is authorized to sell the Fitness Center in which the
Lender asserts an interest, the Debtor will be unable to continue
to operate and manage its property and not allow the Debtor to
effectively reorganize. The disallowance of the requested sale
will cause irreparable harm to the Debtor, its creditors and this
estate.
A copy of the Contract attached to the Motion is available for free
at:
http://bankrupt.com/misc/Oaks_of_Prairie_184_Sales.pdf
About The Oaks of Prairie Point
Condominium Association
The Oaks of Prairie Point Condominium Association is an Illinois
corporation that owns and operates condominium buildings located in
Lake in the Hills, Illinois, known as "The Oaks of Prairie Point
Condominium. "
The Association sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 16-80238) on Feb. 3,
2016, estimating assets and liabilities at $1 million to $10
million. Donna Smith, property manager, signed the petition.
The case is assigned to Judge Thomas M. Lynch.
The Debtor is represented by Thomas W. Goedert, Esq., at Crane,
Heyman, Simon, Welch & Clar, in Chicago, Illinois.
OM SHANTI: Taps Wade Kelly as Legal Counsel
-------------------------------------------
Om Shanti Om Three, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Louisiana to hire legal counsel.
The Debtor proposes to employ Wade Kelly, Esq., to give legal
advice regarding its duties under the Bankruptcy Code and provide
other legal services related to its Chapter 11 case.
Mr. Kelly "has no conflicts of interest" that would prevent him
from serving as legal counsel to the Debtor, according to court
filings.
Mr. Kelly maintains an office at:
Wade N Kelly, Esq.
1 Lakeshore Drive
Lake Charles, LA 70629
Phone: 337-436-5297
About Om Shanti Om Three LLC
Om Shanti Om Three, LLC owns a 78-room hotel known as Fairfield Inn
and Suites located at 1530 MLK Drive, Houma, Louisiana. The hotel
provides complimentary Wi-Fi, plus a newly renovated fitness
center, and an indoor heated pool. The hotel, together with all
FF&E, linens, office equipment, appliances, and all other equipment
and goods required to operate the hotel property, is valued at $1.5
million.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. La. Case No. 17-20833) on September 5, 2017.
Nimesh Zaver, managing member, signed the petition.
At the time of the filing, the Debtor disclosed $1.51 million in
assets and $4.73 million in liabilities.
Judge Robert Summerhays presides over the case.
OPTIMA SPECIALTY: Works on Consummating Reorganization Plan
-----------------------------------------------------------
Optima Specialty Steel, Inc. (together with its subsidiaries,
collectively the "Company" or "OSS") on Sept. 5 disclosed that it
continues to work on consummating its Plan of Reorganization
("POR"). The Company is actively engaged with its stakeholders in
an effort to finalize the necessary documents and emerge from
bankruptcy as soon as practicable, and in a manner that maximizes
value for its stakeholders.
Michael Salamon, President of OSS, commented, "Although OSS'
emergence from bankruptcy has been delayed, this delay will have no
impact on the Company's ability to continue to operate in the
ordinary course. OSS has sufficient liquidity and financing, and
its businesses are generating strong EBITDA. Upon emergence from
bankruptcy, OSS will have enhanced financial flexibility and be
positioned to take advantage of opportunities in the marketplace."
"We are grateful for the continued support of our employees,
customers, vendors, and stakeholders throughout this process," said
Mr. Salamon.
For more information, visit:
http://cases.gardencitygroup.com/oma/key.php
About Optima Specialty Steel
Optima Specialty Steel Inc. and its affiliates are independent
manufacturers of specialty steel products. Their manufacturing
facilities are located in the United States, and each of the
companies' operating units have operated in the steel industry for
more than 50 years.
Optima Specialty Steel, Inc., and its affiliates filed Chapter 11
bankruptcy petitions on Dec. 15, 2016: Optima Specialty Steel, Inc.
(Bankr. D. Del. Case No. 16-12789); Niagara LaSalle Corporation
(Case No. 16-12790); The Corey Steel Company (Case No. 16-12791);
KES Acquisition Company (Case No. 16-12792); and Michigan Seamless
Tube LLC (Case No. 16-12793). The petitions were signed by
Mordechai Korf, chief executive officer. At the time of filing,
Optima Specialty estimated assets and liabilities of $100 million
to $500 million.
The Debtors engaged Greenberg Traurig, LLP, in Wilmington,
Delaware, as counsel. The Debtors tapped Ernst & Young LLP as
their accountant. Garden City Group is the claims and noticing
agent, and maintains the site
http://cases.gardencitygroup.com/oma/info.php
No request has been made for the appointment of a trustee or
examiner.
On Jan. 4, 2017, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors. The committee retained
Squire Patton Boggs (US) LLP as its lead counsel and Whiteford,
Taylor & Preston LLC as its local Delaware counsel.
PACKARD SQUARE: Ann Arbor Project in Ch. 11 to Ward Off Receiver
----------------------------------------------------------------
Packard Square LLC, the owner of an ongoing mixed-use development
project on Packard Street in Ann Arbor, Michigan, sought Chapter 11
bankruptcy protection to retake control of the project from a
receiver.
The Debtor is in the process of completing construction of a
360,000-square foot mixed-use development on a six and a half acre
site on Packard Street in Ann Arbor, Michigan. Once completed, the
Project would be worth approximately $93,500,000. The Debtor is
owned by PSMM, LLC.
The Project includes 249 residential units with high-end amenities,
nearly 30,000 square feet of retail space and over 450 parking
space including an underground parking garage. As of the Petition
Date, the Project is approximately 65% complete.
The Debtor acquired the property for the Project in 2001 and built
a 20+ firm team to conceptualize, design, and obtain approvals for
the Project. The approvals were unanimous at all city levels with
strong support from the community. The Project also involved an
environmental cleanup, tax increment financing, a DEQ grant,
off-site sanitary upgrades benefiting the city, two new public
parks, plus a $50,000 contribution to the Ann Arbor park system,
and more. After obtaining the necessary approvals, the Debtor
prepared the construction documents, constructed a first-class
marketing center, developed beautiful brochures and a first-rate
website and brought in Pinnacle, the second largest property
manager in the country to manage the pre-leasing of the Project.
The City of Ann Arbor approved more than 300 pages of construction
drawings. The Debtor also completed 2,000 pages of specifications
and other documents.
The Debtor had invested more than $14,000,000 of cash equity into
the Project.
The Debtor has one lender, Can IV Packard Square LLC. In October
2014, the Debtor obtained a construction loan from Can IV Packard
Square LLC, any entity created by Canyon Partners, a California
company, in the amount of approximately $53,700,000. However, the
actual amount that the Canyon provided to the Debtor was
approximately $30,000,000.
Following a foreclosure suit filed by Canyon, the Debtor is
currently under receivership. Prior to the appointment of a
receiver, the Debtor had a construction schedule in place with C.E.
Gleeson Construction to have the Project completed by March 2017.
Receivership
According to the Debtor, construction began on the Project in late
2014 but the Debtor missed certain work milestones, prompting
Canyon to allege that the Debtor was in default.
The Debtor had issues with its initial construction manager.
Before the loan closing with Canyon, the originally planned
contractor was unable to obtain a bond as required by the
Construction Loan documents. Therefore, the Debtor was forced to
find a second construction manager. The second construction
manager had several issues as well, including losing several key
team members. Ultimately, the second construction manager was
fired by the Debtor. Shortly thereafter, several force majeure
events resulted in union work stoppages and labor shortages
occurred. These events included an electrician strike, less access
to subcontractors because of the ongoing effects of the financial
crisis, and the construction of the Detroit Red Wings arena and
downtown area. The milestones were not extended to account for
these force majeure events.
According to the Debtor, even though the force majeure provision of
the Construction Loan documents state otherwise, Canyon refused to
fund construction draws that it had previously approved;
manufactured defaults which contradicted its own construction
consultant's positive reports on the status of the Project;
concealed the same reports and brought in a new consultant to
provide false reports; and without notice, accelerated the
Construction Loan, and filed its verified complaint for appointment
of receiver and other relief.
In October 2016, Canyon sued the Debtor for loan foreclosure, in
the case styled CAN IV Packard Square LLC v. Packard Square LLC,
Case No. 16-990-CB, Washtenaw County Trial Court, Honorable Archie
C. Brown presiding. Canyon alleged that the Debtor defaulted on
the Loan and sought to foreclose on the Debtor's property.
An order was entered Nov. 1, 2016, appointing McKinley, Inc., as
the receiver.
The "agent" of the Receiver is Matthew Mason. At the time the
Receiver was appointed, Mr. Mason was employed by the Receiver.
However, in April 2017, Mr. Mason left the Receiver and is now
employed by Conway Mackenzie.
On Nov. 22, 2016, the Receiver entered into a receiver construction
loan agreement with Canyon.
As of the date of this filing, the appointment of the Receiver is
currently on appeal to the Michigan Court of Appeals.
Chapter 11 as Last Resort
The Debtor says it has exhausted all means to remove the receiver
in the Receivership Case, to no avail. In addition, efforts by
the Debtor to work with and assist the Receiver in its completion
of the Project in a timely and cost-efficient manner were either
ignored or went unanswered. The Receiver is also preventing the
Debtor from generating a future income stream. As a result, the
Receiver is depleting the Debtor's assets on a daily basis.
Allowing the Receiver to continue to remain in control of the
Project is not in the best interest of the Debtor or its creditors.
The Debtor avers that in order to successfully reorganize, the
Receiver must be displaced. This Chapter 11 case is the Debtor's
last resort to remove the Receiver and to preserve and maximize the
value of the Project moving forward. In addition, this Chapter 11
case will enable the Debtor to obtain a loan to complete
construction of the Project in a time-efficient and cost-effective
manner. Thereafter, the Debtor says it will be able to pay all of
its secured creditors in full, all of its unsecured creditors in
full, and likely a return to all equity holders, on a much more
expedited basis than the Receiver.
Authority to File Bankruptcy
The Debtor anticipates that Canyon will contest the Debtor's
authority to file bankruptcy on the basis that the Debtor's
operating agreement specifically disallows it. However, the
operating agreement was only revised to include such provision
because Canyon forced the Debtor to add it. Regardless, such
provisions have been deemed improper and unenforceable, the
Debtor's counsel avers, citing In re Lake Mich. Beach Pottawattamie
Resort LLC, 547 B.R. 899 (Bankr. N.D. Ill. 2016) citing Klingman v.
Levinson, 831 F.2d 1292, 1296 (7th Cir. 1987) ("For public policy
reasons, a debtor may not contract away the right to discharge a
bankruptcy"); In re Shady Grove Tech. Ctr. Assocs. Lt'd., 216 B.R.
386, 390 (Bankr. D. Md. 1998), supplemented, 227 B.R. 422 (Bankr.
D. Md. 1998) (holding corporate
An status conference is slated before the Bankruptcy Court on Sept.
27, 2017, at 11:00 a.m. at Courtroom 1925.
About Packard Square
Packard Square LLC owns a 360,000-square foot mixed-use development
on a six and a half acre site on Packard Street in Ann Arbor,
Michigan. Once completed, the Company expects the project to be
worth approximately $93,500,000.
The Debtor is currently under receivership. A receivership case,
CAN IV Packard Square LLC v. Packard Square LLC, Case No.
16-990-CB, Washtenaw County Trial Court, Honorable Archie C. Brown
presiding, was filed, and on Nov. 1, 2016, McKinley, Inc., was
appointed as receiver.
To recover control of the project, Packard Square LLC filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case No.
17-52483) on Sept. 5, 2017, estimating $50 million to $100 million
in assets and less than $50 million in liabilities.
David G. Dragich, Esq., and Amanda Vintevoghel, Esq., at The
Dragich Law Firm PLLC, serve as the Debtor's bankruptcy counsel.
As of Sept. 6, 2017, no request for appointment of a chapter 11
trustee or examiner has been made and no official committee has
been appointed.
PACKARD SQUARE: Arranges $22-Mil. DIP Financing From Ardent
-----------------------------------------------------------
Packard Square LLC asks the U.S. Bankruptcy Court for the Eastern
District of Michigan for authorization to obtain senior secured
postpetition super priority financing from Ardent Financial Fund
II, L.P.
The DIP Financing will be a multiple-draw loan in the approximate
amount of $22,006,132 that will be available to borrow in
accordance with the terms and conditions identified in the
commitment letter and terms and conditions. The DIP Loan will be
secured by, among other things, a first priority mortgage and
assignment of leases and rents, which will be a first priority
security interest in the Debtor's leasehold interest in certain
real property known as 2502 Packard Street, Ann Arbor, Washtenaw
County, Michigan and all improvements thereto.
The DIP Lender will be secured by a first priority lien on all
equipment, furniture, fixtures, materials to be incorporated into
the Improvements, and any other personal property owned by the
Debtor located on or used in connection with the improvements.
Craig Schubiner will unconditionally guaranty the Debtor's recourse
obligations to the DIP Lender pursuant to a guaranty of recourse
events, and a completion guaranty with respect to construction of
the 360,000 square foot mixed-use development on a six and a half
acre site on Packard Street in Ann Arbor, Michigan.
Closing date will be the date of execution of the DIP Loan
Documents and recordation and filing of the Security
Instrument. Interest will accrue at a rate of LIBOR, plus 9.75%
per annum. The Variable Rate will be adjusted monthly during the
term to reflect changes in the LIBOR.
The DIP Loan will mature 12 months after the Closing Date. The
Debtor may extend the Loan Maturity Date for two additional periods
of up to six months each, provided that: (a) no event of default
will have occurred and is continuing, (b) the Debtor gives the DIP
Lender at least 60 days prior written notice before the extension
period, and (c) with that notice, pays an extension fee equal to 1%
of the amount of the DIP Loan for the extension. The DIP Loan will
be a non-amortizing obligation with interest only payments made on
the first day of each month, in arrears, following the initial
advance of the DIP Loan.
The Debtor may prepay the DIP Loan in whole or in part at
prepayments: before maturity, however, a minimum guaranteed
interest of $1.2 million will be due to the DIP Lender regardless
of repayment date.
To the extent the Debtor pursues a sale of its assets, including,
but not limited to the Project, during the course of this Chapter
11 case, the DIP Lender is entitled to credit bid the full amount
of the outstanding DIP Obligations.
The Debtor tells the Court that it has an immediate and critical
need to obtain post-petition financing under the DIP Financing in
order to pursue its reorganization efforts. The Debtor does not
have sufficient available resources to continue the construction of
the Project without the financing requested herein. Ensuring that
the Project is completed competently, correctly and in the most
cost effective manner is of the utmost importance for the Debtor's
business operations, but more importantly, for its creditors.
The Debtor is unable to obtain financing in the form of unsecured
credit allowable under Section 503(b)(1) of the U.S. Bankruptcy
Code, as an administrative expense under Section 364(a) or (b) of
the Bankruptcy Code, or in exchange for the grant of an
administrative expense priority claim pursuant to Section 364(a)(1)
of the Bankruptcy Code, without the grant of liens on assets. The
Debtor has been unable to obtain funding on terms that are more
favorable than offered by the DIP Lender. Without the DIP
Financing, the Debtor would be unable to complete the Project and
its estate would decrease substantially in value and it would not
be able to pursue its reorganization efforts.
As of the Petition Date, and as noted above, the Debtor has one
lender, Partners. The Debtor assures the Court that Canyon
Partners is adequately protected on account of its prepetition
liens being primed.
In October 2014, the Debtor obtained a construction loan from Can
IV Packard Square LLC, any entity created by Canyon in the amount
of $53.7 million. However, the actual amount that the Canyon
provided to the Debtor was approximately $30 million.
A copy of the Debtor's Motion is available at:
http://bankrupt.com/misc/mieb17-52483-13.pdf
About Packard Square
Packard Square LLC is in the process of completing construction of
a 360,000 square foot mixed-use development on a six and a half
acre site on Packard Street in Ann Arbor, Michigan. Once
completed, the Company expects the project to be worth
approximately $93,500,000.
The Debtor is currently under receivership. A receivership case,
CAN IV Packard Square LLC v. Packard Square LLC, Case No.
16-990-CB, Washtenaw County Trial Court, Honorable Archie C. Brown
presiding, was filed, and on Nov. 1, 2016, McKinley, Inc., was
appointed as receiver.
To recover control of the project, Packard Square LLC filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case No.
17-52483) on Sept. 5, 2017, estimating $50 million to $100 million
in assets and less than $50 million in liabilities.
David G. Dragich, Esq., and Amanda Vintevoghel, Esq., at The
Dragich Law Firm PLLC, serve as the Debtor's bankruptcy counsel.
As of Sept. 6, 2017, no request for appointment of a chapter 11
trustee or examiner has been made and no official committee has
been appointed.
PACKARD SQUARE: Seeks to Compel Receiver to Give Back Project
-------------------------------------------------------------
Packard Square LLC, asks the Bankruptcy Court in Michigan to direct
the receiver to turn over all property (including all drawings,
books and records) to the Debtor and file an accounting of the
property.
"The Receiver is incapable of completing of the Debtor's ongoing
project in Ann Arbor, Michigan, because it does not have the
expertise, nor apparent willingness, to properly complete the
Project timely and in a cost-efficient manner. In more than 10
months, the Receiver has made almost no progress on the
construction but incurred costs of nearly $10 million. The Debtor
is ready to resume control of and Complete the Project. This is
evidenced by the Debtor's extensive preparation for the Project,
immense knowledge of the Project, and continued involvement in the
Project, even though the Receiver ignored all of the Debtor's
principal's advice and guidance. Further, prior to the
receivership, the Debtor had already leased space for 70of the
units. The Receiver returned all lease deposits because it could
not provide a schedule for completion. A successful rehabilitation
can occur if the Debtor regains control of the Project," counsel to
the Debtor, David G. Dragich, Esq., at THE DRAGICH LAW FIRM PLLC,
asserts.
"Second, assuming the Court approves the DIP Financing proposed in
its DIP Motion, there will be sufficient funds available for the
Debtor to complete the construction of the Project. F urther, the
Debtor will be able to resume its pre-receivership efforts to
market and lease the residential units and retail space, t o
generate income for the Debtor. Therefore, the second factor,
availability of funds to complete a successful reorganization,
weighs in favor of the Debtor."
"Finally, considering whether there has been mismanagement of the
Debtor's property to date, any mismanagement has not been by the
Debtor, but by the Receiver. In fact, the Debtor has continuously
tried to assist the Receiver to fix its errors and provide useful
information for the successful completion of the Project. The
Receiver was appointed without an evidentiary hearing and no
showing of mismanagement by the Debtor. The significant and
egregious failures of the Receiver to date mandate that the Court
return control to the Debtor in the interests of the Debtor's
creditor."
The Debtor asks the Court to require the Receiver to immediately
turn over all of the Debtor's property consistent with section 543
of the Bankruptcy Code.
According to the Debtor, the Receiver has mismanaged the property
since its appointment. The Debtor cites a number of "extensive
problems and inadequacies":
* The Receiver has made little progress towards completing
construction since it took over the Project in late 2016 and has
wasted millions of dollars. The Receiver does not have experience
in developing a construction project of the same magnitude as the
Project. The Receiver terminated C.E. Gleeson Construction, the
most recent construction manager.
* The Receiver is a property management firm that oversees
completed buildings, and does very little "ground-up" development.
The Receiver owns and manages at least 14 apartment complexes and
retail centers in Ann Arbor, which makes the Receiver a direct
competitor of the Debtor. The Receiver has incentive to delay the
completion of the Project to prevent another competitor from
entering the Ann Arbor apartment market. The Receiver also has an
incentive to prolong the Project in order to collect its fees,
which are substantial.
* The Receiver has not provided a construction schedule, which
was required to be produced within 90 days of the execution of the
Receiver Construction Loan. The Receiver did not, and does not,
have a "game plan," a "construction schedule," or any idea on how
to complete the Project quickly, or at all for that matter. The
failure to have a construction schedule has resulted in millions
of dollars of waste. Further, the failure to have a construction
schedule, while being grossly negligent, also resulted in the
failure to provide potential tenants with information for potential
leasing. As a result, the Receiver is unable to pre-lease any of
the Project and in fact, has ceased all efforts to lease the units
or retail space.
* There were approximately 70 deposits on the apartments before
the receivership began, but the Receiver returned all of these
deposits because it had no schedule for delivery of the units. The
Receiver has not entered into a single lease since its appointment
and has made no mention of leasing in its reports.
* The Receiver does not have a development supervisor on the
Project site. It has relinquished all control to the general
contractor, O'Brien Construction Company. The Receiver has no
on-site presence. Additionally, on most days, there are only 12-15
construction workers on site, when there should be hundreds to
complete a project of this magnitude expeditiously.
* The Receiver has been in control of the Project for 10 months,
but has made almost no progress. There is no urgency on behalf of
the Receiver to complete the Project. This is exemplified by the
fact that the Receiver entered into an amendment with O'Brien
Construction on April 25, 2017 to its general construction
agreement, which states that the building will not be completed
until October 31, 2018.
* The Receiver has spent almost $10,000,000. Only about
$1,000,000 has been spent on actual construction costs, with the
remaining funds spent on "soft costs," including fees and billings
which pre-dated the receivership. Prior to the receivership, the
Debtor spent approximately $2,000,000 on construction costs per
month. On a building that costs approximately $30,000,000 in hard
construction costs to build and should take 18 months in total to
complete, the hard construction cost spending by the Receiver
averaged $125,000 per month.
About Packard Square
Packard Square LLC owns a 360,000 square foot mixed-use development
on a six and a half acre site on Packard Street in Ann Arbor,
Michigan. Once completed, the Company expects the project to be
worth approximately $93,500,000.
