/raid1/www/Hosts/bankrupt/TCR_Public/200731.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, July 31, 2020, Vol. 24, No. 212
Headlines
121 LANGDON STREET: Sept. 14 Hearing on Disclosures and Plan
ACER THERAPEUTICS: Receives $857K From Private Placement
ADVANTAGE SPORTS: Hires Bellinger & Suberg as Special Counsel
ALCHEMY COPYRIGHTS: S&P Assigns 'B+' ICR; Outlook Stable
APPLIED DNA: Will Hold its Virtual Annual Meeting on Sept. 16
ARGYLE CAPITAL: U.S. Trustee Unable to Appoint Committee
ARKLOW LIMITED: U.S. Trustee Appoints Creditors' Committee
ASP MCS: Moody's Appends Limited Default to Ca-PD PDR
ASSET ENHANCEMENT: Seeks to Hire AM Law as Legal Counsel
ATLANTIC AVIATION: Moody's Alters Outlook on B2 CFR to Negative
AUC TRUCKING: Seeks to Hire Havner Law as Legal Counsel
AVIANCA HOLDINGS: White Represents USAV Secured Lender Group
AZ CONTRACTING: U.S. Trustee Unable to Appoint Committee
BAUMANN & SONS: U.S. Trustee Appoints Creditors' Committee
BELLE INVESTMENTS: Creditors to Be Paid From Sale
BHF CHICAGO: Seeks to Hire Hilco Real Estate as Broker
BJ SERVICES: Aug. 12 Auction of Cementing Business Set
BJ SERVICES: Aug. 12 Auction of Fracking Equipment & IP Set
BJ SERVICES: U.S. Trustee Appoints Creditors' Committee
BL RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
BLACK IRON: Unsecured Creditors to Receive Full Payment in Plan
BLESSED HOLDINGS: Unsecureds Will Get 1% of Claims
BLUESTEM BRANDS: Bluestem Group Objects to Disclosure Statement
BOMBARDIER INC: Fitch Puts CCC+ Rated Unsec. Notes on Watch Neg.
BRADLEY INVESTMENTS: McCormick Says Plan Not Confirmable
BULLS HEAD: Aug. 5 Deadline Set for Committee Questionnaires
CALIFORNIA PIZZA: Case Summary & 30 Largest Unsecured Creditors
CALIFORNIA RESOURCES: U.S. Trustee Appoints Creditors' Committee
CALPINE CORP: Fitch Rates New $650MM Senior Unsecured Notes 'BB-'
CB POLY: S&P Lowers Long-Term ICR to 'SD' on Distressed Exchange
CEC ENTERTAINMENT: Law Firm of Russell Represents Utility Companies
CLAAR CELLARS: Creditors to Be Paid in Full Over Time
COATESVILLE AREA SCHOOL: S&P Lowers GO Bonds Rating to 'B+'
COMSTOCK MINING: Reports Selected Second Quarter 2020 Results
D&M LOGISTICS: Unsecureds Owed $325K to Get $725 Per Month
DPW HOLDINGS: Defense Business Awarded a $2M Purchase Order
EAST CAROLINA COMMERCIAL: U.S. Trustee Unable to Appoint Committee
EDGEMARC ENERGY: Unsecureds to Recover 2.4% to 13.8% of Its Claims
ENGINEERED PROPULSION: Case Summary & 20 Top Unsecured Creditors
ENOVA INT'L: Moody's Reviews Ba2 CFR for Downgrade
ENVIRO-SAFE REFRIGERANTS: Unsecureds to Get $75K in 5-Year Plan
EP TECHNOLOGY: $3.26M Sale of Inventory to Guangzhou Approved
FAIRVIEW FUNDING: $1.3M Sale of Customer Accounts to UCF Approved
FARR BUILDERS: Victoria Air Objects to Disclosure Statement
FENER LLC: Kuru Unsecured Creditors to Recover 10% in Joint Plan
FRONTIER COMMUNICATIONS: Element Fleet Objects to Disclosures
FRONTIER COMMUNICATIONS: First Lien Lenders Say Plan Unconfirmable
FRONTIER COMMUNICATIONS: Lead Plaintiffs Object to Disclosures
G-III APPAREL: S&P Affirms 'BB' ICR; Outlook Negative
GERALDINE R. ROSINE: Trustee to Pay $17.5K Pinole Property Sale Tax
GKS CORP: Filing of Proposed Order for Assets Sale Procedures Asked
GNC HOLDINGS: Law Firm of Russell Represents Utility Companies
GO-GO'S GREEK: Plan to be Funded by Continued Business Operations
GUGERLI HOLDINGS: Seeks to Hire Sasser Law as Legal Counsel
HOLLISTER CONSTRUCTION: Unsecureds to Get Paid From Plan Settlement
HYTERA COMMUNICATIONS: Aug. 18 Auction of Specified Assets Set
IMAGEWARE SYSTEMS: Chief Technical Officer Resigns
IMERYS TALC: London Market Insurers Object to Disclosure Statement
IMERYS TALC: Providence Washington Objects to Disclosure Statement
IMERYS TALC: U.S. Trustee Objects to Disclosures Motion
INSIGHT TERMINAL: AWL Unsecureds to be Paid in Full in Plan
INSPIREMD INC: Signs $400K Settlement with Former Underwriter
JOHN FITZGIBBON HOSPITAL: Fitch Cuts Issuer Default Rating to 'B-'
KD BELLE TERRE: Voluntary Chapter 11 Case Summary
KLX ENERGY: Stockholders Pass 5 Proposals at Annual Meeting
LAKELAND TOURS: Gibson, Dunn Represent Term Lender Group
LIP INC: Seeks to Hire Dunham Hildebrand as Legal Counsel
MACY'S INC: Fitch Rates New Second Lien Notes 'BB/RR3'
MACY'S INC: Moody's Affirms Ba3 CFR, Outlook Negative
MARY MALONE: $1.9M of Dallas Property to ColMat Approved
MERITAGE COMPANIES: U.S. Trustee Unable to Appoint Committee
MUSCLEPHARM CORP: COO Troy Bolotnick is No Longer an Employee
NETFLIX INC: S&P Raises ICR to 'BB'; Outlook Stable
NEVER SLIP: S&P Lowers ICR to 'D' on Distressed Restructuring
NEW VENTURE 777: Unsecureds to Get $10K Pot in Plan
NNN 400 CAPITOL: Reed Smith Represents Equity Investors
OFFSHORE MARINE: Court Sets Hearing for Plan & Disclosures
OFFSHORE MARINE: Unsecureds may Recover 0.0025% of Claims
PAPER STORE: U.S. Trustee Appoints Creditors' Committee
PARKING MANAGEMENT: Baker Donelson Represents Square 407, Landlords
PERMIAN HOLDCO 1: U.S. Trustee Appoints Creditors' Committee
PROVIDENT COMMONWEALTH: S&P Cuts 2016A Revenue Bond Rating to BB+
PURDUE PHARMA: ASK LLP Updates on Individual Victims
PYXUS INTERNATIONAL: U.S. Trustee Appoints Equity Committee
REVLON INC: S&P Cuts Rating on $880MM Term Loan to 'CCC-'
RITE AID: Fitch Rates New $850MM Secured Notes Due 2026 'BB-/RR1'
ROSEHILL RESOURCES: Commences Voluntary Chapter 11 Cases in Texas
RTW RETAILWINDS: Weltman & Moskowitz Represents Multiple Parties
RUSSELL CLARK: $135K Sale of Heavener Property to Vang Approved
RYMAN HOSPITALITY: S&P Downgrades ICR to 'B-'; Outlook Negative
SAEXPLORATION HOLDINGS: Extends Forbearance Agreement Until Aug. 31
SALUBRIO LLC: Trustee Hires Bridgehead Networks as Consultant
SEAWORLD PARKS: Moody's Affirms B3 CFR, Outlook Negative
SPEEDCAST INT'L: Creditors' Committee Members Disclose Claims
STONE OAK MEMORY: J&M Family Objects to Disclosure Statement
STRUCTURED CABLING: Unsecureds Will Get 2% of its Claims
TD HOLDINGS: Appoints Wei Sun as New CFO to Fill Vacancy
TESLA INC: S&P Raises ICR to 'B+'; Outlook Stable
TONOPAH SOLAR: Case Summary & 20 Largest Unsecured Creditors
TRUE RELIGION: Unsec. Creditors to Get Full Payment in Joint Plan
TTK RE ENTERPRISE: $335K Sale of Egg Harbor Property to Pham Okayed
UNIQUE TOOL: Aug. 11 Hearing on Disclosure Statement
UNIT CORPORATION: Aug. 6 Plan & Disclosure Hearing Set
VIRGINIA TRUE: Up to 87% for Unsecureds in Diatomite Plan
VISTA PROPPANTS: Committee Hires Kilpatrick Townsend as Counsel
VISTA PROPPANTS: Committee Hires Province Inc. as Financial Advisor
WESTERN GLOBAL: Fitch Assigns 'B+(EXP)' LT IDR, Outlook Stable
WIN BIG DEVELOPMENT: U.S. Trustee Unable to Appoint Committee
[*] Bankruptcy Filings Fall 11.8% for Year Ending June 30
[^] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
*********
121 LANGDON STREET: Sept. 14 Hearing on Disclosures and Plan
------------------------------------------------------------
Judge Catherine J. Furay has ordered that the status hearing
scheduled on Chapter 11 Plan and Disclosure Statement of 121
Langdon Street Group, LLP will be on September 14, 2020 at 10:30.
About 121 Langdon Street
121 Langdon Street Group, LLP, is a privately held company whose
principal assets are located at 121 Langdon St., Madison, Wis.
121 Langdon Street Group filed a voluntary petition under Chapter
11 of the Bankruptcy Code (Bankr. W.D. Wis. Case No. 20-10125) on
Jan. 17, 2020. In the petition signed by Harold Langhammer,
partner, the Debtor was estimated to have $1 million to $10 million
in both assets and liabilities. Judge Catherine J. Furay oversees
the case. Timothy J. Peyton, Esq., represents the Debtor.
ACER THERAPEUTICS: Receives $857K From Private Placement
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Acer Therapeutics Inc. entered into a securities purchase agreement
for the sale and issuance of an aggregate of 244,998 shares of the
Company's common stock, for an aggregate purchase price of
$857,493, in a private placement transaction at a price per share
of $3.50, which represented a 5.7% premium to the $3.31 closing
price of the common stock on that day. The Private Placement
Shares were purchased by: Chris Schelling, the Company's president
and chief executive officer and a member of the Company's Board of
Directors; Stephen J. Aselage, Chairman of the Company's Board of
Directors; John M. Dunn, a member of the Company's Board of
Directors; Donald R. Joseph, the Company's Chief Legal Officer; and
employee Jefferson Davis. The shares of common stock issued in the
Private Placement constitute "restricted securities" under the
federal securities laws and are subject to a minimum six-month
holding period. The proceeds from the Private Placement will be
used by the Company for working capital and general corporate
purposes. The Private Placement is scheduled to close on July 29,
2020 and is subject to the satisfaction or waiver of customary
closing conditions.
Acer Therapeutics
Acer -- http://www.acertx.com/-- is a pharmaceutical company
focused on the acquisition, development and commercialization of
therapies for serious rare and life-threatening diseases with
significant unmet medical needs. Acer's pipeline includes four
clinical-stage candidates: emetine hydrochloride for the treatment
of patients with COVID-19; EDSIVO (celiprolol) for the treatment of
vascular Ehlers-Danlos syndrome (vEDS) in patients with a confirmed
type III collagen (COL3A1) mutation; ACER-001 (a taste-masked,
immediate release formulation of sodium phenylbutyrate) for the
treatment of various inborn errors of metabolism, including urea
cycle disorders (UCDs) and Maple Syrup Urine Disease (MSUD); and
osanetant for the treatment of induced Vasomotor Symptoms (iVMS)
where Hormone Replacement Therapy (HRT) is likely contraindicated.
Each of Acer's product candidates is believed to present a
comparatively de-risked profile, having one or more of a favorable
safety profile, clinical proof-of-concept data, mechanistic
differentiation and/or accelerated paths for development through
specific programs and procedures established by the FDA.
Acer reported a net loss of $29.42 million for the year ended Dec.
31, 2019, compared to a net loss of $21.28 million for the year
ended Dec. 31, 2018. As of March 31, 2020, the Company had $16.14
million in total assets, $2.05 million in total liabilities, and
$14.09 million in total stockholders' equity.
BDO USA, LLP, in Boston, Massachusetts, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 18, 2020, citing that the Company has recurring losses and
negative cash flows from operations that raise substantial doubt
about the Company's ability to continue as a going concern.
ADVANTAGE SPORTS: Hires Bellinger & Suberg as Special Counsel
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Advantage Sports, Inc. and Advantage Sports Complex, LLC seek
approval from the U.S. Bankruptcy Court for the Eastern District of
Texas to employ Bellinger & Suberg, LLP as their special counsel.
The firm will provide services in connection with the proposed sale
of Debtor's real estate property, including preparing and
negotiating letters of intent, non-disclosure and confidentiality
agreements, sale contracts, title work, and responding to due
diligence inquiries and matters.
Bellinger's hourly rates are as follows:
Glen Bellinger $525
Parker Bergeron $305
Lindsey Cummings $415
Haakon Donnelly $375
Barbara Emerson $415
Debbie Fonseca $185
Fred Mischnick $185
Staci Pimar $395
Walt Suberg $450
Bellinger & Suberg is a "disinterested person" as defined under
Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Glen Bellinger, Esq.
Bellinger & Suberg, LLP
12221 Merit Drive, Suite 1750
Dallas, TX 75251
Phone: 214-954-9540
Fax: 214-954-9541
About Advantage Sports
Advantage Sports, Inc. owns and operates a multipurpose athletic
facility located in Carrollton, Texas.
Advantage Sports and Advantage Sports Complex, LLC sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.
Tex. Lead Case No. 20-40667) on March 2, 2020. The petitions were
signed by John W. Sample, manager. At the time of filing, Debtors
disclosed $10 million to $50 million in assets and liabilities.
Judge Brenda T. Rhoades oversees the cases.
Debtors have tapped Spector & Cox, PLLC as their legal counsel and
Swearingen Realty Group, LLC as their broker.
ALCHEMY COPYRIGHTS: S&P Assigns 'B+' ICR; Outlook Stable
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S&P Global Ratings assigned its 'B+' issuer credit rating to
Alchemy Copyrights LLC (d/b/a Concord). At the same time, S&P
assigned its 'BB-' issue-level rating and '2' recovery rating to
the company's first-lien term loan facility that includes a $450
million revolving credit facility and $400 million term loan B.
S&P's issuer credit rating on Concord reflects the tailwinds in the
music industry driving growth for the company, primarily through
digital streaming and its large portfolio of music copyrights
representing about 4.7% of the U.S. music publishing market and
about 1.9% of the U.S. recordings market (as of 2019). S&P's
assessment also incorporates the company's smaller scale in terms
of geographic footprint and revenue base compared with larger
peers, including Warner Music Group Corp.
The music industry is on its sixth year of growth, which supports
Concord's growth prospects.
Digital streaming continues to be the primary driver of growth for
the music industry, outpacing declines in physical and digital
downloads.
"We expect Concord's growth trajectory to mirror those of the music
industry, primarily from streaming services. We expect this trend
to continue, as streaming music grows to become the dominant form
of music consumption globally." 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 could represent
over 50% of global music revenues within the next two years," S&P
said.
The proliferation of streaming services has also increased the
legal sources of music consumption globally, providing a legitimate
access-based model, and when coupled with ongoing legal and
re-education efforts by the industry, helped curb digital piracy
over the past decade.
The industry still has to contend with the value gap and new forms
of piracy, including stream-ripping, that could threaten the
current growth trajectory. The value gap is mainly associated with
user-uploaded websites such as YouTube. This creates a barrier to
revenue growth, because artists do not receive adequate
compensation, particularly in comparison to the revenues generated
by these websites.
Ultimately, the effectiveness of copyright regulations globally and
ongoing campaigns to educate the public on the music value chain
will determine if streaming sustains its growth trajectory and
drive revenues and operating performance for the industry and music
labels globally.
S&P expects the COVID-19 outbreak, and economic impact from the
related shutdown to affect the company's theatricals segment while
accelerating physical declines.
While S&P expects digital streaming growth to be unaffected by the
pandemic and for global streaming services penetration to continue
increasing, the related shutdowns will temporarily alter the
revenue growth trajectory for Concord in 2020. S&P expects a larger
decline in physical sales due to the closures of retail outlets.
The COVID-19 shutdowns will also have a material impact on the
company's theatrical segment due to the cancellations of live
events, including Broadway.
S&P expects 2020 revenues to decline up to 2% before returning to
growth in the 14%-16% range in 2021 as physical sales declines
moderate, while live events gradually return in 2021.
S&P expects Concord to continue pursuing debt-financed
acquisitions, with an expectation that adjusted leverage will
remain below 5.0x on a sustained basis.
The company's adjusted leverage is 4.7x as of March 31, 2020, on a
trailing-12-months basis.
"We expect adjusted leverage to be between 4.8x and 5.0x in 2020,
due to declines in theatricals partially offsetting growth in
recorded music and publishing. We forecast free operating cash flow
(FOCF) to debt to be about 4%-6% in 2020 due to material one-time
costs associated with refinancing and recent acquisitions of
publishing catalogues," S&P said.
S&P expects the company will continue to pursue debt-financed
acquisitions while keeping adjusted leverage below 5.0x on a
sustained basis. The rating agency also forecasts any deleveraging
to come from EBITDA growth instead of debt repayment because it
expects Concord to prioritize free cash flow toward acquisitions
and internal investments.
"The stable outlook reflects our view that Concord's revenue growth
over the next 12 months will continue to mirror the music
industry's growth due to the proliferation of digital streaming
services," S&P said.
S&P's outlook also reflects its expectation that adjusted leverage
will remain below 5.0x over the next 12 months, due to EBITDA
growth.
"We could raise our rating on Concord if current positive industry
trends continue such that adjusted leverage declines to the
low-4.0x area while FOCF to debt rises above 8% on a sustained
basis. In our upside scenario, we would expect to see a commitment
to keeping leverage in the low-4.0x area, even when factoring in
debt-financed acquisitions," S&P said.
"We could lower our rating if we believe adjusted leverage will
remain above the low-5.0x area and FOCF 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 the company adopts a more aggressive financial policy
including debt-financed acquisitions and distributions," the rating
agency said.
APPLIED DNA: Will Hold its Virtual Annual Meeting on Sept. 16
-------------------------------------------------------------
Applied DNA Sciences, Inc.'s Board of Directors has established
Sept. 16, 2020 as the date of the Company's 2020 annual meeting of
stockholders. The Company's 2019 annual meeting was held on May
16, 2019. The 2020 Annual Meeting will be held in a virtual format
only, via the Internet, with no physical in-person meeting. The
Company will publish additional details regarding the exact time,
location via the Internet and matters to be voted on at the 2020
Annual Meeting in the Company's proxy statement for the 2020 Annual
Meeting. Because the date of the 2020 Annual Meeting represents a
change of more than 30 days from the anniversary date of the 2019
Annual Meeting, the deadlines for stockholders to submit proposals
and nominations of directors as set forth in the Company's
definitive proxy statement for the 2019 Annual Meeting are no
longer effective.
The By-Laws of the Company provide that, if the date of the annual
meeting is more than 30 days before or more than 60 days after the
one-year anniversary of the preceding year's annual meeting,
advance written notice of stockholder-proposed business intended to
be brought before an annual meeting of stockholders must be
received by the Secretary of the Company not later than the 90th
day prior to such annual meeting or, if later, the 10th day
following the day on which public disclosure of the date of such
annual meeting was first made. A new deadline has therefore been
set for submission of proposals by stockholders in accordance with
Rule 14a-5(f) of the Securities Exchange Act of 1934, as amended,
and consistent with the ByLaws.
To be considered timely, a proposal or notice on Schedule 14N under
Rule 14a-18 under the Exchange Act (i) intended to be included in
the Proxy Statement under Rule 14a-8 under the Exchange Act or (ii)
intended to be presented at the 2020 Annual Meeting other than by
inclusion in the Proxy Statement must be received by the Company on
or prior to 5:00 p.m. Eastern Time on Monday, Aug. 10, 2020. Any
proposal or nomination received after such date will be considered
untimely.
Proponents are advised to submit their proposals by certified mail,
return receipt requested, addressed to the Company's Secretary at
the Company's principal executive offices at 50 Health Sciences
Drive, Stony Brook, New York 11790. Only proposals and nominations
meeting the requirements of applicable U.S. Securities and Exchange
Commission rules and of the ByLaws will be considered for inclusion
in the Proxy Statement.
About Applied DNA
Applied DNA -- http//www.adnas.com -- is a provider of molecular
technologies that enable supply chain security, anti-counterfeiting
and anti-theft technology, product genotyping, and pre-clinical
nucleic acid-based therapeutic drug candidates. Applied DNA makes
life real and safe by providing innovative, molecular-based
technology solutions and services that can help protect products,
brands, entire supply chains, and intellectual property of
companies, governments and consumers from theft, counterfeiting,
fraud and diversion.
Applied DNA reported a net loss of $8.63 million for the year ended
Sept. 30, 2019, compared to a net loss of $11.69 million for the
year ended Sept. 30, 2018. As of March 31, 2020, the Company had
$11.33 million in total assets, $4.06 million in total liabilities,
and $7.27 million in total equity.
The Company has recurring net losses, which have resulted in an
accumulated deficit of $262,423,267 as of March 31, 2020. The
Company incurred a net loss of $5,617,678 and generated negative
operating cash flow of $5,151,404 for the six month period ended
March 31, 2020. At March 31, 2020 the Company had cash and cash
equivalents of $8,662,889 and working capital of $8,129,189.
"We may require additional funds to complete the continued
development of our products, product manufacturing, and to fund
expected additional losses from operations until revenues are
sufficient to cover our operating expenses. If revenues are not
sufficient to cover our operating expenses, and if we are not
successful in obtaining the necessary additional financing, we will
most likely be forced to reduce operations," the Company stated in
its Quarterly Report for the period ended March 31, 2020.
ARGYLE CAPITAL: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Argyle Capital Group, LLC.
About Argyle Capital Group
Argyle Capital Group, LLC, a company engaged in renting and leasing
real estate properties, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Wash. Case No. 20-11711) on June 22,
2020. At the time of the filing, Debtor disclosed assets of
between $1 million and $10 million and liabilities of the same
range. Judge Christopher M. Alston oversees the case. The Debtor
has tapped Stoll Petteys, PLLC as its legal counsel.
ARKLOW LIMITED: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 1 appointed a committee to represent
unsecured creditors in the Chapter 11 case of Arklow Limited
Partnership.
The committee members are:
1. Richard Gleicher – Chairperson Pro Tem
Rich.Gleicher@gmail.com
2. William Nelson
WilliamNelson55@gmail.com
3. Matthew Cristy
MattCristy@gmail.com
4. Carl Youngman
Carl.Youngman@comcast.net
5. Acushnet Company
c/o Ms. Kate Benner
333 Bridge Street
Fairhaven, MA 02719
Tel: (508) 979-3516
Kate_Benner@acushnetgolf.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Arklow Limited Partnership
Arklow Limited Partnership owns 700 acres of real estate on which
Bolton, Mass.-based International Golf Club and Resort, a lifestyle
destination, operates.
International Golf Club and Resort operates as three entities: The
International Golf Club, LLC, which oversees the golf courses and
memberships; Wealyn LLC, a limited liability company that manages
food and beverage service; and Arklow Limited Partnership.
Arklow Limited Partnership sought Chapter 11 protection (Case No.
20-40523) on May 4, 2020. It sought bankruptcy protection along
with The International Golf Club, LLC (Bankr. D. Mass. Case No.
20-40524) and Wealyn, LLC (Case No. 20-40525), with Arklow
designated as the lead case. At the time of the filing, Arklow
Limited Partnership disclosed assets of between $10 million and $50
million and liabilities of the same range. The Hon. Christopher J.
Panos is the presiding judge.
Murphy & King, Professional Corporation is Debtors' bankruptcy
counsel.
ASP MCS: Moody's Appends Limited Default to Ca-PD PDR
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Moody's Investors Service affirmed the Probability of Default
Rating of ASP MCS Acquisition Corp. and appended a limited default
designation following the company's missed interest payment on its
first lien term loan. Moody's also affirmed the existing ratings of
the company, including the Ca Corporate Family Rating and the Ca
rating on its senior secured credit facility. The outlook is
stable.
The rating action reflects Moody's expectation that ASP's weak
liquidity, low profitability, and untenable capital structure will
lead to a restructuring. The Ca-PD/LD designation follows ASP's
failure to make the interest payment on June 15, 2020 required
under its senior secured first lien term loan. ASP subsequently
entered into a forbearance agreement with its first lien lenders.
The affirmation of the ratings reflects Moody's expectation of
significant losses on debt claims given the strong probability of a
restructuring due to the company's weak liquidity, high debt
leverage and unsustainable capital structure.
The following rating actions were taken:
Affirmations:
Issuer: ASP MCS Acquisition Corp.
Probability of Default Rating affirmed to Ca-PD / appended LD from
Ca-PD
Corporate Family Rating, Affirmed Ca
Gtd Senior Secured 1st Lien Revolving Credit Facility, Affirmed Ca
(LGD3)
Gtd Senior Secured 1st Lien Term Loan, Affirmed Ca (LGD3)
Outlook Actions:
Issuer: ASP MCS Acquisition Corp.
Outlook, Remains Stable
RATINGS RATIONALE
ASP MCS Acquisitions Corp's Ca CFR reflects elevated leverage, weak
liquidity and profitability, and the lack of free cash flow
generation. While the company does not have any near-term
maturities, Moody's views its capital structure as untenable. A
restructuring of its capital structure is more likely given the
lack of operating cash flow to service its debt, as 2020 forecasted
interest coverage and adjusted debt to EBITDA are less than 1.0x
and near 14.0x, respectively.
Moody's also takes into consideration the counter-cyclical nature
of distressed property inspection services business and ASP's
longstanding relationships with customers. ASP also encompasses an
integrated platform with local inspectors/contractors, who provide
preservation services for distressed residential properties in the
US.
The stable outlook reflects Moody's view that recovery prospects
are appropriately captured in the current ratings.
ASP's liquidity profile is weak due to low profitability and
ongoing negative free cash flow. At December 31, 2019, ASP had $5.5
million in cash and full availability under its $35 million
revolving credit facility. However, any borrowing under the
revolver would be limited to 30% as Moody's does not believe the
company would be in compliance with the springing leverage covenant
of 6.95x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if:
- Improvement in the cash flow and liquidity profile
- Operating fundamentals improve
- The company addresses its high debt and interest cost burden
The rating could be downgraded if:
- The company is unable to improve its liquidity profile
- The probability of restructuring or the expectation of creditor
losses increases
- Inability to amend the credit facility leverage covenant,
refinance or extend maturities
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in Lewisville, Texas, ASP MCS Acquisition Corp.,
primarily provides property inspection and preservation services on
behalf of lenders and loan servers for homes with defaulted
mortgage loans. The company is owned by affiliates of American
Securities LLC, a private equity group.
ASSET ENHANCEMENT: Seeks to Hire AM Law as Legal Counsel
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Asset Enchancement, Inc. seeks authority from the U.S. Bankruptcy
Court for the Southern District of Florida to hire AM Law, LLC as
its legal counsel.
The firm will provide the following services:
a. advise Debtor of its powers and duties;
b. advise Debtor of its responsibilities in complying with the
U.S. Trustee's Operating Guidelines and Reposting Requirements and
with the rules of the court;
c. prepare legal documents;
d. protect the interests of Debtor in all matters pending
before the court; and
e. represent Debtor in negotiation with its creditors in the
preparation of a plan of reorganization.
Gary Murphree, Esq., at AM Law, disclosed in court filings that the
firm is disinterested as required by Section 327(a) of the
Bankruptcy Code.
The firm can be reached through:
Gary M Murphree, Esq.
AM Law, LLC
7385 SW 87th Avenue, Ste. 100
Miami, FL 33173
Phone: 305-441-9530
Email: gmm@amlaw-miami.com
About Asset Enchancement
Based in Deerfield Beach, Fla., Asset Enchancement, Inc. filed its
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 20-15782) on May 27, 2020. Debtor
has tapped AM Law, LLC as its legal counsel.
ATLANTIC AVIATION: Moody's Alters Outlook on B2 CFR to Negative
---------------------------------------------------------------
Moody's Investors Service confirmed its ratings for Atlantic
Aviation FBO, Inc., including the company's B2 corporate family
rating and B2-PD probability of default rating, and the B2 ratings
for its senior secured credit facility. The ratings outlook has
been changed to negative. This concludes the review that was
initiated on April 17th, 2020.
RATINGS RATIONALE
The B2 CFR balances Atlantic's position and resultant scale
advantages as the second largest fixed-base operator (FBO) within
the US against comparatively high financial leverage and heavy
exposure to cyclical business jet and general aviation markets.
Atlantic's historically strong profitability speaks to its good
competitive standing within the highly fragmented FBO industry,
while meaningful barriers to entry add further credit support.
These considerations are tempered, however, by the cyclical nature
of general aviation markets and Moody's expectation that lower
general aviation traffic will lead to meaningful top-line and
earnings headwinds and an across the board weakening of Atlantic's
key credit metrics through at least the balance of 2020.
The rapid spread of the coronavirus outbreak, the deteriorating
global economic outlook, low oil prices and high asset price
volatility have created an unprecedented credit shock across a
range of sectors and regions. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety.
