/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/200624.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 24, 2020, Vol. 24, No. 175 Headlines 24 HOUR FITNESS: S&P Lowers Senior Secured Facility Rating to 'D' 6TH & CENTER: Case Summary & Unsecured Creditor ABERCROMBIE & FITCH: S&P Affirms 'B+' ICR; Outlook Negative ADVANCED ORTHOPEDICS: Taps KapilaMukamal as Financial Advisor AIR CANADA: Fitch Rates New Second Lien Secured Notes 'BB-' ALTISOURCE PORTFOLIO: S&P Alters Outlook to Neg., Affirms 'B' ICR AMAZING ENERGY: Delays Filing of Quarterly Report Due to COVID-19 AMC ENTERTAINMENT: Warns of the Impact of COVID-19 on Theaters AMERICAN AIRLINES: Fitch Rates New Secured Notes & Term Loans 'BB-' AMERICAN AIRLINES: Moody's Rates New Sec. Term Loan Due 2024 'Ba3' ARCHDIOCESE OF NEW ORLEANS: Taps Jones Walker as Legal Counsel ARGYLE CAPITAL: Voluntary Chapter 11 Case Summary ARMATA PHARMACEUTICALS: Secures $15M Award from the U.S. DoD AYRO INC: Expects to Get $5.5M from Registered Direct Offering AZ CONTRACTING: Gets Approval to Hire Wright Law Offices as Counsel BANTEC INC: Secures $53K Funding from Geneva Roth BARFLY VENTURE: Hopcat Files for Bankruptcy as Rent Bills Pile Up BARFLY VENTURES: Reopens Restaurants After Covid-19 Pandemic BAYLESS PROPERTY: Seeks to Hire Wiggam & Geer as Bankruptcy Counsel BIOLASE INC: Armistice Capital, et al. Hold 4.5% Equity Stake BLUCORA INC: S&P Rates Senior Secured Term Loan Add-On 'BB' BRAZIL MINERALS: Signs Deal to Repurchase Convertible Debt Notes CARDTRONICS PLC: S&P Affirms 'BB' ICR; Outlook Stable CAROLINAS HOME: Case Summary & 7 Unsecured Creditors CHINESEINVESTORS.COM: Case Summary & 20 Top Unsecured Creditors CITGO HOLDING: S&P Lowers Senior Secured Debt Rating to 'B-' CREATIVE HAIRDRESSERS: Committee Hires Emerald as Financial Advisor CREATIVE HAIRDRESSERS: Committee Hires Faegre Drinker as Counsel CREATIVE REALITIES: Signs Distribution Agreement with InReality CYTODYN INC: Signs Second Amended Employment Contract with CEO DCP MIDSTREAM: S&P Rates $400MM Senior Unsecured Notes 'BB+' DEFOOR CENTRE: Gets Court Approval to Hire Ten-X as Auctioneer DEFOOR CENTRE: Hires Marcus & Millichap as Real Estate Broker DISCOVERORG HOLDINGS: S&P Raises ICR to 'B+'; Rating Withdrawn DMDS LLC: Seeks Court Approval to Hire Bankruptcy Attorney DOUGHNUT CLUB: Reopens on National Doughnut Day DPL INC: S&P Rates New Senior Unsecured Notes 'BB' ECO BUILDING: Voluntary Chapter 11 Case Summary ELDORADO RESORTS: S&P Affirms 'B' ICR; Outlook Negative ELITE INFRASTRUCTURE: Seeks to Hire Murray Law as Special Counsel ENERGIZER HOLDINGS: S&P Rates New $600MM Senior Unsecured Notes B+ EVOKE PHARMA: FDA Approves NDA for GIMOTI Nasal Spray FLEX ACQUISITION: S&P Affirms 'B' ICR on Improved Performance FRE 355 INVESTMENT: Affiliate Taps Compass as Real Estate Agent GI DYNAMICS: Stockholders OK Delisting from the Official List HOLOGENIX LLC: Seeks to Hire Buchalter as Special Patent Counsel HORIZON GLOBAL: Moody's Withdraws 'C' Corp. Family Rating ICONIX BRAND: Stockholders Pass All Proposals at Annual Meeting INLAND FAMILY: Seeks to Hire Holt & Associates as Accountant INNOVATIVE WATER: S&P Lowers ICR to 'CCC+'; Outlook Negative IRON MOUNTAIN: S&P Rates New $1.8BB Senior Unsecured Notes 'BB-' J.C. PENNEY: Reopens Abilene, Texas Branch JAGUAR HEALTH: Board Adopts New Inducement Award Plan JARCO HARVESTING: Case Summary & 9 Unsecured Creditors JC PENNY: Taps Cushman & Wakefield, B. Riley as Real Estate Advisor K&N PARENT: S&P Downgrades ICR to 'CCC'; Outlook Negative LCF LABS: Voluntary Chapter 11 Case Summary LNG LTD: Magnolia LNG Sale Falls Through; New Buyer Emerges LOGISTICS TRANSPORTS: Taps Machi & Associates as Bankruptcy Counsel MAN HANDS: Case Summary & 20 Largest Unsecured Creditors MASTER'S COACH: Seeks to Hire Genova & Malin as Legal Counsel MOHEGAN GAMING: Provides Prelim. Operating Trends for Mohegan Sun MT SIMPSON FARM: Case Summary & 3 Unsecured Creditors NAPHTHA ENERGY: Voluntary Chapter 11 Case Summary NOVA CHEMICALS: S&P Downgrades ICR to 'BB-' on Elevated Leverage OBALON THERAPEUTICS: Incurs $5.3-Mil. Net Loss in First Quarter ODYSSEY ENGINES: Case Summary & 20 Largest Unsecured Creditors OPPENHEIMER HOLDINGS: S&P Affirms 'B+' ICR; Outlook Stable PARKLAND CORP: S&P Rates C$400MM Senior Unsecured Notes 'BB' PENUMBRA BRANDS: Seeks Approval to Hire Valuation Expert PES HOLDINGS: EPA Claims Cap Cut to $10 Million PIMLICO RANCH: Case Summary & 11 Unsecured Creditors PLATINUM GROUP: Closes $1.7 Million Private Placement PROVIDENT GROUP-KEAN PROPERTIES: S&P Cuts Rev. Bond Rating to 'B' PULMATRIX INC: Stockholders Pass All Proposals at Annual Meeting PYXUS INTERNATIONAL: S&P Lowers ICR to 'D' on Bankruptcy Filing RECYCLING REVOLUTION: Taps Daszkal Bolton as Accountant REGIONAL VALVE: Seeks to Hire Phillip K. Wallace as Legal Counsel ROCKSTAR REMODELING: Taps James S. Wilkins as Legal Counsel RTW RETAILWINDS: May File for Chapter 11 Bankruptcy Protection RWDY INC: Case Summary & 19 Unsecured Creditors SCREENVISION LLC: S&P Affirms 'B' ICR; Outlook Negative SHUTTERFLY LLC: Moody's Cuts CFR to B3 & Alters Outlook to Negative SM ENERGY: Fitch Cuts IDR to RD on Debt Exchange Completion SOURCE ENERGY: S&P Lowers ICR to 'D' on Missed Interest Payment SPEEDCAST INTERNATIONAL: Committee Hires Hogan Lovells as Counsel SUNTECH DRIVE: Seeks to Hire Kutner Brinen as Counsel TEMPLAR ENERGY: Begins Chapter 11 With Potential Buyers TIDEWATER ESTATES: Seeks to Hire Sheehan and Ramsey as Counsel TIFFANY & CO: Post $64.6M Loss; LVMH Deal in Doubt TOTAL BODY: Gets Approval to Hire Pittman & Pittman as Counsel ULTIMATE SOFTWARE: S&P Rates $2.6BB First-Lien Term Loan Add-On 'B' UNITED AIRLINES: Fitch Rates Special Facility Bonds 'BB-' VENUS CONCEPT: Stockholders Pass All Proposals at Annual Meeting VISTEON CORP: Moody's Confirms Ba3 CFR, Outlook Stable WARNER MUSIC: S&P Raises ICR to BB on Sustained Operating Strength WOOD PROTECTION: Case Summary & 9 Unsecured Creditors YUMA ENERGY: Committee Hires Locke Lord as Legal Counsel YUNHONG CTI: Forbearance Agreement with PNC Bank Ends [*] Creditor Income Tax Consideration for Oil & Gas Investors [*] Epiq: Bankruptcy Filings Rose 48% in May 2020 [*] Goulston & Storrs: Avoiding Fraudulent Unemployment Claims [*] Key ELements in Out-of-Court Restructurings [*] Spilman Thomas: Revisiting Bankruptcy Filing Papers ********* 24 HOUR FITNESS: S&P Lowers Senior Secured Facility Rating to 'D' ----------------------------------------------------------------- 24 Hour Fitness Worldwide Inc. announced that it had commenced voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware. As a result, S&P Global Ratings has lowered the rating on the company's senior secured revolver and term loan to 'D' from 'CCC-'. The recovery rating on the senior secured facility remains '2'. The company's other ratings remain 'D'. S&P had previously lowered its issuer credit rating to 'D' and its rating on 24 Hour Fitness' senior unsecured notes to 'D' on June 5, 2020, because the company did not make its interest payment on its senior notes due 2022 on June 1, 2020. The recovery rating on the senior unsecured notes remains '6'. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety 6TH & CENTER: Case Summary & Unsecured Creditor ----------------------------------------------- Debtor: 6th & Center, LLC 220 West 6th Street Little Rock, AR 72201 Business Description: 6th & Center is a Single Asset Real Estate as defined in 11 U.S.C. Section 101(51B). The Debtor owns a building located at 6th & Center Streets, Little Rock, AR having an appraised value of $1.4 million. Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court Eastern District of Arkansas Case No.: 20-12694 Judge: Hon. Phyllis M. Jones Debtor's Counsel: James F. Dowden, Esq. JAMES F. DOWDEN, P.A. 212 Center Street Tenth Floor Little Rock, AR 72201 Tel: 501-324-4700 E-mail: JFDowden@swbell.net Total Assets: $1,475,100 Total Liabilities: $906,701 The petition was signed by Danny Brickey, member/authorized representative. The Debtor listed Small Business Administration as its sole unsecured creditor holding a claim of $67,200. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/3GM8eQ ABERCROMBIE & FITCH: S&P Affirms 'B+' ICR; Outlook Negative ----------------------------------------------------------- S&P Global Ratings affirmed its 'B+' issuer credit rating on New Albany, Ohio-based specialty apparel retailer Abercrombie & Fitch Co. (ANF) and its 'BB' issue-level rating on its asset-based lending (ABL) facility due 2022. S&P's '1' recovery rating on the facility remains unchanged. At the same time, S&P is assigning its 'BB-' issue-level rating and '2' recovery rating to the new $300 million senior secured notes due in June 2025 that ANF will use to refinance its 2021 maturity. "The affirmation reflects our view that ANF will maintain adequate liquidity despite its significant cash burn due to the fallout from COVID-19," S&P said. "We view the refinancing in advance of the August 2021 maturity favorably and believe its liquidity position will be sufficient to cover the significant cash burn we expect over the next few months or potential further disruptions," the rating agency said. As of the end of the first quarter of fiscal year 2020, the company reported a sizable $700 million cash balance, which results in a negative net debt position pro forma for the proposed debt issuance. In addition, the company undertook some liquidity-enhancement actions, including drawing $210 million from its previously untapped $400 million ABL revolver, drawing an additional $50 million of excess funds from its trust-owned life insurance policies, and suspending its share repurchases and dividends for the foreseeable future. Moreover, S&P believes the company could dial back or defer its growth capital spending to preserve liquidity if the situation worsens due to a dramatic slowdown in consumer spending. S&P continues to expect weaker earnings prospects and deteriorating credit metrics in the current fiscal year. The coronavirus pandemic caused the company to close all of its locations in North America and Europe, the Middle East, and Africa (EMEA) in mid-March. ANF has subsequently reopened about 45% of its stores as of this week and plans to reopen the majority of its stores by the end of June. In addition, S&P believes the company's online channel, which accounted for a significant (33%) percentage of its total revenue in fiscal year 2020, could offset some of the impact from its store closures in North America and EMEA. Still, S&P believes the demand will be significantly depressed over the next few quarters as consumer confidence rapidly deflates due to the mounting uncertainty over the severity and duration of the outbreak. Therefore, S&P believes ANF's credit metrics will deteriorate significantly in the next several quarters, including leverage spiking above 4x as of the end of fiscal year 2020 (ending Feb. 1, 2021) from the mid-2x area as of the end of fiscal year 2019. As the negative pressures alleviate beginning in the second half of calendar year 2020, S&P expects ANF to report a gradual improvement in its credit metrics, with leverage declining to the mid- to high-3x area as of the end of fiscal year 2021. "Our rating also incorporates our view that the company remains vulnerable to changes in consumer discretionary spending and reflects its participation in the intensely competitive apparel retail segment," S&P said. The negative outlook reflects the heightened uncertainty regarding the effects of the coronavirus pandemic and the ensuing recession on ANF's financial condition. Extended store closures coupled with a slowdown in consumer spending could negatively affect the company's ability to restore its credit metrics in fiscal year 2021. S&P could lower its rating on ANF if: -- The effects of the pandemic or the subsequent recessionary environment are more severe and prolonged than S&P currently anticipates; or -- S&P expects its debt to EBITDA to remain above 4x as of the end of fiscal year 2021. S&P could revise its outlook on ANF to stable if: -- The pandemic's effects are less severe than S&P currently anticipates and the company is able to quickly recover; and -- ANF's sales and earnings begin to rebound later this year and S&P anticipates that its debt to EBITDA will remain below 4x on a sustained basis. ADVANCED ORTHOPEDICS: Taps KapilaMukamal as Financial Advisor ------------------------------------------------------------- Advanced Orthopedics & Pain Management, P.L. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ KapilaMukamal, LLP as its financial advisor. KapilaMukamal will provide the following services: (a) review financial information prepared by Debtor or its accountants, including its assets and liabilities; (b) review and analyze the organizational structure of and financial interrelationships among Debtor and its affiliates and insiders; (c) prepare monthly operating reports, proformas and budgets; (d) provide financial advice, including advice concerning compensation of employees, independent contractors and officers; and (e) prepare tax returns. The retainer fee for the firm's services is $15,000. KapilaMukama is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, according to court filings. The firm can be reached through: Barry E. Mukamal KapilaMukama, LLP 1000 South Federal Highway, Suite 200 Fort Lauderdale, FL 33316 Telephone: (954) 761-1011 Facsimile: (954) 761-1033 Email: bmukamal@kapilamukamal.com About Advanced Orthopedics & Pain Management Advanced Orthopedics & Pain Management, P.L. is a medical group practice located in Palm Beach Gardens, Fla., specializing in orthopedic surgery, neurosurgery, and pain management. Advanced Orthopedics filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 20-15598) on May 21, 2020. The petition was signed by Advanced Orthopedics President Scott Katzman. At the time of the filing, Debtor disclosed assets of $1 million to $10 million and liabilities of the same range. Judge Mindy A. Mora oversees the case. Edelboim Lieberman Revah Oshinsky, PLLC is Debtor's legal counsel. AIR CANADA: Fitch Rates New Second Lien Secured Notes 'BB-' ----------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB-'/'RR4' to Air Canada's proposed 2nd lien secured notes. KEY RATING DRIVERS New 2nd Lien Notes: The rating of 'BB-'/'RR4' for the proposed notes is driven by their second lien position against assets that secure Air Canada's existing credit facility and secured notes due in 2023. The new second lien notes will have a tenor of four years. Proceeds from the notes will be used to bolster the company's liquidity position. The 2nd lien notes do not contain any financial maintenance covenants, but are subject to certain restrictions including: no additional 1st lien debt on the collateral securing this transaction: however, AC is permitted to refinance the existing 1st lien facilities; no additional 2nd lien capacity; and any 3rd lien on this borrowing base is subject to a 1.2x collateral coverage ratio. The notes contain a springing maintenance covenant equal to 1.0x collateral coverage ratio in the event of a suspension of existing 1st lien maintenance covenant of 1.60x. The collateral consists of all the company's slots at LHR, DCA and LGA; real estate; and the company's pacific routes and related slots, gates and ground equipment. The 103 slots included as collateral (16 DCA, 43 LGA and 44 LHR), are highly valuable as they belong to slot constrained airports in high traffic/strategic locations. Based on valuations from the appraisal, the slots make up roughly 25% of the collateral. Nearly 50% of the total collateral value consists of the company's Asian Pacific routes, with the company's Japan and China routes making up the most valuable portion of the route package. Australian route rights real estate and ground equipment make up the remainder. Fitch views the collateral as relatively well diversified and strategically important to Air Canada, making the likelihood that it be rejected in bankruptcy low. Fitch notes that collateral values, particularly international route rights, face some downside risk due to the demand destruction caused by COVID 19. Air Canada's first lien credit facility has a collateral coverage ratio covenant of 1.6x. Collateral coverage currently stands at around 2x, per recent appraisal data. A decline in asset values of roughly 25% would cause a covenant breach and the potential that Air Canada would need to either add collateral or pay down incremental debt. Corporate Rating: Fitch downgraded Air Canada to 'BB-' from 'BB' on June 15. The Rating Outlook is Negative. Air Canada entered 2020 in a strong liquidity position with over CAD6 billion in cash. Fitch believes the company should have sufficient liquidity to manage through the crisis assuming a modest recovery that will begin in the second half of 2020 and continues into 2021. Liquidity has been bolstered by various capital raises completed over the past few months. However, Fitch has revised its forecast since its previous review to include a steeper downturn in 2020 and slower recovery in 2021. Fitch believes that Air Canada carries a greater risk of a slower recovery than some carriers due to its heavy reliance on international traffic. In 2019, 30% of its passenger revenue came from domestic traffic, 48% from U.S. transborder and trans-Atlantic travel and the remainder from the Pacific and other non-domestic traffic. Reluctance to travel internationally and the possibility of prolonged travel restrictions may delay Air Canada's recovery compared to more domestically focused carriers. Given its expectation for a slower recovery in demand, Fitch expects Air Canada's credit metrics will fall outside levels that would support a 'BB' rating at least through 2021 before returning to supportive levels around the end of 2022. The Negative Rating Outlook reflects the high degree of uncertainty remaining around air traffic recovery in light of the ongoing coronavirus pandemic. Air Canada has taken significant actions to date to build up liquidity and reduce cash burn. The company announced layoffs of some 20,000 of its 38,000 employees. The company has raised additional cash by fully drawing its revolvers, accessing a USD600 million 364-day term loan, issuing CAD1 billion in convertible notes, CAD575 million in equity. These actions have shored up liquidity but represent significant additional debt over amounts included in Fitch's prior forecast. DERIVATION SUMMARY Air Canada is rated in line with United Airlines and above American ('B') and Hawaiian Air ('B+'). The ratings reflect Air Canada's balance sheet improvement over recent years prior to the coronavirus downturn, strong financial performance and commitment to conservative credit metrics. The company also entered the downturn in a relatively favorable position as its large cash balance and ample liquidity were favorable to other carriers. These benefits are partly offset by Air Canada's heavy exposure to international travel in relation to some U.S. carriers, particularly given the likely slow return of long-haul international travel. KEY ASSUMPTIONS Key Assumptions in Fitch's rating case include a steep drop in demand through 2020, with full recovery only occurring by 2023. During 2020, Fitch's base case includes revenues down more than 90% through the second quarter of the year, with only a slow recovery thereafter. Our base case reflects traffic only recovering toward 2019 levels by YE21, with a full rebound to 2019 levels only occurring by 2023. Jet fuel prices for the year are assumed at around USD1.55/gallon and rise to about USD1.65/gallon in 2021. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Sustained adjusted debt/EBITDAR around 3.5x; -- FFO fixed-charge coverage sustained above 3x; -- EBITDAR margins towards or above 15%, EBIT margins towards or above 10%; -- Positive FCF generation over the intermediate term. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Weaker than expected margin performance or higher than expected borrowing causing leverage to remain above 4.3x; -- FFO fixed-charge coverage around or below 2.5x; -- Weaker than expected financial performance causing FCF to be notably below Fitch's expectations; -- A decline in the company's EBIT margin to the low single digits, EBITDAR margins into the high single digits. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: At March 31, 2020, cash equivalents and short-term investments were approximately CAD6.1 billion. The company has also taken material steps recently to ensure liquidity including: -- Drew down the company's USD600 million and CAD200 million revolvers (also repaid USD509 million during 1Q19); -- Completed an equity offering for the total amount of CAD575.575 million at a share price of CAD16.25; -- Issued USD747.5 million in senior unsecured convertible notes due 2025; -- Suspended share repurchases; -- Executed a new USD600 million 364-day term loan due in 2021, secured by aircraft and spare engines; -- Executed a bridge financing of CAD788 million; -- Implemented a companywide cost reduction and capital reduction and deferral program that has reached a total of CAD1.05 billion, increased from initial target of CAD500 Million; -- Accelerated the retirement of 79 older aircraft from its fleet to reduce cost structure and to simplify fleet. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). ALTISOURCE PORTFOLIO: S&P Alters Outlook to Neg., Affirms 'B' ICR ----------------------------------------------------------------- S&P Global Ratings said it revised its outlook on Altisource Portfolio Solutions S.A. to negative from stable. S&P affirmed its 'B' long-term issuer credit rating on the company. At the same time, S&P lowered its rating on the company's senior secured notes to 'B' from 'B+'. S&P revised the outlook to negative because it expects the moratorium on foreclosures and the stay-at-home policies due to COVID-19 to weigh on Altisource's 2020 operating results. As a result, the company's leverage could rise and sustain above 4x, S&P's previously cited threshold for a downgrade. However, the company's mostly countercyclical business model should be beneficial to its business if delinquencies or foreclosures rise after forbearance options are exhausted, which could lower leverage back below 4x. Debt to adjusted EBITDA increased to 3.9x in 2019 from 3.1x in 2018 as adjusted EBITDA fell by 32% during the year. The decline in earnings was largely attributable to run-off in the Ocwen servicing portfolio. Altisource also sold its financial services business and wound down or discontinued a few other non-core businesses last year. Ocwen remains the company's largest customer, accounting for 56% of 2019 revenue. Altisource paid down $45 million of debt in 2019. The company began experiencing the negative impact of COVID-19 late in first-quarter 2020. Revenue and adjusted EBITDA declined by 29% and 59%, respectively, between first-quarter 2019 and first-quarter 2020, though this was partially due to the downsizing in 2019. To address the economic effects of COVID-19, the company plans to reduce 2020 cash expenses by $45 million to $50 million, in addition to outside fees and services that generally decline proportionately with a decline in service referrals. Altisource originally planned to use the $43 million of proceeds from the sale of Front Yard Residential Corp. (RESI) shares pursuant to the RESI merger with Amherst Residential to pay down debt in 2020. However, the merger was terminated in May. The company has no mandatory debt amortization until March 2023, and S&P expects the company to pause on debt amortization over the medium term to preserve liquidity for the current economic environment. S&P lowered its rating on the company's senior secured notes to 'B' because of lower recovery expectations in the rating agency's simulated default scenario. The higher-than-expected decline in EBITDA in 2019 led S&P to lower its estimate of the fixed-charge proxy, and the pause on debt amortization over the near term resulted in a higher debt figure in the simulated year of default. The negative outlook on Altisource reflects S&P's view that the company could sustain leverage, as measured by debt to adjusted EBITDA, above 4x as a result of the moratorium on foreclosures and the stay-at-home policies due to COVID-19. "We could lower the rating during the next 12 months if we expect the moratorium on foreclosures to continue beyond a year, depressing the company's earnings for a longer period than expected. We could also lower the rating if we expect leverage to sustain above 4x or EBITDA interest coverage to remain below 3x after the end of the moratorium, or if we expect a material change to the company's relationship with Ocwen or NRZ, such that a large portion of revenues is at risk," S&P said. "Although unlikely, we could revise the outlook to stable during the next 12 months if Altisource maintains leverage under 4x and EBITDA interest coverage over 3x," the rating agency said. AMAZING ENERGY: Delays Filing of Quarterly Report Due to COVID-19 ----------------------------------------------------------------- Amazing Energy Oil and Gas, Co., filed a Current Report on Form 8-K with the Securities and Exchange Commission in connection with the delay in the filing of its Quarterly Report on Form 10-Q for the quarter ended April 30, 2020, as a result of the COVID-19 pandemic. On March 4, 2020, the U.S. Securities and Exchange Commission issued an order under Section 36 (Release No. 34-88318) of the Securities Exchange Act of 1934, as amended, granting exemptions from specified provisions of the Exchange Act and certain rules thereunder. The Order provides that a registrant subject to the reporting requirements of Exchange Act Section 13(a) or 15(d), and any person required to make any filings with respect to such a registrant, is exempt from any requirement to file or furnish materials with the Commission under Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, Regulation 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1, as applicable. Due to stay at home orders, requirements of social distancing and other precautionary measures taken due to the COVID-19 pandemic, the Company's normal operations have been severely curtailed and interrupted. There has also been a delay of information flow from customers, suppliers, contractors and other persons and third-parties involved in the oil and gas industry generally and the Company's operations specifically. Due to the Company's key internal and external accounting personnel responsible for assisting the Company in the preparation of its financial statements no longer being actively employed by the Company or being required to work remotely because of COVID-19, the Company has been unable to timely prepare a Quarterly Report on Form 10-Q or provide to its auditors and accountants the financial records to provide consent. These unforeseen circumstances have resulted in the Company being unable to timely file an accurate Quarterly Report on Form 10-Q for its quarter ended April 30, 2020, by the prescribed date without undue hardship and expense to the Company. Accordingly, in reliance upon the Order, the Company expects to file its Quarterly Report on Form 10-Q no later than 45 days after the due date of filing of June 15, 2020, unless the COVID-19 circumstances do not change and cause a further delay, in which case the Company will file for an extension and amendment to this Current Report on Form 8-K. The Company stated, "Our business may suffer from the severity or longevity of the COVID-19 Global Outbreak. "The COVID-19 is currently impacting countries, communities, supply chains and markets, as well as the global financial markets. To date, COVID-19 has had a material impact on the Company, in addition to that as set forth above by negatively impacting the Company's ability to extract, sell and deliver its oil and gas production. The Company cannot predict whether COVID- 19 will continue to have a material impact on our financial condition and results of operations due to understaffing and/or disruptions in the oil and gas industry and markets, among other factors. In addition, at this time we cannot predict the impact of COVID-19 on our ability to obtain financing necessary for the Company to fund our working capital requirements. In most respects, it is too early in the COVID-19 pandemic to be able to quantify or qualify the longer-term ramifications on our business, our customers and/or our potential investors." About Amazing Energy Amazing Energy Oil and Gas, Co. -- http://www.amazingenergy.com/-- is an independent oil and gas exploration and production company headquartered in Plano, Texas. The Company's primary leasehold is in the Permian Basin of West Texas. The Company controls over 75,000 acres between their rights in Pecos County, Texas and assets in Lea County, New Mexico, and Walthall County, Mississippi. The Company primarily engages in the exploration, development, production and acquisition of oil and natural gas properties. Amazing Energy's operations are currently focused in the Permian Basin and Gulf Coast regions. Amazing Energy reported a net loss of $8.05 million for the year ended July 31, 2019, compared to a net loss of $6.51 million for the year ended July 31, 2018. As of Jan. 31, 2020, the Company had $14.63 million in total assets, $15.73 million in total liabilities, and a total stockholders' deficit of $1.1 million. DeCoria, Maichel & Teague, P.S., in Spokane, Washington, the Company's auditor since 2014, issued a "going concern" qualification in its report dated Nov. 13, 2019, citing that the Company has limited financial resources, negative working capital, recurring losses and an accumulated deficit at July 31, 2019. These factors raise substantial doubt about its ability to continue as a going concern. AMC ENTERTAINMENT: Warns of the Impact of COVID-19 on Theaters -------------------------------------------------------------- Neha Malara, writing for Channel News Asia, reports that AMC Entertainment Holdings Inc. warns of the "substantial doubts" about its ability to continue operating, if the company was forced to keep its theaters closed for a longer period because of the COVID-19 pandemic. Movie theaters worldwide have been shut since mid-March to help contain the spread of the novel coronavirus and many potential box-office draws such as "Top Gun: Maverick", the new James Bond film "No Time To Die" and Walt Disney's "Mulan" have been pushed later into the year. In the United States, individual states are now considering when to allow businesses to reopen. "We cannot predict when or if our business will return to normal levels," the world's largest movie theater operator said in a regulatory filing https://bit.ly/303x7cX. The company, which operated about 996 theaters and 10,973 screens globally as of end-March, also warned that it may not have sufficient liquidity to tide over until its cash-generating operations are back to normal. AMC said it had begun a ramp-up in cash spending as it aims for a summer reopen. The company had a cash balance of US$718.3 million as of April 30, and has said it had enough liquidity to sustain the closures till the end of July. However, the company raised fears that even after theaters reopen it may not have enough films to show and attendance will be further impacted as people may switch over to other forms of entertainment or be wary of health risks. Shares of the company fell 3% in trading before the bell. The company also said it expected to report a loss of between US$2.12 billion to US$2.42 billion for the first quarter ended March 31, largely due to an impairment charge of about US$2 billion related to assets and goodwill. About AMC Entertainment AMC Entertainment Holdings, Inc., is engaged in the theatrical exhibition business. It operates through theatrical exhibition operations segment. It licenses first-run motion pictures from distributors owned by film production companies and from independent distributors. The Company also offers a range of food and beverage items, which include popcorn; soft drinks; candy; hot dogs; specialty drinks, including beers, wine and mixed drinks, and made to order hot foods, including menu choices, such as curly fries, chicken tenders and mozzarella sticks. It operates over 900 theatres with 10,000 screens globally, including over 661 theatres with 8,200 screens in the United States and over 244 theatres with approximately 2,200 screens in Europe. The Company's subsidiary also includes Carmike Cinemas, Inc. AMERICAN AIRLINES: Fitch Rates New Secured Notes & Term Loans 'BB-' ------------------------------------------------------------------- Fitch Ratings has assigned ratings of 'BB-'/'RR2' to American Airlines Group, Inc.'s proposed senior secured notes and term loans. Fitch currently rates American at 'B'/Rating Watch Negative. The company is planning to raise capital through a mix of secured term loans and notes with the exact mix to be determined. The issuances will be secured by American's slots, gates, and routes used to provide services to Mexico, Central America, the Caribbean, Non-EU countries in Europe, Canada and certain Asia/Pacific destinations, as well as a second priority lien on SGR at London Heathrow and certain cities in the EU. This transaction is part of a broader capital raise that includes an equity and unsecured convertible bond issuance. American intends to use the proceeds to prepay its $1 billion 364-day term loan and to bolster liquidity. American's Mexican and Central American SGR is currently pledged as collateral for the 364-day term loan and will be released from that transaction once it is repaid. KEY RATING DRIVERS Secured debt ratings: The 'BB-'/'RR2' ratings on the proposed transactions are supported by American's 'B' corporate rating and Fitch's recovery methodology, which assumes recovery in the 70%-90% range for AAL's senior secured creditors. This would be driven by the allocation of estimated going concern valuation in a hypothetical distressed scenario. While the ratings are primarily driven by Fitch's standard recovery analysis, they are also supported by a solid level of overcollateralization in the specific security package for the new issuances. Fitch has reviewed appraisal data for the underlying SGR collateral which indicate collateral coverage of 3x using the lower end of the appraiser's estimates. While the collateral coverage is meaningful, Fitch believes that valuations of such collateral are highly uncertain at this time, given the depth and unknown duration of the current aviation downturn. The ratings are also supported by the core nature of the collateral to American's operations. Collateral Quality: Slots, gates, and routes are intangible assets that are inherently difficult to value, but Fitch views the collateral as strategically important to American. Fitch believes that American would most likely restructure as a going concern in a potential bankruptcy scenario and the company is unlikely to give up this pool of slots gates and routes given its strong competitive position in the relevant regions. In 2019, American generated roughly 11% of its total revenue via the collateral securing the new debt. The Mexican, Central American and Caribbean networks are also key to American's leading market position in Latin America. Corporate Rating: Fitch expects that the company will have sufficient liquidity and access to capital to manage through this year and well into 2021. Capital raised through the current round of financing along with pending proceeds from the CARES Act loan, which American intends to secure with a portion of its mileage program, provides a material amount of liquidity cushion even if traffic remains subdued. However, American's ability to raise additional capital after completing this transaction and accessing the CARES act loan may be limited, making cost cutting measures and managing cash burn essential. The amount of debt taken on to manage through the coronavirus downturn and the likelihood of a slow recovery make it likely that the company's credit metrics will remain pressured for the next several years. Should a material second wave of coronavirus derail the current uptrend in air traffic, or should American's cash burn remain higher than Fitch's forecast through the end of the year, the ratings could be downgraded. Additionally, should this transaction not proceed as planned or should American experience unexpected problems obtaining government funding, financial flexibility would be impacted, which could also drive negative rating considerations. Recovery Analysis: Fitch's recovery analysis assumes that American would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. The going concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. Fitch uses a GC EBITDA estimate of $5.5 billion and a 5.5x multiple generating an estimated GC enterprise value of $27 billion after an estimated 10% in administrative claims. Fitch views its GC EBITDA assumption as conservative as it remains below levels generated in 2014, the first year after the company last exited bankruptcy, but it incorporates potential structural changes to the industry driven by coronavirus. These assumptions lead to an estimated recovery for senior secured positions in the 71%-90% (RR2) range and poor recovery prospects (RR6) for unsecured positions. DERIVATION SUMMARY American is rated lower than its major network competitors, Delta and United primarily due to the company's more aggressive financial policies. American's debt balance has increased substantially since its exit from bankruptcy and merger with US Airways in 2013 as it has spent heavily on fleet renewal and share repurchases. As such, American's adjusted leverage metrics are at the high end of its peer group. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Adjusted debt/EBITDAR sustained below 4.3x; -- FFO fixed-charge coverage sustained around 2.5x; -- FCF generation above Fitch's base case expectations. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Adjusted debt/EBITDAR sustained above 6x; -- Failure to obtain government grants and/or sufficient outside funds to maintain liquidity; -- Evidence of trouble refinancing pending debt maturities; -- EBIT margins failing to return to mid to high single digits. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE At March 31, 2020, American had $6.8 billion in total available liquidity, consisting of $3.6 billion in unrestricted cash and short-term investments and $3.2 billion in undrawn capacity under its revolving credit facilities, of which American borrowed $2.7 billion in April 2020. During the first quarter of 2020, American completed the following financing transactions: -- Refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027; -- Raised $1.0 billion from a 364-day senior secured delayed draw term loan credit facility; -- Raised $280 million from aircraft sale-leaseback transactions; and -- Raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness. American Airlines Group and its subsidiaries were approved to receive an aggregate of $5.8 billion in financial assistance to be paid in installments through the payroll support program (Payroll Support Program) under the CARES Act of which it received an initial disbursement of $2.9 billion in April 2020 (representing 50% of the current expected total). American and its wholly owned regional affiliates currently anticipate receiving three additional installments from May to July 2020. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). AMERICAN AIRLINES: Moody's Rates New Sec. Term Loan Due 2024 'Ba3' ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 rating to American Airlines, Inc.'s new senior secured term loan due in 2024 and to the new senior secured notes due in 2025 that American Airlines Group Inc. announced on June 21, 2020. The proceeds will be used for general corporate purposes, including the repayment of the $1 billion 364-day loan facility due March 17, 2021 and to bolster American's liquidity. Parent will guarantee the new term loan and the new notes. The obligations will be secured on a first lien basis by certain take-off and landing slots, route authorities and gate leaseholds of AA for service between the US and various countries and on a second lien basis by slots, gates and route authorities AA uses in its service to the EU and the UK. The incurrence of these obligations does not, at this time, affect American's B2 corporate family rating, or any other of Moody's ratings assigned to AA, Parent or any other subsidiaries. The spread of the coronavirus pandemic, the weakened global economic outlook, low oil prices and asset price declines are sustaining a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The passenger airline industry is one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to consumer demand and sentiment. Moody's regards the coronavirus pandemic as a social risk under its ESG framework, given the substantial implications for public health and safety. RATINGS RATIONALE The B2 CFR reflects the greater strain of the coronavirus on American because of its increased financial leverage heading into 2020 and the related higher debt service burden compared to those of its closest US peers. The company's larger employee base also contributes to relatively higher daily cash burn. The expected strengthening of liquidity mitigates downwards pressure on the B2 rating at this time. Moody's expects liquidity to increase by upwards of $10 billion following the completion of the debt raises announced, including an issue of $750 million of convertible unsecured notes, the issuance of $750 million of common equity and the borrowing of $4.75 billion under the US Coronavirus Aid, Relief, and Economic Security Act when completed. American's B2 corporate family rating also reflects its scale and competitive position as the world's second largest airline based on revenue, with a strong trans-Atlantic franchise, including its partnership with British Airways. With a larger domestic network than those of Delta Air Lines or United Airlines, American is better positioned to participate in the recovery of US domestic air travel demand, which will help more quickly lower its daily cash burn through the rest of this year if increases in infection rates in upcoming months do not derail the nascent recovery in demand for domestic travel. Financial leverage has been elevated because of a historically aggressive financial policy defined by debt-funding of the largest amount of cumulative share repurchases by a US airline since 2013 while conducting a multi-year fleet renewal program through 2019. Notwithstanding its size, American has sustained an inferior operating margin relative to the industry, which has limited its free cash flow and the company's ratings. The negative outlook reflects the potential for greater than already anticipated adverse impact from the coronavirus pandemic, which would consume more of the company's liquidity and delay the pace and scope of the recovery in demand, the retirement of debt, and the strengthening of credit metrics relative to Moody's current expectations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Moody's believes the impacts of the coronavirus will lead to a steeper and longer decline in passenger demand through 2021 and weaker credit metrics. Expectations of cash and revolver availability falling below $5 billion; no sustained increase in passenger bookings or revenue passenger miles through August; no meaningful decrease in daily cash burn in the third or fourth quarter of 2020 under a scenario where there is no increase in passenger demand relative to Q2 2020 levels; or that American will not be able to timely restore its financial profile once the virus recedes (for example, if debt-to-EBITDA is sustained above 6x or funds from operations plus interest-to-interest remains below 3x through 2022 could lead to further rating downgrades. There will be no upwards pressure on the ratings until after passenger demand returns to pre-coronavirus levels, American maintains liquidity above $7 billion and key credit metrics improve, including EBITDA margins above 14%, debt-to-EBITDA approaching 4.5x and funds from operations plus interest-to-interest is above 3.5x. The principal methodology used in these ratings was Passenger Airline Industry published in April 2018. The following rating actions were taken: Assignments: Issuer: American Airlines, Inc. GTD Senior Secured Bank Credit Facility, Assigned Ba3 (LGD3) GTD Senior Secured Regular Bond/Debenture, Assigned Ba3 (LGD3) American Airlines Group Inc. is the holding company for American Airlines, Inc. Together with regional partners, operating as American Eagle, the airlines operated an average of nearly 6,800 flights per day to more than 365 destinations in 61 countries before the coronavirus pandemic. The company reported revenue of $45.8 billion for 2019. ARCHDIOCESE OF NEW ORLEANS: Taps Jones Walker as Legal Counsel -------------------------------------------------------------- The Roman Catholic Church of the Archdiocese of New Orleans received approval from the U.S. Bankruptcy Court for the Eastern District of Louisiana to employ Jones Walker LLP as its legal counsel. Jones Walker will provide the following services: (a) advise Debtor of its rights, powers and duties in the continued operation and management of its business and assets; (b) prepare and pursue confirmation of a plan of reorganization and approval of a disclosure statement; (c) prepare legal papers and review financial reports; (d) prepare responses to legal documents which may be filed by other parties; (e) appear in court; (f) represent Debtor in connection with post-petition financing or the use of cash collateral; (g) assist in the negotiation and documentation of financing agreements, cash collateral orders and related transactions; (h) investigate the nature and validity of liens asserted against Debtor's property and advise Debtor concerning the enforceability of such liens; (i) advise Debtor concerning the recovery of property of the bankruptcy estate and take actions to collect income and assets; (j) assist Debtor in connection with any potential property dispositions; (k) advise Debtor concerning the assumption, assignment or rejection of executory contract and unexpired leases; (l) take all necessary action to protect and preserve Debtor's estate, including the prosecution of actions on its behalf, the defense of any actions commenced against Debtor, the negotiation of disputes in which Debtor is involved, and the preparation of objections, as necessary, to relief sought and claims filed against the estate; (m) advise Debtor concerning the settlement of claims against its insurers; and (n) provide legal services with respect to matters relating to corporate governance and those involving the fiduciary duties of Debtor and its officers, directors and managers. The hourly rates range from $155 to $170 per hour for paraprofessionals, $250 to $270 per hour for associates, and $400 to $490 per hour for partners. The firm's attorneys who will be providing the services will be paid at hourly rates as follows: R. Patrick Vance, Partner $490 Elizabeth J. Futrell, Partner $490 Mark A. Mintz, Partner $400 Laura F. Ashley, Partner $400 Lucas H. Self, Associate $250 Samantha Oppenheim, Associate $250 In the past 12 months, Debtor paid Jones Walker $1,999,509.78 for its pre-bankruptcy services and expenses. The firm held a retainer of $250,000 prior to Debtor's bankruptcy filing. Mark Mintz, Esq., at Jones Walker, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: R. Patrick Vance, Esq. Elizabeth J. Futrell, Esq. Mark A. Mintz, Esq. Laura F. Ashley, Esq. Lucas H. Self, Esq. Jones Walker LLP 201 St. Charles Avenue, 51st Floor New Orleans, LA 70170 Telephone: (504) 582-8000 Facsimile: (504) 589-8260 Email: pvance@joneswalker.com efutrell@joneswalker.com mmintz@joneswalker.com lashley@joneswalker.com lself@joneswalker.com About the Archdiocese of New Orleans The Roman Catholic Church of the Archdiocese of New Orleans is a non-profit religious corporation incorporated under the laws of the State of Louisiana. For more information, visit https://www.nolacatholic.org/ Created as a diocese in 1793, and established as an archdiocese in 1850, the Archdiocese of New Orleans has educated hundreds of thousands in its schools, provided religious services to its churches and provided charitable assistance to individuals in need, including those affected by hurricanes, floods, natural disasters, war, civil unrest, plagues, epidemics, and illness. Currently, the archdiocese's geographic footprint occupies over 4,200 square Miles in southeast Louisiana and includes eight civil parishes -- Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, St. Tammany, and Washington. The Roman Catholic Church for the Archdiocese of New Orleans sought Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1, 2020. The archdiocese was estimated to have $100 million to $500 million in assets and liabilities as of the bankruptcy filing. Judge Meredith S. Grabill oversees the case. The archdiocese is represented by Jones Walker LLP. Donlin, Recano & Company, Inc. is the claims agent. The Office of the U.S. Trustee appointed a committee of unsecured creditors on May 20, 2020. The committee is represented by Pachulski Stang Ziehl & Jones, LLP and Locke Lord, LLP. ARGYLE CAPITAL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: The Argyle Capital Group LLC 411 Jefferson St. Seattle, WA 98104-2315 Business Description: The Argyle Capital Group LLC is primarily engaged in renting and leasing real estate properties. Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Western District of Washington Case No.: 20-11711 Debtor's Counsel: David A. Petteys, Esq. STOLL PETTEYS PLLC 1455 NW Leary Way, Suite 400 Seattle, WA 98104 Tel: (206) 876-7828 E-mail: david@stollpetteys.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Kurt Fisher, manager. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/Ckf2Kl ARMATA PHARMACEUTICALS: Secures $15M Award from the U.S. DoD ------------------------------------------------------------ Armata Pharmaceuticals, Inc., has received a $15 million award for a three year program from the U.S. DoD through the Medical Technology Enterprise Consortium (MTEC) with funding from the Defense Health Agency and Joint Warfighter Medical Research Program. Armata will use the award to partially fund a Phase 1b/2, randomized, double-blind, placebo-controlled, dose escalation clinical study of Armata's therapeutic phage-based candidate, AP-SA02, for the treatment of complicated Staphylococcus aureus bacteremia infections. "Today, I am pleased to announce that we have achieved our goal of receiving non-dilutive funding to support clinical development of our optimized phage candidate, AP-SA02, as a promising potential treatment for S. aureus bacteremia. We are excited to have exceeded the amount of funding we had originally targeted, which enables us to robustly examine the potential efficacy of our optimized phage candidate," stated Todd R. Patrick, chief executive officer of Armata Pharmaceuticals. "This funding from the DoD validates the potential of phage-based therapeutics and helps us move AP-SA02 into clinical development while continuing to carefully manage our financial position. Drug-resistant S. aureus bacteremia infections carry mortality rates as high as 40%, reflecting the urgent need for novel and improved treatment options." Mr. Patrick added, "This award from the DoD facilitates what will be our second clinical program in our development pipeline, enabling Armata to advance phage therapy in two distinct indications: our lead program, AP-PA02, will explore inhaled phage therapy in cystic fibrosis patients with Pseudomonas aeruginosa lung infections and is partially funded by the US Cystic Fibrosis Foundation, and AP-SA02, which will test intravenous phage therapy in S. aureus bacteremia and is partially funded by the DoD." Thomas Dunn, Acting Program Manager Naval Advanced Medical Development, stated "Antibiotic resistance is a global challenge and has become more prevalent in recent years, threatening the lives of both warfighters and civilians. There is an imminent need for alternative therapies to help protect the population. Using Armata's targeted phage cocktail to treat Staphylococcus aureus bacteremia that are non-responsive to standard of care is a novel method that can potentially greatly reduce the number of these complicated, drug-resistant infections and help span the ever-growing bacteria/antibiotic resistance gap." The primary objectives of the Phase 1b/2 bacteremia study will be to evaluate the safety and tolerability of AP-SA02 as an adjunct to best available antibiotic therapy, and to determine the appropriate dose or doses for future clinical trials of efficacy. Because of the impact of COVID-19 on the Company's development programs, Armata does not believe the clinical trial will initiate prior to mid-2021. The clinical trial of AP-PA02 targeting Pseudomonas aeruginosa is on target to enroll later this year. About Armata Pharmaceuticals Armata Pharmaceuticals, Inc., f/k/a AmpliPhi Biosciences Corporation -- http://www.armatapharma.com/-- is a clinical-stage biotechnology company focused on the development of precisely targeted bacteriophage therapeutics for the treatment of antibiotic-resistant infections using its proprietary bacteriophage-based technology. Armata is developing and advancing a broad pipeline of natural and synthetic phage candidates, including clinical candidates for Pseudomonas aeruginosa, Staphylococcus aureus, and other pathogens. In addition, in collaboration with Merck, known as MSD outside of the United States and Canada, Armata is developing proprietary synthetic phage candidates to target an undisclosed infectious disease agent. Armata is committed to advancing phage with drug development expertise that spans bench to clinic including in-house phage specific GMP manufacturing. As of March 31, 2020, Armata had $44.10 million in total assets, $10.62 million in total liabilities, and $33.48 million in total stockholders' equity. Ernst & Young LLP, in San Diego, California, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 19, 2020 citing that the Company has suffered recurring losses and negative cash flows from operations and has stated that substantial doubt exists about the Company's ability to continue as a going concern. AYRO INC: Expects to Get $5.5M from Registered Direct Offering -------------------------------------------------------------- AYRO, Inc. has entered into definitive agreements with several institutional and accredited investors for the purchase and sale of 2,200,000 shares of the Company's common stock, at a purchase price of $2.50 per share, in a registered direct offering. The closing of the offering is expected to occur on or about June 19, 2020, subject to the satisfaction of customary closing conditions. The gross proceeds to the Company from this offering are expected to be approximately $5.5 million, before deducting placement agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes. The shares of common stock are being offered by the Company pursuant to a "shelf" registration statement on Form S-3 (File No. 333-227858) previously filed with the Securities and Exchange Commission on Oct. 16, 2018, and declared effective by the SEC on Nov. 9, 2018. The offering of the securities is made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A final prospectus supplement and accompanying prospectus relating to the securities being offered will be filed with the SEC. Electronic copies of the final prospectus supplement and accompanying prospectus may be obtained, when available, on the SEC's website at http://www.sec.gov. About AYRO Texas-based AYRO, Inc. (fka Dropcar, Inc.), designs and delivers compact, emissions-free electric fleet solutions for use within urban and short-haul markets. Capable of accommodating a broad range of commercial and consumer requirements, AYRO's vehicles are the emerging leaders of safe, affordable, efficient and sustainable logistical transportation. AYRO was founded in 2017 by entrepreneurs, investors, and executives with a passion to create sustainable urban electric vehicle solutions for Campus Management, Last Mile Delivery, Urban Commuting, and Closed Campus Transport. For more information, visit: www.ayro.com Dropcar reported a net loss of $4.90 million for the year ended Dec. 31, 2019, compared to a net loss of $18.75 million for the year ended Dec. 31, 2018. Friedman LLP, in East Hanover, New Jersey, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 30, 2020, citing that the Company has recurring losses and negative cash flows from operations. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern. AZ CONTRACTING: Gets Approval to Hire Wright Law Offices as Counsel ------------------------------------------------------------------- AZ Contracting Services LLC received approval from the U.S. Bankruptcy Court for the District of Arizona to employ Wright Law Offices, PLC as its legal counsel. Wright Law Offices will provide the following services: (a) advise Debtor of its powers and duties in the continued operation and management of its property; (b) take necessary action to resolve cash collateral and post-petition financing issues, if needed; (c) assist Debtor in its efforts to obtain a confirmed plan of reorganization; and (d) prepare legal papers. Wright Law Offices does not represent any interest adverse to Debtor and its bankruptcy estate, according to court filings. The firm can be reached through: Shawn McCabe, Esq. Wright Law Offices, PLC 2999 N. 44th Street, Ste 600 Phoenix, AZ 85018 Telephone: (602) 344-9695 Facsimile: (480) 717-3380 Email: bwright@wloaz.com About AZ Contracting Services AZ Contracting Services LLC, a freight brokerage services and logistics company based in Surprise, Ariz., filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 20-06817) on June 4, 2020. At the time of the filing, Debtor had estimated assets of less than $50,000 and liabilities of between $500,001 and $1 million. Judge Scott H. Gan oversees the case. Debtor is represented by Wright Law Offices, PLC. BANTEC INC: Secures $53K Funding from Geneva Roth ------------------------------------------------- Bantec, Inc. entered into a convertible promissory note with Geneva Roth Remark Holdings, Inc. in the principal amount of $53,000. The June 9, 2020 Note carries interest at the rate of 10%, matures on June 9, 2021, and is convertible into shares of the Company's common stock, par value $0.0001, at the Lender's election, after 180 days, at a 42% discount, provided that the Lender may not own greater than 4.99% of the Company's common stock at any time. The Company received funding under the June 9, 2020 Note on June 12, 2020. About Bantec Bantec, Inc., a product and service company, through its subsidiaries and divisions, sells drones and related products manufactured by third parties to various parties, including facility managers, engineers, maintenance managers, purchasing managers and contract officers who work for hospitals, universities, manufacturers, commercial businesses, local and state governments and the US Government. The Company also offers technical services related to drone utilization. As of Dec. 31, 2019, the Company had $1.01 million in total assets, $16.45 million in total liabilities, and a total stockholders' deficit of $15.44 million. Salberg & Company, P.A., in Boca Raton, Florida, the Company's auditor since 2017, issued a "going concern" qualification in its report dated Feb. 6, 2020 citing that the Company has a net loss and cash used in operations of $7,115,159 and $1,105,330, respectively, for the year ended Sept. 30, 2019 and has a working capital deficit, stockholders' deficit and accumulated deficit of $13,632,338, $14,895,354 and $26,746,451 respectively, at Sept. 30, 2019. The Company is also in default on certain promissory notes. These matters raise substantial doubt about the Company's ability to continue as a going concern. BARFLY VENTURE: Hopcat Files for Bankruptcy as Rent Bills Pile Up ----------------------------------------------------------------- Michigan bar chain Hopcat has filed for Chapter 11 bankruptcy protection. Eater Detroit reports that in statements to the House Regulatory Reform Committee, Mark Sellers, the founder of parent company BarFly Ventures, stated that Hopcat has fallen behind on rent payments with all of its landlords and is "barely able to keep the lights on." Sellers further predicted "a giant wave of bankruptcies coming very, very soon." Hopcat expanded aggressively since 2015, when the company signed a $25 million deal with an outside investor. The company planned to open 30 new gastropubs at a rate of three a year and expanded its reach beyond Michigan. However, recently the restaurant group appeared to be contracting. Hopcat closed a location in Chicago last year, shut down a location in Port Saint Lucie, Florida, and permanently closed its St. Louis, Missouri location on March 16 after two years of business. Despite the restructuring, Hopcat was scheduled to reopen restaurants on June 13 now that the state's stay-at-home order has been lifted. Hopcat is far from the only restaurant to face financial hardship due to the pandemic. Eater has confirmed at least eight permanent southeast Michigan restaurant and bar closures since the pandemic hit the region in March and more are likely on the way. Many business owners fear that reopening at 50 percent capacity won’t be financially feasible given the thin margins of the food and beverage industry, not to mention health and safety concerns. About BarFly Ventures BarFly Ventures LLC is the parent company of HopCat, Stella's Lounge, and Grand Rapids Brewing Co. Founded in 2008, BarFly operates a chain of estaurants. Barfly Ventures and its affiliates sought Chapter 11 protection (Bankr. W.D. Mich. Case No. 20-01947) on June 3, 2020. Barfly Ventures was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. The Hon. James W. Boyd is the case judge. The Debtors tapped WARNER NORCROSS & JUDD, LLP and PACHULSKI STANG ZIEHL & JONES LLP as counsel; ROCK CREEK ADVISORS LLC as financial advisor; and MASTODON VENTURES, INC., as investment banker. BARFLY VENTURES: Reopens Restaurants After Covid-19 Pandemic ------------------------------------------------------------ BarFly Ventures, LLC, the parent company of HopCat, Stella's Lounge and Grand Rapids Brewing Co., announced that it has begun to reopen certain of its restaurants in accordance with their states' reopening guidelines and safety measures. Effective June 13, all Michigan restaurants will be open to host dine-in guests with Lincoln, Nebraska and Indianapolis, Indiana following on June 22. The Company is taking extraordinary precautions to protect employees and guests with increased cleaning, sterilization and social distancing procedures, among many other steps taken to ensure the safety of guests and employees. Barfly's other restaurants will be opening in phases with dates to be announced soon. "It's been a rough few months, but we're excited to welcome our team and local community members back into our restaurants," said Mark Sellers, founder of BarFly Ventures. "We're following all CDC guidelines and taking extra precautions to ensure the health and safety of our staff and guests." In mid-March, Barfly temporarily closed all locations under federal and local government mandates, and as a proactive step to protect customers and employees in response to the COVID-19 pandemic. Financial Restructuring The Company also announced that it is pursuing a comprehensive financial restructuring aimed at reducing the Company's current debt which has become untenable because of the COVID-19 pandemic, in addition to other reasons. The goal is to strengthen its balance sheet so Barfly is better positioned for long-term growth. To swiftly facilitate the restructuring and reduce the debt exacerbated by the closures of restaurants as mandated by the State of Michigan and other states in response to the COVID-19 pandemic, the Company has filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the Western District of Michigan. The Company will operate in the ordinary course through this process and anticipates moving through the process swiftly. "This action should have little to no impact on our day to day business operations, but will allow us to emerge as a financially stronger company and enable us to continue serving our guests, team members and other business partners for many years to come," Sellers said. The Company expects the restructuring process to be seamless for guests, team members and vendors and intends to: * Honor customer programs such as gift cards and HopCat loyalty rewards * Pay employee wages and benefits in the ordinary course of business * Pay vendors and suppliers in a timely fashion going forward "As is the case with most restaurants, BarFly has faced a number of challenges in recent years, including increased industry competition and craft beer saturation," Sellers added. "However, we were meeting these challenges, and operationally the business was sound until the recent global pandemic pushed us into an unforeseen economic crisis and a 100% drop in revenue for almost three months. After an exhaustive examination of all options, we've determined that the Chapter 11 process is the best path forward to enable BarFly to focus on continued growth and transformation for the future." About BarFly Ventures BarFly Ventures LLC is the parent company of HopCat, Stella's Lounge, and Grand Rapids Brewing Co. Founded in 2008, BarFly operates a chain of estaurants. Barfly Ventures and its affiliates sought Chapter 11 protection (Bankr. W.D. Mich. Case No. 20-01947) on June 3, 2020. Barfly Ventures was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. The Hon. James W. Boyd is the case judge. The Debtors tapped WARNER NORCROSS & JUDD, LLP and PACHULSKI STANG ZIEHL & JONES LLP as counsel; ROCK CREEK ADVISORS LLC as financial advisor; and MASTODON VENTURES, INC., as investment banker. BAYLESS PROPERTY: Seeks to Hire Wiggam & Geer as Bankruptcy Counsel ------------------------------------------------------------------- Bayless Property Group, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Wiggam & Geer, LLC, as its bankruptcy counsel. Wiggam & Geer will provide the following services in connection with Debtor's Chapter 11 case: (a) prepare pleadings and applications; (b) conduct examination; (c) advise Debtor of its rights, duties and obligations; (d) consult with Debtor and represent Debtor with respect to a Chapter 11 plan; and (e) perform legal services incidental and necessary to the day-to-day operations of Debtor's business, including the prosecution of legal proceedings, and general business and corporate legal advice. Wiggam & Geer charges $400 per hour for its attorneys and $150 per hour for legal assistants. The firm received a $7,000 retainer. Will Geer, Esq., at Wiggam & Geer, disclosed in court filings that he and his firm neither hold nor represent any interest adverse to Debtor and its bankruptcy estate. The firm can be reached at: Will B. Geer, Esq. Wiggam & Geer, LLC 50 Hurt Plaza, SE, Suite 1150 Atlanta, GA 30303 Telephone: (678) 587-8740 Facsimile: (404) 287-2767 Email: wgeer@wiggamgeer.com About Bayless Property Group Bayless Property Group, LLC, a Georgia-based company, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 20-66871) on June 1, 2020. At the time of the filing, Debtor had estimated assets of between $1 million and $10 million and liabilities of between $500,001 and $1 million. Debtor is represented by Wiggam & Geer, LLC. BIOLASE INC: Armistice Capital, et al. Hold 4.5% Equity Stake ------------------------------------------------------------- Armistice Capital, LLC, Armistice Capital Master Fund Ltd., and Steven Boyd disclosed in a Schedule 13G filed with the Securities and Exchange Commission that as of June 8, 2020, they beneficially own 2,500,000 shares of common stock of Biolase, Inc., which represents 4.5 percent of the shares outstanding. A full-text copy of the regulatory filing is available for free at: https://is.gd/E2SaMt About BIOLASE BIOLASE -- http://www.biolase.com/-- is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry, and medicine. BIOLASE's products advance the practice of dentistry and medicine for patients and healthcare professionals. BIOLASE's proprietary laser products incorporate approximately patented 261 and 52 patent-pending technologies designed to provide biologically clinically superior performance with less pain and faster recovery times. BIOLASE's innovative products provide cutting-edge technology at competitive prices to deliver superior results for dentists and patients. BIOLASE's principal products are revolutionary dental laser systems that perform a broad range of dental procedures, including cosmetic and complex surgical applications, and a full line of dental imaging equipment. BIOLASE has sold over 41,200 laser systems to date in over 80 countries around the world. Laser products under development address BIOLASE's core dental market and other adjacent medical and consumer applications. Biolase reported a net loss of $17.85 million for the year ended Dec. 31, 2019, compared to a net loss of $21.52 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $24.53 million in total assets, $25.42 million in total liabilities, $3.96 million in total redeemable preferred stock, and a total stockholders' deficit of $4.86 million. BDO USA, LLP, in Costa Mesa, California, the Company's auditor since 2005, issued a "going concern" qualification in its report dated March 27, 2020 citing that the Company has suffered recurring losses from operations, has negative cash flows from operations and has uncertainties regarding the Company's ability to meet its debt covenants and service its debt. These factors, among others, raise substantial doubt about its ability to continue as a going concern. BLUCORA INC: S&P Rates Senior Secured Term Loan Add-On 'BB' ----------------------------------------------------------- S&P Global Ratings has assigned its 'BB' rating to Blucora Inc.'s $175 million add-on to its senior secured term loan due 2024. The proceeds will fund the firm's previously announced $100 million acquisition of Honkamp Krueger Financial Services, as well as provide additional liquidity. In March, S&P revised its outlook on Blucora to negative because it expects the company's earnings will suffer this year due to the COVID-19-related decline in the stock market, very low short-term interest rates, and the extended tax season. Still, S&P expects a rebound in 2021, particularly if the stock market continues to rise. The new debt has no impact on the rating, because, while pro forma S&P Global Ratings' total debt to EBITDA is over 3.4x, the rating agency expects weighted average debt to EBITDA to remain under 3x. The recovery expectations remain '4'. BRAZIL MINERALS: Signs Deal to Repurchase Convertible Debt Notes ---------------------------------------------------------------- Brazil Minerals, Inc., signed an agreement with GW Holdings Group, LLC which allows the Company to purchase back for extinguishment all of the convertible debt notes issued to GWHG by the Company. Under the agreement, the Company has the option to purchase and cancel all of its obligations, including principal and accrued interest, under the repurchased GWHG Convertible Notes, in six monthly tranches during the period ending Dec. 15, 2020. There is no penalty for prepayment of one or more tranches. The principal amount of the GWHG Convertible Notes subject to repurchase by the Company range in size from an initial tranche aggregating $86,375 in principal amount to a final tranche aggregating $141,000 in principal amount. For each tranche the total repurchase price to be paid by the Company to GWHG is 110% of the principal amount of the GWHG Convertible Notes which are repurchased, and all accrued interest and any late-payment penalties are canceled . To the extent that the GWHG Convertible Notes are repurchased by the Company and extinguished, no shares will be issuable from those notes. About Brazil Minerals Brazil Minerals, Inc. -- http://www.brazil-minerals.com/-- has two components to its business model: (1) growing a portfolio of mineral rights in a wide spectrum of strategic and sought-after minerals, from which equity holdings and/or royalty interests may develop, and (2) mining certain specific areas for gold, diamonds, and sand. The Company currently owns mineral rights in Brazil for lithium, rare earths, titanium, cobalt, iron, manganese, nickel, gold, diamonds, precious gems, and industrial sand. Brazil Minerals reported a net loss of $2.08 million for the year ended Dec. 31, 2019, compared to a net loss of $1.85 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $1.03 million in total assets, $2.35 million in total liabilities, and a total stockholders' deficit of $1.32 million. BF Borgers CPA PC, in Lakewood, Colorado, the Company's auditor since 2015, issued a "going concern" qualification in its report dated April 14, 2020 citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. CARDTRONICS PLC: S&P Affirms 'BB' ICR; Outlook Stable ----------------------------------------------------- S&P Global Ratings affirmed its issuer credit rating of 'BB' and the stable outlook on independent ATM operator Cardtronics PLC. Cardtronics plans to raise $500 million of first-lien debt and use a portion of available excess balance sheet cash to repay all revolver borrowings. The transaction is leverage neutral on a pro forma basis as S&P net cash from debt. S&P has assigned a BB+ (recovery rating of '2') issue level rating to the new $500 term loan debt. Meanwhile, S&P has lowered the rating on the company's first-lien revolving credit facility to 'BB+' (recovery rating of '2') from 'BBB-' and the rating on the company's unsecured notes to 'BB-' (recovery rating of '5') from 'BB'. The increased first-lien debt as a result of this debt transaction will increase claims against enterprise value in a simulated default. While it expects credit metrics to worsen in 2020 due to pandemic related disruptions, S&P foresees a credible path to better metrics within 12 months. About 75% of Cardtronics' annual revenues are derived from ATM withdrawal transactions (either through surcharge fees paid by consumers or interchange fees paid by banks). With the onset of the global COVID-19 pandemic and related shelter-in-place orders in March, Cardtronics' same-store ATM withdrawal transaction volumes declined substantially year over year. In the U.S. market, which accounts for about 60% of annual revenue, Cardtronics reported weekly same-unit withdrawal transaction declines of -18% to -32% during March and April 2020. The company has pointed to improving trends in recent weeks as lockdown restrictions are relaxed. Sixty percent of 2020 year-to-date transaction volume occurs outside of population-dense areas, where foot traffic will likely continue to improve over the next few months. "Supporting our confidence in deleveraging is the company's financial policy and its record of quickly adjusting its cost base in the face of operational headwinds," S&P said. Management has laid out a leverage target for the business in the 2.0x-2.5x area (equivalent to 2.3x-2.8x on an S&P adjusted basis). "It is our opinion management will feel comfortable with shareholder friendly practices such as reinstating share repurchases, which were paused in the first quarter once the company is back in its leverage target," S&P said. Over the last few years management has had to adjust its operating and cost-structure plans several times in response to sudden headwinds. These events include the loss of its largest customer, 7-Eleven, in 2015 (18% of 2016 revenues, which took three years to roll out of Cardtronics' revenues due to the way the contract was structured); interchange rate cuts in the U.K. announced in 2017 (where about 25% of annual revenues are derived); and the elimination of surcharges in 2017 at most Australian ATMs (where 7% of annual revenues is derived). The company has preserved reported EBITDA margins in the high-teen to low-20% area through these negative events. While the impact of the COVID-19 pandemic is very severe, S&P believes management will be able to preserve EBITDA margins in at least the mid-teen percentage area as it flexes down some spend. S&P notes that about half of Cardtronics' cost structure is variable, dependent on transaction volume. Over the next few years, banks should continue to outsource ATM management and AllPoint should continue to gain traction. Long-term threats to cash as a payments mechanism remain, but S&P does not expect the COVID-19 pandemic and related 2020 recession to accelerate those trends. Based on Federal Reserve statistics, the annual spikes in dollars circulated corresponds to recessionary years (2002, 2009, and 2020) as cash is viewed as a good budgetary tool. Cardtronics grew through the last recession in 2009 as consumers shifted to cash. While the total number of ATMs worldwide remains stable at around 3.5 million units, cash in circulation continues to grow. U.S. currency in circulation has grown 1%-11% every year since 2000. Federal Reserve data in 2019 shows cash was used in 26% of transactions, compared with 23% for credit and 28% for debit." Over the next few years, Cardtronics will benefit from industry tailwinds as banks continue to outsource ATM management to independent operators, and as more financial institutions sign up with Cardtronics' surcharge-free ATM network, AllPoint. Cardtronics improved the number of ATMs it helps operate by 27% in 2019, to about 287,000 units from 230,000. As the number of bank branches continues to decline, S&P believes banks will still want to provide access to ATMs for its cardholders. Cardtronics has built up its U.S. ATM network, such that over 80% of the population resides within five miles of a Cardtronics ATM. This increases the likelihood that a financial institution will choose to join the AllPoint network. In 2019, Cardtronics posted record growth in its "bank branding and surcharge free" revenues (which includes AllPoint) at 12%. S&P also notes that Cardtronics may gain share against other ATM operators over the next few years. Cardtronics is the largest nonbank ATM provider in the U.S. and may display more financial resilience in the aftermath of the coronavirus pandemic compared with some of its competitors, many of which are much smaller in scale and thus vulnerable to financial distress this year. "We expect the company to maintain sufficient liquidity and a good cash buffer over the next 12 months. We view the company's current debt transaction as positive from a liquidity perspective as it will restore Cardtronics' revolver capacity. We no longer expect the company to use its revolver to pay down its $288 million of convertible debt due in December 2020, as the company will use a portion of the proceeds of the new term loan debt for this purpose," S&P said. S&P expects Cardtronics to continue to generate positive free operating cash flow, even during 2020. The company will cut its discretionary capital expenditures (capex) in 2020, which should support at least $20 million of free cash flow in 2020. It also expects EBITDA to interest coverage to remain robust. This metric was 7.5x in 2019. The rating agency expects temporary weakness to 5.8x in 2020 before improving to the low-6x area in 2021. The stable outlook reflects S&P's expectation that the company's leverage will rise above 3.5x temporarily and will decline below that level within 12 months due to cost containment, and stabilizing ATM transaction trends. S&P expects performance headwinds in 2020 stemming from shelter-in-place mandates and declines in consumer spending. It expects improving operating metrics (such as ATM withdrawals) compared with weak numbers posted during March and April as much of the world was under shelter-in-place mandates. The outlook also reflects S&P's expectation that management will control its expense and capex and reduce shareholder returns in 2020 to preserve liquidity. "We could lower the rating if weak macroeconomic conditions pressure ATM transaction volume further and the company is unable to offset margin contraction through immediate cost reductions such that leverage remains above 3.5x. We could also lower the rating if EBITDA to interest coverage is sustained below 6x. Ratings could be pressured longer term if cash usage and ATM unit growth turns negative, leading to a smaller market for Cardtronics," S&P said. "An upgrade over the next 12 months is unlikely as we view leverage to rise in 2020. We also view the company's regulatory and market risks as elevated longer term given pressures to eliminate surcharge ATMs and lower interchange fees in various geographies over the last few years. However, we could upgrade the company longer term if management updates its financial policy to maintain leverage under 2x," the rating agency said. CAROLINAS HOME: Case Summary & 7 Unsecured Creditors ---------------------------------------------------- Debtor: Carolinas Home and Land Investments, LLC 3335 Jason Avenue Charlotte, NC 28208 Business Description: Carolinas Home and Land Investments, LLC is the owner of fee simple title to 2.187- acres and commercial building located in Charlotte, NC, having a current value of $658,200. The Company also owns 12.7-acres, single family home, and commercial building in Mount Holly, NC having tax records valuation of $360,410. Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Western District of North Carolina Case No.: 20-30619 Judge: Hon. Laura T. Beyer Debtor's Counsel: Richard S. Wright, Esq. MOON WRIGHT & HOUSTON, PLLC 121 West Trade Street Suite 1950 Charlotte, NC 28202 Tel: 704-944-6560 Email: rwright@mwhattorneys.com Total Assets: $1,023,610 Total Liabilities: $1,193,519 The petition was signed by John M. Caves, sole member-manager. A copy of the petition containing, among other items, a list of the Debtor's seven unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/m92ScE CHINESEINVESTORS.COM: Case Summary & 20 Top Unsecured Creditors --------------------------------------------------------------- Debtor: Chineseinvestors.com, Inc. 227 W. Valley Blvd., Suite 208A San Gabriel, CA 91776 Business Description: Chineseinvestors.com, Inc. was established as an 'in language' (Chinese) financial information web portal that provides information about US Equity and Financial Markets, as well as other financial markets. Chapter 11 Petition Date: June 18, 2020 Court: United States Bankruptcy Court District of California Case No.: 20-15501 Judge: Hon. Ernest M. Robles Debtor's Counsel: Rachel M. Sposato, Esq. THE HINDS LAW GROUP 21257 Hawthorne Boulevard Second Floor Torrance, CA 90503 Tel: (310) 316-0500 E-mail: jhinds@hindslawgroup.com; rsposato@hindslawgroup.com Total Assets as of February 29, 2020: $2,655,736 Total Debts as of February 29, 2020: $11,574,081 The petition was signed by Wei Warren Wang, CEO. A copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/I7jwDG CITGO HOLDING: S&P Lowers Senior Secured Debt Rating to 'B-' ------------------------------------------------------------ S&P Global Ratings lowered its issue-level rating on CITGO Holding Inc.'s senior secured debt to 'B-' from 'B' and revised the recovery rating to '3' from '2'. The '3' recovery rating indicates its expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a default. On June 9, 2020, CITGO Petroleum Corp. refinanced its $614 million term loan B due 2021 with the proceeds from its issuance of $1.125 billion of new notes due 2025. On June 8th, the company repaid $105 million on its 2024 term loan B at Citgo Petroleum using cash on hand. S&P lowered its issue-level rating on CITGO Holding's secured debt and revised the recovery rating to reflect the increased amount of debt in the company's capital structure, which reduced the assumed enterprise value remaining to service CITGO Holding Inc.'s obligations in the rating agency's simulated default scenario. S&P's 'B-' issuer credit rating on CITGO remains unchanged. ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P's default and recovery analysis for refinery companies recognizes that the sector is capital-intensive, highly competitive, and involves erratic profitability with periods of weak to negative margins due to high fixed costs, fluctuating commodity inputs, and output prices based on shifting supply and demand dynamics. -- S&P's simulated default scenario assumes that a default would most likely occur during a downturn in the sector when refinery margins are low and cash flow is constrained. Furthermore, S&P assumes this financial stress causes suppliers to tighten their credit terms or demand cash or letters of credit to support purchases. This contributes to a liquidity shortfall and payment default. Required capital expenditure for periodic maintenance, upgrades, or regulatory and environmental requirements could also contribute to tightened liquidity and a default. Simulated default assumptions -- S&P assumes a default occurring in 2022 on a consolidated basis (Petroleum and Holding) because of low EBITDA from unfavorable margins and operational problems at its plants during a cyclical downturn in the volatile refining sector. -- S&P expects CITGO to be reorganized rather than liquidated following a default. It assumes all of its refineries will continue to operate given the continued need for refined petroleum products, the limited number of refineries in the U.S., and the difficulty of building new facilities because of regulations and the high required capital investment. S&P assumes a default during a cyclical downturn when refining margins and cash flow may be poor or negative but expect the valuation of the refineries to reflect an anticipated return to more favorable market conditions given the industry's historical cyclicality. -- To value CITGO, S&P applies a multiple to its estimate of $2,750 per barrel per day of throughput given the high complexity rating of the company's refineries. Furthermore, S&P estimates an inventory valuation of approximately $1.42 billion --assuming a $50 per barrel crude oil price and accounts receivable of $850 million--and an estimated terminal valuation of $672 million (assuming a $30 multiple per barrel of storage capacity). -- S&P does not attribute any value to the CITGO-branded retail gas stations because those are independently owned and operated. Simplified waterfall CITGO Holding Inc.: -- Simulated year of default: 2022 -- Value at emergence: $4.74 billion -- Net enterprise value after 5% administrative costs: $4.5 billion -- Net priority claims at CITGO Petroleum: $0 -- Net value to service CITGO Petroleum claims: $4.5 billion -- CITGO Petroleum senior secured claims: $3.23 billion -- Recovery expectations: 90%-100% (rounded estimate: 95%) -- Net value to service CITGO Holding claims: $1.27 billion -- CITGO Holding senior secured claims: $1.96 billion -- Recovery expectations: 50%-70% (rounded estimate: 65%) CITGO Petroleum Corp.: -- Simulated year of default: 2022 -- Value at emergence: $4.42 billion -- Net enterprise value after 5% administrative costs: $4.2 billion -- Priority claims: $177 million -- Total collateral value available to secured debt: $4 billion -- Senior secured claims: $3.23 billion -- Recovery expectations: 90%-100% (rounded estimate: 95%) CREATIVE HAIRDRESSERS: Committee Hires Emerald as Financial Advisor ------------------------------------------------------------------- The official committee of unsecured creditors appointed in the Chapter 11 cases of Creative Hairdressers, Inc. and Ratner Companies, L.C. seeks approval from the U.S. Bankruptcy Court for the District of Maryland to employ Emerald Capital Advisors as its financial advisor. Emerald Capital will render the following services to the committee in connection with Debtors' Chapter 11 cases: (a) review and analyze Debtors' operations, financial condition, business plan, strategy and operating forecasts; (b) assist the committee in evaluating any proposed debtor-in-possession financing; (c) assist in determining an appropriate capital structure for Debtors; (d) advise the committee as it assesses Debtors' executory contracts; (e) assist the committee in connection with its identification, development, and implementation of strategies related to the potential recoveries for unsecured creditors; (f) help the committee understand the business and financial impact of various restructuring alternatives of Debtors; (g) assist the committee in its analysis of Debtors' financial restructuring process, including its review of Debtors' plan of reorganization and related disclosure statement; (h) assist the committee in evaluating, structuring and negotiating the terms and conditions of any proposed transaction; (i) assist in the evaluation of any asset sale process; (j) assist in evaluating the terms, conditions and impact of any proposed asset sale transaction; (k) assist the committee in evaluating any proposed merger, divestiture, joint-venture or investment transaction; (l) assist the committee to value the consideration offered by Debtors to unsecured creditors in connection with a restructuring or sale of their assets; and (m) provide testimony. Emerald Capital's hourly rates are as follows: Managing Partners $550 - $600 Managing Directors $500 Vice Presidents $400 - $450 Associates $300 - $350 Analysts $200 - $250 John Madden, managing partner at Emerald Capital, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: John P. Madden Emerald Capital Advisors 150 East 52nd Street, 15th Floor New York, NY 10022 Telephone: (212) 201-1904 Facsimile: (212) 731-0307 About Creative Hairdressers Creative Hairdressers, Inc. operates over 750 salons nationwide under the trade names Hair Cuttery, BUBBLES, and Salon Cielo. The company began in 1974 to create a quality whole-family salon where stylists could make a good living. Visit http://www.ratnerco.com/ Creative Hairdressers and Ratner Companies, L.C. sought Chapter 11 protection (Bankr. D. Md. Lead Case No. 20-14583) on April 23, 2020. Creative Hairdressers was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Thomas J. Catliota oversees the cases. Debtors tapped Shapiro Sher Guinot & Sandler as legal counsel; Carl Marks Advisors as strategic financial advisor; A&G Realty Partners as real estate advisor; and Epiq Bankruptcy Solutions as claims agent. The Office of the U.S. Trustee appointed a committee to represent unsecured creditors in Debtors' Chapter 11 cases. The committee is represented by Faegre Drinker Biddle & Reath, LLP. CREATIVE HAIRDRESSERS: Committee Hires Faegre Drinker as Counsel ---------------------------------------------------------------- The official committee of unsecured creditors appointed in the Chapter 11 cases of Creative Hairdressers, Inc. and Ratner Companies, L.C. seeks approval from the U.S. Bankruptcy Court for the District of Maryland to employ Faegre Drinker Biddle & Reath, LLP as its legal counsel. Faegre Drinker will render the following services to the committee in connection with Debtors' Chapter 11 cases: (a) attend the meetings of the committee; (b) review financial and operational information furnished by Debtors to the committee; (c) investigate and determine the value of Debtors' unencumbered assets; (d) analyze and negotiate the budget and the terms of the debtor-in-possession financing; (e) assist in the efforts to sell assets or equity of Debtors in a manner that maximizes the value for creditors; (f) review the proposed sale of substantially all of Debtors' assets; (g) review and analyze issues concerning Debtors' Chapter 11 plan and pursue confirmation of the plan; (h) review and investigate the liens of purported secured parties; (i) review and investigate pre-bankruptcy transactions in which Debtors or their insiders were involved; (j) confer with Debtors' management, counsel and financial advisors; (k) review Debtors' schedules, statements of financial affairs and business plan; (l) advise the committee as to the ramifications regarding all of Debtors' activities and motions before the court; (m) file pleadings on behalf of the committee; (n) review and analyze Debtors' financial professionals' work product and report to the committee on that analysis; (o) provide the committee with legal advice in relation to the cases; and (p) prepare various applications and memoranda of law to be submitted to the court for consideration. The firm's attorneys and paralegal will be paid at hourly rates as follows: Keith N. Costa, Partner $850 Dustin R. DeNeal, Partner $605 Patrick A. Jackson, Partner $725 Jonathan H. Todt, Associate $655 Elizabeth M. Little, Associate $510 Rokeysha Ramos, Paralegal $335 Patrick Jackson, Esq., a partner at Faegre Drinker, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Patrick A. Jackson, Esq. Faegre Drinker Biddle & Reath, LLP 1050 K Street NW, Suite 400 Washington, DC 20001 Telephone: (202) 312-7400 Facsimile: (202) 312 7461 Email: patrick.jackson@faegredrinker.com About Creative Hairdressers Creative Hairdressers, Inc. operates over 750 salons nationwide under the trade names Hair Cuttery, BUBBLES, and Salon Cielo. The company began in 1974 to create a quality whole-family salon where stylists could make a good living. Visit http://www.ratnerco.com/ Creative Hairdressers and Ratner Companies, L.C. sought Chapter 11 protection (Bankr. D. Md. Lead Case No. 20-14583) on April 23, 2020. Creative Hairdressers was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Thomas J. Catliota oversees the cases. Debtors tapped Shapiro Sher Guinot & Sandler as legal counsel; Carl Marks Advisors as strategic financial advisor; A&G Realty Partners as real estate advisor; and Epiq Bankruptcy Solutions as claims agent. The Office of the U.S. Trustee appointed a committee to represent unsecured creditors in Debtors' Chapter 11 cases. The committee is represented by Faegre Drinker Biddle & Reath, LLP. CREATIVE REALITIES: Signs Distribution Agreement with InReality --------------------------------------------------------------- Creative Realities, Inc., entered into a Master Distribution Agreement with InReality, LLC, pursuant to which the Company will serve as the exclusive master distributor of InReality's ThermalMirror product in the United States and Canada. The initial term of the Distribution Agreement is twelve months, and the term will automatically renew for successive twelve-month periods until InReality gives the Company proper notice of non-renewal or the Distribution Agreement is otherwise terminated according to its terms. As the master distributor in the United States and Canada, the Company will purchase Products from InReality at varying prices determined based on order volume, and sell Products to distributors, resellers and end users in the United States and Canada. The Company must satisfy minimum purchase requirements in each calendar quarter of the initial term beginning Oct. 1, 2020 in order to maintain its status as exclusive distributor of the Product in the United States and Canada. The Company may establish distributor, reseller and referral programs to sell the Products at its sole discretion. The Company will develop marketing campaigns and strategies to promote Product sales with InReality's cooperation. The Company will install the Product at the end user's site and perform basic repairs, troubleshooting, and helpdesk services. InReality will provide escalated technical support for the Product and associated software and platform. The Company and InReality will split revenues derived from activations and subscriptions to the Product's associated software-as-a-service platform sold by the Company. The Distribution Agreement contains other customary terms. Sales Agreement On June 19, 2020, the Company entered into a Sales Agreement with Roth Capital Partners, LLC under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.01 per share, having an aggregate offering price of up to $8,000,000 through Roth as the Company's sales agent. Roth may sell the Common Stock by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415 of the Securities Act of 1933, as amended. Subject to the terms of the Agreement, Roth will use its commercially reasonable efforts to sell the Common Stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company or Roth may suspend the offering of the Common Stock being made through Roth under the Agreement upon proper notice to the other party. The Company will pay Roth a commission of 3.0% of the gross sales proceeds of any Common Stock sold through Roth under the Agreement, and also has provided Roth with customary indemnification rights. The Company is not obligated to make any sales of Common Stock under the Agreement. The offering of shares of Common Stock pursuant to the Agreement will terminate upon the earlier of (i) the sale of all Common Stock subject to the Agreement or (ii) termination of the Agreement in accordance with its terms. About Creative Realities Creative Realities, Inc. -- http://www.cri.com-- is a Minnesota corporation that provides innovative digital marketing technology and solutions to retail companies, individual retail brands, enterprises and organizations throughout the United States and in certain international markets. The Company has expertise in a broad range of existing and emerging 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. Creative Realities reported net income of $1.04 million for the year ended Dec. 31, 2019, following a net loss of $10.62 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $21.79 million in total assets, $16.42 million in total liabilities, and $5.37 million in total shareholders' equity. Management believes that, based on (i) the extension of the maturity date on the Company's term loan and revolving loans to June 30, 2021, (ii) its receipt of $1,551,800 of funding through the Payroll Protection Program on April 27, 2020, (iii) its operational forecast through 2021, and (iv) support from Slipstream through June 30, 2021, the Company can continue as a going concern through at least May 15, 2021. However, given the Company's history of net losses, cash used in operating activities and working capital deficit, each of which continued as of and for the three months ended March 31, 2020, the Company can provide no assurance that its ongoing operational efforts will be successful, particularly in consideration of the business interruptions and uncertainty generated as a result of the COVID-19 pandemic which could have a material adverse effect on its results of operations and cash flows. Creative Realities received a letter from The Nasdaq Stock Market LLC on April 28, 2020, advising the Company that for 30 consecutive trading days preceding the date of the Notice, the bid price of the Company's common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). CYTODYN INC: Signs Second Amended Employment Contract with CEO -------------------------------------------------------------- CytoDyn Inc. and Nader Z. Pourhassan, Ph.D., president and chief executive officer of the Company, entered into a second amended and restated employment agreement effective June 15, 2020. The primary changes to the agreement include a modification to the severance payable to Dr. Pourhassan in the event his employment is terminated by the Company without cause, by increasing severance payable to 18 months from 12 months upon termination without cause and deleting the limitation from his prior agreement that the severance would not be payable if the Company had less than $4 million in cash on hand or net worth of less than $5 million. The amended agreement also clarifies that vesting on option grants will only accelerate upon termination of employment if permitted by the underlying stock option award agreement. Effective June 15, 2020, the Company and Michael D. Mulholland, chief financial officer, entered into an amended and restated employment agreement. With the exception of the severance-pay period which remains 12 months, the changes to Mr. Mulholland's agreement mirror those of Dr. Pourhassan described above. The Compensation Committee of the Board of Directors of CytoDyn Inc. approved a form of Restricted Stock Unit Agreement and Performance Based Restricted Stock Unit Agreement and an amended form of Stock Option Agreement for employees under the Company's 2012 Equity Incentive Plan. On June 16, 2020, the Board of the Company approved an amendment to the Company's 2012 Equity Incentive Plan. The amendment changes the governing law of the Plan from Oregon to Delaware, the Company's state of incorporation, and deletes the annual limitation on the number of shares subject to options that may be granted under the Plan and the aggregate limitation of grants of restricted stock awards and restricted stock unit awards under the Plan. The Board believed the limitations were no longer necessary after the repeal of Section 162(m) of the Internal Revenue Code, relating to the deductibility of performance-based compensation, for tax years beginning after Dec. 31, 2017. About CytoDyn Inc. Headquartered in Vancouver, Washington, CytoDyn Inc. -- http://www.cytodyn.com-- is a late-stage biotechnology company focused on the clinical development and potential commercialization of leronlimab (PRO 140), a CCR5 antagonist to treat HIV infection, with the potential for multiple therapeutic indications. As of Feb. 29, 2020, the Company had $38.82 million in total assets, $43.20 million in total liabilities, and a total stockholders' deficit of $4.38 million. Warren Averett, LLC, in Birmingham, Alabama, the Company's auditor since 2007, issued a "going concern" qualification in its report dated Aug. 14, 2019, on the Company's consolidated financial statements for the year ended May 31, 2019, citing that the Company incurred a net loss of approximately $56,187,000 for the year ended May 31, 2019 and has an accumulated deficit of approximately $229,363,000 through May 31, 2019, which raises substantial doubt about its ability to continue as a going concern. DCP MIDSTREAM: S&P Rates $400MM Senior Unsecured Notes 'BB+' ------------------------------------------------------------ DCP Midstream Operating LP announced it would issue $400 million in senior unsecured notes to repay revolver borrowings. Credit metrics are unaffected in S&P's forecast because the company will not be adding incremental debt. S&P Global Ratings rated the new senior unsecured notes 'BB+', which is in line with the existing notes. The recovery rating is unchanged at '3'. The 'BB+' issuer credit rating and negative outlook are also unchanged. In March 2020, S&P revised the outlook on the company to negative given its expectation for weaker cash flows over the next few years because of direct commodity exposure and volumetric exposure. S&P expects leverage to be over 5x in 2020, but gradually decline into the 4.75x–5x range in 2021. DEFOOR CENTRE: Gets Court Approval to Hire Ten-X as Auctioneer -------------------------------------------------------------- Defoor Centre, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Ten-X, Inc. as auctioneer. Ten-X, an online auction broker, will assist Debtor in the marketing and sale of its real property located at 1710 Defoor Ave. NW, Atlanta. The firm will get a 2 percent commission on the sales price. Kevin Spellacy of Ten-X disclosed in court filings that his firm does not have any interest adverse to Debtor's bankruptcy estate. The firm can be reached through: Kevin Spellacy Ten-X, Inc. 15295 Alton Parkway Irvine, CA 92618 Telephone: (888) 770-7332 About Defoor Centre Defoor Centre, LLC owns a real property located at 1710 Defoor Ave. NW, Atlanta, known as The Defoor Center (www.defoorcentre.com). The property is an events venue ideal for private weddings, mitzvahs, corporate meetings and parties. Defoor Centre sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-04273) on June 1, 2020. At the time of the filing, Debtor disclosed total assets of $3,588,000 and total liabilities of $3,349,560. Debtor is represented by Jennis Law Firm. DEFOOR CENTRE: Hires Marcus & Millichap as Real Estate Broker ------------------------------------------------------------- Defoor Centre, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Marcus & Millichap Real Estate Investment Services of Atlanta as its real estate broker. The firm will assist in the marketing and sale of Debtor's real property located at 1710 Defoor Ave. NW, Atlanta. Marcus & Millichap will get a 5 percent commission to be split with the buyer's agent. Paul Johnson of Marcus & Millichap disclosed in court filings that the firm does not have any interest adverse to Debtor's bankruptcy estate. The firm can be reached through: Paul Johnson Marcus & Millichap Real Estate Investment Services of Atlanta 1100 Abernathy Road NE, Ste. 600 Atlanta, GA 30328 Telephone: (678) 808-2700 Facsimile: (678) 808-2710 About Defoor Centre Defoor Centre, LLC owns a real property located at 1710 Defoor Ave. NW, Atlanta, known as The Defoor Center (www.defoorcentre.com). The property is an events venue ideal for private weddings, mitzvahs, corporate meetings and parties. Defoor Centre sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-04273) on June 1, 2020. At the time of the filing, Debtor disclosed total assets of $3,588,000 and total liabilities of $3,349,560. Debtor is represented by Jennis Law Firm. DISCOVERORG HOLDINGS: S&P Raises ICR to 'B+'; Rating Withdrawn -------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on DiscoverOrg Holdings LLC to 'B+' from 'B-' and subsequently withdrew the issuer credit rating because of the company's new organizational structure, under which it is now a subsidiary of ZoomInfo Technologies Inc. At the same time, S&P assigned its 'B+' issuer credit rating to ZoomInfo, the newly created holding company that will operate and control all of DiscoverOrg's business and affairs. S&P is also raising its issue-level rating on DiscoverOrg's first-lien debt to 'B+' from 'B', commensurate with the upgrade, and is revising the recovery rating to '3' from '2' because of the elimination of lower priority debt in the capital structure. The upgrade reflects the steep decline in ZoomInfo's leverage to the high-4x area immediately following its debt repayment from 8x as of March 31, 2020. The company's strong growth profile, recurring revenue base, and robust EBITDA margin will support further deleveraging over the coming quarters. S&P expects ZoomInfo's leverage to decline to the low 4x area by the end of 2020 absent any large merger and acquisition or shareholder return activities. The company's repayment of its high-cost debt will also materially improve its free operating cash flow (FOCF) generation, which S&P forecasts will rise to $120 million annually from $40 million previously. ZoomInfo is a small player in the niche data intelligence industry, which features low barriers to entry. The company offers a broad and exhaustive business-to-business contact database that facilitates the role of sales and marketing professionals, which it sells purely on a software-as-a-service (SaaS) basis. Its main competitive advantage lies with its market leading 95% data accuracy rate that supports it strong organic revenue growth and high customer retention. S&P views the company's automated and high-quality product offering to be relatively recession-resistant, even amid the coronavirus pandemic, because its professional users rely on data accuracy and utility to conduct their business transactions while operating remotely in a stressed economic environment. ZoomInfo gathers data from a variety of sources, which it then processes and verifies through its proprietary algorithmic engines. One of the company's key sources of information is its contributory network because the users of its database can opt in to add their own list of professional contacts. ZoomInfo generates nearly all of its revenue from subscriptions under annual or longer contracts and receives a one-year payment advance on a large proportion of its contracts. Over the coming year, S&P expects the company to increase its revenue by adding new accounts and transitioning its existing customers to more comprehensive offerings, which will raise its average selling prices. Based on the company's need to maintain a highly efficient machine-based operating model, S&P expects the company to generate EBITDA margins of about 51% over the coming year, which is lower than the mid-50% area margin it reported in 2019, as it makes additional platform enhancements and faces incremental costs related to running a public company. S&P also expects that the company will face increased competition from its peers as larger and better-capitalized companies look to provide similar solutions. ZoomInfo's financial risk profile reflects its pro forma leverage in the high 4x area, which S&P expects to decline to the low-4x area by the end of 2020 on continued organic revenue and EBITDA growth. S&P also expects the company to generate FOCF of $120 million over the coming year partly due to a $40 million reduction in its interest expense, which will increase its FOCF-to-debt ratio to the low double-digit percent area. Furthermore, ZoomInfo's starting cash balance of $340 million and solid FOCF generation will provide it with capacity for acquisitions without stressing its balance sheet if management finds an attractive target. Pro forma for the IPO, TA Associates and the Carlyle Group account for roughly two-thirds of the company's shareholder base. S&P expects the company's financial sponsors to decrease their equity positions over the coming year. The stable outlook on ZoomInfo reflects S&P's expectation that the company will organically increase its revenue by the mid-40% area and proportionally expand its EBITDA base such that its leverage declines to the low-4x area by the end of 2020. S&P's forecast does not incorporate any large acquisitions or shareholder returns. "We could lower our rating on ZoomInfo if its leverage approaches 5x. This could occur if a deterioration in the company's data accuracy rates or business operations leads to material customer losses or declining profitability," S&P said. "We would consider raising our rating on ZoomInfo if it exhibits consistent organic revenue growth while maintaining high profitability such that its leverage declines to, and remains substantially below, 4x. We would also look for its private-equity owners to relinquish the majority of their stake in the company before raising our rating," the rating agency said. DMDS LLC: Seeks Court Approval to Hire Bankruptcy Attorney ---------------------------------------------------------- DMDS, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Larry Vick, Esq., to handle its Chapter 11 case. The services to be provided by the bankruptcy attorney include: (a) analyzing the financial situation of Debtor; (b) advising Debtor of its rights, powers and duties in its bankruptcy case; (c) representing Debtor at court hearings and other proceedings; (d) preparing legal papers; (e) representing Debtor at any meeting of creditors; (f) representing Debtor in other judicial or administrative proceedings where its rights may be litigated or affected; (g) assisting Debtor in the preparation of its disclosure statement and Chapter 11 plan of reorganization; and (h) analyzing claims and negotiating with creditors. Debtor has agreed to pay the attorney an hourly fee of $450. Mr. Vick received a pre-bankruptcy retainer of $10,000. A post-petition retainer of $2,000 will be paid to the attorney every 30 days following Debtor's bankruptcy filing. Mr. Vick disclosed in court filings that he is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The attorney holds office at: Larry A. Vick, Esq. 13501 Katy Freeway, Suite 1460 Houston, TX 77079 Telephone: (832) 413-3331 Facsimile: (832) 202-2821 Email: lv@larryvick.com About DMDS LLC DMDS, LLC is a limited liability company that owns and leases commercial properties in South Houston, Texas. On May 29, 2020, DMDS sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 20-32833). The petition was signed by DMDS President David M. Soliman. At the time of the filing, Debtor disclosed total assets of $2,017,633 and total liabilities of $1,430,653. Debtor is represented by Larry A. Vick, Esq. DOUGHNUT CLUB: Reopens on National Doughnut Day ----------------------------------------------- Pat Ferrier, writing for Coloradoan, reports that the Doughnut Club reopens at 501 Riverside Avenue at 501 Riverside Avenue, at Fort Collins, Colorado, during National Doughnut Day, eight months after it closed abruptly when owner the Dough Bar filed Chapter 11 bankruptcy protection. The store will be open Fridays through Sundays only as owners "gauge what customers are most interested in," said Ondrea Fernandez, who co-owns the store with her husband, Marquez. "We want to find the best balance to offer our product locally as well as continue to grow the online business." Simultaneously, the Fernandezes are opening another shop in the RiNo district in Denver. Their online business, The Dough Bar, generated national buzz two years ago when its protein-infused doughnuts won support from a "Shark Tank" investor. The Fernandezes moved the business to Fort Collins as online sales grew to $2.1 million in 2018. They opened a brick-and-mortar store in April 2019. The Doughnut Club was open a few months before it shut down in October 2019. As it worked through bankruptcy, The Dough Bar "reinvented itself," adding new protein-infused products like monkey bread, cinnamon rolls and whoopie pies to its lineup — all of which are also available at The Doughnut Club. "We feel so optimistic that the opportunity is still there as we worked through bankruptcy," Ondrea Fernandez said. While The Dough Bar offers more nutritious products, The Doughnut Club specializes in yeast-based doughnuts with decadent toppings such as maple bacon and s'mores. "We're happy to be moving forward," even though they are still working through the Chapter 11 bankruptcy. "We are feeling very optimistic for the future." Ondrea Fernandez said last year the couple made a strategic decision to reorganize their company's debt in order to continue operating the business. According to court documents, The Dough Bar LLC has $599,000 in assets and more than $774,115 in secured and unsecured debt. It reported more than $2.1 million in gross revenue in 2018 and $830,712 through June this year. Many of its debtors "are standing behind us and want to see us succeed," Ondrea Fernandez said Tuesday. "Companies are encouraging us and working with us so we can continue with our business." The RiNo store has a long-term lease, and the Fort Collins store plans to stay open "as long as the demand is there," she said. "We want to give people what they want." About The Dough Bar The Dough Bar, LLC is a Colorado limited liability company engaged in the business of making proprietary high-protein doughnuts at its commercial kitchen located in Fort Collins, Colorado. It sells the doughnuts direct to consumers online through its website, and ships doughnuts to its customers nation-wide. It also makes more traditional doughnuts, prepares them in gourmet-style and sells them at a retail location the Flatirons Mall in Broomfield, Colorado. It uses the trade name The Doughnut Club in connection with the traditional doughnut products. The Dough Bar, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 19-19325) on Oct. 29, 2019. At the time of the filing, the Debtor estimated between $500,001 and $1 million in both assets and liabilities. The case is assigned to Judge Kimberley H. Tyson. The Debtor tapped Owen Hathaway, Esq., at The Law Offices of Owen Hathaway, LLC, as its legal counsel. The Office of the U.S. Trustee on Dec. 5, 2019, disclosed in a court filing that no official committee of unsecured creditors has been appointed in the case. DPL INC: S&P Rates New Senior Unsecured Notes 'BB' -------------------------------------------------- S&P Global Ratings assigned its 'BB' rating to U.S.-based electric utility DPL Inc.'s (BB/Negative/--) proposed senior unsecured notes. The company intends to use the net proceeds from this issuance to redeem all of its outstanding 7.25% senior unsecured notes due 2021 and to pay certain related fees and expenses, with any remaining proceeds used for general corporate purposes. The notes will be DPL's unsecured and unsubordinated obligations, ranking equally in right of payment with all of DPL's other senior unsecured debt. As such, S&P rates these notes on a senior unsecured basis. The recovery rating is '3', indicating S&P's expectation for meaningful (50%-70%; rounded estimate 55%) recovery under a hypothetical payment default scenario. All of S&P's ratings on the company are unchanged, including the 'BB' issuer credit rating. The outlook is negative. ISSUE RATINGS--RECOVERY ANALSIS Key analytical factors: -- S&P is assigning its '3' recovery rating to DPL Inc.'s senior unsecured debt. S&P conducts its recovery analysis for DPL and its subsidiary Dayton Power & Light Co. (DP&L) on a consolidated basis and assume a default in 2023. S&P's recovery valuation assumes the regulated transmission and distribution (T&D) assets will be valued at their net book value of close to $1.44 billion, as a proxy for the allowed regulated return on rate base. -- S&P expects DP&L's secured debt to total $593 million at default (including an estimate of six months' accrued interest and assuming that the first mortgage bonds due October 2020 are refinanced on similar terms) and would have the highest priority claim to the value of the regulated assets, or about $1.44 billion on a net basis. This suggests collateral coverage of about 231%. S&P's first-mortgage bond criteria requires coverage from regulated assets of at least 150% to qualify for a '1+' recovery rating. As such, this debt has a '1+' recovery rating, indicating S&P's expectation for full recovery. -- After accounting for other estimated claims at DP&L of about $220 million (consisting of revolving bank debt, which S&P assumes is 85% drawn at default, and an unfunded pension adjustment of about $65 million), there is roughly $555 million in remaining value available to DPL creditors. This suggests total coverage of about 59% for DPL's unsecured debt of roughly $944 million (including an estimate of six months interest). As such, this debt has a '3' recovery rating (rounded recovery estimate of 55%). Lastly, the contractually subordinated trust preferred securities at DPL Capital Trust II have a recovery rating of '6' (0%). Simulated default assumptions: -- Simulated year of default: 2023 Simplified waterfall: -- Regulated asset value: $1.44 billion -- Net enterprise value (after 5% administrative costs): $1.37 billion -- Net value available to DP&L's first-lien debt: $1.37 billion -- First-mortgage bonds and other first-lien debt: $593 million -- Recovery expectations: 231% -- Total value available to unsecured creditors at DP&L: $774 million -- Unsecured revolver at DP&L: $154 million -- Unfunded pension adjustment: $65 million -- Remaining value available to claims at DPL: $555 million -- Senior unsecured debt at DPL: $944 million -- Recovery expectations: 55% -- Residual value available to DPL trust preferreds: $0 -- Trust preferred claims: $16 million -- Recovery expectations: 0% Notes: All debt amounts include six months of prepetition interest. Revolvers assumed to be drawn at 85%. ECO BUILDING: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Eco Building Products, Inc. 1175 Industrial Avenue, Unit R Escondido, CA 92029 Business Description: Eco Building Products, Inc. is a manufacturer of paint, coating, and adhesive products. Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court District of Colorado Case No.: 20-14262 Debtor's Counsel: Warren Katz, Esq. 2949 North Broadway, Unit 2 Chicago, IL 60657 Tel: 949-697-4111 E-mail: wkatz@kentlaw.iit.edu Total Assets: $360,000 Total Liabilities: $5,135,080 The petition was signed by Steven Plumb, representative. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/JeGnqI ELDORADO RESORTS: S&P Affirms 'B' ICR; Outlook Negative ------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on U.S. gaming operator Eldorado Resorts Inc. and removed all ratings from CreditWatch, where it placed them with negative implications on April 30, 2020. Eldorado plans on issuing around $7.5 billion in new debt to help finance the acquisition of Caesars Entertainment Corp., refinance existing debt, and to pay for transaction related fees and expenses. The company has secured the majority of required regulatory approvals, and S&P believes the company will receive the remaining approvals in the next few weeks. There is a high likelihood it will complete the proposed financing transactions and fund the acquisition. S&P assigned its 'B' issue-level and '4' recovery rating to Eldorado's proposed senior secured notes. S&P assigned its 'CCC+' issue-level and '6' recovery rating to Eldorado's proposed senior unsecured notes. The rating agency assigned its 'B+' issue-level and '2' recovery rating to the proposed term loan B and senior secured notes issued by Caesars' subsidiary Caesars Resort Collection LLC (CRC). It also lowered the issue-level rating on CRC's existing revolver and term loan to 'B+' from 'BB-', and revised the recovery rating to '2' from '1' as a result of the increase in secured debt. Pro forma combined adjusted leverage could improve to around 8x in 2021 under S&P's recovery assumptions, after a significant spike this year due to casino closures. Combined adjusted leverage could improve to around 8x in 2021, after a significant spike this year driven by an around 50% drop in pro forma combined EBITDA because of the temporary closure of casinos due to the coronavirus pandemic. "We view adjusted leverage of around 8x as high, and aligned with a 'B' rating for Eldorado pro forma for the completion of the acquisition, because a large portion, around 55%, of the combined asset base will be subject to high fixed lease payments, which can drive greater EBITDA volatility and meaningfully lower cash flow when revenues decline. Nevertheless, we view the acquisition of Caesars favorably because it adds significant scale and diversity to Eldorado's operations and gives it access to Caesars' player loyalty database and portfolio of destination properties in Las Vegas," S&P said. Caesars and Eldorado expect to reopen the majority of their properties this month, after closing them in mid-March. S&P believes that for the regional properties, revenue for the remainder of 2020 will be around 20% to 25% below 2019 levels, driven primarily by lingering consumer fears about being in enclosed spaces--especially if there is a second wave of the virus later this year--and by the U.S. recession, which may reduce consumer discretionary spending, especially given the rating agency's forecast for high unemployment to persist through at least 2021 and expanded unemployment benefits not to be extended. While S&P believes social distancing and other health and safety measures that limit capacity in casinos may hurt revenue, these measures might have less of an impact given the rating agency's understanding that peak utilization rates in many markets were historically below these limits. Furthermore, in regional gaming markets, margins could improve, at least temporarily, even if revenue falls as operators take a measured approach to increasing labor and marketing expenses. Additionally, many of the amenities, like buffets, that may remain closed for some time are often lower-margin, if profitable at all. However, S&P believes gaming operators will likely face challenges managing their expense base over the coming quarters due to uncertain and potentially volatile demand. For Las Vegas, S&P believes revenue for the remainder of 2020 will be on average around 30% below 2019 levels since about half of customers fly to Las Vegas, which increases the cost of the trip and since consumers may have lingering fears about air travel. Furthermore, it is possible that the number of available flights to Las Vegas will be lower, at least until travel demand recovers. Nevertheless, S&P believes Caesars' Las Vegas Strip properties may recover somewhat faster than other operators' because Caesars is less reliant on group business, which the rating agency does not expect to start to recover until 2021. Additionally, Caesars is less exposed to international and high-end customer visitation, which can be volatile and is more reliant on air travel and the lifting of travel restrictions. S&P also believes Eldorado can use Caesars' database and loyalty program to market to, and incentivize regional customers to visit its Strip properties. The addition of Eldorado's customers into the Caesars Rewards loyalty program should also support a potentially faster recovery. S&P's 2021 adjusted leverage forecast for the combined company assumes: -- S&P believes the combined company may experience a somewhat better recovery path through 2021, compared to other gaming operators, since it believes the combined company will benefit from the breadth of its regional gaming portfolio and its expansive rewards network, which can incentivize customers to visit both regional and Las Vegas Strip properties. -- Total net revenue is about 5% to 10% below 2019 levels. S&P assumes Las Vegas revenue is around 10% to 15% below 2019 levels given lingering travel fears, customers' reduced ability to pay for flights because of continued pressure on consumer discretionary spending and high unemployment, and assuming air lift remains below 2019 levels. S&P assumes regional gaming revenue is up to 5% below 2019 levels (pro forma all regional properties that were divested in 2020 and 2021 are also excluded from the portfolio in 2019). S&P believes the combined company can use the player loyalty database to market its regional properties more extensively to consumers if travel fears persist, which should allow those properties to recover faster than the destination markets. -- Total EBITDAR down modestly to up low-single digits relative to 2019 EBITDAR, driven by S&P's assumption that expenses that were reduced or eliminated while casinos were closed do not return, or return only partially as casinos ramp up through the remainder of 2020, and driven by the realization of merger related synergies. -- EBITDAR margin in Las Vegas is modestly below 2019 levels given lower assumed average daily rates (ADRs) and higher promotion and marketing expense to drive visitation. -- EBITDAR margin at regional properties is about flat to slightly higher than 2019 levels. -- Eldorado achieves about 80% to 85% of its total $500 million in synergies by the end of 2021. -- Eldorado is successful in executing its proposed financing transactions. -- Eldorado's financing obligation with Gaming & Leisure Properties Inc. (GLPI), and Caesars' financing obligation with VICI Properties, remain in place. -- The real estate associated with the Harrah's Resort Atlantic City, the Harrah's Laughlin, and Harrah's New Orleans properties sold to VICI is subsequently leased to Caesars, resulting in incremental financing obligations. -- VICI amends its existing lease with Caesars in 2020, resulting in incremental rent associated with Caesars Palace and Harrah's Las Vegas. -- S&P assumes the combined lease obligations total $12.5 billion to $13 billion on the balance sheet. S&P believes Eldorado will have sufficient capital resources and liquidity to complete the acquisition and absorb a decline in cash flow this year. Eldorado plans on acquiring Caesars for about $17.2 billion, including the assumption of around $6.3 billion in Caesars' existing debt. Total consideration paid to Caesars shareholders for the acquisition will be around $11 billion, of which $7.5 billion will be paid in cash and the remainder through the issuance of around 77 million Eldorado shares to Caesars shareholders. As part of the transaction, Eldorado plans to refinance around $2 billion in Caesars' debt, including outstanding revolver balances, and plans to refinance around $2.8 billion in Eldorado's existing debt, including outstanding revolver balances. To fund the cash consideration portion of the acquisition, the proposed debt refinancings, and transaction fees and expenses, the company plans on using around $672 million in net equity from its recently priced equity offering, issuing around $7.5 billion in new funded debt, and applying around $3.4 billion in committed asset sales proceeds. Eldorado plans to sell to VICI the real estate associated with the Harrah's Resort Atlantic City, Harrah's Laughlin Hotel and Casino, and Harrah's New Orleans Hotel and Casino for $1.8 billion, and plans to modify terms of the existing lease between Caesars and VICI for the Caesars Palace Las Vegas and Harrah's Las Vegas properties in consideration for $1.4 billion. Further, Eldorado has an agreement to sell its Kansas City and Vicksburg properties for $225 million. Following the acquisition, S&P believes Eldorado will have good availability under about $2.2 billion in revolving commitments, including a new proposed $1.185 billion revolver issued by Eldorado, and CRC's existing $1.03 billion revolver. Eldorado may have the ability to reduce leverage faster than S&P projects in its base case, given potential asset sales over the next year. Eldorado has asset sale agreements and plans in place to divest additional assets within the next year. These asset sales should generate incremental cash the company may use to repay debt, and may be deleveraging depending on the sale multiples. Eldorado has an agreement in place to sell its Shreveport and Montbleu properties for $155 million, which S&P has incorporated into its assumptions. The company also has a letter of intent to sell land to VICI and mortgage the recently opened Caesars Forum Convention Center for total proceeds of about $504 million. S&P has not incorporated these transactions into its liquidity assessment as they remain subject to due diligence and definitive documentation. Other potential and expected asset sales, which S&P has not included in its forecast since there are no definitive agreements in place, include the sale of the LINQ Promenade and potentially other non-gaming assets, and the sale of two of the company's five Indiana properties. Eldorado expects the Indiana Gaming Commission will require the company to divest certain assets once the acquisition is completed. Further, Eldorado has indicated its intent to sell at least one Las Vegas Strip gaming property. Eldorado expects to enter into an agreement to provide VICI the right of first refusal to purchase the land associated with the Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood, Bally's Las Vegas, and The LINQ Las Vegas. Environmental, Social, and Governance (ESG) Credit Factors for this Credit Rating change: -- Health and Safety Factors The negative outlook reflects a significant deterioration in credit measures this year due to the temporary closure of casinos as a result of the coronavirus pandemic. Although many of the companies' casinos are now open and regional casinos have been experiencing year-over-year improvements in EBITDAR, there is a limited record of operating performance and a high degree of uncertainty around the sustainability of this recovery path through 2020 and into next year, especially given S&P's view that high unemployment will persist through at least 2021 and there is still risk of a second wave of the virus later this year. Further, S&P is forecasting adjusted leverage to be around 8x at the end of 2021 and for EBITDAR coverage of interest and rent to be in the mid-1x area, measures which provided limited cushion relative to downgrade thresholds. "We would consider lowering the ratings if we believed the company would sustain adjusted leverage above 8.5x, or if adjusted EBITDAR coverage of interest and rent fell below 1.5x. This could occur if recovery in the second half of 2020 is weaker than we are assuming in our base case, or if 2021 EBITDAR fell modestly below our forecast," S&P said. "We would consider an outlook revision to stable if we believed operating performance has stabilized across the portfolio, and we believed adjusted leverage would improve below 8x, providing more cushion against downside thresholds. Higher ratings are unlikely through at least 2021 given our forecast credit measures, although we would consider raising the ratings if adjusted leverage appears to be sustainably under 7x. This could occur if 2021 EBITDAR outperformed our current forecast by around 15%," the rating agency said. ELITE INFRASTRUCTURE: Seeks to Hire Murray Law as Special Counsel ----------------------------------------------------------------- Elite Infrastructure, LLC, seeks authority from the US Bankruptcy Court for the Northern District of Texas to hire James Murray, Esq. of Murray Law Firm as its special counsel. Mr. Murray will represent the Debtor in oil & gas related legal matters including foreclosure on lien claims. Mr. Murray will charge $450 per hour for his services. James Murray, Esq., sole member of Murray Law, assures 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. Mr. Murray can be reached at: James Murray, Esq. Murray Law Firm 311 S Duck St Stillwater, OK 74074 Phone: (405) 377-7000 About Elite Infrastructure, LLC Elite Infrastructure, LLC provides engineering, design, and construction of water treatment plants, midstream infrastructure and oil and gas facilities, offering comprehensive turnkey solutions and project management services. Based in Pacific Richardson, Texas, Elite Infrastructure, LLC, filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-31384) on May 8, 2020. In the petition signed by Eric Benavides, sole member, the Debtor estimated $50,000 in assets and $1 million to $10 million in liabilities. The Debtor is represented by Eric A. Liepins, Esq., at Eric A. Liepins, P.C. ENERGIZER HOLDINGS: S&P Rates New $600MM Senior Unsecured Notes B+ ------------------------------------------------------------------ S&P Global Ratings assigned its 'B+' issue-level rating and '5' recovery rating to Energizer Holdings Inc.'s proposed $600 million senior unsecured notes due 2028. The '5' recovery rating indicated S&P's expectation for modest (10%-30%; rounded estimate: 25%) recovery in the event of a payment default. The company will use the net proceeds from the proposed notes to refinance its $600 million 5.5% senior unsecured notes due 2025 and pay related expenses and fees. S&P viewed the transaction as leverage neutral. Pro forma for this transaction, Energizer has about $3.6 billion of total debt outstanding. All of S&P's existing ratings on the company, including its 'BB-' issuer credit rating and 'BB+' issue-level rating on its senior secured debt, remain unchanged. The outlook is negative. S&P's ratings on Energizer incorporate the company's premier brand name, given its No. 1 or No. 2 market positions globally, as well as its participation in a highly competitive and mature industry. S&P views the company as having strong positions in the premium and specialty segments and believe the battery business it acquired from Spectrum Brands Holdings Inc. allows it to expand into the lower-priced segment of the category to compete with Amazon and private-label rivals. S&P expects the level of discounting and promotional activity in the battery category to remain aggressive due to the fierce competition. Nevertheless, S&P believes Energizer's global manufacturing and distribution platform, strong brand recognition, and diversified customer base will support its profitability and provide it with competitive advantages. S&P expects the demand in the company's core battery business to remain relatively stable during the pandemic. The rating agency projects that Energizer's leverage will decline to about 5x by the end of fiscal year 2020 and continue improving to the mid-4x area by the end of fiscal year 2021 with funds from operations (FFO)-to-debt ratio in the low-teens percent area in both fiscal years 2020 and 2021. EVOKE PHARMA: FDA Approves NDA for GIMOTI Nasal Spray ----------------------------------------------------- Evoke Pharma, Inc. reports that the U.S. Food and Drug Administration has approved the New Drug Application for GIMOTI (metoclopramide) nasal spray, the first and only nasally-administered product indicated for the relief of symptoms in adults with acute and recurrent diabetic gastroparesis. The Company currently expects to launch commercial sales of GIMOTI in the fourth quarter of 2020 through its commercial partner Eversana Life Sciences Services, LLC. The FDA approval of GIMOTI allows Evoke to access its existing $5 million line of credit from EVERSANA, to support manufacturing and other aspects of GIMOTI's commercialization. As of May 31, 2020, the Company's cash and cash equivalents were approximately $4.7 million. Evoke believes, based on its current operating plan, that its cash and cash equivalents, together with the EVERSANA line of credit, will support the company's operations into 2021, without consideration of potential GIMOTI revenue. About Evoke Pharma Headquartered in Solana Beach, California, Evoke -- http://www.evokepharma.com/-- is a specialty pharmaceutical company focused primarily on the development of drugs to treat GI disorders and diseases. The Company is developing Gimoti, a nasal spray formulation of metoclopramide, for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in adult women. Evoke Pharma recorded a net loss of $7.13 million for the year ended Dec. 31, 2019, compared to a net loss of $7.57 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $4.64 million in total assets, $1.72 million in total current liabilities, and $2.92 million in total stockholders' equity. BDO USA, LLP, in San Diego, California, the Company's auditor since 2014, issued a "going concern" qualification in its report dated March 12, 2020, citing that the Company has suffered recurring losses from operations and has not generated revenues or positive cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. FLEX ACQUISITION: S&P Affirms 'B' ICR on Improved Performance ------------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on Hartsville, S.C.