The Debtor is currently under receivership. A receivership case,
CAN IV Packard Square LLC v. Packard Square LLC, Case No.
16-990-CB, Washtenaw County Trial Court, Honorable Archie C. Brown
presiding, was filed, and on Nov. 1, 2016, McKinley, Inc., was
appointed as receiver.
To recover control of the project, Packard Square LLC filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case No.
17-52483) on Sept. 5, 2017, estimating $50 million to $100 million
in assets and less than $50 million in liabilities.
David G. Dragich, Esq., and Amanda Vintevoghel, Esq., at The
Dragich Law Firm PLLC, serve as the Debtor's bankruptcy counsel.
As of Sept. 6, 2017, no request for appointment of a chapter 11
trustee or examiner has been made and no official committee has
been appointed.
PBA EXECUTIVE: New Plan Cuts SC's Payment to $1,681 Per Month
-------------------------------------------------------------
PBA Executive Suites LLC filed with the U.S. Bankruptcy Court for
the Southern District of Florida a third amended plan of
reorganization, which propose to pay creditors of Railside, LLC,
from future income.
Class 3 under the third amended plan is the secured claim of Swift
Capital in the amount of $166,110.74. This amount has been reduced
post-petition and the Debtor currently owes $55,487.60 which
includes attorneys' fees. The amount owed to Swift shall be paid
over 33 weeks in the amount of $1,681.71 per week. At the end of 15
months Swift will be fully satisfied. The class is impaired.
The previous plan proposed to pay Swift Capital a monthly payment
of $7,790.67 over 15 months.
Class 4 consists of the unsecured claims, which will be paid in
full over 60 months. The estimated amount of the unsecured claims
is $80,000. The unsecured claims will be paid pro rata over 60
months by sharing a payment of $1,333.33 per month. The class is
impaired.
A full-text copy of the Third Amended Plan of Reorganization is
available at:
http://bankrupt.com/misc/flsb16-26136-131.pdf
About PBA Executive Suites
PBA Executive Suites, LLC, sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 16-26136) on Dec. 3,
2016. The petition was signed by William Smith, chief financial
officer. At the time of the filing, the Debtor estimated assets of
less than $1 million and liabilities of less than $500,000.
The Debtor is represented by Brian K. McMahon, Esq., at Brian K.
McMahon, P.A.
An official committee of unsecured creditors has not yet been
appointed in the Debtor's case.
The Debtor was formed in 2014. A few months later, it entered into
leases with Republic Western Investments, Co., LLC, which owns
properties in Boca Raton and Boynton Beach, Florida. The leases
have been assumed by the Debtor.
The Debtor operates executive suites in Boca Raton and Boynton
Beach. It has 210 offices of which 136 are leased at these two
locations. At these locations, there are 118 tenants generating
$145,000 per month in income.
PENNSVILLE 8 URBAN: Plan Outline Okayed, Plan Hearing on Sept. 28
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey is set to
hold a hearing on September 28 to consider approval of the Chapter
11 plan for Pennsville 8 Urban Renewal, LLC.
The court had earlier approved the company's disclosure statement,
allowing it to start soliciting votes from creditors.
The order signed on August 22 required creditors to file their
objections and cast their votes accepting or rejecting the plan not
less than seven days before the hearing.
About Pennsville 8 Urban Renewal
Pennsville 8 Urban Renewal, LLC sought protection under Chapter 11
of the Bankruptcy Code (Bankr. D.N.J. Case No. 17-14388) on March
6, 2017. The petition was signed by William Juliano, managing
member, Pennsville 8 Manager, LLC. The case is assigned to Judge
Michael B. Kaplan.
At the time of the filing, the Debtor estimated its assets and
debts at $1 million to $10 million.
On August 17, 2017, the Debtor filed a disclosure statement, which
explains its proposed Chapter 11 plan.
PETROLEUM SPECIALTY: Taps Darnall Sikes as Accountant
-----------------------------------------------------
Petroleum Specialty Rental, LLC seeks approval from the U.S.
Bankruptcy Court for the Western District of Louisiana to hire an
accountant.
The Debtor proposes to employ Darnall, Sikes, Gardes & Frederick
to, among other things, prepare and file its quarterly tax returns
and provide other accounting services.
Darnall charges an hourly fee of $140 for the services of its
senior accountants, and $263 for partners. Meanwhile, the firm
charges $92 per hour for bookkeeping and payroll services.
John Armato, a certified public accountant employed with Darnall,
disclosed in a court filing that he has no relationship or business
association with any creditor, attorney or accountant involved in
the Debtor's bankruptcy case.
The firm can be reached through:
John P. Armato
Darnall, Sikes, Gardes & Frederick
1201 Brashear Ave
Morgan City, LA 70380
Phone: 985-384-6264
Fax: 985-384-8140
About Petroleum Specialty
Petroleum Specialty Rental, LLC, a small business debtor as defined
in 11 U.S.C. Sec. 101(51D), is an oil & natural gas company located
in Morgan City, Louisiana. The Debtor posted gross revenue of
$808,642 for 2016 and gross revenue of $2.03 million for 2015.
The Debtor filed a Chapter 11 petition (Bankr. W.D. La. Case No.
17-50747) on June 13, 2017. The petition was signed by John
Patrick Williamson, chief operating officer. The Debtor disclosed
$609,954 in total assets and $1.69 million in total liabilities.
The case is assigned to Judge Robert Summerhays. The Debtor is
represented by William C. Vidrine, Esq., at Vidrine & Vidrine,
PLLC.
PIKE CORP: S&P Rates New $630 Million First-Lien Term Loan 'B'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to Pike Corp.'s proposed $630 million first-lien
term loan due 2024. The '3' recovery rating indicates S&P's
expectation for meaningful (50%-70%; rounded estimate: 50%)
recovery in a payment default scenario.
S&P said, "At the same time, we affirmed our 'B' issue-level rating
on Pike's existing revolving credit facility. The '3' recovery
rating is unchanged, indicating our expectation for meaningful
(50%-70%; rounded estimate 50%) recovery in a payment default
scenario.
"The company anticipates that it will use the proceeds from the
proposed $630 million first-lien term loan to repay its existing
first- and second-lien term loans. We plan to withdraw our
issue-level ratings on these term loans following the close of the
transaction.
"The refinancing transaction will not substantially alter the
company's credit metrics; therefore, our corporate credit rating on
Pike Corp. remains unchanged. Our ratings on the company reflect
our expectation that its debt leverage will remain above 6x over
the next 12 months. We believe that the company's free operating
cash flow-to-debt ratio will remain above 5% based on the increased
revenue from its existing and new customers and its steady EBITDA
margin performance."
RECOVERY ANALYSIS
Key analytical factors
S&P's simulated default scenario assumes a payment default in 2020
that stems from broader macroeconomic weakness, which leads to a
slowdown in outsourcing and reduced or postponed maintenance
spending by the company's utilities customers.
This could be further exacerbated if the company is unable to
attract and/or retain a skilled labor force, particularly in the
event of a severe storm, when there is an immediate need to
mobilize employees in order to provide a timely response.
This could cause the company to lose key contracts and customers,
causing revenue to decline and margins to shrink. Thus, the
company's cash flow generation would be impaired, its liquidity
eroded, and a payment default could occur.
Other assumptions also include the following:
-- LIBOR of 250 basis points at default,
-- 85% of revolver drawn at default, and
-- All debt refinanced on similar terms before maturity.
Simulated default assumptions
-- Simulated year of default: 2020
-- EBITDA at emergence: $78 million
-- EBITDA multiple: 5x
Simplified waterfall
-- Gross enterprise value: $392 million
-- Administrative expenses: $20 million
-- Net enterprise value: $373 million
-- Secured first-lien debt claims: $722 million
--Recovery expectations: 50%-70% (rounded estimate: 50%)
Note: All debt amounts include six months of prepetition interest.
Collateral value equals the asset pledge from obligors after
priority claims plus the equity pledge from nonobligors after
nonobligor debt.
Ratings List
Pike Corp.
Corporate Credit Rating B/Stable/--
Ratings Affirmed; Recovery Rating Revised
To From
Senior Secured
US$100 mil first-lien revolver due 2022 B B
Recovery 3(50%) 3(55%)
New Rating
Pike Corp.
Senior Secured
$630 mil first-lien term loan B due 2024 B
Recovery Rating 3(50%)
PIONEER NURSERY: Taps Fear Waddell as Legal Counsel
---------------------------------------------------
Pioneer Nursery, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of California to hire legal counsel in
connection with its Chapter 11 case.
The Debtor proposes to employ Fear Waddell, P.C. to, among other
things, give legal advice regarding its duties under the Bankruptcy
Code and assist in the preparation of a bankruptcy plan.
The firm received a retainer in the amount of $105,000 from the
Debtor prior to the petition date.
Fear Waddell does not hold or represent any interest adverse to the
Debtor's estate or creditors, according to court filings.
The firm can be reached through:
Peter L. Fear, Esq.
Gabriel J. Waddell, Esq.
Fear Waddell, P.C.
7650 North Palm Avenue, Suite 101
Fresno, CA 93711
Phone: (559) 436-6575
Fax: (559) 436-6580
Email: pfear@fearlaw.com
About Pioneer Nursery LLC
Founded in 1968, Pioneer Nursery Inc. is in the retail nurseries
and garden stores industry. It owns crops -- either planted or
harvested -- of approximately 440,000 pistacio trees worth $7 per
tree having a total retail value of $3.08 million. The Debtor
posted gross revenue of $4.55 million in 2016 and gross revenue of
$7.78 million in 2015.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Calif. Case No. 17-13112) on August 11, 2017.
Brian Blackwell, member, signed the petition.
At the time of the filing, the Debtor disclosed $5.42 million in
assets and $245,701 in liabilities.
Judge Fredrick E. Clement presides over the case.
PITNEY BOWES: Moody's Lowers Senior Unsecured Debt Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service downgraded Pitney Bowes Inc.'s senior
unsecured debt ratings to Ba1 from Baa3 and changed the outlook to
stable from negative. As part of the rating action, Moody's
assigned Pitney Bowes a Ba1 corporate family rating (CFR), Ba1-PD
probability of default rating, and an SGL-1 speculative grade
liquidity rating. The rating action follows the company's
announcement that it will acquire Newgistics for total
consideration of $475 million, to be funded with debt.
RATINGS RATIONALE
The downgrade reflects Moody's view that the incremental debt that
Pitney Bowes will incur to close the Newgistics acquisition will
further strain an already weakened credit profile, and the company
will not have sufficient financial flexibility to maintain an
investment grade rating while it navigates through the secular and
macro pressures facing its core mail meter business.
Although the rating agency views the potential acquisition of
Newgistics as strategically sound, as it stands to expand the
company's product offerings around e-commerce fulfillment and
shipping services, execution risks and costs of integrating
Newgistics will further strain the company's credit metrics over
the next couple of years. The potential need for additional
borrowings over the next few years to aid in the company's
transformation drive is also a consideration in the rating action.
Moody's notes that despite delivering relatively consistent cash
from operations, the company's dividend payments relative to the
projected cash generation limit internal cash sources needed for
further investments to grow the business.
The Ba1 CFR recognizes Pitney Bowes' leading market presence in the
highly regulated mail metering market, with European-based
providers NeoPost/Hasler and FP Mailing Solutions seeking to gain
share in hardware based meters.
Over the past several years, the company has taken steps towards
rationalizing its business by selling non-core units, such as
Pitney Bowes Management Services, refocusing its legacy postage
meter and digital commerce units around product strengths,
reorganizing the sales organization, taking more costs out of the
business and revamping the IT and reporting systems to improve
operating margins. In mid-2016, Pitney Bowes launched a revamp of
its hardware portfolio, in addition to introducing a new suite of
competitive cloud-based shipping and postage platforms that will
address customer demands across all market segments. Moody's notes
that the new initiatives will not deliver immediate improvements in
the company's results, as it will take time and incremental
spending to migrate the customer base to the new hardware
platforms. In the meantime, the company's revenue will continue to
be pressured by competitive pricing, secular decline in traditional
mail, customers delaying upgrading older meters, or US customers
downsizing to smaller and less profitable machines.
Pitney Bowes provides customer financing as an integral part of
meter leases and rentals and its finance operations represent a
high proportion of the company's profit generation. Moody's
believes that Pitney Bowes' customer-finance residual-asset
valuation methods, residual realization, underwriting and risk
management processes are prudently managed and executed. However,
financing these receivables weighs on the company's risk assessment
due to the ongoing need to manage its debt maturities and cost of
funding.
Pitney Bowes' SGL-1 rating reflects the company's very good
liquidity position, supported by healthy cash and short term
investment balances of over $1 billion at June 30, 2017, that
Moody's expects will largely be maintained in excess of $700
million over the next 12 -- 15 months and free cash flow generation
of over $150 million (Moody's adjusted). The company's liquidity is
supplemented by a $1 billion revolving credit facility, which
Moody's expects will remain largely undrawn. Given Pitney Bowes'
credit profile, Moody's expects the company to remain within the
financial maintenance covenants tied to its debt facilities.
The ratings for the senior unsecured notes (Ba1, LGD4) reflect the
overall probability of default of the company, as reflected in the
PDR of Ba1-PD, and the expectation for average family recovery in a
default scenario.
The stable outlook reflects Moody's view that despite the pressure
on legacy mailing revenues and operating margins in the near term,
the launch of the new product portfolio and gains in digital
commerce revenues will allow the company to address its business
challenges. The outlook is also supported by the company's need to
maintain strong credit protection measures to support the customer
finance business.
The ratings may be upgraded if Pitney Bowes demonstrates a track
record of consistent revenue growth and operating margin
improvement, while adjusted debt/EBITDA leverage is maintained
comfortably below 3 times and free cash flow to adjusted debt
percentage grows to double digits.
The ratings could be downgraded if the persistent revenue
contraction is not reversed, if adjusted debt to EBITDA remains
above 4.0x or if free cash flow to debt percentage remains in the
low single digits. The rating would also be pressured if the
company prioritizes shareholder payouts over maintaining
conservative financial policies.
Ratings Actions:
Issuer: Pitney Bowes Inc.
Corporate Family Rating -- Assigned Ba1
Probability of Default Rating -- Assigned Ba1-PD
Speculative Grade Liquidity Rating -- Assigned SGL-1
Senior Unsecured Notes -- Downgraded to Ba1 (LGD4) from Baa3
-- Issuer Rating, Baa3, Withdrawn
-- Senior Unsecured Shelf, Downgraded to (P) Ba1 from (P)Baa3
-- Preferred Shelf, Downgraded to (P) Ba3 from (P)Ba2
-- Preference Shelf, Downgraded to (P) Ba3 from (P)Ba2
-- Subordinate Shelf, Downgraded to (P) Ba2 from (P)Ba1
-- Senior Unsecured Commercial Paper, Downgraded to NP from P-3
Outlook Actions:
Issuer: Pitney Bowes Inc.
-- Outlook, Changed to Stable from Negative
Based in Stamford, CT, Pitney Bowes is a leading global provider of
integrated mail, messaging and document management solutions that
includes postage meters, mailing equipment and related document
messaging services and software, mail and marketing services.
The principal methodology used in these ratings was Diversified
Technology Rating Methodology published in December 2015.
PLYMOUTH PLACE: Fitch Alters Outlook to Neg, Affirms BB+ on Bonds
-----------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating on approximately $79.9
million in bonds issued by the Illinois Finance Authority on behalf
of Plymouth Place.
The Rating Outlook is revised to Negative from Stable.
SECURITY
The bonds are secured by an interest in the gross revenues of the
obligated group (OG), a security interest in certain mortgaged
properties and a debt service reserve fund.
KEY RATING DRIVERS
COMPRESSED PROFITABILITY: The Negative Outlook reflects Plymouth
Place's compressed profitability and coverage metrics.
Profitability compressed in fiscal 2016 and in the six-month
interim period ending June 30, 2017 with net operating margin
adjusted (NOMA) decreasing to 18.2% and 16.2%, respectively, and is
now light relative to Fitch's below investment-grade (BIG) medians
of 20.0%.
HIGH DEBT BURDEN: Plymouth Place needs to sustain solid
profitability to support its high debt burden with maximum annual
debt service (MADS) equal to 20.2% of fiscal 2016 revenue. Prior to
the tightening in fiscal 2016, MADS coverage was solid, since
stabilization was achieved, averaging 2.0x through 2015, but
decreased to 1.0x in fiscal 2016 and 1.1x in the interim period
reflecting the compressed profitability.
STRONG OCCUPANCY: Independent living unit (ILU) and assisted living
unit (ALU) occupancy have been consistently strong since the
community achieved stabilization in fiscal 2013, averaging 96%
through fiscal 2016. However skilled nursing (SNF) occupancy has
been more volatile and equaled 88% at June 30, 2017.
ADEQUATE LIQUIDITY: Liquidity metrics have improved significantly
since 2011 and are now adequate for the rating with 355 days cash
on hand, 34.3% cash-to-debt and 4.6x cushion ratio at June 30,
2017.
RATING SENSITIVITIES
IMPROVED COVERAGE: Fitch expects Plymouth Place to improve
operating profitability to provide for MADS coverage consistent
with the rating category. Failure to improve coverage metrics may
lead to negative rating movement.
POINTE PROPERTIES: Taps Steven P. Taylor as Legal Counsel
---------------------------------------------------------
Pointe Properties, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of Indiana to hire legal counsel in
connection with its Chapter 11 case.
The Debtor proposes to employ the Law Office of Steven P. Taylor,
P.C. to, among other things, give legal advice regarding its duties
under the Bankruptcy Code and assist in the preparation of a
bankruptcy plan.
The firm will charge an hourly fee of $350 for its services and
will receive a retainer in the sum of $5,000.
Steven Taylor, Esq., disclosed in a court filing that he does not
hold or represent any interest adverse to the Debtor's estate.
The firm can be reached through:
Steven P. Taylor, Esq.
Law Office of Steven P. Taylor, P.C.
6100 North Keystone Avenue, Suite 254
Indianapolis, IN 46220
Tel: 317-475-1570
Fax: 317-475-1697
Email: sptaylor@bankruptcyoffice.net
About Pointe Properties LLC
Pointe Properties, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Ind. Case No. 17-06729) on September
5, 2017. Judge Jeffrey J. Graham presides over the case.
At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $50,000 and liabilities of $1,000,001
to $10 million.
POSTO 9 LAKELAND: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor affiliates that filed Chapter 11 bankruptcy petitions:
Debtor Case No.
------ --------
Posto 9 Lakeland, LLC 17-07887
4363 Doral Court
Lakeland, FL 33801
Posto 9 Properties, LLC 17-07890
4363 Doral Court
Lakeland, FL 33801
Type of Business: Posto 9 Lakeland, LLC is a privately held
company that operates a Brazilian restaurant
at 215 East Main Street Lakeland, FL 33801,
Polk County.
Posto 9 Properties listed its business as a
single asset real estate (as defined in 11
U.S.C. Section 101(51B)). It owns in
fee simple interest a real property located
at 215 East Main Street, Lakeland, Florida
33801 valued at $2.39 million.
Chapter 11 Petition Date: September 6, 2017
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: Hon. Michael G. Williamson
Debtors' Counsel: Eric D Jacobs, Esq.
JENNIS LAW FIRM
606 East Madison Street
Tampa, FL 33602
Tel: 813-229-2800
Fax: 813-229-1707
E-mail: ecf@jennislaw.com
- and -
David S Jennis, Esq.
JENNIS LAW FIRM
606 East Madison Street
Tampa, FL 33602
Tel: (813) 229-2800
Fax: (813) 229-1707
E-mail: ecf@jennislaw.com
Total Total
Assets Liabilities
---------- -----------
Posto 9 Lakeland, LLC $1,210,000 $4,850,000
Posto 9 Properties, LLC $2,410,000 $3,800,000
The petitions were signed by Marco Franca, manager.
Posto 9 Lakeland, LLC's list of 20 largest unsecured creditors is
available for free at http://bankrupt.com/misc/flmb17-07887.pdf
Posto 9 Properties, LLC's list of six unsecured creditors is
available for free at:
http://bankrupt.com/misc/flmb17-07890.pdf
PUERTO RICO: Ambac Cleared of Allegations of Misleading Investors
-----------------------------------------------------------------
Alex Wolf, writing for Bankruptcy Law360, reports that U.S.
District Judge Richard M. Berman has dismissed a putative class
action brought against Ambac Financial Group Inc. on charges it
attempted to cover up the true credit risk and loss exposure to the
billions in Puerto Rico. According to Law360, Ambac Financial and
its executives were accused of misleading investors about the
company's $2.5 billion Puerto Rican bond portfolio and exposure to
losses. The Court found no alleged signs of intentional fraud or
concealment, Law360 states.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ("PROMESA").
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21. On July 2, 2017, a Title III case was commenced for the
Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are onboard as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Toro, Colon, Mullet, Rivera & Sifre, P.S.C., and Kramer Levin
Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc.,
Franklin Advisers, Inc., and the First Puerto Rico Family of Funds,
which collectively hold over $3.5 billion in COFINA Bonds and over
$2.9 billion in other bonds issued by Puerto Rico and other
instrumentalities, including over $1.8 billion of Puerto Rico
general obligation bonds ("GO Bonds").
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC,
Monarch Alternative Capital LP, Senator Investment Group LP, and
Stone Lion Capital Partners L.P.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed a nine-member Official Committee of
Retirees and a seven-member Official Committee of Unsecured
Creditors of the Commonwealth. The Retiree Committee tapped Jenner
& Block LLP and Bennazar, Garcia & Milian, C.S.P., as its
attorneys. The Creditors Committee tapped Paul Hastings LLP and
O'Neill & Gilmore LLC as counsel.