Notwithstanding some early signs that the adverse impact of the
coronavirus outbreak on Atlantic and the deterioration in credit
quality that it triggered may be relatively short-lived and
subsiding, the company remains vulnerable to shifts in market
demand and changing sentiment in these unprecedented operating
conditions.
The negative outlook considers the difficult and volatile operating
environment that Atlantic will face over the coming period,
particularly through the balance of 2020. The negative outlook also
reflects weaker liquidity with expectations of reduced cash
generation over the coming quarters and the absence of a dedicated
revolving credit facility at the borrower level.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a ratings upgrade include expectations
of an improved liquidity profile, involving the establishment of a
revolving credit facility at Atlantic Aviation, or sustainably
higher cash balances, or expectations of free cash flow-to-debt
consistently in at least the mid-single-digit percent range.
Expectations of growth in general aviation traffic and a more
stable operating environment with earnings growth could also result
in an upgrade.
Factors that could lead to a ratings downgrade include declines in
general aviation volumes beyond those currently contemplated, or if
debt-to-EBITDA exceeds 6.5x for any meaningful period. A downgrade
could also occur with weakening liquidity such that free cash flow
is expected to be materially negative, or if Atlantic's cash
balances decline significantly, or if the company fails to
implement a new backstop revolving credit facility beyond 2020. A
weakening of parent company MIC's overall credit profile could also
cause downward ratings pressure.
The following is a summary of its rating actions:
Issuer: Atlantic Aviation FBO, Inc.:
Corporate Family Rating, confirmed at B2
Probability of Default Rating, confirmed at B2-PD
Gtd Senior Secured credit facility, confirmed at B2 (LGD3)
Outlook, Changed to Negative from Rating Under Review
Atlantic Aviation FBO, Inc., headquartered in Plano, Texas, has
fixed base operator locations at 70 general aviation airports in
the US. The company's FBOs provide fueling and fuel related
services, aircraft parking and hangar services to owners/operators
of jet aircraft, primarily in the general aviation sector of the
air transportation industry, but also to commercial, military,
freight and government aviation customers. Through an intermediate
holding company, Atlantic is owned by Macquarie Infrastructure
Corporation. Gross revenues for the twelve months ended March 2020
were approximately $938 million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
AUC TRUCKING: Seeks to Hire Havner Law as Legal Counsel
-------------------------------------------------------
Auc Trucking, Inc. seeks authority from the U.S. Bankruptcy Court
for the Eastern District of Arkansas to employ Havner Law Firm PA
as its legal counsel.
The firm will provide the following services:
a. prepare a Chapter 11 plan and other legal papers;
b. identify and prosecute claims and causes of action
assertable by Debtor on behalf of its bankruptcy estate;
c. examine proofs of claim filed and prosecute objections to
claims, if necessary;
d. advise Debtor and prepare documents in connection with the
ongoing operation of its business;
e. assist Debtor in performing its official functions; and
f. represent Debtor before the bankruptcy court and any other
court.
The firm will charge $300 per hour for services rendered by its
attorney, Kyle Havner, Esq., and $100 per hour for paralegals.
Ms. Havner disclosed in court filings that the firm is
disinterested as defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Kyle W. Havner, Esq.
PO Box 21539
White Hall, AT 71612
Phone: 501-541-4057
Fax: 501-712-1235
About Auc Trucking
Auc Trucking, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Ark. Case No. 20-12714) on June 24,
2020, listing under $1 million in both assets and liabilities.
Debtor has tapped Havner Law Firm PA as its legal counsel.
AVIANCA HOLDINGS: White Represents USAV Secured Lender Group
------------------------------------------------------------
In the Chapter 11 cases of Avianca Holdings S.A., et al., the law
firm of White & Case LLP submitted a verified statement under Rule
2019 of the Federal Rules of Bankruptcy Procedure, to disclose that
it is representing the USAV Secured Lender Group.
White & Case is an international law firm that maintains its
principal office at 1221 Avenue of the Americas, New York, New York
10020 and has numerous additional offices throughout the United
States and worldwide.
White & Case serves as counsel to the USAV Secured Lender Group,
which is composed of lenders under that certain Loan Agreement,
dated as of December 12, 2017, by and among USAVflow Limited, as
borrower, certain Debtors, as guarantors, the lenders party
thereto, and Citibank, N.A., as administrative agent and collateral
agent.
White & Case has been advised by the Administrative Agent under the
Loan Agreement and/or members of the USAV Secured Lender Group that
they or their affiliates are the holders, advisors, or affiliates
of advisors to holders, or managers of various accounts with
investment authority, contractual authority or voting authority, of
or with respect to one hundred percent of the aggregate principal
amount of loans under the Loan Agreement. As of July 20, 2020,
approximately $80,867,677.44 aggregate principal amount remained
outstanding under the Loan Agreement, plus accrued and unpaid
interest, fees, costs and expenses.
As of July 22, 2020, members of the USAV Secured Lender Group and
their disclosable economic interests are:
Loan Agreement
--------------
BANCO DE CREDITO $14,017,064.09
DEL PERU
MIAMI AGENCY
121 Alhambra Plaza, Suite 1200
Coral Gables
Miami, FL 33134
USA
BANK UNITED N.A. $9,434,562.37
7815 NW 148th Street
2-CMMLO-6802
Miami Lakes
Florida 33016
USA
DEUTSCHE BANK AG $18,060,447.96
LONDON BRANCH
Winchester House
1 Great Winchester Street
London EC2N 2DB
United Kingdom
FIRST CITIZENS BANK LIMITED $11,860,592.69
9 Queen's Park East
Port of Spain
Trinidad and Tobago
METROBANK S.A. $9,434,562.37
Calle Isaac Hanono Missri
Torre Metrobank, Piso 4
Punta Pacífica Panama City
Panama 0816-02041
MONEDA LATINO AMERICA DEUDA $6,469,414.19
LOCAL FONDO DE INVERSION
Isidora Goyenechea 3621
Piso 8 Las Condes
Santiago, RM, Chile
MONEDA DEUDA LATINO AMERICANA $7,008,532.04
FONDO DE INVERSION
Isidora Goyenechea 3621
Piso 8, Las Condes
Santiago, RM, Chile
PRIVAL BANK S.A. $4,582,501.72
Calle 50 y 71 San Francisco
Panama, Panama 0832-00396
The USAV Secured Lender Group retained White & Case to represent it
in connection with the Debtors' chapter 11 cases. Each member of
the USAV Secured Lender Group has consented to White & Case's
representation.
Although the USAV Secured Lender Group has hired White & Case to
represent its interests collectively as a group, each member of the
USAV Secured Lender Group (i) made and makes its own investment
decisions which are not based on the investment decisions of any
other creditor, and (ii) made and makes its own independent
decisions as to how it wishes to proceed and does not speak for, or
on behalf of, any other creditor, in each case including the other
members of the USAV Secured Lender Group in their individual
capacities. In addition, the USAV Secured Lender Group neither
represents nor purports to represent any other entity in connection
with these chapter 11 cases.
White & Case does not own any claims against or equity interests in
any of the Debtors.
Counsel for the USAV Secured Lender Group can be reached at:
WHITE & CASE LLP
Mark Franke, Esq.
Scott Greissman, Esq.
Joshua D. Weedman, Esq.
Brandon D. Batzel, Esq.
1221 Avenue of the Americas
New York, NY 10020
Telephone: (212) 819-8200
Facsimile: (212) 354-8113
Email: mark.franke@whitecase.com
gkurtz@whitecase.com
sgreissman@whitcase.com
jweedman@whitecase.com
brandon.batzel@whitecase.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/44bUt0
About Avianca
Avianca -- https://aviancaholdings.com/ -- is the commercial brand
for the collection of passenger airlines and cargo airlines under
the umbrella company Avianca Holdings S.A. Avianca has been flying
uninterrupted for 100 years. With a fleet of 158 aircraft, Avianca
serves 76 destinations in 27 countries within the Americas and
Europe.
Avianca Holdings S.A. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-11133) on May 10, 2020. At the time of the filing, the Debtors
disclosed $7,273,900,000 in assets and $7,268,700,000 in
liabilities.
Judge Martin Glenn oversees the cases.
The Debtors tapped Milbank LLP as general bankruptcy counsel;
Urdaneta, Velez, Pearl & Abdallah Abogados and Gomez-Pinzon
Abogados S.A.S. as restructuring counsel; Smith Gambrell and
Russell, LLP as aviation counsel; Seabury Securities LLC as
financial restructuring advisor and investment banker; FTI
Consulting, Inc. as financial restructuring advisor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.
The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors in Debtor's bankruptcy cases on May 22, 2020.
AZ CONTRACTING: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of AZ Contracting Services, LLC.
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.
BAUMANN & SONS: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in the Chapter 11 cases of Baumann & Sons
Buses, Inc. and its affiliate .
The committee members are:
1. School Bus Parts Company
P.O. Box 10, 6124 Potters Lane
Plumsteadville, PA 18949F
2. Nesco Bus Maintenance Inc
202 South Fehr Way
Bay Shore, NY 11706
3. The Hanover Insurance Co.
c/o Brian Lebrun, Sr. Bond Claims Rep.
440 Lincoln Street N477
Worchester, MA 01653
4. A & A Auto Glass Plus
211 Sunrise Highway
Amityville, NY 11701
5. Sarad Martketing Inc
165 Williams Avenue
Brooklyn, NY 11207
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Baumann & Sons Buses
Baumann & Sons Buses, Inc. and ACME Bus., along with their
non-debtor parent and two affiliates, operated a large school bus
transportation concern with contracts with a number of school
districts in Nassau, Suffolk and Westchester Counties. The Baumann
Companies had collective annual gross revenues of over $62 million
for the 2018-2019 school year, but ceased operations by March 16,
2020 when New York State Governor Andrew Cuomo mandated the closure
of public schools as a result of the COVID-19 pandemic.
On May 27, 2020, Nesco Bus Maintenance and several other creditors
filed an involuntary petition under Chapter 7 of the Bankruptcy
Code against Baumann & Sons Buses and ACME Bus in the U.S.
Bankruptcy Court for the Eastern District of New York. On July 1,
2020, the court converted the cases to cases under Chapter 11
(Bankr. E.D.N.Y. Lead Case No. 20-72121.
BELLE INVESTMENTS: Creditors to Be Paid From Sale
-------------------------------------------------
Belle Investments, LLC, filed a liquidation plan. In other words,
the Debtor seeks to accomplish payments under the Plan through the
sale of real property.
With respect to Secured Claimant Renasant Bank in Class I, the
Debtor proposes to pay Renasant Bank in full from the sale of 179
Belle Forest Circle Suite 101, Nashville, TN 37221 within 18 months
from date of confirmation.
Secured Claimant Scott Hodes in Class II has a total claim $40,000.
The claims of Scott Hodes will be paid in full at the time of the
sale of real property, which will be the liquidation of 179 Belle
Forest Circle Suite 101, Nashville, TN 37221 within eighteen months
from date of confirmation.
There are no general unsecured claims.
The Plan will be funded by the income from rental income.
A full-text copy of the Disclosure Statement dated June 22, 2020,
is available at https://tinyurl.com/yaxjhb8v from PacerMonitor.com
at no charge.
Counsel to the Debtor:
STEVEN L. LEFKOVITZ
618 Church Street, Suite 410
Nashville, TN 37219
Phone: (615) 256-8300
Fax: (615) 255-4516
E-mail: slefkovitz@lefkovitz.com
About Belle Investments
Belle Investments, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Tenn. Case No. 19-03205) on May 20,
2019. At the time of the filing, the Debtor disclosed assets of
between $100,001 and $500,000 and liabilities of the same range.
The case has been assigned to Judge Charles M. Walker. Lefkovitz &
Lefkovitz, PLLC is the Debtor's legal counsel.
BHF CHICAGO: Seeks to Hire Hilco Real Estate as Broker
------------------------------------------------------
BHF Chicago Housing Group B LLC seeks authority from the U.S.
Bankruptcy Court for the Northern District of Illinois to hire
Hilco Real Estate, LLC as its real estate broker.
BHF Chicago requires Hilco to:
a. meet with Debtor to ascertain its goals, objectives and
financial parameters in selling its property. The sales structure,
including reserve pricing, is more specifically described on
Exhibit B to the Engagement Letter;
b. prepare marketing plan and budget for Debtor's review and
approval. A proposed market plan and budget shall be provided by
Hilco to Debtor within five (5) business days of the Effective
Date;
c. solicit interested parties for the sale of the property,
and market the property for sale through an accelerated sales
process. The bid deadline is anticipated to be on or about
September 30, 2020 or within ten (10) weeks after entry of the
order approving Hilco's employment;
d. negotiate the business terms of the sale of the property
solely at Debtor's direction; and
e. perform all other broker-related services for Debtor which
may be necessary and proper in order to effectuate the sale of the
property.
Hilco will be compensated on a commission basis and will receive
reimbursement for work-related expenses pursuant to a budget not to
exceed $25,000.
In the event the property is sold to the stalking horse bidder in
an amount equal to the stalking horse bidder's initial bid amount
as provided in the stalking horse agreement, as subsequently
amended, Hilco shall earn a fee equal to one and 1.5 percent of the
Gross Sale Proceeds; provided, however, in the event stalking horse
bidder is the successful bidder for the property and increases its
bid amount as a result of the Managed Bid Process, Hilco shall earn
a fee equal to 3 percent of the Gross Sale Proceeds.
In the event property is sold to a party that is not Saybrook,
Hilco shall earn a fee equal to 3 percent of the Gross Sale
Proceeds.
Hilco is a "disinterested person" as that term is defined in
section 101(14) of the Bankruptcy Code, according to court
filings.
Hilco can be reached through:
Sarah Baker
Hilco Real Estate, LLC
5 Revere Drive, Suite 206
Northbrook, IL 60062
Tel. (847) 504-2462
Email: sbaker@hilcoglobal.com
About BHF Chicago Housing Group B
BHF Chicago Housing Group B, LLC is the owner of fee simple title
to certain parcels of real property, all in Chicago, Ill.
BHF Chicago Housing Group sought Chapter 11 protection (Bankr. N.D.
Ill. Case No. 20-12453) on June 15, 2020. At the time of the
filing, Debtor was estimated to have assets in the range of $10
million to $50 million and $50 million to $100 million in debt at
the time of the filing.
Debtor has tapped Clark Hill PLC as its legal counsel.
BJ SERVICES: Aug. 12 Auction of Cementing Business Set
------------------------------------------------------
Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern
District of Texas authorized the bidding procedures proposed by BJ
Services, LLC, and its debtor affiliates in connection with the
auction sale of their cementing business.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Aug. 10, 2020 at 11:59 p.m. (CT)
b. Initial Bid: If the Debtors have filed the Stalking Horse
Notice, in addition to the Bid Requirements set forth, the Bid must
provide for a Purchase Price equal to: (a) the Purchase Price set
forth in the Stalking Horse Bid, plus (b) the Overbid Increment (as
defined below), plus (c) the Breakup Fee, if any (provided that
such Breakup Fee must be paid in cash), plus (d) any other amounts
payable under the Stalking Horse Bid to the Stalking Horse Bidder.
c. Deposit: 5% of the aggregate value of the proposed Purchase
Price of the Bid
d. Auction: The Auction will take place at a time to be
determined no later than Aug. 12, 2020, by remote video as will be
indicated in the Auction Notice, or such later date and time or
location as selected by the Debtors after consultation with the
Consultation Parties.
e. Bid Increments: $250,000
f. Sale Hearing: Aug. 14, 2020 at 1:30 p.m. (CT)
g. Sale Objection Deadline: Aug. 13, 2020, at 4:00 p.m. (CT)
h. Any Qualified Bidder who has a valid and perfected lien on
any assets of the Debtors' estates will have the right to credit
bid all or a portion of the value of such Secured Creditor's
claims. Notwithstanding anything to the contrary set forth in the
Bidding Procedures, the Prepetition Equipment Term Loan Agent
shall: (i) have the right to credit bid all or a portion of its
prepetition secured claims up to a maximum amount of $190 million,
without prejudice to the actual allowable amount of such claims;
and (ii) be deemed to be a Qualified Bidder and will not be
required to provide any cash deposit, asset purchase agreement, due
diligence materials, or any other materials as a condition to its
participation at the Auction, and may participate in the Auction
with respect to the Assets.
Consummation of any Transaction will be on an "as is, where is"
basis and without representations or warranties of any kind,
nature, or description by the Debtors or their estates, except as
specifically accepted or agreed to by the Debtors.
Aug. 5, 2020 at 4:00 p.m. (CT) is the deadline for Acceptable
Bidders that wish to be selected as the Stalking Horse Bidder to
meet the Bid Requirements and submit a final version of the Form
APA to Simmons and the counsel to the Debtors.
If the Debtors execute a Stalking Horse Agreement, no later than
Aug. 6, 2020 at 4:00 p.m. is the deadline for the Debtors to file a
notice with the Court announcing the Stalking Horse Bidder and
execution of the Stalking Horse Agreement.
The Debtors will be authorized, but not obligated, in an exercise
of their business judgment, to select no more than one Stalking
Horse Bidder and may agree to provide such Stalking Horse Bidder
certain bid protections, including the expense reimbursement, work
fee, and/or a break-up fee.
On a date no later than seven days prior to the Sale Hearing, the
Debtors will file with the Court the Assumption and Assignment
Notice. The Debtors will cause the Assumption and Assignment
Notice to the Notice Parties. Parties seeking to object must file
an Assumption Objection so that such Assumption Objection is filed
with the Court and actually received two days prior to the Sale
Hearing.
The Notice of the Motion satisfies the requirements of Bankruptcy
Rule 6004(a) and the Local Rules are satisfied by such notice.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions
of the Order are immediately effective and enforceable upon its
entry.
A copy of the Bidding Procedures is available at
https://tinyurl.com/y2brkyc7 from PacerMonitor.com free of charge.
About BJ Services
BJ Services, LLC, and its related entities are providers of
pressure pumping and oilfield services for the petroleum industry.
Headquartered in Tomball, Texas, the companies operate through two
segments, hydraulic fracturing and cementing. BJ Services --
https://www.bjservices.com/ -- primarily serves customers in
upstream North American oil and natural gas shale basins in the
completion of new wells and in remedial work on existing wells.
Chapter 11 petitions were filed by BJ Services (Bankr. S.D. Tex.
Case No. 20-33627), as Lead Debtor, together with its affiliates BJ
Management Services, L.P. (Case No. 20-33628), BJ Services Holdings
Canada, ULC (Case No. 20-33629), and BJ Services Management
Holdings Corp. (Case No. 20-33630) on July 20, 2020. The cases are
assigned to Judge Marvin Isgur.
In the petition signed by CEO Warren Zemlak, BJ Services was
estimated to have assets at $500 million to $1 billion and $500
million to $1 billion in debt.
The Debtors tapped Joshua A. Sussberg, P.C., at Kirkland & Ellis
LP; Christopher T. Greco, P.C., at Kirkland & Ellis International
LP; Samantha G. Lawrence, Esq., and Joshua M. Altman, Esq., as
their General Bankruptcy Counsel.
The Debtors tapped Jason S. Brookner, Esq., Paul D. Moak, Esq.,
Amber M. Carson, Esq., at Gray Reed & McGraw LLP as their
co-bankruptcy counsel.
BJ SERVICES: Aug. 12 Auction of Fracking Equipment & IP Set
-----------------------------------------------------------
Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern
District of Texas authorized the bidding procedures proposed by BJ
Services, LLC and its Debtor affiliates in connection with the sale
of their fracking equipment and intellectual property to TES Asset
Acquisition, LLC for $30 million, subject to overbid.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Aug. 10, 2020 at 11:59 p.m. (CT)
b. Initial Bid: The Bid must provide for a (i) a cash Purchase
Price equal to: (a) the Purchase Price set forth in the Stalking
Horse Bid, plus (b) $500,000.
c. Deposit: 10% of the aggregate value of the proposed
Purchase Price of the Bid
d. Auction: The Auction will take place at a time to be
determined no later than Aug. 12, 2020, by remote video as will be
indicated in the Auction Notice, or such later date and time or
location as selected by the Debtors after consultation with the
Consultation Parties.
e. Bid Increments: $500,000
f. Sale Hearing: Aug. 14, 2020 at 1:30 p.m. (CT)
g. Sale Objection Deadline: Aug. 13, 2020, at 4:00 p.m. (CT)
Consummation of any Transaction will be on an "as is, where is"
basis and without representations or warranties of any kind,
nature, or description by the Debtors or their estates, except as
specifically accepted or agreed to by the Debtors.
On a date no later than seven days prior to the Sale Hearing, the
Debtors will file with the Court the Assumption and Assignment
Notice. The Debtors will cause the Assumption and Assignment
Notice to the Notice Parties. Parties seeking to object must file
an Assumption Objection so that such Assumption Objection is filed
with the Court and actually received two days prior to the Sale
Hearing.
The contents of the Motion satisfy the requirements of Bankruptcy
Rule 6003(b).
The Notice of the Motion satisfies the requirements of Bankruptcy
Rule 6004(a) and the Local Rules are satisfied by such notice.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions
of the Order are immediately effective and enforceable upon its
entry.
A copy of the Stalking Horse Agreement and the Bidding Procedures
is available at https://tinyurl.com/y4xqh22t from PacerMonitor.com
free of charge.
About BJ Services
BJ Services, LLC, and its related entities are providers of
pressure pumping and oilfield services for the petroleum industry.
Headquartered in Tomball, Texas, the companies operate through two
segments, hydraulic fracturing and cementing. BJ Services --
https://www.bjservices.com/ -- primarily serves customers in
upstream North American oil and natural gas shale basins in the
completion of new wells and in remedial work on existing wells.
Chapter 11 petitions were filed by BJ Services (Bankr. S.D. Tex.
Case No. 20-33627), as Lead Debtor, together with its affiliates BJ
Management Services, L.P. (Case No. 20-33628), BJ Services Holdings
Canada, ULC (Case No. 20-33629), and BJ Services Management
Holdings Corp. (Case No. 20-33630) on July 20, 2020. The cases are
assigned to Judge Marvin Isgur.
In the petition signed by CEO Warren Zemlak, BJ Services was
estimated to have assets at $500 million to $1 billion and $500
million to $1 billion in debt.
The Debtors tapped Joshua A. Sussberg, P.C., at Kirkland & Ellis
LP; Christopher T. Greco, P.C., at Kirkland & Ellis International
LP; Samantha G. Lawrence, Esq., and Joshua M. Altman, Esq., as
their General Bankruptcy Counsel.
The Debtors tapped Jason S. Brookner, Esq., Paul D. Moak, Esq.,
Amber M. Carson, Esq., at Gray Reed & McGraw LLP as their
co-bankruptcy counsel.
BJ SERVICES: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------
The Office of the U.S. Trustee on July 28 appointed a committee to
represent unsecured creditors in the Chapter 11 cases of BJ
Services, LLC and its affiliates.
The committee members are:
1. Gardner Denver Petroleum Pumps, LLC
1800 Gardner Exwy
Quincy, IL 62305
James Sheets 706-513-9720
james.sheets@irco.com
2. Infosys Limited
1 World Trade Center
285 Fulton St., 79th Floor
New York, NY 10007
Frank Clark
510-402-3765
frank_clark@infosys.com
3. SPM Flow Control
7601 Wyatt Drive
Fort Worth, TX 76108
Wes E. Wadle
817-653-2475
wes.wadle@mail.weir
4. DTE Enterprises
2350 W Pinehurst Blvd.
Addison, IL 60101
Stephen Gregory
630-307-9355
sgregory@dealerstrans.com
5. Solvay USA d/b/a Chemplex
504 Carnegie Center
Princeton, NJ 08540
Kim Sears
609-860-2244
kim.sears@solvay.com
6. High Roller Sand Operating
1325 South Dairy Ashford
Houston, TX 77077
Donald Burell
281-285-1963
dburell@slb.com
7. Circle Bar A, Inc.
27035 Campbellton Road
San Antonia, TX 78264
Charles Metzger
210-626-2272
charlie@circlebara.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About BJ Services
BJ Services, LLC provides hydraulic fracturing and cementing
services to upstream oil and gas companies engaged in the
exploration and production of North American oil and natural gas
resources. Based in Tomball, Texas, BJ Services operates in every
major basin throughout U.S. and Canada.
BJ Services and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 20-33627)
on July 20, 2020. At the time of the filing, Debtors disclosed
assets of between $500 million and $1 billion and liabilities of
the same range. Judge Marvin Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP, Kirkland & Ellis
International, LLP and Gray Reed & McGraw LLP as their legal
counsel; PJT Partners LP as investment banker; Ankura Consulting
Group, LLC as restructuring advisor; PricewaterhouseCoopers LLP as
tax consultant; and Donlin, Recano & Company, Inc. as claims agent.
Debtors have also tapped a number of professionals to assist in
the marketing and sale of their assets.
BL RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 3 announced the resignation of NCR
Corporation from the official committee of unsecured creditors
appointed in the Chapter 11 case of BL Restaurants Holding, LLC.
As of July 29, 2020, the members of the committee are:
1. A&Z Novi LLC
Attn: Anthony Marougi
6630 Oak Hills Drive
Bloomfield Hills, MI 48301
Phone: 248-217-1307
2. Edward Don & Company
Attn: John Fahey
9801 Adam Don Pkwy
Woodridge, IL 60517
Phone: 708-883-8362
Fax: 866-299-3038
3. Brookfield Property REIT, Inc.
Attn: Julie Minnick Bowden
350 N. Orleans St., Suite 300
Chicago, IL 60654-1607
Phone: 312-960-2707
Fax: 312-442-6374
4. Bradley Alverson
Attn: c/o Joseph Fitapelli
Fitapelli & Schaffer, LLP
28 Liberty Street, Fl. 30, Suite 3080
New York, NY 10005
Phone: 212-300-0375
Fax: 212-481-1333
About BL Restaurants Holding
Founded in 1991, BL Restaurants Holding, LLC operates gastrobars at
various locations including lifestyle centers, traditional shopping
malls, event locations, central business districts and other
stand-alone specialty sites.
BL Restaurants and three affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Case No. 20-10156) on
Jan. 27, 2020. At the time of the filing, the Debtors were
estimated to have assets of between $50 million and $100 million
and liabilities of between $100 million and $500 million. The
petitions were signed by Howard Meitiner, chief restructuring
officer.
Debtors have tapped Klehr Harrison Harvey Branzurg LLP as legal
counsel; Configure Partners LLC as investment banker; Carl Marks
Advisory Group LLC as restructuring advisor; and Epiq Bankruptcy
Solutions Inc as notice and claims agent.
On Feb. 5, 2020, the Office of the United States Trustee appointed
a committee of unsecured creditors. The committee retained Kelley
Drye & Warren LLP and Womble Bond Dickinson (US) LLP as its legal
counsel, and Province, Inc. as its financial advisor.
BLACK IRON: Unsecured Creditors to Receive Full Payment in Plan
---------------------------------------------------------------
Black Iron, LLC, a Utah limited liability company, filed with the
U.S. Bankruptcy Court for the District of Utah a Combined Plan of
Reorganization and a Disclosure Statement dated June 19, 2020.
The Plan contemplates a transfer of all or substantially all of
Debtor's assets under Section 1123(b)(4) and provides for the
payment in full of all creditors, both secured and unsecured, with
security to ensure that disputed and unliquidated claims will be
paid in full upon, and to the extent of, their final allowance.
The Plan will be implemented through the following primary steps:
* Sale of Black Iron's Assets to New Black Iron: On the
Effective Date of the Plan, all or substantially all of Debtor's
assets will be transferred to a new corporation or limited
liability company ("New Black Iron") to be organized and owned by
Gilbert Development Corporation ("GDC") and by SA Recycling, LLC or
an affiliate of SA Recycling, LLC ("SA Recycling"), acting jointly
as sponsors of the Plan.
* Payment in Full of All Allowed Claims: Except for Insider
Claims, all Allowed Claims—regardless of classification, secured
or unsecured status, or priority—will be Paid in Full on or
within 10 days of the Effective Date or the date of their Final
Allowance.
* Assumption of Liability by New Black Iron and Security for
Payment of Disputed and Unliquidated Claims: On the Effective Date,
New Black Iron will succeed to Debtor’s liabilities with respect
to each of the following disputed and unliquidated Claims against
Debtor, and will provide security for the payment of such Claims
pending their Final Allowance and payment.
* Assumption or Capitalization of Insider Claims: On the
Effective Date, Debtor's obligations with respect to all Claims by
persons who are Insiders of Debtor will be assumed by New Black
Iron and/or converted into equity interests in New Black Iron.
Subclass 3E Other Allowed General Unsecured Claims consists of all
other Allowed Unsecured Claims, including Durham Jones’ Claim for
$5,952.00 (claim number 4-1) and Smith Knowles’ Claim (claim
number 5-1) for $18,758, for a total of $24,710. All Allowed Class
3E Claims will be Paid in Full on or within 10 days after the
Effective Date.
Class 5 equity interest holders will receive no distributions under
the Plan.
A full-text copy of the Combined Plan and Disclosure Statement
dated June 19, 2020, is available at https://tinyurl.com/yb2kje2s
from PacerMonitor.com at no charge.
Counsel for Black Iron:
David J. Jordan
David B. Levant
Mark E. Hindley
Ellen E. Ostrow
STOEL RIVES LLP
201 S Main Street, Suite 1100
Salt Lake City, UT 84111
Telephone: 801.328.3131
Facsimile: 801.578.6999
E-mail: david.jordan@stoel.com
david.levant@stoel.com
mark.hindley@stoel.com
ellen.ostrow@stoel.com
About Black Iron
Black Iron, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Utah Case No. 17-24816) on June 1, 2017.