-based Flex Acquisition Holdings Inc. Improved operating performance and ongoing debt reduction have strengthen credit metrics in line with the rating. For the 12 months ended March 31, 2020, Flex's various operating segments steadily improved. Demand volumes across Flex's legacy paper and plastics businesses are stable while challenges associated with the Waddington Group acquisition seemingly peaked over the past year. Operating margins also notably improved with the pass-through of Waddington-related acquisition and integration costs and lower resin prices. This enabled Flex to pay down approximately $212 million of term loan debt and strengthen leverage below 7.5x, which is appropriate for the rating. Overall demand volumes are expected to remain steady, although product mix could significantly shift in a post-COVID-19 environment. S&P believes Flex's diverse end markets and the nondiscretionary nature of some of its products position the company to enjoy relatively stable demand volumes, despite ongoing COVID-19 related market uncertainty. S&P also expects Flex's product mix to shift considerably. It expects Flex's paper segment to be a strong beneficiary of current market dynamics, as grocery and food packaging demand (approximately 40% of total sales) remain elevated even as social restrictions ease. At-home food consumption will likely remain elevated relative to pre-COVID-19 demand. Flex's plastic segment should also benefit for the same reasons as several jurisdictions have indefinitely lifted plastic bag bans. While it does not know if or when they will be reinstituted, S&P believes heightened hygiene and sanitation concerns bode well for resin-based packaging as a more sanitary solution." On the downside, S&P expects a sustained drop in food service demand even as social restrictions are lifted. Food service (approximately 40%) includes products such disposable cutlery and flexible and rigid food containers. While it expects demand to improve from a likely April bottom, S&P does not expect food service to return to pre-COVID-19 demand over the next several years. S&P believes the expected shift in product mix will pressure operating margins over the next several years. Before the pandemic, Flex enjoyed higher margins on food service solutions relative to paper and plastic packaging due to the more specialized, greater value-added proposition of the category. It was one of the strengths associated with the acquisition of Waddington, which primarily focuses on food service packaging solutions. With the fall-off in food service demand likely to shift toward food packaging and grocery on a sustained basis, S&P believes operating margin contraction is likely due to the changing demand dynamic. S&P expects continued debt reduction supported by stable free cash flows. It believes Flex's broad end-market exposure supports continued debt reduction despite broader market uncertainty. Barring unforeseen acquisitions or shareholder rewards, S&P expects the company will continue to use cash flows to reduce debt over the next 12-18 months. The stable outlook reflects S&P's expectations that steady demand volumes will support Flex's sizable free cash flow generation and further debt reduction, such that leverage remains below 7.5x in the next 12 months. The company may pursue small bolt-on acquisitions as part of its growth strategy, but S&P's forecast does not contemplate large debt-funded transactions that would meaningfully weaken credit measures on a sustained basis. "We could lower our ratings on Flex if sales volumes decline or there is significant margin pressure, such that leverage remains above 7.5x on a sustained basis. This could occur if sales growth and operating margins are 150 basis points (bps) below our base-case scenario. We could also lower our ratings if Flex pursues acquisitions or shareholder rewards that raises leverage to aforementioned levels," S&P said. "Although unlikely, we could raise our rating on Flex if the company continues to strengthen its credit metrics, such that leverage approaches 5x on a sustained basis. This could occur if sales growth exceeds our base-case scenario by 100 bps and operating margins by 400 bps. In addition, we would require the company and its financial sponsor to explicitly commit to financial policies that support leverage around 5x," the rating agency said. FRE 355 INVESTMENT: Affiliate Taps Compass as Real Estate Agent --------------------------------------------------------------- Mora House, LLC, an affiliate of FRE 355 Investment Group, LLC, seeks authority from the U.S. Bankruptcy Court for the Northern District of California to hire a real estate agent. Among the assets of Debtor's estates are a parcel of developed real estate owned by FRE 355 commonly known as and located at 10718 Mora Drive, Los Altos, California, consisting of a newly constructed single family residence of approximately 9,677 square foot main residence consisting of 6 bedrooms, 8 full baths, 3 half baths, a separate in-laws living quarters with 800 square feet. Immediately adjacent to the Residence is a parcel of undeveloped real estate owned by Mora commonly referred to as lot 3, Parcel No. 331-14-067, consisting of 1.47 acres (the Mora House Property). Prior to the commencement of these bankruptcy cases, FRE 355 had entered into a Residential Listing Agreement Agreement with Joe Velasco of Compass, to sell the Residence. Prior to the commencement of these bankruptcy cases, Mora had entered into a Vacant Land Listing Agreement with Joe Velasco of Compass, to sell the Mora House Property The Velasco Listing Agreements both commenced on May 28, 2019 and expired on May 28, 2020. On May 27, 2020, FRE 355 entered into a new listing agreement concerning both the Residence and Mora House entered into a new listing agreement concerning the Mora House Property with Phil Chen, another agent affiliated with Compass. The Chen Listing Agreements both expire on August 27, 2020 and may be extended by further written agreement of the parties to each respective agreement. The listing agreement between Mr. Chen and FRE 355 provides for a combined list price of the real properties of both FRE 355 and Mora House of $17,500,000. An addendum to the FRE 355 listing agreement with Mr. Chen provides for the possible sale of the FRE 355 Residence alone without the sale of the Mora House Property for $14,999,999. An addendum to the Mora House listing agreement with Mr. Chen provides for the possible sale of the Mora House Property alone without the sale of the FRE 355 Residence for $3,500,000. The Chen Listing Agreements both provide that Compass as the Broker has agreed to pay any cooperating real estate broker representing a buyer of the Residence and the Mora House Property respectively, 2.5 percent of the sale price as a commission for any sale (i.e. the total commission of 5. percent shall be split equally with the buyer's broker). Neither Compass, nor Phil Chen, nor Joe Velasco, have any connections with the Debtor, its creditors, or other parties in interest herein, or its respective attorneys, or represent any interest adverse to the estate, according to court filings. The agents can be reached through: Phil Chen Compass RE 680 E. Colorado Blvd, Suite 150 Pasadena CA 91101 Mobile: 650-204-1920 Email: phil.chen@compass.com About FRE 355 Investment Group FRE 355 Investment Group, LLC, is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). FRE 355 Investment Group filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 20-50628) on April 13, 2020. In the petition signed by Melvin Vaugh, managing member, the Debtor was estimated to have $10 million to $50 million in both assets and liabilities. Michael W. Malter, Esq. at BINDER & MALTER, LLP, is the Debtor's counsel. GI DYNAMICS: Stockholders OK Delisting from the Official List ------------------------------------------------------------- GI Dynamics Inc. held its Special Meeting of Stockholders on June 21, 2020 and, in accordance with ASX Listing Rule 3.13.2, confirms that each of the resolutions put to stockholders as set forth in the Notice of Special Meeting and Proxy Statement dated May 26, 2020 (EST), including a resolution to approve the proposed delisting of the Company from the Official List of the Australian Securities Exchange, were passed. Update on Delisting from the Official List As first announced on May 11, 2020, the Board of Directors of the Company has for some time been considering whether it is in the best interests of the Company and its stockholders to remain listed on the Official List. For the reasons set out in the Proxy Statement and in a number of recent announcements, the Company applied to ASX for their approval to delist the Company from the Official List. In accordance with ASX's usual practice, ASX requested, amongst other conditions, that the Company obtain the approval of stockholders by way of a special resolution to delist the Company from the Official List. The Company subsequently sought, and has now obtained, the relevant stockholder approval required in order to delist from the Official List. With the approval now obtained, and a formal delisting application already submitted to ASX, the Company will be delisted from the Official List in accordance with the timetable below. Timetable to Delisting Event Date EDT Date AEST ----- -------- --------- Date Stockholder Approval was obtained 6/20/2020 6/21/2020 Trading Suspension Date 7/20/2020 7/21/2020 Delisting Date 7/21/2020 7/22/2020 Arrangements in place to sell CDIs in the lead up to the Delisting The Company is not in a position to operate a share buy-back or similar facility in connection with the Delisting. Stockholders that wish to sell their CDIs on ASX will need to do so before the time at which the Company's CDIs are suspended from trading on the Official List, being the time noted in the above timetable. If CDI holders do not sell their CDIs prior to the Trading Suspension Date, their CDIs will need to be converted to shares of common stock in the Company. Further details on this process will be provided in the lead up to the Delisting Date. Update on Ongoing Funding Arrangements As has been announced by the Company on a number of occasions, the Company will need to raise additional funds to those secured under the recent Bridge Note (as announced on June 19, 2020) in order to continue to implement its business plan and to continue to carry on business. If the necessary funds are not raised, the Company may need to cease business operations and be wound up. Further to the announcement of June 19, 2020, the Company will continue to update stockholders should there be any material developments in relation to a further fundraising. About GI Dynamics Founded in 2003 and headquartered in Boston, Massachusetts, GI Dynamics, Inc. (ASX:GID) is a developer of EndoBarrier, an endoscopically-delivered medical device for the treatment of type 2 diabetes and the reduction of obesity. EndoBarrier is not approved for sale and is limited by federal law to investigational use only. EndoBarrier is subject to an Investigational Device Exemption by the FDA in the United States and is entering concurrent pivotal trials in the United States and India. GI Dynamics reported a net loss of $17.33 million for the year ended Dec. 31, 2019, compared to a net loss of $8.04 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $5.65 million in total assets, $8.71 million in total liabilities, and a total stockholders' deficit of $3.06 million. Wolf and Company, P.C., in Boston, Massachusetts, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 26, 2020 citing that the Company has suffered losses from operations since inception and has an accumulated deficit and working capital deficiency that raise substantial doubt about the Company's ability to continue as a going concern. HOLOGENIX LLC: Seeks to Hire Buchalter as Special Patent Counsel ---------------------------------------------------------------- Hologenix, LLC, seeks authority from the United States Bankruptcy Court for the Central District of California to hire Buchalter, as its special patent counsel. Buchalter will aid the Debtor with all of its patent filings and prosecutions. Additionally, the Debtor requires the aid of the counsel to perform transactional work related to its intellectual property. The primary attorneys at Buchalter that will be working with the Debtor are J. Rick Tache and Kari L. Barnes. The primary attorneys at Buchalter that will be working with the Debtor are J. Rick Tache and Kari L. Barnes. Mr. Tache's hourly billing rate is $800 and Ms. Barne's hourly rate is $545. Additionally, Buchalter may from time to time have to engage the services of international counsel located in the United Kingdom to aid the Debtor and Buchalter with international patent issues. Buchalter will engage the services of Forresters law firm and will work with Russell Sessford. Mr. Sessford's billing rate is GBP599 per hour and the hourly rates of other professionals are GBP599 to GBP125. Buchlater is requesting a post-petition retainer in the amount of $5,000. Mr. Tache, a partner at Buchalter, 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 have an interest materially adverse to the interest of the estate. Buchalter can be reached at: Bernard D. Bollinger, Jr., Esq. Mirco Haag, Esq. BUCHALTER, A Professional Corporation 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-2457 Telephone: (213) 891-0700 Facsimile: (213) 896-0400 E-mail: bbollinger@buchalter.com bharvey@buchalter.com About Hologenix, LLC Hologenix, LLC is the inventor of Celliant technology (https://celliant.com), a patented, clinically-tested textile technology that harnesses and recycles the body's natural energy. Based in Pacific Palisades, California, Hologenix, LLC filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-13849) on April 22, 2020. In the petition signed by Seth Casden, CEO, the Debtor estimated $1 million to $10 million in both assets and liabilities. John-Patrick M. Fritz, Esq. at Levene, Neale, Bender, Yoo & Brill L.L.P. represents the Debtor as counsel. HORIZON GLOBAL: Moody's Withdraws 'C' Corp. Family Rating --------------------------------------------------------- Moody's Investors Service withdrew its ratings for Horizon Global Corporation, including the C corporate family rating, C-PD Probability of Default Rating and Caa3 rating on its senior secured first lien term loan. RATINGS RATIONALE Moody's has decided to withdraw the ratings for its own business reasons. Horizon, headquartered in Plymouth, Michigan, is a publicly-traded manufacturer and distributor of towing, trailering, cargo management and other products primarily for the automotive market. Net sales for the last twelve months ended March 2020 were approximately $676 million. The following ratings were withdrawn: Withdrawals: Issuer: Horizon Global Corporation Corporate Family Rating, Withdrawn, previously rated C Probability of Default Rating, Withdrawn, previously rated C-PD Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-4 Senior Secured 1st Lien Bank Credit Facility, Withdrawn, previously rated Caa3 (LGD3) Outlook Actions: Issuer: Horizon Global Corporation Outlook, Changed to Rating Withdrawn From Stable ICONIX BRAND: Stockholders Pass All Proposals at Annual Meeting --------------------------------------------------------------- At the Annual Meeting of Stockholders of Iconix Brand Group, Inc. held on June 16, 2020, the Company's stockholders: (a) elected Justin Barnes, Peter F. Cuneo, Drew Cohen, Robert C. Galvin, and James Marcum as directors of the Company to hold office until the Company's Annual Meeting of Stockholders to be held in 2021 and until their respective successors have been duly elected and qualified; (ii) ratified the appointment of BDO USA, LLP as the Company's independent registered public accountants for the fiscal year ending Dec. 31, 2020; and (iii) approved, on a non-binding advisory basis, the resolution approving named executive officer compensation. About Iconix Brand Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including: CANDIE'S, BONGO, JOE BOXER, RAMPAGE, MUDD, MOSSIMO, LONDON FOG, OCEAN PACIFIC, DANSKIN, ROCAWEAR, CANNON, ROYAL VELVET, FIELDCREST, CHARISMA, STARTER, WAVERLY, ZOO YORK, UMBRO, LEE COOPER, ECKO UNLTD., MARC ECKO, ARTFUL DODGER, and HYDRAULIC. In addition, Iconix owns interests in the MATERIAL GIRL, ED HARDY, TRUTH OR DARE, MODERN AMUSEMENT BUFFALO and PONY brands. The Company licenses its brands to a network of retailers and manufacturers. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and brand loyalty. Iconix Brand reported a net loss attributable to the company of $111.51 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the company of $100.52 million for the year ended Dec. 31, 2018. As of March 31, 2020, Iconix Brand had $465.25 million in total assets, $712.25 million in total liabilities, $31.34 million in redeemable non-controlling interest, and a total stockholders' deficit of $278.35 million. BDO USA, LLP, in New York, NY, the Company's auditor since 1998, issued a "going concern" qualification in its report dated March 30, 2020 citing that the Company has suffered recurring losses and has certain debt agreements which require compliance with financial covenants. The COVID 19 pandemic is expected to have a material adverse effect on the Company's results of operation, cash flows and liquidity, including compliance with future debt covenants. These conditions raise substantial doubt about the Company's ability to continue as a going concern. INLAND FAMILY: Seeks to Hire Holt & Associates as Accountant ------------------------------------------------------------ Inland Family Practice Center LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Mississippi to hire Holt & Associates as its accountant. Services the accountant will render are: a. assist in filing state and federal tax returns; b. assist in preparing the filing of all required state and federal payroll tax reports as needed; c. assist in preparing the filing of all required financial reports and operating reports, including Monthly Operating Reports; d. provide general accounting services. The firm will be paid at these hourly rates: Julie Uher, CPA $150 Staff Accountants $95 Bookkeepers $75 The firm does not represent any interest adverse to the Debtor, according to court filings. The firm can be reached through: Julie Uher, CPA Holt & Associates 2815 Mississippi Highway 15 N Laurel, MS 39440 Phone: (601) 649-3000 About Inland Family Practice Center Inland Family Practice Center, LLC -- http://www.inlandfamilypractice.com/-- is a privately-owned family practice clinic serving Hattiesburg and South Eastern Mississippi. Established in 2008, the company has a state of the art facility in Hattiesburg. Inland Family Practice Center filed a Chapter 11 petition (Bankr. S.D. Miss. Case No. 19-50020) on Jan. 3, 2019. In the petition signed by Ikechukwu Okorie, sole member, the Debtor estimated up to $50,000 in assets and $1 million to $10 million in liabilities. The Debtor tapped Sheehan Law Firm, PLLC as its legal counsel, and Mitchell Day Law Firm, PLLC as its special counsel. INNOVATIVE WATER: S&P Lowers ICR to 'CCC+'; Outlook Negative ------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating on Innovative Water Care Global Corp. to 'CCC+' from 'B-' to reflect its view that, absent a turnaround in operating performance, the company's capital structure is unsustainable and liquidity will be constrained due to weak operating performance. S&P is also lowering its issue-level rating on IWC's $360 million first-lien term loan due February 2026 to 'CCC+' from 'B-' with a recovery rating of '3' (reflecting a rounded estimate recovery of 50% in the event of a payment default), and is lowering its issue-level rating on the company's $100 million second-lien term loan due February 2027 to 'CCC' from 'CCC+' with a recovery rating of '5' (rounded estimated recovery of 10%)." Operating performance has been weaker than expected and will likely remain pressured in 2020. S&P expects performance to remain weak in 2020 given operating challenges in the company's Residential segment and costs associated with transitioning to a stand-alone company. These factors will persist and competition will remain intense, likely leading to further shelf space losses at its largest customer and offsetting the benefits of a good season for residential pool treatment demand. The lower EBITDA in 2019 was driven by significantly lower volumes with its largest customer, substantial investments related to new contract wins at large customers, cost inflation on raw materials, and costs incurred to separate IWC from its prior owner, which will continue into 2020. Although the company's EBITDA improved in the first quarter of fiscal 2020 compared to the trough levels in the first quarter of 2019 as the new management team executed its operating plan, performance was hurt by store closures related to the coronavirus pandemic, especially in the Europe, Middle East, and Africa (EMEA) region and North America. Furthermore, the company's largest customer instituted a change in its stocking program resulting in further volume declines in the quarter. S&P expects the company's profitability to continue to improve sequentially. However, absolute profitability will remain substantially lower compared to expectations since the company's carve-out from Lonza Group AG in March 2019. Elevated operating costs and high fixed charges lead to an expectation of negative FOCF. S&P forecasts EBITDA margins will improve by more than 150 basis points (bps) in fiscal 2020 despite the rating agency's expectation that the company will continue to incur some carve-out related operating expenses for the separation of certain functions such as finance and IT from its prior owners, which is still underway. Moreover, certain regulatory and legal costs will also burden the company's profitability. S&P expects these headwinds to be offset by savings resulting from operational improvements, including third-party logistics-related freight savings, lower warehouse rent, overtime reductions, better sourcing programs with key raw material suppliers and improved plant efficiencies through labor reductions, in-house packaging savings, and utility savings. Still, this level of profitability is significantly lower than S&P's previous expectations, which incorporated its assumption that the company would incur minimal one-time transition-related costs from its carve-out and significantly improve profitability as a stand-alone entity from the start of fiscal 2020. Moreover, profitability in fiscal 2020 will be hampered by lower volumes within the company's higher-margin industrial, commercial, municipal, and surface water (ICMS) business because of mandated commercial swimming pool closures because of the pandemic. IWC's liquidity over the next 12 months will be further constrained by working-capital related payments owed to Lonza under the purchase agreement. This supports S&P's expectation that the company will not generate enough EBITDA to cover its interest expense plus capital expenditures (capex) for the year, likely leading to at least $35 million of negative FOCF, constraining its liquidity position. The capital structure is unsustainable and liquidity is constrained. Adjusted leverage remained high at 14.7x as of March 31, 2020, above S&P's expectations of 9x-10x with interest coverage staying weak at 0.9x for the same period. While IWC does not face any maturities until the asset-based lending (ABL) facility matures in 2024, S&P's expectation for sustained high leverage and negative free cash flow generation, absent a strong recovery in operating and financial performance, indicates that the company's financial commitments are unsustainable in the long term. S&P believes the group will need further cash sources to cover fixed costs, debt service expenses and minimum capex. "In addition, we see only limited opportunity for it to improve its fixed-charge coverage ratios absent a lower interest burden. Therefore, we believe there is heightened risk of a debt restructuring if operating performance does not materially improve after 2020, or if liquidity remains pressured by weak cash flow generation and the company's owners don't continue to contribute equity to cover any liquidity shortfall," S&P said. S&P's negative outlook reflects the possibility that it could lower the ratings within the next 12 months if near-term default scenarios become more likely, resulting from liquidity issues or the company being unable to turn around operating performance. "We could lower the ratings if a near-term default scenario appears likely. This could happen if the company continues to incur additional costs to separate its operations from the Lonza Group or to service its largest customers, leading to depressed EBITDA. It could also occur if we no longer believed that the sponsor would offset a liquidity shortfall over the next 12 months with incremental equity contribution such that a distressed exchange or a balance sheet restructuring appears more likely over the next 12 months," S&P said. "We could raise the ratings if operating performance improves, leading to positive FOCF, adjusted leverage below 9x, and EBITDA interest coverage approaching 1.5x. This could occur if the company successfully implements its operating plan and steadily grows EBITDA as a result of lower one-time transition-related costs and cost savings from logistics, sourcing, and other operational improvements," the rating agency said. IRON MOUNTAIN: S&P Rates New $1.8BB Senior Unsecured Notes 'BB-' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level ratings and '3' recovery rating to Iron Mountain Inc.'s proposed $1.8 billion senior unsecured notes with maturities between 2028 and 2030. The '3' recovery rating on the senior unsecured notes reflects S&P's expectations of meaningful (50%-70%; rounded estimate: 50%) recovery in its simulated default scenario. The company intends to use the proceeds from the proposed notes to redeem its $1.0 billion senior subordinated notes due 2024, $500 million senior unsecured notes due 2021, and repay a portion of outstanding revolving credit facility borrowings. "All of our existing ratings on Iron Mountain are unchanged. Our 'BB-' issuer credit rating on the company reflects its position as the global market leader in the records management business as well as its high leverage, acquisitive growth strategy, above-average capital intensity for a business services company, and shareholder-favoring dividend policies," S&P said. The company benefits from low customer attrition, high switching costs, favorable EBITDA margins, and long-term storage contracts that provide stable and recurring revenue. These strengths are somewhat offset by the increasing secular trend toward digital storage that could negatively affect its long-term prospects. The negative outlook reflects uncertainty regarding IRM's operating performance amid expected earnings volatility because of the ongoing COVID-19 pandemic and the company's restructuring program, as well as its financial policy track record of favoring debt-financed investments and dividend payments over leverage reduction. "We could lower our rating on IRM within the next six to 12 months if credit measures remain pressured and we become increasingly confident that adjusted leverage will remain above 6x over the next 12-18 months or should we forecast a financial maintenance covenant violation. In order to revise our outlook to stable, we would need to see strong operating performance and a demonstrated commitment to sustain leverage below 6x while IRM realizes benefits from its extensive restructuring program," S&P said. ISSUE RATINGS - RECOVERY ANALYSIS Key analytical factors -- S&P's simulated default scenario contemplates a default occurring in 2024 due to financial stress arising from a cyclical downturn and an accelerating shift away from paper records storage. -- Pro forma for the debt refinancing about 27% of the company's debt capitalization is senior secured. -- U.S. subsidiaries generally guarantee Iron Mountain's U.S. secured and unsecured debt on a pari passu basis. The company's foreign subsidiaries do not guarantee Iron Mountain's senior unsecured notes issued in the U.S. -- The liens granted to its senior secured revolving credit facility and term loan lenders are modest and generally limited to intercompany claims and the capital stock of domestic and first tier foreign subsidiaries. Additionally, given that the U.S. domestic subsidiaries guarantees provided to the senior secured and senior unsecured debtholders rank equally, S&P attributed negligible recovery from liens on the capital stock of U.S. subsidiaries. -- Certain foreign subsidiaries are direct obligors under the senior secured revolving credit facility and term loan. In the event of a default, the senior secured revolving credit facilities lenders' recoveries could benefit from their claims on foreign borrowers for their outstanding borrowings. However, under S&P's base case, it makes a conservative assumption and assumes revolving credit facility borrowings are from U.S. based borrowers. -- S&P's recovery ratings on the Canadian dollar (CAD)-denominated senior notes and the British pound (GBP)-denominated senior notes reflect direct credit support from the issuers in those respective countries along with a parent guarantee from Iron Mountain. -- Given the company has significant unencumbered real estate from of its storage facilities as well as recent growth investments in data centers, S&P now includes its stressed estimate of value realizable from these assets. Simulated default assumptions -- Simulated year of default: 2024 -- EBITDA at emergence: $902 million -- EBITDA multiple: 6x -- An 85% draw on the revolving credit facility at the time of default -- Refinancing of debt maturing before 2024 under similar terms prior to maturity -- Modest operating lease rejection resulting in approximately $170 million of unsecured claims in a default scenario -- Additional value from property, plant and equipment based on about 50% realization rate on net book value: $1.4 billion Simplified waterfall -- Net enterprise value (after 5% administrative costs): $6.5 billion -- Valuation split at U.S./U.K., Canada/Australia, other entities: 66%/12%/22% -- Priority claims (e.g., accounts receivable securitization, mortgages, etc.): $353 million -- Value available to senior secured claims: $1.8 billion (including unpledged foreign subsidiary stock value) -- Secured first-lien debt claims: $2.6 billion -- Recovery expectations: 70%-90% (rounded estimate: 70%) -- Net value available to senior unsecured claims (excluding U.K. and Canadian subsidiary issued notes): $4.3 billion -- Senior unsecured claims, including lease rejection claims: $8.3 billion -- Recovery expectations: 50%-70% (rounded estimate: 50%) -- Value available to Canadian subsidiary issued senior notes: $467 million -- Canadian subsidiary issued notes claims: $176 million. Please note that these noteholders receive more than 65%. However, S&P caps its recovery ratings for issuers rated 'BB-' or higher at '3' in accordance with its criteria -- Recovery expectations: 50%-70% (rounded estimate: 65%) -- Value available to U.K. subsidiary issued senior notes: $498 million. -- U.K. subsidiary priority claims: $151 million -- U.K. subsidiary issued senior notes claims: $495 million. Please note that these noteholders receive more than 65%. However, S&P caps its recovery ratings for issuers rated 'BB-' or higher at '3' in accordance with its criteria -- Recovery expectations: 50%-70% (rounded estimate: 65%) Note: All debt amounts include six months of prepetition interest. Collateral value equals an asset pledge from obligors after priority claims. S&P assumes usage of 85% for cash flow revolvers at default. J.C. PENNEY: Reopens Abilene, Texas Branch ------------------------------------------ Laura Gutschke, writing for Abilene Reporter-News, reports that the Plano, Texas-based J.C. Penney temporarily closed its locations across the country on March 18, 2020, in response to local and state stay-at-home orders because of the coronavirus pandemic. On June 3, 2020, the facebook page of the Mall of Abilene in Abilene, Texas, announced that the store is opening under modified hours, which is noon to 7 p.m. Monday through Saturday and noon to 6 p.m. Sunday. The company is providing associates with masks and gloves, and hand sanitizer is available to promote a healthy work and shopping environment, the release said. Stores are operating in staggered shift schedules to minimize associate contact and have implemented enhanced cleaning with a focus on high-touch areas. Plexiglass shields have been added at registers, and new signage promotes social distancing, the release said. All J.C. Penney stores also offer designated shopping hours for seniors, expectant mothers and those with underlying health conditions from 11 a.m. to noon on Wednesdays and Fridays, the release said. About J.C. Penney J.C. Penney Corporation, Inc., is an American retail company, founded in 1902 by James Cash Penney and today engaged in marketing apparel, home furnishings, jewelry, cosmetics, and cookware. The company was called J.C. Penney Stores Company from 1913 to 1924, when it was reincorporated as J.C. Penney Co. On May 15, 2020, J.C. Penney announced that it has entered into a restructuring support agreement with lenders holding 70% of JCPenney's first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the Plan, the Company and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney JAGUAR HEALTH: Board Adopts New Inducement Award Plan ----------------------------------------------------- The Board of Directors of Jaguar Health, Inc., adopted the New Employee Inducement Award Plan and, subject to the adjustment provisions of the Inducement Award Plan, reserved 500,000 shares of the Company's common stock for issuance pursuant to equity awards granted under the Inducement Award Plan. The Inducement Award Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Award Plan provides for the grant of nonstatutory stock options, restricted stock units, restricted stock, and performance shares. The terms and conditions of the Inducement Award Plan are substantially similar to the Company's 2014 Stock Incentive Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award rules. On June 16, 2020, the Board also adopted forms of award agreements for use with the Inducement Award Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the only persons eligible to receive grants of equity awards under the Inducement Award Plan are individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. About Jaguar Health Jaguar Health, Inc. -- http://www.jaguar.health/-- is a commercial stage pharmaceuticals company focused on developing novel, sustainably derived gastrointestinal products on a global basis. The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc., focuses on developing and commercializing proprietary human gastrointestinal pharmaceuticals for the global marketplace from plants used traditionally in rainforest areas. Its Mytesi (crofelemer) product is approved by the U.S. FDA for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. Jaguar reported a net loss of $38.54 million for the year ended Dec. 31, 2019, compared to a net loss of $32.15 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $33.28 million in total assets, $16.67 million in total liabilities, $10.37 million in series A redeemable convertible preferred stock, and $6.23 million in total stockholders' equity. Mayer Hoffman McCann P.C., in San Francisco, California, the Company's auditor since 2019, issued a "going concern" qualification in its report dated April 2, 2020 citing that the Company has experienced losses since inception, significant cash used in operations, and is dependent on future financing to meet its obligations and fund its planned operations. These conditions raise substantial doubt about its ability to continue as a going concern. JARCO HARVESTING: Case Summary & 9 Unsecured Creditors ------------------------------------------------------ Debtor: Jarco Harvesting, Inc. 2310 Valholla Court Abilene, TX 79606 Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court Northern District of Texas Case No.: 20-10107 Debtor's Counsel: Max R. Tarbox, Esq. TARBOX LAW, P.C. 2301 Broadway Lubbock, TX 79401 Tel: (806) 686-4448 Email: jessica@tarboxlaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Richard Wendland, president. A copy of the petition containing, among other items, a list of the Debtor's nine unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/LYzadc JC PENNY: Taps Cushman & Wakefield, B. Riley as Real Estate Advisor ------------------------------------------------------------------- J. C. Penney Company, Inc. and its debtor-affiliates seeks authority from the US Bankruptcy Court for the Southern District of Texas to employ Cushman & Wakefield U.S., Inc. and B. Riley Real Estate, LLC as their real estate advisors. J. C. Penney requires the advisors to: (a) consult with the Debtors to discuss the Debtors' goals, objectives, and financial parameters in relation to the Debtors' owned and leased properties; (b) negotiate with the landlords of leased properties and other third parties on behalf of the Debtors in order assist the Debtors with respect to monetary lease modifications, non-monetary lease modifications, early termination rights, rent deferrals, sales, and landlord consents, on terms desired by the Debtors; (c) market the Debtors' leased and owned properties as deemed necessary by the Debtors; and (d) report periodically, but in any event as often as reasonably requested by the Debtors, to the Debtors regarding the status of the services provided and details related thereto. Joint real estate advisors' fees are: (a) Retainer: A non-refundable retainer equal to $100,000. (b) Sales. For each sale of a lease or sale of an owned property, the Real Estate Advisors shall earn a sales commission of 2.5 percent of Gross Proceeds up to a $10 million cap, plus 1.5 percent of the Gross Proceeds above $10 million and up to and including $20 million, plus 1% of the Gross Proceeds above $2 million, calculated on a per-transaction basis. (c) Purchase and Sale Agreement Modifications. For each Restructured PSA resulting in the sale of relevant property for Gross Proceeds in excess of the stated anticipated Gross Proceeds pursuant to the applicable Restructured PSA, the Real Estate Advisors shall earn and be paid a sales commission of 7% of the amount equal to the net increase in Gross Proceeds created by a Restructured PSA relative to the corresponding Existing PSA. (d) Fees. The Real Estate Advisors shall not be responsible for any transactional costs incurred by the Debtors in connection with their retention and services. The Debtors shall reimburse the Real Estate Advisors for their respective reasonable and documented out-of-pocket expenses (including, but not limited to legal, mailing, marketing, and travel expenses) incurred in connection with their retention and services. For clarification, this includes, but is not limited to, responding to any litigation or other type of inquiry, deposition, or otherwise relating to the services or the Agreement. Any reimbursable expenses shall be paid to the Real Estate Advisors within thirty (30) days of the Real Estate Advisors' receipt of invoice. Additional BRRE Fees are: (a) Monetary Lease Modifications: BRRE shall earn and be paid 2.5 percent of occupancy cost savings per applicable lease (but excluding occupancy cost savings resulting from a rent deferral). (b) Non-Monetary Lease Modifications. BRRE shall earn and be paid $5,000 per applicable lease. (c) Early Termination Rights. BRRE shall earn and be paid 50 percent of one month's gross occupancy cost per lease. (d) Rent Deferral. For each lease modification that defers any portion of rent for a period of deferral of one year or more, BRRE shall earn and be paid a fee of $500 per applicable lease. (e) Landlord Consents. BRRE shall earn and be paid a fee of $500 per applicable lease. Each real estate advisor is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors or the Debtors' estates, according to court filings. The advisors can be reached through: Mark Gilbert Cushman & Wakefield U.S., Inc. 333 SE 2nd Avenue, Suite 3900 Miami, FL 33131 Office: +1 (305) 533-2866 Michael Jerbich B. Riley Real Estate, LLC 11100 Santa Monica Blvd., Suite 800 Los Angeles, CA 90025 Phone: (310) 966-1444 Fax: (310) 966-1448 About J. C. Penney Company, Inc. J. C. Penney Company, Inc. is an American department store chain with 846 locations in 49 U.S. states and Puerto Rico. In addition to selling conventional merchandise, JCPenney offers large Fine Jewelry departments, The Salon by InStyle, and Sephora inside JCPenney. J. C. Penney Company, Inc. and its affiliates, filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182) on May 15, 2020. At the time of filing, the Debtor estimated $1,000,000,001 to $10 billion in both assets and liabilities. Matthew D Cavenaugh, Esq. at Jackson Walker LLP represents the Debtor as counsel. K&N PARENT: S&P Downgrades ICR to 'CCC'; Outlook Negative --------------------------------------------------------- S&P Global Ratings lowered its ratings on car, truck, and motorcycle aftermarket parts provider K&N Parent Inc., including its issuer credit rating to 'CCC' from 'CCC+', and its issue-level ratings on the company's first-lien term loan and revolver to 'CCC+' from 'B-', and on the second-lien term loan to 'CC' from 'CCC-'. At the same time, S&P removed its ratings from CreditWatch, where it had placed them with negative implications on March 23, 2020. S&P believes K&N will generate only a small amount of EBITDA in 2020, its liquidity will be constrained, and it could pursue a debt restructuring within the next 12 months. In addition to the weakening sales from the coronavirus pandemic, the company's operating performance continues to deteriorate as growth in sales of lower-margin original equipment manufacturer (OEM) products has outpaced aftermarket sales. Selling, general, and administrative (SG&A) expenses also remain high due to increased online advertising, high OEM sales commissions, and increased compensation expenses. While the company has a new management team in place and has moved operations to Texas to reduce costs, it is not clear whether such efforts can offset these issues. The company is likely facing more competition in some of its products lines and S&P views a recovery of its high-margin and highly discretionary aftermarket products as challenging in the current economic environment. As a result, adjusted leverage will likely stay well above 12x and the company will continue to burn cash. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety The negative outlook reflects the risk that K&N would pursue a distressed debt restructuring within the next 12 months due to its elevated debt leverage and liquidity challenges. "We could lower the rating if the company announces a debt exchange or other restructuring transaction that we view as tantamount to a default. We could also lower the rating if the company cannot meet or amend its first-lien debt covenant," S&P said. "Before raising our rating on K&N, we would expect the company to demonstrate a significant and sustained improvement in its performance as well as a material improvement in liquidity and/or a waiver or amendment of its covenants," the rating agency said. LCF LABS: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: LCF Labs Inc. 895 S. Rockefeller Avenue Unit 103 Ontario, CA 91761 Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Central District of California Case No.: 20-14295 Debtor's Counsel: Neil C. Evans, Esq. LAW OFFICES OF NEIL C. EVANS 13351 D. Riverside Drive, Ste. 612 Sherman Oaks, CA 91423 Tel: (818) 802-8333 E-mail: evanstnt@aol.com Estimated Assets: $1 million to $10 million Estimated Liabilities: Unspecified The petition was signed by Qusay Al Qaza, CEO. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/g5btqc LNG LTD: Magnolia LNG Sale Falls Through; New Buyer Emerges ----------------------------------------------------------- Kristen Mosbruker, writing for The Advocate, reports that LNG Ltd. cancelled a deal to sell its operations in Lafayette, Louisiana, in May 2020. The Australian parent company behind the Magnolia LNG project near Lake Charles canceled a deal to sell the operation to Global Energy Megatrend Ltd., a British business with a significant presence in Lafayette. Global Energy was expected to pay $2.25 million to LNG Ltd. by May 15, but on May 25 the deal was terminated due to the buyer's "failure to close the transaction within the required timeframe." One day later, Magnolia LNG Holdings LLC, a Delaware-based entity incorporated on May 7, 2020, stepped up and bought Magnolia LNG for $2 million. The new purchase agreement includes an unsecured non-interest bearing promissory note worth $1.3 million if the Magnolia LNG project raises enough capital to begin construction. The new buyer also agreed to work with LNG Ltd. on a potential recapitalization of the company expected to be completed on Nov. 30. The deal includes the permits, land, detailed engineering plans and a contract for development, in addition to the underlying technology related to the LNG project. Former proposed buyer Global Energy had described itself as an integrated natural gas company that has been leasing U.S. natural gas fields and investing in pipelines that lead to Louisiana ports and LNG export terminals. Global Energy Megatrend co-founders include Lafayette businessmen Bill Miller of Miller Energy LLC, Ben Blanchet and Eddie Moses of Miller Thomson & Partners LLC. It also has co-founders in London. Before that, LNG Ltd. had expected to be sold in a $75 million deal to Singapore-based LNG9 Ltd., but investors pulled out of that deal after a loan fell through. About LNG Ltd. Liquefied Natural Gas Limited (LNGL) -- https://www.lnglimited.com.au/site/content/ -- operates as a natural gas exploring company. The Company develops and operates liquefied natural gas production projects. LNG Ltd. in April 2020 appointed administrators who were tasked with dealing with a potential insolvency. PricewaterhouseCoopers was appointed as the voluntary administrators in late April. The company was on track to run out of money in May. LOGISTICS TRANSPORTS: Taps Machi & Associates as Bankruptcy Counsel ------------------------------------------------------------------- Logistics Transports Group, LLC, seeks authority from the US Bankruptcy Court for the Northern District of Texas to hire Machi & Associates, P.C., as its bankruptcy counsel. Machi will represent the Debtor in its bankruptcy proceedings. Machi will be paid at these rates: Ted Machi $300 Daniel S. Wright $300 Kim Machi $80 Kimberly Pittman $80 Daniel S. Wright, ESq. of Machi & Associates, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Daniel S. Wright, Esq. Machi & Associates, P.C. 1521 N. Cooper St., Ste. 550 Arlington, TX 76011 Phone: 817-335-8880 Email: dwright@tedmachi.com About Logistics Transports Group, LLC Based in Oak Leaf, Texas, Logistics Transports Group, LLC, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-41995) on June 8, 2020, listing under $1 million in both assets and liabilities. Daniel S. Wright, Esq. at Machi & Associates, P.C. represents the Debtor as counsel. MAN HANDS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Man Hands, LLC 109 S. Main Street Mansfield, TX 76063 Business Description: Man Hands, LLC is a privately hedl company that operates in the food service industry. Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Northern District of Texas Case No.: 20-42090 Debtor's Counsel: John P. Henry, Esq. HENRY & REGEL, LLC 2100 Ross Ave., Suite 800 Dallas, TX 75201 Tel: 972-299-8445 E-mail: John@henryregel.com Estimated Assets: $50,000 to $100,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Jason Boso, president and manager. A copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/fwDt1z MASTER'S COACH: Seeks to Hire Genova & Malin as Legal Counsel ------------------------------------------------------------- The Master's Coach, Ltd. seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Genova & Malin as its legal counsel. The Debtor needs Genova & Malin to: a) give the Debtor legal advice with respect to its powers and duties in its financial situation and management of the property of the Debtor; b) take necessary action to void liens against the Debtor's property; c) prepare and/or amend, on behalf of the Debtor, necessary petitions, schedules, orders, pleadings and other legal papers; and d) perform all other legal services for your Applicant as debtor which may be necessary. The Debtor desires to employ Genova & Malin under a general retainer. Genova & Malin does not hold or represent any interest adverse to the Bankruptcy Estate and is a disinterested person, according to court filings. The firm may be reached at: Andrea B. Malin, Esq. Michelle L. Trier, Esq. GENOVA & MALIN Hampton Business Center 1136 Route 9 Wappingers Falls, NY 12590 Tel: (845) 298-1600 About The Master's Coach, Ltd. Based in Wallkill, New York, The Master's Coach, Ltd. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 20-35614) on June 5, 2020. At the time of filing, the Debtor estimated in assets and $500,001 to $1 million in liabilities. Michelle L Trier, Esq. at Genova & Malin represents the Debtor as counsel. MOHEGAN GAMING: Provides Prelim. Operating Trends for Mohegan Sun ----------------------------------------------------------------- In order to ensure the health and safety of its employees, guests and the surrounding communities in which Mohegan Gaming & Entertainment operates, consistent with directives from various government bodies, on March 18, 2020, MGE announced its decision to temporarily suspend operations at its North American owned, operated and managed properties. During these closures, MGE took steps to significantly reduce expenses to protect its financial position, including the implementation of significant reductions in variable operating expenses, furloughs of approximately 98% of its workforce, reduction in capital expenditures and suspension of growth investments, among other initiatives. In late May 2020, two of MGE's managed properties, Paragon Casino Resort and ilani Casino Resort, reopened, and on June 1, 2020, MGE's flagship property, Mohegan Sun Casino, partially reopened. Based on data that is currently available, the following information reflects estimated, preliminary operating trends for Mohegan Sun from its opening date on June 1, 2020 through June 14, 2020 compared to the same period in 2019: * Gaming revenues for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) increased approximately 10% compared to the prior year period; * Net revenues for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) declined approximately 20% compared to the prior year period; * Income from operations for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) increased approximately 15% compared to the prior year period; * Adjusted EBITDA for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) increased approximately 10% compared to the prior year period; * Operating margin for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) increased approximately 900 basis points compared to the prior year period; and * Adjusted EBITDA margin for Mohegan Sun since reopening (June 1, 2020 through June 14, 2020) increased approximately 1,000 basis points compared to the prior year period. About Mohegan Gaming & Entertainment The Mohegan Tribal Gaming Authority d/b/a Mohegan Gaming & Entertainment -- http://www.mohegangaming.com/-- is primarily engaged in the ownership, operation and development of integrated entertainment facilities, both domestically and internationally, including: (i) Mohegan Sun in Uncasville, Connecticut, (ii) Mohegan Sun Pocono in Plains Township, Pennsylvania, (iii) Niagara Fallsview Casino Resort, Casino Niagara and the future 5,000-seat Niagara Falls Entertainment Centre, all in Niagara Falls, Canada, (iv) Resorts Casino Hotel in Atlantic City, New Jersey, (v) ilani Casino Resort in Clark County, Washington, (vi) Paragon Casino Resort in Marksville, Louisiana and (vii) INSPIRE Entertainment Resort, a first-of-its-kind, multi-billion dollar integrated resort and casino under construction at Incheon International Airport in South Korea. Mohegan Tribal reported a net loss of $2.37 million for the fiscal year ended Sept. 30, 2019. As of Dec. 31, 2019, the Company had $2.85 billion in total assets, $2.71 billion in total liabilities, and $145.96 million in total capital. * * * As reported by the TCR on May 14, 2020, S&P Global Ratings lowered all of its ratings on casino operator Mohegan Tribal Gaming Authority (MTGA) and hotel owner Mohegan Tribal Finance Authority (MTFA), including its issuer credit ratings, by one notch to 'CCC+' from 'B-' and removed the ratings from CreditWatch, where it placed them with negative implications on March 20, 2020. In April 2020, Moody's Investors Service downgraded Mohegan Tribal Gaming Authority's Corporate Family Rating to Caa2 from B3. The downgrade reflects that significant pressure on earnings and free cash flow will increase leverage and elevate default risk. MT SIMPSON FARM: Case Summary & 3 Unsecured Creditors ----------------------------------------------------- Debtor: MT Simpson Farm, LLC 7104 Honey Bee Road Monroe, NC 28110 Business Description: MT Simpson Farm is engaged in the business of commercial and industrial machinery and equipment rental and leasing. Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court Western District of North Carolina Case No.: 20-30625 Judge: Hon. Laura T. Beyer Debtor's Counsel: Cole Hayes, Esq. MOON WRIGHT & HOUSTON, PLLC 121 West Trade Street Suite 1950 Charlotte, NC 28202 Tel: 704-944-6560 E-mail: chayes@mwhattorneys.com Total Assets: $763,499 Total Liabilities: $2,300,768 The petition was signed by Cameron Simpson, owner. A copy of the petition containing, among other items, a list of the Debtor's three unsecured creditors is available f or free at PacerMonitor.com at: https://is.gd/0Bv6AD NAPHTHA ENERGY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Naphtha Energy Solutions, LLC d/b/a Hippo Energy Partners Suite 204 1645 Greens Prairie Rd. College Station, TX 77845 Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Southern District of Texas Case No.: 20-33115 Judge: Hon. Jeffrey P. Norman Debtor's Counsel: Johnie Patterson, Esq. WALKER & PATTERSON, P.C. P.O. Box 61301 Houston, TX 77208 Tel: (713) 956-5577 Email: jjp@walkerandpatterson.com Total Assets: $2,765,299 Total Liabilities: $2,874,223 The petition was signed by Robert W. Pierce, Jr., managing member. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/RtOSjK NOVA CHEMICALS: S&P Downgrades ICR to 'BB-' on Elevated Leverage ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit and issue-level ratings on NOVA Chemicals Corp. to 'BB-' from 'BB+'. The two-notch downgrade reflects the expectation for leverage to remain significantly high over S&P's forecast period. The downgrade reflects S&P's expectation for material deterioration in NOVA's cash flows in 2020 due to significant reduction in oil prices, which are correlated with NOVA's product prices, and global demand contraction amid the COVID-19 pandemic. This follows a very weak 2019, when the company's EBITDA declined by about 40% due to weakening product prices. Benchmark prices for polyethylene (PE) and ethylene declined meaningfully in 2019 due to trade tensions, new capacity additions in PE, and softer domestic demand. As a result, fully adjusted debt-to-EBITDA leverage spiked to 5.0x in 2019 from 1.8x in 2018. S&P estimates EBITDA will further significantly decline in 2020 due to challenging economic conditions. While demand for food packaging, and health and hygiene products has held relatively strong, S&P believes overall demand for ethylene and PE will shrink, further lowering their prices. To put this into context, ethylene net transaction prices in March and April were at their lowest levels since 2002. "Based on our revised estimates, we expect the company to generate adjusted FFO-to-debt in the low single digits in 2020, increasing to close to 12% in 2021, from improved industry conditions and an expectation that some of the near-term capacity expansions in Asia could be delayed due to the pandemic. In our view, credit measures at these levels are not commensurate with a 'BB+' rating," S&P said. "We believe the company has limited financial flexibility to support credit measure in the near term. Also contributing to the weakness in credit measures, is the material increase in NOVA's reported debt in the recent past. The company's reported debt has increased to US$4 billion in 2019 from US$1 billion since 2016, which in our view, has added meaningful volatility to NOVA's credit measures," the rating agency said. The increase was primarily led by the US$2 billion debt-financed acquisition of Geismar ethylene assets in 2017 and the US$1.08 billion payment to Dow Chemical in 2019 for litigation claims. While the Geismar acquisition improved NOVA's operational diversity and established the company's presence in the Gulf Coast, the assets have materially underperformed expectations primarily due to lower ethylene prices. In addition, while the company has appealed the litigation claims against Dow, there is the possibility NOVA might have to incur additional damages of US$250 million-US$350 million for the E3 litigation over S&P's forecast period, which could further pressure credit measures. Furthermore, the company continues to invest aggressively in growth projects, specifically the second advanced SCLAIRTECH technology facility (AST2) and expansion of the Corunna cracker. S&P believes management is unlikely to slow the pace of spending on these growth projects, with approximately US$1 billion still remaining to be spend through 2022. The recent sale of the 50% ownership interest in Novealis JV to Borealis for US$600 million is expected to partially fund the growth spending. However, the remaining funding depends on cash flow from operations, which in turn is contingent on improving industry conditions beyond 2020. S&P also notes that asset sales, including a potential sale of the styrenics business, might create pressure in the current environment. Based on the above factors, S&P expects NOVA to generate negative free operating cash flows in 2020 and 2021, and remain reliant on the credit facility to fund any cash shortfalls. Given current industry conditions, the company has fully drawn on its credit facility and, as of March 31, 2020, had US$1.2 billion in cash balances. S&P's business risk assessment continues to reflect the company's relatively good market position, improved scale and feedstock diversity, and structurally advantageous cost position as a North American producer of ethylene and polyethylene. NOVA has a good market position in the North American (N.A.) ethylene and PE industry, which has favorable growth prospects. S&P expect the company's scale and market position to continue to improve as the company completes growth projects under NOVA's 2020 strategic plan--specifically the new PE facility in Sarnia (additional capacity of 950 million pounds per year), and expansion of its Corunna cracker by approximately 50%. In addition, S&P believes the company's improved feedstock diversity and recent conversion of the Corunna facility to use up to 100% ethane from the Marcellus and Utica shale basins have improved profitability and reduced volatility relative to the naphtha feedstock it previously used. "Our assessment also factors in NOVA's cost-advantaged position in North America, although we note that global competitiveness for N.A. chemical producers, including NOVA, has been tempered in the near term relative to that of global peers that use naphtha as an input. This is the result of a steep fall in global oil prices that erodes the cost benefits U.S.-based low-cost natural gas has offered N.A. chemical producers for much of the past decade. Accordingly, we believe the company's EBITDA margins will decline meaningfully in 2020 to about 12%, but on a five-year weighted-average basis, still remain above 20%, and in the top quartile of our commodity chemicals peer group," S&P said. The aforementioned strengths are partially offset by NOVA's relatively limited product and operational diversity. S&P believes the company has less comprehensive scale, scope, and diversity relative to that of larger peers such as Westlake Chemical Corp. and LyondellBasell Industries N.V., which are significantly larger and have better product diversification. "We believe the parent will be supportive of NOVA. We view NOVA as moderately strategic to direct parent Mubadala Investment Co., as part of the rated government-related entity Mamoura Diversified Global Holding PJSC, because we believe the parent is likely to provide indirect support, if needed. For instance, management has indicated that dividends will not be paid in 2020 given weak industry conditions. Accordingly, our rating on NOVA is enhanced one notch due to our perception of parental support under our group rating methodology," S&P said. The negative outlook reflects concerns surrounding continued high capital spending despite the steep decline in cash flows and leverage metrics from persistently weak industry conditions. S&P estimates NOVA's adjusted FFO-to-debt will be in the low single digits in 2020, improving to about 12% in 2021. The rating agency believes weaker-than-expected economic conditions and potential for additional litigation payments are key risks to the downside and if weighted-average adjusted FFO-to-debt were to remain below 12% beyond 2020, and would no longer support the current rating. "We could lower the rating to 'B+' over the next 12 months if NOVA's credit measures do not improve as expected, with three-year, weighted-average adjusted FFO-to-debt (fiscal years 2021-2023) weakening below 12%. In such a scenario, we expect oil prices do not recover from expected 2020 levels, resulting in continuing deterioration in PE prices. In addition, leverage metrics could remain weak if the company has to make material litigation payments to Dow. We could also lower the rating if we revised our assessment of NOVA's strategic importance to its parent company. This could occur if, in our view, the parent was unlikely to lend support to NOVA during stress conditions," S&P said. "We could revise the outlook to stable if we expect the company's adjusted FFO-to-debt to improve in line with our current expectations beyond 2020. We believe this could occur if oil and product prices improved in line with our expectations. Specifically, we would expect NOVA's weighted-average FFO-to-debt to improve to above 12% and remain there after factoring in financial policy decisions," the rating agency said. OBALON THERAPEUTICS: Incurs $5.3-Mil. Net Loss in First Quarter --------------------------------------------------------------- Obalon Therapeutics, Inc. reported a net loss and comprehensive loss of $5.26 million on $780,000 of revenue for the three months ended March 31, 2020, compared to a net loss and comprehensive loss of $8.29 million on $1.77 million of revenue for the three months ended March 31, 2019. As of March 31, 2020, the Company had $19.23 million in total assets, $8.16 million in total liabilities, and $11.07 million in total stockholders' equity. Cost of revenue was $0.5 million for the first quarter of 2020, down from $1.2 million for the first quarter of 2019. Gross profit for the first quarter of 2020 was $0.2 million, down from $0.5 million for the first quarter of 2019. Research and development expense for the first quarter of 2020 totaled $1.3 million, down from $2.4 million for the first quarter of 2019. Selling, general and administrative expense decreased to $3.9 million for the first quarter of 2020, compared to $6.2 million for the first quarter of 2019. Operating loss for the first quarter of 2020 was $4.9 million, down from a loss of $8.1 million for the first quarter of 2020. In the first quarter ended March 31, 2020, the Company did not record any asset impairment charges, but it would expect to record certain long-lived asset and inventory impairment charges in the second quarter ended June 30, 2020 related to its decision to move away from the retail treatment center model. The Company estimates the second quarter impairment charge to be in a range between $0.8 million and $1.4 million. As of March 31, 2020, the Company had cash and cash equivalents of $8.9 million and no debt. The Company believes its cash and cash equivalents as of March 31, 2020 are sufficient to fund its operations only through the end of 2020. If the Company is not able to raise additional capital to meet its needs, it will not be able to support any ongoing operations and may not be able to settle all of its liabilities. The Company has actively reviewed financial and strategic alternatives, including debt and equity financing, whole or partial sale of the company and a reverse merger in order to meet its capital needs and financial obligations, and to date it has been unable to identify a viable alternative for capital raising. Business update On June 16, 2020, the Company and certain of its executive officers reached a settlement with the plaintiffs in its ongoing securities class action litigation, and they intend to submit a final settlement agreement for court approval. The settlement provides that the defendants continue to deny the allegations and claims asserted by the plaintiffs, and are entering into the settlement solely to eliminate the burden and expense of further litigation. The Company expects that any amounts due as part of the settlement will be covered by the Company's insurance policies. In March 2020, the Company announced that the overall uncertainty, the restriction on elective procedures and the specific directives issued by the Governor of California as a result of COVID-19 had a significant impact on its business. As a result, the Company halted sales to new patients in its company-branded retail treatment centers, terminated expansion plans for additional retail centers and subsequently closed the two retail treatment centers it had opened. The Company also halted manufacturing operations and has not filled orders to U.S. customers or its former international distributor since that time. Given those impacts and the significant concern about an economic recovery that would allow consumers to feel confident enough to spend on a cash-pay procedure like the Obalon Balloon System, the Company does not currently plan to re-open its retail treatment centers, re-initiate its retail treatment center expansion plans, or plan to ship orders to U.S. customers or its former international distributor. As a result, the Company would not expect to report any meaningful revenue for the foreseeable future. The Company continues to believe the Obalon Balloon System can provide significant benefits to patients and value to the healthcare system. However, treatment with the Obalon Balloon System is not currently covered by any kind of private or public health insurance. The Company believes this has contributed to slow commercial adoption of the product and the procedure, as physicians are not reimbursed for treating patients with the Obalon therapy and patients must pay solely out of pocket for the Obalon Balloon System and the procedure. With that in mind, the Company is initiating efforts to explore obtaining third-party payor reimbursement and coverage for the Obalon Balloon System. The Company believes that reimbursement and coverage for the Obalon Balloon System could significantly expand its market opportunity. There are more than 70 million adults in the United States who are obese and over 11 million adults in the United States who have Type 2 diabetes and are obese. Moreover, the COVID-19 pandemic has further highlighted the personal health and economics costs of the obesity epidemic in the United States. Recently published data suggest that next to age, the underlying health conditions of obesity and obesity-related health conditions (hypertension and diabetes) are the greatest predictors of COVID-19 hospitalizations and death. The Company believes the Obalon Balloon System could help reduce third-party payors' costs and improve patient care, and the Company intends to explore how additional data may be collected to demonstrate the economic and clinical evidence necessary to secure reimbursement. However, obtaining reimbursement is never certain and can take many years to achieve, and if achieved, may not be determinative of the Company's success. If the Company's initial efforts with payors begin to bear success, it would expect to need to raise additional capital to support those efforts. To enable it to pursue this reimbursement strategy, the Company is taking further steps to significantly reduce expenses in an effort to extend its cash runway. The Company has significantly reduced the organization to only essential personnel and expects that, after a transition, only two full-time employees will remain: Andy Rasdal, the current executive chairman of the Board, who effective as of the close of business on the date of this quarterly report will reassume the role of CEO, and Nooshin Hussainy, who will remain chief financial officer. During this time the Company also plans to continue to seek strategic alternatives that may be in the best interests of its stockholders, while it explores establishing third party coverage and reimbursement for the Obalon Balloon System. If the Company is unsuccessful in either of these two endeavors over the next several months, there is a high likelihood it may need to sell all or portions of its business, liquidate all or some of its assets or seek bankruptcy protection, any of which could result in a significant decrease in value for all stakeholders. If the Company determines to proceed with a plan to establish reimbursement coverage for its products, it will need additional capital to fund operations beyond the end of 2020 and there is no assurance that such capital will be available on acceptable terms or at all. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/Z6u5qr About Obalon Obalon Therapeutics, Inc. (NASDAQ:OBLN) -- http://www.obalon.com-- is a San Diego-based company focused on developing and commercializing novel technologies for weight loss. Obalon recorded a net loss of $23.68 million for the year ended Dec. 31, 2019, compared to a net loss of $37.38 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $20.39 million in total assets, $4.54 million in total liabilities, and $15.85 million in total stockholders' equity. KPMG LLP, in San Diego, California, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Feb. 27, 2020, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. ODYSSEY ENGINES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Nine affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Odyssey Engines, LLC 20-16772 8050 NW 90th Street Miami, FL 33166 Turbine Engine Center, Inc. 20-16805 8050 NW 90th Street Miami, FL 33166 JA Aerocell LLC 20-16802 8050 NW 90th Street Miami, FL 33166 Miami NDT, Inc. 20-16806 8050 NW 90th Street Miami, FL 33166 Savanna Leasing, LLC 20-16800 8050 NW 90th Street Miami, FL 33166 JA Aerocell LLC 20-16798 8050 NW 90th Street Miami, FL 3316 Odyssey Leasing, LLC 20-16792 8050 NW 90th Street Miami, FL 3316 8130 Acquisition Corporation, LLC 20-16799 8050 NW 90th Street Miami, FL 33166 Odyssey Real Estate Holdings, LLC 20-16797 8050 NW 90th Street Miami, FL 33166 Business Description: The Debtors are engaged in the business of commercial and industrial machinery and equipment rental and leasing. Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court Southern District of Florida Judges: Hon. Robert A. Mark (20-16772, 20-16805, 20-16806, 20-16792, & 20-16799) Hon. Laurel M. Isicoff (20-16802, 20-16798, & 20-16797) Hon. Jay A. Cristol (20-16800) Debtors' Counsel: David R. Softness, Esq. DAVID R. SOFTNESS, P.A. 201 South Biscayne Boulevard Suite 2740 Miami, FL 33131 Tel: 305-341-3111 Email: david@softnesslaw.com Estimated Estimated Assets Liabilities -------------- ------------- Odyssey Engines, LLC $1 million to $10 million to $10 million $50 million Turbine Engine Center, Inc. $1 million to $10 million to $10 million $50 million JA Aerocell LLC $1 million to $10 million to $10 million $50 million Miami NDT, Inc. $1 million to $10 million to $10 million $50 million Savanna Leasing, LLC $1 million to $10 million to $10 million $50 million JA Aerocell LLC $1 million to $10 million to $10 million $50 million Odyssey Leasing, LLC $1 million to $10 million to $10 million $50 million 8130 Acquisition Corporation, LLC $1 million to $10 million to $10 million $50 million Odyssey Real Estate Holdings, LLC $1 million to $10 million to $10 million $50 million The petitions were signed by David Alan Boyer, president. Copies of the petitions containing, among other items, lists of the Debtors' 20 largest unsecured creditors are available for free at PacerMonitor.com at: https://is.gd/epVtIC https://is.gd/XKWFvW https://is.gd/HDluuR https://is.gd/Enzumi https://is.gd/7lT2mb https://is.gd/ZWUzBI https://is.gd/9h1IJ1 https://is.gd/Kxtu9I https://is.gd/LGIa3p OPPENHEIMER HOLDINGS: S&P Affirms 'B+' ICR; Outlook Stable ---------------------------------------------------------- S&P Global Ratings said it affirmed its 'B+' issuer credit and senior secured debt ratings on Oppenheimer Holdings Inc. The outlook remains stable. S&P's affirmation of the rating on Oppenheimer reflects the company's satisfactory capital position but weaker-than-peer profitability. As of March 31, 2020, Oppenheimer's risk-adjusted capital ratio (RAC) was nearly 12%, essentially in line with March 31, 2019 levels, and similar to ratios of higher-rated peers such as Raymond James Financial Inc.(BBB+/Stable). S&P's expectation is that this ratio will remain roughly stable in 2020, despite headwinds to earnings. Earnings challenges remain given S&P's expectation that the vast majority of cash-sweep income will be lost this year as a result of the Fed's rate cuts. Cash sweep income made up 10% of revenues over the last twelve months ended March 31, 2020. Furthermore, investment banking revenues will likely decline materially as well year over year, while the ultimate path for advisory fees will depend on the sustainability of the equity market recovery, which remains uncertain. S&P expects that the company's pretax margin will continue to be lower than peers (for the last 12 months ended March 31, it was 6.8%), with limited visibility into how it might improve to more average levels. Despite some improvements, the capital markets division has been loss-making for the past 4 years and S&P expects it will remain the case this year. The company substantially reduced the size of its trading portfolio in March 2020 in light of rising volatility in the markets and only incurred limited trading losses in the process. "In our view, volatile market conditions in the first quarter highlighted weakness in Oppenheimer's liquidity position, which we believe is already reflected in our 'B+' rating," S&P said. Specifically, S&P's liquidity coverage metric, which is a measurement of liquidity sources versus liquidity needs, fell well below the rating agency's expectations, declining to 0.58x as of March 31, 2020, from 1.28x as of Dec. 31, 2019. This decrease was due to an increase in margin requirements at clearinghouses (following elevated volatility) and a lower liquid securities balance. The company's short-term secured borrowing with banks also increased materially versus Dec. 31 levels, rising to $203 million from zero, and cash decreased to $24 million (with only $2 million at the parent entity) from $80 million at year-end. Oppenheimer has no committed lines of credit, which S&P views unfavorably. On a positive note, Auction Rate Securities holdings on the balance sheet were minimal, at $26 million as of quarter end. Additionally, commitments to buy back securities from clients as a result of legal settlements and awards were only $3.7 million, and eligible investors for future buybacks under settlements with regulators held only approximately $2.3 million in ARS as of March 31, capping potential future funding needs. The stable outlook reflects S&P's expectation that unfavorable market and economic conditions will likely weaken the company's profitability and earnings but that the company will operate with sufficient capital (RAC ratio above 10%) and liquidity to meet potential stresses. "Over the same time horizon, we could lower the ratings if the RAC ratio decreases substantially, liquidity deteriorates, or if we believe the firm's wealth management business has weakened as a result of attrition of clients and financial advisers," S&P said. "An upgrade is unlikely over the next 12 months. However, over the longer term, we could raise our ratings if the firm sustainably improves profitability while maintaining a RAC ratio above 10%, a liquidity coverage metric above 1.2x, a gross stable funding ratio above 130%, and conservative risk management practices," the rating agency said. PARKLAND CORP: S&P Rates C$400MM Senior Unsecured Notes 'BB' ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue-level and '4' recovery ratings to Parkland Corp.'s proposed C$400 million senior unsecured notes due in 2028. The '4' recovery rating reflects S&P's expectation of average (30%-50%; rounded estimate: 40%) recovery in a default scenario. The 'BB' issue-level ratings on Parkland's existing unsecured notes are unchanged. However, S&P has revised the recovery rating on the notes to '4' from '3'. S&P expects the company to use the proceeds to refinance C$200 million of unsecured debt due in 2021 and 2022; as a result, the rating agency views the transaction to be leverage neutral. Along with the proposed issuance, the company has expanded its revolving credit facility by C$300 million to enhance its liquidity throughout the pandemic. Consequently, after the higher amount of senior secured debt has been paid off, ahead of senior unsecured noteholders, it will lead to a lower enterprise value available for the senior unsecured debt in the recovery waterfall. Therefore, S&P's recovery prospects for the existing senior unsecured noteholders decreases to 40% from 50%, resulting in its revision of the recovery rating on the notes to '4' from '3'." However, the recovery rating revision does not affect the 'BB' issue-level rating on the existing senior unsecured debt. "The proposed transaction extends Parkland's debt maturities and improves liquidity, supporting the company's ability to navigate through the COVID-19-related headwinds. In our view, the pandemic will lead to a substantial drop in fuel volumes in fiscal 2020 due to lower miles driven, caused by the shelter-in-place measures in Parkland's various operating markets," S&P said. While S&P expects higher fuel margins to partially offset the volume declines, they will not fully offset the volume drop, leading adjusted 2020 EBITDA to decline in the high-single-digit area (excluding the impact of the Burnaby refinery turnaround). As a result, S&P expects adjusted debt to EBITDA to be close to 4.5x in fiscal 2020 (including the impact of the refinery turnaround)." Nevertheless, a recovery in fuel volumes in fiscal 2021, as shelter-in-place measures are lifted and the economy slowly recovers, could lead to adjusted EBITDA increasing to about C$1.25 billion, causing adjusted debt to EBITDA to approach 3.5x. At the same time, Parkland has taken prudent steps to reduce operating costs, cutting back on growth capital expenditures and putting a temporary halt on acquisitions, which could preserve free cash flow and liquidity in the short term, allowing the company to withstand any further impacts from the pandemic and macroeconomic recovery. ISSUE RATINGS—RECOVERY ANALYSIS Key analytical factors: -- S&P assumes a default in 2025 stemming from a significant decline in fuel volumes and margins, which could result from a protracted economic recession that reduces fuel demand. -- In addition, intensifying competition and lower-than-expected refinery use could further pressure cash flows to the point that the company is no longer able to operate absent filing for creditor protection. -- To value Parkland's Burnaby refinery asset, S&P applies about a US$3,000 multiple to the refinery's 55,000 barrels per day crude slate throughput capacity. -- S&P's valuation reflects the favorable market dynamics, access to cost-advantaged sources of crude through the Trans Mountain Pipeline System, low-complexity refinery, and good product slate because more than 90% of the refinery output is high-value products. -- S&P assumes that the borrowings on the intermediation facility will fully absorb the working-capital assets of the refining operations. -- S&P also assumes that Parkland owns 100% of SOL Investments Inc. by then and has financed the acquisition through its bank borrowings, and therefore, it assumes a 100% draw on the revolver. -- S&P values the rest of Parkland's assets, including 100% of SOL, using an EBITDA multiple approach--the fuel retail assets are valued at a 5x multiple on default-year EBITDA of about C$620 million. -- Parkland's secured debtholders (credit facilities) would expect very high (90%-100%; rounded estimate: 95%) recovery in the event of default. -- The remaining value of about C$1.3 billion after servicing the senior secured claims will be available to the senior unsecured noteholders, thereby leading to average (30%-50%; rounded estimate: 40%) recovery in the event of default and an issue-level rating of 'BB'. Simulated default assumptions: -- Valuation of refinery: About C$215 million -- Emergence EBITDA of retail assets: C$620 million -- Multiple: 5.0x -- Gross enterprise value (including the valuation for the Burnaby refinery): about C$3.3 billion -- Net recovery value for waterfall after administrative expenses (5%): about C$3.15 billion Simplified waterfall: -- Estimated priority claims: about C$9.0 million -- Remaining recovery value: about C$3.14 billion -- Estimated senior secured claim: about C$1.9 billion -- Value available for senior secured claim: about C$3.1 billion -- Recovery range: 90%-100% (rounded estimate: 95%) -- Estimated senior unsecured claims: about C$3.0 billion -- Value available for unsecured claim: about C$1.3 billion -- Recovery range: 30%-50% (rounded estimate:40%) Ratings List New Rating Parkland Corp. Senior Unsecured CAD400 mil nts due 2028 BB Recovery Rating 4(40%) Issue-Level Rating Unchanged; Recovery Rating Revised To From Parkland Corp. Senior Unsecured Recovery Rating 4(40%) 3(50%) PENUMBRA BRANDS: Seeks Approval to Hire Valuation Expert -------------------------------------------------------- Penumbra Brands LLC and Penumbra Brands Holdings, Inc. seek authority from the U.S. Bankruptcy Court for the District of Utah to employ Jeffrey S. Pickett of Lone Peak Valuation Group as its valuation expert. Mr. Pickett of Lone Peak as valuation expert will assist the Debtor with the valuation of the its assets in relation to its plan of reorganization. Mr. Pickett assures the court that the firm does not hold or represent an interest materially adverse to the estate, does not have any connection with the Debtor, its creditors or other parties in interest or their respective attorneys, and is a disinterested person as that term is used in section 101(14) of the Bankruptcy Code. The firm can be reached through: Jeffrey S. Pickett Lone Peak Valuation Group 36 State St Salt Lake City, UT 84111 Phone: +1 801-708-7700 About Penumbra Brands Penumbra Brands offers and supports products that improve the performance, aesthetic and lifespan of mobile devices. For more information, visit https://penumbrabrands.com Penumbra Brands and Penumbra Brands Holdings, Inc. filed their voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. D. Utah Lead Case No. 20-22804) on May 8, 2020. At the time of the filing, Penumbra Brands had estimated assets of between $1 million and $10 million and liabilities of between $10 million and $50 million. Penumbra Brands Holdings had estimated assets of less