PUERTO RICO: GO Group Seeks to Look Into Fiscal Plan Projections
----------------------------------------------------------------
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure,
the Ad Hoc Group of General Obligation Bondholders (the "GO
Group"), Assured Guaranty Corp. and Assured Guaranty Municipal
Corp. and the Mutual Fund Group on Oct. 4, 2017, at 9:30 a.m. will
seek approval of a motion seeking an examination of documents and
key witnesses concerning the projections in the Fiscal Plan, which
will form the basis of any plan of adjustment, and the
Commonwealth's fiscal health in general.
In March 2017, the Board certified a fiscal plan for the
Commonwealth (as amended, the "Fiscal Plan"). While the Board's
advisors have, at times, relied upon longer-term projections, the
Fiscal Plan covers fiscal years 2017 through 2026 and contains
financial projections and other data for that period. On its face,
the Fiscal Plan requires financial creditors collectively to accept
a haircut of nearly 80%.
The Movants said they have long have tried to work with the
Oversight Board and the Commonwealth to understand the
Commonwealth's finances. The Movants say they have sought
documents concerning the projections in the Fiscal Plan but the
Oversight Board and the Commonwealth have steadfastly refused to
provide these facts voluntarily to the Movants or to most other
creditors.
"In the Board's view as expressed repeatedly to all creditors, to
this Court, and most recently to Movants during a conference held
in advance of our filing this Motion, the determination to certify
the Fiscal Plan is insulated by PROMESA not only from our
"second-guessing," but even from this Court's scrutiny. That facile
response misses the point: Movants' purpose in seeking this
discovery is to be able to assess whether any proposed plan of
adjustment—which must be consistent with the Fiscal Plan—is
confirmable. And the confirmability of a plan of adjustment is
assuredly open to the Court's scrutiny," says Gregory A. Horowitz,
Esq., at Kramer Levin Naftalis & Frankel LLP, counsel to the
Movants.
The Movants, which collectively own or insure more than $15.6
billion of debt issued by Puerto Rico or its instrumentalities,
seek an examination, pursuant to Bankruptcy Rule 2004, of
categories of documents and testimony relating to the support for
the numerous projections in the Fiscal Plan, bases for the Board's
and the Commonwealth's numerous claims that the Commonwealth lacks
funds to pay financial creditors, and documents provided to the
Commonwealth's and the Oversight Board's financial advisors and
other professionals. It also seeks permission to request
information on similar topics from the Commonwealth's financial
advisors and other professionals without further leave from the
Court.
Counsel to the Ad Hoc Group of General Obligation Bondholders is
represented by attorneys at Paul, Weiss, Rifkind, Wharton &
Garrison, LLP; Jimenez, Graffam & Lausell; and Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP.
Counsel for Assured Guaranty Corp and Assured Guaranty Municipal
Corp. are Casellas Alcover & Burgos P.S.C, and Cadwalader,
Wickersham & Taft LLP. Counsel to the Mutual Fund Group are Kramer
Levin Naftalis & Frankel LLP and Toro, Colón, Mullet, Rivera &
Sifre, P.S.C.
A copy of the Rule 2004 Motion is available at:
http://bankrupt.com/misc/PR_1178_M_2004_GO_Group.pdf
* * *
Judge Laura Taylor Swain on Aug. 28, 2017 ordered that the Movants'
motion is referred to Magistrate Judge Judith Dein pursuant to 28
U.S.C. Sec. 636(b).
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ("PROMESA").
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21. On July 2, 2017, a Title III case was commenced for the
Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin
Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc.,
Franklin Advisers, Inc., and the First Puerto Rico Family of Funds,
which collectively hold over $3.5 billion in COFINA Bonds and over
$2.9 billion in other bonds issued by Puerto Rico and other
instrumentalities, including over $1.8 billion of Puerto Rico
general obligation bonds ("GO Bonds").
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC,
Monarch Alternative Capital LP, Senator Investment Group LP, and
Stone Lion Capital Partners L.P.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed a nine-member Official Committee of
Retirees and a seven-member Official Committee of Unsecured
Creditors of the Commonwealth. The Retiree Committee tapped Jenner
& Block LLP and Bennazar, Garcia & Milian, C.S.P., as its
attorneys. The Creditors Committee tapped Paul Hastings LLP and
O'Neill & Gilmore LLC as counsel.
PUERTO RICO: NPFGC Says Board Not Giving Basic Financial Info
-------------------------------------------------------------
National Public Finance Guarantee Corporation filed with the U.S.
Bankruptcy Court for the District of Puerto Rico a motion for an
order pursuant to Rule 2004 of the Federal Rules of Bankruptcy
Procedure, authorizing National to take discovery of (i) the
Financial Oversight and Management Board for Puerto Rico, as
representative of the Commonwealth of Puerto Rico; (ii) the
Commonwealth; and (iii) the Puerto Rico Fiscal Agency and Financial
Advisory Authority ("AAFAF") and approving procedures to take
related discovery from other parties.
National, which owns or insures billions of dollars of debt issued
by the Commonwealth or its instrumentalities, seeks from the
Oversight Board, AAFAF, the Commonwealth, and other third parties
basic financial information that is necessary for National and its
advisors to understand the Commonwealth's financial condition and
its fiscal plan, as certified by the Oversight Board on March 13,
2017. Without more information regarding the assumptions and
methodology underlying the Fiscal Plan, including key financial
information regarding the Debtor's assets and projected revenues
and expenses, National cannot accurately evaluate and react to any
restructuring proposals made by the Debtor, including in connection
with any proposed plan of adjustment, which by law must be based on
the Fiscal Plan.
According to National, counsel for the Oversight Board has
addressed the importance of allowing creditors to understand the
full picture of the Commonwealth's financial condition. For
example, at a hearing before Judge Dein on Aug. 22, 2017, counsel
for the Oversight Board emphasized the importance of conducting
investigations in a bankruptcy case: "There are always two reasons
for an investigation in bankruptcy, Your Honor: One is to see if
you can find something that will help enlarge the pie for the
benefit of the stakeholders; the other is simply to provide
sunshine. Creditors are suffering losses. They should know why."
Moreover, counsel for the Oversight Board asserted that "the Board
also doesn't have a problem making public other findings because
the sunshine policy is important, and the Board is in a perfect
position to provide that sunshine. . . . The Board has certainly
been as transparent as possible[.]"
National avers that while transparency is a hallmark of both
democratic government and the bankruptcy process, contrary to the
Oversight Board's assertions, the Commonwealth and its
representatives have inconceivably, repeatedly refused to provide
basic financial information to its creditors. Indeed, National's
financial advisor, PJT Partners ("PJT"), and its counsel, Weil,
Gotshal & Manges LLP ("Weil") have submitted multiple requests to
the Oversight Board, AAFAF and their respective advisors for
financial information and other diligence that would allow National
to evaluate the financial condition of the Commonwealth and its
instrumentalities, including various fiscal plans and their
implications for stakeholders. The Oversight Board and AAFAF,
however, have repeatedly ignored such requests and have yet to
produce the majority of the requested information.
National says the need for transparency is obvious. For example,
at a press conference on August 3, 2017, Governor Rossello stated
that the Commonwealth government had approximately $1.799 billion
cash on hand as of June 30, 2017.
This figure, according to National, is well above the projected
$291 million cash on hand for the June 30, 2017 forecast in the
Fiscal Plan. The significant discrepancy highlights the need for
transparency into the assumptions underlying the Fiscal Plan as
well as to the Commonwealth's overall financial condition.
There is no reason to further delay the disclosure of this
important information. Creditors in these Title III Cases must
have this information in order to participate meaningfully in the
process of advancing these Title III Cases. This Court recognized
this point at the very first hearing in these cases, when the Court
emphasized that "transparency is important in these proceedings"
and expressed hope that the Commonwealth would make "progress on
issues relating to the disclosure of information to creditors." To
that end, the Court ordered the Oversight Board to submit a status
report (the "Status Report") to keep the Court apprised of such
progress and also the status of settlement discussions.
National avers that the Status Report filed by the Oversight Board,
however, focused predominantly on the extremely limited information
that the Oversight Board deposited into a data room shortly before
the commencement of the Title III Cases. The Oversight Board
acknowledged that the Commonwealth received extensive follow-up
diligence requests and exaggerated the response delivered to
creditors by the Oversight Board and AAFAF. Contrary to the
Oversight Board's assertion that it "agreed to produce a
substantial amount of additional data," in large part they refused
to provide more information. Creditors' repeated requests for
critical information have been left unanswered and this is
evidenced by the various statements filed in response to the Status
Report, all of which express dissatisfaction with the lack of
transparency in these Title III Cases.
Unfortunately, the Oversight Board, AAFAF, and the Commonwealth
have thus far shown little intention of voluntarily conducting the
transparent and cooperative process that all parties, including
creditors, deserve and expect in a proposed restructuring of this
magnitude and importance. As a result, National now seeks an order
from the Court compelling the Oversight Board, AAFAF, the
Commonwealth, and related third parties to produce this
information.
A full-text copy of the Rule 2004 Motion is available at:
http://bankrupt.com/misc/PR_1177_M_2004_NPFGC.pdf
Counsel to NPFGC:
Marcia Goldstein, Esq.
Salvatore A. Romanello, Esq.
Kelly DiBlasi, Esq.
Gabriel A. Morgan, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
E-mail: marcia.goldstein@weil.com
salvatore.romanello@weil.com
kelly.diblasi@weil.com
gabriel.morgan@weil.com
- and -
Eric Perez-Ochoa, Esq.
Alexandra Casellas-Cabrera, Esq.
Lourdes Arroyo Portela, Esq.
ADSUAR MUNIZ GOYCO SEDA & PEREZ-OCHOA, P.S.C.
208 Ponce de Leon Avenue, Suite 1600
San Juan, PR 00936
Telephone: 787.756.9000
Facsimile: 787.756.9010
E-mail: epo@amgprlaw.com
acasellas@amgprlaw.com
larroyo@amgprlaw.com
* * *
Judge Laura Taylor Swain on Aug. 28, 2017 ordered that National's
Rule 2004 motion is referred to Magistrate Judge Judith Dein
pursuant to 28 U.S.C. Sec. 636(b).
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ("PROMESA").
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21. On July 2, 2017, a Title III case was commenced for the
Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings. Joint administration
of the Title III cases, under Lead Case No. 17-3283, was granted on
June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin
Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc.,
Franklin Advisers, Inc., and the First Puerto Rico Family of Funds,
which collectively hold over $3.5 billion in COFINA Bonds and over
$2.9 billion in other bonds issued by Puerto Rico and other
instrumentalities, including over $1.8 billion of Puerto Rico
general obligation bonds ("GO Bonds").
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC,
Monarch Alternative Capital LP, Senator Investment Group LP, and
Stone Lion Capital Partners L.P.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed a nine-member Official Committee of
Retirees and a seven-member Official Committee of Unsecured
Creditors of the Commonwealth. The Retiree Committee tapped Jenner
& Block LLP and Bennazar, Garcia & Milian, C.S.P., as its
attorneys. The Creditors Committee tapped Paul Hastings LLP and
O'Neill & Gilmore LLC as counsel.
QUINTILES IMS: Moody's Rates New $750MM Term Loan B Due 2025 'Ba1'
------------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to the proposed
$750 million senior secured term loan B due 2025 of Quintiles IMS
Incorporated. Quintiles IMS will use the proceeds to repay
borrowings under its revolver and for general corporate purposes.
Moody's affirmed QuintilesIMS' existing ratings including the Ba2
Corporate Family Rating (CFR), Ba2-PD Probability of Default Rating
(PDR), and SGL-1 Speculative Grade Liquidity Rating. At the same
time, Moody's revised the rating outlook to negative from stable.
Despite good operating performance and progress on its post-merger
integration, the change in outlook to negative reflects Moody's
concern regarding QuintilesIMS' higher leverage due to aggressive
share repurchases. In Moody's view, debt/EBITDA will remain
elevated above 4.5 times until the end of 2018 allowing minimal
cushion in the rating to withstand much additional debt-funded
share repurchases or business shortfalls.
The affirmation of the Ba2 CFR is based on Moody's view that
earnings and cash flow will continue to improve and that the pace
of share repurchases will slow. In addition, Moody's estimates
QuintilesIMS will continue to generate strong free cash flow, over
$1 billion in 2018.
Ratings assigned to Quintiles IMS Incorporated:
-- USD senior secured term loan of $750 million due 2025 at Ba1
(LGD2)
Ratings affirmed at Quintiles IMS Incorporated:
-- Probability of Default Rating, Ba2-PD
-- Speculative Grade Liquidity Rating, SGL-1
-- Corporate Family Rating, Ba2
-- Senior Secured Ratings, Ba1 (LGD2)
-- Senior Unsecured Notes, Ba3 (LGD5)
Outlook Actions:
-- The outlook is revised to negative from stable
RATINGS RATIONALE
QuintilesIMS's Ba2 Corporate Family Rating reflects the company's
considerable size, scale, and strong market positions as both a
pharmaceutical contract research organization (CRO) and
pharmaceutical data and analytics provider. The ratings are also
supported by the company's good operating cash flow and very good
liquidity. The ratings are constrained by Moody's view that
debt/EBITDA will not fall below 4.5 times before the end of 2018.
Despite growing earnings and favorable underlying market dynamics,
Moody's does not anticipate material debt repayment and believes
that most cash flow will continue to be prioritized for share
repurchases and acquisitions. The potential for integration
disruption remains a risk given the transformational nature of the
merger of legacy Quintiles and IMS Health, which closed in October
2016.
Moody's could downgrade QuintilesIMS' ratings if it believes debt
to EBITDA will be sustained above 4.5 times. Significant
debt-funded acquisitions or share repurchases could also result in
a downgrade.
Moody's could upgrade the ratings if Moody's expects the company to
maintain debt to EBITDA below 3.5 times, while demonstrating
consistent revenue growth and favorable profit margins.
QuintilesIMS is a leading global provider of outsourced contract
research and contract sales services to pharmaceutical,
biotechnology and medical device companies. The company is also a
leading provider of sales and other market intelligence primarily
to the pharmaceutical and biotech industries. Reported net service
revenues for the twelve months ended June 30, 2017 were $7.8
billion.
The principal methodology used in these ratings was that for the
Business and Consumer Service Industry published in October 2016.
RECESS HOLDINGS: Moody's Assigns First Time B3 Corp. Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned a first time B3 Corporate Family
Rating (CFR) and a B3-PD probability of default rating to Recess
Holdings, Inc. At the same time, Moody's assigned a B2 rating to
the company's $370 million first lien term loan and $50 million
delayed draw first lien term loan. Moody's also assigned a Caa2
rating to the company's $145 million second lien term loan.
Proceeds from the facilities will be used to fund the acquisition
of Recess by private equity firm Court Square Capital Partners.
Recess expects the acquisition to close by September 30, 2017.
Proceeds from the delayed draw term loan will be used to fund
future acquisitions. The ratings outlook is stable.
Moody's took the following rating actions on Recess Holdings,
Inc.:
Ratings Assigned:
- Corporate Family Rating at B3
- Probability of Default Rating at B3-PD
- $370 million first lien term loan due 2024 at B2 (LGD 3)
- $50 million delayed draw first lien term loan due 2024 at B2
(LGD 3)
- $145 million second lien term loan due 2025 at Caa2 (LGD 5)
The ratings outlook is stable.
RATINGS RATIONALE
Recess' B3 Corporate Family Rating reflects the cyclical nature of
its business, limited geographic diversity with sales concentrated
in the U.S., and high financial leverage. The company's products
are relatively high-cost, discretionary items, the purchase of
which can be delayed during cyclical downturns. And leverage is
high with debt/EBITDA above 6 times declining to 5.5 times by year
end 2019. The rating also reflects an aggressive acquisition
strategy that will keep financial leverage high and require
significant management attention to avoid integration issues. The
ratings further reflect Recess' strong market position in the U.S.,
being one of the two top two commercial playground equipment
manufacturers. It also reflects the company's good profit margins.
The first lien term loans are rated B2, one notch higher than the
Corporate Family Rating, reflecting their senior position to a
meaningful amount of lower priority debt. The first lien term loans
have a lower priority interest (second lien) on current assets,
which are secured on a first lien basis by the company's $70
million ABL revolving credit facility (not rated). The second lien
term loan is rated Caa2, two notches below the Corporate Family
Rating, reflecting the substantial amount of higher priority debt
in the capital structure.
The stable outlook incorporates Moody's expectation that Recess
will remain highly leveraged as it executes an acquisition growth
strategy.
Ratings could be upgraded if Recess effectively manages its
acquisition growth strategy, maintains stable operating
performance, and reduces financial leverage such that debt/EBITDA
approaches 5.5 times.
Ratings could be downgraded if operating performance declines,
liquidity weakens, or integration issues arise.
Recess manufactures commercial playground equipment, adult outdoor
fitness equipment, outdoor site amenities, and other recreational
equipment. Pro forma revenue is approximately $533 million. Recess
is being acquired by private equity firm Court Square Capital
Partners.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
REES ASSOCIATES: Arthur J. Gallagher Joins Creditor's Committee
---------------------------------------------------------------
Arthur J. Gallagher & Co has joined the official committee of
unsecured creditors in the Chapter 11 case of Rees Associates,
Inc., replacing RR Donnelley.
As reported by the Troubled Company Reporter on March 16, 2017,
Daniel M. McDermott, U.S. Trustee for Region 12, on March 13
appointed three creditors to serve on the Committee.
The committee members now include:
(1) Arthur J. Gallagher & Co.
c/o Kent Rosenberg
4200 Corporate Drive, Suite 160
Des Moines, IA 50305
Tel: (515) 440-8404
Fax: (515) 457-8964
E-mail: Robert.a.larsen@rrd.com
(2) Integrity Printing
c/o John Dalby
1923 NW 92nd Court
Clive, IA 50325
Tel: (515) 288-2980
Fax: (515) 288-2983
E-mail: Johnd@integrityprintdsm.com
(3) Packaging Distribution Services, Inc.
c/o Bob Buising, Jr.
P.O. Box 1284
West Des Moines, IA 50266
Tel: (515) 422-5889
Fax: (515) 883-2044
E-mail: BobB@pdspack.com
Bob Buising Jr. of Packaging Distribution is designated as Acting
Chairperson of the Committee pending selection by the Committee
members of a permanent Chairperson.
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at a debtor's
expense. They may investigate the debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent.
About Rees Associates Inc.
Based in Des Moines, Iowa, Rees Associates, Inc., sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Iowa Case No.
17-00273) on Feb. 27, 2017. The petition was signed by Stephen D.
Lundstrom, president. At the time of the filing, the Debtor
disclosed $6.43 million in assets and $3.58 million in
liabilities.
The Debtor is represented by Jeffrey D. Goetz, Esq., at Bradshaw
Fowler Proctor & Fairgrave P.C. The Debtor employs Amherst
Consulting, LLC, as financial advisor and investment banker.
On March 13, 2017, the U.S. Trustee for Region 12 appointed an
official committee of unsecured creditors. The committee members
are: (1) RR Donnelley; (2) Packaging Distribution Services, Inc.;
and (3) Integrity Printing. The Committee hired Shaw Fishman Glantz
& Towbin LLC as bankruptcy counsel, and Dickinson Mackaman Tyler &
Hagen, P.C., as Iowa counsel. The Committee also hired Province
Inc. as financial advisor.
The TCR reported on June 19 that RR Donnelley has been removed the
Official Committee of Unsecured Creditors of Rees Associates, Inc.,
pursuant to stipulation and consent order regarding RR Donnelley
and Sons Company's motion for relief from automatic stay.
REHOBOTH MCKINLEY: Fitch Cuts Rating on 2007A Hospital Bonds to CCC
-------------------------------------------------------------------
Fitch Ratings has removed from Rating Watch Negative and downgraded
to 'CCC' from 'B' the rating on the following bonds issued by the
New Mexico Hospital Equipment Loan Council on behalf of Rehoboth
McKinley Christian Heath Care Services, Inc. (RMCHCS):
-- $5.6 million hospital facility improvement and refunding
revenue bonds, series 2007A.
SECURITY
The bonds are secured by a pledge of revenues and equipment and a
debt service reserve fund.
KEY RATING DRIVERS
LIQUIDITY DECLINE: The downgrade reflects a material drop in
unrestricted liquidity through the first six months of 2017, which
has elevated the possibility of default. Unrestricted cash and
investment fell to $2.9 million, which equates to a very thin 15.8
days cash on hand, from $5.7 million at Dec. 31, 2016. The drop in
liquidity has been driven by operating losses of $1.6 million (a
negative 5% operating margin) through the first six months of
2017.
2017 OPERATING CHALLENGES: The operating losses in 2017 are being
driven by a variety of factors, including slightly softer inpatient
volumes and an increase in length of stay without a commensurate
rise in case mix. RMCHCS is also paying $183,000 a month and is not
receiving payments for three quarters (approximately $1.8 million
in total withheld payments) from the New Mexico Safety Net Care
Pool Program. The payments to the state of New Mexico are related
to prior year reconciliations.
POTENTIAL REFINANCING: Rehoboth McKinley Cristian Care Services,
Inc.'s (RMCHCS) 2007A bonds became callable on Aug. 15, 2017.
RMCHCS is actively seeking to refinance the bonds. The rating does
not factor in the potential refinancing of the bonds.
RATING SENSITIVITIES
LIQUIDITY PROFILE: A further deterioration in Rehoboth McKinley
Cristian Care Services, Inc.'s (RMCHCS) liquidity would likely lead
to further negative rating action, as RMCHCS would move closer to a
potential default or bankruptcy. The rating could stabilize or
improve if RMCHC is able to hold its current liquidity position
until the New Mexico Safety Net Care Pool payments resume in 2018.