In the petition signed by Steve L. Gilbert, its manager, the Debtor
was estimated to have its assets and debt at $1 million to $10
million.
The Hon. William T. Thurman is the case judge.
The Debtor hired Adelaide Maudsley, Esq., and Ralph R. Mabey, Esq.,
at Kirton McConkie P.C., as bankruptcy counsel. The Debtor tapped
Stoel Rives LLP as legal counsel; Durham Jones as special
litigation counsel; WSRP, LLC as accountant; and Alysen Tarrant as
environmental consultant.
BLESSED HOLDINGS: Unsecureds Will Get 1% of Claims
--------------------------------------------------
Blessed Holdings Trust, Corp., submitted a Second Amended
Disclosure Statement explaining its Chapter 11 Plan.
The Debtor is a holding company for real property. It holds three
parcels of real property.
Class 1 Allowed Secured Claim of 1Sharpe Income Fund, L.P totaling
$425,062 is impaired. The Creditor's claim will be capped at
$425,062 with no further accruing interest, penalties, costs and
attorney fees. The collateral is valued at $408,080. Creditor and
Debtor may later enter an agreement acceptable to both.
Class 2 Secured claim of U.S. Bank, N.A. as indenture trustee for
Angel Oak Mortgage Trust 1, LLC 2018-PB1 totaling $1,545,959 is
impaired. This creditor's rights will be restored so that they may
proceed with their foreclosure sale in rem.
Class 3 Secured claim of Miami-Dade County totaling $29,802 is
impaired. The property taxes shall be paid in full upon the sale
of the property located at 2320 SW 14th Street, Miami, Florida
33145.
Class 4 Secured claim of Miami-Dade County totaling $18,872 is
impaired. This creditor's rights shall be fully restored.
Class 5 General unsecured claims are impaired. All unsecured
creditors with validly filed unsecured claims shall receive 1
percent of their claims.
Payments and distributions under the Plan will be funded by the
Debtor will make payments to the creditors through use of the
income derived from its business as well as new value contributed
by the principal.
A full-text copy of the Second Amended Disclosure Statement dated
June 22, 2020, is available at https://tinyurl.com/yclnv46v from
PacerMonitor.com at no charge.
About Blessed Holdings Trust Corp.
Blessed Holdings Trust Corp. is a corporation based in Hialeah,
Florida. It is a small business debtor as defined in 11 U.S.C.
Section 101(51D).
Blessed Holdings Trust sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 18-25403) on Dec. 11,
2018. At the time of the filing, the Debtor had estimated assets
of $1 million to $10 million and liabilities of $1 million to $10
million. The case has been assigned to Judge Jay A. Cristol. The
Debtor tapped the Law Offices of Richard R. Robles, P.A., as its
legal counsel.
BLUESTEM BRANDS: Bluestem Group Objects to Disclosure Statement
---------------------------------------------------------------
Bluestem Group Inc. objects to Bluestem Brands, Inc., et al.'s
motion for entry of an order approving the adequacy of the
disclosure statement on an interim basis.
BGI points out that the Disclosure Statement provides insufficient
information regarding the facts and circumstances leading up to the
Debtors' entry into chapter 11.
BGI asserts that the Disclosure Statement provides no explanation
of the Debtors' basis, or the resulting impact, of accepting a $100
million reduction in the Stalking Horse Bidder's credit bid from
$300 million to $200 million -- a decision that conflicts with the
Debtors' historical performance and is seemingly at odds with the
Debtors' strong post-COVID-19 financial performance and
projections.
BGI complains that the Disclosure Statement does not provide
information sufficient for holders of Allowed General Unsecured
Claims (including BGI) to understand or evaluate the amount and
adequacy of their expected recoveries under the Plan, beyond
knowing that these recoveries will be minuscule, in stark contrast
to the 100% recoveries promised to trade creditors.
According to BGI, the Disclosure Statement omits material
information regarding the nature of the Debtors' pension-related
obligations, the amount, if any, of any previous underfunding of
such obligations, and how those obligations will be treated under
the Plan.
BGI points out that the Disclosure Statement omits material
information relating to the lease with BGI governing the Debtors'
distribution center in Irvine, Pennsylvania (the "IDC Lease").
BGI asserts that the Disclosure Statement does not provide
sufficient information relating to the timing and amounts of any
repayments made by the Debtors' of its debtor-in-possession
financing (the "DIP Financing").
Counsel to Bluestem Group Inc.:
Richard S. Cobb
Matthew R. Pierce
LANDIS RATH & COBB LLP
919 Market Street, Suite 1800
Wilmington, Delaware 19801
Telephone: (302) 467-4400
Facsimile: (302) 467-4450
Email: cobb@lrclaw.com
pierce@lrclaw.com
- and -
Kenneth H. Eckstein
Philip Bentley
Andrew Pollack
KRAMER LEVIN NAFTALIS & FRANKEL LLP
1177 Avenue of the Americas
New York, New York 10036
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
E-mail: keckstein@kramerlevin.com
pbentley@kramerlevin.com
apollack@kramerlevin.com
About Bluestem Brands
Bluestem Brands, Inc. -- https://www.bluestem.com/ -- its a
direct-to-consumer retailer that offers fashion, home, and
entertainment merchandise through internet, direct mail, and
telephonic channels under the Orchard and Northstar brand
portfolios. Headquartered in Eden Prairie, Minnesota, Bluestem
employs 2,200 individuals and own and/or lease warehouses,
distribution centers, and call centers in 10 other states,
including New Jersey, Massachusetts, Georgia, and California. The
Debtors' supply chain consists of name-brand vendors -- e.g.,
Michael Kors, Samsung, Keurig, Dyson -- as well as private label
and non-branded sources based in the United States and abroad.
Bluestem Brands, Inc., based in Eden Prairie, MN, and its
debtor-affiliates sought Chapter 11 protection (Bankr. D. Del. Lead
Case No. 20-10566) on March 9, 2020. In its petition, Bluestem
Brands was estimated to have $500 million to $1 billion in both
assets and liabilities. The petition was signed by Neil P. Ayotte,
executive vice president, general counsel and secretary.
The Hon. Mary F. Walrath oversees the case.
The Debtors tapped YOUNG CONAWAY STARGATT & TAYLOR, LLP, and
KIRKLAND & ELLIS LLP, KIRKLAND & ELLIS INTERNATIONAL LLP as
counsels; FTI CONSULTING, INC., as financial advisor; RAYMOND JAMES
& ASSOCIATES, INC., as investment banker; IMPERIAL CAPITAL LLC, as
restructuring advisor; and PRIME CLERK LLC as claims and noticing
agent.
BOMBARDIER INC: Fitch Puts CCC+ Rated Unsec. Notes on Watch Neg.
----------------------------------------------------------------
Fitch Ratings has placed Bombardier Inc.'s 'CCC+'/'RR3' rated
senior unsecured notes on Rating Watch Negative. The action follows
BBD's July 22, 2020 announcement it had received a commitment for a
new three-year secured term loan of up to $1 billion to commence
during the third quarter of 2020. The loan will be secured by
certain aviation inventory and related accounts receivable, which
will put it in a senior position to BBD's unsecured notes.
Upon completion of the new facility, Fitch expects to resolve the
Rating Watch Negative and downgrade existing senior unsecured notes
by one notch to 'CCC'/'RR4'. This reflects lower recoveries
estimated by Fitch in a distress scenario, even after considering
the mandatory repayment of 50% of the outstanding balance of the
term loan upon the sale of Bombardier Transportation to Alstom. The
'CCC' Issuer Default Rating and 'CC'/'RR6' ratings on preferred
shares are not expected to be affected when the Rating Watch
Negative on the senior unsecured notes is resolved.
The term loan will provide additional liquidity while BBD completes
pending asset sales of its aerostructures and Bombardier
Transportation businesses, and addresses the impact of the
coronavirus pandemic on demand for business jets. The term loan
will also increase BBD's financial flexibility over the medium term
following the asset sales, as there is currently no credit facility
available to the aviation business.
Bombardier Inc.
- Senior unsecured; LT CCC+; Rating Watch On
KEY RATING DRIVERS
BBD's ratings incorporate the company's high leverage, negative
FCF, Fitch's concerns about the risk of constrained liquidity over
the long term if FCF does not become positive after 2020, and
substantially smaller scale after completing pending asset sales.
BBD intends to use proceeds from asset sales to pay down debt, but
Fitch believes the loss of earnings from divested businesses will
offset much of the effects of lower debt and leave leverage at
elevated levels. After mid-2021, BBD will be focused on the
business jet market where it is well positioned. However, the
business jet market is highly cyclical and is experiencing
significant disruption due to the coronavirus pandemic.
Negative FCF: The impact of the coronavirus pandemic has
exacerbated BBD's seasonally weak FCF in the first half of 2020,
which totaled approximately negative $2.6 billion, including FCF in
the second quarter, which was less negative than originally
anticipated at approximately negative $1 billion. Fitch expects
that FCF in the second half could be break-even or slightly
negative. Cash from pending asset sales in 2020 and 2021 will help
to offset negative FCF during the period. However, Fitch expects
liquidity, before considering short-term borrowing, might be
inadequate for short periods depending on the timing of cash flows.
This concern is mitigated by the new $1 billion term loan.
Asset Sales: Proceeds from pending asset sales include
approximately $550 million from the Canadair Regional Jet program
completed June 1, 2020, and approximately $500 million from BBD's
aerostructures business, which is expected to be completed in
coming months. The sale of Bombardier Transportation to Alstom SA
is expected to occur in the first half of 2021, which would provide
net proceeds of approximately $4.2 billion-$4.5 billion.
High Leverage: BBD intends to use proceeds from asset sales to
reduce debt, including EUR414 million due in May 2021 and USD1.018
billion due in December 2021. There are additional debt maturities
in 2022. Despite planned debt reduction, Fitch expects BBD's
leverage could remain high in the absence of a solid economic
recovery. At March 31, 2020, debt/EBITDA was well above 10x, as
calculated by Fitch. Apart from debt, BBD has funding requirements
for pension liabilities and certain retained liabilities related to
the sale of the regional jet program. BBD may qualify to defer
certain payments under government support programs being
implemented to address the coronavirus pandemic.
Weak Operating Results: Low orders at BBD's Aviation and
Transportation businesses and previous temporary production
shutdowns associated with the coronavirus are contributing to sharp
declines in revenue and to lower margins expected for all of 2020.
Fitch expects the revenue impact on BBD to be mitigated by a solid
backlog for the Global 7500. Margins likely will be negatively
affected by new safety measures implemented to protect employee
health, and planning will be more difficult until economic
conditions stabilize.
Fitch assumes demand will start to recover in the last half of
2020, but the pace of improvement will be sensitive to the
effectiveness of control measures against the coronavirus. The
Transportation business has a large backlog, and government support
for Transportation customers is possible. However, a resumption of
normal activity may not occur before the anticipated divestiture of
the business in 2021.
DERIVATION SUMMARY
BBD's current operating profile includes well established positions
in its aerospace and transportation markets. There is significant
competition in these markets and several competitors are larger,
better capitalized or generate higher margins, putting BBD at a
disadvantage with respect to funding future new programs in
business jets and supporting working capital at BT. Alstom's
agreement to acquire BT is consistent with expected consolidation
in the rail equipment sector. When the transaction is concluded,
BBD will be less diversified and have a more concentrated exposure
to the cyclical business jet market. BBD generates lower revenue
and margins than Gulfstream, a subsidiary of General Dynamics
Corporation, but margins should benefit over the long term from an
updated product line and BBD's increased focus on business jets and
aftermarket revenue. BBD's credit profile is weaker than its peers
due to significant previous investment in developing the A220,
which contributed to high leverage.
KEY ASSUMPTIONS
-- FCF in 2020 is significantly negative and could approach
negative $3 billion;
-- BBD completes pending divestitures in 2020 and the first half
of 2021;
-- Liquidity is adequate to fund scheduled debt maturities at
least through 2021;
-- Business jet revenue declines significantly in 2020 due to the
impact of the coronavirus pandemic;
-- Aviation margins improve over the long term due to a refreshed
product line, a focus on aftermarket revenue, and cost efficiencies
associated with higher production of the Global 7500;
-- Margins at BT continue to be pressured by legacy projects.
Recovery Analysis:
-- The analysis for BBD reflects Fitch's expectation that the
enterprise value of the company, and recovery rates for creditors,
would be maximized as a going concern rather than through
liquidation. Fitch has assumed a 10% administrative claim. The
recovery analysis assumes that a combination of lower end market
demand, negative FCF, and an inability to refinance debt creates a
distress scenario in 2021 or 2022.
-- Going-concern EBITDA of $390 million reflects Fitch's
projected EBITDA in 2022 for BBD's business jet operations
following asset sales of other aviation businesses in 2020 and the
sale of BT in 2021. EBITDA is discounted to incorporate uncertainty
about the timing of a full recovery in BBD's business jet market
due to the coronavirus pandemic. Fitch assumes proceeds from the
sale of Aviation assets are used to offset negative FCF in 2020.
-- An EBITDA multiple of 6.0x is used to calculate a
post-reorganization valuation, below the 6.7x median for the
industrial and manufacturing sector and above the 5.5x average for
the small subset of A&D companies. The multiple incorporates a
competitive environment and cyclicality and event risk in the
aerospace sector.
-- In a distress scenario, Fitch assumes BT is divested in 2021
as planned. Fitch uses a discounted value of $3.4 billion, which
incorporates execution risk and the potential for negative FCF
after 2020 that would reduce the amount of sale proceeds available
to fund debt reduction. Fitch assumes all liabilities at BT remain
with BT as it is relatively independent of BBD's aviation
business.
-- The recovery model produces a Recovery Rating of 'RR4' for
unsecured debt, reflecting average recovery prospects (31%-50%) in
a distress scenario. The 'RR6' for preferred stock reflects poor
recovery prospects due to a low priority position relative to BBD's
debt.
RATING SENSITIVITIES
Fitch expects to resolve the Rating Watch Negative on the senior
unsecured notes and downgrade the ratings to 'CCC/RR4' from
'CCC+/RR3' when the new $1 billion three-year secured term loan is
completed sometime in the third quarter of 2020. If the term loan
is not completed, Fitch expects the Rating Watch Negative would be
removed and the ratings affirmed at 'CCC+'/'RR3'.
The rating sensitivities for BBD's other ratings remain in place.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The impact of the coronavirus pandemic is resolved without a
significant long-term impact to the business jet market;
-- Annual FCF is positive;
-- Consistently lower leverage, including debt/EBITDA below
6.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- FFO interest coverage is below 1x;
-- The pending sales of BT and aerostructures assets are not
completed as planned;
-- Cash plus availability under BT's revolver is less than $1
billion.
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
BBD's liquidity at March 31, 2020 included cash of $2 billion plus
$859 million of availability under BT's EUR1.154 billion revolver
that matures in 2022. BT has access to a EUR75 million uncommitted
short-term revolver and has a letter of credit facility used to
support performance risk and secure advance payments from
customers. In addition, BT has arrangements under which it receives
amounts from third-party advance providers in exchange for rights
to customer payments, and sells certain receivables on a
non-recourse basis. BT and the Aviation business both make use of
extended payment terms.
As of March 31, 2020, covenants in BT's bank facilities included
minimum liquidity, minimum equity, and a maximum debt/EBITDA ratio,
all calculated for BT on a stand-alone basis. Minimum required
liquidity at the end of each quarter was EUR750 million. BBD does
not publicly disclose required levels for other covenants.
Amendments to the revolver and letter of credit facility were made
in the first quarter of 2020, including adjustments to certain
financial covenants. Financial covenants were all met as of March
31, 2020.
BBD's reported long-term debt totaled $9.3 billion at March 31,
2020. Scheduled maturities include approximately $1.5 billion due
in 2021 (EUR414 million in May; USD1.018 billion in December) and
$1.7 billion due in 2022. BBD's debt at March 31, 2020 as
calculated by Fitch totaled approximately $11.7 billion. In
addition to long term debt, this amount includes short term debt of
$414 million and approximately $1.8 billion related to contract
balances and receivables sold under BT's arrangements together with
amounts sold under extended payment terms. Fitch also includes half
of BBD's preferred shares and allocates 50% equity credit.
BBD's net pension obligation at Dec. 31, 2019 was nearly $2 billion
(79% funded) including unfunded plans. Funded plans were 86%
funded. BBD plans to contribute $276 million in 2020 including $47
million at the aerostructures businesses. BBD will retain slightly
more than half of pension and other post-retirement liabilities
after BT is sold.
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.
BRADLEY INVESTMENTS: McCormick Says Plan Not Confirmable
--------------------------------------------------------
McCormick 109, LLC, as assignee of Regions Bank, objects to the
Disclosure Statement Accompanying Plan of Reorganization filed by
Bradley Investments, Inc., as follows:
* The Disclosure Statement does not provide adequate information
as required by the Bankruptcy Code and applicable case law. Without
limitation, the Disclosure Statement provides no explanation as to
how the Debtor determined the value of the Real Property to be
$950,000.
* The Plan proposes only to grant Robert Bradley the exclusive
option to purchase a 100% ownership interest in the Reorganized
Debtor for a mere $5,000 while paying pennies on the dollar to
holders of general unsecured claims that likely will exceed
$1,750,000. Accordingly, and as the court set forth in Homestead
Partners, the Plan violates the absolute priority rule and is
patently unconfirmable.
* To retain the Property and confirm the Plan over McCormick’s
objection, the Debtor will be required to make significant
additional debt service payments. The Debtor's financial
projections demonstrate that it does not have the financial
capacity to do so. Thus, the Plan is patently unconfirmable, and
the Disclosure Statement should not be approved.
McCormick requests that the Court deny approval of the Disclosure
Statement and grant McCormick such further and additional relief it
deems just and proper.
A copy of McCormick's objection dated June 19, 2020, is available
at https://tinyurl.com/yc8ptkx2 from PacerMonitor.com at no charge.
Attorneys for McCormick 109:
Christopher L. Hawkins
Andrew J. Shaver
BRADLEY ARANT BOULT CUMMINGS LLP
One Federal Place
1819 Fifth Avenue North
Birmingham, Alabama 35203
Telephone: (205) 521-8000
E-mail: chawkins@bradley.com
ashaver@bradley.com
About Bradley Investments
Bradley Investments, Inc., which conducts business under the name
Timbercreek Golf Club, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Ala. Case No. 19-12908) on Aug. 22,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $1 million and $10 million and liabilities of the
same range. The case has been assigned to Judge Henry A. Callaway.
The Debtor is represented by Irvin Grodsky, Esq., at Grodsky and
Owens.
On Sept. 19, 2019, the U.S. Bankruptcy Court for the Southern
District of Alabama appointed an Official Committee of Unsecured
Creditors. The Committee retained Blakeley LLP as counsel.
BULLS HEAD: Aug. 5 Deadline Set for Committee Questionnaires
------------------------------------------------------------
The U.S. Trustee is soliciting creditor interest in serving on
committees in the bankruptcy case of Bulls Head Diner Inc. The
committee formation meeting will not be held in person.
If a party wishes to be considered for membership on an official
unsecured creditors committee, it must complete a required
Questionnaire and return it to the Office of the United States
Trustee by electronic mail to USTPRegion02.NYECF@usdoj.gov so that
it
is received no later than August 5, 2020 at 12:00 p.m. (EST).
A representative from the U.S. Trustee's Office will contact all
creditors submitting a questionnaire to arrange for a telephonic
interview.
Under the Bankruptcy Code, the Unsecured Creditors Committee has
the right to demand that the Debtor consult with the Committee
before making major decisions or changes, to request the
appointment of a trustee or examiner, to participate in the
formation of a plan of reorganization, and in some cases, to
propose its own plan of reorganization.
Bulls Head Diner Inc. filed for bankruptcy protection (Bankr.
S.D.N.Y. Case No. 20-22807) on July 2, 2020. Lawrence F. Morrison,
Esq. of Morrison Tenenbaum, PLLC serves as counsel to the Debtor.
CALIFORNIA PIZZA: Case Summary & 30 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: California Pizza Kitchen, Inc.
12181 Bluff Creek Drive
5th Floor
Playa Vista, California 90094
Business Description: California Pizza Kitchen, Inc. is a casual
dining restaurant chain that specializes in
California-style pizza. Since opening its
doors in Beverly Hills in 1985, CPK has
grown from a single location to more
than 200 restaurants worldwide. CPK's
traditional dine-in locations are full-
service restaurants that serve pizza,
salads, pastas and other California-inspired
fare, alongside a curated selection of wines
and a menu of handcrafted cocktails and
craft beers. Though the Company's dine-in
restaurants are the primary way the Company
serves its customers, CPK also has a number
of "off-premises" services and licensing
agreements that allow customers to get their
favorite CPK dishes on the go. For more
information, visit http://www.cpk.com.
Chapter 11
Petition Date: July 29, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Eight affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
California Pizza Kitchen, Inc. (Lead Debtor) 20-33752
California Pizza Kitchen of Annapolis, Inc. 20-33753
CPK Holdings Inc. 20-33755
CPK Hospitality, LLC 20-33751
CPK Management Company 20-33757
CPK Spirits, LLC 20-33756
CPK Hunt Valley, Inc. 20-33754
CPK Texas, LLC 20-33758
Judge: Hon. Marvin Isgur
Debtors'
General
Bankruptcy
Counsel: Joshua A. Sussberg, P.C.
Matthew C. Fagen, Esq.
Francis Petrie, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Tel: (212) 446-4800
Fax: (212) 446-4900
Email: joshua.sussberg@kirkland.com
matthew.fagen@kirkland.com
francis.petrie@kirkland.com
Debtors'
Local
Bankruptcy
Counsel: Matthew D. Cavenaugh, Esq.
Kristhy M. Peguero, Esq.
Genevieve Graham, Esq.
Veronica A. Polnick, Esq.
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Tel: (713) 752-4200
Fax: (713) 752-4221
Email: mcavenaugh@jw.com
kpeguero@jw.com
ggraham@jw.com
vpolnick@jw.com
Debtors'
Financial
Advisor and
Investment
Banker: GUGGENHEIM SECURITIES, LLC
Debtors'
Restructuring
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
Debtors'
Real Estate
Consultant &
Advisor: HILCO REAL ESTATE, LLC
Debtors'
Notice,
Claims &
Solicitation
Agent: PRIME CLERK LLC
https://cases.primeclerk.com/CPK
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $500 million to $1 billion
The petitions were signed by James Hyatt, chief executive officer.
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Simon Property Group, Inc. Landlord $2,865,798
225 West Washington Street
Indianapolis, IN 46204
Attn: Justin Stein
Tel: 212-745-9610
Email: jstein@simon.com
2. Sysco Corporation Trade Payable $2,848,577
1390 Enclave Parkway
Houston, TX 77077-2099
Attn: Kevin Hourican
Chief Executive Officer
Tel: 281-584-1390
3. Brookfield Asset Management Landlord $2,737,040
250 Vesey Street, 15th Floor
New York, NY 10281-1023
Attn: Keith Isselhardt
Tel: 315-569-9812
Email: keith.isselhardt@brookfieldpropertiesretail.com
4. Westfield Property Management LLC Landlord $1,854,422
2049 Century Park East 41st Floor
Los Angeles, CA 90067
Attn: John Miller
Tel: 310-401-4343
Email: john.miller@urw.com
5. Freshpoint Inc. Trade Payable $1,579,775
5900 N. Golden State Blvd.
Turlock, CA 95382
Attn: Robert Gordon
President and Chief Executive Officer
6. Taubman Centers, Inc. Landlord $1,316,840
200 E. Long Lake Road, Suite 300
Bloomfield Hills, MI 48304-2324
Attn: Michele Walton
Tel: 248-792-1697
Email: mwalton@taubman.com
7. Macerich Landlord $1,267,392
401 Wilshire Boulevard, Suite 700
Santa Monica, CA 90401
Attn: Bill Palmer
Tel: 585-249-4421
Email: bill.palmer@macerich.com
8. The Irvine Company LLC Landlord $703,067
550 Newport Center Drive
Newport Beach, CA 92660
Attn: Doug Stubblefield
Tel: 949-720-2536
Email: dstubblefield@vinecompany.com
9. Starwood Retail Partners Landlord $620,595
1 East Wacker, Suite 3600
Chicago, IL 60601
Attn: Bill Cikalo
Tel: 312-283-5121
Email: bcikalo@starwoodretail.com
10. Cole CP/VEREIT Real Estate, LP Landlord $608,356
4700 Wilshire Boulevard
Los Angeles, CA 90010
Attn: Robin Mora
Tel: 602-513-0462
Email: rmora@vereit.com
11. Wasserstom Company Trade Payable $583,652
4500 E. Broad St.
Columbus, OH 43213
Attn: Rodney Wasserstrom
Chief Executive Officer
Tel: 614-228-6525
12. The Forbes Company Landlord $532,466
100 Galleria Officentre, Suite 427
Southfield, MI 48034-8430
Attn: Hans Wolf
Tel: 312-339-6395
Email: hwolf@theforbescompany.com
13. Forest City Realty Landlord $498,271
C/O Brookfield Asset Management Inc.
250 Vesey Street, 15th Floor
New York, NY 10007
Attn: Keith Isselhardt
Tel: 315-569-9812
Email: keith.isselhardt@brookfield
propertiesretail.com
14. Fox Interactive Media Landlord $454,966
407 N Maple Dr
Beverly Hills, CA 90210
Attn: Denise Eccleston
Tel: 917-664-4765
Email: denise.eccleston@disney.com
15. Y. Hata and Co Limited Trade Payable $407,682
285 Sand Island Access Rd
Honolulu, HI 96819
Attn: Russell Hata
Chairman and Chief Executive
Officer
16. CBL Properties Landlord $379,073
2030 Hamilton Place Blvd.
Chattanooga, TN 37421
Attn: Howard Grody
Tel: 423-667-8485
Email: howard.grody@cblproperties.com
17. Consolidated Theatres Landlord $337,218
Management, Inc.
C/O Reading International, Inc.
5995 Sepulveda Blvd Suite 300
Culver City, CA 90230
Attn: Gabriela Medford
Email: gmedford@decurion.com
18. Bain Capital Marketing LLC Trade Payable $293,955
131 Dartmouth Street
Boston, MA 02116
Attn: John Grudnowski
Expert Vice President
19. Vestar Capital Partners Landlord $288,756
2425 E. Camelback Road Suite 750
Phoenix, AZ 85016
Attn: Jeff Axtell
Tel: 562-938-1722
Email: jaxtell@vestar.com
20. BP Prucenter Acquisition LLC Landlord $273,942
C/O Boston Properties Limited
Partnership
800 Boylston Street, Suite 1900
Boston, MA 02199-8103
Attn: Sydney Rodenstein
Email: srodenstein@bxp.com
21. Opinionated Group Trade Payable $252,979
116 NE 6th Ave #300
Portland, OR 97232
Attn: Mark Fitzloff
Founder/Creative Director
22. Zurich U.S. Trade Payable $247,922
1299 Zurich Way Zaic
Schaumburg, IL 60196
Attn: Kathleen Savio
Chief Executive Officer
23. Atlantic Town Center, LLC Landlord $242,276
3280 Peachtree Road, NE,
20th Floor
Atlanta, GA 30305
Attn: Nick Garzia
Email: nickgarzia@hines.com
24. H&H Retail Owner Landlord $217,884
6801 Hollywood Blvd, Ste 170
Hollywood, CA 90028-9117
Attn: Patricia Apel
Email: papel@djmcapital.com
25. Glimcher Landlord $217,524
C/O Washington Prime Group
180 East Broad Street
Columbus, OH 43215
Attn: Sean McMahon
Email: sean.mcmahon@washingtonprime.com
26. NCR Corporation Trade Payable $212,958
864 Spring St NW
Atlanta, GA 30308
Attn: Michael Hayford
President and Chief Executive
Officer
Tel: 937-445-1936
27. Turner Duckworth Trade Payable $211,175
375 Hudson Street, 16th Floor
New York, NY 10014
Attn: Joanne Chan
Chief Executive Officer
Tel: 212-463-2400
28. Noble People Trade Payable $200,003
13 Crosby Street #402
New York, NY 10013
Attn: Greg March
Chief Executive Officer
Tel: 646-326-8515
Email: gregmarch@noblepeople.co
29. Fairbourne Properties Landlord $191,059
One East Wacker Drive, Suite 3110
Chicago, IL 60601
Attn: Michael Wethington
Email: mwethington@fairbourne.com
30. American Assets Landlord $185,320
11455 El Camino Real, Suite 200
San Diego, CA 92130
Attn: Chris Sullivan
Tel: 858-350-2584
CALIFORNIA RESOURCES: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------------
Henry Hobbs Jr., the acting U.S. trustee for Region 7, appointed a
committee to represent unsecured creditors in the Chapter 11 cases
of California Resources Corp. and its affiliates.
The committee members are:
1. Wilmington Trust, National Association
Attn: Steven Cimalore/Rita Marie Ritrovato
1100 North Market Street
Wilmington, DE 19890
Tel: 302-636-5137
Fax: 302-636-4145
Email: scimalore@wilmingtontrust.com
rritrovato@wilmingtontrust.com
Counsel: Reed Smith LLP
Kurt F. Gwynne, Esq.
Mark W. Eckard, Esq.
Lloyd A. Lim, Esq.
811 Main Street, Suite 1700
Houston, TX 77002-6110
Tel: 302-345-7996
Fax: 713-469-3899
Email: kgwynne@reedsmith.com
meckard@reedsmith.com
llim@reedsmith.com
2. Delaware Trust Company
Attn: Michelle Dreyer
251 Little Falls Drive
Wilmington, DE 19808
Tel: 302-636-5806
Fax: 302-636-8666
Email: michelle.dreyer@cscgfm.com
Squire Patton Boggs (US) LLP
Jeffrey N. Rothleder, Esq.