than $50,000 and liabilities of between $10 million and $50 million. Judge Joel T. Marker oversees the cases. Holland & Hart LLP is Debtors' legal counsel. PES HOLDINGS: EPA Claims Cap Cut to $10 Million ----------------------------------------------- Law 360 reports that the operator of growing Philadelphia oil refinery PES Holdings LLC has received approval in early June from a Delaware bankruptcy judge a settlement to cap its obligations related to environmental regulatory rules at $10 million, down from the amount asserted by the federal government at $35 million. U.S. Bankruptcy Judge Laurie Selber Silverstein approved the deal between debtor PES Holdings LLC and the U.S. Environmental Protection Agency to resolve PES' obligations over its failure to acquire the renewable fuel credits, called Renewable Identification Numbers or RINS, to comply with clean air standards related to the refining of fuel products. About PES Holdings LLC Headquartered in Philadelphia, Pennsylvania, PES Holdings LLC and its subsidiaries are owners and operators of oil refining complex and have been continuously operating in some form for over 150 years. PES Energy Inc. is the indirect parent company of Philadelphia Energy Solutions Refining and Marketing LLC (PESRM). PESRM owns and operates the Point Breeze and Girard Point oil refineries located on an integrated, 1,300-acre refining complex in Philadelphia. PES Holdings, LLC, and seven subsidiaries, including PES Energy, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 19-11626) on July 21, 2019. PSE Holdings estimated $1 billion to $10 billion in assets and the same range of liabilities as of the bankruptcy filing. The Debtors tapped Kirkland & Ellis LLP as general bankruptcy counsel; Pachulski Stang Ziehl & Jones LLP as local bankruptcy counsel; PJT Partners LP as financial advisor; and Alvarez & Marsal North America, LLC, as restructuring advisor. Omni Management Group, Inc., is the notice and claims agent. The Company's proposed DIP financing lenders are represented by Davis Polk & Wardwell LLP and Houlihan Lokey Capital, Inc. PIMLICO RANCH: Case Summary & 11 Unsecured Creditors ---------------------------------------------------- Debtor: Pimlico Ranch, LLC 12203 Magnolia Avenue Riverside, CA 92503 Business Description: Pimlico Ranch, LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). It owns vacant land and 25-unit residential subdivision in Murrieta, California, having an appraised value of $5.5 million. Chapter 11 Petition Date: June 22, 2020 Court: United States Bankruptcy Court Central District of California Case No.: 20-14307 Judge: Hon. Scott C. Clarkson Debtor's Counsel: Robert M. Yaspan, Esq. LAW OFFICES OF ROBERT M. YASPAN 21700 Oxnard Street, Suite 1750 Woodland Hills, CA 91367 Tel: 818-905-7711 E-mail: ryaspan@yaspanlaw.com Total Assets: $5,500,000 Total Liabilities: $6,719,670 The petition was signed by Ben R. Clymer, managing member. A copy of the petition containing, among other items, a list of the Debtor's 11 unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/XX1AXh PLATINUM GROUP: Closes $1.7 Million Private Placement ----------------------------------------------------- Platinum Group Metals Ltd. reports closing of the Company's previously announced non-brokered private placement of common shares at price of US$1.40 each. An aggregate of 1,221,500 common shares were subscribed for and issued resulting in gross proceeds to the Company of US$1.71 million. A 6% cash finder's fee in the amount of US $37,926 was paid in cash on a portion of the Private Placement. Hosken Consolidated Investments Limited, an existing major shareholder of the Company, subscribed for 500,000 common shares through Deepkloof Limited, a subsidiary of HCI. The Company intends to use the net proceeds of the Private Placement for its share of costs on the Waterberg Project and for general corporate and working capital purposes. About Platinum Group Metals Headquartered in British Columbia, Canada, Platinum Group Metals Ltd. -- http://www.platinumgroupmetals.net/-- is a platinum and palladium focused exploration, development and operating company conducting work primarily on mineral properties it has staked or acquired by way of option agreements or applications in the Republic of South Africa and in Canada. The Company's sole material mineral property is the Waterberg Project. The Company continues to evaluate exploration opportunities both on currently owned properties and on new prospects. PricewaterhouseCoopers LLP, in Vancouver, Canada, the Company's auditor since 2007, issued a "going concern" qualification in its report dated Nov. 25, 2019, citing that the Company has suffered recurring losses from operations and has significant amounts of debt payable without any current source of operating income. The Company also has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Platinum Group reported a net loss of $16.77 million for the year ended Aug. 31, 2019, compared to a net loss of $41.02 million for the year ended Aug. 31, 2018. As of Aug. 31, 2019, Platinum Group had $43.66 million in total assets, $44.82 million in total liabilities, and a total shareholders' deficit of $1.16 million. PROVIDENT GROUP-KEAN PROPERTIES: S&P Cuts Rev. Bond Rating to 'B' ----------------------------------------------------------------- S&P Global Ratings lowered its long-term rating five notches to 'B' from 'BBB-' on New Jersey Economic Development Authority's series 2017A and 2017B (taxable) housing revenue bonds, issued for Provident Group-Kean Properties LLC. (Provident). The outlook is negative. "The multi-notch downgrade reflects our view of the significant operating pressure that Provident Group-Kean Properties, LLC faces due to our view of the sudden loss of occupancy as students vacated the residence facility following the onset of the COVID-19 pandemic and Kean University transitioned to remote learning," said S&P Global Rating credit analyst Amber Schafer. "Due to this decline in occupancy, which has continued through the summer, and our expectation of weaker occupancy in the fall and overall view of corresponding revenue loss for fiscal 2020, we anticipate debt service coverage will be significantly impaired in fiscal 2020, likely below 1.0x,. The extent is unknown at this point, given its fiscal year end of Dec. 31, 2020, uncertainty regarding the project's fall occupancy, and management's need to draw on its debt service reserve fund to make its Jan. 1, 2021 payment in full--the size of the draw is still unknown as well," Ms. Schafer added. The negative outlook reflects S&P's view that it is highly likely the project will continue to generate weaker rental revenues and will need to use debt service reserve funds, with no clear ability to replenish these funds, given the project was originally structured with a high 83% break-even occupancy, and no extraordinary support from Kean University to date. S&P understands that if the debt service reserve fund is drawn to make the Jan. 1, 2021 debt service payment, the project will have a 12-month replenishment requirement. "In our opinion, the project's financial operation is not sustainable without significant occupancy and rental revenues in the near term –- the opposite would likely lead to eventual default, without extraordinary support from the university," S&P said. "The downgrade reflects our opinion of the operating pressure that faces Provident Group- Kean Properties, LLC as students vacated the residence facility following the onset of the COVID-19 pandemic," the rating agency said. Kean University transitioned to remote learning in an effort to protect the health and safety of students, and limit the community spread of COVID-19. S&P views the risks posed by COVID-19 to public health and safety as a social risk under its ESG factors. Despite the elevated social risk, S&P believes the project's environmental and governance risk are in line with its view of the sectors as a whole. The project, funded by the 2017 bonds, comprised the construction, furnishing, and equipping of a new 385-bed residence hall on the campus of Kean University in New Jersey, known as Cougar Hall. PULMATRIX INC: Stockholders Pass All Proposals at Annual Meeting ---------------------------------------------------------------- Pulmatrix, Inc., held its 2020 annual meeting of stockholders on June 17, 2020, at which the stockholders: (a) elected Michael J. Higgins and Mark Iwicki as Class III directors to serve on the Company's Board of Directors until its 2023 Annual Meeting of Stockholders or until successors have been duly elected and qualified; (b) ratified the appointment of Marcum LLP as the Company's independent registered public accounting firm for the 2020 fiscal year; (c) approved, on an advisory basis, the compensation paid to the Company's named executive officers; and (d) approval, on an advisory basis, the triennial frequency of future advisory votes on the compensation paid to the Company's named executive officers. About Pulmatrix Pulmatrix, Inc. -- http://www.pulmatrix.com/-- is a clinical stage biopharmaceutical company developing innovative inhaled therapies to address serious pulmonary and non-pulmonary disease using its patented iSPERSE technology. The Company's proprietary product pipeline is initially focused on advancing treatments for serious lung diseases, including Pulmazole, an inhaled anti-fungal for patients with ABPA, and PUR1800, a narrow spectrum kinase inhibitor in lung cancer. Pulmatrix's product candidates are based on iSPERSE, its proprietary engineered dry powder delivery platform, which seeks to improve therapeutic delivery to the lungs by achieving optimal local drug concentrations and reducing systemic side effects to improve patient outcomes. Pulmatrix reported a net loss of $20.59 million for the year ended Dec. 31, 2019, compared to a net loss of $20.56 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $30.82 million in total assets, $23.88 million in total liabilities, and $6.94 million in total stockholders' equity. PYXUS INTERNATIONAL: S&P Lowers ICR to 'D' on Bankruptcy Filing --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based tobacco leaf merchant Pyxus International Inc. to 'D' from 'CCC-' and its issue-level ratings on the company to 'D'. S&P's recovery ratings on its debt remain unchanged. The downgrade follows Pyxus' announcement that it filed for Chapter 11 bankruptcy protection under a prepackaged reorganization plan. In connection with the filing, the company entered into a restructuring support agreement (RSA) with the holders of more than 92% of the principal amount of its first-lien notes and more than 67% of the principal amount of its second-lien notes. In addition, the lenders of Pyxus' receivables financing and certain key foreign lenders granted the company waivers and amendments under their respective facilities. Under the prepackaged reorganization plan, the company plans to equitize approximately $635 million of debt and extend the maturity of its existing first-lien notes by four years. In addition, it will provide the holders of all of its outstanding common stock with a ratable share of $1,000,000 in cash. The company will continue to operate through the bankruptcy process and has sourced $207 million of debtor-in-possession (DIP) financing. S&P believes management will use the proceeds from the DIP financing, together with cash flow from operations, to support Pyxus' business through the bankruptcy process. If approved, the company would emerge with approximately $600 million of debt under the filed plan. S&P will reassess or withdraw all of its ratings on the company as the bankruptcy progresses depending on the available information. RECYCLING REVOLUTION: Taps Daszkal Bolton as Accountant ------------------------------------------------------- Recycling Revolution, LLC and RR3 Resources, LLC received approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Daszkal Bolton, LLP as its accountant. The firm's services will include: (a) reviewing and analyzing tax considerations of Debtors' bankruptcy estates; (b) preparing tax returns for 2019 and beyond as needed; and (c) coordinating with all other bankruptcy professionals and assisting such professionals in carrying out their duties. Brett Burgan, the firm's accountant who will be providing the services, charges an hourly fee of $350. Mr. Burgan disclosed in court filings that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brett Burgan, CPA Daszkal Bolton, LLP 2401 NW Boca Raton Blvd. Boca Raton, FL 33431 Telephone: (561) 367-1040 Facsimile: (561) 750-3236 Email: bburgan@dbllp.com About Recycling Revolution Recycling Revolution, LLC is a recycling company specializing in low end, contaminated and hard-to-handle materials. It purchases all types of plastic, metal and electronic waste. For more information, visit http://www.RecyclingRevolution.net/ Recycling Revolution and its affiliate RR3 Resources, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Lead Case No. 19-25063) on Nov. 7, 2019. Recycling Revolution disclosed $365,896 in assets and $9,318,956 in debt, while RR3 Resources disclosed under $1 million in both assets and liabilities. Judge Mindy A. Mora oversees the cases. Debtors tapped Marshall Grant, PLLC as their legal counsel and Daszkal Bolton, LLP as their accountant. REGIONAL VALVE: Seeks to Hire Phillip K. Wallace as Legal Counsel ----------------------------------------------------------------- Regional Valve Corp seeks authority from the United States Bankruptcy Court for the Eastern District of Louisiana to hire Phillip K. Wallace and Phillip K. Wallace, PLC, as its counsel. The firm will advise the Debtor of its powers and duties under the Bankruptcy Code and will provide other legal services in connection with its Chapter 11 case. Phillip Wallace, Esq., the firm's attorney who will be handling the case, charges an hourly fee of $250. Paralegals charge $80 per hour. The Debtor paid the firm $1,717 to file its bankruptcy case. The firm neither represents nor holds any interest adverse to the Debtor and its bankruptcy estate, according to court filings. The firm can be reached through: Phillip K. Wallace, Esq. Phillip K. Wallace, PLC 4040 Florida Street, Suite 203 Mandeville, LA 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com About Regional Valve Corp Regional Valve Corp -- http://www.regionalvalvecorp.com-- provides industrial utility, petro chemical, marine, oil field, and commercial equipment. It also offers repair, testing, installation, and maintenance of safety relief valves for air, gas, steam and liquid services. Regional Valve Corp filed its voluntary petition for relief under Chapter 11 of the Bankrutpcy Code (Bankr. E.D. La. Case No. 20-11025) on June 8, 2020. In the petition signed by by Donald J. Roth, Jr., president/registered agent, the Debtor estimated $941,080 in assets and $1,212,129 in liabilities. Phillip K. Wallace, Esq. at PHILLIP K. WALLACE, PLC represents the Debtor as counsel. ROCKSTAR REMODELING: Taps James S. Wilkins as Legal Counsel ----------------------------------------------------------- Rockstar Remodeling and Diamond Decks, LLC received approval from the U.S. Bankruptcy Court for the Western District of Texas to employ James S. Wilkins, P.C. as its legal counsel. The firm's services will include: (a) advising Debtor of its powers and duties in the continued operation and management of its property; (b) taking necessary actions to collect property of the bankruptcy estate and filing suits to recover the property; (c) representing Debtor in connection with the formulation and implementation of a plan of reorganization; (d) preparing legal papers; and (e) filing objections to disputed claims. Wilkins charges an hourly fee of $425. The retainer fee is $50,000, which consists of $47,500 for initial attorney fees and $2,500 as a cost deposit. James Wilkins, Esq., disclosed in court filings that he is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Wilkins holds office at: James S. Wilkins, Esq. James S. Wilkins, P.C. 711 Navarro Street, Suite 711 San Antonio, TX 78205-1711 Telephone: (210) 271-9212 Facsimile: (210) 271-9389 Email: jwilkins@stic.net About Rockstar Remodeling and Diamond Decks Rockstar Remodeling and Diamond Decks, LLC, a provider of construction services based in San Antonio, Texas, filed a Chapter 11 petition (Bankr. W.D. Tex. Case No. 20-50997) on May 27, 2020. The petition was signed by Donald Ferguson, managing member of Rockstar Remodeling Trust. At the time of the filing, Debtor had estimated assets of less than $50,000 and liabilities of between $1 million and $10 million. Judge Craig A. Gargotta oversees the case. Debtor is represented by James S. Wilkins, P.C. RTW RETAILWINDS: May File for Chapter 11 Bankruptcy Protection -------------------------------------------------------------- Pymnts reports that RTW Retailwinds warned that the company is likely to file Chapter 11 bankruptcy protection due to the implications of the coronavirus pandemic on the company. RTW Retailwinds, the parent company of New York & Co., the wear-to-work retailer for women, warned it may file for Chapter 11 bankruptcy protection as the nationwide chain has been crippled by the COVID-19 crisis, CNBC reported. RTW Retailwinds Inc. said in its filing with the Securities and Exchange Commission (SEC) that there's "substantial doubt" about its ability to do business, bankruptcy is "probable" without seeking bankruptcy protection, and "it does not have ability to raise additional capital at this time." The company also said it is likely to default on a loan agreement with Wells Fargo. The company operates more than 385 retail and outlet locations in 33 states, according to its website. New York & Co. offers special collections in collaboration with actresses Gabrielle Union, Eva Mendes and Kate Hudson, according to The Wall Street Journal. RTW said it is working with its independent auditor to complete its SEC filing to explain how COVID-19 has hurt its business. If RTW is granted bankruptcy, it would be the latest casualty among retailers that have been driven out of business from the coronavirus pandemic. Earlier this month, J.Crew Group Inc. sought bankruptcy protection. Department store chains Neiman Marcus Group, JCPenney and Stage Stores have also said they are considering bankruptcy filings amid the crisis. A PYMNTS survey revealed just a third of online shoppers will return to brick-and-mortar stores to shop when they reopen. Of those shoppers who preferred in-store shopping to online, only 40 percent said they will resume their normal shopping activities when those stores reopen. In a recent PYMNTS interview on “Powering the Digital Shift 2020, Nick Kaplan, president and co-founder of Fashion To Figure, a New York-based plus-size women's retailer, quoted his brother who said “adapt or die.” "A vaccine is a very long ways away," he said. "We're evolving, and that stagnation equals death. We are going to change, and I think it's always the case that consumers are going to vote. I think that we, as an industry, have recognized that with some of the carnage we are seeing that we have to evolve quickly and be nimble, allow for ourselves to test and fail quickly and give him or her [customers] what they're looking for, and if they’re voting no, then change and be dynamic." About RTW Retailwinds RTW Retailwinds is a specialty women's digitally enabled and omni-channel retailer with powerful multi-brand lifestyle platform that provides curated fashion solutions that are on-trend, stylish, and versatile at great value. RWDY INC: Case Summary & 19 Unsecured Creditors ----------------------------------------------- Debtor: RWDY, Inc. 2640 Youree Drive, Suite 200 Shreveport, LA 71104 Business Description: RWDY, Inc. -- http://www.rwdyinc.com-- is an internationally recognized provider of oil field consultants. The Company's personnel have successfully supported offshore drilling operations in Australia, Brazil, Cameroon, New Zealand, Nigeria, Qatar, New Zealand, United Arab Emirates and Venezuela. The Company's consultants include: project managers; drilling/ completion engineers; drilling/completion foreman; mud engineers; HSE advisors/SEMS advisors/HSE consultants; rig clerks/ logistics coordinators; shore base dispatchers/materials coordinators; rig commissioning managers; and cement specialists. Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court Western District of Louisiana Case No.: 20-10616 Judge: Hon. John S. Hodge Debtor's Counsel: Robert W. Raley, Esq. ROBERT W. RALEY, ESQ. 290 Benton Spur Road Bossier City, LA 71111 Tel: (318) 747-2230 E-mail: rwr@robertraleylaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $10 million to $50 million The petition was signed by Brian T. Owen, president. A copy of the petition containing, among other items, a list of the Debtor's 19 unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/4YmZcv SCREENVISION LLC: S&P Affirms 'B' ICR; Outlook Negative ------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on U.S.-based theatre advertising company ScreenVision LLC and assigned a negative outlook. At the same time, S&P removed the ratings from CreditWatch. Leverage will spike in 2020 but likely return to mid-4x in 2021 even with slow recovery in theater attendance, which will affect theater advertising. ScreenVision's revenue is directly tied to theater attendance because it is paid by advertisers based on the number of impressions it can deliver. While theaters remain closed due to the coronavirus, the company is not generating any revenue and is generating modestly negative EBITDA and cash flow. S&P expects leverage will spike well above its 5x downgrade threshold in 2020, and fall to the mid-4x area if revenue can return to about 70% of 2019 levels in 2021. As stay-at-home restrictions are eased, local and national governments may still impose social distancing restrictions, which would almost certainly affect crowd-based events, including movie theaters, and could limit ScreenVision's audience. We also believe consumers will continue to be wary of attending such events until either a vaccine is available or the risks of COVID-19 are better understood. These factors will likely lead to a prolonged impact on Screenvision's revenue. ScreenVision generates around 85% of its total advertising revenue from national advertising, which is cyclical. Similar to national TV advertising, theater advertising has longer lead times than other forms of media. As a result, S&P expects declines in national advertising to generally lag an economic downturn, but be slower than other forms of media to recover. S&P expects national advertising will have the steepest declines in the second and third quarters, with some improvement in the fourth quarter. The rating agency expects ScreenVision to shift most of its upfront commitments from the second quarter into the third quarter, which could help offset some of the expected weakness in the scatter market when theaters reopen." If the economy begins to recover in the second half of 2020, advertisers that have pulled back on transactional advertising may retain more of their budgets committed to brand building, which could benefit theater advertisers. Any benefits from this could be tempered by a smaller audience if theaters are forced to implement social distancing through the end of 2020 or potentially lower cost-per-thousand (CPM) pricing if the recession lowers what advertisers are willing to pay. ScreenVision has enough liquidity to weather the downturn, but incremental borrowing will be limited by the springing covenant on its revolver. S&P believes ScreenVision's liquidity is sufficient to weather an extended shutdown. The company currently has about $40 million of cash including $10 million drawn on the revolving credit facility, which S&P believes provides more than enough liquidity to fund operations until theaters reopen and return to significant attendance. The company's cost structure is mostly variable, and it has been able to significantly reduce fixed costs through wage reductions and staff reductions. Including debt service, the company's cash burn will be around $4 million per month until theaters reopen. S&P expects the company will have enough cash for theaters to remain closed through the end of 2020. Theaters are currently planning a return in July, although S&P still believes there is considerable risk to that timeline and attendance could be low even once they reopen. Even if theaters do not reopen until later in 2020, S&P believes ScreenVision has enough liquidity to weather the shutdown period and will be able to quickly return to positive cash flows even with a slow pick up in attendance. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety The negative outlook reflects the uncertainty around the length and the extent of the pandemic's impact on theater attendance and the potential that a longer-than-expected shutdown, a slower-than-expected recovery in theater attendance, or a prolonged impact on national advertising could cause the company's credit metrics to deteriorate over the next 12 months. S&P could lower its rating under any of the following scenarios: -- The pandemic extends longer or recovery is slower than expected, such that ScreenVision cannot reduce leverage below 5x in 2021. -- Theater attendance or in-theater advertising rates are permanently impaired as a result of the pandemic, such that revenue and EBITDA never return within 90% of 2019 levels. -- ScreenVision has to draw on its revolver such that the springing covenant becomes active and S&P doesn't expect the company to maintain compliance over the next 12 months. S&P could revise the outlook to stable if: -- Theaters reopen in the second half of 2020; -- Attendance returns to a level that allows ScreenVision to return to positive free cash flow; and -- S&P believes the company faces no near-term liquidity risks. SHUTTERFLY LLC: Moody's Cuts CFR to B3 & Alters Outlook to Negative ------------------------------------------------------------------- Moody's Investors Service has downgraded Shutterfly, LLC's Corporate Family Rating to B3 from B2, Probability of Default Rating to B3-PD from B2-PD, senior secured first-lien bank credit facilities ratings to B2 from B1, senior secured notes rating to B2 from B1 and senior unsecured notes rating to Caa2 from Caa1. The outlook was revised to negative from stable. Following is a summary of its rating actions: Ratings Downgraded: Issuer: Shutterfly, LLC Corporate Family Rating, Downgraded to B3 from B2 Probability of Default Rating, Downgraded to B3-PD from B2-PD $300 Million Gtd Senior Secured First-Lien Revolving Credit Facility due 2024, Downgraded to B2 (LGD3) from B1 (LGD3) $675 Million (originally $775 Million) Gtd Senior Secured First-Lien Term Loan B due 2026, Downgraded to B2 (LGD3) from B1 (LGD3) $255 Million Gtd Senior Secured First-Lien Term Loan B-1 due 2026, Downgraded to B2 (LGD3) from B1 (LGD3) $750 Million (originally $785 Million) 8.5% Gtd Senior Secured Notes due 2026, Downgraded to B2 (LGD3) from B1 (LGD3) $300 Million 11.0% Gtd Senior Unsecured Notes due 2027, Downgraded to Caa2 (LGD6) from Caa1 (LGD6) Outlook Actions: Issuer: Shutterfly, LLC Outlook, Changed to Negative from Stable RATINGS RATIONALE The downgrade action reflects the significant impact that the novel coronavirus pandemic and economic recession will have on Shutterfly's operating and financial performance in 2020 and 2021 given that its personalized photo products business is highly dependent on consumer discretionary spending. The postponement or cancellation of memorable life events, closure of schools and churches, and reduction in print marketing spend during the recent three-month shutdown of the US economy will lead to a temporary deterioration in Shutterfly's profitability and higher financial leverage. Moody's projects total debt to EBITDA will increase to around 7.5x (Moody's adjusted) at year end 2020 from roughly 6x at March 31, 2020 (excludes non-recurring transaction, restructuring and integration costs and other one-time adjustments associated with the September 2019 LBO) and free cash flow generation (defined as cash flow from operations less capex less dividends) will be negative, in Moody's opinion. To the extent the recent strong momentum in Shutterfly's consumer segment (30%+ year-over-year order growth in April and May) continues over the remainder of 2020 combined with a rebound in the Lifetouch segment, and the company exceeds Moody's baseline expectations, free cash flow could potentially turn positive this year. However, Moody's also expects some lost business volume will not be recovered this year. As the virus subsides and consumer spending gradually rebounds in 2021, Moody's projects leverage will improve to the 6x-6.5x area by the end of next year. Moody's expects free cash flow to remain slightly negative in 2021 given the prospect for continued weak consumer sentiment and Shutterfly's print-based photo products to experience an acceleration of the secular decline that was evident prior to the pandemic. However, if the company outperforms Moody's projections and experiences better-than-expected demand from customers, realizes cost savings ahead of schedule and improves working capital metrics, free cash flow could be positive next year. Moody's thinks consumers will alter purchasing behavior and increasingly adopt digital and cloud-based photo products as a result of their online experience during COVID-19 stay-at-home measures. The negative outlook reflects the likelihood that leverage will remain elevated above 6x (Moody's adjusted) and free cash flow will stay negative over the next two years, in Moody's opinion, owing to revenue challenges in some business segments and dependence on consumer discretionary spending, which Moody's expects will remain depressed for several quarters due to the economic recession. The negative outlook also embeds the numerous uncertainties related to the social considerations and economic impact from COVID-19 on the company's leverage, liquidity and cash burn in the January to September period. Given the higher-than-expected cash burn, underperformance relative to Moody's baseline expectations could lead Shutterfly to fully exhaust its existing liquidity sources during this period and require the company to need to access additional external liquidity. Pro forma for additional borrowings on the revolver in Q2 2020, at March 31, 2020, liquidity consisted of $145 million of revolver availability and $134 million in cash. The magnitude of the impact will depend on the depth and duration of the pandemic, the impact that government restrictions to curb the virus will have on consumer behavior, the duration of restrictions in regions that Shutterfly operates as well as the timeline for fully reopening those economies. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Moody's projects a decline in economic activity in the wake of the coronavirus outbreak, with US GDP growth contracting 5.7% in 2020, followed by a 4.5% rebound next year. Moody's expects Shutterfly to experience adequate liquidity over the coming 12-15 months, however future underperformance could require the need for additional external liquidity. Historically, the business model was profitable from an EBITDA standpoint, required minimal capex and produced positive free cash flow. However, Moody's projects free cash flow conversion will be negative this year due to significant volume and revenue declines, EBITDA shortfalls and a highly leveraged capital structure from last year's LBO. Shutterfly will continue to produce the bulk of its positive free cash flow in the October-December quarter, but in Moody's opinion, it will not be enough to offset negative free cash flow produced during January to September. Over the next twelve months, Moody's projects negative free cash flow in the range of -$50 million to -$100 million and expects Shutterfly to rely more heavily on the $300 million revolving credit facility (RCF) and retain minimum cash balances of at least $60 million. As of March 31, 2020, cash totaled $79 million following the $100 million mandatory repayment on the term loan B in February. The company is required to pay an annual amortization equal to 7% ($54.25 million) and 1% ($2.55 million) of the original principal amounts of term loan B and term loan B-1, respectively. Given the higher-than-expected cash burn in the first nine months of the year and diminished cash balances, Moody's projects Shutterfly will also rely on the RCF to fund these mandatory payments. The RCF matures in 2024 and currently has $155 million of borrowings outstanding. Further reliance on the RCF or any additional increases in senior secured debt obligations could pressure the senior secured debts' B2 ratings. While the term loan contains no covenants, the RCF maintains a springing maximum Net First-Lien Senior Secured Leverage Ratio covenant of 6.3x (as defined in the bank credit agreement) tested quarterly if at least 35% of the RCF is drawn. At March 31, 2020, the leverage ratio was 3.93x. Moody's will closely monitor the covenant headroom over the next several quarters given its expectation for diminished EBITDA. In Q1 2020, Shutterfly's consumer segment (about 60% of revenue) increased 5% (excludes Snapfish). Branded photobooks and personalized gifts and home décor products experienced increased volumes as a result of strategic investments into improving the creation experience and product assortment, both of which are key drivers of new customer growth and retention; however other consumer products, particularly cards and stationery, decreased in the double-digit percentage range due to delayed or cancelled weddings and graduations. The value-oriented Snapfish brand, also experienced double-digit declines, primarily driven by continued weakness in CafePress. The Lifetouch segment (about 28% of revenue) declined 31% in the March quarter primarily due to shipment delays caused by closures of its operating facilities, reduced volumes due to cancellation of spring photo days arising from school closures, and to a lesser extent, church and portrait studio closures as a result of the outbreak. Since most of Lifetouch's studio revenue is derived from sales in JCPenny stores, the retailer's recent bankruptcy filing and planned store closures will permanently impact about $3-$4 million of annual Lifetouch revenue. The SBS segment (about 12% of revenue) experienced a 16% decline in the March quarter due to customer order cancellations, budget cuts and a pullback in discretionary print marketing spend from several enterprise customers. To offset the impact from COVID-19 revenue declines, Shutterfly implemented an $85 million operating cost savings plan that will be realized in 2020, deferred non-critical IT investments and optimized working capital. The new plan is incremental to the $120 million of cost actions identified from the LBO and Snapfish combination. Approximately $8.4 million of the $120 million was realized in 2019 with $69.6 million expected to be achieved in 2020 and the remaining $42 million in 2021-22. While Moody's believes the entire amount is achievable and will help expand EBITDA margins longer-term, roughly $70-$80 million of one-time cash costs associated with the merger and necessary to achieve savings will be incurred this year, partially offsetting any near-term savings. As the US economy gradually reopens, Moody's expects Shutterfly's business to experience mixed results. Continued social distancing practices, reduced occupancy guidelines and increased online participation for classroom education and church events, combined with reduced in-store retail customer traffic and high unemployment levels will curtail demand in parts of the consumer segment as well as the Lifetouch segment, which rely on life events and social gatherings. Further, the demand for print-based products will likely experience an accelerated secular decline amid increasing consumer adoption of digital-based photo products, services and methods for photo-sharing that became more prevalent during stay-at-home practices and continue to remain popular as coronavirus restrictions are relaxed. The accelerated pace of retailer store closures and increasing fragmentation of online retailers and consumer packaged goods companies have redirected users to a wider range of e-commerce alternatives that could make it challenging for Shutterfly to sustain consumer engagement. In addition, the broad range of competitors selling photo merchandise similar to Shutterfly will likely result in more frequent competitive price discounting during the economic recession to stimulate shopper engagement. Other parts of the consumer segment, such as photobooks and personalized gifts and home décor products, will likely experience stable-to-increasing online traffic and order volumes as consumers spend more time at home and avoid public gatherings. The consumer segment reported strong 30+% year-over-year order growth in April and May for both Shutterfly and Snapfish brands and expects Q2 2020 to finish with double-digit order growth, driven by investments and a rebound in cards and stationary orders that were deferred from Q1 2020. Lifetouch implemented a new and standardized pricing strategy to stimulate customer demand and expects to be well-positioned for Fall School Picture Day, however Moody's expects Q2 2020 and Q3 2020 orders to remain pressured. The segment continues to receive orders and generate revenue on yearbook and other products based on photos taken since last year. In the SBS segment, Shutterfly has shifted the business from customers with more volatile discretionary print marketing needs to clients with steadier transactional and regulatory requirements. Nonetheless, volumes will likely remain lower than historical levels given the overall expected decline in advertising and marketing spend as a result of the recession. Shutterfly's B3 CFR is constrained by its elevated financial leverage, exposure to cyclical consumer discretionary spending, highly seasonal business with idled capacity during non-peak selling periods and absence of meaningful international diversification. The rating also reflects its large consumer business, which has struggled to lift organic revenue growth due to exposure to print-based and other legacy consumer product categories that have become commoditized as new products, services and methods for personalizing and sharing photos have evolved. The B3 rating considers the intensely competitive marketplace and the company's lack of pricing power, evidenced by historically low single-digit operating margins. Shutterfly is heavily dependent on fourth quarter earnings to offset operating losses produced in the first nine months of the year, which stems from a sizable fixed cost base and large product discounting to stimulate consumer demand during the seasonally weak January to September period. The rating is supported by Shutterfly's leadership position and manufacturing scale as a provider of personalized photo products and services increasingly via online customer engagement, broad range of customized products and seamless user experience that facilitate recurring customer usage. The company benefits from a vertically-integrated operation with low customer acquisition costs. Historically, Shutterfly exhibited prudent cash management and relatively good conversion of EBITDA to free cash flow, albeit generated chiefly in the fourth calendar quarter. Business line diversification is provided by Lifetouch, the US market leader in school photography, and Snapfish, a global online retailer of digital photography and personalized photo-based products, which gives Shutterfly greater exposure to the faster growth value segment. ESG CONSIDERATIONS The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The personalized consumer photo products and school photography sectors have been affected by the shock given their sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Shutterfly's credit profile, including its exposure to the US economy, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Shutterfly remains vulnerable to the outbreak's continuing spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Its action reflects the impact on Shutterfly of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Though Shutterfly demonstrated prudent financial policies as a public company prior to the September 2019 LBO, as a privately-owned portfolio company of Apollo, Moody's expects the financial strategy to be more aggressive given the equity sponsor's tendency to tolerate high leverage and favor high capital return strategies. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating outlook could be revised to stable if Shutterfly experienced organic revenue growth in the low-single digit percentage range with 18%-20% adjusted LTM EBITDA margins, financial leverage in the 5.5x-6.5x band (Moody's adjusted) and positive free cash flow to debt in the 1% to 2% range (Moody's adjusted) on an annual basis. A ratings upgrade is unlikely over the near-term given the negative impact the economic recession will have on consumer discretionary spending. Over time, an upgrade could occur if Shutterfly demonstrates organic revenue growth consistent with US online retail sales growth and EBITDA margin expansion leads to sustained reduction in total debt to EBITDA below 5.5x (Moody's adjusted) and free cash flow to adjusted debt of at least 2% (Moody's adjusted) on an annual basis. The company would also need to maintain a good liquidity position and exhibit prudent financial policies. A ratings downgrade could occur if financial leverage, as measured by total debt to EBITDA, was sustained above 7x (Moody's adjusted), EBITDA interest coverage declines below 1.5x (Moody's adjusted) or liquidity experiences deterioration such that free cash flow generation becomes meaningfully negative on an annual basis. Downward pressure could also transpire if Shutterfly experienced market share losses, a material slowdown or decline in customer and/or total order growth, deterioration in average order value and/or substantial increase in customer acquisition costs resulting in operating margin erosion. Debt-financed acquisitions and/or shareholder distributions that increase leverage could also result in a downgrade. Headquartered in Redwood City, CA, Shutterfly, LLC is a leading online manufacturer and retailer of personalized consumer photo products and services through premium brands such as Shutterfly (photo books, personalized holiday cards, announcements, invitations, stationery and home decor products); and Tiny Prints Boutique (online cards and stationery boutique offering stylish announcements, invitations and personal stationery). The SBS business unit provides customized direct marketing and variable print-on-demand solutions to enterprise customers. The Lifetouch unit is a leading provider of school photography in the US serving over 50,000 schools. Apollo Global Management, LLC purchased Shutterfly in September 2019 and combined it with Snapfish, LLC, which was acquired in January 2020, for a total purchase price of $3 billion (including balance sheet cash and transaction fees and expenses). GAAP revenue totaled approximately $2.1 billion for the twelve months ended March 31, 2020. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. SM ENERGY: Fitch Cuts IDR to RD on Debt Exchange Completion ----------------------------------------------------------- Fitch Ratings has downgraded SM Energy Company's Issuer Default Rating to 'RD' from 'C' upon the completion of the company's exchange of senior unsecured notes for new second lien secured notes. Fitch had deemed the exchange as a distressed debt exchange under its criteria. Following the exchange, Fitch has upgraded SM's IDR to 'CCC+'. In addition, Fitch has downgraded the revolving credit facility to 'B+'/'RR1' from 'BB-'/'RR1', assigned a 'B'/'RR2' rating to the new second lien secured notes, and upgraded the senior unsecured notes to 'CCC+'/'RR4' from 'C'/'RR4'. In addition, the remaining convertible notes were secured and are pari passu with the second lien notes following the exchange, and the rating was upgraded to 'B'/'RR2' from 'C'/'RR4'. The revised IDR reflects SM's heavy near-term debt amortization schedule, challenges in accessing the capital markets, low commodity price outlook, and relatively high debt load. This is partially offset by the strong performance of its Permian assets, significant liquidity, and lack of material refinancing until late 2022. Although the exchange provided partial runway in its debt maturity profile, Fitch does not believe SM can generate sufficient free cash flow under the current price environment to address the remaining maturities. The company does have options including significant availability under its revolver, second lien debt capacity, asset sales, and further reductions in capex and operating costs. KEY RATING DRIVERS Exchange Addresses Pending Maturities: SM was able to address all but $65.5 million of its senior unsecured convertible stock due in 2021 through the debt exchange. As a reminder, if SM's stock is delisted because it trades below $1 for a defined period, the convertible note holders have the right to put the notes to SM at par. The exchange was also able to reduce the maturities of other near-term notes due 2022-2027, although the amounts outstanding remain material. Fitch believes that SM has levers to address these maturities in the near term through availability under its revolver, second lien capacity, ability to further reduce capex spending, potential asset sales, and attractive asset value supporting its Permian assets. Nevertheless, Fitch notes that higher commodity prices and access to capital markets are necessary to address maturities, particularly when the revolver matures in 2023. Uncertain 2020 Outlook: SM has pulled guidance for 2020, leaving forecasts far from certain. Currently, the company has five rigs operating in the Midland Basin and one in the Eagle Ford, and expects to remove one rig in the Midland in July. Although SM continues to reduce costs and has a strong hedge program in place for 2020, Fitch does not expect the company to be FCF positive under its base and strip pricing scenarios unless capex plans are further reduced. Near Term Production Hedged: SM has hedged approximately 52 mboepd of oil production for the remainder of 2020 at prices above $57, which represents approximately 75% of its 1Q20 production rate. The company has also hedged a portion of its natural gas production. Hedges for oil in 2021 are not as strong given lower strip prices, although the company has hedged a greater portion of its expected natural gas production. Strong Permian Performance: SM's Midland Basin assets continue to exhibit solid performance since the 2016 acquisition through strong well performance and increased capital efficiency. SM's wells are considered among the best performing wells in the basin, and continue to add value through lower operating and drilling costs. The 2020 plan envisions average lateral feet per well of 11,300 and expected well costs of $6.8 million. Netbacks Below Peers: Due to SM's large exposure to natural gas, its unhedged cash netback of $14.6 is well below Permian and other more oil-focused peers. Fitch anticipates the netback to improve over time as the high oil Permian assets are developed and recent cost reduction efforts are implemented. Nevertheless, Fitch expects netbacks to remain below SM's peers because of the weight of its natural gas production in its profile. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer -- Base Case WTI oil price of $32/bbl in 2020 increasing to $42.00/bbl in 2021, $50/bbl in 2022 and $52/bbl thereafter; -- Base Case Henry Hub natural gas price of $1.85/mcf in 2020 and $2.45/mcf in the long term; -- Strip Case WTI oil price of $35.40/bbl in 2020, $38.02/bbl in 2021, $40.11/bbl in 2022 and $41.83/bbl thereafter; -- Strip Case Henry Hub natural gas price of $1.94/mcf in 2020, $2.64/mcf in 2021, $2.46/mcf in 2022 and $2.39/mcf thereafter; -- Production decline of 6.5% in 2020 and 5% in 2021; -- Capex of $670 million in 2020; -- Negative FCF in 2020 and through the forecast period; -- No assumptions of acquisitions, divestitures, share repurchases or dividends. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that SM Energy Corp. would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern Approach SMs GC EBITDA assumption reflects Fitch's projections under a stressed case price deck, which assumes WTI oil prices of USD32.00 in 2020, USD42.00 in 2021, USD50.00 in 2022, and USD52.00 in 2023. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. The GC EBITDA assumption reflects the 2022 base case EBITDA. Under Fitch's base case, the ability to refinance the revolver maturing in 2023 could result in a default. The model was adjusted for reduced production and varying differentials given the material decline in the prices from the previous price deck. An EV multiple of 2.75x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considered the following factors: -- The historical bankruptcy case study exits multiples for peer companies ranged from 2.8x-7.0x, with an average of 5.6x and a median of 6.1x; -- Commodity prices are assumed to have recovered at a level that limits potential upside. Although the Permian basin assets are considered valuable, the Eagle Ford has less value given the gassier nature of those assets and weak performance of peers in that basin, which includes several bankrupt companies. Liquidation Approach The liquidation estimate reflects Fitch's view of the value of balance sheet assets that can be realized in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors. Fitch considers valuations such as SEC PV-10 and M&A transactions for each basin including multiples for production per flowing barrel, proved reserves valuation, value per acre, and value per drilling location. The revolver is assumed to be 80% drawn upon default with the expectation that commitments would be reduced during a redetermination. The revolver is senior to the second lien notes, secured convertible notes, and senior unsecured bonds in the waterfall. The allocation of value in the liability waterfall results in recovery corresponding to 'RR1' recovery for the first lien revolver ($880 million), an 'RR2' recovery for the second lien notes and secured convertible notes, and a recovery corresponding to 'RR4' for the senior unsecured notes $1,824 million. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Proven ability to address near term maturities without entering into distressed debt exchanges; -- Ability to generate positive FCF; -- Reducing mid-cycle debt/EBITDA to below 3.5x; Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Inability to refinance near-term debt maturities; -- Material reduction in liquidity that challenges future debt reduction; -- Mid-cycle debt/EBITDA above 4.5x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE SM's senior secured credit agreement provides for a borrowing base and commitment level of $1.1 billion following the company's redetermination amended credit agreement in April 2020. The amendment also allows for up to $900 million of second lien debt provided the proceeds are used to redeem senior unsecured debt. Availability under the revolver was $1.0 billion. The credit facility matures on Sept. 28, 2023. The maturity will spring to Aug. 16, 2022 if there is more than $100 million outstanding on the 2022 notes and there is more than $300 million of availability under the revolver combined with unrestricted cash and certain types of unrestricted investments. If the 2022 notes are redeemed from the proceeds of the second lien debt, the credit facility maturity will be revised to July 2, 2023. The facility has two financial maintenance covenants: A total funded debt to adjusted EBITDAX ratio that cannot be greater than 4.0x beginning March 31, 2020 and an adjusted current ratio that cannot be less than 1.0 to 1.0. The completed debt exchange and agreement with certain noteholders resulted in the maturity on the 2021 convertible notes being reduced to $65.5 million from $172.5 million. There are $294 million of senior notes due in 2022 as well as significant maturities due in every year until 2027. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). SM Energy Company - LT IDR RD; Downgrade - LT IDR CCC+; Upgrade - Senior unsecured; LT B; Upgrade - Senior unsecured; LT CCC+; Upgrade - Senior secured; LT B+; Downgrade - Senior Secured 2nd Lien; LT B; New Rating SOURCE ENERGY: S&P Lowers ICR to 'D' on Missed Interest Payment --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Calgary, Alta.-based Source Energy Services Ltd to 'D' (default) from 'CCC-'. At the same time, S&P lowered its issue-level rating on Source Energy Services Canada L.P. and Source Energy Services Canada Holdings Ltd.'s first-lien secured notes to 'D' from 'CCC'. The '2' recovery rating (with a recovery expectations of 70%) on the notes is unchanged. "The downgrade reflects our belief that continued weak crude oil prices and depressed demand outlook for frac sand make it likely the company will not make the interest payments within the grace period. We believe Source will negotiate with its debtholders to address its capital structure for its long-term viability," S&P said. SPEEDCAST INTERNATIONAL: Committee Hires Hogan Lovells as Counsel ----------------------------------------------------------------- The official committee of unsecured creditors appointed in the Chapter 11 cases of SpeedCast International Limited and its affiliates seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Hogan Lovells US LLP as its legal counsel. The firm's services will include: (a) advising the committee of its rights, powers and duties in Debtors' Chapter 11 cases; (b) participating in in-person, video conference and telephonic meetings of the committee; (c) assisting the committee in its meetings and negotiations with Debtors and other parties regarding the cases; (d) assisting the committee in analyzing claims against, and interests in, Debtors and in negotiating with the holders of such claims and interests; (e) assisting the committee in reviewing Debtors' schedules of assets and liabilities, statements of financial affairs, and other financial reports prepared by Debtors; (f) assisting the committee in its investigation of the acts, conduct, assets, liabilities, management and financial condition of Debtors and the historic and ongoing operation of their businesses; (g) assisting the committee in its analysis of, and negotiations with the Debtors or any third party related to, financing, asset disposition transactions, compromises of controversies, and assumption and rejection of executory contracts and unexpired leases; (h) assisting the committee in its analysis of, and negotiations with Debtors or any third party, related to the formulation, confirmation and implementation of any Chapter 11 plan; (i) assisting the committee with respect to communications with the general creditor body in Debtors' bankruptcy cases; (j) responding to inquiries from individual creditors as to the status of, and developments in, Debtors' bankruptcy cases; (k) representing the committee at hearings and other proceedings before the bankruptcy court and other courts or tribunals; (l) reviewing and analyzing complaints, motions, applications, orders and other pleadings filed with the court; (m) assisting the committee in its review and analysis of, and negotiations with Debtors and non-debtor affiliates related to, intercompany claims and transactions; (n) reviewing and analyzing third party analyses or reports prepared in connection with Debtors' potential claims and causes of action, and performing such other diligence and independent analysis as may be requested by the committee; (o) advising the committee on federal and state regulatory issues; and (p) assisting the committee in preparing pleadings and in pursuing or participating in adversary proceedings, contested matters and administrative proceedings. The standard hourly rates charged by Hogan Lovells are as follows: Partners $745 - $1,555 Counsel $830 - $1,405 Associates and Senior Attorneys $450 - $960 Paralegals $265 - $490 David Simonds, Esq., a partner at Hogan Lovells, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: David P. Simonds, Esq. Hogan Lovells US, LLP 1999 Avenue of the Stars, Suite 1400 Los Angeles, CA 90067 Telephone: (310) 785-4647 Facsimile: (310) 785-4601 Email: david.simonds@hoganlovells.com About SpeedCast International Headquartered in New South Wales, Australia, SpeedCast International Limited and its affiliates provide remote and offshore satellite communications and information technology services. SpeedCast's fully-managed service is delivered to more than 2,000 customers in 140 countries via a global, multi-access technology, multi-band and multi-orbit network of more than 80 satellites and an interconnecting global terrestrial network, bolstered by on-the-ground local support from more than 40 countries. Speedcast services customers in sectors such as commercial maritime, cruise, energy, mining, government, NGOs, enterprise and media. SpeedCast International and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-32243) on April 23, 2020. At the time of the filing, Debtors each had estimated assets of between $500 million and $1 billion and liabilities of the same range. Judge David R. Jones oversees the cases. Debtors tapped Weil, Gotshal & Manges, LLP as bankruptcy counsel; Herbert Smith Freehills as co-counsel with Weil; Moelis Australia Ltd. as financial advisor; FTI Consulting Inc. as restructuring advisor; and Kurtzman Carson Consultants LLC as claims agent. The Office of the U.S. Trustee appointed a committee to represent unsecured creditors in Debtors' bankruptcy cases. The committee is represented by Hogan Lovells US, LLP. SUNTECH DRIVE: Seeks to Hire Kutner Brinen as Counsel ----------------------------------------------------- SunTech Drive, LLC, seeks authority from the United States Bankruptcy Court for the District of Colorado to hire Kutner Brinen, P.C., as its attorneys. The professional services that counsel is to render are: a. provide the Debtor with legal advice with respect to its powers and duties; b. aid the Debtor in the development of a plan of reorganization under Chapter 11; c. file the necessary petitions, pleadings, reports, and actions that may be required in the continued administration of the Debtor’s property under Chapter 11; d. take necessary actions to enjoin and stay until a final decree herein the continuation of pending proceedings and to enjoin and stay until a final decree the commencement of lien foreclosure proceedings and all matters as may be provided under 11 U.S.C. Sec. 362; and e. perform all other legal services for the Debtor that may be necessary. Kutner Brinen holds a pre-petition retainer for payment of post-petition fees and costs in the amount of $2,182.82. Jeffrey S. Brinen, Esq., a partner of Kutner Brinen, P.C., 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. Kutner Brinen can be reached at: Jeffrey S. Brinen, Esq. KUTNER BRINEN, P.C. 1660 Lincoln Street, Suite 1850 Denver, CO 80264 Tel: 303-832-2400 E-mail: jsb@kutnerlaw.com About SunTech Drive, LLC SunTech Drive, LLC -- http://suntechdrive.com-- is a privately held solar power electronics company. SunTech Drive provides source-agnostic, intelligent power conversion equipment. Its patent pending designs represent a dramatic departure from the large and costly legacy controllers of the past. SunTech has replaced traditional electromagnetic cores and windings with high-speed digital switching silicon and adaptive firmware. SunTech Drive, LLC filed its voluntary petition for relief under Chapter 11 of the Bankrutpcy Code (Bankr. D. Colo. Case No. 20-1394) on June 8, 2020. In the petition signed by Harold K. Michael, CEO, the Debtor estimated $199,483 in assets and $6,675,846 in liabilities. Jeffrey S. Brinen, Esq. at KUTNER BRINEN, P.C. represents the Debtor as counsel. TEMPLAR ENERGY: Begins Chapter 11 With Potential Buyers ------------------------------------------------------- Law360 reports that bankrupt gas and oil exploration company Templar Energy sought Chapter 11 protection in early June 2020, with nine potential buyers expressing their interests to liquidate its assets. During a first-day hearing conducted via phone and video conferencing, debtor attorney Robert A. Britton of Paul Weisw Rifkind Wharton & Garrison LLP said Templar had been struggling under a significant debt load since last year, and the continued degradation in energy commodity prices forced it to explore a sale prior to the Chapter 11 filing. Through that prepetition marketing process, Templar's investment banker contacted nearly 150 potential buyers, and the company had nine bids in hand when it filed its petition Monday, Britton said. "Our marketing process is ongoing, and we remain in active negotiations with several bidders," Britton said. The company came to court with a prepackaged plan of liquidation that will see Templar sell off its more than 2,100 wells in Texas and Oklahoma to repay lenders under a reserve-based lending facility. Given the terms of the prepetition indications of interest received by Templar, Britton said it is clear that the RBL lenders — owed $437 million — will not be paid in full. Templar intends to file bidding procedures that will allow it to identify a stalking horse bidder to set a floor price for the assets by June 26, according to Britton, with a July 6 bid deadline and a July 9 auction, if necessary. A combined hearing on the Chapter 11 plan and the sale transaction will be sought for July 14, about six weeks after the case began. The proposed plan envisions the payment in full of all priority and administrative claims, all claims under a $25 million debtor-in-possession package being provided by some of the RBL lenders and the payment of nearly all unsecured claims in the ordinary course of business. U.S. Bankruptcy Judge Brendan L. Shannon granted interim approval of the DIP loan Tuesday, making $10 million of new money lending available to the debtor along with a roll-up of a $12.5 million portion of the prepetition RBL debt. Another $2.5 million in new money will be available if the DIP is granted final approval. Templar filed for Chapter 11 protection June 1 after a prolonged downturn in the oil and gas pricing market came to a head with a nosedive in demand during the COVID-19 outbreak and an ongoing pricing war among other oil-producing nations, according to court filings. Having borrowed $437 million under the RBL facility, an April 2019 recalculation of the value of its reserves caused a significant drop that set the value below the amount already borrowed. According to initial case documents filed in Delaware court, Templar Energy operates about 2,100 wells on 273,000 acres of land in the Anadarko Basin that covers parts of Oklahoma and Texas, producing about 18,000 barrels of oil equivalent per day in oil, natural gas and natural gas liquids. About Templar Energy Templar Energy LLC and its affiliates, founded in 2012, are independent exploration and production companies, with a core focus on the development and acquisition of oil and natural gas reserves in the Greater Anadarko Basin of Western Oklahoma and the Texas Panhandle. Templar Energy and its operating subsidiaries -- http://templar.energy/-- have acquired substantial assets in the Mid-Continent region covering, as of the Petition Date, approximately 273,400 net acres by directly leasing oil and gas interests from mineral owners. Templar Energy LLC and its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 20-11441) on June 1, 2020. Templar Energy was estimated to have $100 million to $500 million in assets and $500 million to $1 billion in liabilities. Guggenheim Securities, LLC is acting as the Company's investment banker, Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel, and Alvarez & Marsal North America, LLC is acting as financial advisor. Young Conaway Stargatt & Taylor, LLP is local co-counsel. Kurtzman Carson Consultants LLC is the claims agent, maintaining the page http://www.kccllc.net/TemplarEnergy TIDEWATER ESTATES: Seeks to Hire Sheehan and Ramsey as Counsel -------------------------------------------------------------- Tidewater Estates, Inc. seeks authority from the United States Bankruptcy Court for the Southern District of Mississippi to employ Sheehan and Ramsey, PLLC, as its counsel. Services Sheehan will render are: a. consult with the Subchapter V Trustee and any appointed committee concerning the administration of the case; b. investigate the acts, conduct, assets, liabilities, and financial condition of the Debtor, the operation of the Debtor's business and the desirability of the continuance of such business, and any other matter relevant to the case or to the formulation of the plan; c. formulate a plan; and d. prepare any pleadings, motions, answers, notices, orders and reports that are required for the proper function of the Debtor. Sheehan will be paid at these rates: Patrick A. Sheehan $325 Associate Attorneys $275 Paralegals $125 The firm has no connection of any kind or nature with the Debtor, creditors or any other "party in interest," according to court filings. Sheehan can be reached through: Patrick A. Sheehan, Esq. Sheehan and Ramsey, PLLC 429 Porter Avenue Ocean Springs, MS 39564-3715 Tel: 228-875-0572 Fax: 228-875-0895 Email: pat@sheehanlawfirm.com About Tidewater Estates, Inc. Tidewater Estates, Inc. filed its voluntary petition for relief under CHapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case No. 20-50955) on June 9, 2020. In the petition signed by Emile A. Bertucci, III, director, secretary/treasurer, the Debtor estimated $1 million to $10 million in assets and $500,000 to $1 million in liabilities. The Debtor is represented by Patrick Sheehan, Esq. at SHEEHAN AND RAMSEY, PLLC. TIFFANY & CO: Post $64.6M Loss; LVMH Deal in Doubt -------------------------------------------------- Tiffany & Co. swung to a net loss of $64.6 million, or 53 cents a share, in its fiscal quarter ended April 30, 2020, from earnings of $125 million, or $1.03 a share, a year ago. Revenue dropped 45% to $555.5 million. French luxury retailer LVMH in November signed a deal to buy Tiffany for $16.2 billion. But the shutdowns resulting from the Covid-19 pandemic has thrown the deal into doubt. Reuters reported that French luxury retailer LVMH CEO Bernard Arnault is exploring ways to reopen negotiations on the French luxury goods giant's US$16.2 billion acquisition of U.S. jewelry chain Tiffany & Co, as U.S. social unrest and the coronavirus pandemic weigh on the retail sector, people familiar with the matter said on June 3, 2020. Arnault has been in talks with his advisers this week to identify ways to pressure Tiffany to lower the agreed deal price of US$135 per share, the sources said. He is considering whether he can argue that the New York-based company is in breach of its obligations under the merger agreement, they said. LVMH has not yet settled on a strategy to pursue a deal price cut and has not asked Tiffany to reopen negotiations, according to the sources. It is not clear whether it will do so, and what arguments it could pursue. Tiffany does not believe there is a legal basis to renegotiate the deal, the sources said. The company is in compliance with financial covenants under the merger agreement with LVMH, and expects to remain so after declaring a quarterly dividend two weeks ago, the sources said. While Arnault now has concerns about overpaying for Tiffany, he still believes in the deal's strategic rationale, according to the sources. Tiffany will give LVMH a bigger share of the lucrative U.S. market and expand its offerings in jewelry, the fastest-growing sector in the luxury goods industry. Were Tiffany to rebuff LVMH's bid to reopen the deal, their dispute could end up in Delaware court, the sources said. An acrimonious end to the deal would make it more difficult for LVMH to make another attempt at acquiring Tiffany in the future, they said. Several acquirers have walked away or renegotiated deals in the wake of the pandemic. In the retail sector, private equity firm Sycamore Partners walked away from a US$525 million deal to acquire a majority stake in L Brands Inc's Victoria's Secret. About LVMH LVMH Moet Hennessy Louis Vuitton Inc. operates an online design clothing retail store. The Company offers handbags, shoes, jewellery, timepieces, perfumes, books, apparel products, and other accessories. LVMH Moet Hennessy Louis Vuitton serves customers worldwide. About Tiffany Headquartered in New York City, Tiffany & Co. is a luxury jewelry and specialty retailer. The company is engaged in selling jewelry, sterling silver, china, crystal, stationery, fragrances, water bottles, watches and personal accessories, as well as some leather goods. TOTAL BODY: Gets Approval to Hire Pittman & Pittman as Counsel -------------------------------------------------------------- Total Body Laser Center, LLC received approval from the U.S. Bankruptcy Court for the Western District of Wisconsin to employ Pittman & Pittman Law Offices, LLC as its legal counsel. The firm will assist Debtor in the preparation of its Chapter 11 plan and will provide other legal services in connection with its bankruptcy case. The firm's attorneys and paralegal will be paid at hourly rates as follows: Galen W. Pittman $400 Greg P. Pittman $300 Wade. M. Pittman $300 Paralegal $75 Wade Pittman, Esq., the firm's attorney who will be handling the case, disclosed in court filings that he is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Wade M. Pittman, Esq. Pittman & Pittman Law Offices, LLC 702 N Blackhawk Ave., Suite 101 Madison, WI 53705 Telephone: (608) 233-4336 Facsimile: (608) 268-8605 About Total Body Laser Center Total Body Laser Center, LLC is a medical grade skin care specialist based in Madison, Wis., that offers tattoo removal, hair removal, laser skin treatments, scar and stretch mark removal, spider vein removal, and toenail fungus treatment. For more information, visit https://totalbodylasermedspa.com Total Body Laser Center filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wis. Case No. 20-11328) on May 19, 2020. At the time of the filing, Debtor disclosed total assets of $138,150 and total liabilities of $1,026,300. Judge Catherine J. Furay oversees the case. Pittman & Pittman Law Offices, LLC is Debtor's legal counsel. ULTIMATE SOFTWARE: S&P Rates $2.6BB First-Lien Term Loan Add-On 'B' ------------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level and '2' recovery ratings on Weston, Fla.-based human capital management (HCM) solutions provider The Ultimate Software Group Inc.'s proposed $2.6 billion first-lien term loan add-on, and affirmed the ratings on the proposed $425 million revolving credit facility (upsized from $275 million). The '2' recovery rating indicates S&P's expectation of substantial (70%-90%; rounded estimate: 70%) recovery in the event of default. S&P also assigned its 'CCC' issue-level and '6' recovery to its proposed $700 million second-lien term loan. The '6' recovery rating indicates our expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of default. The existing $900 million privately placed second-lien term loan remains unrated." All of S&P's other ratings on Ultimate are unchanged. The outlook is stable. The proceeds will be used, along with cash on hand, to repay in full Kronos Inc.'s outstanding debt of $3.381 billion, which Ultimate acquired on April 1, 2020. S&P estimates the transaction increases Ultimate's 2020 leverage to the mid-13x area, around 0.5x higher than its forecast from April 2020. Although S&P's EBITDA forecast is unchanged, the revolver balances at Kronos ($95 million) and Ultimate ($245 million) are $320 million higher than S&P previously forecast, resulting in the slightly higher leverage forecast. S&P continues to expect negative discretionary cash flows (DCF) in 2020 ($155 million) and 2021 ($25 million) before turning positive in 2022 ($75 million) from ongoing revenue and EBITDA growth. Despite the negative DCF in 2020 and 2021, S&P expects the $346 million cash at close to provide adequate liquidity to absorb the negative DCF. In addition, the company has access to another $180 million of its $425 million revolver. ISSUE RATINGS – RECOVERY ANALYSIS Key analytical factors -- S&P's simulated default scenario analysis of Ultimate contemplates a default in 2022 as the company faces strong price competition from the crowded HCM space, leading to severe attrition among its client base and an inability to cover its debt and interest expense. -- In S&P's analysis, it values the company as a going concern, which would maximize value to creditors. -- S&P applies a 7x EBITDA multiple to an assumed distressed emergence EBITDA of $628 million to derive an estimated gross recovery value of $4.4 billion. -- The valuation multiple is consistent with that for similar software companies. Simulated default assumptions -- Simulated year of default: 2022 -- Emergence EBITDA: $628 million -- EBITDA multiple: 7x -- LIBOR at default: 2.5% Simplified waterfall -- Net enterprise value (after 5% administrative costs): $4.2 billion -- Valuation split (obligors/nonobligors): 90%/10% -- Priority claims: 0 -- Value available to first-lien debt claims: $4.1 billion -- Secured first-lien debt claims: $5.6 billion -- Recovery expectations: 70%-90% (rounded estimate: 70%) -- Secured second-lien debt claims: $1.7 billion -- Recovery expectations: 0%-10% (rounded estimate: 0%) UNITED AIRLINES: Fitch Rates Special Facility Bonds 'BB-' --------------------------------------------------------- Fitch Ratings has assigned 'BB-'/'RR4' ratings to a series of special facility revenue bonds to be issued by the city of Houston and Guaranteed by United Airlines Holdings, Inc. The city intends to issue three series of airport special facility revenue bonds to refinance existing bonds that begin maturing on July 1, 2020, with United unconditionally guaranteeing the payment of the bonds. The bonds do not constitute indebtedness to the city of Houston or the airport and neither are liable for any payments. The bonds are secured by a pledge of certain revenues, consisting primarily of net rentals to be paid by United pursuant to a lease between Houston and United. The series 2020-A bonds will refinance the existing Series 2014 Bonds, which were originally issued to refinance Series 2001 Bonds. The Series 2001 bonds were originally issued to finance a portion of the cost of the construction, improvement, and equipping of an international passenger terminal (Terminal E) and related airport facilities for use by United (formerly Continental Airlines) at George H. Bush International Airport/Houston. All of the Terminal E project is owned by the city and has been leased by the city to United. Under the terms of the lease, United has the exclusive use of Terminal E (23 gates) and of other components of the Terminal E project. The 2020B-2 bonds will refinance the existing Series 2015B-2 Bonds, which were originally issued to refinance the existing Series 1997B Bonds and the Series 1998B Bonds. The Series 97/98B Bonds were issued to finance a portion of the cost of the acquisition, construction, improvement, and equipping of certain terminal facilities in Terminal B, Terminal C and elsewhere at the airport for use by United. The 2020 C bonds will refinance the existing Series 2015C Bonds and will be secured in parity with the Series 2018C Bonds. The Series 2015C Bonds were originally issued to provide a portion of the funds for the redemption of United's Series 1997C and Series 1998C Bonds. The 1997/1998C Bonds were originally issued to finance the improvement, construction and installation of certain facilities each to support the operations of United at the Airport including an aircraft hangar, a maintenance and parts storage facility, a mail sorting facility, flight simulator and in-flight training facilities and certain improvements to hangar facilities. KEY RATING DRIVERS Ratings in Line with United's Unsecured Debt: Although the revenue bonds benefit from a security interest in United's lease payments, Fitch views the risk profile of these revenue bonds as closer to United's unsecured issuances. United does not have a master lease at Houston International Airport. Instead, United has multiple leases in place tied to various terminals and facilities. In a bankruptcy scenario, it is possible select leases could take priority and leave other leases to be rejected or consolidated. In certain circumstances, Fitch provides ratings uplift for airport revenue bonds. For instance, American Airlines' JFK bonds are rated above the Issuer Default Rating as the bonds benefit from a single master lease, which Fitch views as having a lower risk of being rejected in a bankruptcy scenario. The risks of potential lease rejections are mitigated by the strategic importance of United's Houston hub. The airport represents United's second largest domestic hub, accounting for 10% of United's system-wide passenger enplanements. The airport has five terminals with 128 gates. United has 97 total gates including its exclusive and preferential gates. Prior to the onset of the coronavirus, United had prioritized growth at its mid-continent hubs like Houston, growing its regional connections to better compete with other network carriers. United's mid-continent hub strategy had proven successful, and Fitch expects that Houston will remain a key part of that strategy as the airline works to recover from the coronavirus downturn. The bonds are also supported by potential cash flows from replacement lessors should United reject the leases in a bankruptcy. The City of Houston has an obligation to make commercially reasonable efforts to find a replacement lessor for the benefit of the facility bonds should United default on the leases. However, the value to bondholders of a replacement lessor is difficult to ascertain particularly in the current environment. United's Corporate Rating: Fitch downgraded United to 'BB-'/Negative from 'BB' in April. The agency expects credit metrics to remain weak for the 'BB-' rating level at least through 2021 and into 2022. The company has arranged a term loan facility secured against its loyalty program. The access to capital gives Fitch confidence around the company's liquidity balance, but may add a material amount of debt to the balance sheet, which will lead to elevated leverage for the next few years. The company will retain access to roughly $4.5 billion in loans under the Coronavirus Aid, Relief, and Economic Security Act. Fitch believes the risk inherent in rising debt is partly offset by United's ability to de-lever. Assuming that passenger traffic trends toward 2019 levels by 2023, United should be able to pay down a material amount of debt between over that time period. Its forecast shows the company generating significant FCF starting in 2021 based on lower operating costs, and sharply lower capex. Fitch's updated forecast shows leverage around 6x at YE 2021, which is high for the current rating, but leverage is expected to track lower thereafter. The agency's updated forecast indicates that leverage will remain above its negative sensitivity through 2021 and potentially 2022, but other sensitivities (fixed charge coverage and FCF) return to within Fitch's sensitivities quicker. Fitch also notes that the leverage figure at YE 2021 remains highly variable to model inputs. The agency is currently forecasting 2021 revenues to be more than 25% below 2019 levels. A vaccine/effective coronavirus treatment could lift revenues higher, whereas a resurgence in the virus/further lockdowns could push results lower. DERIVATION SUMMARY United's 'BB-' rating is in between the ratings of its two major network rivals, Delta Air Lines and American Airlines. The ratings distinction between the three airlines is reflective of the financial strategies adopted by each airline. For instance, following its merger with Northwest Airlines, Delta aggressively deleveraged its balance sheet and now maintains a low leverage ratio. American Airlines on the other hand, has adopted a more aggressive financial policy, borrowing heavily to finance new aircraft deliveries while simultaneously sending material amounts of cash to shareholders via share repurchases. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Adjusted debt/EBITDAR trending towards 3.25x; -- FFO fixed-charge sustained at or above 3x; -- Neutral to positive sustained FCF. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Adjusted debt/EBITDAR sustained above 4x; -- FFO fixed-charge coverage sustained below 2x; -- EBITDAR margins deteriorating into the low double-digit range; -- Persistently negative or negligible FCF. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE As of March 31, 2020, the Company had $5.2 billion in unrestricted cash, cash equivalents and short-term investments. The company also had $2 billion available under its undrawn revolvers. The company has taken a number of additional measures to shore up liquidity that includes: -- Reducing capex projections to be below $4.5 billion in 2020 and $2 billion in 2021; -- Terminated share repurchases; -- Entered into approximately $3 billion in secured term loan and new aircraft financings; -- Raised about $1.1 billion in cash through issuance of common stock; -- Reduced or waived executive salaries; -- Entered into the Payroll Support Program PSP with U.S. Treasury Department, which will provide company approximately $5 billion starting in April and going through July 2020; -- The company also has the ability to borrow up to $4.5 billion from the Treasury Department by Sept. 30, 2020. Debt Obligation: As of March 31, 2020, the company had approximately $17.7 billion of debt and finance lease obligations, including $4.1 billion that will become due in the next 12 months ESG Considerations The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). VENUS CONCEPT: Stockholders Pass All Proposals at Annual Meeting ---------------------------------------------------------------- Venus Concept Inc. held its 2020 Annual Meeting of Stockholders on June 16, 2020, at which the stockholders: (a) elected Scott Barry, Fritz LaPorte, and Garheng Kong, M.D. as directors to hold office until the 2023 annual meeting of stockholders or until their successors are elected and qualified; (b) approved the issuance of shares of 6,600,000 shares of common stock of the Company upon the conversion of the 660,000 shares of Series A Convertible Preferred Stock issued by the Company on March 19, 2020; and (c) ratified the selection by the audit committee of the Company's board of directors, of MNP LLP, as the independent registered public accounting firm of the Company for the fiscal year ending Dec. 31, 2020. About Venus Concept Toronto, Ontario-based Venus Concept Inc. is an innovative global medical technology company that develops, commercializes, and delivers minimally invasive and non-invasive medical aesthetic and hair restoration technologies and related practice enhancement services. The Company's aesthetic systems have been designed on a cost-effective, proprietary and flexible platform that enables the Company to expand beyond the aesthetic industry's traditional markets of dermatology and plastic surgery, and into non-traditional markets, including family and general practitioners and aesthetic medical spas. In the years ended Dec. 31, 2019 and in 2018, a substantial majority of its systems delivered in North America were in non-traditional markets. Venus Concept incurred a net loss of $42.29 million in 2019 following a net loss of $14.21 million in 2018. As of March 31, 2020, Venus Concept had $155.26 million in total assets, $108.68 million in total liabilities, and $46.57 million in stockholders' equity. MNP LLP, in Toronto, Canada, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 30, 2020, citing that the Company has reported recurring net losses and negative cash flows from operations, which raise substantial doubt about the Company's ability to continue as a going concern. VISTEON CORP: Moody's Confirms Ba3 CFR, Outlook Stable ------------------------------------------------------ Moody's Investors Service confirmed the ratings of Visteon Corporation's including the Corporate Family Rating and Probability of Default Rating, at Ba3 and Ba3-PD, respectively, and the senior secured credit facilities at Ba3. The Speculative Grade Liquidity Rating remains SGL-1. The outlook is stable. This action concludes the review for downgrade initiated on March 26, 2020. Ratings Confirmed: Issuer: Visteon Corporation Corporate Family Rating, at Ba3 Probability of Default Rating, at Ba3-PD Senior Secured Bank Credit Facility, at Ba3 (LGD3) Outlook Action: Issuer: Visteon Corporation Outlook, Changed To Stable from Rating Under Review RATINGS RATIONALE Visteon's ratings reflect the company's strong position as a global supplier to the auto industry of digital instrument clusters, digital cockpit displays and other vehicle electronics, with a strong backlog of new business that should evident in revenue over the 2020/2021 period. Visteon operates in diverse geographic end-markets, with 46% of revenues in Asia, 33% in Europe, and 27% in the Americas (before 6% intercompany eliminations). Visteon high Asian exposure negatively affected profits early in 2020, but recovery of plant operations there should aid results going forward and somewhat offset the impact of the coronavirus pandemic plant closures in North America and Europe. Europe and North America auto production facilities are restarting. Visteon's concentration outside of North American should aid recovery of profits going forward as North America was the last region to start plants back up. Further, Visteon entered the downturn with a solid book of business as the company began the year with $6.1 billion in life time business booked in 2019. The backlog is a management estimate, however, of: 1) about 30% share of the vehicle cluster market, and 2) display wins of $800 million in the first quarter of 2022, which is a company record. Still, the backlog should somewhat mitigate the lower global automotive production expected in 2020 and generate solid revenue growth in 2021. Moody's notes that despite the new product launch headwinds Visteon experienced in 2019, the company achieved its full-year revenue guidance in 2019 largely supported by its backlog of new business. Visteon's debt/EBITDA as of March 31, 2020 was elevated at 6.3x (after Moody's standard adjustments) and includes the company's $400 million of borrowings under the revolving credit agreement. Pro forma debt/EBITDA to exclude the revolver drawdown was 4.2x. Visteon's debt leverage will deteriorate through 2020 with the impact from temporary closures of automotive customer manufacturing operations in North America and Europe. Management actions to help mitigate lost volumes from the impact of the coronavirus pandemic include capital expenditure reductions, temporary salary reductions, reduced discretionary spending, improved working capital management, and additional organizational restructuring actions, but not likely sufficient to offset the impact of the volume decline. Nonetheless, with recovering industry conditions expected in 2021 and debt paydown from available cash, Moody's expect Visteon's debt leverage will recover to pre coronavirus pandemic levels by the back half 2021. The stable outlook reflects Moody's belief that Visteon's strong backlog of new business wins will add to the expected gradual recovery in the automotive industry, although there is concern about potential interruption from a second wave of infection rates. Moody's also believes the launch issues of 2019 are resolved. Visteon has very good liquidity, which should support operations under these circumstances. Visteon's SGL-1 Speculative Grade Liquidity Rating reflects very good liquidity with global unrestricted cash of $822 million, as of March 31, 2020. Visteon's $400 million revolving credit facility was fully drawn as of March 31, 2020, however, and expected to remain outstanding until year-end 2020 or into 2021 until industry conditions stabilize. Moody's now expects free cash flow generation in 2020 in the negative $150 million range due to a more gradual recovery of automotive production levels. The revolving credit facility includes a net leverage ratio test, and Visteon is expected to be in compliance through 2020. Visteon has a complex organizational structure includes consolidated overseas joint-venture interests that contribute a significant amount of the company's consolidated operating profits. The secured debt rating of Ba3 on the US issued debt reflects Moody's belief that the recovery value for the U.S.