The resumption of payments would immediately help RMCHCS
operational performance.
ROBERT TAYLOR: Selling 1994 Toyota Tacoma to Father for $5K
-----------------------------------------------------------
Robert Drew and Anissa Rose Taylor ask the U.S. Bankruptcy Court
for the Western District of Louisiana to authorize their private
sale of 1994 Toyota Tacoma, bearing VIN 4TAVN13D1RZ222451, to
Drewitt Taylor for $5,000.
Among the assets of the Debtors' estate is the motor vehicle. It
is encumbered by a lien in favor of Southern Heritage Bank. This
creditor holds a non-purchase money security interest in the motor
vehicle and has filed a proof of claim reflecting a balance of
$4641, and indicating it is fully secured. The Plan filed in this
matter provided that the truck will be transferred to the creditor
in full satisfaction of its claim upon entry of a final order
confirming the Plan.
The Debtors received an offer to purchase the truck from the father
of Debtor Robert Drew Taylor for the price and sum of $5,000. The
offer is for the motor vehicle, as is, and for cash, or cash
equivalent at time of purchase, free and clear of all liens,
encumbrances, claims, and interests. The sale of the asset will be
conveyed "as is, where is." The sale will be without any warranty
or recourse whatsoever, even as to return of the purchase price,
but with full substitution and subrogation to all rights and
actions of warranty against all preceding owners.
The Debtors believe the offer made is in keeping with the fair
market value of the vehicle. They therefore recommend the sale to
the prospective Purchaser as being in the best interests of the
estate.
The proceeds of the sale will be used to pay the secured claim of
Southern Heritage Bank in full.
Counsel for the Debtors:
Thomas R. Willson, Esq.
LAW OFFICE OF THOMAS R. WILLSON
1330 Jackson Street
Alexandria, LA 71301
Telephone: (318) 442-8658
Facsimile: (318) 442-9637
E-mail: rocky@rockywillsonlaw.com
Robert Drew Taylor and Anissa Rose Taylor filed a voluntary
petition seeking relief pursuant to Chapter 12 of Title 11 of the
United States Code on March 14, 2017. Thereafter, the same was
converted to one under Chapter 11 (Bankr. W.D. La. Case No.
17-80258) on June 8, 2017. Their Plan of Reorganization was filed
on Aug. 21, 2017, providing for liquidation of unencumbered assets.
RS LEGACY: Court Dismisses F. Toscano's Complaint as Time-Barred
----------------------------------------------------------------
Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the
District of Delaware granted the Motions to Dismiss the First
Amended Complaint of Plaintiff Fabiola Toscano filed by Peter
Kravitz, the Liquidating Trustee of the RSH Liquidating Trust, and
by General Wireless Operations, Inc. and General Wireless Inc.
Ms. Toscano filed the adversary proceeding on behalf of herself, as
a former employee of Debtors RS Legacy Corporation and affiliates
seeking money for unpaid accrued time off, and on behalf of a
putative class of those situated similarly to her. Ms. Toscano's
Complaint alleges that she and putative class members were deprived
of payment of wages after General Wireless acquired RadioShack in
March 2015 and refused to honor the previously earned vacation pay.
The Liquidating Trustee asserts that this Court must dismiss
Plaintiff's complaint with prejudice, maintaining that the
Complaint is a procedurally improper attempt to circumvent the Bar
Date Order. General Wireless similarly seeks to dismiss the
Complaint, on the ground that she has failed to state a claim upon
which relief can be granted, as General Wireless is not a successor
in liability to the RadioShack Debtors.
In light of a previously-issued Opinion in this adversary
proceeding, in which this Court found that the Plaintiff's claims
were subject to, and missed the applicable bar dates, the Court
finds that Plaintiff's Complaint is time-barred and must be
dismissed as a matter of law.
Ms. Toscano also failed to articulate claims against General
Wireless where the undisputed record reflects that General Wireless
acquired the Debtors' assets "free and clear" of claims under
section 363(f). The clear language of the asset purchase agreement
and this Court's sale order serves to limit liability for the
buyer, who explicitly did not assume the obligations asserted by
Ms. Toscano. The First Amended Complaint does not advance any
allegations as to the asset purchase being fraudulent -- Ms.
Toscano first makes this claim, without factual support, in her
Opposition. Without any further theory or facts explaining why the
sale order under the APA should not control in this case, the First
Amended Complaint as against General Wireless must be dismissed.
A full-text copy of Judge Shannon's Opinion dated August 31, 2017,
is available at:
http://bankrupt.com/misc/deb15-10197-4557.pdf
Co-Counsel for Liquidating Trustee:
Christopher M. Samis
L. Katherine Good
WHITEFORD, TAYLOR & PRESTON LLC
The Renaissance Centre, Suite 500
405 North King Street
Wilmington, DE 19801
csamis@wtplaw.com
kgood@wtplaw.com
-and-
Jay R. Indyke, Esq.
Cathy Hershcopf, Esq.
COOLEY LLP
1114 Avenue of the Americas
New York, NY 10036
jindyke@cooley.com
chershcopf@cooley.com
Counsel for Plaintiff:
Joseph H. Huston, Jr.
Jason D. Angelo
STEVENS & LEE, P.C.
919 North Market Street, Suite 1300
Wilmington, DE 19801
jhh@stevenslee.com
jda@stevenslee.com
-and-
Douglas N. Silverstein, Esq.
Mia Munro, Esq.
KESLUK, SILVERSTEIN & JACOB, P.C.
9255 Sunset Blvd., suite 411
Los Angeles, CA 90069-3309
-and-
Daniel I. Barness, Esq.
BARNESS & BARNESS, LLP
11377 W. Olympic Blvd., 2nd Floor
Los Angeles, CA 90064
Daniel@barnesslaw.com
About RadioShack Corporation
Headquartered in Fort Worth, Texas, RadioShack was a retailer of
mobile technology products and services, as well as products
related to personal and home technology and power supply needs.
RadioShack's retail network includes more than 4,300
company-operated stores in the United States, 270 company-operated
stores in Mexico, and approximately 1,000 dealer and other outlets
worldwide.
RadioShack Corp. and affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 15-10197) on Feb. 5, 2015, disclosing
total assets of $1.2 billion, versus total debt of $1.3 billion.
David G. Heiman, Esq., Greg M. Gordon, Esq., Amanda M. Suzuki,
Esq., Jonathan M. Fisher, Esq., Thomas A. Howley, Esq., and Paul M.
Green, Esq., at Jones Day served as the Debtors' bankruptcy
counsel. David M. Fournier, Esq., Evelyn J. Meltzer, Esq., and
John H. Schanne, II, Esq., at Pepper Hamilton LLP served as
co-counsel.
Carlin Adrianopoli at FTI Consulting, Inc. is the Debtors'
restructuring advisor. Maeva Group, LLC, is the Debtors'
turnaround advisor. Lazard Freres & Co. LLC is the Debtors'
investment banker. A&G Realty Partners is the Debtors' real estate
advisor. Prime Clerk is the Debtors' claims and noticing agent.
The Official Committee of Unsecured Creditors tapped Quinn Emanuel
Urquhart & Sullivan, LLP and Cooley LLP as co-counsel, and Houlihan
Lokey Capital, Inc., as financial advisor and investment banker.
* * *
After an auction in March 2015, the Debtors sold most of the assets
to General Wireless, Inc., an entity formed by Standard General,
L.P., for $150 million. The Debtors also sold Mexican assets to
Office Depot de Mexico, S.A. de C.V., for $31.8 million plus the
assumption of debt. Regal Forest Holding Co. Ltd. bought the
Debtors' intellectual property assets in Latin America for a
purchase price of $5,000,000.
In June 2015, the Debtors changed their name to RS Legacy
Corporation, et al., following the sale of the Company's brand name
and customer data to General Wireless.
The bankruptcy judge on Oct. 2, 2015, issued an order confirming
the first amended joint plan of liquidation of the Debtors. The
centerpiece of the Plan is the resolution of various disputes among
the Debtors, the Creditors' Committee and the SCP Secured Parties.
The Plan was declared effective on Oct. 7, 2015.
* * *
General Wireless Operations Inc., doing business as RadioShack --
http://www.RadioShack.com-- operates a
chain of electronics stores. It is the predecessor of RadioShack
Corp. In March 2015, Standard General
affiliate General Wireless won court approval to purchase
RadioShack Corp.'s assets, gaining ownership of around 1,700
RadioShack locations. Two years later, General Wireless commenced
its own bankruptcy case, announcing plans to close 200 of 1,300
remaining stores.
General Wireless Operations Inc., and its affiliates based in Ft.
Worth, TX, filed a Chapter 11 petition (Bankr. D. Del. Lead Case
No. 17-10506) on March 8, 2017. The petition was signed by
Bradford Tobin, SVP, general counsel. In its petition, the Debtor
estimated $100 million to $500 million in both assets and
liabilities.
Pepper Hamilton LLP is serving as counsel to the Debtors, Jones
Day as co-counsel, Prime Clerk, LLC as claims and noticing agent,
Loughlin Management Partners & Company, Inc.
Andrew R. Vara, Acting U.S. Trustee for Region 3, has appointed
eight members to the official committee of unsecured creditors in
the Chapter 11 cases of General Wireless Operations Inc. and its
affiliates. The Committee tapped Bartlit Beck Herman Palenchar &
Scott LLP, as special counsel.
RS LEGACY: F. Toscano's Late Claims Subject to Applicable Bar Dates
-------------------------------------------------------------------
Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the
District of Delaware denied Plaintiff Fabiola Toscano's Motion for
an Extension of the Bar Date for the Filing of Employee Vacation
and Wage Claims, or, Alternatively, Leave to File and for Allowance
of Such Claims.
Peter Kravitz, as Liquidating Trustee of the RSH Liquidating Trust
objected.
The Motion required the Court to address several discrete issues:
(i) the nature of Ms. Toscano's claims (i.e. administrative,
priority, general unsecured, or some mixture); (ii) the applicable
bar date for Ms. Toscano's claims; and (iii) whether Ms. Toscano
may file a late claim.
Judge Shannon finds that Ms. Toscano's claims consist predominantly
of general unsecured claims, with a small portion potentially
entitled to administrative status or priority under section
507(a)(4)(A). Judge Shannon further finds that Ms. Toscano's tardy
claims were subject to the applicable bar dates and that she has
not demonstrated that her failure to comply with those deadlines
were the result of "excusable neglect." Thus, the Court denies the
motion.
A full-text copy of Judge Shannon's Opinion dated August 31, 2017,
is available at:
http://bankrupt.com/misc/deb15-10197-4555.pdf
Co-Counsel for Liquidating Trustee:
Christopher M. Samis
L. Katherine Good
WHITEFORD, TAYLOR & PRESTON LLC
The Renaissance Centre, Suite 500
405 North King Street
Wilmington, DE 19801
csamis@wtplaw.com
kgood@wtplaw.com
-and-
Jay R. Indyke, Esq.
Cathy Hershcopf, Esq.
COOLEY LLP
1114 Avenue of the Americas
New York, NY 10036
jindyke@cooley.com
chershcopf@cooley.com
Counsel for Plaintiff:
Joseph H. Huston, Jr.
Jason D. Angelo
STEVENS & LEE, P.C.
919 North Market Street, Suite 1300
Wilmington, DE 19801
jhh@stevenslee.com
jda@stevenslee.com
-and-
Douglas N. Silverstein, Esq.
Mia Munro, Esq.
KESLUK, SILVERSTEIN & JACOB, P.C.
9255 Sunset Blvd., suite 411
Los Angeles, CA 90069-3309
-and-
Daniel I. Barness, Esq.
BARNESS & BARNESS, LLP
11377 W. Olympic Blvd., 2nd Floor
Los Angeles, CA 90064
Daniel@barnesslaw.com
About RadioShack Corporation
Headquartered in Fort Worth, Texas, RadioShack was a retailer of
mobile technology products and services, as well as products
related to personal and home technology and power supply needs.
RadioShack's retail network includes more than 4,300
company-operated stores in the United States, 270 company-operated
stores in Mexico, and approximately 1,000 dealer and other outlets
worldwide.
RadioShack Corp. and affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 15-10197) on Feb. 5, 2015, disclosing
total assets of $1.2 billion, versus total debt of $1.3 billion.
David G. Heiman, Esq., Greg M. Gordon, Esq., Amanda M. Suzuki,
Esq., Jonathan M. Fisher, Esq., Thomas A. Howley, Esq., and Paul M.
Green, Esq., at Jones Day served as the Debtors' bankruptcy
counsel. David M. Fournier, Esq., Evelyn J. Meltzer, Esq., and
John H. Schanne, II, Esq., at Pepper Hamilton LLP served as
co-counsel.
Carlin Adrianopoli at FTI Consulting, Inc. is the Debtors'
restructuring advisor. Maeva Group, LLC, is the Debtors'
turnaround advisor. Lazard Freres & Co. LLC is the Debtors'
investment banker. A&G Realty Partners is the Debtors' real estate
advisor. Prime Clerk is the Debtors' claims and noticing agent.
The Official Committee of Unsecured Creditors tapped Quinn Emanuel
Urquhart & Sullivan, LLP and Cooley LLP as co-counsel, and Houlihan
Lokey Capital, Inc., as financial advisor and investment banker.
* * *
After an auction in March 2015, the Debtors sold most of the assets
to General Wireless, Inc., an entity formed by Standard General,
L.P., for $150 million. The Debtors also sold Mexican assets to
Office Depot de Mexico, S.A. de C.V., for $31.8 million plus the
assumption of debt. Regal Forest Holding Co. Ltd. bought the
Debtors' intellectual property assets in Latin America for a
purchase price of $5,000,000.
In June 2015, the Debtors changed their name to RS Legacy
Corporation, et al., following the sale of the Company's brand name
and customer data to General Wireless.
The bankruptcy judge on Oct. 2, 2015, issued an order confirming
the first amended joint plan of liquidation of the Debtors. The
centerpiece of the Plan is the resolution of various disputes among
the Debtors, the Creditors' Committee and the SCP Secured Parties.
The Plan was declared effective on Oct. 7, 2015.
* * *
General Wireless Operations Inc., doing business as RadioShack --
http://www.RadioShack.com-- operates a
chain of electronics stores. It is the predecessor of RadioShack
Corp. In March 2015, Standard General
affiliate General Wireless won court approval to purchase
RadioShack Corp.'s assets, gaining ownership of around 1,700
RadioShack locations. Two years later, General Wireless commenced
its own bankruptcy case, announcing plans to close 200 of 1,300
remaining stores.
General Wireless Operations Inc., and its affiliates based in Ft.
Worth, TX, filed a Chapter 11 petition (Bankr. D. Del. Lead Case
No. 17-10506) on March 8, 2017. The petition was signed by
Bradford Tobin, SVP, general counsel. In its petition, the Debtor
estimated $100 million to $500 million in both assets and
liabilities.
Pepper Hamilton LLP is serving as counsel to the Debtors, Jones
Day as co-counsel, Prime Clerk, LLC as claims and noticing agent,
Loughlin Management Partners & Company, Inc.
Andrew R. Vara, Acting U.S. Trustee for Region 3, has appointed
eight members to the official committee of unsecured creditors in
the Chapter 11 cases of General Wireless Operations Inc. and its
affiliates. The Committee tapped Bartlit Beck Herman Palenchar &
Scott LLP, as special counsel.
SAI FAMILY TRUST: Taps Sean M. Patrick as Legal Counsel
-------------------------------------------------------
Sai Family Trust seeks approval from the U.S. Bankruptcy Court for
the Northern District of California to hire legal counsel in
connection with its Chapter 11 case.
The Debtor proposes to employ the Law Office of Sean M. Patrick to,
among other things, give legal advice regarding its duties under
the Bankruptcy Code; negotiate with creditors; and assist in the
preparation of a bankruptcy plan.
The firm will charge an hourly fee of $175 for the services of its
attorney and $120 for paralegal services.
Ravi Reddy, representative for the Debtor's trustee, paid the firm
$2,467 prior to the petition date, of which $1,717 was used to pay
the filing fee.
Sean M. Patrick is a "disinterested person" as defined in section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Sean M. Patrick, Esq.
Law Office of Sean M. Patrick
P.O. Box 2822
Rocklin, CA 95677
Phone: (916) 226-6062
Fax: (916) 721-2727
Email: sean@seanmpatricklaw.com
About Sai Family Trust
Sai Family Trust sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Cal. Case No. 17-41835) on July 17,
2017. Purushotham Reddy, trustee, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets and liabilities of less than $1 million.
Judge William J. Lafferty presides over the case.
STANFORD INT'L: Hunton & Williams Ends Ponzi Scheme Allegations
---------------------------------------------------------------
Andrew Strickler, writing for Bankruptcy Law360, reports that
Hunton & Williams LLP has settled allegations that it aided Robert
Allen Stanford's $7 billion Ponzi scheme. Law360 relates that the
$34 million deal would benefit some of Mr. Stanford's thousands of
victims. Law360 says that Hunton's settlement is a significant
step in a swarm of lawsuits that arose from the 2009 collapse of
Stanford International Bank and other companies Mr. Stanford
controlled.
About Stanford Group
The Stanford Financial Group was a privately held international
group of financial services companies controlled by Allen Stanford,
until it was seized by United States (U.S.) authorities in early
2009.
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under management
or advisement. Stanford Private Wealth Management served more than
70,000 clients in 140 countries.
On Feb. 16, 2009, the United States District Court for the Northern
District of Texas, Dallas Division, signed an order appointing
Ralph Janvey as receiver for all the assets and records of Stanford
International Bank, Ltd., Stanford Group Company, Stanford Capital
Management, LLC, Robert Allen Stanford, James M. Davis and Laura
Pendergest-Holt and of all entities they own or control. The Feb.
16 order, as amended March 12, 2009, directs the Receiver to, among
other things, take control and possession of and to operate the
Receivership Estate, and to perform all acts necessary to conserve,
hold, manage and preserve the value of the
Receivership Estate.
The case in district court was Securities and Exchange Commission
v. Securities Investor Protection Corp., 11-mc-00678, U.S. District
Court, District of Columbia (Washington).
The U.S. Securities and Exchange Commission charged before the U.S.
District Court in Dallas, Texas, Mr. Stanford and three of his
companies for orchestrating a fraudulent, multi-billion dollar
investment scheme centering on an US$8 billion Certificate of
Deposit program.
A criminal case was pursued against him before the U.S. District
Court in Houston, Texas. Mr. Stanford pleaded not guilty to 21
charges of multi-billion dollar fraud, money-laundering and
obstruction of justice. Assistant Attorney General Lanny Breuer,
as cited by Agence France-Presse News, said in a 57-page indictment
that Mr. Stanford could face up to 250 years in prison if convicted
on all charges. Mr. Stanford surrendered to U.S. authorities after
a warrant was issued for his arrest on the criminal charges.
STEEL DYNAMICS: Moody's Raises Sr. Unsecured Notes Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service upgraded Steel Dynamics Inc's (SDI)
senior unsecured notes to Ba1 from Ba2 and assigned a Ba1 rating to
the new senior unsecured notes due 2025. The Ba1 Corporate Family
Rating (CFR), Ba1-PD Probability of Default Rating and SGL-1
Speculative Grade Liquidity Rating were affirmed. Proceeds from the
offering, along with the available cash on hand, will be used to
repay the company's existing $350 million notes due August 2022 The
outlook is stable.
The upgrade in the senior unsecured notes to Ba1, the same level as
the CFR, reflects the significant level of unsecured debt in the
capital structure following the repayment of the senior secured
term loan. The only secured debt remaining is the $1.2 billion
asset backed revolving credit facility, which Moody's expects to
continue to be unused.
Upgrades:
Issuer: Steel Dynamics, Inc.
-- Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1
(LGD4) from Ba2 (LGD4)
Assignments:
Issuer: Steel Dynamics, Inc.
-- Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4)
Outlook Actions:
Issuer: Steel Dynamics, Inc.
-- Outlook, Remains Stable
Affirmations:
Issuer: Steel Dynamics, Inc.
-- Probability of Default Rating, Affirmed Ba1-PD
-- Speculative Grade Liquidity Rating, Affirmed SGL-1
-- Corporate Family Rating, Affirmed Ba1
RATINGS RATIONALE
SDI's Ba1 CFR considers its low cost mini-mill operating structure
and its diversified product mix, as the company continues to shift
toward higher value-added steel and specialty alloys. Moody's views
SDI as among the lowest cost steel producers in the US, on a per
ton basis, which enables the company to better manage through
periods of low prices and sluggish demand and exhibit strong
performance in periods of improved prices and utilization levels.
The company's 2014 acquisition of Severstal Columbus (Columbus)
provided strategic value by strengthening product and geographic
diversity, increasing production capacity, and improving
operational flexibility.
The rating considers the improved fundamentals in the steel
industry with better capacity utilization levels and higher price
levels for hot-rolled coil. The ongoing recovery in the
construction industry, although uneven, as well as improved
drilling performance has benefitted the overall steel industry,
although growth in the automotive industry has peaked. Nonetheless,
SDI remains well positioned in the markets it serves to benefit
from the improvements seen. Reflective of the more favorable
operating environment and low cost production capability, SDI's
credit and debt protection metrics have strengthened despite lower
shipments and metal spread compression evidenced in the second
quarter of 2017. For the twelve months ended June 30, 2017 leverage
reduced to 1.8x versus 2.1x for the twelve months ended December
31, 2016 and 4x for the twelve months ended December 31, 2015.