2550 M Street, NW
Washington, DC 20037
Tel: 202-457-6462
Fax: 202-457-6315
Email: jeffrey.rothleder@squirepb.com
3. Richard Soutsos
c/o Diversity Law Group
515 S. Figueroa Street, Suite 1250
Los Angeles, CA 90071
Tel: 530-623-2741
Email: thatsmystuff@yahoo.com
Diversity Law Group
Larry W. Lee, Esq.
515 S. Figueroa Street, Suite 1250
Los Angeles, CA 90071
Tel: 213-488-6555
Fax: 213-488-6554
Email: lwlee@diversitylaw.com
4. Kenai Drilling Limited
Attn: David Uhler
P.O. Box 2248
Orcutt, CA 93457
Tel: 805-937-7871
Fax: 805-937-4768
Email: duhler@kenaidrilling.com
Clifford & Brown
Grover Waldon, Esq.
1430 Truxtun Avenue, Suite 900
Bakersfield, CA 93301-5230
Tel: 661-322-6023
Fax: 661-322-3508
Email: gwaldon@clifford-brownlaw.com
5. Chris G. Girand
125 E. Jason St.
Encinitas, CA 92024
Tel: 917-657-6978
Email: chrisgirand@yahoo.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About California Resources
California Resources Corporation is an oil and natural gas
exploration and production company headquartered in Los Angeles.
The company operates its resource base exclusively within
California, applying complementary and integrated infrastructure to
gather, process and market its production. Visit
http://www.crc.comfor more information.
On July 15, 2020, California Resources and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Texas Lead Case No. 20-33568). At the time of the filing,
California Resources disclosed assets of between $1 billion and $10
billion and liabilities of the same range.
Judge David R. Jones oversees the cases.
Debtors have tapped Sullivan & Cromwell, LLP and Vinson & Elkins
LLP as their bankruptcy counsel, Perella Weinberg Partners as
investment banker, Alvarez & Marsal North America, LLC as
restructuring advisor, and Epiq Corporate Restructuring, LLC as
claims agent.
CALPINE CORP: Fitch Rates New $650MM Senior Unsecured Notes 'BB-'
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' rating to Calpine Corp.'s $650
million 4.625% senior unsecured notes due 2029 and $850 million
5.0% senior unsecured notes due 2031. The notes rank pari passu
with Calpine's existing unsecured debt. In addition, Fitch has
assigned Calpine's senior unsecured notes an 'RR3' recovery rating.
The 'RR3' rating implies good recovery prospects in the event of
default. The Rating Outlook is Stable.
Calpine plans to use the net proceeds from the new financings,
along with cash on hand, to repurchase all of its 5.5% and 5.75%
senior unsecured notes due in 2024 and 2025, respectively via a
concurrent tender offer. With these new issuances, Calpine has
extended its debt maturity profile and lowered its interest
expense, and has no corporate debt maturity until 2024.
Calpine's ratings reflect its elevated leverage and high business
risk associated with owning a largely uncontracted power generation
fleet. The ratings also consider the positive attributes of
Calpine's fleet, such as a relatively clean fuel profile,
geographic diversity and the ability to generate consistent EBITDA
in different natural gas price environments. A strong financial
performance in 2019, aided by higher than expected resource
adequacy prices in California, and a run up in power prices in
Texas during the months of August and September, allowed the
company to achieve its net debt to EBITDA target of 4.5x.
A weaker macro backdrop owing to coronavirus induced economic
slowdown will likely hurt EBITDA in 2020 in Fitch's view. Fitch
expects pressures on EBITDA to linger in 2021, given relatively
lower hedged position for the generation fleet at the start of the
economic slowdown. Fitch expects leverage as measured by gross
debt-to-EBITDA to remain closer to 5.0x over 2020-2022, yet remain
comfortably below Fitch's negative sensitivity trigger of 6.0x.
KEY RATING DRIVERS
Relatively Stable EBITDA Profile: Ownership of a relatively younger
and predominantly natural gas-fired power generation fleet enables
Calpine to generate stable EBITDA in the current low natural gas
price environment through higher run times. Longer-term contracts,
in particular for its geothermal fleet in California, and forward
integration into the retail electricity business add further
stability to profitability and cash flows. Retail margins in the
commercial and industrial segments have generally remained
range-bound during commodity cycles, and residential retail margins
are usually countercyclical, given the length and stickiness of
customer contracts.
Impact of Coronavirus: The coronavirus-related economic slowdown is
having a detrimental impact on power demand. Fitch expects
commercial and industrial sales to decline in 2020 due to a severe
pull back in economic activity. This is likely to impact Calpine's
retail business. Given Calpine's ratable hedging policy for its
generation fleet, the impact on generation EBITDA in 2020 may not
be material but could be more pronounced in 2021 and will depend on
the duration and severity of the slowdown.
Fitch expects Calpine to generate adjusted EBITDA in a narrow range
of $1.9 billion-$2.1 billion over 2020-2022, driven by Fitch's
expectation of fall in power demand, lower MWh sales and higher
uncollectible in the retail C&I business, modest pull back in power
prices and completion of announced growth projects. Fitch's
projections are more conservative than company's guidance, as
management expects to achieve 2020 financial metrics more
consistent with 2018-2019 results. Fitch's EBITDA forecasts
incorporate a natural gas price assumption at Henry Hub of
$1.85/million cubic feet (mcf), $2.1/mcf and $2.25/mcf in 2020,
2021, and 2022, respectively.
Exposure to PG&E Bankruptcy Resolved: Calpine sells power to
Pacific Gas & Electric Company under long-term power purchase
agreements from certain of its natural gas and geothermal plants.
The project debt at its two-natural gas-fired plants, Russell City
Energy Center and Los Esteros Critical Energy Facility, both of
which have PPAs with PG&E, stood at $272 million and $135 million,
respectively, as of Dec. 31, 2019. PG&E exited the bankruptcy
earlier this month and Calpine is expected to receive all the
restricted cash distributions from the projects in the near future.
While PG&E continued to perform under its contracts in bankruptcy,
the cash distribution from these projects was being withheld
subject to the terms of the project debt agreements associated with
the two plants along with collateral from PG&E.
Modest Deterioration in Credit Metrics: In 2019, Calpine achieved
its net debt-to-EBITDA target of 4.5x. 2019 EBITDA was boosted by
strong resource adequacy prices in California and the run up in
power prices in Texas in August and September in response to summer
heat and low reserve margins. Fitch expects headwinds created by
the coronavirus pandemic to negatively impact power demand in 2020
and 2021 and undermine any material recovery in power prices. As a
result, Fitch expects Calpine's gross debt-to-EBITDA to increase to
approximate 5.0x over 2020-2022. With the wind down of growth
capex, Fitch expects Calpine to generate FCF (before dividend) of
approximately $1 billion annually. Fitch expects FFO interest
coverage to range between 3.0x-3.5x, in line with a 'B+' profile.
Light Covenants in Credit Agreements: Fitch's key concern relates
to light covenants in the credit agreements that pose minimal
restrictions on use of asset sale proceeds. Calpine sold two of its
power plants for approximately $360 million in July 2019. The sale
proceeds and cash on hand were used to fund a $400 million
dividend. In June 2020, Calpine raised $900 million of project debt
financing and a $200 million revolving letter of credit facility at
Geysers Power Company. Part of the proceeds were used to pay off
$348 million of Steamboat project financing, with the remainder
reserved for potential debt repurchases at the corporate level,
including the current tender.
Rating Linkages with CCFC: Strong contractual, operational and
management ties exist between Calpine and Calpine Construction
Finance Company, L.P. (CCFC; B+/Stable). CCFC sells a majority of
its power plant output under a long-term tolling arrangement with
Calpine's wholly-owned marketing subsidiary. CCFC is also a party
to a master operation and maintenance agreement and a master
maintenance services agreement with another wholly-owned Calpine
subsidiary. Fitch consequently determined a strong rating linkage
exists between CCFC and Calpine. Fitch believes CCFC has a stronger
credit profile, and therefore, taking a weak parent/strong
subsidiary approach, assigns the same IDR to 'CCFC' as Calpine.
Both IDRs are assigned based on the consolidated credit profile.
Recovery Analysis: The individual security ratings at Calpine are
notched above or below the IDR as a result of the relative recovery
prospects in a hypothetical default scenario. Fitch values the
power generation assets that guarantee the parent debt using a net
present value analysis. A similar NPV analysis is used to value the
generation assets that reside in non-guarantor subsidiaries, and
the excess equity value is added to the parent recovery prospects.
The generation asset NPVs vary significantly based on future gas
price assumptions and other variables, such as the discount rate
and heat rate forecasts in California, ERCOT and the Northeast.
For the NPV of generation assets used in Fitch's recovery analysis,
Fitch uses the plant valuation provided by its third-party power
market consultant, Wood Mackenzie, as well as Fitch's own gas price
deck and other assumptions. The NPV analysis for Calpine's
generation portfolio yields approximately $1,500/kW for the
geothermal assets and an average of $475/kW for the natural gas
generation assets. The recovery analysis resulted in a Recovery
Rating of 'RR1', implying outstanding recovery, for the first lien
debt and a Recovery Rating of 'RR3', implying good recovery, for
the senior unsecured debt in the event of default.
DERIVATION SUMMARY
Calpine is unfavorably positioned compared to Vistra Energy Corp.
(BB/Positive) with respect to size, asset composition and
geographic exposure but well-positioned relative to Talen Energy
(B/Stable). Vistra is the country's largest independent power
producer, with approximately 39 gigawatts of generation capacity,
compared with Calpine's 26 gigawatts and Talen's 15 gigawatts.
Vistra benefits from its ownership of large and well-entrenched
retail electricity businesses in contrast to Calpine, whose retail
business is smaller.
The biggest qualitative strength for Calpine, in Fitch's view, is
its younger and predominantly natural gas-fired fleet, which bears
less operational and environmental risk than coal-fired assets
owned by Vistra and Talen. In addition, Calpine's EBITDA is very
resilient to changes in natural gas prices and heat rates, compared
with peers. Calpine's leverage is higher, however, which results in
a lower rating. Calpine's forecast leverage at 5.0x, as measured by
total debt/ EBITDA, is higher than Vistra's 3.0x, but lower than
Talen (high 5.0x in 2022).
KEY ASSUMPTIONS
-- Wholesale power prices based on forward market curves through
2022;
-- Annual debt amortizations of $230 million-$240 million
annually;
-- Growth capex of approximately $200 million for 2020-2022
period; growth projects include Washington Parish (2020) and
Storage (2021);
-- O&M costs generally escalating at 1.0% through 2022;
-- Dividend to sponsors at $750 million p.a.;
-- Taxes assume net operating loss usage.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating actions for Calpine and CCFC appear unlikely
unless there is material and sustainable improvement in Calpine's
credit metrics compared with Fitch's expectations;
-- Gross debt /EBITDA below 4.0x on a sustainable basis and/or
conservative capital-allocation policies.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sale of and/or addition of structurally senior secured debt at
core assets with an aim to maximize shareholder returns without
commensurate debt reduction;
-- Weaker power demand or higher than expected power supply,
depressing wholesale power prices in its core regions;
-- Unfavorable changes in regulatory construct and rules in its
markets;
-- An aggressive growth strategy that diverts a significant
proportion of growth capex toward merchant assets or an inability
to renew expiring long-term contracts;
-- Total adjusted debt/EBITDA above 6.0x on a sustained basis;
-- Any incremental leverage and/or deterioration in NPV of the
generation portfolio would lead to downward rating pressure on the
unsecured debt.
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: Calpine had approximately $550 million of cash
and cash equivalents, excluding restricted cash, at the corporate
level as of March 31, 2020, and approximately $900 million of
availability under the corporate revolver. Corporate revolved was
paid down during the 2Q. The $2 billion revolving facility matures
on March 8, 2023.
Calpine has three unsecured LOC facilities totaling approximately
$300 million, of which $5 million was available as of March 31,
2020. One of the facilities with commitments of $150 million was
maturing partially in June 2020 and fully by December 2020. In
April 2020, Calpine amended the facility to partially extend the
maturity of $100 million in commitments from June 2020 to June
2022. The other two facilities totaling $50 million and $100
million mature in December 2023 and December 2021, respectively. In
addition, Calpine can issue first-lien debt for collateral
support.
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.
CB POLY: S&P Lowers Long-Term ICR to 'SD' on Distressed Exchange
----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
U.S.-based promotional products supplier CB Poly Investments LLC
(dba Polyconcept) to 'SD' (selective default) from 'B-' and
lowering our rating on the company's second-lien term loan due 2024
to 'D' (default).
The downgrade follows the company's distressed exchange of its $175
million second-lien term loan due August 2024. As part of the
transaction, the company exchanged $125 million of the second-lien
term loan for payment-in-kind (PIK, interest at LIBOR+450)
incremental first-lien term loan. The incremental term loan ranks
pari passu with existing first-lien term loan. The remaining $50
million of second-lien debt has been stripped of all covenants with
interest to be converted from cash to PIK at LIBOR+1,000. S&P
expects the transaction to reduce the company's annual cash
interest payments by about $19.25 million.
"Given the timing of cash interest payments has slowed, and the
significant business disruption and steep revenue declines caused
by the COVID-19 pandemic, we view the transaction as distressed
rather than purely opportunistic," S&P said.
"We intend to reevaluate our ratings in the coming days after we
meet with the company's management, review recent operating
performance, and discuss its business prospects. Our review will
focus on the long-term viability of the company's capital structure
and liquidity position against the backdrop of difficult market
conditions and weak operating trends, along with the potential it
will undertake subsequent distressed repurchases," the rating
agency said.
CEC ENTERTAINMENT: Law Firm of Russell Represents Utility Companies
-------------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the Law Firm of Rusell R. Johnson III submitted a verified
statement that it is representing the utility companies in the
Chapter 11 cases of CEC Entertainment, Inc., et al.
The names and addresses of the Utilities represented by the Firm
are:
a. American Electric Power
Attn: Dwight C. Snowden
American Electric Power
1 Riverside Plaza, 13th Floor
Columbus, Ohio 43215
b. Arizona Public Service Company
Attn: Gisel Rosales
2043 W. Chery Dr., Bldg. M
Mail Station 3209
Phoenix, Arizona 85021-1015
c. Consolidated Edison Company of New York, Inc.
Attn: Rosalie Zuckerman
Con Edison Law Department
Attn: Bankruptcy
18th Floor
4 Irving Place
New York, NY 1003
d. Florida Power & Light Company
Attn: Gloria Lopez
Revenue Recovery Department RRD/LFO
4200 W. Flagler St.
Coral Gables, Florida 33134
e. Atlantic City Electric Company
Baltimore Gas and Electric Company
Commonwealth Edison Company
Delmarva Power & Light Company
PECO Energy Company
The Potomac Electric Power Company
Attn: Lynn R. Zack, Esq.
Assistant General Counsel
Exelon Corporation
2301 Market Street, S23-1
Philadelphia, PA 19103
f. New York State Electric and Gas Corporation
Attn: Kelly Potter
James A. Carigg Center
Bankruptcy Department
18 Link Drive
Binghamton, NY 13904
g. Rochester Gas and Electric Corporation - $3,295
Attn: Patricia Cotton
89 East Avenue
Rochester, NY 14649
h. Salt River Project
Attn: Breanna Holmes/ISB 232
2727 E. Washington St.
P.O. Box 52025
Phoenix, AZ 85072-2025
i. San Diego Gas & Electric Company
Attn: Kelli S. Davenport, Bankruptcy Specialist
8326 Century Park Court
San Diego, CA 92123
j. Southern California Gas Company
Attn: Cranston J. Williams, Esq.
Office of the General Counsel
555 W. Fifth Street, GT14G1
P.O. Box 30337
Los Angeles, CA 90013-1034
k. Southern California Edison Gas Company
Attn: Patricia A. Cirucci, Esq.
Director and Managing Attorney
Commercial Litigation
224 Walnut Grove Avenue
P.O. Box 800
Rosemead, CA 91770
l. Virginia Electric and Power Company
d/b/a Dominion Energy Virginia
Attn: Sherry Ward
600 East Canal Street, 10th floor
Richmond, VA 23219
m. Tampa Electric Company
TECO Peoples Gas System
Attn: Barbara Taulton FRP, CAP
Florida Registered Paralegal
Tampa Electric Company
702 N. Franklin Street
Tampa, FL 33602
n. Georgia Power Company
Attn: Daundra Fletcher
2500 Patrick Henry Parkway
McDonough, GA 30253
o. The Cleveland Electric Illuminating Company
Ohio Edison Company
Metropolitan Edison Company
Jersey Central Power & Light Company
Pennsylvania Power Company
Potomac Edison Company
Attn: Kathy M. Hofacre
FirstEnergy Corp.
76 S. Main St., A-GO-15
Akron, OH 44308
p. Boston Gas Company
Colonial Gas Cape Cod
KeySpan Energy Delivery Long Island
KeySpan Energy Delivery New York
Massachusetts Electric Company
Narragansett Electric Company
Niagra Mohawk Power Corporation
Attn: Vicki Piazza, D-1
National Grid
300 Erie Boulevard West
Syracuse, NY 13202
q. Connecticut Light & Power Company
Yankee Gas Services Company
NStar Electric Company
Western Massachusetts
Public Service Company of New Hampshire
Attn: Honor S. Heath, Esq.
Eversource Energy
107 Seldon Street
Berlin, CT 06037
The nature and the amount of claims of the Utilities, and the times
of acquisition thereof are as follows:
a. The following have unsecured claims against the
above-referenced Debtors arising from prepetition utility usage:
American Electric Power, Arizona Public Service Company,
Consolidated Edison Company of New York, Inc., Florida Power &
Light Company, Atlantic Electric Company, Baltimore Gas and
Electric Company, Commonwealth Edison Company, Delmarva Power &
Light Company, PECO Energy Company, The Potomac Electric Power
Company, New York State Electric and Gas Corporation, Rochester Gas
& Electric Corporation, Salt River Project, San Diego Gas and
Electric Company, Southern California Gas Company Southern
California Edison Company, Virginia Electric and Power Company
d/b/a Dominion Energy Virginia, Tampa Electric Company, TECO
Peoples Gas System, Georgia Power Company, The Cleveland Electric
Illuminating Company, Ohio Edison Company, Metropolitan Edison
Company, jersey Central Power & Light Company, Pennsylvania
Electric Company, Potomac Edison Company, Boston Gas Company,
Colonial Gas Lowell, KeySpan Energy Delivery Long Island, KeySpan
Energy Delivery New York, Massachusetts Electric Company,
Narragansett Electric Company, Niagara Mohawk Power Corporation,
Connecticut Light & Power Company, Yankee Gas Services Company,
NStar Electric Company, Western Massachusetts and Public Service
Company of New Hampshire.
b. Florida Power & Light Company hold surety bonds that it
will make claims upon for payment of the prepetition debt that the
Debtors owe to Florida Power & Light Company.
c. For more information regarding the claims and interests of
the Utilities in these jointly-administered cases, refer to the
Objection of Certain Utility Companies To the Emergency Motion of
Debtors Pursuant To 11 U.S.C. 105(a) and 366 and Fed. R. Bankr. P.
6003 and 6004 For An Order (I) Approving Debtors' Proposed Form of
Adequate Assurance of Payment To Utility Companies, (II)
Establishing Procedures For Resolving Objections By Utility
Companies, (III) Prohibiting Utility Companies From Altering,
Refusing, or Discontinuing Service, and (IV) Granting Related
Relief filed in the above-captioned, jointly-administered,
bankruptcy cases and Joinder to be filed on July 21, 2020.
The Law Firm of Russell R. Johnson III, PLC was retained to
represent the foregoing Utilities in June and July 2020. The
circumstances and terms and conditions of employment of the Firm by
the Companies is protected by the attorney-client privilege and
attorney work product doctrine.
The Firm can be reached at:
Russell R. Johnson III, Esq.
LAW FIRM OF RUSSELL R. JOHNSON III, PLC
2258 Wheatlands Drive
Manakin-Sabot, VA 23103
Tel: (804) 749-8861
Fax: (804) 749-8862
Email: russell@russelljohnsonlawfirm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/2YkGml
About CEC Entertainment
CEC Entertainment -- http://www.chuckecheese.com/-- is a family
entertainment and dining company that owns and operates Chuck E.
Cheese and Peter Piper Pizza restaurants. As of Dec. 31, 2019,
CEC
Entertainment and its franchisees operate a system of 612 Chuck E.
Cheese restaurants and 129 Peter Piper Pizza stores, with
locations
in 47 states and 16 foreign countries and territories.
CEC Entertainment recorded a net loss of $28.92 million for the
year ended Dec. 29, 2019, compared to a net loss of $20.46 million
for the year ended Dec. 30, 2018. As of Dec. 29, 2019, CEC
Entertainment had $2.12 billion in total assets, $1.90 billion in
total liabilities, and $213.78 million in total stockholders'
equity.
On June 24, 2020, CEC Entertainment and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Lead Case No. 20-33163). Judge Marvin Isgur oversees the
cases.
The Debtors tapped Weil, Gotshal & Manges, LLP as bankruptcy
counsel; FTI Consulting, Inc. as financial advisor; PJT Partners
LP
as investment banker; Hilco Real Estate, LLC as real estate
advisor; and Prime Clerk, LLC, as claims, noticing and
solicitation
agent.
CLAAR CELLARS: Creditors to Be Paid in Full Over Time
-----------------------------------------------------
Claar Cellars, LLC and RC Farms, LLC, filed with the U.S.
Bankruptcy Court for the Eastern District of Washington a Joint
Plan of Reorganization and a Joint Disclosure Statement dated June
19, 2020.
This Plan of Reorganization proposes to: (a) merge RC Farms, LLC
into Claar Cellars, LLC, which would operate as the Reorganized
Debtor under the Plan; (b) revoke the Whitelatch Trust and transfer
the 27 acre parcel with shop and house into the Reorganized Debtor,
Claar Cellars, LLC and (c) have the Reorganized Debtor pay
creditors one hundred percent (100%) of the principal amount of
their claims plus interest.
The Plan proposes to pay all creditors in classes 1-11 in full,
with interest, over time. The source of payments to creditors will
be through the Debtors' continued business operations, changes in
operations for immediate funding, and the proposed sale or
refinance of property. Budget projections show that the Debtors
will be able to generate sufficient cash to fund their continuing
operations as well as make payments to creditors.
Class 10 consists of all unsecured claims scheduled by the Debtor
or filed by unsecured creditors. Class 10 includes the
under-secured portion of the Farm Credit Leasing claims as well as
the unsecured portion of the IRS Claim. Unsecured Claims shall
accrue interest at the rate of two and one-half percent (2.5%) per
annum until paid in full. Unsecured Creditor’s Allowed Claims
shall be paid in five (5) equal annual payments of principal and
with the first payment due on December 31, 2021 and subsequent
payments due on December 31 of each subsequent year until December
31, 2025 when the entire balance of the Unsecured Claims shall be
due in full. Unsecured Creditors shall receive full payment of
their claims upon the sale or refinancing of substantially all of
the Reorganized Debtor’s assets but no later than December 31,
2025. In the event unsecured creditors have not received full
payment of their allowed unsecured claims within the Payoff Period,
unsecured creditors shall be entitled to exercise their State law
remedies against the Reorganized Debtor without further Court
order.
Class 11 includes the claims of the Reorganized Debtor’s members,
Bob Whitelatch (30% interest), Crista Whitelatch (30% interest),
James Whitelatch (20% interest) and John Whitelatch (20% interest).
Bob Whitelatch, Crista Whitelatch, John Whitelatch and James
Whitelatch shall retain their interests in the Reorganized Debtor,
without payment of money, under the Plan.
The payments contemplated by the Plan will be funded through the
operations of the Debtors as well as the sale and/or refinancing of
the Reorganized Debtor’s assets. The Reorganized Debtor will
assume and conduct all of the Debtors’ RC and Claar operations,
farming, and sales operations from and after the Effective Date.
The Debtors believe that cash flow generated from the operations of
the Reorganized Debtor will be sufficient to fund all of the
Reorganized Debtor’s operations under the Plan.
A full-text copy of the joint disclosure statement dated June 19,
2020, is available at https://tinyurl.com/y8hw975z from
PacerMonitor at no charge.
Attorney for Debtors:
STEVEN H. SACKMANN, #00618
P.O. Box 409 - 455 E. Hemlock, #A
Othello, Washington 99344
Tel: (509) 488-5636
TONI MEACHAM
1420 Scooteney Road
Connell, Washington 99326
Tel: (509) 488-3289
ROGER W. BAILEY
411 North 2nd Street
Yakima, Washington 98901
About Claar Cellars LLC and
RC Farms LLC
Claar Cellars LLC -- https://www.claarcellars.com/ -- is a
family-owned estate winery. It offers a selection of wines,
including Riesling, Cabernet Sauvignon, Merlot, Chardonnay,
Sauvignon Blanc, Syrah, Sangiovese, and newly planted Pinot Gris,
Viognier, Malbec and Petite Sirah.
Claar Cellars and its affiliate, RC Farms LLC, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Wash. Lead
Case No. 20-00044) on Jan. 9, 2020. At the time of the filing, the
Debtors each had estimated assets of between $10 million and $50
million and liabilities of between $1 million and $10 million.
Judge Whitman L. Holt oversees the cases.
The Debtors are represented by Steven H. Sackmann, Esq., at
Sackmann Law, PLLC; Toni Meacham, Esq., Attorney at Law; and Roger
W. Bailey, Esq., at Bailey & Busey, PLLC.
A committee of unsecured creditors has been appointed in Claar
Cellars' bankruptcy case. The committee is represented by
Southwell & O'Rourke, P.S.
COATESVILLE AREA SCHOOL: S&P Lowers GO Bonds Rating to 'B+'
-----------------------------------------------------------
S&P Global Ratings lowered its underlying rating on Coatesville
Area School District (ASD), Pa.'s series 2013 and 2017 general
obligation (GO) bonds two notches to 'B+' from 'BB'. The outlook is
negative.
"The downgrade and negative outlook reflect our view of the
district's worsened reserves and liquidity position due to ongoing
charter school costs and management's associated unrealistic
assumptions that continue to pressure the budget," said S&P Global
Ratings credit analyst Moreen Skyers-Gibbs. "We also believe that
the weak fiscal management practices given that the district lacks
the ability to mitigate these ongoing costs and recessionary risk
represent a governance risk within our environmental, social, and
governance (ESG) factors. We believe that the potential effects of
the COVID-19 pandemic, if prolonged, could exacerbate the
district's current budget challenges."
The negative outlook reflects ongoing concern regarding the
district's ability to achieve structural balance, potentially
deepening its deficit fund balance, and uncertainty associated with
its ability to continue accessing the market for cash-flow
borrowings to meet its debt service and general operations," said
Ms. Skyers-Gibbs.
S&P anticipates withdrawing the rating at the request of district
shortly after this publication.
The district's full-faith-and-credit GO pledge secures the
outstanding unlimited and limited GO bonds. The Act 1 Index under
Pennsylvania commonwealth statute restricts a district's ability to
raise the tax levy above a certain index, which the Pennsylvania
Department of Education determines. Despite the limitations, S&P
rates the limited-tax GO debt at the same level as its view of the
district's general creditworthiness as expressed in the rating on
unlimited-tax GO bonds, with no notching because the rating agency
believes that the district's resources are fungible and that its
ability to repay the debt has close ties to its general
operations.
"Coatesville ASD's overall credit quality continues to weaken as it
grapples with balancing the budget," added Ms. Skyers-Gibbs.
Persistent loss of students to charter schools and the related
costs continue to rise at an uncontrollable rate. These costs have
been materially understated consistently by management, which
further compounds the district's fiscal distress. As a result, the
general fund operated with year-over-year shortfalls over the past
three audited years, with another expected for fiscal 2020 and
beyond. Additionally, its reserves and liquidity position
deteriorated. Deficit borrowing, debt restructuring (scoop and
toss), and cash-flow notes have allowed the district to meet its
debt obligations and general operations in recent years.
S&P's rating action reflects what it believes are governance risks
above those of the sector represented in the district's weak fiscal
management practices, significant turnovers in key managerial
roles, and unrealistic budget assumptions, which compromised its
ability to mitigate risks and effectively prepare for the
recession. S&P's rating action incorporates its view regarding the
health and safety risks posed by the COVID-19 pandemic, which, if
sustained, could further constrain the budget. Absent the
implications of COVID-19, S&P considers the district's social risks
to be in line with those of the sector. Finally, the rating agency
views the environmental risks as being in line with those of the
sector.
COMSTOCK MINING: Reports Selected Second Quarter 2020 Results
-------------------------------------------------------------
Comstock Mining Inc. announced selected strategic and financial
updates (unaudited) for the second quarter and year to date:
Selected Strategic Highlights
* Investment in Tonogold Resources Inc. valued at $10.4
million at June 30, 2020;
* Investment in Mercury Clean Up LLC increased to $1.75
million (in cash and stock) at June 30, 2020, with the
Comstock mercury remediation system completed and shipping
this week;
* Formed MCU Philippines Inc., after MCU agreed to a
definitive joint venture agreement with Clean Ore Solutions
OPC, to partner in a landmark mercury remediation project in
the Philippines;
* Committed up to $3 million in debt and equity investments,
for 62.5% of the newly created MCU-P, with the new mercury
remediation system scheduled for shipment in the next few
weeks;
* Extended agreements for the sale of Comstock's two non-
mining properties in Silver Springs, NV, for total expected
proceeds of $10.1 million sale, with the closings expected
this quarter; and
* Consummated the April acquisition of 25% of PELEN LLC, owner
of the historic Sutro Tunnel Company.