-issued debt from its diverse global operations would not be materially different the overall family recovery. Automotive suppliers face material credit risk from carbon transition. Automotive suppliers are coming under increasing pressure to accelerate the electrification of their vehicles, requiring large long-term investments while technologies are evolving. These efforts coincide with a period in which green house gas emissions from the transportation sector rose faster than the overall growth of emissions. Visteon's products are agnostic to vehicle powertrain. Yet, the company's digital and electronic offerings are likely in line with vehicle electrification trends and the need for more interactive driver data in the vehicle. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be upgraded following a demonstrated ability to deliver improved operating performance and positive free cash flow resulting in EBITA margin (inclusive of restructuring charges) above 8% EBITA/interest above 4x and Debt/EBITDA approaching 2.5x. Evidence that the cash repatriation strategies support strong debt service will also be an important consideration for any upgrade. The ratings could be downgraded with Moody's expectation of EBITA/interest being sustained below 2.5x or Debt/EBITDA expected to be sustained above 4x by the second half of 2021. Deteriorating liquidity could also lead to a rating downgrade. The principal methodology used in these ratings was the Automotive Supplier Methodology published in January 2020. Visteon Corporation, headquartered in Van Buren Township, Michigan, is a global automotive supplier that designs, engineers and manufactures cockpit electronics and connected car solutions for the world's major vehicle manufacturing companies. Visteon has an international network of manufacturing operations, technical centers and joint venture operations. Visteon had sales of $2.9 billion in for the LTM period ending March 31, 2020. WARNER MUSIC: S&P Raises ICR to BB on Sustained Operating Strength ------------------------------------------------------------------ S&P Global Ratings raised its issuer credit rating on Warner Music Group (WMG) to 'BB' from 'BB-'. The outlook is stable. S&P is also raising its issue-level rating on the senior secured debt to 'BB' from 'BB-'; the recovery rating on this debt remains '3'. S&P is raising its issue-level rating on the senior unsecured notes to 'BB-' from 'B+'; the recovery rating on this debt remains '5' At the same time, S&P is assigning its 'BB' issue-level rating and '3' recovery rating to the company's new senior secured notes comprising of a US$535 million tranche and a EUR325 million tranche The upgrade reflects S&P's expectations that WMG's adjusted leverage will decline to the low 4.0x area while discretionary cash flow (DCF) to debt will be above 10% on a sustained basis over the next 12 months. The deleveraging is driven by strong operating performance, particularly within digital streaming, and the company's improved cost structure post the completion of its initial public offering (IPO). WMG's long-term incentive compensation will move to share-based compensation from the current cash payments. As part of S&P's adjustments, it adds back share-based compensation to EBITDA, which will improve leverage and cash flow metrics. At the same time, S&P is assigning its 'BB' issue-level ratings on the company's new senior secured notes comprising of a US$535 million tranche and a EUR325 million tranche. The company will use the proceeds to redeem currently outstanding notes and S&P expects this transaction to be leverage neutral. S&P doesn't expect WMG's financial policy, post IPO, to materially change the company' cash flow priorities. As the company transitions to paying long-term incentive compensation in shares as opposed to cash, its S&P Global Ratings-adjusted leverage and cash flow metrics will show a modest improvement. Adjusted leverage as of March 31, 2020, was 4.7x. S&P forecasts adjusted leverage to decline to 4.3x by the end of fiscal 2020 (ending Sept. 30, 2020) and further decline to between 3.8x–4.0x in fiscal 2021. S&P expects WMG will continue to prioritize using free cash flow on acquisitions and internal investments to drive EBITDA growth as well as declared dividends, of about $245 - $255 million annually over the next 2 years, before considering any further shareholder returns. The rating agency also expects any material deleveraging to come from EBITDA growth instead of repaying debt. The music industry's continued growth momentum, now in its sixth year, supports WMG's growth prospects, although S&P expects fiscal 2020 to be affected by the COVID-19 shutdowns. WMG's strong operating performance mirrors the music industry's expansion in general, driven by robust growth in digital music streaming, more than offsetting declines in physical and digital downloads. The COVID-19 shutdowns will temporarily alter this trajectory as S&P expects a larger decline in physical sales and lower expanded services revenue due to the cancellation of live concert events. This will likely result in a modest decline in fiscal 2020 revenue before a return to growth in fiscal 2021 as physical sales declines normalize (to the 8%-10% annual range) and artist and expanded services improve in line with its expectations for a gradual recovery in live events in the first half of 2021. S&P expects digital streaming growth to be unaffected by COVID-19 and for global streaming services penetration to continue increasing. Global revenue share for streaming is just under 50% of global music revenue, and with expected growth to continue in excess of 20% annually, streaming will represent over 50% of global music revenues within the next two years. As streaming becomes a larger part of the overall music industry revenue base, S&P would expect the rate of digital streaming growth to slow down. However, given the larger base, the rating agency still expects streaming growth to more than offset future declines in physical sales. "The stable outlook reflects our view that WMG's mid-single-digit percentage growth trajectory will continue to mirror the music industry's growth resulting from the proliferation of digital streaming services. Our outlook also reflects our expectations that adjusted leverage will decline to the low-4.0x area over the next 12 months, driven primarily by EBITDA growth," S&P said. "We could lower our issuer credit rating on WMG if we believe adjusted leverage will increase above the mid-4.0x area and DCF to debt declines below 5% on a sustained basis. This could occur if operating performance deteriorates leading to lower-than-expected EBITDA growth, driven by a slowdown or reversal in growth trends within the music industry or market share losses," the rating agency said. Additionally, S&P could lower the rating if WMG materially changes its financial policy with regard to shareholder returns or debt-financed acquisition such that leverage is above the mid 4x area on a sustained basis. "We could raise our ratings on WMG if the current positive industry trends continue to spur growth for the company, leading to adjusted leverage declining below 3.5x, while DCF to debt remains above 10% on a sustained basis. In an upside scenario, we would also expect to see digital streaming as the dominant source of revenue for the company providing a greater degree of earnings stability," the rating agency said. WOOD PROTECTION: Case Summary & 9 Unsecured Creditors ----------------------------------------------------- Debtor: Wood Protection Technologies, Inc. 1175 Industrial Avenue, Unit R Escondido, CA 92029 Business Description: Wood Protection Technologies, Inc. is engaged in the business of paint, coating, and adhesive manufacturing. Chapter 11 Petition Date: June 23, 2020 Court: United States Bankruptcy Court District of Colorado Case No.: 20-14273 Debtor's Counsel: Warren Katz, Esq. 2949 North Broadway, Unit 2 Chicago, IL 60657 Tel: 949-697-4111 E-mail: wkatz@kentlaw.iit.edu Total Assets: $360,000 Total Liabilities: $1,837,195 The petition was signed by Steven Plumb, representative. A copy of the petition containing, among other items, a list of the Debtor's nine unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/eR5FVn YUMA ENERGY: Committee Hires Locke Lord as Legal Counsel -------------------------------------------------------- The official committee of unsecured creditors of Yuma Energy, Inc. and its affiliated debtors seeks authority from the U.S. Bankruptcy Court for the Northern District of Texas to hire the law firm of Locke Lord LLP as its counsel. The Committee requires Locke Lord to: a. advise the Committee with respect to its rights, powers, and duties in these chapter 11 cases; b. participate in in-person and telephonic meetings of the Committee and subcommittees formed thereby; c. assist and advise the Committee in its meetings and negotiations with the Debtors and other parties in interest regarding these chapter 11 cases; d. assist the Committee in analyzing claims asserted against, and interests in, the Debtors, and in negotiating with the holders of such claims and interests and bringing, or participating in, objections or estimation proceedings with respect to such claims and interests; e. assist with the Committee’s review of the Debtors’ Schedules of Assets and Liabilities, Statement of Financial Affairs, and other financial reports prepared by the Debtors; f. assist the Committee in its investigation of the acts, conduct, assets, liabilities, management, and financial condition of the Debtors and of the historic and ongoing operation of their businesses; g. assist the Committee in its analysis of, and negotiations with the Debtors or any third party related to, financing, asset disposition transactions, compromises of controversies, and assumption and rejection of executory contracts and unexpired leases; h. assist the Committee in its analysis of, and negotiations with the Debtors or any third party related to the formulation, confirmation, and implementation of a chapter 11 plan(s) and all documentation related thereto; i. assist and advise the Committee with respect to communications with the general creditor body regarding significant matters in these cases; j. respond to inquiries from individual creditors as to the status of, and developments in, these chapter 11 cases; k. represent the Committee at hearings and other proceedings before the Court and other courts or tribunals, as appropriate; l. review and analyze complaints, motions, applications, orders, and other pleadings filed with the Court, and advise the Committee with respect to formulating positions thereon and filing responses thereto; m. assist the Committee in its review and analysis of, and negotiations with the Debtors and their affiliates related to, intercompany claims and transactions; n. review and analyze third party analyses or reports prepared in connection with the Debtors' assets, and potential claims and causes of action, advise the Committee with respect to formulating positions thereon, and perform such other diligence and independent analysis as may be requested by the Committee; o. advise the Committee with respect to applicable federal and state regulatory issues, as such issues may arise in these cases; p. assist the Committee in preparing pleadings and applications, and pursuing or participating in adversary proceedings, contested matters, and administrative proceedings as may be necessary or appropriate in furtherance of the Committee's duties; and q. perform such other legal services as may be necessary or as may be requested by the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. Locke Lord's hourly rates are: Attorney $325 to $1,050 Paraprofessional $200 to $425 Locke Lord is a "disinterested person" within the meaning of Bankruptcy Code Section 101(14), according to court filings. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Acosta made the following disclosures: The firm can be reached through: Philip G. Eisenberg, Esq. Locke Lord LLP JPMorgan Chase Tower 600 Travis, Suite 2800 Houston, TX 77002 Tel: 713-226-1200 Fax: 713-223-3717 About Yuma Energy Yuma Energy, Inc. -- http://www.yumaenergyinc.com/-- is an independent Houston-based exploration and production company. The Company is focused on the acquisition, development, and exploration for conventional and unconventional oil and natural gas resources, primarily in the U.S. Gulf Coast, the Permian Basin of West Texas and California. The Company has employed a 3-D seismic-based strategy to build a multi-year inventory of development and exploration prospects. Its current operations are focused on onshore properties located in southern Louisiana, southeastern Texas and recently, in the Permian basin of West Texas. In addition, the Company has non-operated positions in the East Texas Eagle Ford and Woodbine, and operated positions in Kern County in California. Yuma Energy and three of its affiliates filed for bankruptcy protection on April 15, 2020 (Bankr. N. D. Texas, Lead Case No. 20-41455). The petitions were signed by Anthony C. Schnur, chief restructuring officer. As of Dec. 31, 2019, Yuma posted $32,290,329 in total assets and $28,270,794 in total liabilities. THe Debtors have tapped Fisher Broyles LLP as their legal counsel; Seaport Gordian Energy LLC as their investment banker; Ankura Consulting Group LLC as their financial advisor; and Stretto as their administrative advisor. YUNHONG CTI: Forbearance Agreement with PNC Bank Ends ----------------------------------------------------- As previously disclosed on a Current Report on Form 8-K of Yunhong CTI Ltd., on Dec. 14, 2017, the Company entered into a Revolving Credit, Term Loan and Security Agreement with PNC Bank, National Association. Prior to Jan. 13, 2020, certain events of default under the Loan Agreement had occurred. On Jan. 13, 2020, a Limited Waiver, Consent, Amendment No. 5 and Forbearance Agreement between the Lender and the Company became effective, pursuant to which the Lender agreed to, among other things, forebear from exercising the rights and remedies in respect of the Prior Defaults afforded to the Lender under the Loan Agreement for a period ending no later than Dec. 31, 2020. On June 15, 2020, the Lender provided the Company notice that (i) an additional Event of Default (as defined in the Loan Agreement) had occurred and is continuing as a result of the Company's failure to maintain a Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of 0.75 to 1.00 for the three-month period ended March 31, 2020, (ii) as a result of the occurrence and continuance of the March FCCR Default, the Forbearance Period has ended, and (iii) as a result of the termination of the Forbearance Period, the Lender is entitled to exercise immediately all of its rights and remedies under the Loan Agreement including, without limitation, ceasing to make further advances to the Company and declaring all obligations to be immediately due and payable in accordance with the Loan Agreement. As of June 18, 2020, the Lender has not taken any further action nor has it indicated its intent to do so. About Yunhong CTI Ltd. Yunhong CTI Ltd. f/k/a CTI Industries -- http://www.ctiindustries.com/-- is a manufacturer and marketer of foil balloons and producer of laminated and printed films for commercial uses. Yunhong CTI also distributes Candy Blossoms and other gift items and markets its products throughout the United States and in several other countries. Yunhong CTI reported a net loss of $8.07 million for the year ended Dec. 31, 2019, compared to a net loss of $3.74 million for the year ended Dec. 31, 2018, following a net loss of $1.78 million for the year ended Dec. 31, 2017. As of Dec. 31, 2019, the Company had $31.32 million in total assets, $30.19 million in total liabilities, and $1.13 million in total equity. RBSM, in Larkspur, CA, the Company's auditor since 2019, issued a "going concern" qualification in its report dated May 14, 2020, citing that the Company has suffered net losses from operations and liquidity limitations that raise substantial doubt about its ability to continue as a going concern. [*] Creditor Income Tax Consideration for Oil & Gas Investors ------------------------------------------------------------- Lynn Loden of Opportune LLP wrote on JDSupra an article titled "Creditor Income Tax Considerations in the Form of Ownership for Upstream Oil & Gas Investors": So, you are (or represent) an investor in first or second lien debt tranche of an upstream oil and gas E&P entity that is held through perhaps a master-feeder fund or other private equity structure, and you receive the wonderful news that your debtor filed a Chapter 11 bankruptcy petition. Congratulations. After you confer with your auditors about the required GAAP impairment (if you have not already done so), talk then turns to what is the value of consideration to be expected and, in general, its legal form (usually some form of equity at this point). What is often not vetted until the bitter end of the restructuring (whether in or out of bankruptcy court) is: how is the consideration you will receive treated for income tax[i] purposes? This article is intended to give you an array of considerations that takes into account your form of organization (and attendant income tax sensitivities), as well as the income tax characteristics of the new instrument you receive in exchange for your indebtedness. Previously, the status of bona fide indebtedness of your investment solved most tax problems involving: * The active trade or business nature of oil and gas working interests (as opposed to royalties, net profits interests or production payments); * The location of the property in the U.S. (including the Gulf of Mexico) being treated as a U.S. Real Property Interest[ii] for purposes of the Foreign Investment in U.S. Real Property Tax Act of 1984 (FIRPTA); and * The tax character of the return on indebtedness, as interest is, well, interest, and the sale of an asset giving rise to interest is usually not an issue either for taxpayers with specific needs of types of taxable income such as Regulated Investment Companies and tax-exempt entities. This is about to change with the restructuring. You will likely receive (possibly a combination of): * Cash (hopefully) * New debt instrument * Voting ownership interest in either a C corporation or a (tax) partnership, and, maybe, * Warrants. Depending on numerous non-tax factors, use of a newco may be desired. This typically results in the assets being "marked to market" for tax purposes, as prior tax losses of a C corporate debtor do not export in asset sale transactions (a topic far beyond the scope of this article). The debt discharge income is the debtor’s problem, so we will wish them luck and move on. Income tax exit structures[iii] usually involve the former creditors holding either: * A regarded C corporation (its own taxpayer), * A pass-through taxed as a partnership (which can be an LLC or a state law limited partnership), or * Some combination thereof (that I like to refer to as a restructuring UP-C[iv]). Thus, assuming for all non-tax purposes that alternative exit structures are the same (i.e., liability protection, discharge, good title to assets, adequate liquidity, governance, etc.), here is what I suggest you look for: The Exchange Even if only adjustments to terms are made and the original principal remains outstanding, in most cases, for income tax purposes, such a debt modification is treated as an exchange[v] for income tax purposes. Most creditors prefer that the exchange at effective time of the restructuring to be treated as a taxable exchange of their debt instrument usually resulting in the current recognition of a long-term capital loss[vi]. However, if the debt has Original Issue Discount (OID), market discount[vii] or there is a partial payment with accrued but unpaid interest outstanding, there is mixed authority[viii] on how the proceeds are allocated between principal and interest, so be aware of a hidden trap where ordinary interest income is recognized, but a long-term capital loss is increased, as the loss may not offset the portfolio interest income[ix]. Items to Consider 1. If the debtor is a C corporation and stock or securities in that (or successor of) the C corporation debtor are wholly or partly received in exchange for the distressed debt, the exchange can default into a Tax-Free Reorganization[x] under Subchapter C of the Code. This has the effect of deferring[xi] inherent losses on the exchange except for property received on indebtedness with accrued but unpaid interest at the time of the exchange[xii]. 2. If an interest in a Limited Liability Company (or state law limited partnership) taxed as a passthrough entity is received, care must be taken that the creditor's loss is not deferred and added to its basis[xiii] in the new partnership interest, similar to the Tax-Free Reorganization discussed above. Also note that these rules may cast an "ordinary" character on the interest received in that if it is sold in the future, it does not[xiv] generate capital gain income. 3. If you get a debt instrument in return, check for OID upon receipt as it may require accrual of taxable interest income in periods when no cash is received. This Thing I Got in the Mail: What is it Going to Do to My Future Tax Returns? Ownership Interest Treated as Stock of a C Corporation: * This instrument is usually the safest and simplest form of exit, in that it effectively serves as a blocker for the entire group. * Income to investors is remitted in the form of dividends (likely qualifying for a 20% maximum rate) or gain on sale of shares (which are generally treated as capital assets). * In the event an exit strategy involves a sale to a publicly traded company in exchange for their shares, this can qualify as a tax-free exchange (whereas a partnership interest cannot without some pre-transaction gymnastics). * For investors subject to FIRPTA, withholding usually only occurs upon an actual receipt of cash via a dividend or stock sale. * No investor receives an annual Schedule K-1 with active oil and gas working interest income, depletion, intangible drilling costs, investment interest limitations and other things that tend to give Tax-Exempts and RICs' tax indigestion. Downsides: * One potential downside is that in the event the subject assets turn the corner in value, for a subsequent buyer to own them directly would cause the C corporation to incur a cash income tax[xv] prior to the sale; otherwise, we're left with selling them the stock of the entity where they will seek a discount for this inherited tax liability. * Another C corporation downside is that if it issues new high-yield debt, it could be bifurcated[xvi] into a (deemed) preferred stock slice and a debt instrument, which could change the timing and character of yield. Ownership Interest Treated as a Partnership Interest: In some ways, the inverse of the C corporation exit in that: * No double tax on sale at a gain at exit. * Should additional funding for development of proved undeveloped properties be supplied, development expenses (primarily intangible drilling costs) may be shared with investors in real time for consideration in their current year tax returns (i.e., a tax shield). * Partnership sharing arrangements are quite flexible in accomplishing pre-tax economic arrangements if properly planned. * Partnerships are not generally subject to the applicable high yield discount obligation (AHYDO) rules (for high yield debt), although there is a concern that C corporate partners might have to "look through" an issuing partnership if the structure is deemed abusive[xvii]. Downsides: * Individual unitholder blockers may be required to prevent the recognition of taxable income of an unfavorable character (UBTI and/or non-qualifying RIC income). * Tax reporting is more difficult that the receipt of annual Forms 1099-DIV, -INT, or -OID and Schedules K-1 are usually delivered at least 6-8 weeks later than Forms 1099, * New holders of passthrough interests may now have to file numerous state income and franchise tax returns depending on the location of the debtor's properties. * Should there be more than 100 investors in the surviving pass-through, consideration of whether the income would be qualifying income similar to a master limited partnership/publicly traded partnership[xviii] in order to retain pass-through status while not either losing pass-through status or requiring trading restrictions, which most creditors find unpalatable, and, * Withholding may apply in interim periods where effectively connected income (ECI) is present (whether distributed or not) and dispositions of partnership interests holding U.S. Real Property[xix]. Conclusion Restructurings are not fun times, but to avoid getting "a gift that keeps on giving " once your economic deal seems to be gaining a tailwind: * Discuss the strawman exit plan with your tax advisor seeking to maximize the recognized loss in the Exchange, and * How will entering into this type of investment affect future tax filings? And in parting: * Just say no to the response: "We're just trying to close and will address that later," and, * Rules and principles involving troubled debt restructurings involve complex capital markets transactional authority that are not typically drafted to provide guidance for distressed situations. Consultations with a qualified restructuring tax advisor are always encouraged. [*] Epiq: Bankruptcy Filings Rose 48% in May 2020 ------------------------------------------------- NEW YORK, June 03, 2020 (GLOBE NEWSWIRE) -- Epiq Global released bankruptcy filings statistics from its AACER business unit that shows commercial Chapter 11 filings were up 48% in May as compared to May 2019 with a total of 724 new petitions, and up 30% over April with 165 new petitions. There was a slight increase month over month in U.S. bankruptcy filings. Across all U.S. bankruptcy code chapters, the total number of new bankruptcy filings in May 2020 was 39,943. This represents a 3.9% increase from April, which had 38,440 new filings. Overall, commercial filings were up 13% over April with a total of 2,571 new filings. Non-commercial filings were up only 1% over April with a total of 37,372 new filings across all chapters. "May was largely consistent with April's new U.S. bankruptcy filing numbers as the country delays seeking bankruptcy protections during the global COVID-19 pandemic. We expect these delays to continue while key government programs address personal and commercial borrower liquidity concerns," commented Chris Kruse, senior vice president of Epiq AACER. Since the beginning of 2020, the weekly average overall new bankruptcy filings are down about 3%. During this period, the largest number of new filings each week have been non-commercial Chapter 7 filings, where the weekly average is down over 45%. "Our AACER customers are watching this category very closely as early indications of growth in this segment is a likely indicator of accelerated new filing activity," said Kruse. [*] Goulston & Storrs: Avoiding Fraudulent Unemployment Claims -------------------------------------------------------------- Rebecca Harris, Matthew Horvitz, and Andrew O'Connor of Goulston & Storrs PC wrote an article on JDSupra titled "Employer Beware: Avoiding Fraudulent Unemployment Claims": In the wake of the COVID-19 pandemic, the U.S. unemployment rate is at its highest level since the Great Depression. In light of the economic upheaval caused by this pandemic, in March 2020 Congress passed the largest economic stimulus package in U.S. history: the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. In addition to various types of direct payments and loan programs for businesses and individuals, the CARES Act provides workers with enhanced unemployment benefits, including Federal Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, Pandemic Unemployment Assistance, and other reimbursements. These programs expand unemployment assistance to individuals who ordinarily would not be entitled to unemployment assistance or who have exhausted their benefits. These programs also provide unemployed workers with extra weekly payments in addition to existing state-provided benefits. Moreover, states have passed additional measures to provide unemployment relief. In response to Massachusetts' unemployment rate reaching as high as 24 percent—an all-time high—Governor Baker signed into law bill S.2618 which expands unemployment relief measures for both employees and employers. In addition to providing much-needed relief, the rapidly expanded scope and availability of unemployment benefits have also created conditions ripe for fraud. Indeed, the rise in unemployment filings and the expansion of available benefits have led to a nationwide increase in the filing of fraudulent unemployment claims. Authorities suspect that criminal enterprises have been using stolen personal information collected from previous data breaches to file fraudulent claims, which are being submitted under the names of legitimate claimants as well as individuals who are still employed and never filed for unemployment benefits. Each state has its own process for submitting and processing unemployment claims, and similar vulnerabilities for fraud and abuse. In Massachusetts, for example, once an application for unemployment benefits is filed with the Department of Unemployment Assistance ("DUA"), the DUA sends the employer a letter notifying it that the application was filed and the estimated unemployment insurance payments the employer may owe. For larger employers who have instituted widespread layoffs and furloughs—and receive a large volume of such letters—insurance payments for fraudulent claims may end up being processed alongside those for legitimate claims. In such cases, employees only learn of the fraud when they themselves receive a letter from the DUA approving their "claim" for unemployment benefits—which they never filed. There are actions employers and employees can take to prevent these fraudulent unemployment claims from being paid: * First, upon notification from the state unemployment agency that an application for unemployment benefits has been filed, the employer should confirm whether the named applicant is a current or former employee. If it is a current employee, then the claim is likely fraudulent. If it is a former employee, the employer should contact the former employee to confirm whether the individual filed a claim for unemployment benefits. * Second, if it is determined that the claim is fraudulent, both the employer and the employee/former employee should immediately contact the state unemployment agency to report that the claim is fraudulent. For example, in Massachusetts, there is a webpage devoted to reporting fraudulent unemployment benefits claims, which provides a Fraud Reporting Form, the UIfraud@mass.gov email address for reporting fraudulent claims, and a telephone number. Due to reduced staff and high call volume, using the online form or email is recommended. * Third, employees should be aware that this is evidence of a possible theft of their personal information, and they should take appropriate measures to protect their information, including alerting their banks and health insurers, signing up for credit monitoring services, and reporting the theft of their personal information to the Federal Trade Commission and separately to the IRS by filing IRS Form 14039. Such employees should also file a police report with their local law enforcement and coordinate with their employer to file the report of the data breach with the Office of Consumer Affairs and Business Regulation. In addition, the three major credit reporting agencies provide mechanisms for placing fraud alerts on accounts so that any application for a line of credit will require additional identity verification measures. * Fourth, employers should monitor their tax accounts on a daily basis to identify unexpected claims as early as possible. In Massachusetts, for example, employers can monitor their DUA and MassTaxConnect Accounts for any suspicious activity. The Secret Service is currently pursuing leads to shut down this fraud network. In Massachusetts, the DUA is taking its own measures to protect against this kind of fraud by requiring applicants to provide additional identifying information when filing a claim. Consequently, claimants and employers should anticipate a delay in the approval and payment of benefits. Due to this unfortunate surge in fraudulent unemployment claims, it is important for employers to diligently monitor unemployment claims and confirm the legitimacy of any such claims with their employees and former employees. [*] Key ELements in Out-of-Court Restructurings ----------------------------------------------- Goulston & Storrs bankruptcy attorney Doug Rosner recently collaborated with Thomson Reuters to create a three-part video series regarding alternative solutions to the financial problems of distressed companies. See the video at https://www.goulstonstorrs.com/douglas-b-rosner/publications/thomson-reuters-bankruptcy-series-the-key-elements-of-an-out-of-court-restructuring/ This summary highlights the key elements to a successful out-of-court restructuring (part two of the series): APPROACHES TO RESTRUCTURING The art of restructuring requires a feel for the right approach fitted to the situation of each distressed borrower. Here are some of the approaches a borrower might take in negotiations: 1.If there is one senior secured lender, it generally makes sense for the borrower to talk with that party first. That lender often provides essential ongoing liquidity to the borrower and the consent of that lender can help pave the way for consents from more junior creditors. 2. A borrower might consider opening dialogue with a well-crafted letter to all creditors, inviting their input on a plan, which frequently has a good response rate. 3. A borrower might also consider focusing first on a group of the largest and most critical trade creditors, talking to them in some strategic sequential order, or inviting a “committee” approach with them before taking a detailed plan to the larger creditor population. 4. A borrower could consider calling its creditors for personal dialogues, starting first with the biggest and most critical among them, and then replicating the process among the smaller creditors that will have less negotiating leverage and less at stake. Really, the approaches are limited only by the creativity of those involved and the financial situation of the borrower. Regardless of approach, there are a few steps that should be carefully considered in every situation, including: • Planning to pay essential equipment lessors, which often provide copiers, vehicles, and other important equipment at fixed monthly prices that often cannot be negotiated due to every lessor’s financing arrangements with their own banks. • Obtaining necessary landlord concessions or deal restructurings to facilitate profitable operations at every site. • Obtaining landlord consents to assignment or subletting at sites where operations should be strategically abandoned. ASSIGNMENTS FOR THE BENEFIT OF CREDITORS Another legal tool available to distressed companies is the assignment of assets for the benefit of creditors. Such an approach, which generally or frequently involves all or most of a distressed company’s assets, can often produce liability-insulating consents from creditors. One way to facilitate this approach is to appoint a mutually satisfactory neutral fiduciary to run a sale of the borrower's assets and interact with all creditors. The neutral then distributes to creditors the ultimate proceeds of any sale or sales, either on a pro rata basis or otherwise as agreed among the parties. The buyer(s) or assignee(s) typically ask for creditors to consent to the sale(s) as a condition of sharing in the proceeds, leveraging the fact that many creditors will want to deal with a more solvent buyer on an ongoing basis. This approach can be flexibly tailored to fit the needs of a total or partial liquidation, or the sale of ongoing business to a purchaser of substantially all the assets. Benefits: The borrower, any lenders and the ultimate buyer of assets can obtain some measure of insulation against attack by obtaining creditor consents. The creditors have the comfort of dealing with a neutral fiduciary rather than the distressed borrower's management team with whom they may have disagreements and trust issues. Examples: Recently, Goulston & Storrs has successfully used this tool for the benefit of distressed e-commerce retailers and catering equipment companies. ESSENTIAL ELEMENTS OF SUCCESS No matter what kind of collaborative approach a distressed company takes to resolving or restructuring its debt, there are certain essential elements of success in the execution of any plan: 1. Transparency. The distressed borrower must be transparent in all dealings with creditors, many of whom may have already lost faith in management. Creditors will want to see historical financial statements that are complete and accurate, as well as a detailed and cogent business plan before they approve any restructuring. 2. Strong Management. To trust in management's restructuring and recovery plan, creditors must see a strong management team that is credible, honest, and smart. 3. A Good Story. Management should have a good and accurate story to tell about how the debtor became distressed and how management has tried to address fundamental problems. 4. Concessions. Creditors will want to see some concessions by the debtor's management team, some sharing of pain, and some assurance that management will not be unjustly enriched. 5. Equal Treatment. The management plan for restructuring and recovery should treat all similarly situated creditors equally. 6. An Approach that Mirrors Chapter 11. A successful plan for payment of creditors is likely to mirror the terms of Chapter 11 regarding appropriate plan objectives, statutory preferences on payments, treatment of various classes of creditors, and other provisions. A distressed debtor that knows how to collaborate with lenders and other creditors in formulating and executing a sound restructuring plan can often recover without having to suffer the time, distractions, and expenses of a multi-party Chapter 11 bankruptcy reorganization. [*] Spilman Thomas: Revisiting Bankruptcy Filing Papers ------------------------------------------------------- Debra Lee Allen of Spilman Thomas & Battle, PLLC, wrote an article on JDSupra titled "Revisiting Bankruptcy Filing Papers": With the expectation that bankruptcy filings will increase over the next few months, this might be a good time to revisit the documents filed with a bankruptcy filing and the information they provide. The focus today is on the Notice of Bankruptcy, Petition, Schedules and Statement of Financial Affairs, which are always filed. There are several other papers that may be filed (required or not), depending on the bankruptcy case. A bankruptcy case is initiated by filing a petition in bankruptcy court. Once the petition is filed, the automatic stay is effective, and all efforts to collect from the petitioner or to enforce a security interest must cease. A filing also stops litigation against the petitioner. It generally does not stop litigation against a non-debtor co-defendant, but many courts will order a stay of the entire litigation nonetheless. The party pursuing the litigation claims must assess whether to (i) seek relief from the automatic stay in the bankruptcy case to continue the litigation, (ii) dismiss the pending case and file a complaint within the bankruptcy case, or (iii) simply file a proof of claim in the bankruptcy case for the relief it is seeking, with the claim litigated in the claims process. A Notice of Bankruptcy is sent to all creditors listed by the petitioner. The Notice tells us where the case is filed, the name of the debtor and any aliases. It also tells us the debtor's address, contact information for the debtor's attorney and the bankruptcy trustee if one is appointed, and the address for the clerk of the bankruptcy court. The Notice tells us what type of bankruptcy case was filed, i.e., under what Chapter of the Bankruptcy Code. The Notice is an official form (like so many other bankruptcy papers) promulgated by the United States Trustee's Office. However, the content differs by type of bankruptcy case. If petitioner is an individual, the case could be filed under Chapter 7, 13, or 11. Sole proprietorships sometimes show up under Chapter 13. If the petitioner is a farmer, the case may be filed under Chapter 12. If the petitioner is a business, the case may be filed under Chapter 7 or 11. However, Chapter 11 cases are not all alike. It could be a small business Chapter 11, a Subchapter V Chapter 11 or just a Chapter 11. The type of case is shown in the title on the Notice. This is important information because the rules and timetable attendant to the case can vary. Also, the type of case determines whether a bankruptcy trustee is appointed. The Notice of Bankruptcy also tells us whether a proof of claim is required and the deadline for filing. Proofs of claim are prepared on official forms, which can be found by googling "bankruptcy official forms." Note there are instructions for each form, and special forms are required for claims based upon a loan secured by a residential mortgage. Last, the Notice of Bankruptcy provides deadlines. Bankruptcy deadlines are very important because a case can move quickly, and failure to comply with deadlines can result in waiver of a claim or interest. Besides the deadline for filing a proof of claim, the Notice tells us the date, time and place of the first meeting of creditors. For individual cases, the Notice tells us the deadline for filing an objection to discharge or to the debtor's claimed exemptions. The bankruptcy Petition provides basic information about the petitioner, such as name, business name(s), federal employer identification number or social security number, and address. The petition tells us again under what type of bankruptcy case the petitioner is seeking relief. If it is a business, it tells us the form and type of business. The petitioner is asked to estimate the number of creditors, total assets and total liabilities. Finally, the petitioner must sign the petition under penalty of perjury that the information provided is true and correct. With the Petition, the petitioner is to file Schedules and the Statement of Financial Affairs, commonly called the "SOFA." Often these are not filed with the Petition, and the Court will then set a deadline for when they must be filed. A bankruptcy case can be dismissed for failure to file Schedules and the SOFA. The Schedules are just that. They provide lists of petitioner's property with value (Schedule A/B), petitioner's exemption claims, if an individual (Schedule C), creditors whose claims are secured by property, with information about the collateral (Schedule D), creditors with unsecured claims and those with priority in distribution under the Code (Schedule E/F), leases or executory contracts (Schedule G), and any co-obligors, including guarantors (Schedule H). Analysis of the Schedules provides a picture of the petitioner's financial circumstances, with clues as to why the petitioner sought bankruptcy protection. They also can inform the creditor whether the petitioner believes it is holding claims against the creditors or others. The SOFA are questions to the petitioner about the petitioner's financial affairs in the years preceding bankruptcy. The questions are more extensive for the business petitioner as opposed to the individual. The petitioner is asked about income, payments made, gifts/contributions, losses, and legal actions, including repossessions and foreclosures. The petitioner must provide information about the financial records and location of books and records, and pertinent information about the business. For the individual petition, the SOFA asks about business interests. For the business petitioner, the SOFA asks about the officers, control persons, and payments made to insiders in the year prior to filing. Creditors are invited to attend the first meeting of creditors where they can be asked specific questions regarding the Schedules and the Statement of Financial Affairs. Together, these can preview possible bankruptcy litigation, such as preferences, or voidable conveyances, voidance of liens, or assumption or rejection of executory contracts. A party wishing to receive notice of filings within the bankruptcy case should file a Notice of Appearance. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2020. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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