SDI's rating is constrained by the volatility in the steel industry
as well as its secured ABL., However the company's low cost
position and good product diversity has enabled the SDI to evidence
better utilization rates than those exhibited in the domestic
industry. Nonetheless, SDI's sustained performance is dependent on
steady demand from the non-residential construction, a substantial
end market served primarily by SDI's steel fabrication and
structural steel operations.
The solid liquidity, with $908.8 million in cash at June 30, 2017
and no near term debt maturities further support the rating.
The stable outlook incorporates Moody's expectations that SDI will
exhibit solid performance and maintain metrics consistent with its
Ba1 rating over the next 12-18 months. Moody's expects SDI to
evidence further benefits from the Columbus acquisition the
commercial construction end market will continue to show
improvement and other markets, such as automotive, structural and
rail, will remain solid despite some expected softening. The
outlook also incorporates Moody's expectations that hot- rolled
levels will average within a range of $600/ton to $650/ton although
increasing input prices for scrap could drive steel prices up.
Should SDI sustain debt/EBITDA under 3.0x, EBIT/interest coverage
above 4.0x, EBIT margins in the mid-teens, and consistently
generate free cash flow, its ratings and/or outlook could be
favorably impacted. However, upward rating movement to investment
grade is constrained by the secured nature of the ABL revolver. A
downward rating action could occur should SDI's debt/EBITDA exceed
4.0x, EBIT/interest track below 3.0x, and free cash flow generation
is negative, all on a sustainable basis.
The principal methodology used in these ratings was Global Steel
Industry published in October 2012.
Headquartered in Fort Wayne, Indiana, Steel Dynamics, Inc. (SDI)
manufactures steel through its domestic mini-mills, which have an
estimated annual production capacity of approximately 11 million
tons. In addition, the company ranks among the largest scrap
processors in the United States, SDI also operates steel
fabrication facilities, which manufacture trusses, girders, joists,
and decking, and owns two iron-making facilities (Iron Dynamics and
its idled Minnesota Operations which includes its 83% owned Mesabi
Nugget). During the twelve months ended June 30, 2017, the company
generated approximately $8.8 billion in revenues.
STEEL DYNAMICS: S&P Rates New $350MM Senior Unsecured Notes 'BB+'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating (same as
the corporate credit rating) to Fort Wayne, Ind.-based steelmaker
Steel Dynamics Inc.'s proposed $350 million senior unsecured notes
due 2025. The recovery rating is '3', indicating our expectation of
meaningful (50%-70%; rounded estimate: 60%) recovery in the event
of payment default. S&P expects the company will use the proceeds
to fund the repayment of its existing $350 million 6.375% senior
unsecured notes due in 2022. For a more detailed view on S&P's
credit opinion see the research update published July 21, 2017.
Ratings List
Steel Dynamics Inc.
Corporate Credit Rating BB+/Positive/--
New Rating
Steel Dynamics Inc.
$350 mil sr unsec notes due 2025 BB+
Recovery Rating 3(60%)
STEFANOVOUNO LLC: Wants to Use Charbel Realty's Cash Collateral
---------------------------------------------------------------
Stefanovouno, LLC, seeks permission from the U.S. Bankruptcy Court
for the District of New Hampshire to use cash collateral.
At this time, Debtor believes that Charbel Realty, LLC, holds a
first priority lien on the pre-petition cash collateral. In
addition to the mortgage that Charbel Realty holds on the real
estate, it has UCC Financing Statements securing all of the
business assets and equipment of the Debtor as part of its mortgage
which provides the creditor with an interest in the cash collateral
of the real estate and business. On the Petition date, the cash
collateral consisted of approximately $0 in cash, and the real
estate valued at $900,000.
Charbel Realty has liens on all of the Debtor's business assets and
real estate. Thus, the Debtor has no cash with which to operate
other than cash collateral. The cash is necessary to pay real
estate taxes, building maintenance and monthly mortgage payments
and monthly operating expenses of the restaurant business including
employee wages.
The Debtor says it cannot continue its operations without the use
of cash collateral because like any other operating company, the
Debtor must pay its mortgage payments, real estate taxes, and
monthly operating expenses and wages each month.
The Debtor tells the Court that no significant diminution in the
amount of the Debtor's accounts or asset will occur during the Use
Periods because of their value of the Petition Date. The use of
the cash collateral is essential to the effective reorganization of
the Debtor. The Debtor proposes granting Charbel Realty a
replacement lien on the estate's postpetition accounts receivable
and the cash proceeds thereof.
The Debtor asks the Court to authorize the Debtor to use the
proceeds of its accounts and other cash collateral to pay the
mortgage, bills, costs and expenses listed as estimated in the
budget for the period starting Aug. 17, 2017, and ending on Sept.
30, 2017 and for the period starting on the day following the last
day of the Interim Use Period and ending on Oct. 31, 2017, in the
absence of an objection by the lien holder which is sustained by
the Court.
A copy of the Debtor's request is available at:
http://bankrupt.com/misc/nhb17-11142-13.pdf
About Stefanovouno
Stefanovouno, LLC, owns a business and real estate located at 2323
Brown Avenue, Manchester, New Hampshire. The Debtor is owned,
managed, and operated by Thomas Katsiantonis. Mr. Katsiantonis has
owned, managed, and operated Stefanovouno since November 2014.
Stefanovouno, LLC has owned the real estate at 2323 Brown Avenue,
Manchester, New Hampshire since March 2015. Stefanovouno, LLC,
operates a pizza restaurant known as Tommy K's in the building at
2323 Brown Avenue, Manchester, New Hampshire. It is open seven days
a week.
Stefanovouno, LLC, filed for Chapter 11 bankruptcy protection
(Bankr. D. N.H. Case No. 17-11142) on Aug. 16, 2017, estimating its
assets at between $100,000 and $500,000 and liabilities at between
$1 million and $10 million. The petition was signed by Thomas
Katsiantonis, manager.
Eleanor Wm Dahar, Esq., at Victor W. Dahar Professional
Association, serves as the Debtor's bankruptcy counsel.
SUNEDISON INC: Wants Over $23M Coverage Split Between Insurers
--------------------------------------------------------------
Rick Archer, writing for Bankruptcy Law360, reports that SunEdison
Inc. asks the U.S. Bankruptcy Court for the Southern District of
New York to let its insurers split more than $23 million in
coverage between the settlements of two shareholder lawsuits
against its yieldcos.
Law360 shares that if approved, the accord will allocate $20
million of the proceeds of the Debtor's ABC Tower director and
officers policies to a settlement with a TerraForm Global
shareholder and $13.6 million to a TerraForm Power shareholder,
with the remainder of the coverage to go toward a $32 million
settlement with the Debtor's unsecured creditors.
About SunEdison, Inc.
SunEdison, Inc. (OTC PINK: SUNEQ), is a developer and seller of
photovoltaic energy solutions, an owner and operator of clean power
generation assets, and a global leader in the development,
manufacture and sale of silicon wafers to the semiconductor
industry.
On April 21, 2016, SunEdison, Inc., and 25 of its affiliates each
filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case Nos.
16-10991 to 16-11017). Martin H. Truong, the senior vice
president, general counsel and secretary, signed the petitions.
The Debtors disclosed total assets of $20.7 billion and total debt
of $16.1 billion as of Sept. 30, 2015.
The Debtors have hired Skadden, Arps, Slate, Meagher & Flom LLP as
counsel, Togut, Segal & Segal LLP as conflicts counsel, Rothschild
Inc. as investment banker and financial advisor, McKinsey Recovery
& Transformation Services U.S., LLC, as restructuring advisors and
Prime Clerk LLC as claims and noticing agent. The Debtors employed
PricewaterhouseCoopers LLP as financial advisors; and KPMG LLP as
their auditor and tax consultant.
SunEdison also tapped Eversheds LLP as its special counsel for
Great Britain and the Middle East. Cohen & Gresser LLP has also
been retained as special counsel.
The Debtors tapped Ernst & Young LLP to provide tax-related
services. Keen-Summit Capital Partners LLC has been hired as real
estate advisor. Binswanger of Texas, Inc. also has been retained
as real estate agent.
Sullivan & Cromwell LLP serves as counsel to TerraForm Power, Inc.,
and TerraForm Global, Inc.
An official committee of unsecured creditors has been appointed in
the case. The Committee tapped Weil, Gotshal & Manges LLP as its
general bankruptcy counsel and Morrison & Foerster LLP as special
counsel. Togut, Segal & Segal LLP and Kobre & Kim LLP serve as
conflicts counsel. Alvarez & Marsal North America, LLC, serves as
the Committee's financial advisors.
Counsel to the administrative agent under the Debtors' prepetition
first lien credit agreement are Richard Levy, Esq., and Brad
Kotler, Esq., at Latham & Watkins.
Counsel to the administrative agent under the postpetition DIP
financing facility are Scott Greissman, Esq., and Elizabeth Feld,
Esq., at White & Case LLP.
Counsel to the Tranche B Lenders (as defined in the DIP credit
agreement) and the steering committee of the second lien creditors
are Arik Preis, Esq., and Naomi Moss, Esq., at Akin Gump Strauss
Hauer & Field, LLP.
Counsel to the administrative agent under the Debtors' prepetition
second lien credit agreement is Daniel S. Brown, Esq., at Pillsbury
Winthrop Shaw Pittman LLP.
The collateral trustee under the Debtors' prepetition second lien
credit agreement and the indenture trustee under each of the
Debtors' outstanding bond issuances, is represented by Marie C.
Pollio, Esq., at Shipman & Goodwin LLP.
Counsel to the ad hoc group of certain holders of the Debtors'
convertible senior notes is White & Case LLP's Tom Lauria, Esq.
* * *
On March 28, 2017, the Debtors filed their Plan of Reorganization
and related Disclosure Statement.
SUSTAINABLE AQUACULTURE: Taps Markarian & Hayes as Legal Counsel
----------------------------------------------------------------
Sustainable Aquaculture Initiative LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to hire legal
counsel in connection with its Chapter 11 case.
The Debtor proposes to employ Markarian & Hayes to, among other
things, give legal advice regarding its duties under the Bankruptcy
Code and negotiate with creditors in the preparation of a
bankruptcy plan.
Markarian & Hayes received a retainer of $2,500 from a third party
prior to the Debtor's bankruptcy filing. On the petition date, the
firm held in its trust account $4,217 for future costs and
expenses, of which $1,717 was used to pay the filing fee.
Malinda Hayes, Esq., disclosed in a court filing that she and her
firm do not represent any interest adverse to the Debtor or its
estate.
Markarian & Hayes can be reached through:
Malinda L. Hayes, Esq.
Markarian & Hayes
2925 PGA Blvd., Suite 204
Palm Beach Gardens, FL 33410
Tel: 561-626-4700
Fax: 561-627-9479
Email: malinda@businessmindedlawfirm.com
About Sustainable Aquaculture Initiative
Founded in 2013, Sustainable Aquaculture Initiative LLC is a
Florida limited liability company whose principal assets are
located at 15369 County Road 512 Fellsmere, Florida. The Debtor is
an affiliate of Florida Organic Aquaculture LLC, which sought
bankruptcy protection on April 24, 2017 (Bankr. S.D. Fla. Case No.
17-15012).
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 17-21251) on September 1, 2017.
Clifford Morris, member's manager, signed the petition.
At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $100,000 and liabilities of $1
million to $10 million.
Judge Erik P. Kimball presides over the case.
TAKATA CORP: Court Approves Frankel as Future Claimants Rep
-----------------------------------------------------------
The Hon. Brendan L. Shannon in Delaware entered an order approving
Roger Frankel as legal representative for individuals who sustain
personal injuries after the June 25, 2017 bankruptcy filing date,
arising from or related to PSAN Inflators manufactured by the
Debtors prior to confirmation of a Chapter 11 plan of
reorganization.
The FCR may employ attorneys and other professionals consistent
with Section 1103 of the Bankruptcy Court, subject to prior Court
approval. The FCR's representatives and his professionals are
required to undertak reasonable efforts to comply with the U.S.
Trustee's request for information and additional disclosures as set
forth in the Guidelines for Reviewing Applications for Compensation
and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 by
Attorneys in Large Chapter 11 Cases Effective as of November 1,
2013.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea,
China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the U.S.,
amid recall costs and lawsuits over its defective airbags. Takata
and its Japanese subsidiaries commenced proceedings under the Civil
Rehabilitation Act in Japan in the Tokyo District Court on June 25,
2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.
17-11375) on June 25, 2017. Together with the bankruptcy filings,
Takata announced it has reached a deal to sell all its global
assets and operations to Key Safety Systems (KSS) for US$1.588
billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is
tax advisor. Prime Clerk is the claims and noticing agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of the
Chapter 11 Debtors, obtained an order of the Ontario Superior Court
of Justice (Commercial List) granting, among other things, a stay
of proceedings against the Chapter 11 Debtors pursuant to Part IV
of the Companies' Creditors Arrangement Act. The Canadian Court
appointed FTI Consulting Canada Inc. as information officer. TK
Holdings, as the foreign representative, is represented by McCarthy
Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants. The Official Committee of Tort Claimants selected
Pachulski Stang Ziehl & Jones LLP as counsel.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Tyson
Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York;
and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in Washington, D.C., as its bankruptcy counsel.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
TAKATA CORP: OEM Customer Group Balks at Ch.11 Notice Cost
----------------------------------------------------------
Jeff Montgomery, writing for Law360, reports that manufacturing
creditors of Takata Corp. objected to taking on most of the $37
million cost of expanded notifications to future individual
claim-makers, arguing in a Delaware bankruptcy filing that the
expense is part of the overall case cost and benefit.
The Original Equipment Manufacturer Customer Group noted that
Takata's Chapter 11 plan sponsor and prospective buyer, Key Safety
Systems Inc., has said it will not proceed with a global
transaction in Takata's case without additional noticing measures.
Specifically, the noticing provisions must include the Takata
Debtors purchasing available vehicle owner data, directly mailing
notices to these vehicle owners, creating a dedicated website,
setting up a toll-free number, pursuing paid interest advertising,
issuing press releases and undertaking a social media campaign --
all targeted to ensure widespread notice to and communication with
creditors. While these are material additional steps aimed at a
more expansive due process, they constitute an integral component
of the complex Global Transaction announced by the Debtors.
Without the Debtors undertaking these efforts, the Plan Sponsor has
repeatedly advised that it is not prepared to consummate the Global
Transaction.
As the Debtors have indicated to the Court, the Global Transaction
is the crux of this restructuring and, without it, the Debtors will
liquidate. Therefore, the use of the Supplemental Notice Plan is
critical and, by definition, benefits all stakeholders.
In its limited objection, the Unsecured Creditors Committee only
takes issue with two components of the Supplemental Notice Plan --
the purchase of individual identifying data and the direct mailing
of notices to currently unknown PPICs -- that will together cost
approximately $29.1 million. The UCC makes two arguments: (a)
actual mailing to unknown creditors is not customary and goes over
and above that which is legally required and (b) the OEMs should
bear these costs as the primary beneficiary of this supplemental
direct mailing to PPICs.
But the Plan Sponsor, not the OEMs, insists on actual mailing and
has stated that this is a condition of its willingness to proceed
with the Global Transaction. The Debtors' estates and all of their
stakeholders are the beneficiaries from the Global Transaction, not
the OEMs alone.
The OEM Customer Group contends that noticing is an estate
obligation and a cost of this Global Transaction and overall
restructuring. There is no basis to force any single creditor group
(OEMs or otherwise) to bear the cost of this required notice.
"The relevant inquiry is not whether actual mailing is customary,
but rather whether the scope of the proposed notice benefits the
estates and all of their stakeholders -- and, here, the answer is
yes. Nor has the UCC cited any precedent holding that a more
elaborate noticing protocol is legally impermissible," said Derek
C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, counsel
to the OEM Customer Group.
Separately, the Official Committee of Tort Claimants suggests that
the OEMs should participate in the noticing process by providing
vehicle owner lists and information to vehicle owners that visit
the dealerships. The OEMs do not have current individual vehicle
owner information necessary for the proposed actual mailing. Nor
are the OEMs able to mandate that its dealers participate in the
Debtors' noticing plan. Those dealerships are independently-owned
and operated. The Tort Committee has not provided any authority to
support this type of notice.
According to Mr. Abbott, implementing any such noticing process
advocated for by the Tort Committee would inevitably require each
OEM to rely on its vehicle owners to actually visit the dealership
during the prescribed time frame and would require the OEM's
employees (who are not employees of the dealerships) to provide
notices during each visit. This inconsistent and haphazard noticing
approach cannot legitimately serve as a substitute for the Debtors'
noticing procedures. The Debtors' efforts provide certainty that
noticing to PPICs is completed in a uniform fashion.
The OEM Customer Group also notes that the Official Committee of
Tort Claimants seeks to link OEM participation in noticing as a
quid pro quo to the OEMs receiving a third-party release.
Third-party releases are a plan confirmation issue unrelated to the
Bar Date Motion and the noticing process to be undertaken by the
Debtors.
Mr. Abbott may be reached at:
Derek C. Abbott, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 North Market Street, 16th Floor
Wilmington, DE 19899-1347
Telephone: (302) 658-9200
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea,
China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the U.S.,
amid recall costs and lawsuits over its defective airbags. Takata
and its Japanese subsidiaries commenced proceedings under the Civil
Rehabilitation Act in Japan in the Tokyo District Court on June 25,
2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.
17-11375) on June 25, 2017. Together with the bankruptcy filings,
Takata announced it has reached a deal to sell all its global
assets and operations to Key Safety Systems (KSS) for US$1.588
billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is
tax advisor. Prime Clerk is the claims and noticing agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of the
Chapter 11 Debtors, obtained an order of the Ontario Superior Court
of Justice (Commercial List) granting, among other things, a stay
of proceedings against the Chapter 11 Debtors pursuant to Part IV
of the Companies' Creditors Arrangement Act. The Canadian Court
appointed FTI Consulting Canada Inc. as information officer. TK
Holdings, as the foreign representative, is represented by McCarthy
Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants. The Official Committee of Tort Claimants selected
Pachulski Stang Ziehl & Jones LLP as counsel.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Tyson
Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York;
and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in Washington, D.C., as its bankruptcy counsel.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
TGP HOLDINGS III: Moody's Assigns B3 CFR; Outlook Stable
--------------------------------------------------------
Moody's Investors Service assigned a first time B3 Corporate Family
Rating (CFR) and B3-PD Probability of Default Rating to TGP
Holdings III LLC (TGP). Moody's also assigned a B2 rating to the
company's proposed $325 million first lien credit facilities,
consisting of a $30 million first lien bank revolving credit
facility, a $255 million first lien term loan and a $40 million
delayed draw term loan. Moody's also assigned a Caa2 rating to a
proposed $115 million second lien term loan.
TGP owns Traeger Pellet Grills, LLC (Traeger). Traeger designs and
markets wood pellet grills and grilling accessories primarily to
consumers in the US. Proceeds from the proposed debt financing
along with a significant amount of equity will be used to finance
the $850 million acquisition of Traeger, and pay related fees and
expenses and a potential earn out. Existing debt of Traeger will be
repaid upon close of the transaction, which Moody's expects to
occur during the fourth quarter of 2017.
Issuer: TGP Holdings III LLC
Ratings Assigned:
Corporate Family Rating at B3;
Probability of Default Rating at B3-PD;
Senior Secured 1st Lien Revolving Credit Facility expiring 2022 at
B2 (LGD 3);
Senior Secured 1st Lien Term Loan due 2024 at B2 (LGD 3);
Senior Secured Delayed Draw Term Loan due 2024 at B2 (LGD 3);
Senior Secured 2nd Lien Term Loan due 2025 at Caa2 (LGD 5)
The rating outlook is stable.
RATINGS RATIONALE
The B3 Corporate Family Rating reflects the company's high leverage
of approximately 7.2 times pro forma debt/EBITDA, modest scale and
limited product and geographic diversification. The rating also
reflects the discretionary nature of the more expensive grills TGP
sells, the company's limited operating history and risks associated
with private equity ownership. Supporting the rating are TGP's
strong operating margins, good liquidity and leading share within
the niche wood pellet grilling industry.
The B2 ratings on the first lien credit facility is one notch
higher than the B3 CFR, reflecting its senior position to the
second lien facility and other unsecured obligations in the capital
structure. The second lien term loan is rated Caa2, two notches
lower than the CFR, reflecting its effective subordination to the
first lien facility. The first lien credit facilities and second
lien term loan have upstream guarantees from operating
subsidiaries.
The stable outlook reflects Moody's expectation that TGP's scale
will remain modest and that debt/EBIDA will approach 5.5 times by
the end of 2018.
Ratings could be upgraded if the company can profitably grow its
scale, improve its product and geographic diversification, and
sustain debt to EBITDA below 5.0 times.
Ratings could be downgraded if the company's operating performance
or liquidity deteriorates for any reason, or if debt/EBITDA remains
above 6.0 times.
The principal methodology used in these ratings was that for the
Consumer Durables Industry published in April 2017.
Headquartered in Salt Lake City, Utah, Traeger Pellet Grills, LLC
is a designer and marketer of wood pellet grills and grilling
accessories primarily to consumers in the U.S. market. The company
is principally owned and controlled by private equity firm AEA
Investors.
TGP HOLDINGS III: S&P Gives B- Corp Credit Rating, Outlook Positive
-------------------------------------------------------------------
S&P Global Ratings assigned its 'B-' corporate credit rating to TGP
Holdings III, LLC (Traeger). The outlook is positive.