Unaudited Second Quarter 2020 Selected Financial Highlights
* Total costs and expenses improved approximately 16% over Q2
2019;
* Interest expense improved approximately 50% over Q2 2019;
* Net income was positive for Q2 2020, as compared to net loss
of $2.1 million, or ($0.13) loss per share for Q2 2019,
driven by lower costs and total gains of $1.7 million from
the Company's equity investment in Tonogold;
* Net cash used in operations was $0.4 million in Q2 2020, as
compared to a net use of $1.6 million in Q2 2019, with
improvements resulting from lower operating expenses and
higher Tonogold reimbursements;
* Net cash provided by investing activities was $0.4 million
in Q2 2020, from non-refundable deposits and proceeds from
the sale of certain properties, offset by investments made
in Mercury Clean Up; and
* Cash and cash equivalents at June 30, 2020, were $1.0
million.
Mr. Corrado DeGasperis, executive chairman and CEO stated, "We are
on track to land the MCU - Comstock system this week, equipment
started to arrive yesterday, and to commence testing within the
boundaries of the Carson River Mercury Superfund Site ("CRMSS").
We are finalizing the requirements for shipping the first
international unit to the Philippines and have scheduled deployment
to the Davao D'Oro Province. We are accelerating the pace of
deployment as we continue to invest in clean, precious-metal based
growth."
Corporate
The Company received a $0.5 million early payment in June 2020, on
obligations owed from Tonogold and reduced its Senior Debt
principal down to $4.1 million in mid-July, down from $4.5 million
at June 30, 2020. Cash and cash equivalents at June 30, 2020, were
$1.0 million, and the Company raised an additional $1.25 million on
July 22, 2020, primarily for growth investments in MCU Philippines
Inc., bringing total common shares outstanding at July 28, 2020, to
31,981,105 shares, as compared to 28,815,000 shares, at June 30,
2020.
Outlook
During the third quarter of 2020, the Company expects to close on
the sale of certain non-mining assets located in Silver Springs,
NV, to Sierra Springs Enterprises Inc., for total proceeds of
approximately $10 million. The agreements, as amended, included
$0.4 million of non-refundable deposits made and released to the
Company from escrow. The Company will use the remaining proceeds
to extinguish the entirety of its outstanding Senior Secured
Debenture principal and make-whole, of approximately $4.3 million,
plus accrued interest of less than $0.1 million.
Tonogold is currently permitting a drilling program for the Storey
County exploration targets, including the leased mineral claims,
just north of the Lucerne area, and expects to begin drilling in
the third quarter of 2020. As of June 30, 2020, Tonogold has
earned 54.57% of the membership interest after making payments of
over $6.5 million in cash and $6.1 million in CPS. The Company
expects to monetize approximately $0.5 million worth of common
shares in the second half of 2020, depending on price and
liquidity, under an existing 10b5-1 plan.
The Company's second half 2020 plans also include obtaining the
local permits for Dayton, expanding Dayton's current resource and
continuing southerly into Spring Valley with incremental
exploration programs that include exploration and definition
drilling of targets identified by geophysical surveys, surface
mapping, prior drilling and deeper geological interpretations that
all lead to publishing a new, SK-1300 compliant, mineral resource
estimate.
For 2020, the Company's plans include advancing the investment in
and the commercialization of MCU's mercury remediation processing
technologies. The Company expects to close on the MCU transactions
during the fourth quarter of 2020, meaning, at that time, it will
own 25% of MCU and 50% of its first joint venture in the
Philippines. Oro has completed the manufacture of the
25-ton-per-hour mercury recovery plant and is shipping the system
to the Comstock, including a 200 gallon-per-minute dissolved air
flotation water treatment plant, this week.
MCU has commenced trial operations that will continue throughout
the second half of 2020, at the Company's American Flat processing
facility, to validate and fine-tune the mercury extraction and
remediation process, with the objective of reclaiming and
remediating the Company's existing properties within the Carson
River Mercury Superfund Site, enhancing the values of, and
evaluating the potential economic feasibilities for, these
properties and creating new global growth opportunities in mercury
remediation by demonstrating MCU's technological and operational
effectiveness, efficiency, and feasibility.
MCU-P has agreed and plans to commence reclamation operations
during the third quarter 2020, in the Philippines. MCU-P will
operate under a joint venture agreement with Clean Ore Solutions, a
Philippine Company, for mercury extraction and remediation of Mt.
Diwata and the Naboc River, one of the most mercury polluted, gold
mining regions in the world. This represents the first real
international opportunity for large-scale mercury remediation and
environmental reclamations, using MCU's systems, with the objective
of establishing MCU a leader in mercury remediation projects, and
in particular, contaminations caused by Artisanal and Small-Scale
Miners (ASM).
The Company's annual operating expenditures, including other cash
income and expenditures and excluding depreciation, are planned at
approximately $5.5 million, with approximately $2.5 million of that
amount currently being reimbursed under the Tonogold Purchase
Agreement, Lease-Option Agreement, and Mineral Exploration and
Mining Lease Agreement, resulting in net operating expenses for
2020, excluding exploration spending, of $3 million. During the
first six months of 2020, the Company received approximately $1.25
million in expense reimbursements and $1.0 million in cash for
prepaid reimbursements required under the Tonogold agreements and
expects to receive another $0.2 million during the fourth quarter
of 2020.
A full-text copy of the press release is available for free at:
https://is.gd/MgU2kj
About Comstock Mining
Comstock Mining Inc. -- http://www.comstockmining.com/-- is a
Nevada-based, gold and silver mining company with extensive,
contiguous property in the Comstock District. The Company began
acquiring properties in the Comstock District in 2003. Since then,
the Company has consolidated a significant portion of the Comstock
District, amassed the single largest known repository of historical
and current geological data on the Comstock region, secured
permits, built an infrastructure and completed its first phase of
production. The Company continues evaluating and acquiring
properties inside and outside the district expanding its footprint
and exploring all of its existing and prospective opportunities for
further exploration, development and mining.
Comstock Mining recorded a net loss of $3.81 million for the year
ended Dec. 31, 2019, compared to a net loss of $9.48 million for
the year ended Dec. 31, 2018. As of March 31, 2020, the Company
had $39.25 million in total assets, $16.79 million in total
liabilities, and $22.46 million in total equity.
Deloitte & Touche LLP, in Salt Lake City, Utah, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated March 30, 2020 citing that the Company has incurred
recurring losses and cash outflows from operations, has an
accumulated deficit and has debt maturing within twelve months from
the issuance date of the financial statements that raise
substantial doubt about its ability to continue as a going concern.
D&M LOGISTICS: Unsecureds Owed $325K to Get $725 Per Month
----------------------------------------------------------
D&M Logistics, LLC, submitted a Plan and a Disclosure Statement.
The Debtor owns the personal properties consisting of Assets, Cash
on Hand, Accounts Receivables, Vehicles (Motorized
tractor-trailers) and Equipment (Trailers) with a total worth of
$337,875.
Class 2 Allowed Priority Creditor Claims are impaired. Class 2
Claims will be paid in full over 60 months at an interest rate of
4.25% per annum. Payments will commence from the first day after
the Effective Date and continue on the first day of each month
thereafter until paid in full.
Class 3 Allowed Secured Claim of Hitachi Capital America Corp. is
impaired. The estimated amount of the Class 3 Claim is $34,300.
The Class 3 Claim will be paid in full over 60 months at an
interest rate of 5.75% per annum. Payments will commence from the
first day after the Effective Date and continue on the first day of
each month thereafter until paid in full.
Class 4 Allowed Secured Claim of TAB Bank totaling $28,000 is
impaired. The Class 4 Claim will be paid in full over 84 months at
an interest rate of 5.75% per annum. Payments will commence from
the first day after the Effective Date and continue on the first
day of each month thereafter until paid in full.
Class 5 Allowed Secured Claim of De Lage Landen totaling $148,000
is impaired. The Class 4 Claim will be paid in full over 72 months
at an interest rate of 5.75% per annum. Payments will commence
from the first day after the Effective Date and continue on the
first day of each month thereafter until paid in full.
Class 6 Allowed Secured Claim of Bank Capital Services, LLC, d/b/a
F.N.B. Equipment Finance, totaling $120,000 is impaired. The Class
6 Claim will be paid in full over 66 months at an interest rate of
5.75% per annum. Payments will commence from the first day after
the Effective Date and continue on the first day of each month
thereafter until paid in full.
Class 7 Allowed General Unsecured Claims totaling an estimated
$324,909 are impaired. Each holder of an allowed general unsecured
claim will receive pro rata from $725.08 per month, beginning on
the 15th day of the 6th month following the Effective Date and
continuing through and until month 60.
Class 8 Equity interests are impaired. Holders of Class 8
Interests will receive no distribution under the Plan in such
capacity, and shall have no right to any dividends or distributions
on account of their interests, unless and until all unclassified
and classified claims are paid as called for by the Plan.
The funds necessary for the satisfaction of the creditors' claims
will be generated from the Debtor's income.
A full-text copy of the Disclosure Statement dated June 22, 2020,
is available at https://tinyurl.com/ydb972nv from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Warren Norred
Clayton L. Everett
NORRED LAW, PLLC
515 E. Border Street
Arlington, Texas 76010
Telephone: (817) 704-3984
E-mail: clayton@norredlaw.com
About D & M Logistics
D & M Logistics, LLC, provides long haul trucking services
throughout the continental United States.
D & M Logistics fell into financial distress due to growing
financial burdens placed on it by the industry as the market place
shifted. The competitors that use D&M's services have their own
financial issues to deal with which has forced them to tighten
their use of outside companies to provide services like those
provided by the Debtor.
Based in Azle, Texas, D & M filed a voluntary bankruptcy petition
under Chapter 11 of Title 11 of the United States Code (Bankr. N.D.
Tex. Case No. 19-44476) on Nov. 1, 2019, listing under $1 million
in both assets and liabilities. Warren V. Norred at Norred Law,
PLLC, is the Debtor's counsel.
DPW HOLDINGS: Defense Business Awarded a $2M Purchase Order
-----------------------------------------------------------
DPW Holdings, Inc.'s global defense business, Gresham Worldwide,
Inc., has received a $2.0 million purchase order from a defense and
aerospace customer of its wholly owned subsidiary Enertec Systems
2001, Ltd.
Enertec, based in Israel, is a defense and aerospace designer and
manufacturer of advanced multi-purpose electronic systems,
including customized computer-based automated test equipment and
turnkey solutions designed to perform in harsh environments and
battlefield conditions.
Enertec has completed the development and proof of fitness of a
unique generic automated testing system to meet complex challenges
in validating capabilities and readiness of defense and attack
platforms. The test system can test and perform diagnostics on all
sophisticated computers that support a wide range of military and
aerospace systems. Enertec has been in business for more than 30
years and Enertec's CEO, Zvi Avni, has over 35 years of experience
developing advanced testing systems. After receiving a $2.9 million
order in 2019 to develop this unique and complex testing system, in
the first quarter of 2020, Enertec recently received a follow-up
order of an additional $1.4 million and announced that on July 26,
2020 it received a new $2.0 million order for additional work on
the testing system. During the first half of 2020, Enertec
recognized revenue for approximately 30% of the first two orders.
Enertec's management believes the balance of the orders will be
recognized as revenue over the next twelve months and that this
customer has the potential to order over $10 million of Enertec
solutions per year.
Enertec's CEO, Zvi Avni said, "The completion of the development of
our testing system has resulted in a $2.0 million order and
represents a major milestone for Enertec. This accomplishment
solidifies Enertec's position as a leading provider of complex
testing solutions for the defense and aerospace industry, both at
home and abroad."
"We are very pleased with Enertec's progress, which contributes
significantly to the prospects for Gresham Worldwide," said
Jonathan Read, Gresham Worldwide's CEO. "This recent order
demonstrates that demand for Gresham's technology offerings remains
strong. The expansion of Enertec's testing systems offerings
reflects the confidence and the trust that global defense
contractors have to work with Gresham on long life cycle platform
programs. We remain optimistic that Gresham can achieve our goals
for significant growth in 2020 and 2021."
About DPW Holdings
DPW Holdings, Inc. -- http://www.DPWHoldings.com/-- is a
diversified holding company pursuing growth by acquiring
undervalued businesses and disruptive technologies with a global
impact. Through its wholly and majority-owned subsidiaries and
strategic investments, the Company provides mission-critical
products that support a diverse range of industries, including
defense/aerospace, industrial, telecommunications, medical, and
textiles. In addition, the Company owns a select portfolio of
commercial hospitality properties and extends credit to select
entrepreneurial businesses through a licensed lending subsidiary.
DPW's headquarters are located at 201 Shipyard Way, Suite E,
Newport Beach, CA 92663.
DPW Holdings recorded a net loss available to common stockholders
of $32.93 million for the year ended Dec. 31, 2019, compared to a
net loss available to common stockholders of $32.34 million for the
year ended Dec. 31, 2018. As of March 31, 2020, the Company had
$37.76 million in total assets, $35.28 million in total
liabilities, and $2.48 million in total stockholders' equity.
Ziv Haft., Certified Public Accountants (Isr.) BDO Member Firm, the
Company's auditor since 2012, issued a "going concern"
qualification in its report dated May 29, 2020 citing that the
Company has a working capital deficiency, has incurred significant
losses and needs to raise additional funds to meet its obligations
and sustain its operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
EAST CAROLINA COMMERCIAL: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------------
The U.S. Bankruptcy Administrator for the Eastern District of North
Carolina disclosed in a court filing that no official committee of
unsecured creditors has been appointed in the Chapter 11 case of
East Carolina Commercial Services.
About East Carolina Commercial Services
East Carolina Commercial Services, LLC, is a commercial solar
installation company specializing in module installation and
racking installation based in Wilson, North Carolina.
East Carolina Commercial Services sought protection under Chapter
11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-02361) on
June 27, 2020. The petition was signed by Caesar Mendoza, Debtor's
managing member. At the time of the filing, Debtor disclosed
assets of $1 million to $10 million and liabilities of the same
range. Judge Joseph N. Callaway oversees the case.
Sasser Law Firm is the Debtor's bankruptcy counsel.
EDGEMARC ENERGY: Unsecureds to Recover 2.4% to 13.8% of Its Claims
------------------------------------------------------------------
EdgeMarc Energy Holdings, LLC and its affiliates submitted an
Amended Disclosure Statement.
Pursuant to the Global Settlement, the Released Parties provided a
substantial contribution with more than $90 million in aggregate
value to the Debtors' estates. Specifically, KeyBank purchased the
Butler Assets through a credit bid and cash of $9,684,637,
satisfying in full its outstanding secured DIP Facility (as defined
in the DIP Motion) of approximately $60 million. Additional
consideration provided by the Global Settlement includes, among
other things, (a) $1,000,000 contributed by ETC to the Debtors’
Estates for distribution pursuant to the Plan (the “ETC
Settlement Payment”) and (b) $17,000,000 in additional cash
payments paid by KeyBank to the Debtors' estates in five annual
payments of $3,400,000 beginning on Dec. 31, 2020 (the "KeyBank
Settlement Payments"). The Global Settlement further established a
$1,000,000 reserve to cover the administrative costs of wind-down
of the Debtors' estates pursuant to the Plan.
The Plan implements the Global Settlement and distributes the
consideration contained therein to holders of allowed claims as
further set forth in the Plan.
Class 4 General Unsecured Claims totaling $250,000,000 to
$1,000,000,000 are projected to recover 2.4% to 13.8%. Each holder
of the allowed general unsecured claim will receive its pro rata
share of the Beneficial Trust Interests, which Beneficial Trust
Interests will entitle the holders thereof to receive their pro
rata share of the Liquidation Trust Assets.
Class 5 Intercompany Claims, Class 6 Subordinated Claims, and Class
7 Interests will receive no distribution under the Plan.
Distributions under the Plan on account of the Beneficial Trust
Interests will be funded by the Liquidation Trust Assets.
A full-text copy of the Amended Disclosure Statement dated June 22,
2020, is available at https://tinyurl.com/yd2k69ex from
PacerMonitor.com at no charge.
Counsel to the Debtors:
Darren S. Klein
Lara Samet Buchwald
Aryeh E. Falk
Jonah A. Peppiatt
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800
Counsel to the Debtors:
Adam G. Landis
Kerri K. Mumford
Matthew R. Pierce
LANDIS RATH & COBB LLP
919 Market Street, Suite 1800
Wilmington, DE 19801
Telephone: (302) 467-4400
Facsimile: (302) 467-4450
About EdgeMarc Energy
EdgeMarc Energy Holdings, LLC -- http://www.edgemarcenergy.com/--
is a locally based natural gas exploration and production company
headquartered in Canonsburg, Pa. It is engaged in the acquisition,
production, exploration and development of natural gas and natural
gas liquids from underground deposits in the Appalachian Basin.
EdgeMarc Energy conducts its drilling and exploration activities in
the "stacked" liquid-rich Marcellus shale in Pennsylvania and dry
gas Utica shale in Ohio.
EdgeMarc Energy and its 8 affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 19-11104) on May 15, 2019.
EdgeMarc Energy was estimated to have assets of $100 million to
$500 million and liabilities of the same range as of the bankruptcy
filing.
The Hon. Brendan Linehan Shannon is the case judge.
The Debtors tapped Landis Rath & Cobb LLP as counsel; Davis Polk &
Wardwell LLP as corporate counsel; Evercore Partners as investment
banker; Oportune LLC and Dacarba LLC as financial advisor; and
Prime Clerk LLC as claims agent.
ENGINEERED PROPULSION: Case Summary & 20 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Engineered Propulsion Systems, Inc.
625 West Hanger Road, Hanger 11-16
New Richmond, WI 54017
Business Description: Engineered Propulsion Systems, Inc.
was formed to develop, manufacture, and
market aircraft engines and engine parts.
Chapter 11 Petition Date: July 29, 2020
Court: United States Bankruptcy Court
Western District of Wisconsin
Case No.: 20-11957
Debtor's Attorneys: James D. Sweet, Esq.
STEINHILBER SWANSON LLP
122 W. Washington Street
Suite 850
Madison, WI 53703
Tel: 608-630-8990
Email: JSweet@Steinhilberswanson.com
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Michael Fuchs, president.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/MO6waE
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. American Diesel Tube Corp. Trade Debt $26,076
1240 Capitol Drive
Addison, IL 60101
2. Bakke Norman S.C. Defenses/ $78,527
Attn: Timothy O'Brien Business
1200 Heritage Drive
New Richmond, WI 54017
3. Bosch Aviation Technology LLC Trade Debt $227,500
28875 Cabot Drive
Novi, MI 48377
4. Bosch General Aviation Trade Debt $336,885
Technology GmbH
Goellnergasse 15-17
Vienna 1030
5. Bremer Bank Loan $435,600
National Association
372 St. Peter Street
Saint Paul, MN 55102
6. Carl Zeiss Industrial Trade Debt $19,954
Metrology
25065 Network Place
Chicago, IL 60673
7. Communication Resources Services $27,000
Attn: David Gustafson
40 High Cliff Lane
Bellingham, WA 98229
8. dbraun99 LLC Consulting $56,445
Attn: Dave Braun Services
3113 Cass Trail
Webster, MN 55088
9. DMG Mori USA Trade Debt $38,787
Lockbox # 773744
350 East Devon Avenue
Itasca, IL 60143
10. Feng Liu Notes, Loans, $52,926
48 Harvey Court and Accrued
Irvine, CA 92617 Interest Owed
11. Justus von Wedel Loan $211,814
Ricklinger Street 38
31535 Neustadet
Germany
12. National Technical Systems Trade Debt $106,315
PO Box 733364
Dallas, TX 75373
13. NET.AG System Integration Services $21,501
Schellerdamm 16
Hamburg 21079
14. Patterson Thuente Services $49,263
Pederson P.A.
4800 IDS Center
80 South 8th Street
Minneapolis, MN 55402
15. PCM Global Solutions LLC Services $25,000
1461 Wood Duck Lane
New Richmond, WI 54017
16. Peter Fong Notes, Loans, $52,926
44284 Navajo Drive and Accrued
Ashburn, VA 20147 Interest Owed
17. Purple Seal Inc. Services $37,334
2121 Co Rd 143
PO Box 283
Clearwater, MN55320
18. Sunrise Certification Services $48,622
& Consulting, Inc.
Attn: Susie Knickerbocker
14866 51st Road
Winfield, KS 67156
19. United Gear Trade $18,550
1700 Livingstone Road
Hudson, WI 54016
20. Wisconsin Department of CBDG-ED-FY10-19 $67,684
Administration 506, Payment #46
Attn: Fiscal July 2020
101 E. Wilson Street, 6th Floor
Madison, WI 53707
ENOVA INT'L: Moody's Reviews Ba2 CFR for Downgrade
--------------------------------------------------
Moody's Investors Service has placed Enova International, Inc.'s B2
long-term senior unsecured and corporate family ratings on review
for downgrade, following the company's announcement to acquire
fintech business lender On Deck Capital, Inc.
List of affected ratings:
On Review for Downgrade:
Issuer: Enova International, Inc.
Corporate Family Rating, Placed on Review for Downgrade, currently
B2
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently B2
Outlook Actions:
Issuer: Enova International, Inc.
Outlook, Changed to Rating Under Review from Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The ratings review follows Enova's announcement that it intends to
acquire an internet small businesses lender operating primarily in
the United States (Aaa stable). Enova has disclosed that the
transaction is valued at approximately $90 million, $8 million of
which will be paid in cash and the remainder in equity. Moody's
considers the acquisition as transformative for Enova, given that
small business loans only represented just 16% of Enova's loan
portfolio as of March 31, 2020. Pro-forma for the On Deck
acquisition, small business loans will account for an estimated 60%
of the combined entity; gross receivables will increase to $2.4
billion from $1.2 billion as of the same reporting date. Enova has
also indicated it expects leverage to increase with a debt
accounting to 4.5x equity pro-forma for the combination, from 1.9x
as of March 31, 2020.[1]
Moody's believes that if successful, the acquisition will reduce
Enova's reliance on unsecured subprime consumer loans, which tend
to experience high credit losses and carry a high degree of
regulatory scrutiny. Moody's review will focus on assessing whether
the benefits from the acquisition fully offset the credit
challenges resulting form higher leverage and higher level of
operational risk, including integration risk, particularly during a
time of great economic dislocation due to the ongoing coronavirus
pandemic.
WHAT COULD MOVE THE RATINGS UP/DOWN
Given the review for downgrade, a ratings upgrade is unlikely over
the next 12-18 months. However, the ratings could be confirmed upon
conclusion of the review if Moody's assesses that Enova would
maintain strong profitability and liquidity, and if a reduced
reliance on subprime consumer lending offset the challenges for
creditors from increased leverage, and operational risk,
particularly integration risk, associated with the acquisition of
On Deck.
The ratings could be downgraded upon completion of the review if
Moody's determines that Enova's profitability, leverage and
liquidity will meaningfully deteriorate as a result of the
acquisition. Further, the ratings could be downgraded if Moody's
assesses that the increased operational risk, particularly
integration risk, resulting from the On Deck acquisition is not
fully offset by the benefits of a reduced reliance on subprime
consumer lending.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
ENVIRO-SAFE REFRIGERANTS: Unsecureds to Get $75K in 5-Year Plan
----------------------------------------------------------------
Enviro-Safe Refrigerants Inc., submitted an Amended Disclosure
Statement describing its Chapter 11 Plan.
Due to the dispute over insurance coverage, the Debtor was forced
to defend several products liability claims on its own. The cost of
the litigation and the risk of a large judgment being entered
against it, which would have disrupted the Debtor's ability to
remain a going concern, resulted in the Debtor filing these Chapter
11 proceedings.
Class 3 consists of the identified pre-bankruptcy products
liability claimants (Andre Grier, John J. Montoya and Nikki L.
Montoya). The Plan proposes that these claimholders would share a
"pro rata" distribution to these claimholders from annual payments
in the amount of $50,000 for five years. Additionally, the Plan
proposes that these claimholders would share "pro rata" with the
Class Four claimholders from the annual payments in the amount of
$15,000 for five years.
Class 4 general unsecured claims will receive a "pro rata"
distribution from annual payments in the amount of $15,000 for five
5 years.
Class 5 sole pre-petition equity interest holder, Julie C. Price,
will retain the same sole ownership in the reorganized Debtor.
Payments and distributions under the Plan will come from
post-confirmation business operations of the reorganized Debtor and
capital contributions of the Equity Owner.
A full-text copy of the Disclosure Statement dated June 22, 2020,
is available at https://tinyurl.com/yb7a7fpl from PacerMonitor.com
at no charge.
The Debtor's attorney:
Sumner A. Bourne
Rafool & Bourne, P.C.
411 Hamilton Blvd., Suite 1600
Peoria, Illinois 61602
Telephone: (309) 673-5535
Facsimile: (309) 673-5537
E-mail: notices@rafoolbourne.com
About Enviro-Safe Refrigerants
Headquartered in Pekin, Illinois, Enviro-Safe Refrigerants Inc. --
http://www.es-refrigerants.com/-- provides refrigerant and support
fluids. Its products include air conditioning tools, automotive
fluids, green gas and industrial supplies.
Enviro-Safe Refrigerants filed for Chapter 11 bankruptcy protection
(Bankr. C.D. Ill. Case No. 17-80827) on June 5, 2017. In the
petition signed by Julie C. Price, president, the Debtor was
estimated to have assets and liabilities of between $1 million and
$10 million.
Judge Thomas L. Perkins oversees the case.
Sumner Bourne, Esq., at Rafool, Bourne & Shelby, P.C., serves as
the Debtor's bankruptcy counsel.
On July 11, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The Committee tapped
Armstrong Teasdale LLP as counsel.
EP TECHNOLOGY: $3.26M Sale of Inventory to Guangzhou Approved
-------------------------------------------------------------
Judge Mary P. Gorman of the U.S. Bankruptcy Court for the Central
District of Illinois authorized EP Technology Corp. USA's sale of
the inventory including cameras, camera systems, and their
respective components, listed on Exhibits A and B, to Guangzhou
Boguan Optoelectronics Technology Co. for $3.26 million.
A hearing on the Motion was held on July 23, 2020, 11:30 a.m.
The Debtor is authorized to execute the Agreement attached to the
Motion as Exhibit 1 as well as any other acts as may be reasonable
and necessary to consummate the sale of the Sale Property.
Pursuant to 11 U.S.C. Sections 363(b) and (f), and upon payment of
the Purchase Price, the transfer of the Sale Property to the Buyer
free and clear of all interests and the transactions contemplated
thereby are approved in all respects. For the avoidance of doubt,
UPS Capital Corp. ("UPS") retains a security interest in the Sale
Property until paid in full. Any and all claims, liens, interests
and encumbrances of UPS with respect to the Sale Property will
attach to the proceeds of the sale of the Sale Property.
The Order will be effective and enforceable immediately upon entry,
and any stay of orders provided for in Bankruptcy Rules 6004(h) and
any other provision of the Bankruptcy Code or Bankruptcy Rules will
not apply.
A copy of the Agreement and the Exhibits is available at
https://tinyurl.com/y9snnxa3 from PacerMonitor.com free of charge.
About EP Technology
Founded in 1997, EP Technology Corporation U.S.A. is a developer
and manufacturer of video surveillance products, digital video
recorders, security cameras.
EP Technology Corporation sought Chapter 11 protection (Bankr. C.D.
Ill. Case No. 19-90927) on Sept. 23, 2019 in Urbana, Illinois. In
the petition signed by Kevin Wan, president, the Debtor was
estimated to have assets at $10 million to $50 million and
liabilities within the same range. Judge Mary P. Gorman oversees
the Debtor's case. FactorLaw is the Debtor's counsel.
FAIRVIEW FUNDING: $1.3M Sale of Customer Accounts to UCF Approved
-----------------------------------------------------------------
Judge Michael B. Kaplan of the U.S. Bankruptcy Court for the
District of New Jersey authorized Fairview Funding, LLC's sale of
customer accounts and customer receivables listed in Exhibit B to
the Debtor's Verified Application in Support of the Sale, to United
Capital Funding ("UCF") for $1.3 million.
A hearing on the Motion was held on July 23, 2020, 11:30 a.m.
UCF is authorized and directed to pay directly to First Horizon
Bank the purchase price of $407,158 (as that amount is adjusted
based upon the value of the customer accounts and customer
receivables at the time of closing) to be applied to First Horizon
Bank's secured claim against the Debtor.
The assets transferred by the Debtor to UCF will be transferred
free and clear of First Horizon's security interest therein, and
UCF will have the right to file UCC-3 financing statement
amendments to reflect the deletion of such assets as listed on
Exhibit B to the Verified Application from any UCC financing
statement filed in favor of First Horizon in the event First
Horizon fails to file such Partial Release within five business
days of the receipt of the Payment.
The Order is without prejudice to the rights and claims of Infusion
Funding, LLC and Capital For Factors, LLC (if any) to assert
superior ownership and/or superior liens to the customer accounts
and receivables approved for sale, which claims are reserved to
Infusion Funding and Capital For Factors. First Horizon reserves
all its rights, remedies, and defenses in connection with any
right, claim or remedy asserted by Infusion Funding and Capital For
Factor.
Despite the transfer of the ownership of the Transferred Accounts,
the account Debtors as to the Transferred Accounts have continued
to make payments into the Lockbox Account at First Horizon.
Upon execution of the Acknowledgement of Right to Funds and
Settlement and Indemnity Agreement by UCF and First Horizon as to
the Transferred Accounts, First Horizon is authorized to wire the
Subject Funds to UCF.
The Sale approved by the Order is not subject to avoidance or the
imposition of costs and damages pursuant to Bankruptcy Code section
363(n).
To the extent applicable, the notice requirement of Bankruptcy Rule
6004(a) is waived.
The Order is effective immediately upon entry.
About Fairview Funding
Fairview Funding, LLC, is a privately held company that operates in
the nondepository credit intermediation industry. It operates a
factoring company located at 565 Highway 35, Suite 10, Red Bank,
NJ, whereby it assists its clients with liquidity by purchasing
accounts receivable from its clients at a discount. After it
collected the receivable, the Debtor returns the balance of the
receivable to its clients, keeping a small percentage of the total
receivable as a fee.
Fairview Funding sought Chapter 11 protection (Bankr. D.N.J. Case
No. 20-18314) on July 7, 2020.
The Debtor disclosed total assets of $7,482,044 and debt of
$4,245,757 as of the bankruptcy filing.
In the petition signed by Vincent Galano, managing director, the
Debtor tapped Andrew J. Kelly, Esq., at The Kelly Firm, P.C., as
counsel.
FARR BUILDERS: Victoria Air Objects to Disclosure Statement
-----------------------------------------------------------
Creditor and party-in-interest Victoria Air Conditioning, Ltd.
objects to the Disclosure Statement of debtor Farr Builders, LLC.
Victoria points out that:
* The Disclosure Statement does not include any information about
litigation that is likely to arise in a non-bankruptcy context or
any information about pending or planned litigation.
* The Disclosure Statement does not contain adequate information
about the feasibility of Debtor's proposed plan of reorganization.
The sale of real property is a primary source of funding for many
of the plan payments. However, there is very little information
about the values of those properties or their proposed sales.
* The Debtor scheduled a claim in favor of VAC in the amount of
$1,682. The Disclosure Statement does not contain adequate
information about this claim to permit VAC to determine whether it
should vote to approve or reject the Proposed Plan.
* VAC objects to its classification as a general unsecured
creditor because its claim is secured by payment bonds issued by
Philadelphia Indemnity. Thus, VAC's claim is not "substantially
similar" to the general unsecured claims with which it is broadly
classified.
* The Debtor has not projected its future income, let alone
future income sufficient to make plan payments and to meet ongoing
operating expenses. Because the Debtor has not met its burden of
showing that confirmation of the plan is unlikely to be followed by
liquidation or the need for further reorganization, the Plan cannot
be confirmed.
A full-text copy of Victoria Air's objection dated June 19, 2020,
is available at https://tinyurl.com/y8g737ym from PacerMonitor.com
at no charge.
Attorneys for Victoria Air:
LANGLEY & BANACK, INC.
Natalie F. Wilson
State Bar No. 24076779
745 E Mulberry Ave, Suite 700
San Antonio, TX 78212
Tel: (210) 736-6600
Fax: (210) 735-6889
E-mail: nwilson@langleybanack.com
- and -
PORTER HEDGES LLP
David D. Peden
Amanda J. Garza
1000 Main Street
36th Floor
Houston, Texas 77002
Tel: (713) 226-6000
Fax: (713) 226-6248
E-mail: dpeden@porterhedges.com
agarza@porterhedges.com
About Farr Builders
Farr Builders, LLC, a general contractor based in San Antonio,
Texas, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Tex. Case No. 20-50324) on Feb. 7, 2020. At the time
of the filing, the Debtor disclosed $3,792,881 in assets and
$2,345,269 in liabilities. Judge Ronald B. King oversees the case.
Heidi McLeod Law Office is the Debtor's bankruptcy counsel.
FENER LLC: Kuru Unsecured Creditors to Recover 10% in Joint Plan
----------------------------------------------------------------
Debtors Fener, LLC and Kuru, Inc. filed with the U.S. Bankruptcy
Court for the District of Maryland, Baltimore Division, a Joint
Disclosure Statement with respect to Joint Plan of Liquidation
dated June 19, 2020.
As part of their Chapter 11 Cases, the Debtors evaluated their
ability to (i) restructure their existing credit facilities with
Fulton Bank; (ii) secure financing alternatives; and (iii) sell all
or substantially all of their Assets. After evaluating their
options, the Debtors, in consultation with their professionals,
determined that it is in the best interest of Creditors and their
Estates to sell the Assets in one assemblage.
The Debtors, through Murphy Commercial Real Estate Services, Inc.,
began marketing the Assets on or about February 27, 2020. The
Assets are presently listed for sale for $1,535,000.00. As set
forth herein, the Debtors intend to continue to market the Assets
for sale through and including September 15, 2020, at which time,
absent a binding contract with prompt settlement, the Debtors will
conduct a competitive bankruptcy auction, which shall be held no
later than October 31, 2020.
The Plan will be funded from the sale of the Assets and from
recoveries of Avoidance Actions. Creditors are expected to receive
a distribution based on the priority of their liens, if any, and
consistent with the provisions of the Plan and the Bankruptcy
Code.
Class 5 consists of General Unsecured Claims filed against and/or
scheduled by Fener in the amount of approximately $214.00. In full
and final satisfaction and discharge of each Allowed Class 5 Claim,
each Holder of an Allowed Class 5 Claim shall be paid in full on
the earlier of the Effective Date or at closing on the sale of the
Commercial Property. Payments to the Holders of Class 5 Allowed
General Unsecured Claims against Fener shall be in full and final
satisfaction of their Allowed Claims.
Class 6 consists of General Unsecured Claims filed against and/or
scheduled by Kuru in the amount of approximately $90,370.06, plus
the under-secured balance, if any, of the Allowed Class 4 Claim. In
full and final satisfaction and discharge of each Allowed Class 6
Claim, each Holder of an Allowed Class 6 Claim shall receive their
pro-rata share of the balance of the proceeds from the sale of the
Assets after all Allowed Secured Claims in Classes 2, 3 and 4 are
paid, to the extent sufficient funds exist. Notwithstanding the
foregoing, whether from the proceeds of Assets or gifting by one or
more Equity Holder, the Holders of Class 6 General Unsecured Claims
(except for insiders) shall receive no less than ten percent (10%)
of their Allowed Class 6 Claims. Payments to the Holders of Class 6
Allowed General Unsecured Claims against Kuru shall be in full and
final satisfaction of their Allowed Claims.
Class 7 consists of Equity Interests in Fener, LLC. As of the
Petition Date, the membership interests in Fener were owned by
Rustem Keskin (50%) and Dilek Keskin (50%). The Holders of the
Class 7 Equity Interests in Fener, LLC will receive no
distributions under the Plan on account of such Equity Interests.
Following closing on the sale of the Commercial Property and the
distribution of sale proceeds pursuant to the Plan, the Equity
Interests will be deemed cancelled and extinguished, without any
further act or action under any applicable law, regulation, order
or rule.
Class 8 consists of Equity Interests in Kuru, Inc. As of the
Petition Date, the stock interests in Kuru were owned by Rustem
Keskin (50%) and Dilek Keskin (50%). The Holders of the Class 8
Equity Interests in Kuru, Inc. will receive no distributions under
the Plan on account of such Equity Interests. Following closing on
the sale of the Assets and the distribution of sale proceeds
pursuant to the Plan, the Equity Interests will be deemed cancelled
and extinguished, without any further act or action under any
applicable law, regulation, order or rule.
A full-text copy of the joint disclosure statement dated June 19,
2020, is available at https://tinyurl.com/y7ku7ym9 from
PacerMonitor at no charge.
The Debtors are represented by:
MCNAMEE, HOSEA, JERNIGAN, KIM
GREENAN & LYNCH, P.A.
Steven L. Goldberg
6411 Ivy Lane, Suite 200
Greenbelt, Maryland 20770
Telephone: (301) 441-2420
Facsimile: (301) 982-9450
E-mail: sgoldberg@mhlawyers.com
About Fener LLC and Kuru Inc.
Fener, LLC, is a Maryland limited liability company with its
principal place of business in Baltimore City. It owns the real
property and improvements located at 801 S. Broadway, Baltimore,
Md.
Kuru, Inc., operates Jimmy's Restaurant of Fells Point from the
property.
Fener, LLC and Kuru, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D. Md. Lead Case No. 20-10720) on Jan.
20, 2020.
At the time of the filing, Fener, LLC, disclosed assets of between
$1 million and $10 million and liabilities of the same range.
Kuru, Inc., had estimated assets of between $50,000 and $100,000
and liabilities of between $1 million and $10 million.
The Debtors tapped McNamee, Hosea, Jernigan, Kim, Greenan & Lynch,
P.A. as their legal counsel.
FRONTIER COMMUNICATIONS: Element Fleet Objects to Disclosures
-------------------------------------------------------------
Element Fleet Corporation and its affiliates D.L. Peterson Trust
and Gelco Fleet Trust object to the limited extent to Frontier
Communications Corporation, et al.'s Disclosure Statement and
Solicitation Motion.
Element Fleet points out that the additional Disclosure and/or
Clarification is needed with respect to the third- party release
provisions of the Joint Plan with respect to AT&T services and
AT&T, Inc.
Element Fleet submits that the logical interpretation of these
third-party release provisions is that neither AT&T Services nor
AT&T Inc. are contemplated to be (or should be) released from the
AT&T Obligations; but the breadth of the third-party release
provisions makes such conclusion indefinite.
Element Fleet asserts that the additional Disclosure is required
with respect to the Joint Plan provisions seeking to extend
assumption/rejection decisions beyond confirmation.
Element Fleet objects to this proposed solicitation procedure as
such is not in compliance with Federal Rule of Bankruptcy Procedure
2002 and will disenfranchise a claimant (at least with respect to
possible objections to confirmation of the Joint Plan) that 7 days
prior to the voting and objection deadline is not on the rejection
list but thereafter, including after confirmation, may be included
for the first time thereon.
Attorneys for Element Fleet Corporation:
John D. Demmy
SAUL EWING ARNSTEIN & LEHR LLP
1201 N. Market Street , Suite 2300
P.O. Box 1266
Wilmington, DE 19899
Telephone: 302-421-6848
E-mail: john.demmy@saul.com
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020. Judge Robert D. Drain oversees the cases.
Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore as
financial advisor; and FTI Consulting, Inc., as restructuring
advisor. Prime Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC as financial advisor; and UBS
Securities LLC as investment banker.
FRONTIER COMMUNICATIONS: First Lien Lenders Say Plan Unconfirmable
------------------------------------------------------------------
The ad hoc committee of certain unaffiliated holder, of Frontier
Communications Corporation, et al.'s outstanding first lien debt
objects to the Debtors' motion seeking approval of the disclosure
statement.
The First Lien Committee points out that the Disclosure Statement
should not be approved because the Plan it describes is patently
unconfirmable.
The First Lien Committee complains that the term loan claims and
the first lien notes claims cannot be reinstated.
The First Lien Committee asserts that the Plan deprives the first
lien lenders of their contractual right to default interest.
According to First Lien Committee, the Plan impairs the first lien
lenders' rights with respect to the PNW sale proceeds.
The First Lien Committee points out that the Plan violates the pro
rata sharing provisions of the credit agreement.
The First Lien Committee complains that the Plan violates the
Debtors' obligations under the intercreditor agreement.
The First Lien Committee asserts that the Plan triggers a change in
control under the credit agreement.
According to First Lien Committee, the alternative proposed
treatment of the term loan claims and first lien notes claims also
violates the bankruptcy code.
The First Lien Committee points out that the Plan impermissibly
seeks to pay the unsecured noteholder groups' professional fees.
The First Lien Committee complains that the Disclosure Statement
fails to provide for the solicitation of votes from the term loan
lenders and the first lien noteholders whose claims are impaired
under the plan.
The First Lien Committee asserts that the Disclosure Statement
fails to provide adequate information.
Counsel to the First Lien Committee:
Brian S. Hermann
Julia Tarver Mason Wood
Gregory F. Laufer
Kyle J. Kimpler
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, New York 10019-6064
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020. Judge Robert D. Drain oversees the cases.
Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore as
financial advisor; and FTI Consulting, Inc., as restructuring
advisor. Prime Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC as financial advisor; and UBS
Securities LLC as investment banker.
FRONTIER COMMUNICATIONS: Lead Plaintiffs Object to Disclosures
--------------------------------------------------------------
Arkansas Teacher Retirement System and Carlos Lagomarsino
(together, "Lead Plaintiffs"), submitted an objection to approval
of the Disclosure Statement and Solicitation procedures of Frontier
Communications Corporation, et al.
Lead Plaintiffs point out that the Disclosure Statement should not
be approved because it does not provide adequate information.
Lead Plaintiffs complain that the Disclosure Statement does not
contain any description of the Securities Litigation.
Lead Plaintiffs assert that the Disclosure Statement violates
Bankruptcy Rule 3016(c) by failing to disclose the scope of the
Third-Party Release and the Plan Injunction.
According to Lead Plaintiffs, the Disclosure Statement fails to
provide any legal or factual basis for the Third-Party Release or
the Plan Injunction, particularly as they relate to Lead
Plaintiffs, the putative Class, and the Securities Litigation.
Lead Plaintiffs point out that the Disclosure Statement does not
disclose whether the claims of Lead Plaintiffs and the putative
Class will be preserved against the Debtors to the extent of
available insurance coverage.
Lead Plaintiffs complain that the Disclosure Statement does not
disclose whether or how the Debtors intend to preserve evidence
potentially relevant to the Securities Litigation after the
Effective Date of the Plan.
Lead Plaintiffs assert that the Disclosure statement should not be
approved because the Third-Party release renders the Plan
unconfirmable.
According to Lead Plaintiffs, the Third-Party Release is improper
and legally impermissible.
Lead Plaintiffs point out that the Court lacks jurisdiction,
constitutional adjudicatory authority, or both to release or enjoin
any claims of Lead Plaintiffs or the putative Class against the
Non-Debtor Defendants.
Lead Plaintiffs further point out that the plan and solicitation
procedures should be modified to acknowledge lead plaintiffs’
authority to opt out of the third-party release on behalf of the
putative class.
Counsel to Lead Plaintiff:
Michael S. Etkin
Andrew Behlmann
Colleen Maker
LOWENSTEIN SANDLER LLP
One Lowenstein Drive
Roseland, New Jersey 07068
Tel: (973) 597-2500
Lead Counsel to Lead Plaintiff:
Katherine M. Sinderson
Jesse L. Jensen
Kate W. Aufses
BERNSTEIN LITOWITZ BERGER &
GROSSMANN LLP
1251 Avenue of the Americas
New York, NY 10010
Tel: (212) 554-1400
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020. Judge Robert D. Drain oversees the cases.
Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore as
financial advisor; and FTI Consulting, Inc., as restructuring
advisor. Prime Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC as financial advisor; and UBS
Securities LLC as investment banker.
G-III APPAREL: S&P Affirms 'BB' ICR; Outlook Negative
-----------------------------------------------------
S&P Global Ratings affirmed all of its ratings on U.S.-based
apparel seller G-III Apparel Group Ltd., including its 'BB' issuer
credit rating, and removed the ratings from CreditWatch, where S&P
placed them with negative implications on April 3, 2020.
At the same time, S&P assigned its 'BB+' issue-level rating and '2'
recovery rating to the $350 million of first-lien secured notes
proposed by the company. The company will use the proceeds to
repay its existing $300 million term loan due 2022 and retain
approximately $42 million of cash on its balance sheet to
supplement its liquidity. The '2' recovery rating indicates S&P's
expectation for substantial (70%-90%; rounded estimate: 70%)
recovery in the event of a default.
Meanwhile, S&P affirmed its 'BB+' issue-level rating on the
company's first lien term loan, and removed it from CreditWatch
with negative implications. The rating agency will withdraw its
ratings on this facility once it is paid off. S&P's ratings assume
the transaction closes on the same terms provided to the rating
agency.
"The affirmation and removal from CreditWatch reflect our view that
the company will recover when the COVID-19 cases are largely
contained," S&P said.
S&P expects G-III's fiscal year 2021's operating results to be very
poor and anticipates that the upcoming quarter ending July 2020
will be its weakest of the year. However, S&P believes the
company's operating performance will meaningfully recover in fiscal
year 2022 (ending January 2022) and expects it to maintain
sufficient liquidity to weather the economic fallout from the
pandemic. Specifically, S&P forecasts G-III will generate negative
cash flow this year on lower profitability, higher working capital
requirements, and costs related to its exit from its retail
business. Additionally, S&P projects that the company will carry a
balance on its asset-based lending (ABL) facility until fiscal year
2023, which is when the rating agency forecasts it will return to
generating healthy levels of free operating cash flow. S&P expects
G-III's leverage to be very high this year, potentially in the high
single digit area, and does not forecast the company's credit
metrics will return to pre-COVID levels until fiscal year 2023.
However, because the company has a history of successful product
launches, good merchandising capabilities, and a conservative
financial policy, S&P believes the company will recover relatively
quickly in fiscal year 2022 and reduce its leverage below 3x before
subsequently improving its leverage to the low-2x area the
following year.
S&P believes the company is an effective wholesaler in the U.S.
apparel sector. G-III's resilient brand portfolio, anchored by its
five marquee brands (Calvin Klein, Tommy Hilfiger, DKNY, Donna
Karen, and Karl Lagerfeld), has resonated well with its customers,
which fueled its fast growth over the last couple of years as it
took market share from its competitors. This is worth noting
because the company's growth occurred during a very challenging
period for the North American retail environment as industry sales
continued to shift to online platforms. S&P believes the COVID-19
pandemic has accelerated this secular shift to e-commerce and view
G-III as well positioned to capture this growth in the wholesale
channel. Additionally, S&P views the company's decision to exit its
Bass and Wilson retail stores, which have not been profitable over
the last couple of years, as credit positive." The North American
brick and mortar retail footprint is overcrowded and the Bass and
Wilson brands no longer have enough brand strength to support a
retail presence. Pro forma for the restructuring, the company's
retail segment will initially comprise 41 DKNY and 13 Karl
Lagerfeld Paris stores as well as its e-commerce platforms for
DKNY, Donna Karen, Karl Lagerfeld Paris, Andrew Marc, Wilson
Leather, and G.H. Bass.
The negative outlook reflects the uncertainty around the severity
and duration of the COVID-19 pandemic and the ongoing economic
recession and their effect on the apparel industry. Department
stores and discount retailers were classified as non-essential
services and required to close for weeks during the spring store
closures intended to slow the spread of the coronavirus. This
created unprecedented stress across the industry as it reduced
industrywide revenue by potentially more than 50% for the period.
"Although we expect industry trends to improve in the coming months
as stores reopen, and view retailers' improving sales conversion
rates as encouraging, it is difficult to say when conditions will
return to pre-COVID levels. Furthermore, a spike in the infection
rate would likely discourage consumers from returning to shops and
may lead to additional government social restrictions, which would
likely cause more severe industry declines than what we assume in
our base-case forecast," S&P said.
A prolonged recession could also derail the company's recovery
because apparel purchases are highly discretionary and G-III's
portfolio of branded and fashion-oriented products are more
susceptible to declines in consumer confidence and spending power.
The negative outlook reflects the potential that S&P will lower its
ratings on G-III over the next couple of quarters if it forecasts
that it will sustain leverage above 3x in fiscal year 2022 (ending
January 2022).
"We could lower our ratings on G-III if the COVID-19 pandemic's
effects on its performance are more severe than we currently
forecast. This could occur if infection rates spike and lead to
additional social restrictions, a protracted recession with high
unemployment rates dramatically reduces consumer discretionary
spending, or the bankruptcy of any of the company's wholesale
partners leads to weaker profitability and cash flow generation
such that G-III sustains adjusted leverage of more than 3x," S&P
said.
"We could revise our outlook on G-III to stable if it can rebound
from the pandemic by improving its profitability and cash flow
generation such that we no longer view it as at risk of sustaining
leverage of more than 3x. This could occur if the company performs
in line with our base-case forecast, including a good performance
over the upcoming holiday season and a successful exit from its
Bass and Wilson retail businesses," the rating agency said.
GERALDINE R. ROSINE: Trustee to Pay $17.5K Pinole Property Sale Tax
-------------------------------------------------------------------
Judge Charles Novack of the U.S. Bankruptcy Court for the Northern
District of California authorized Kari Bowyer, the Chapter 11
Trustee of the estate of Geraldine Rose Rosine, to pay $17,483 to
the Franchise Tax Board for income taxes incurred on account of the
sale of the real property located at 781 San Pablo Ave., Pinole,
California to Juan Venica and Valeria Ode for $360,000.
Geraldine Rose Rosine sought Chapter 11 protection (Bankr. N.D.
Cal. Case No. 18-42185) on Sept. 20, 2018. The Debtor tapped
Craig
V. Winslow, Esq., at Law Office of Craig V. Winslow, as counsel.
Kari Bowyer was appointed as Chapter 11 Trustee on Aug. 29, 2019.
GKS CORP: Filing of Proposed Order for Assets Sale Procedures Asked
-------------------------------------------------------------------
Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the
District of Massachusetts ordered GKS Corp.'s counsel to submit, in
Word format, to edk@mab.uscourts.gov, a proposed order reflecting
the comments made in open court on July 29, 2020, relating to the
proposed procedures in connection with the sale of assets utilized
by the Debtor in operating its business, to VS Southwick, LLC or
its eligible designee for $9 million, subject to higher and better
offers.
Said Assets include without limitation to (i) the real property and
improvements known as The American Inn for Retirement Living
located at One Sawmill Park, Southwick Massachusetts; (ii) personal
property, including equipment, furniture and inventory used to
operate the Community; (iii) certain contracts with third-party
vendors; (iv) permits and licenses authorizing the provision of
certain services to Community residents (to the extent
transferable); and (v) and other miscellaneous, specified assets
including the right to use the Debtor's trade names and other
intellectual property.
The Proposed Sale of the Assets is to be made free and clear of all
liens, claims, and interests, except as otherwise provided for by
the APA or the order of the Bankruptcy Court approving the sale.
The Debtor has concurrently with the sale motion filed a motion for
an order of the Court establishing procedures for the Debtor's
solicitation of competing bids to acquire the Assets, and otherwise
governing the conduct of the Proposed Sale. These proposed sale
procedures contemplate that prospective bidders will abide by
confidentiality restrictions with respect to the Debtor's
confidential information, will agree that any third-party reports
which VS Southwick has made available to the Debtor and prospective
bidders are without any representation or warranty of, or recourse
to, VS Southwick and the third party providing the report, and that
each prospective bidder will bear its own expenses associated with
negotiation, documentation, and efforts to obtain Bankruptcy Court
approval of its offer and related definitive purchase agreement.
The proposed sale procedures also contemplate that "Qualified Bids"
to purchase Assets must be submitted to the Debtor by the bid
deadline established by the Bankruptcy Court.
If more than one Qualified Bid is submitted (inclusive of VS
Southwick's Qualified Bid embodied in the APA), the Debtor, in
accordance with the proposed sale procedures, will conduct an
auction among Qualified Bidders at which each Qualified Bidder will
be entitled to participate in accordance with the applicable sale
procedures. At the conclusion of such auction, the Debtor, in
consultation with the Bank and the Committee, will designate the
highest or otherwise best offer (or combination of offers) for the
Assets to be submitted to the Bankruptcy Court for approval.
The proposed sale procedures also contemplate other terms and
conditions customary to bankruptcy sales of the type involved. For
a thorough review and understanding of such terms and conditions,
and for greater detail of the specific terms and conditions of the
APA summarized above, it is recommended that interested parties
review the APA and the Debtor's motion for approval of sale
procedures filed. The Debtor encourages all prospective bidders to
contact the Debtor's broker Cushman & Wakefield immediately in
order to obtain further information about the Assets, the Debtor's
business enterprise, and the procedures for obtaining due diligence
and participating in the sale process.
A copy of the Agreement and the Procedures is available at
https://tinyurl.com/y6csxszk from PacerMonitor.com free of charge.
About GKS Corporation
GKS Corporation -- http://www.theamericaninn.net/-- owns and
operates a continuing care retirement community and assisted
living
facility for the elderly. It is a 50-acre country village setting
in Southwick, Mass., with easy access to healthcare services,
transportation, shopping and recreation.
GKS Corporation sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Mass. Case No. 19-30998) on Dec. 26,
2019. At the time of the filing, the Debtor had estimated assets
of
between $1 million and $10 million and liabilities of between $10
million and $50 million.
Michael J. Goldberg, Esq., at Casner & Edwards, LLP, is the
Debtor's legal counsel. OnePoint Partners, LLC, was approved to
provide Toby Shea as CRO for the Debtor.
GNC HOLDINGS: Law Firm of Russell Represents Utility Companies
--------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the Law Firm of Russell R. Johnson III submitted a verified
statement to disclose that it is representing the utility companies
in the Chapter 11 cases of GNC Holdings, Inc., et al.
The names and addresses of the Utilities represented by the Firm
are:
a. Appalachian Power Company
Indiana Michigan Power Company
Kentucky Power Company
Kingsport Power Company
Ohio Power Company
Wheeling Power Company
Public Service Company of Oklahoma and
Southwestern Electric Power Company
Attn: Dwight C. Snowden
American Electric Power
1 Riverside Plaza, 13th Floor
Columbus, Ohio 43215
b. Arizona Public Service Company
Attn: Gisel Morales
2043 W. Chery Dr., Bldg. M
Mail Station 3209
Phoenix, Arizona 85021-1015
c. Consolidated Edison Company of New York, Inc.
Attn: Rosalie Zuckerman
Con Edison Law Department
Attn: Bankruptcy
18th Floor
4 Irving Place
New York, NY 10003
d. Orange and Rockland Utilities, Inc.
Attn: Jennifer Woehrle
390 W. Route 59
Spring Valley, New York 10977
e. Florida Power & Light Company
Attn: Gloria Lopez
Revenue Recovery Department RRD/LFO
4200 W. Flagler St.
Coral Gables, Florida 33134
f. Constellation NewEnergy, Inc.
Attn: C. Bradley Burton
Credit Analyst
Constellation Energy
1310 Point Street, 12th Floor
Baltimore, MD 21231
g. The Connecticut Light & Power Company
Yankee Gas Services Company
Attn: Honor S. Heath, Esq.
Eversource Energy
107 Seldon Street
Berlin, CT 06037
h. Atlantic City Electric Company
Baltimore Gas and Electric Company
Commonwealth Edison Company
Delmarva Power & Light Company
PECO Energy Company
The Potomac Electric Power Company
Attn: Lynn R. Zack, Esq.
Assistant General Counsel
Exelon Corporation
2301 Market Street, S23-1
Philadelphia, PA 19103
i. Salt River Project
Attn: Breanna Holmes/ISB 232
2727 E. Washington St.
P.O. Box 52025
Phoenix, AZ 85072-2025
j. San Diego Gas & Electric Company
Attn: Kelli S. Davenport, Bankruptcy Specialist
8326 Century Park Court
San Diego, CA 92123
k. Virginia Electric and Power Company
d/b/a Dominion Energy Virginia
Attn: Sherry Ward
600 East Canal Street, 10th floor
Richmond, VA 23219
l. The Cleveland Electric Illuminating Company
Ohio Edison Company
Monongahela Power Company
Metropolitan Edison Company
Jersey Central Power & Light Company
Toledo Edison Company
Pennsylvania Electric Company
West Penn Power Company
Pennsylvania Power Company
Potomac Edison Company
Attn: Kathy M. Hofacre
FirstEnergy Corp.
76 S. Main St., A-GO-15
Akron, OH 44308
m. Boston Gas Company
Essex Gas Company
Colonial Gas Cape Cod
KeySpan Energy Delivery Long Island
KeySpan Energy Delivery New York
Massachusetts Electric Company
Narragansett Electric Company
Niagara Mohawk Power Corporation
Attn: Vicki Piazza, D-1
National Grid
300 Erie Boulevard West
Syracuse, NY 13202
n. Tampa Electric Company
Attn: Barbara Taulton FRP, CAP
Florida Registered Paralegal
Tampa Electric Company
702 N. Franklin Street
Tampa, FL 33602
o. Tucson Electric Power Company
UNS Gas, Inc.
Attn: Adam D. Melton, Esq.
Senior Attorney – Litigation
88 E. Broadway Blvd.
Tucson, AZ 85701
The nature and the amount of claims of the Utilities, and the times
of acquisition thereof are as follows:
a. The following Utilities have unsecured claims against the
above-referenced Debtors arising from prepetition utility usage:
American Electric Power, Consolidated Edison Company of New York,
Inc., Orange and Rockland Utilities, Inc., Constellation NewEnergy,
Inc., Georgia Power Company, Gulf Power Company, the Connecticut
Light & Power Company, Yankee Gas Services Company, Atlantic City
Electric Company, The Potomac Electric Power Company, San Diego Gas
and Electric Company, The Cleveland Electric Illuminating Company,
Ohio Edison Company, Monongahela Power Company, Metropolitan Edison
Company, Jersey Central Power & Light Company, Toledo Edison
Company, Pennsylvania Electric Company, Pennsylvania Power Company.
Potomac Edison Company, Boston Gas Company, Essex Gas Company,
Colonial Gas Cape Cod, Colonial Gas Lowell, KeySpan Energy Delivery
Long Island, KeySpan Energy Delivery New York, Massachusetts
Electric Company, Narragansett Electric Company and Niagara Mohawk
Power Corporation.
b. Arizona Public Service Company, Baltimore Gas and Electric
Company, Commonwealth Edison Company, Delmarva Power & Light
Company, PECO Energy Company, Tucson Electric Power Company and UNS
Gas, Inc. held prepetition deposits that secured all prepetition
debt.
c. Florida Power & Light Company, Salt River Project, Tampa
Electric Company and Virginia Electric and Power Company d/b/a
Dominion Energy Virginia hold surety bonds that they will make
claims upon for payment of the prepetition debt that the Debtors
owe to those Utilities.
d. For more information regarding the claims and interests of
the Utilities in these jointly-administered cases, refer to the
Objection of Certain Utility Companies To the Motion of Debtors For
Orders (A) Prohibiting Utility Companies From Altering or
Discontinuing Service on Account of Prepetition Invoices, (B)
Approving Deposit As Adequate Assurance of Payment, (C)
Establishing Procedures For Resolving Requests By Utility Companies
For Additional Assurance of Payment, and (D) Authorizing Payment of
Any Prepetition Service Fees filed in the above-captioned,
jointly-administered, bankruptcy cases.