S&P said, "At the same time, we assigned our 'B-' issue-level
rating and '3' recovery rating to the company's proposed $325
million first-lien facility, consisting of a $255 first-lien term
loan maturing 2024, $30 million cash flow revolver maturing 2022,
and $40 million delayed-draw term loan that will be fungible with
the first-lien term loan. The '3' recovery rating indicates our
expectation for a meaningful (50%-70%: rounded estimate 65%)
recovery in the event of payment default. We also assigned our
'CCC' issue-level rating and '6' recovery rating to the company's
proposed $115 million second-lien term loan maturing in 2025. The
'6' recovery rating indicates our expectation for negligible
(0%-10%: rounded estimate 0%) recovery in the event of payment
default.
"Upon the closing of the transaction, we estimate the company will
have roughly $370 million of funded debt and $379 million in
adjusted debt outstanding. All ratings are based on preliminary
terms and are subject to review of final documentation
"Our ratings on TGP Holdings (Traeger) reflect the company's high
leverage, significant product and geographic concentrations, small
market share, participation in the smaller wood pellet grill
category, the highly discretionary nature of its products, and the
potential for increased competition resulting in loss of market
share. In addition, the company could encounter difficulty managing
its high growth, in our view. We have also factored into our
ratings the companies good channel diversity. We estimate pro
forma debt to EBITDA to be high, at roughly in the mid-6x range
and forecast improvement to below 5.0x by fiscal year-end 2018 if
the company is able to continue its rapid sales growth and expand
its EBITDA margin."
The positive outlook reflects the potential for a higher rating if
Traeger is able to leverage its cost structure by meaningfully
increasing sales enabling it to increase free cash flow and
deleverage. This assumes the company is successful at gaining new
customers and expanding its geographic reach.
S&P said, "We could upgrade the company if it is able to continue
to grow revenues and maintain gross margins over the next 12 months
in line with our forecast resulting in EBITDA margins materially
improving in line with our base case forecast while generating
meaningfully improved free operating cash flows and deleveraging
below 6.0x. This could occur if the company orchestrates an
effective marketing campaign that enables it to gain new customers
and enter new geographies.
"We could revise the outlook to stable if the company is unable to
sustain EBITDA margins in line with our base case forecast
resulting in debt to EBITDA remaining above 6.0x and minimal free
operating cash flow. This could be the result of a competitor
entering the category or the company not gaining new customers or
expanding into new markets resulting in sales growth
underperforming our base-case forecast."
THO VAN PHAN: Huynh Buying Fountain Valley Property for $865K
-------------------------------------------------------------
Tho Van Phan asks the U.S. Bankruptcy Court for the Central
District of California to authorize the sale of real property
located at and commonly known as 16347 Shadbush Street, Fountain
Valley, California, outside the ordinary course of business to
Phuong My Thi Huynh for $865,000, subject to overbid.
A hearing on the Motion is set for Sept. 27, 2017 at 10:00 a.m.
Pursuant to his Schedule A, the Debtor listed an interest in the
Property with a scheduled value of $750,000. He did not claim an
exemption as to the equity in the Property. His Schedule D
reflects that the Property is encumbered by one deed of trust in
favor of Hong Cuc Phan, also known as Sarah Phan ("Ms. Phan") in
the approximate amount of $470,250. Ms. Phan is the Debtor's
daughter.
In order to facilitate the sale of the Property and to maximize a
distribution to unsecured creditors, the Committee, the Debtor, and
Ms. Phan negotiated a stipulation whereby Ms. Phan would (i) market
and sell the Property without receiving a commission, and (ii)
would waive any right to payment she may have on account of the
Phan Lien. On May 30, 2017, the Debtor filed the Sarah Phan
Stipulation which was approved by the Court on June 5, 2017.
According to the Preliminary Title Report obtained by the Debtor on
the Property, title to the Property is held by Tho Phan and Diep
Phan, trustees of the Tho Phan and Diep Phan Revocable Trust dated
Jan. 13, 2010. As such, the Property is property of the Estate.
The Debtor has discussed the value, condition, and market
conditions with Ms. Phan and has determined the value of the
Property is approximately $799,000 to $875,000. Ms. Phan has been
marketing the Property since July 24, 2017.
On Aug. 15, 2017, the Buyer submitted an offer for $865,000. The
Buyer provided proof of funds, and agreed to an initial deposit of
$26,000, which has been deposited with American Trust Escrow. The
deposit will be refundable only if certain conditions to the sale
are not satisfied, or the Buyer is not the successful bidder in the
event overbids are received, or the Buyer affirmatively cancels the
transaction prior to Sept. 19, 2017. The Buyer's offer is the
highest and best offer received by the Debtor.
The salient terms of the Sale are:
a. Subject to Court approval, the Debtor has accepted the
Buyer's offer to purchase the Property for the sum of $865,000,
free and clear of all liens, claims, and interests. The Buyer made
an initial deposit of $26,000, which Escrow is holding in trust,
pending court approval of the sale.
b. The proposed sale is subject to overbids as set forth below.
The purchase price will be refundable only if the conditions to
the sale are not satisfied or the Buyer is not the successful
bidders in the event overbids are received.
c. The proposed sale will be "as is, where is, with all
faults," and with no warranties, and the transfer of the Property
will be by grant deed.
A copy of the PSA attached to the Motion is available for free at:
http://bankrupt.com/misc/Tho_Van_Phan_127_Sales.pdf
The Debtor has determined that it is in the best interest of the
Estate to proceed with the sale of the Property to the Buyer for
the sum of $865,000, subject to overbid. The Motion asks approval
for the Debtor to sell the Property on substantially the terms and
conditions set forth in the PSA, which reflects the material terms
agreed to between the Buyer and the Debtor. The parties may agree
on minor, non-material changes to the PSA before the hearing on the
Motion.
The Debtor proposes to distribute the sale proceeds in the amounts
estimated and in this manner:
Sale Price $865,000
Phan Lien ($0)
Brokers' Commissions ($0)
Title, escrow, taxes, recording charges ($5,300)
Property Taxes 2016-17 (approximately) ($1,300)
----------
Estimated Net Proceeds to the Estate
that will be available to pay allowed claims $858,400
Any potential overbidder is encouraged to obtain a copy of the
Motion and contact the Debtor's counsel prior to the hearing. The
Property will be sold subject to overbid at an open auction to be
conducted by the Debtor before the Court at the time that the
Motion is heard.
The salient terms of the Bidding procedures are:
a. Bid Deadline: Any Overbid must be actually received no later
than the commencement of the Auction.
b. Mimimum Purchase Price: $875,000
c. Any Overbid must be for the Property "as is, where is, with
all faults, and will not contain any financing, due diligence, or
any other contingency, termination fee, or any similar fee or
expense reimbursement, unless such contingency is satisfied prior
to the commencement of the Auction.
d. Deposit: $26,000
e. Auction: Sept. 27, 2017 at 10:00 a.m.
f. Bid Increments: $5,000
g. If the Successful Bidder is not the original bidder of
record, the Successful Bidder must agree to reimburse the original
bidder up to $1,000 in costs incurred, with the reimbursable
expenses limited to appraisal fees, physical inspection fees, and
termite inspection fees.
h. The Successful Bidder must pay, at the closing, all amounts
reflected in the Best Bid in cash and such other consideration as
agreed upon.
In compliance with Rule 6004(f)(1), the Debtor will provide a copy
of the escrow closing statement to the Office of the United States
Trustee within 10 days after close of escrow.
The Debtor anticipates that there may be some capital gains
incurred via the sale of the Property. He also believes that such
gains may be offset by the administrative expenses incurred in this
instant bankruptcy case. To that end, the Debtor will retain
Grobstein Teeple LLP to perform a capital gains analysis, and will
submit the analysis prior to the Sept. 27, 2017, hearing.
The facts reflect that the Debtor's decision to sell the Property
is supported by sound business judgment because the price is fair
and the sale will generate significant cash proceeds for the
Estate. Specifically, the sales price is fair based upon the
listing prices of comparable parcels of real property, and the
extensive marketing efforts made since July 24, 2017, including
hosting two open houses. In light of these factors, he believes
that the present offer is the highest and best offer received.
Moreover, the Sale will result in the Estate receiving
approximately $858,000, which should be sufficient to pay most (if
not all) of the claims against the Estate, as set forth in the
Joint Plan. Accordingly, the Debtor asks the Court to approve the
relief sought.
The Debtor asks the Court to waive the 14-day stay under Fed.
R.Bankr. P. 6004(h).
Counsel for the Debtor:
Michael R. Totaro, Esq.
TOTARO & SHANAHAN
P.O. Box 789
Pacific Palisades, CA 90272
Telephone: (310) 573-0276
Facsimile: (310) 496-1260
E-mail: Ocbkatty@aol.com
- and -
Matthew Grimshaw, Esq.
David Wood, Esq.
Richard A Marshack, Esq.
MARSHACK HAYS LLP
870 Roosevelt
Irvine, California 92620
Telephone: (949) 333-7777
Facsimile: (949) 333-7778
E-mail: mgrimgshaw@marshackhays.com
dwood@marshackhays.com
rmarshack@marshackhays.com
About Tho Van Phan
Tho Van Phan sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. C.D. Cal. Case No. 16-13873) on Sept. 14, 2016. The
Debtor is represented by Michael R. Totaro, Esq., at Totaro &
Shanahan.
The bankruptcy case was filed as a result of two state court
lawsuits involving Debtor's former business – Kim Tho Gold, and
his son Quoc Viet Phan. The state court lawsuits were filed by
B.A.K. Precious Metals, Inc. ("BAK"), and P&P Precious Metals Inc.,
("P&P"). On April 13, 2017, the Debtor and P&P and BAK attended
mediation with the Hon. Mitchel Goldberg (Ret.) of Judicate West.
The parties were able to come to terms on a global settlement.
As a result of the global settlements with BAK and P&P, the Debtor
and the Official Committee of Unsecured Creditors negotiated a
joint Chapter 11 Plan of Reorganization. On Aug. 10, 2017, the
Committee and the Debtor filed the Joint Plan, which contemplates
the sale of the Debtor's property at 16347 Shadbush Street,
Fountain Valley, California. The Court set a plan confirmation
hearing on Oct. 11, 2017, at 10:00 a.m.
TOYS "R" US: Hires Restructuring Lawyers as $400M Debt Looms
------------------------------------------------------------
To deal with $400 million in debt due by the end of the year, Toys
"R" Us has reportedly hired a law firm to look at its options which
range from refinancing to possibly filing for bankruptcy
protection.
The Company has hired restructuring lawyers at Kirkland & Ellis to
help address the looming payments, CNBC reports, citing sources
familiar with the situation.
CNBC, however, notes that hiring a law firm like Kirkland is not
indicative of a bankruptcy filing, and many companies work with law
firms to successfully refinance or restructure their debt out of
court.
The Company has earlier announced it is working with Lazard to
assist the Company in connection with a potential debt refinancing
to address these upcoming maturities.
As of April 29, 2017, the Company had $446 million of debt
maturities before the end of fiscal 2018, which were primarily
comprised of an incremental secured term loan facility of $125
million and a second incremental secured term loan facility of $63
million maturing in May of 2018, and 7.375% senior notes of $208
million maturing in October of 2018.
"We believe we will have the ability to refinance this debt, a
portion of which may be repaid using cash on hand; however, a
number of factors including factors beyond our control could reduce
or restrict our ability to refinance these debt obligations on
favorable terms," the Company said in its Form 10-Q for the quarter
ended April 29, 2017.
About Toys "R" Us
Toys "R" Us, Inc. is an American toy and juvenile-products retailer
founded in 1948 and headquartered in Wayne, New Jersey, in the New
York City metropolitan area.
Merchandise is sold in 880 Toys "R" Us and Babies "R" Us stores in
the United States, Puerto Rico and Guam, and in more than 780
international stores and more than 245 licensed stores in 37
countries and jurisdictions. Merchandise is also sold at
e-commerce sites including Toysrus.com and Babiesrus.com.
On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the company.
Toys "R" Us is now a privately owned entity but still files with
the Securities and Exchange Commission as required by its debt
agreements.
The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders' deficit
of $1.319 billion as of April 29, 2017.
The Company and its subsidiaries posted a net loss of $163 million
on $2.206 billion of net sales for the 13 weeks ended April 29,
2017, compared with a net loss of $125 million on $2.319 billion of
net sales for the 13 weeks ended April 30, 2016.
TOYS 'R' US: Fitch Affirms CCC Issuer Default Ratings
-----------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) for
Toys 'R' Us, Inc. (Toys, or the Holdco), Toys 'R' Us - Delaware,
Inc., Toys 'R' Us Property Co. I, LLC and TRU Taj LLC at 'CCC'.
Fitch has also upgraded the Toys-Delaware B-4 term loan to 'B-/RR2'
from 'CCC+/RR3' and withdrawn the IDR of Toys 'R' Us Property Co.
II, LLC.
KEY RATING DRIVERS
Long-Term Headwinds: EBITDA (Fitch calculated) at $734 million in
2016 was essentially flat to 2015 levels versus $597 million in
2014. The improvement from 2014 levels was supported by
approximately $325 million in SG&A savings. However, Fitch expects
EBITDA to decline to $600 million-$650 million in 2017 given
same-store sales declines of 3.5%-4.0% (on a consolidated basis)
and gross margin pressure as the company clears excess inventory
from the 2016 holiday season. Toys ended 2016 with domestic
inventory up 10% year over year, which will put significant gross
margin pressure at least through first-half 2017.
Long term, Fitch believes Toys faces both competitive and secular
headwinds, and the company will continue to be a share donor. Toys
has faced a multi-decade onslaught of competition from discounters
such as Wal-Mart Stores, Inc. and Target Corporation, and more
recently, online-only players such as Amazon.com, Inc., leading to
market share losses. Fundamental characteristics of the toy
industry, including its seasonality, hit-driven nature, and low
importance of sales assistance and inviting in-store experience,
continue to make it attractive for the discount and online channels
to take share.
Fitch believes Toys needs to invest further to improve its price
perception and build out its omnichannel infrastructure. Its
current online penetration, at approximately 16.8% and 13.0% of
domestic and total revenue in 2016, respectively, lags the overall
industry, especially in its core categories. Fitch estimates online
penetration is in the low- to mid-20% range domestically in Baby
and Core Toys. However, even with these investments Fitch is not
confident the company will be able to stabilize share over the
medium term given the level of investments needed relative to a
constrained balance sheet.
Fitch consequently expects same store declines to persist in the
negative low single digit range and for EBITDA to be range bound in
the $550 million to $650 million range. At these EBITDA levels,
Toys will not be able to grow out of its capital structure and will
largely remain dependent on favorable credit markets to refinance
debt on an ongoing basis.
Significant and Ongoing Refinancing Ahead: Toys has approximately
$3.5 billion of debt due through 2020: $450 million of debt due in
2018, $1.7 billion in 2019 (excluding the $1.85 billion revolver)
and $1.3 billion due in 2020 at various entities. Toys will
primarily have to refinance with existing collateral that already
supports the debt tranches as well as some excess liquidity, given
the absence of material unencumbered assets.
The $450 million of debt maturities coming due in 2018 consists of
a EUR 48 million French PropCo facility due February 2018, $208
million of Holdco notes due October 2018 and $186 million of
B-2/B-3 term loans due May 2018. Fitch expects the French PropCo
facility to largely remain intact and be secured by the same nine
properties; this facility was already downsized from EUR 65 million
when it was last refinanced in February 2013 against the same
assets.
Fitch expects the $208 million of 7.375% Senior Unsecured Holdco
notes to be paid down through future exchanges into other debt or
by transferring cash from various operating entities through
restricted payment and investments baskets. A successful take-out
of the 2018 Holdco Notes has the potential to make available assets
(103 properties valued at approx. $570 million by Cushman &
Wakefield in September 2016) on which there is a limitation on
liens under the bond indenture. (Fitch has not allocated the value
of these assets to any debt in its recovery analysis. Please see
the Recovery Analysis and Considerations section for more
details.)
The B-4 term loan lenders have a springing first lien on these
assets post the repayment of the Holdco notes and Fitch believes
Toys could use these assets to negotiate with B-4 term lenders for
an add-on or a more comprehensive refinancing plan to address the
B-2/B-3 term loan maturities. The B-2, B-3 and B-4 term loan
holders are equally secured by Toys intellectual property (IP) and
trademarks (and have a second lien on the ABL collateral) but the
B-4 term loan also benefits from an unsecured guaranty by the
indirect parent of PropCo I and is secured by a first-priority
pledge on two-thirds of the Canadian subsidiary stock. To the
extent that B-4 lenders are over-collateralized with the addition
of a first lien against the 103 Delaware properties, Toys may be
able to effect a $200 million to $400 million add on to address the
B-2/B-3 term loans as well as Holdco maturities. The inability to
successfully negotiate with the B-4 term loan lenders could
potentially lead to the B-2/B-3 term loans being refinanced with
debt secured by a pro rata share of IP assets, which is the
existing collateral for these loans.
The remainder of the $3.5 billion debt due through 2020 is
primarily secured by real estate. Refinancing prospects will depend
on credit market conditions as well as updated real estate market
valuation although Fitch note that underlying properties were
appraised and a significant portion of upcoming debt was put in
place over 2012-2016. Real estate valuations since that time period
largely remain the same or have modestly improved, although
valuations could be impacted by recent weakness in the retail
sector and the related square foot rationalization.
DERIVATION SUMMARY
Toys' CCC rating reflects the long-term competitive and secular
headwinds faced by the company that have led to meaningful top-line
and EBITDA declines and questions regarding long term competitive
viability. As a result of these trends and a high debt load post
its 2005 LBO, the company faces ongoing refinancing risk. Other
single category retailers such as Best Buy (BBB-/Stable), The Gap
(BB+/Stable) and Kroger (BBB/Stable) have also faced secular
pressures but have been able to largely stem declines as a result
of their ability to invest in their businesses due to lower
leverage profiles and strong cash flow generation. Difference in
category fundamentals has also prevented these retailers from
experiencing the level of market share erosion to discount/online
channels as seen with the toy category. Sears Holding Corporation
(CC), like Toys, faces market share erosion but its significant
cash burn yields heightened liquidity and refinancing risk versus
Toys.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
-- Fitch assumes comps remain in the negative low to mid-single
digits in 2017 and be in the negative low single digits range
thereafter.
-- EBITDA is expected to decline to around $600 million to $650
million in 2017, from 2016's level of $734 million, and remain
rangebound thereafter.
-- Annual FCF is expected to be in the negative $80 million to
$100 million range, absent any swings in working capital. FCF
was negative $265 million in 2016 given a negative working
capital swing of approximately $315 million. Barring
refinancing needs, Fitch views liquidity available under its
credit facilities as adequate to fund the upcoming 2017 and
2018 holiday seasons.
-- Leverage is expected to increase to the low to mid 8x over the
next 24-36 months versus the 7x range in 2015/2016.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead to
Positive Rating Action
A positive rating action could result from sustainable improvement
in Toys' same-store sales trends, which would indicate stable
and/or improved market share, while continuing to generate EBITDA
at a level where the company is generating FCF.
Future Developments That May, Individually or Collectively, Lead to
Negative Rating Action
A negative rating action could result if same-store sales in the
U.S. and international businesses revert to midsingle-digit
declines and/or gross margins decline meaningfully without any
offset from cost reductions. This would indicate more severe market
share losses and lead to tighter liquidity than Fitch's current
expectation over the next 24 months. The inability to refinance
ongoing debt maturities starting 2018 would also be a rating
concern.
LIQUIDITY
Adequate Liquidity: Toys held $301 million of cash ($35 million at
Toys 'R' Us - Delaware, Inc.) and $252 million of availability
under its various revolvers as of April 29, 2018, including $176
million available under its domestic $1.85 billion facility. Fitch
views liquidity as adequate to fund the upcoming 2017 and 2018
holiday seasons.
Recovery Analysis and Considerations
For issuers with IDRs at 'B+' and below, Fitch performs a recovery
analysis for each class of obligations. Issue ratings are derived
from the IDR and the relevant Recovery Rating (RR) and notching
based on expected recoveries in a distressed scenario for each of
the company's debt issues and loans. Toys' debt is at three types
of entities: operating companies (OpCo); property companies
(PropCos); and HoldCos, with a structure summary as follows:
Toys 'R' Us, Inc. (HoldCo)
(I) Toys 'R' Us-Delaware, Inc. (Toys-Delaware) is a subsidiary of
HoldCo.
(a) Toys 'R' Us Canada (Toys-Canada) is a subsidiary of
Toys-Delaware.
(II) TRU Taj LLC, an indirectly owned subsidiary of Holdco.
(a) Toys 'R' Us Property Co. I, LLC (PropCo I) is a subsidiary of
TRU Taj.
OpCo Debt
Fitch takes the higher of liquidation value or enterprise value
(EV, based on 5.0x multiple applied to the stressed EBITDA) at the
OpCo levels: Toys-Delaware and Toys-Canada and the international
entities that provide a stock pledge to the debt at TRU Taj. The
5.0x is consistent with the 5.4x median multiple for retail going
concern reorganizations but at the low end of the 12-year retail
market multiples of 5x-11x, and below 7x-12x for retail transaction
multiples. The stressed EV is reduced by 10% for administrative
claims.
Toys-Canada
Toys has a $1.85 billion ABL revolver with Toys-Delaware as the
lead borrower, and this contains a $200 million subfacility in
favor of Canadian borrowers. Assets of the Canadian borrower and
its subsidiaries secure only the Canadian liabilities (including
the Canadian portion of the first in, last out [FILO] term loan).
The $200 million subfacility is more than adequately covered by the
EV calculated based on stressed EBITDA at the Canadian subsidiary.
The stressed EBITDA of $80 million assumes ongoing revenues of $800
million and a 10% EBITDA margin, which is in line with the average
over the last five years. Therefore, the fully recovered
subfacility is reflected in the recovery of the consolidated $1.85
billion revolver discussed below.