The Law Firm of Russell R. Johnson III, PLC was retained to
represent the foregoing Utilities in July 2020. The circumstances
and terms and conditions of employment of the Firm by the Companies
is protected by the attorney-client privilege and attorney work
product doctrine.
The Firm can be reached at:
Russell R. Johnson III, Esq.
LAW FIRM OF RUSSELL R. JOHNSON III, PLC
2258 Wheatlands Drive
Manakin-Sabot, VA 23103
Tel: (804) 749-8861
Fax: (804) 749-8862
Email: russell@russelljohnsonlawfirm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/PJQL1K
About GNC Holdings
GNC Holdings Inc. -- http://www.gnc.com/-- is a global health and
wellness brand with a diversified omni-channel business. In its
stores and online, GNC Holdings sells an assortment of performance
and nutritional supplements, vitamins, herbs and greens, health and
beauty, food and drink, and other general merchandise, featuring
innovative private-label products as well as nationally recognized
third-party brands, many of which are exclusive to GNC Holdings.
GNC Holdings and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-11662) on
June 23, 2020. The Debtors disclosed $1,415,957,000 in assets and
$895,022,000 in liabilities as of March 31, 2020.
Judge Karen B. Owens oversees the cases.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Latham
& Watkins, LLP as legal counsel; Evercore Group, LLC as investment
banker and financial advisor; FTI Consulting, Inc. as financial
advisor; and Prime Clerk as claims and noticing agent. Torys LLP
is the legal counsel in the Companies' Creditors Arrangement Act
case.
GO-GO'S GREEK: Plan to be Funded by Continued Business Operations
-----------------------------------------------------------------
Go-Go's Greek Grille LLC filed a Second Plan of Reorganization and
a Second Amended Disclosure Statement on June 19, 2020.
Each Holder of an Allowed Unsecured Claim shall receive, on account
of such allowed claim, a pro rata distribution of cash from the
Plan Trust. To the extent the Holder of an Allowed General
Unsecured Claim receives less than full payment on account of such
Claim, the Holder of such Claim may be entitled to assert a bad
debt deduction or worthless security deduction with respect to such
Allowed Unsecured Claim.
To the extent that any amount received by a holder of an allowed
unsecured claim under the Plan is attributable to accrued but
unpaid interest and such amount has not previously been included in
the Holder's gross income, such amount should be taxable to the
Holder as ordinary interest income. Conversely, a Holder of an
Allowed Unsecured Claim may be able to recognize a deductible loss
to the extent that any accrued interest on the debt instruments
constituting such Claim was previously included in the Holder's
gross income but was not paid in full by the Debtors. Such loss
may be ordinary, but the tax law is unclear on this point.
The Plan will be funded by revenue generated from the Debtor's
post-confirmation operations. The Debtor proposes a reasonable Plan
which is proposed in good faith and not by any means forbidden by
law. The Debtor's proposed Plan provides for the continued
ownership of the Debtor's business and the continued operation of
the Debtor.
A full-text copy of the Second Amended Disclosure Statement dated
June 19, 2020, is available at https://tinyurl.com/ybze9sc4 from
PacerMonitor.com at no charge.
Attorney for Debtor:
BUDDY D. FORD, P.A.
Buddy D. Ford, Esquire
Jonathan A. Semach, Esquire
9301 West Hillsborough Avenue
Tampa, Florida 33615-3008
Telephone #: (813) 877-4669
Facsimile #: (813) 877-5543
Office Email: All@tampaesq.com
E-mail: Buddy@tampaesq.com
E-mail: Jonathan@tampaesq.com
About Go-Go's Greek Grille
Go-Go's Greek Grille LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-10198) on Oct. 28,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $100,001 and $500,000 and liabilities of the same
range. The case is assigned to Judge Catherine Peek Mcewen. The
Debtor is represented by Buddy D. Ford, P.A.
The U.S. Trustee did not appoint an official committee of unsecured
creditors in the Debtor's case.
GUGERLI HOLDINGS: Seeks to Hire Sasser Law as Legal Counsel
-----------------------------------------------------------
Gugerli Holdings, LLC seeks authority from the U.S. Bankruptcy
Court for the Eastern District of North Carolina to employ Sasser
Law Firm as its legal counsel.
The firm's services will include:
a. advising Debtor of its powers and duties in the continued
operation of its business and management of its property;
b. preparing and filing monthly reports, plan of
reorganization and disclosure statement;
c. preparing legal papers;
d. undertaking necessary actions, if any, to avoid liens
against Debtor's property obtained by creditors and to recover
preferential payments within 90 days of the filing of its Chapter
11 case;
f. performing a search of the public records to locate liens
and assess validity; and
g. representing Debtor at hearings and examinations.
Sasser Law Firm will be paid at a rate of $350 per hour.
Travis Sasser disclosed in court filings that the firm is a
disinterested party and has no connection with creditors or any
other "party in interest" in Debtor's bankruptcy case.
The firm can be reached at:
Travis Sasser, Esq.
Sasser Law Firm
2000 Regency Parkway, Suite 230
Cary, NC 27518
Tel: (919) 319-7400
Fax: (919) 657-7400
Email: tsasser@carybankruptcy.com
About Gugerli Holdings
Gugerli Holdings, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-02492) on July 9,
2020, listing under $1 million in both assets and liabilities.
Debtor has tapped Sasser Law Firm as its legal counsel.
HOLLISTER CONSTRUCTION: Unsecureds to Get Paid From Plan Settlement
-------------------------------------------------------------------
Hollister Construction Services, LLC, filed with the U.S.
Bankruptcy Court for the District of New Jersey a Plan of
Liquidation and a Disclosure Statement dated June 19, 2020.
The Debtor proposes to the creditors and other parties in interest
this Chapter 11 plan of orderly liquidation.
The Plan implements the Plan Settlement between and among the
Debtor, Creditors' Committee, the Prepetition Secured Lender, Arch
and the Insiders. Distributions to be made to Holders of Allowed
(i) Pre-Petition Secured Lender Clams; (ii) Arch Claim, and (iii)
General Unsecured Claims pursuant to the Plan will be made on
account of and in consideration of, among other things, the Plan
Settlement.
On the Effective Date, the Liquidation Trust shall be formed to
carry out all actions and perform all duties set forth in the Plan
and the Liquidation Trust Documents. On the Effective Date, the
Debtor will distribute the Liquidation Trust Assets to the
Liquidation Trust and as soon as reasonably practicable after the
Effective Date, the Liquidation Trust will distribute Cash to
Holders of Allowed Claims as of the Effective Date, subject to any
required Reserves, in accordance with the Plan. The Liquidation
Trust will also distribute payments to Holders of Claims that are
Allowed after the Effective Date. The Liquidation Trust may also
pursue Causes of Action, if any, the proceeds of which will be
distributed in accordance with the Plan.
Class 4 General Unsecured Claims will be treated as follows:
* Each Holder of an Allowed General Unsecured Claim will receive
its pro rata share of the Cash to be distributed by the Debtor or
the Liquidation Trust.
* All payments from the Debtor or the Liquidation Trust to
Holders of Allowed General Unsecured Claims will be paid after
payment of all Allowed Administrative Claims, Allowed Professional
Fee Claims, Allowed Priority Claims and other Allowed Claims in
accordance with the treatment afforded to Classes 1, 2, and 3.
Class 5 Interests will retain no ownership interests in the Debtor
under the Plan, receive no distribution on account thereof, and
such Interests shall be cancelled effective as of the Effective
Date.
The Plan will be implemented through: (i) the formation of the
Liquidation Trust on the Effective Date which, as set forth below,
shall carry out all actions and perform all duties set forth in the
Plan and the Liquidation Trust Documents; (ii) the Liquidation
Trust’s distribution as soon as reasonably practicable after the
Effective Date to Holders of Claims that are Allowed as of the
Effective Date in accordance with the Plan; (iii) the Debtor’s
distribution of the Liquidation Trust Assets to the Liquidation
Trust; and (iv) the Liquidation Trustee's distribution to Holders
of Allowed Claims that have not been Allowed or paid by the Initial
Distribution, in accordance with the Plan.
A full-text copy of the Disclosure Statement dated June 19, 2020,
is available at https://tinyurl.com/y8kfsuz9 from PacerMonitor.com
at no charge.
Counsel to the Debtor:
LOWENSTEIN SANDLER LLP
Arielle B. Adler, Esq.
Bruce Buechler, Esq.
Joseph J. DiPasquale, Esq.
Jennifer B. Kimble, Esq.
Kenneth A. Rosen, Esq.
Mary E. Seymour, Esq.
One Lowenstein Drive
Roseland, New Jersey 07068
Tel: (973) 597-2500
Fax: (973) 597-2400
About Hollister Construction
Hollister Construction Services, LLC -- http://www.hollistercs.com/
-- is a full service commercial construction company with a team of
150+ construction professionals. The Company's specialties include
interior and exterior renovations, building additions, and ground
up construction. Hollister's areas of expertise include the
construction of corporate, education, healthcare, industrial,
retail, and residential projects.
Hollister Construction sought Chapter 11 protection (Bankr. D.N.J.
Lead Case No. 19-27439) on Sept. 9, 2019, in Trenton, New Jersey.
In the petition signed by Brendan Murray, president, the Debtor was
estimated to have $100 million to $500 million in assets and
liabilities of the same range.
Hon. Michael B. Kaplan oversees the case.
The Debtor tapped Lowenstein Sandler as counsel; SM Law PC, as
special counsel; 10X CEO Coaching, LLC, as restructuring counsel;
and The Parkland Group, Inc., as business consultant.
HYTERA COMMUNICATIONS: Aug. 18 Auction of Specified Assets Set
--------------------------------------------------------------
Judge Erithe Smith of the U.S. Bankruptcy Court for the Central
District of California authorized the bidding procedures proposed
by Hytera Communications America (West), Inc. and its affiliates in
connection with the sale of the specified assets of the Debtors to
Hytera US, Inc., for approximately $7,897,459, cash, plus the
assumption of the liabilities set forth in the Stalking Horse
Agreement, subject to overbid.
A hearing on the Motion was held on July 23, 2020 at 10:30 a.m.
(PT).
Upon execution of a non-disclosure agreement in favor of the
Debtors by any person identified by the Debtors, with the
assistance of their financial advisor, as reasonably likely to be a
Qualified Bidder that wishes to conduct due diligence regarding the
Debtors or their assets with respect to a potential bid may be
granted access to due diligence information.
The Asset Purchase Agreement dated as of July 15, 2020 between the
Debtors and Hytera US Bidder is deemed a "Qualified Bid" for
purposes of the Bidding Procedures.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Aug. 14, 2020 at 4:00 p.m. (PT)
b. Initial Bid: Agree in such Modified Agreement to a purchase
price that provides for the following: (i) assumption of all the
Assumed Liabilities except as set forth in section 1.4 of the
Initial APA; and (ii) payment in cash at closing in an initial
minimum amount equal to the sum of at least $250,000 more than the
Purchase Price.
c. Deposit: 10% of the Purchase Price
d. Auction: The Auction to determine the successful bidder for
the Purchased Assets will be held on Aug. 18, 2020 at 3:00 p.m.
(PT) at the offices of the counsel for the Debtors, Pachulski Stang
Ziehl & Jones LLP, 10100 Santa Monica Boulevard, 13th Floor, Los
Angeles, CA 90067, or such other place (including by video
conference) and time designated by the Debtors with prior notice to
all Qualified Bidders.
e. Bid Increments: $100,000
f. Sale Hearing: Aug. 27, 2020 at 10:00 a.m. (PT)
g. Sale Objection Deadline: Aug. 19, 2020 at 4:00 (PT)
Within three business days after entry of the Order, the Debtors
will provide the Sale Notice upon all Sale Notice Parties.
Within three business days after entry of the Order, the Debtors
will file with the Court and serve on all persons known by the
Debtors to be a counterparty to an executory contract or unexpired
lease, the Cure Notice. The Cure Objection Deadline is Aug. 13,
2020 at 4:00 p.m. (PT).
A list of all contracts assumed, assigned, and sold to the Winning
Bidder as "Purchased Contracts" under the Initial APA (or Modified
Agreement) will be filed with the Court no later than five business
days following the Closing Date.
Notwithstanding any applicability of Bankruptcy Rules 6004(h),
7062, or 9014, the terms and conditions of the Order will be
immediately effective and enforceable upon its entry.
A copy of the Bidding Procedures and the Agreement is available at
https://tinyurl.com/yczmf87u from PacerMonitor.com free of charge.
About Hytera Communications America
Hytera communications America (West), Inc. --
https://www.hytera.us/ -- is a global company in the two-way radio
communications industry. It has 10 international R&D Innovation
Centers and more than 90 regional organizations around the world.
Forty percent of Hytera employees are engaged in engineering,
research, and product design. Hytera has three manufacturing
centers in China and Spain.
On May 26, 2020, Hytera sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Lead Case No. 20-11507). At the
time of the filing, Debtor had estimated assets of between $10
million and $50 million and liabilities of between $500 million and
$1 billion.
Judge Erithe A. Smith oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Steptoe & Johnson, LLP as corporate and special counsel;
and Imperial Capital, LLC as financial advisor.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 15, 2020. The committee is represented by Levene
Neale Bender Yoo & Brill, LLP.
IMAGEWARE SYSTEMS: Chief Technical Officer Resigns
--------------------------------------------------
David Harding, ImageWare Systems, Inc.'s senior vice president and
chief technical officer, tendered his resignation effective on July
21, 2020.
About ImageWare Systems
Headquartered in San Diego, CA, ImageWare Systems, Inc. --
http://www.iwsinc.com/-- is a developer of mobile and cloud-based
identity management solutions, providing two-factor, biometric and
multi-factor cloud-based authentication solutions for the
enterprise. The company delivers next-generation biometrics as an
interactive and scalable cloud-based solution. ImageWare brings
together cloud and mobile technology to offer two-factor,
biometric, and multi-factor authentication for smartphone users,
for the enterprise, and across industries. The Company's products
are used to manage and issue secure credentials, including national
IDs, passports, driver licenses and access control credentials.
ImageWare recorded a net loss available to common shareholders of
$17.25 million for the year ended Dec. 31, 2019, compared to a net
loss available to common shareholders of $16.46 million for the
year ended Dec. 31, 2018. As of March 31, 2020, the Company had
$7.96 million in total assets, $10.54 million in total liabilities,
$9.06 million in mezzanine equity, and $11.64 million in total
shareholders' deficit.
Mayer Hoffman McCann P.C., in San Diego, California, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated May 15, 2020 citing that the Company does not generate
sufficient cash flows from operations to maintain operations and,
therefore, is dependent on additional financing to fund operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
IMERYS TALC: London Market Insurers Object to Disclosure Statement
------------------------------------------------------------------
Interested parties Certain Underwriters at Lloyd's London and
Certain London Market Insurers (collectively "London Market
Insurers"), filed their joinder to Certain Insurers' Objection to
the Disclosure Statement and proposed Confirmation Schedule of
Imerys Talc America, Inc. (ITA) and its Debtor Affiliates.
London Market Insurers respectfully request that this Court deny
approval of the Disclosure Statement until the Trust Distribution
Procedures (TDPs) and other critical information are provided,
decline to set a confirmation schedule at this time, and otherwise
grant London Market Insurers such additional relief as is just and
proper.
A full-text copy of London Market Insurers' objection to Disclosure
Statement dated June 19, 2020, is available at
https://tinyurl.com/y7cklklr from PacerMonitor at no charge.
Counsel for Certain Underwriters:
HILLER LAW, LLC
Adam Hiller (DE No. 4105)
1500 North French Street
Wilmington, Delaware 19801
(302) 442-7677 telephone
ahiller@adamhillerlaw.com
-and-
Michael A. Shiner, Esquire
TUCKER ARENSBERG, P.C.
1500 One PPG Place
Pittsburgh, PA 15222
Phone: 412-594-5586
Fax: 412-594-5619
Email: mshiner@tuckerlaw.com
-and-
Matthew B. Anderson, Esquire
Rodrigo Tordecilla, Esquire
MENDES & MOUNT LLP
750 Seventh Avenue
New York, NY 10019
Phone: 212-261-8000
Fax: 212-261-8750
Email: matthew.anderson@mendes.com
rodrigo.tordecilla@mendes.com
About Imerys Talc America
Imerys Talc and its subsidiaries--
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling, and distributing talc.
Talc is a hydrated magnesium silicate that is used in the
manufacturing of dozens of products in a variety of sectors,
including coatings, rubber, paper, polymers, cosmetics, food, and
pharmaceuticals. Its talc operations include talc mines, plants,
and distribution facilities located in: Montana (Yellowstone,
Sappington, and Three Forks); Vermont (Argonaut and Ludlow); Texas
(Houston); and Ontario, Canada (Timmins, Penhorwood, and Foleyet).
It also utilizes offices located in San Jose, California and
Roswell, Georgia.
Imerys Talc America, Inc., and two subsidiaries, namely Imerys Talc
Vermont, Inc., and Imerys Talc Canada Inc., sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 19-10289) on Feb. 13,
2019.
The Debtors were estimated to have $100 million to $500 million in
assets and $50 million to $100 million in liabilities as of the
bankruptcy filing.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as counsel; Alvarez & Marsal North America, LLC, as
financial advisor; and Prime Clerk LLC as claims agent.
IMERYS TALC: Providence Washington Objects to Disclosure Statement
------------------------------------------------------------------
Providence Washington Insurance Company (PWIC), as successor in
interest to Seaton Insurance Company, successor in interest to
Unigard Mutual Insurance Company (collectively "PWIC"), files its
joinder to the Certain Insurers' Objection to Disclosure Statement
and proposed Confirmation Schedule of Imerys Talc America, Inc.
(ITA) and its debtor affiliates.
PWIC joins in the Certain Insurers' Objection to the Disclosure
Statement for Joint Chapter 11 Plan of Reorganization of Debtors to
emphasize that the Disclosure Statement does not provide "adequate
information" within the meaning of Sec. 1125 of the Bankruptcy
Code.
PWIC asserts that:
* The Trust Distribution Procedures (the "TDPs"), which are
essential to understanding how the proposed plan may adversely
impact the interests of PWIC and other creditors, have not been
filed. The Debtors' failure to file the TDPs means that the
Disclosure Statement does not provide PWIC and other creditors with
"adequate information."
* The Disclosure Statement also fails to address the pending
motion to lift the stay, the resolution of which will unmistakably
have a significant effect on this chapter 11 case and on the
treatment of creditors.
PWIC respectfully requests that the Court deny approval of the
Disclosure Statement until the TDPs and other critical information
are provided, decline to set a confirmation schedule at this time,
and otherwise grant PWIC such additional relief as is just and
proper.
A full-text copy of Providence Washington's objection dated June
19, 2020, is available at https://tinyurl.com/yag9bw2g from
PacerMonitor at no charge.
Counsel to Providence Washington:
ELLIOTT GREENLEAF, P.C.
Rafael X. Zahralddin-Aravena
Eric M. Sutty
1105 North Market Street, Suite 1700
Wilmington, DE 19801
Telephone: (302) 384-9400
E-mail: rxza@elliottgreenleaf.com
ems@elliottgreenleaf.com
- and -
Lawrence A. Tabb, Esq.
MUSICK, PEELER & GARRETT LLP
624 S. Grand Avenue, Suite 2000
Los Angeles, CA 90017
Telephone: (213) 629-7797
E-mail: l.tabb@musickpeeler.com
- and -
Chad A. Westfall, Esq.
MUSICK, PEELER & GARRETT LLP
1 Post Street, Suite 600
San Francisco, CA 94104
Telephone: (415) 281-2030
E-mail: c.westfall@musickpeeler.com
About Imerys Talc America
Imerys Talc and its subsidiaries --
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling, and distributing talc.
Talc is a hydrated magnesium silicate that is used in the
manufacturing of dozens of products in a variety of sectors,
including coatings, rubber, paper, polymers, cosmetics, food, and
pharmaceuticals. Its talc operations include talc mines, plants,
and distribution facilities located in: Montana (Yellowstone,
Sappington, and Three Forks); Vermont (Argonaut and Ludlow); Texas
(Houston); and Ontario, Canada (Timmins, Penhorwood, and Foleyet).
It also utilizes offices located in San Jose, California and
Roswell, Georgia.
Imerys Talc America, Inc., and two subsidiaries, namely Imerys Talc
Vermont, Inc., and Imerys Talc Canada Inc., sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 19-10289) on Feb. 13,
2019.
The Debtors were estimated to have $100 million to $500 million in
assets and $50 million to $100 million in liabilities as of the
bankruptcy filing.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as counsel; Alvarez & Marsal North America, LLC as
financial advisor; and Prime Clerk LLC as claims agent.
IMERYS TALC: U.S. Trustee Objects to Disclosures Motion
-------------------------------------------------------
Andrew R. Vara, the United States Trustee for Regions 3 and 9,
objects to the motion of Imerys Talc America, Inc. (ITA) and its
Debtor Affiliates for entry of order approving Disclosure
Statement.
The U.S. Trustee asserts that:
* The Disclosure Statement Does Not Contain Adequate Information
As Required by Section 1125 of the Bankruptcy Code. The Disclosure
Statement does not include any disclosure regarding the Trust
Distribution Procedures, the Trust Agreement, the Cooperation
Agreement, or the Debtors' projections. Nor have any of these
documents been filed.
* For those law firms that represents a member of the Tort
Claimants Committee, and who also have the right to vote on behalf
of their other clients, such law firms will be completing ballots
in which they have to determine whether their clients will opt-out
of giving releases that benefit their own law firm. This presents
a conflict between the interests of the law firm, and the interests
of their own clients.
* Valuing all Talc Personal Injury Claims will effectively
nullify the requirements of Sections 1126(c) and 524(g) of the
Bankruptcy Code that at least two thirds in amount those in the
voting class vote to accept the Plan.
* The U.S. Trustee objects to there being less than 14 days
between the latest day that the Debtors may serve an amendment to
the Proposed Cure Cost or any other aspect of the initial
Contract/Lease Notice, and the date by which the affected contract
or lease counterparty must object to the same, unless the Debtors
agree to make service of such amendment by overnight mail.
A full-text copy of the U.S. Trustee's objection to Disclosure
Statement motion dated June 19, 2020, is available at
https://tinyurl.com/yanzepx6 from PacerMonitor at no charge.
About Imerys Talc America
Imerys Talc and its
subsidiaries--https://www.imerys-performance-additives.com/ -- are
in the business of mining, processing, selling, and distributing
talc. Talc is a hydrated magnesium silicate that is used in the
manufacturing of dozens of products in a variety of sectors,
including coatings, rubber, paper, polymers, cosmetics, food, and
pharmaceuticals. Its talc operations include talc mines, plants,
and distribution facilities located in: Montana (Yellowstone,
Sappington, and Three Forks); Vermont (Argonaut and Ludlow); Texas
(Houston); and Ontario, Canada (Timmins, Penhorwood, and Foleyet).
It also utilizes offices located in San Jose, California and
Roswell, Georgia.
Imerys Talc America, Inc., and two subsidiaries, namely Imerys Talc
Vermont, Inc., and Imerys Talc Canada Inc., sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 19-10289) on Feb. 13,
2019.
The Debtors were estimated to have $100 million to $500 million in
assets and $50 million to $100 million in liabilities as of the
bankruptcy filing.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as counsel; Alvarez & Marsal North America, LLC as
financial advisor; and Prime Clerk LLC as claims agent.
INSIGHT TERMINAL: AWL Unsecureds to be Paid in Full in Plan
-----------------------------------------------------------
Debtors Insight Terminal Solutions, LLC (ITS) and Insight Terminal
Holdings, LLC (ITH) filed the First Amended Disclosure Statement
for Chapter 11 Plan of Reorganization dated June 19, 2020.
Class 3: Autumn Wind Lending, LLC (AWL) General Unsecured Claim
will receive payment in Cash in the full amount of any AWL General
Unsecured Claim, which payment shall occur on the later of (i)
thirty (30) days after the Effective Date, (ii) 30 days after such
Claim is Allowed, and (iii) the date due in the ordinary course of
business in accordance with the terms and conditions of the
particular transaction giving rise to such Allowed AWL General
Unsecured Claim. AWL as a Holder of the AWL General Unsecured
Claim(s) is unimpaired, and is conclusively deemed to have accepted
the Plan.
A full-text copy of the First Amended Disclosure Statement dated
June 19, 2020, is available at https://tinyurl.com/yce5eebq from
PacerMonitor at no charge.
Counsel for the Debtors:
Andrew D. Stosberg
MIDDLETON REUTLINGER
401 S. Fourth Street, Suite 2600
Louisville, Kentucky 40202
Tel: (502) 625-2734
E-mail: astosberg@middletonlaw.com
About Insight Terminal Solutions
Insight Terminal Solutions -- http://insightterminals.com-- is an
Oakland, Calif.-based company that provides terminal and
stevedoring services at the Oakland Bulk and Oversized Terminal
(OBOT) for a variety of bulk agriculture and mineral commodities.
Insight Terminal Solutions and its affiliate Insight Terminal
Holdings, LLC filed voluntary petitions for relief under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Ky. Lead Case No. 19-32231) on
July 17, 2019. The petitions were signed by John J. Siegel, Jr.,
manager.
At the time of filing, Insight Terminal Solutions was estimated to
have $1 million to $10 million in assets and $10 million to $50
million in liabilities. Insight Terminal Holdings was estimated to
have up to $50,000 in assets and $1 million to $10 million in
liabilities.
Andrew David Stosberg, Esq., at Middleton Reutlinger, represents
the Debtor.
INSPIREMD INC: Signs $400K Settlement with Former Underwriter
-------------------------------------------------------------
InspireMD, Inc., entered into a settlement agreement and release
with H.C. Wainwright & Co., LLC, which served as the underwriter
for its September 2019 public offering and for other offerings
conducted by the Company prior to that. Pursuant to the Settlement
Agreement, the Company will pay to the Prior Underwriter $400,000
in cash and effect a reduction in the exercise price per share of
warrants to purchase 274,029 shares of the Company's common stock
that had been issued by the Company to the Prior Underwriter in
various offerings ranging from March 2018 to September 2019 to
$0.495, which is the same exercise price as the Series F Warrants
that the Company issued in its June 2020 public offering. The
warrants being repriced have exercise prices per share ranging from
$187.50 to $2.25 and a weighted average exercise price per share of
$7.32. All other terms of such warrants will remain unchanged.
The terms of engagement for the Prior Underwriter for the Company's
September 2019 offering contained a purported 12-month right of
first refusal in favor of the Prior Underwriter with respect to
future financings. Due to, among other things, difficulties in the
Companys relationship with the Prior Underwriter and the Company's
need to raise additional funds to finance its ongoing operations,
the Company engaged A.G.P./Alliance Global Partners in May 2020 as
underwriter for the Company's June 2020 offering, while also
negotiating the terms of the Settlement Agreement, which was
finalized. In consideration for the cash payment and warrant
pricing, the Prior Underwriter provided the Company with a final,
unconditional release from any further obligations arising out of
or related to the engagement agreements, underwriting agreements
and placement agency agreements which the Company had entered into
with the Prior Underwriter or with respect to any services which
the Prior Underwriter had provided to the Company. Pursuant to the
Settlement Agreement the Company also provided the Prior
Underwriter with a final, unconditional release from any further
obligations arising out of or related to the Prior Agreements and
Services.
About InspireMD Inc.
Headquartered in Tel Aviv, Israel, InspireMD --
http://www.inspiremd.com/-- is a medical device company focusing
on the development and commercialization of its proprietary
MicroNet stent platform technology for the treatment of complex
vascular and coronary disease. A stent is an expandable
"scaffold-like" device, usually constructed of a metallic material,
that is inserted into an artery to expand the inside passage and
improve blood flow. Its MicroNet, a micron mesh sleeve, is wrapped
over a stent to provide embolic protection in stenting procedures.
InspireMD recorded a net loss of $10.04 million for the year ended
Dec. 31, 2019, compared to a net loss of $7.24 million for the year
ended Dec. 31, 2018. As of March 31, 2020, the Company had $7.38
million in total assets, $3.91 million in total liabilities, and
$3.48 million in total equity.
Kesselman & Kesselman, in Tel-Aviv, Israel, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated March 9, 2020, citing that the Company has suffered recurring
losses from operations and cash outflows from operating activities
that raise substantial doubt about its ability to continue as a
going concern.
JOHN FITZGIBBON HOSPITAL: Fitch Cuts Issuer Default Rating to 'B-'
------------------------------------------------------------------
Fitch Ratings has downgraded to 'B-' from 'B' the Issuer Default
Rating and revenue bond ratings on the following bonds issued by
the Saline County Industrial Development Authority, MO on behalf of
John Fitzgibbon Memorial Hospital.
-- $8.2 million health facilities refunding bonds, series 2010.
The bonds have been removed from Rating Watch Negative and assigned
a Negative Outlook.
SECURITY
The bonds are secured by general revenues of the obligated group, a
mortgage on certain system facilities, and a debt service reserve
fund.