The residual value of approximately $220 million is applied toward
the FILO term loan and B-4 term loan.
Toys-Delaware
At the Toys-Delaware level, recovery on the various debt tranches
is based on liquidation value of domestic assets rather than a
going concern enterprise value. To derive a going concern
enterprise value of $1.5 billion, Fitch assumes a going concern
EBITDA of $310 million valued at a 5x multiple. This assumes (i)
ongoing domestic EBITDA of $230 million based on revenue of $5
billion (an approximately 35% discount to current Toys-Delaware
revenues (ex. Canada) of $7.1 billion) operating at a 5% EBITDA
margin and (ii) $80 million of IP royalty fees that Toys charges
its international businesses and third parties.
In deriving a liquidation value of domestic assets of $1.9 billion
at Toys Delaware, Fitch considered the liquidation value of
domestic inventory and receivables assumed at seasonal peak, at the
end of the third quarter, and applied typical advance rates of 70%
and 80%, respectively, and estimated value for Toys' IP assets,
which are held at Geoffrey, LLC as a wholly owned subsidiary of
Toys-Delaware.
In addition, the B-4 term loan benefits from the equity residual
from Toys-Canada and from an unsecured guarantee from the indirect
parent of PropCo I. Fitch's liquidation analysis did not include
any valuation for plant, property and equipment (excluding Propco I
and Propco II) because of the lack of transparency regarding the
value of these properties. At the end of 2016, Toys operated 879
domestic stores of which 318 units are held at Propco I and 123
units are held at Propco II leaving 438 units at Toys Delaware. The
mix of leased versus owned (included ground leases) is unclear
although on Oct. 24, 2016, Toys filed an 8K disclosing that 103
Toys-Delaware properties (88 ground leased locations where Toys
owns the building and 15 owned locations) were appraised by Cushman
and Wakefield at $568 million. As mentioned previously, the B-4
term loan lenders have a springing first lien on these assets post
the repayment of the Holdco notes, and Fitch believes Toys could
use these assets to negotiate with B-4 term lenders for an add-on
or a more comprehensive refinancing plan to address the B2/B3 term
loan maturities.
The $1.85 billion revolver is secured by a first lien on inventory
and receivables of Toys-Delaware. Fitch assumes $1.3 billion, or
approximately 70%, of the facility commitment is drawn under the
revolver. The facility is fully recovered and is therefore rated
'B/RR1'.
The FILO term loan is secured by the same collateral as the $1.85
billion ABL facility and ranks second in repayment priority
relative to the ABL. The FILO tranche is governed by the residual
borrowing base within the ABL facility and benefits from a lien
against 15% of the estimated value of real estate at Toys-Canada.
The facility is rated 'B/RR1' based on outstanding recovery
prospects (91%-100%), as it benefits from the excess liquidation
value of domestic inventory and A/R.
The $1 billion B-4 term loan and the $186 million of B-2 and B-3
term loans have a first lien on all present and future IP,
trademarks, copyrights, patents, websites and other intangible
assets, and a second lien on the ABL collateral. The B-4 term loan
also benefits from an unsecured guaranty by the indirect parent of
PropCo I and is secured by a first-priority pledge on two-thirds of
the Canadian subsidiary stock.
After prorating the value of the IP assets (estimated at $350
million), the residual equity in Toys-Canada and applying the
benefit from the guaranty by the indirect parent of PropCo I, the
B-4 term loan is expected to have superior recovery prospects
(71%-90%), and is therefore upgraded to 'B-/RR2' from 'CCC+/RR3'.
The $186 million in remaining B-2 and B-3 term loans are rated
'CCC/RR4', as they are expected to have average recovery prospects
(31%-50%), mainly from their prorated claim against the IP assets.
The $22 million 8.75% debentures due Sept. 1, 2021 have poor
recovery prospects (0%-10%) and are therefore rated 'CC/RR6'.
Valuation of IP
Toys' IP assets held at Geoffrey, LLC are the first lien collateral
backing the senior secured term loans issued at Toys-Delaware. The
annual license fees paid by HoldCo's international subsidiaries
were $64 million as of Jan. 28, 2017, a decline from $102 million
in 2012. In addition, Toys generated $16 million in license fees
from third parties for a total of $80 million in licensing fees in
2016.
In terms of valuing the IP, Fitch applied a 4.0x-5.0x multiple to
these royalty streams from Toys' international subsidiaries
(excluding Canada) and third parties to arrive at a value of $350
million. While the multiple paid could potentially be better,
resulting in a higher IP valuation, there could also be further
downward pressure on the royalty stream itself given weakness in
its international businesses.
PropCo Debt
At the PropCo levels (PropCo I and other international PropCos) LTM
net operating income (NOI) is stressed at 20%.
PropCo I is set up as bankruptcy-remote entity with a 20-year
master lease through 2029 covering all the properties within the
entities, which requires Toys-Delaware to pay all costs and
expenses related to leasing these properties from these two
entities. The ratings on the PropCo debt reflect a distressed
capitalization rate of 12% applied to the stressed NOI of the
properties to determine a going-concern valuation. The stressed
rates reflect downtime and capital costs that would need to be
incurred to re-tenant the space. The 12% capitalization rate
reflects the exposure to a single tenant versus a more diversified
portfolio. As a reference the Fitch CMBS Large Loan Rating Criteria
typically uses default cap rates of 8.5% to 11.25%.
Applying these assumptions to the $866 million senior unsecured
term loan facility at PropCo I results in outstanding recovery
prospects (91%-100%) and the facility is therefore rated 'B/RR1'.
The PropCo I unsecured term loan facility benefits from a negative
pledge on all PropCo I real estate assets, which includes around
320 properties (318 stores, three distribution centers and
headquarters).
As described above, the residual value of approximately $334
million after fully recovering the $866 million term loan at PropCo
I is applied toward the Toys-Delaware B-4 term loan via an
unsecured guaranty by the indirect parent of PropCo I.
TRU Taj LLC Debt
The $583 million notes due 2021 are secured by a stock pledge in
certain international subsidiaries, including guarantors of the
European ABL, and the EBITDA attributed to TRU Taj was $173 million
in 2016, calculated on a covenant basis. Fitch applied a 5.0x
multiple to each entity's EBITDA (stressed at 20% from current
levels to reflect the secular headwinds in the category),
subtracted out any entity-level debt, and then applied the
remaining value against the $583 million notes. This resulted in
average recovery (31%-50%), and the notes are therefore rated
'CCC/RR4'.
Toys 'R' Us, Inc. - HoldCo Debt
The $208.3 million 7.375% unsecured notes due Oct. 15, 2018 (and
the $741 million senior notes due to Toys-Delaware that are
considered pari passu with the publicly traded HoldCo notes) have
poor recovery prospects (0%-10%) because there is no residual value
flowing in from the wholly owned subsidiaries. Therefore, they are
rated 'CC/RR6'.
FULL LIST OF RATING ACTIONS
Fitch has affirmed the followings ratings:
Toys 'R' Us, Inc.
--IDR at 'CCC';
--Senior unsecured notes at 'CC/RR6'.
Toys 'R' Us - Delaware, Inc.
--IDR at 'CCC';
--Secured revolver at 'B/RR1';
--Secured FILO term loan at 'B/RR1'
--Secured B-2 and B-3 term loans at CCC/RR4';
--Senior unsecured notes at 'CC/RR6'.
Toys 'R' Us Property Co. I, LLC
--IDR at 'CCC';
--Senior unsecured term Loan facility at 'B/RR1'.
TRU Taj LLC
--IDR at 'CCC';
--Senior secured notes at 'CCC/RR4'.
Fitch has upgraded the following rating:
Toys 'R' Us - Delaware, Inc.
--Secured B-4 term loan to 'B-/RR2' from 'CCC+/RR3'.
Fitch has withdrawn the following rating:
Toys 'R' Us Property Co. II, LLC
--IDR at 'CCC'.
TROY'S DELI: Court Sets Oct. 6, 2017 as Claims Bar Date
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York in
Poughkeepsie, set Oct. 6, 2017, as the deadline for
parties-in-interest, including individuals, partnerships,
corporations, joint ventures, trusts and governmental units, to
file proofs of claim in the Chapter 11 case of Troy's Deli &
Pizzeria, Inc.
These persons or entities DO NOT need to file a proof of claim on
or prior to the Bar Date:
(a) A person or entity that has already filed a proof of claim
against the Debtor with the Clerk of the Bankruptcy Court for the
Southern District of New York in a form substantially similar to
Official Bankruptcy Form No. 10;
(b) A person or entity whose claim is listed on the Schedules
if (i) the claim is not scheduled as "disputed," "contingent," or
"unliquidated" and (ii) the party does not disagree with the
amount, nature and priority of the claim as set forth in the
Schedules;
(c) A holder of a claim that has been paid in full by the
Debtor;
(d) A holder of a claim for which a specific deadline has
previously been fixed by the Court;
(e) A holder of a claim allowable under Sec. 503(b) and Sec.
507(a)(2) of the Bankruptcy Code as an expense of administration of
the Debtor's estate.
Holders of an equity interest in the Debtor need not file a proof
of interest with respect to the ownership of such equity interest
at this time.
The Debtor is represented by:
Michelle L. Trier, Esq.
GENOVA & MALIN
Hampton Business Center
1136 Route 9
Wappingers Falls, NY 12590
Tel: (845) 298-1600
About Troy's Deli & Pizzeria
Troy's Deli & Pizzeria, Inc, based in Kerhonkson, New York, filed a
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 17-36010) on June 12,
2017, estimating under $1 million in both assets and liabilities.
Michelle L Trier, Esq., at Genova & Malin, serves as bankruptcy
counsel.
TRUE RELIGION: Unsecureds to be Paid Up to 7.7% in Latest Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware is set to
hold a hearing on October 5 to consider approval of the Chapter 11
plan of reorganization for True Religion Apparel, Inc. and its
affiliates.
The court had earlier approved the company's disclosure statement,
allowing it to start soliciting votes from creditors.
The order signed on August 24 set a September 27 deadline for
creditors to file their objections and cast their votes accepting
or rejecting the plan.
True Religion's latest restructuring plan proposes to pay creditors
holding Class 5 general unsecured claims between 4.1% and 7.7%.
The estimated amount of general unsecured claims is $105.6
million.
In its original plan, the company had proposed to pay general
unsecured creditors between 4.9% and 7.5%, and estimated the amount
of claims at $104.7 million.
The latest plan also modified the treatment of general unsecured
claims as part of a settlement between True Religion and the
official committee of unsecured creditors that would provide
additional benefits to unsecured creditors.
If Class 5 votes to accept the plan, general unsecured creditors
will have the option to elect their pro rata share of $2,102,991 in
cash on account of their claims.
Moreover, TRLG Holdings LLC, the parent company, will provide
general unsecured creditors with 0.5% of equity in the reorganized
companies in exchange for releases of the company under the plan.
The latest plan also provides for the modification of the terms of
the first lien term loan facility under which the lenders have
agreed that for the first two quarters post-emergence, the
reorganized companies, at the discretion of the new board of
directors, will have the option to pay up to 50% of the interest
payments in kind if the reorganized companies fail to satisfy a
minimum liquidity covenant (subject to a 15% cushion).
If the plan is confirmed, True Religion and its affiliates will
emerge from bankruptcy with as much as 71% less funded debt,
according to their latest disclosure statement.
A copy of the disclosure statement for the first amended plan is
available for free at https://is.gd/Ou4c4y
About True Religion Apparel
Manhattan Beach, California-based True Religion Apparel Inc.
designs and markets denim, sportswear and accessories for men,
women and children under the "True Religion" brand. Founded by
Jeff Lubell in 2002, the Company sells its products through
wholesale and retail channels on six continents and through their
websites at http://www.truereligon.com/and
http://www.last-stitch.com/ As of July 5, 2017, the True Religion
Brand Jeans retailer had 140 True Religion and Last Stitch
brick-and-mortar stores.
The company has been controlled by TowerBrook Capital Partners
since its take-private transaction in July 2013.
True Religion and four affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 17-11460) on July 5, 2017, after
obtaining secured stakeholder support for a restructuring that
would reduce debt by over $350 million.
True Religion had $243.3 million in assets against $534.7 million
of liabilities as of Jan. 28, 2017.
The company's legal advisors include Wachtell Lipton Rosen & Katz
and Pachulski Stang Ziehl & Jones. Its financial advisor is MAEVA
Group, LLC. Prime Clerk LLC is the claims and noticing agent.
The Ad Hoc Group of Unaffiliated Prepetition First and Second Lien
Lenders -- which signed the RSA -- tapped Akin Gump Strauss Hauer &
Feld LLP as counsel and Moelis & Company, LLP, as financial
advisor.
On July 12, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The Committee retained
Cooley LLP, as counsel, Province, Inc., as financial advisor.
On July 5, 2017, the Debtors filed a disclosure statement, which
explains their joint Chapter 11 plan of reorganization.
TTM TECHNOLOGIES: Moody's Affirms B1 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service affirmed TTM Technologies, Inc.'s
Corporate Family Rating ("CFR") of B1, the Probability of Default
Rating ("PDR") of B1-PD, the rating on the US senior secured
asset-based lending ("ABL") revolving credit facility of Ba1, and
the Speculative Grade Liquidity ("SGL") rating of SGL-1.
Concurrently, Moody's assigned a Ba3 rating to the company's
proposed $350 million first lien term loan. The rating action
follows TTM's announced plans to refinance its presently
outstanding term loan with proceeds from the new loan and the
expected issuance of additiional senior unsecured debt in the near
term, resulting in a lower proportion of secured debt in the
post-closing capital structure.
Moody's assigned the following ratings:
Senior Secured Term Loan B due 2024 --Ba3 (LGD3)
Moody's affirmed the following ratings:
Corporate Family Rating-B1
Probability of Default Rating-B1-PD
Senior Secured Revolving Credit Facility expiring 2020 --Ba1
(LGD2)
Speculative Grade Liquidity rating-SGL-1
Outlook is stable
RATINGS RATIONALE
TTM's B1 CFR is supported by the company's strong market presence
as a manufacturer of specialty printed circuit board ("PCB")
products such as advanced multiple layer count and high density
interconnect PCBs. The ratings are also supported by TTM's moderate
debt leverage of less than 3x and improving financial flexibility
to invest in research and development initiatives and state of the
art manufacturing facilities to stay on the leading edge of PCB
fabrication ahead of rival Asian providers of commoditized PCBs.
The rating is constrained by the highly fragmented and competitive
nature of the electronic PCB industry as well as the company's
exposure to economic cycles that could limit revenue growth
prospects and TTM's ability to realize margin expansion.
Moody's believes TTM's liquidity will be very good over the next
year, as indicated by the SGL-1 rating. Liquidity will be supported
by $247 million of cash on the company's balance sheet as of July
3, 2017, nearly $330 million of pro forma revolver availability,
and Moody's expectation of free cash flow ("FCF") in excess of $200
million over the next year. Borrowings under the proposed term loan
are not governed by financial covenants, but the revolver is
subject to a springing covenant of at least 1x fixed charge
coverage. Moody's expects TTM to remain comfortably in compliance
with these covenants over the next 12-18 months.
The stable outlook reflects Moody's expectation that TTM will
generate low single digit revenue growth over the next 12 months
due principally to modestly improving end market demand trends.
Concurrently, operating leverage benefits and the company's ongoing
focus on cost efficiencies should produce moderate improvement in
profit margins as well as reduce debt to EBITDA (Moody's adjusted)
to the mid 2x range.
What Could Change the Rating -- Up
TTM's ratings could be upgraded if the company continues to improve
its competitive position in the PCB sector and demonstrates
consistent growth that exceeds that of the broader market while
realizing ongoing improvement in its credit metrics.
What Could Change the Rating -- Down
The ratings could be downgraded if TTM experiences deteriorating
financial performance due to market share losses or significant
margin erosion as a result of lower volumes, pricing pressures, or
higher operating costs. Additionally, the ratings could be
downgraded if debt financed acquisitions or shareholder initiatives
increase debt leverage above 3.5x or annual FCF/debt falls below
10%.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in December 2015.
TTM is a provider of complex multi-layer PCBs and electromechanical
solutions. The products are used for applications in the aerospace
& defense, automotive, information technology, networking &
communications infrastructure, industrial and healthcare/medical
end markets. Moody's expects revenues in 2017 to approximate $2.6
billion.
TTM TECHNOLOGIES: S&P Raises CCR to 'BB', Outlook Stable
--------------------------------------------------------
S&P Global Ratings raised its corporate credit rating to 'BB' from
'BB-' on Costa Mesa, Calif.-based TTM Technologies Inc. The outlook
is stable.
S&P said, "At the same time, we assigned our 'BBB-' issue-level
rating and '1' recovery rating to the company's $350 million
first-lien term loan due 2024. The '1' recovery rating indicates
our expectation for very high (90% to 100%; rounded estimate 95%)
recovery in the event of payment default.
"We also raised our issue-level rating to 'B+' from 'B' on the
company's $250 million unsecured convertible notes due 2020. The
'6' recovery rating is unchanged and reflects our expectation for
negligible recovery (0% to 10%; rounded estimate 0%) in the event
of payment default."
"The rating action is based on our view of TTM's second straight
quarter with leverage in the mid-2x area, and our expectation that
management will maintain leverage at or below this level over the
intermediate term," said S&P Global Ratings credit analyst Geoffrey
Wilson.
The stable outlook reflects S&P Global Ratings' expectation that
the company's market position among leading PCB makers and its
diverse end markets (serving the automotive, A&D, cellular,
computing, medical industrial and instrumentation, and networking
and communication industries) will result in consistent operating
performance.
TULARE LOCAL: Fitch Cuts Rating on $13.65MM 2007 Bonds to CC
------------------------------------------------------------
Fitch Ratings has downgraded to 'CC' from 'B' $13,650,000 of series
2007 fixed-rate bonds issued by the Tulare Local Health Care
District, CA d/b/a Tulare Regional Medical Center (TRMC). Fitch has
also downgraded TRMC's Issuer Default Rating (IDR) to 'CC' from
'B', indicating probable default risk. Fitch maintains the bonds
and the IDR on Rating Watch Negative.
KEY RATING DRIVERS
DOWNGRADE ON INABILITY TO RESTORE LIQUIDITY: Fitch's Aug. 9, 2017
release noted that TRMC's current rating hinged on its ability to
restore liquidity by the end of August 2017. The downgrade to 'CC'
represents very high levels of credit risk, reflecting TRMC's
continued delays in executing external liquidity agreements to
bolster working capital and heightened political instability at the
TRMC board level.
NEGATIVE WATCH REFLECTS FRACTURED GOVERNANCE: Maintenance of the
Rating Watch Negative reflects Fitch's concern over the breakdown
of communication between the TRMC board and hospital management
that places risk on hospital operations and execution of credit
agreements.
RATING SENSITIVITIES
LIQUIDITY IMPROVEMENTS: The current rating assumes near term
improvement in TRMC's cash position. An inability to restore
liquidity by the end of September 2017 will result in further
negative rating action.
FUNCTIONAL GOVERNANCE: Resolution of the Rating Watch Negative
requires clarity over the legality of TRMC board and hospital
administration actions and development of a working relationship
between the TRMC board and hospital administration to support TRMC
operations, reporting and financing activities.
SUFFICIENT INFORMATION: Fitch is concerned about receipt of timely
and reliable information. Maintenance of the Fitch rating is
dependent on management's ability to provide timely and reliable
information.
UNITED MOBILE: Selling Lubbock Properties to All Cellular for $250K
-------------------------------------------------------------------
United Mobile Solutions, LLC, asks the U.S. Bankruptcy Court for
the Northern District of Georgia to authorize its subsidiary, Italk
Lease Management, LLC, to assign the leasehold interest for its
five Lubbock, Texas locations: (i) 1702-A 4th Street; (ii) 5408 4th
Street; (iii) 6302 Frankford Avenue; (iv) 4921 34th Street; and (v)
6002 Slide Road to All Cellular Orlando, LLC in exchange for
$250,000.
The Debtor operates 41 cellular retail stores as a carrier master
dealer for T-Mobile USA, Inc., MetroPCS Georgia, LLC, and MetroPCS
Texas, LLC. Specifically, it operates (i) 13 T-Mobile stores with
10 sub-dealer locations and 3 direct operated locations; (ii) 17
MetroPCS GA stores with 12 sub-dealer locations and 5 direct
operated locations; and (iii) 11 MetroPCS TX stores with 5
sub-dealer locations and 6 direct operated locations.
A copy of the list of the store locations attached to the Motion is
available for free at:
http://bankrupt.com/misc/United_Mobile_229_Sales.pdf
At the request and direction of Metro PCS GA and MetroPCS TX, the
Debtor is in the process of winding down its MetroPCS Locations.
It is unable to operate the MetroPCS Locations without the express
authorization and continued consent of MetroPCS. The Debtor is
working with MetroPCS for the orderly and efficient disposition of
the MetroPCS stores that it operates directly or as a Master Dealer
to various sub-dealers.
The Debtor's wholly owned Subsidiary, Italk Lease Management, holds
the lease-hold interest for 22 of the MetroPCS Locations. In order
to effectuate the disposition of the Leasehold Interests for the
benefit of the Estate of the Debtor, the Subsidiary is seeking to
find MetroPCS approved buyers for the Leasehold Interests. Upon
approval, it is the Subsidiary's intention to assign the specific
Leasehold Interest to a MetroPCS approved Master Dealer for the
MetroPCS Locations in exchange for payment to the Subsidiary of the
fair market value for each Leasehold Interest. In the Debtor's
experience, the Leasehold Interests have a value of in between
$5,000 and $50,000 for each location.
The Subsidiary has five Leasehold Interests in Lubbock, Texas. It
has designated the Buyer as the Buyer for the five Lubbock Texas
stores identified. MetroPCS TX has approved this transaction.
The Debtor can no longer afford the overhead for the Lubbock
Locations and intends to cease operations in the Lubbock Locations
by Sept. 8, 2017.
Upon the assignment of the Leases for the Lubbock Locations, All
Cellular will pay $250,000 to the Subsidiary. After payment of the
debts of the Subsidiary related to the Lubbock Locations, the
Subsidiary will pay all net proceeds from the sale to the Debtor.
The
Subsidiary anticipates a net payment of $150,000 to the Debtor.
The Subsidiary is a tenant under an additional 17 leases for
MetroPCS Locations. The Debtor asks Court approval for the
subsidiary to assign the leases for its remaining MetroPCS
Locations upon terms substantially similar to the terms set forth.
All transactions will
be pre-approved by MetroPCS and all net proceeds will be submitted
to the Debtor.
The Debtor respectfully asks for a waiver of the stay arising out
of Fed. R. Bankr. Pro. 6006(d) so it can assign the Leasehold
Interests.
About United Mobile Solutions
United Mobile Solutions, LLC, is a carrier master dealer that
operates and manages approximately 20 retail cellular phone stores.
Its corporate offices are located in Norcross, Georgia.
United Mobile filed a Chapter 11 petition (Bankr. N.D. Ga. Case No.
16-62537) on July 20, 2016. The petition was signed by Kil Won
Lee, president. At the time of the filing, the Debtor estimated
assets of less than $50,000 and liabilities of $1 million to $10
million.
The Debtor is represented by Cameron M. McCord, Esq., at Jones &
Walden, LLC.
An official committee of unsecured creditors has not been appointed
in the case.
* * *
On Dec. 16, 2016, the Debtor filed a disclosure statement and
Chapter 11 plan of reorganization.
VANTIV LLC: S&P Alters Outlook to Negative & Affirms 'BB+' CCR
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' corporate credit rating on
Cincinnati-based Vantiv LLC and removed all ratings from
CreditWatch negative. The outlook is negative.
S&P said, "At the same time, we affirmed our 'BBB-' issue-level and
'2' recovery ratings on the company's first-lien credit facility
and assigned the same ratings to company's proposed incremental
first-lien credit facility. The '2' recovery rating indicates our
expectation for substantial (70%-90%; rounded estimate: 85%)
recovery in the event of a payment default.
"We also assigned our 'BB' issue-level and '5' recovery ratings to
the company's proposed senior unsecured notes. The '5' recovery
rating indicates our expectation for modest (10%-30%; rounded
estimate: 20%) recovery in the event of a payment default."
The negative outlook reflects Vantiv's substantial increase in
leverage pro forma for two debt raises associated with its
acquisition of Worldpay. Vantiv is raising $3.27 billion of senior
secured and unsecured debt to fund the cash portion of the purchase
price and refinance existing Worldpay debt. S&P expects the
acquisition to close in the first quarter of 2018. Additionally,
last month Vantiv raised $1.27 billion senior secured term loan B
to fund a buyback of Fifth Third Bank's shares, reducing the bank's
stake in Vantiv to below 5% (pro-forma for the Worldpay
acquisition). Pro forma for the transactions, leverage will
increase to 5.5x from around 3.5x as of June 30, 2017.
The negative outlook reflects Vantiv's sizeable debt raise to fund
the Worldpay acquisition and share repurchase, resulting in an
initial spike in leverage to the mid-5x area. S&P expects Vantiv to
continue to grow EBITDA in at least the high single digit percent
range and use most of its free cash flow to repay debt such that
leverage declines to the low-4x area by twelve months following the
close of the acquisition.
The rating could be lowered if Vantiv does not stay on pace to
reduce leverage to the low-4x area within 12 months of closing the
acquisition, through at least high–single-digit percentage
organic net revenue growth, slight margin expansion as modest
synergies are realized, and the use of most of its free cash flow
to repay debt.
S&P could revise the outlook to stable if Vantiv continues to grow
net revenues in at least the high single percent range, expands
EBITDA margins through modest first-year cost synergies, and uses
most of its free cash flow to repay debt such that leverage
declines to the low-4x range within twelve months following the
close of the acquisition.
WALLACE RUSH: Disclosure Statement Hearing Set for Oct. 6
---------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Louisiana is
set to hold a hearing on October 6 to consider approval of the
disclosure statement, which explains the proposed Chapter 11 plan
for Wallace, Rush, Schmidt, Inc.
The hearing will be held at 10:00 a.m., at Hale Boggs Federal
Building, Courtroom B-705, 500 Poydras Street, New Orleans,
Louisiana. Objections are due by September 29.
About Wallace, Rush, Schmidt Inc.
Wallace, Rush, Schmidt, Inc., doing business as Wallace Resource
Systems of Leachville, LLC, and Wallace Staffing and Labor, LLC, is
a personnel resource company specializing in Natural Disaster Clean
up/Recovery and Man-Made disasters which combined with its many
years of experience in disaster clean up and restoration,
supervision and administration expanding customer base. The
company specializes in job management and labor services for
disaster restoration companies. It serves its clients nationwide
24/7.
Wallace Rush sought Chapter 11 protection (Bankr. E.D. La. Case No.
17-10698) on March 24, 2017. The petition was signed by Eddie
Schmidt, vice president.
The Debtor estimated assets and liabilities in the range of $1
million to $10 million.
Judge Jerry A. Brown is assigned to the case.
The Debtor tapped Phillip K. Wallace, Esq., at Phillip K. Wallace,
PLC, as counsel.
WASTE INDUSTRIES: S&P Puts 'BB-' CCR on CreditWatch Negative
------------------------------------------------------------
S&P Global Ratings placed all of its ratings on U.S.-based Waste
Industries USA Inc., including its 'BB-' corporate credit rating,
on CreditWatch with negative implications.
The CreditWatch placement follows Waste Industries' announcement
that it has entered into a definitive agreement to be acquired by
Wrangler Buyer Corp., an affiliate of HPS Investment Partners LLC
and Equity Group Investments. Following the transaction, Waste
Industries will become a subsidiary of Wrangler Buyer Corp. For
additional information, please see our research update on Wrangler
Buyer Corp. published Sept. 6, 2017.
The ratings are on CreditWatch with negative implications, and we
could either affirm the ratings or lower them during the next 90
days. S&P said, "We will update our CreditWatch placement following
the close of the acquisition of Waste Industries by Wrangler Buyer
Corp. (an affiliate of HPS Investment Partners and Equity Group
Investments), which the company expects to occur before Sept. 30,
2017. We could potentially equalize our rating on Waste Industries
with Wrangler Buyer Corp., because Waste Industries will likely
become a core subsidiary given that it would contribute all of
Wrangler's sales and operations. When the transaction closes, which
we expect will occur before Sept. 30, 2017, we will likely withdraw
our ratings on Waste Industries USA Inc."
WRANGLER BUYER: S&P Assigns 'B' Corp Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' corporate credit rating to
U.S.-based Wrangler Buyer Corp. The outlook is stable.
S&P said, "We assigned our 'B' issue-level and '3' recovery rating
to the company's proposed senior secured credit facility, which
consists of a $200 million revolving credit facility due 2022 and
an $890 million term loan B maturing in 2024. The '3' recovery
rating indicates our expectation for meaningful (50%-70%; rounded
estimate: 55%) recovery for lenders in the event of a payment
default.
"At the same time, we assigned our 'CCC+' issue-level rating and
'6' recovery rating to the company's proposed $305 million senior
unsecured notes. The '6' recovery rating indicates our expectation
for negligible (0%-10%; rounded estimate: 0%) recovery for lenders
in the event of a payment default.
"Our 'B' corporate credit rating on Wrangler reflects the company's
high pro forma debt leverage following the proposed transaction. We
estimate that Wrangler's debt to EBITDA will be about 8x (including
a $295 million shareholder PIK note that we treat as debt)
following the transaction close, which is likely before Sept. 30,
2017, and expect that the company will reduce leverage to the
mid-7x area by the end of 2018. Excluding the shareholder PIK note,
Wrangler's debt to EBITDA would be in the mid-6x area following
transaction close. These factors are partially offset by our belief
that demand for the company's services are relatively stable and
recession-resistant given that almost three quarters of the
company's revenue from collection operations comes from one- to
five-year service contracts. We note that the company has good
profitability and has experienced success in enhancing pricing
during 2017.
"The stable outlook on Wrangler Buyer Corp. reflects our view that
the company's efforts to enhance its pricing, along with slight
improvements in volume, should allow it to continue to generate
strong profits. Wrangler Buyer Corp. will be the parent company of
Waste Industries following Waste Industries' acquisition by its new
financial sponsors, HPS Investment Partners LLC and Equity Group
Investments. Following the transaction, Wrangler's adjusted
debt-to-EBITDA ratio will increase to the 8x area, including a
Shareholder PIK note that we treat as debt, or approximately 6.5x
excluding the Shareholder PIK note. Under our base-case scenario,
we expect Wrangler to reduce its leverage to a more manageable
mid-7x area by the end of 2018, including a Shareholder PIK note
that we treat as debt, or approximately 6x excluding the
Shareholder PIK note.
"Although unlikely over the next 12 months, we could lower our
ratings on Wrangler Buyer Corp. by one notch if we expected its
debt-to-EBITDA metric (including the Shareholder PIK note that we
treat as debt) would remain above 8x for an extended period with
limited prospects for improvement. We could also lower the ratings
if the company pursued debt-financed acquisitions or shareholder
returns that increased its leverage above 8x on a sustained basis.
We could also lower our ratings if operational issues resulted in
the company's liquidity becoming constrained, such that the
springing covenant under its revolver is tested, and the level of
EBITDA headroom under the maximum total leverage ratio declined to
less than 15%.
"We could raise our rating by one notch if we expected its
debt-to-EBITDA metric to approach 6.5x (including the Shareholder
PIK note that we treat as debt). However, given the company's very
highly leveraged capital structure at present, we believe that its
operating performance would be insufficient to realize such a
scenario during the next year."
WTE S&S AG: Disclosure Statement Hearing Set for Oct. 3
-------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois is
set to hold a hearing on October 3 to consider approval of the
disclosure statement, which explains the Chapter 11 plan of
reorganization for WTE-S&S AG Enterprises LLC.
The hearing will take place at Courtroom 619, 219 South Dearborn,
Chicago, Illinois. Objections are due by September 26.
Under the restructuring plan, creditors holding Class 3 unsecured
claims will be paid not less than 50% but not more than 100% of
their claims.
Payments will be made in equal quarterly installments over five
years starting in the month following the effective date of the
plan. Class 3 is impaired under the plan.
WTE-S&S will pay creditors from cash deposits existing at the time
of confirmation of the plan, from proceeds generated from the
continued operation of its business, and from the amount that may
be recovered from the litigation involving DVO Inc. and S&S Ag,
according to the company's disclosure statement filed on August
22.
A copy of the disclosure statement is available for free at
https://is.gd/lmZkzv
About WTE-S&S AG Enterprises
WTE-S&S AG Enterprises, LLC, is a limited liability company formed
for the purpose of constructing an anaerobic digester on the
largest dairy farm in Door County, Wisconsin, so as to generate
electricity from harnessing methane extracted from animal waste.
WTE-S&S AG Enterprises filed for Chapter 11 bankruptcy protection
(Bankr. N.D. Ill. Case No. 16-09913) on March 23, 2016. The
petition was signed by James G. Philip, manager and designated
representative. The Debtor estimated assets and liabilities in the
range of $1 million to $10 million at the time of the filing.
The case is assigned to Judge Donald R. Cassling.
The Debtor is represented by David K. Welch, Esq., at Crane,
Heyrnan, Simon, Welch & Clar.
YOSI SAMRA: Fold-Up Flats Maker Seeks Chapter 11 for "Fresh Start"
------------------------------------------------------------------
Yosi Samra Inc., the popular elastic-top flats maker founded by
second-generation shoe designer Yosi Mara, sought Chapter 11
protection to address its past due-debts.
The Company launched the Yosi Samra footwear line in 2009,
pioneering what would become the popular fold-up ballet flat
movement, elevating the style into one that was just as superior in
structure and design as it was comfortable and convenient. Yosi
Samra's runway-inspired styles have been featured in Vogue, lnStyle
and Glamour Magazines and spotted on some of fashion's most
trend-setting celebrities, including Sarah Jessica Parker, Anne
Hathaway, and Halle Berry. The Yosi Samra brand is available in
over 1,000 boutiques across the US and in 85 other countries,
including 15 brand shops in Asia and The Middle East.
At its height in 2014, the Debtor generated over $9.5 million per
year in revenue. It currently projects about $5.6 million in
revenue for 2017.
As of Sept. 5, 2017, the Debtor had $1.5 million in assets, and
$6.28 million in liabilities. Of these liabilities, $661,000 is
secured by a lien on the Debtor's personal assets in favor of Sally
Port Commercial Finance. My father Jacob Samra has purchase money
liens of about $696,000.
The Debtor is a defendant in the proceeding, Brandswami LLC vs.
Yosi Samra, Inc., S.D.N.Y. Case No. 16-cv-3436. Judgment has been
entered in the case and the creditor has frozen some of the
Debtor's bank accounts. However, enforcement has been stayed due
to the Debtor's bankruptcy filing.
Events Leading to Bankruptcy
The Debtor created the foldable ballet flat and launched the brand
in October 2009. Within the first week, the Debtor received 300+
emails from domestic and global retailers as well as distributors
to carry the brand. At the time, Yosy Samra was the sole employee
of the Debtor and the intent was to ship directly to consumers. As
the business grew, the business shifted to wholesale. The Company
hired a sales team, a design team, and back office accounting. The
Debtor also leased warehouse and office space to service e-commerce
customers.
The Debtor presently leases two properties located at (i) 530
Seventh Avenue, Suite M1, NY, and (ii) 5307 E. Mockingbird Lane,
5th Floor, Dallas, TX.
The Debtor's footwear was initially made by Rong Xhin Factory, in
Guangzhou, China. This factory, however, produced low-quality
goods and the Debtor began to lose distributors. As sales declined
from Fall 2014 to Fall 2016, the Debtor's cash flow suffered
because overhead expenses remained fixed. The Debtor also switched
factories in 2016, which led to about 4 to 5 months of shipping
delays.
In late 2016, the Debtor determined to reduce overhead expenses by
switching warehouses, reducing employees, streamlining its
e-commerce business and moving to smaller office space. In
addition, the Debtor re-focused its business away from wholesale,
and towards e-commerce to ship directly to consumers.
The Debtor has successfully reduced overhead and can be profitable
even at $5 million in revenue per year. The Debtor, however, is
still addressing past due debts and is being sued in various
jurisdictions. The bankruptcy filing was a last resort to
centralize litigation and negotiate with prepetition creditors so
that it may enjoy the "fresh start" afforded by the Bankruptcy
Code.
About Yosi Samra
Yosi Samra Inc. -- https://www.yosisamra.com/ -- sells designer
brand footwear for women and kids famous for its fold-up ballet
flats. Yosi Samra's runway-inspired styles have been featured in
Vogue, InStyle and Glamour Magazines and spotted on some of
fashion's most trend-setting celebrities, including Sarah Jessica
Parker, Anne Hathaway, and Halle Berry. The Yosi Samra brand is
available in more than 1,000 boutiques across the US and in 85
other countries, including 15 brand shops in Asia and The Middle
East.
Yosi Samra Inc. sought Chapter 11 protection (Bankr. S.D.N.Y. Case
No. 17-12493) on Sept. 5, 2017, disclosing $1.5 million in assets,
and $6.28 million in liabilities as of Sept. 5, 2017. The petition
was signed by Larry Reines, president.
Ballon Stoll Bader & Nadler P.C., in New York, serves as counsel to
the Debtor.
[*] Moody's B3 Neg. & Lower Corp. Ratings List Ticks up in August
-----------------------------------------------------------------
The number of companies on the B3 Negative and Lower corporate
ratings list ticked up slightly in August to 218 companies, with a
moderately higher pace of downgrades to the B3 Negative and lower
ranks from the month prior, Moody's Investors Service says in a new
data report. Despite the uptick, however, the total size of the
list's cohort remains below its three-month moving average for the
14th straight month and down more than 25% from its all-time high
of 291, reached at the end of March 2016.
"Moody's list of lower-rated companies comprises 15% of total
spec-grade corporates, which is on par with its long-term average
of approximately 15%," said Moody's Associate Analyst Julia
Chursin. "As an indicator of speculative-grade credit quality,
benign rating actions taken on companies still remaining on the
list far exceeded downgrades, signaling a continuing improvement in
spec-grade credit quality."
In August, rating actions which triggered debt issuers to exit the
cohort were mainly comprised of benign rating upgrades/outlook
revisions and rating withdrawals unrelated to defaults. The sole
registered default for the month was a distressed exchange
consummated by retail company Tops Holdings II Corp.
Oil & gas industry firms still constitute the largest share of the
list, at 21%, even as the industry has realized the greatest
monthly and yearly shrinkage among 25 tracked industries in the
rating agency's heat map. The next most represented sectors are
consumer and business services firms, at 14%, and retail and
manufacturing, at 9% each.
The report, Moody's B3 Negative and Lower Corporate Ratings List,
can be accessed at the Moody's site at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_197258.
[*] PwC's Bid to Stay $2-Bil. Suit Over Mortgage Fraud Denied
-------------------------------------------------------------
Rick Archer, writing for Bankruptcy Law360, reports that Alabama
District Court Judge Barbara Rothstein has denied
PricewaterhouseCoopers LLP's motion to stay the Sept. 18 start of
the trial of a bank and auditor Crowe Horwath LLP and certify an
appeal of the Aug. 18 rejection of PwC's defense. Law360 relates
that Judge Rothstein said she won't pause the $2 billion lawsuit
that alleges PwC overlooked a mortgage fraud scheme that brought
down the bank while the auditor appeals the court's rejection of
its attempt to shift the blame to federal regulators.
[*] Regulators to Have 48 Hrs. to Move Instruments to Another Bank
------------------------------------------------------------------
Jack Newsham, writing for Bankruptcy Law360, reports that the
governors of the Federal Reserve have approved a new rule first
proposed in 2016 which will give federal banking regulators as long
as 48 hours after a megabank files for bankruptcy to try to
transfer those instruments to a bank that can honor them before a
counterparty can declare a default. According to Law360, the rule
is meant to prevent a stampede of defaults on derivative and swap
contracts if a massive bank that anchors the global financial
system goes under.
[^] BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
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Author: Robert Sobel
Publisher: Beard Books
Softcover: 240 pages
List Price: $34.95
Review by David Henderson
Order your personal copy today at http://is.gd/1GZnJk
The marvelous thing about capitalism is that you, too, can be a
Master of the Universe. If you are of a certain age, you will
recall that is the name commandeered by Wall Street bond traders
in their Glory Days. Being one is a lot like surfing: you have to
catch the crest of the wave just right or you get slammed into the
drink, and even the ride never lasts forever. There are no
Endless Summers in the market.
This book is the behind-the-scenes story of the financial wizards
and bare-knuckled businessmen who created the conglomerates, the
glamorous multi-form companies that marked the high noon of post-
World War II American capitalism. Covering the period from the
end of the war to 1983, the author explains why and how the
conglomerate movement originated, how it mushroomed, and what
caused its startling and rapid decline. Business historian Robert
Sobel chronicles the rise and fall of the first Masters of the
Universe in the U.S. and describes how the era gave rise to a
cadre of imaginative, bold, and often ruthless entrepreneurs who
took advantage of a buoyant stock market to create giant
enterprises, often through the exchange of overvalued paper for
real assets. He covers the likes of Royal Little (Textron), Text
Thornton (Litton Industries), James Ling (Ling-Temco-Vought),
Charles Bludhorn (Gulf & Western) and Harold Geneen (ITT). This
is a good read to put the recent boom and bust in a better
perspective.
While these men had vastly different personalities and processes,
they had a few things in common: ambition, the ability to seize
opportunities that others were too risk-averse to take, willing
bankers, and the expansive markets of the 1960s. There is
something about an expansive market that attracts and creates
Masters of the Universe. The Greek called it hubris.
The author tells a good joke to illustrate the successes and
failures of the period. It seems the young son of a
Conglomerateur brings home a stray mongrel dog. His father asks,
"How much do you think it's worth?" To which the boy replies, "At
least $30,000." The father gently tries to explain the market for
mongrel dogs, but the boy is undeterred and the next afternoon
proudly announces that he has sold the dog for $50,000. The
father is proudly flabbergasted, "You mean you found some fool
with that much money who paid you for that dog?" "Not exactly,"
the son replies, "I traded it for two $25,000 cats."
While it lasted, the conglomerate struggles were a great slugfest
to watch: the heads of giant corporations battling each other for
control of other corporations, and all of it free from the rubric
of "synergy." Nobody could pretend there was any synergy between
U.S. Steel and Marathon Oil. This was raw capitalist power at
work, not a bunch of fluffy dot.commies pretending to defy market
gravity.
History repeats itself, endlessly, because so few people study
history. The stagflation of the 1970s devalued the stock of
conglomerates and made it useless a currency to keep the schemes
afloat. The wave crashed and waiting on the horizon for the next
big wave: the LBO Masters of the 1980s.
Robert Sobel was born in 1931 and died in 1999. He was a prolific
chronicler of American business life, writing or editing more than
50 books and hundreds of articles and corporate profiles. He was
a professor of business history at Hofstra University for 43 years
and he a Ph.D. from NYU.
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