ANALYTICAL CONCLUSION
The one-notch downgrade reflects JFMH's overall operational
deterioration. Despite some improvements in performance through six
months of fiscal 2020 (YE April 30), JFMH's unaudited 12-month
fiscal 2020 results show a decline in profitability partly due to
some continued operating challenges (i.e. higher-than-budgeted
self-insurance claims and a high incidence of self-pay patients),
but primarily because of the coronavirus pandemic.
While the State of Missouri did not mandate the hold on elective
procedures, patients in the surrounding community did not visit the
hospital as frequently to avoid potential infection. The JFMH
management team also voluntarily suspended certain screening
services as a precaution to prevent the spread of the virus. As a
result, volumes for certain specialties, such as radiology and
pulmonology, as well as ER visits, dipped to lower levels. The
volume declines are partially reflected in the unaudited 12-month
fiscal 2020 financials, where JFMH's management team notes that the
downturn in volumes was most significant in March and April.
As of June, however, volumes are still gradually recovering to
pre-pandemic levels. Despite this recovery, Fitch believes that
given the hospital's small size, relatively thin balance sheet, and
the fact that it's still in the process of restructuring its
operations, JFMH remains sensitive to volume loss. Lastly, the
diminishment in volumes caused by the pandemic impedes the
hospital's strategic plans to improve margins and regrow its
liquidity.
Through six months of fiscal 2020, unrestricted liquidity was
relatively stable as operations showed some growth. Furthermore,
liquidity has increased from about $6.3 million (as of Oct. 31,
2019) to approximately $10.5 million (as of April 30, 2020), but
that cash growth is inflated by roughly $5.2 million in PPP loans
that JFMH expects to be forgiven by fiscal 2021.
While Fitch agrees that there is a solid likelihood that the PPP
loan proceeds will be forgiven, there is still some risk that they
will have to be repaid, which would significantly deplete JFMH's
liquidity position to roughly $5.4 million, representing a net loss
of roughly $987,000 since Oct. 31, 2019.
The downgrade also reflects both continued limited financial
flexibility and the wide range of operational headwinds that the
hospital faces in the midst of the pandemic. Prior to the pandemic,
JFMH put in place a series of strategic initiatives to improve
operations with the help of a consultant, but is still recovering
from an information technology conversion that caused material
operating disruptions, including revenue cycle management. Although
JFMH has shown some progress by improving collections, the pandemic
presents a new host of challenges for JFMH and has impacted its
ability to stay on track with recovery plans.
For a third consecutive year, JFMH missed its 1.25x debt service
coverage covenant. Unaudited 12-month financials for fiscal 2020
show JFMH's coverage at negative 1.1x. JFMH received a waiver for
the covenant default in fiscal 2019 and brought in a consultant in
fiscal 2019 as required in the bond documents. To avoid an event of
default, bond documents indicate that JFMH has to follow the
consultant's recommendations and maintain coverage of at least 1x
in fiscal 2020. Since JFMH did not stay above 1x in fiscal 2020,
however, it had to request another waiver, which bondholders have
preliminarily agreed to. Management expects the waiver to be
officially granted once their fiscal 2020 audit is completed in
late August 2020.
JFMH management is working closely with its consulting firm and has
identified its own cost-cutting initiatives, such as modifying its
self-insurance plan, closing unprofitable business lines, adding
telehealth to retain physicians, and reducing expensive agency
staff, to improve financial performance. However, the impact of
these efforts will take time to fully realize and Fitch believes
there is risk in JFMH effectively executing these initiatives as
planned. Fitch also believes that given JFMH's payor mix, lack of
population growth and sensitivity to physician turnover given its
small size, the hospital will be challenged in rebuilding its
balance sheet even if profitability improves from current low
levels. JFMH had over $20 million in unrestricted liquidity in
fiscal 2016, highlighting the precipitous decline in cash over the
last few years.
The coronavirus outbreak and related government containment
measures worldwide have created an uncertain environment for the
entire healthcare sector in 2020. Material changes in revenue and
cost profiles have occurred across the sector. Fitch's ratings are
forward-looking in nature, and Fitch will monitor developments in
the sector related to the severity and duration of the virus
outbreak, and will incorporate revised expectations for future
performance and assessment of key risks.
KEY RATING DRIVERS
Revenue Defensibility: 'bb'
Leading Market Position
JFMH's revenue defensibility is primarily supported by a market
position that is nearly double that of its leading competitor. As
of fiscal 2019, the hospital secures a leading market share of 42%
with its nearest competitor at 22%. Payor mix is midrange as
Medicaid and self-pay accounted for 18% of gross revenues as of
April 30, 2020. The service area comprises weaker demographics and
economic factors, which has contributed to an increase in self-pay
and relatively flat volume growth.
Operating Risk: 'b'
Weakened Operating Performance with Limited Growth Potential
The hospital generated operating losses in the last four fiscal
years and through the end of fiscal 2020. Revenues have either
decreased or remained flat due to physician turnover, high costs
from agency labor, expensive insurance claims associated with
self-funded health insurance benefits, and continued challenges
with the electronic accounting (EA)/electronic medical record
implementation process that caused a considerable increase in
accounts receivable. The coronavirus pandemic has also diminished
volumes across multiple service lines and deteriorated management's
ability to deal with ongoing operating challenges. Fitch believes
that given the hospital's weak operating risk profile that existed
prior to the pandemic, JFMH will struggle to improve operating
performance. The new challenges introduced by the pandemic add to
the host of issues management is trying to manage, and accentuate
current ones.
Financial Profile: 'b'
Financial Flexibility Remains Weak
Fitch only utilizes the base case as there is limited financial
flexibility to navigate adverse economic conditions at this time.
Net leverage ratios were negative in fiscal 2017-2020 due to
operational pressures, a challenging EMR implementation process,
and volume declines caused by the pandemic. Unrestricted liquidity,
assuming the PPP loan is forgiven, is higher in the near term, but
due to weak operating cash flows, Fitch's scenario analysis shows
liquidity deteriorating over the next few years.
John Fitzgibbon Memorial Hospital has an ESG Relevance Score of 4
for Financial Transparency due to recent failure to file certain
financial disclosures. As a result, JFMH had to post a Catch-Up
Filing for the period April 30, 2015 - April 30, 2019 on EMMA.
JFMH's lack of timely public financial postings indicates the
hospital faces challenges with internal financial reporting
primarily because of IT conversion disruptions. However, Fitch
believes management has taken steps to address these reporting
issues and is working with a consultant to improve internal systems
to effectively meet disclosure deadlines.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
Thera are no asymmetric risk considerations affecting the rating
determination.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improvements in operational performance resulting in operating
EBITDA and EBITDA margins increasing to levels closer to 4.5%;
-- Cash flow growth that results in a notable increase in
unrestricted liquidity.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Operating metrics and liquidity ratios do not stabilize, but
instead deteriorate to lower levels close to or below fiscal 2020
results, where JFMH posted an operating EBITDA margin of negative
4.0%;
-- Failure to stay above 1x coverage in fiscal 2021 triggering an
event of default;
-- The government does not forgive the PPP loan of roughly $5.2
million, which would meaningfully erode JFMH's liquidity balance;
-- Should economic conditions decline further than expected from
Fitch's current expectations or should a second wave of infections
and additional lockdown periods occur, Fitch would expect to see a
weaker recovery in 2021, which may further pressure the rating.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure 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 three 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.
CREDIT PROFILE
JFMH is a 60-licensed-bed hospital located in Saline County, MO,
approximately 80 miles east of Kansas City. Operations also include
a 99-bed skilled nursing facility and several rural health clinics.
Total revenues in fiscal 2020 were $54.1 million. Fitch reviews and
cites consolidated financial data, and the consolidated entity
currently comprises the obligated group.
REVENUE DEFENSIBILITY
JFMH's payor mix consists of Medicaid and self-pay accounting for
18% of gross revenues as of April 30, 2020. The payor mix reflects
modest service area characteristics. Self-pay has averaged
approximately 7% over the last four fiscal years as Missouri did
not expand Medicaid under the Affordable Care Act. In addition,
JFMH is relatively reliant on governmental payors with Medicare and
Medicaid accounting for 61% of gross revenue, while commercial and
managed care account for 30%. Blue Cross Blue Shield of Kansas City
accounted for 50% of JFMH's commercial and managed care revenue.
From Oct. 1, 2019 to Dec. 31, 2019, JFMH maintained Sole Community
status under the 340(b) programs, but resumed their
disproportionate share hospital status by Jan. 1, 2020. DSH status
is contingent upon the hospital's payor mix having at least 12%
Medicaid based on gross revenues. However, because JFMH's payor mix
fluctuates close to that requirement, qualifying DSH status varies
year-to-year, causing stress on operations and challenges for
financial budgeting.
JFMH maintained a leading inpatient market share position of 42%
within its primary service area in fiscal 2019, which is nearly
double its nearest competitor, but not a relatively significant
portion of the PSA. The hospital retains the area's lower acuity
services while higher acuity cases go to either of the two closest
competitors; Boone Hospital (rated BBB-/Stable) and University of
Missouri Hospital; both are about 60 miles from JFMH.
The PSA for JFMH is within Saline County, MO. The socioeconomic
indicators are generally modest. The PSA's unemployment rate is
in-line with national and state averages, while the population
trends in the county have declined over the last five years. Wealth
levels as measured by median household income are below state and
national averages and poverty rates are somewhat above the averages
as well. Current service area conditions have contributed to an
increase in self-pay patient volumes.
Management Changes
OPERATING RISK
JFMH showed some improved operating results through unaudited six
months of fiscal 2020, but the coronavirus pandemic has reversed
that progress, causing JFMH to post weaker-than-expected
profitability according to 12-month unaudited data. Between April
30, 2019 and Oct. 31, 2019, operating EBITDA margin and EBITDA
margin climbed from (5.2%) to 3.0%, and (4.9%) to 3.3%,
respectively, but as of unaudited fiscal 2020, operating EBITDA was
(4.0%), whereas EBITDA margin was (3.8%). The negative trend is a
result of several factors stemming primarily from the pandemic,
including reduced surgical and ER volumes, and increased costs for
administering coronavirus testing and purchasing personal
protective equipment.
In addition to pandemic-related issues, JFMH has been contending
with operational challenges that existed prior to the outbreak. For
example, in unaudited fiscal 2020, the hospital absorbed several
large health insurance claims that amounted to roughly $600,000
more than budgeted. While management also notes advancement with
labor efficiencies and revenue cycle management in fiscal 2020,
containing agency labor costs and having strong payment collections
are operating improvements management will continue to address.
In fiscal 2020, JFMH suffered an operating loss of approximately
$6.6 million, which amounts to a very weak operating margin of
(12.2%). JFMH has been dealing with losses from operations since
fiscal 2016, which have gotten worse over time, particularly
because of severe disruptions following an EMR conversion that
occurred in fiscal 2017. Since the EMR installation, JFMH has been
trying to rebound for the last few years.
In addition, managing the fairly sizable self-pay population,
containing agency labor costs, maintaining 340(b) status and
improving the revenue cycle are remaining challenges for the
hospital. The management team has put in place plans to address
these hurdles, and has made some progress (i.e. better collections
and rightsizing its workforce), but the pandemic has made strategic
plans difficult to execute, while also introducing new problems.
While CARES Act stimulus, PPP loans, and CMS Advanced Payments have
all been helpful in buoying the hospital's operations and cash
position in the short term, Fitch believes government assistance
will not be enough in the medium-to-long term to combat the
combination of persistent operating issues and business headwinds
from coronavirus.
As of fiscal 2020, JFMH realized roughly $2.3 million of CARES Act
subsidies, $5.2 million in PPP loans, and $5.8 million in CMS
Advanced Payments. Additionally, the hospital will realize another
$8.6 million in CARES Act stimulus in fiscal 2021, and expects to
have the PPP loan completely forgiven. Fitch expects a slow
recovery of surgical and ER volumes to continue for the first few
months of fiscal 2021 and minimal revenue growth for the next few
years. Since the hospital has an April 30 YE, a portion of the
volume losses have already been accounted for in fiscal 2020, but
the gradual climb in volumes will create residual operating
pressure in fiscal 2021. Despite coronavirus challenges, JFMH
historically has also struggled to grow its revenue base due to the
hospital's modest service area and small size, leaving it
susceptible to operating disruptions, like physician turnover.
While Fitch believes cost-cutting efforts, particularly for labor
expenses, as well as improved payment collections, will help
mitigate revenue losses, the lack of cash flow growth will continue
well after government stimulus and loans have been fully
incorporated into financial performance. As weak cash flow
persists, Fitch expects that the balance sheet to deteriorate over
time.
JFMH breached its DSCR covenant of 1.25x for a third consecutive
year in fiscal 2020, falling below 1.0x to negative 1.1x. The
hospital hired a consultant in fiscal 2019 to conduct a revenue
cycle assessment focusing on its EMR implementation and post
implementation strategy to improve collections of outstanding
accounts receivable and to provide JFMH with recommendations for
increasing its DSCR to the required level.
Management reports that AR days are on the downswing due to
stronger revenue cycle management, but DSCR has remained very weak
as expense management is an ongoing challenge and volumes shrink
because of the pandemic. In addition to revenue cycle assessments,
the hospital will change its collection agency vendor hoping to
decrease the amount of its self-pay patients and further decrease
AR days. JFMH expects to receive an official waiver from
bondholders for the DSCR covenant violation once the fiscal 2020
audit is completed, but Fitch will continue to monitor this going
forward.
Fitch expects JFMH's capital spending to remain low over the near
future as no major capital projects are planned and JFMH's main
focus will be to improve operations. As a result of lower spending,
average age of plant is relatively high at 14.9 years as of fiscal
2020. In addition, fiscal 2018-2020 capex averaged approximately
31% of depreciation and included some higher spending for equipment
replacements. The biggest near-term project is to replace a linear
accelerator, but this will be funded primarily by the hospital's
foundation.
Deferring capital spending to address other core operating
challenges could present a credit concern in the long term as
average age of plant remains elevated. However, if liquidity
deteriorates due to poor cash flow, JFMH will not have adequate
financial capacity to make necessary capital investments.
FINANCIAL PROFILE
As of fiscal 2020, JFMH posted weak operating metrics, but
liquidity has shown some improvement due to revenue cycle
enhancements, government stimulus and PPP loans. Despite some
increased balance sheet cushion in the midst of the pandemic, the
hospital's operating profile is still very weak and Fitch expects
the downturn in volumes will continue to hamper profitability in
fiscal 2021 and potentially thereafter.
Fitch's scenario analysis shows operating EBITDA and EBITDA margins
essentially breaking even, averaging negative 0.1% and 0.2% for
fiscal 2021-2025. Fitch expects JFMH to achieve notable cost
reductions in fiscal 2021 due to continued labor cost efficiencies
and staff furloughs as the hospital deals with softer volumes. Even
with significant expense reductions, the hospital will still post
negative operating cash flow in fiscal 2021 due to the gradual
recovery of lost volumes. Year one of the forward look demonstrates
that JFMH will improve to an EBITDA margin of roughly 0.3% and, if
they execute on their planned cost efficiencies spread across the
next few years, will reach EBITDA margins closer to 2.0% - 2.5% in
the coming years, thus stabilizing at lower profitability levels.
Although the hospital achieves positive cash flow and has
sufficient liquidity for its current rating by year three, the
lower margins will lead to balance sheet deterioration, but
liquidity will eventually stabilize by approximately fiscals 2024
and 2025.
For fiscal 2021-2025, Fitch assumes JFMH will maintain a modest
capital expenditure budget as it shifts its focus toward improving
operations and also benefit from Foundation contributions for
equipment upgrades. Fitch believes annual spending will thus
average roughly $1.2 million for the remainder of the forward look,
which is somewhat conservative relative to management's forecast.
By fiscal 2025 of the scenario analysis, cash-to-adjusted debt and
net adjusted debt to adjusted EBITDA equate to 62% and 5.2x,
respectively.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No additional asymmetric additional risk considerations were
applied in this rating determination, given the current rating
revision to 'B-'. JFMH has crossed several asymmetric risk
thresholds, including debt service coverage below what is required
by covenant, a days' cash on hand minimum level per Fitch criteria
of 75 days. In addition, Fitch has experienced qualitative data
issues in terms of timing and detail. Fitch feels that all of these
asymmetric risks are fully incorporated into the current rating
revision to 'B-', at this time.
At April 30, 2020, JFMH had $23.6 million in total debt, which is
almost all fixed-rate. Total debt includes $8.2 million in 2010
bonds, $6.7 million in series 2016 bonds which are privately held
debt, a $1.7 million variable-rate loan (used to purchase a medical
office building), $3.1 million in a fully collateralized note
payable (which is included in unrestricted cash and investments),
and the PPP loan of $5.2 million. JFMH has no swaps and no defined
benefit pension obligation.
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
John Fitzgibbon Memorial Hospital (MO): Financial Transparency: 4
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
KD BELLE TERRE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: KD Belle Terre, L.L.C.
10606 Coursey Boulevard
Suite B
Baton Rouge, LA 70816-4874
Business Description: KD Belle Terre L.L.C. is a single asset
real estate debtor (as defined in 11 U.S.C.
Section 101(51B)), whose principal assets
are located at 150 Belle Terre Boulevard La
Place, LA 70068.
Chapter 11 Petition Date: July 29, 2020
Court: United States Bankruptcy Court
Middle District of Louisiana
Case No.: 20-10537
Debtor's Counsel: Ryan J. Richmond, Esq.
STERNBERG, NACCARI & WHITE, LLC
17732 Highland Road
Suite G-228
Baton Rouge, LA 70810
Tel: (225) 412-3667
E-mail: ryan@snw.law
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael D. Kimble, manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/JpYwHZ
KLX ENERGY: Stockholders Pass 5 Proposals at Annual Meeting
-----------------------------------------------------------
KLX Energy Services Holdings, Inc. held a virtual annual meeting of
stockholders on July 24, 2020, at which the stockholders:
(1) approved the issuance of shares of the Company's common
stock, par value $0.01 per share, to stockholders of
Quintana Energy Services Inc. pursuant to the Agreement
and Plan of Merger, dated as of May 3, 2020, by and among
the Company, QES, Krypton Intermediate LLC, a Delaware
limited liability company and an indirect wholly owned
subsidiary of the Company, and Krypton Merger Sub Inc., a
Delaware corporation and an indirect wholly owned
subsidiary of the Company;
(2) approved an amendment to the amended and restated
certificate of incorporation of the Company to effect a
reverse stock split of Company Common Stock at a ratio
within a range of 1-for-5 and 1-for-10, as determined by
the Company's Board of Directors;
(3) did not approve an amendment to the Company's Long-Term
Incentive Plan to increase the number of shares issuable
thereunder, and to provide for an annual limit on the
awards to non-employee directors;
(4) approved the election of two Class II Directors (Benjamin
A. Hardesty and Stephen M. Ward, Jr.) to the Company's
Board of Directors for a three-year term;
(5) approved an amendment to the Company's Employee Stock
Purchase Plan to increase the number of shares issuable
thereunder;
(6) approved the annual ratification of the appointment of
Deloitte & Touche LLP to serve as the Company's
independent auditor for 2020; and
(7) approved the adjournment of the Annual Meeting to solicit
additional proxies if there are not sufficient votes at
the time of the Annual Meeting to approve any of the Share
Issuance Proposal, the Reverse Stock Split Proposal, the
LTIP Proposal, the Director Election Proposal, the ESPP
Amendment Proposal or the Auditor Proposal, or to ensure
that any supplement or amendment to the Joint Proxy
Statement/Prospectus dated June 29, 2020, as supplemented
is timely provided to Company stockholders.
Although the Adjournment Proposal received sufficient votes to be
approved, no motion to adjourn the Annual Meeting was made because
adjournment of the Annual Meeting was determined not to be
necessary or appropriate.
About KLX Energy
Headquartered in Wellington, Florida, KLX Energy Services Holdings,
Inc. is a provider of completion, intervention and production
services and products to the major onshore oil and gas producing
regions of the United States. The Company offers a range of
differentiated, complementary technical services and related tools
and equipment in challenging environments that provide "mission
critical" solutions for our customers throughout the life cycle of
the well.
As of April 30, 2020, KLX Energy had $378.2 million in total
assets, $63.4 million in total current liabilities, $243.2 million
in long-term debt, $3.5 million in other non-current liabilities,
and $68.1 million in total stockholders' equity.
KLX Energy recorded a net loss of $96.4 million for the year ended
Jan. 31, 2020.
* * *
As reported by the TCR on April 3, 2020, S&P Global Ratings lowered
its issuer credit rating on KLX Energy Services Holdings Inc., a
U.S.-based provider of onshore oilfield services and equipment, to
'CCC+' from 'B-'. "Demand for onshore U.S. oilfield services
collapsed along with oil prices. The recent fall in oil prices has
led many E&P companies to announce material cuts to capital
spending plans, leading us to reduce our demand expectations for
the oilfield services sector. We now expect oilfield services
demand could decline by about 30% in the U.S. in 2020, with further
downside risk if the current weak price environment remains for a
prolonged period," S&P said.
LAKELAND TOURS: Gibson, Dunn Represent Term Lender Group
--------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Gibson, Dunn & Crutcher LLP submitted a verified
statement to disclose that it is representing the Ad Hoc Term
Lender Group in the Chapter 11 cases of Lakeland Tours, LLC, et
al.
In April 2020, the members of the Ad Hoc Term Lender Group retained
Gibson, Dunn & Crutcher LLP to represent them as counsel in
connection with a potential restructuring of the outstanding debt
obligations of the above-captioned debtors and certain of their
subsidiaries and affiliates.
Gibson Dunn represents the members of the Ad Hoc Term Loan Lender
Group in their capacity as: (a) lenders under that certain Credit
Agreement, dated as of December 15, 2017 by and among (i) WS
Holdings Acquisition, Inc., as the initial borrower, (ii) Lakeland
Tours, LLC d/b/a WorldStrides, as the successor borrower, (iii)
Lakeland Finance, LLC, as holdings, (iv) Goldman Sachs Bank USA, as
administrative agent, (v) Goldman Sachs Bank USA and BNP Paribas,
as issuing banks, (vi) the guarantors thereunder, and (vii) the
lenders party thereto; and (b) lenders under the Debtors' proposed
postpetition financing facility.
Gibson Dunn does not represent or purport to represent any other
entities in connection with the Debtors' chapter 11 cases. Gibson
Dunn does not represent the Ad Hoc Term Lender Group as a
"committee" and does not undertake to represent the interests of,
and is not a fiduciary for, any creditor, party in interest, or
other entity that has not signed a retention agreement with Gibson
Dunn. In addition, the Ad Hoc Term Lender Group does not represent
or purport to represent any other entities in connection with the
Debtors' chapter 11 cases.
Upon information and belief formed after due inquiry, Gibson Dunn
does not hold any disclosable economic interests in relation to the
Debtors.
As of July 22, 2020, members of the Ad Hoc Term Lender Group and
their disclosable economic interests are:
Credit Agreement
Claims Held
----------------
ABRY Partners, LLC $18,930,470.77
888 Boylston Street
Suite 1600 Boston, MA 02199
Angelo Gordon $20,461,217.43
245 Park Avenue
New York, NY 10167
Apex Credit Partners LLC $9,786,947.90
520 Madison Avenue
New York, NY 10022
Bain Capital Credit, LP $57,817,073.02
200 Clarendon Street
Boston, MA 02116
Barings LLC $26,766,236.43
300 South Tryon Street
Suite 2500 Charlotte, NC 28202
Benefit Street Partners L.L.C. $82,815,197.25
9 West 57th Street
Suite 4920 New York, NY 10019
First Eagle Alternative Credit, LLC $6,632,796.32
227 West Monroe Street
Suite 3200 Chicago, IL 60606
HPS Investment Partners, LLC $27,053,686.93
40 W 57th Street 7th Floor
New York, NY 10019
Invesco Senior Secured Management, Inc. $38,757,086.51
1166 Avenue of the Americas 26th Floor
New York, NY 10036
Oak Hill Advisors, L.P. $20,676,897.33
1114 Avenue of the Americas 27th Floor
New York, New York 10036
Oaktree Capital Management, L.P. $38,302,235.83
333 South Grand Avenue 28th Floor
Los Angeles, CA, 90071
Octagon Credit Investors LLC $44,680,180.75
250 Park Avenue
New York, NY 10177
Rockford Tower Capital Management, L.L.C. $20,274,036.91
299 Park Avenue
40th Floor
New York, NY 10171
Shenkman Capital Management, Inc. $21,651,100.75
461 Fifth Avenue
22nd Floor New York, NY 10017
Steele Creek Investment Management, LLC $21,700,728.93
201 South College Street Suite 1690
Charlotte, NC 28244
York Capital Management $14,746,527.98
767 Fifth Avenue
17th Floor
New York, NY 10153
Counsel for the Ad Hoc Term Lender Group can be reached at:
Scott J. Greenberg, Esq.
Steven A. Domanowski, Esq.
Jeremy D. Evans, Esq.
GIBSON, DUNN & CRUTCHER LLP
200 Park Ave.
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 817-9349
Email: sgreenberg@gibsondunn.com
sdomanowski@gibsondunn.com
jevans@gibsondunn.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/hHxHGl
About Lakeland Tours
Lakeland Tours, LLC, et al., d/b/a WorldStrides, together with
their non-debtor affiliates, provide full-service educational
travel and experiential learning programs domestically and
internationally for students from K12 to graduate level. The
Companies are one of the U.S.' largest accredited travel company,
providing organized educational travel and other experiential
learning programs for more than 550,000 students in 2019.
Lakeland Tours LLC and certain of its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 20-11647) on July 20, 2020. The petitions were signed by
Kellie Goldstein, chief financial officer.
At the time of the filing, the Debtors estimated consolidated
assets of $1 billion to $10 billion and consolidated liabilities
of
$1 billion to $10 billion.
Nicole L. Greenblatt, P.C., Susan D. Golden, Esq., and Whitney
Fogelberg, Esq. of Kirkland & Ellis LLP is the Debtors' counsel.
KPMG LLP is the Debtors' financial advisor. Houlihan Lokey
Capital, Inc. is the Debtors' investment banker; Bankruptcy
Management Solutions is the notice and claims agent; and Daniel J.
Edelman Holdings Inc is the communications consultant and advisor.
LIP INC: Seeks to Hire Dunham Hildebrand as Legal Counsel
---------------------------------------------------------
LIP, Inc. and its affiliates seek authority from the U.S.
Bankruptcy Court for the Middle District of Tennessee to employ
Dunham Hildebrand, PLLC, as their legal counsel.
The firm will provide the following services:
a. render legal advice with respect to the rights, powers and
duties of Debtors in the management of their property;
b. investigate and, if necessary, institute legal action to
collect and recover assets of Debtors' bankruptcy estates;
c. prepare legal papers; and
d. assist Debtors in the preparation, presentation and
confirmation of their disclosure statements and plans of
reorganization.
Dunham Hildebrand will be paid at hourly rates as follows:
Attorneys $325 to $350
Paralegals $125
Debtor paid Dunham Hildebrand a retainer of $79,653. Of this
amount, $26,156 was earned and paid prior to the petition date,
including $5,151 that was used to pay the Chapter 11 filing fees.
The remaining $53,497 is retained by the firm and held in trust.
Griffin Dunham, Esq., a partner at Dunham Hildebrand, assured the
court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Dunham Hildebrand can be reached at:
Griffin S. Dunham, Esq.
Dunham Hildebrand , PLLC
2416 21st Avenue South, Suite 303
Nashville, TN 37212
Tel: (615) 933-5850
Email: griffin@dhnashville.com
About LIP Inc.
LIP, Inc. and its affiliates are Mellow Mushroom franchisees in
Davidson County and Williamson County, Tenn., owned and operated by
LIP President Mark Clark.
On July 7, 2020, LIP and its affiliates filed their voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. M.D. Tenn. Lead Case No. 20-03270). Debtors first filed
their Chapter 11 cases in September 2019.
At the time of filing, LIP disclosed $211,607 in assets and
$3,923,230 in liabilities.
Griffin S. Dunham, Esq. and R. Alex Payne, Esq., at Dunham
Hildebrand, PLLC, PLLC represent Debtors as legal counsel.
MACY'S INC: Fitch Rates New Second Lien Notes 'BB/RR3'
------------------------------------------------------
Fitch Ratings has assigned a 'BB'/'RR3' rating to Macy's Inc.'s new
$360 million second lien secured notes issued at subsidiary Macy's
Retail Holdings, LLC. The new notes are due between 2024 and 2030
in exchange for existing unsecured debt of the same amount, coupon,
and maturity.
The new notes will be secured by a second-priority lien on the same
collateral securing the $1.3 billion senior secured notes recently
issued under Macy's Inc. The notes will be secured on a
second-priority basis by (i) a pledge from Macy's PropCo Holdings,
LLC, an Ohio limited liability company and a direct, wholly owned
subsidiary of Macy's, Inc., and (ii) a first mortgage/deed of trust
in all real property owned or to be owned by PropCo. The notes will
also be guaranteed on an unsecured basis by MRH.
Fitch has also affirmed Macy's existing ratings, including its
Long-Term Issuer Default Rating at 'BB' and the ratings on its
existing debt at Macy's Inc., Macy's Retail Holdings, LLC, and
Macy's Inventory Funding LLC. The Rating Outlook is Negative. The
ratings and Negative Outlook reflect the significant business
interruption from the coronavirus pandemic and the implications of
a downturn in discretionary spending that Fitch expects could
extend well into 2021, as well as increased leverage from the
recent $1.3 billion secured bond offering in June 2020.
Fitch anticipates a sharp increase in leverage to over 15x in 2020
from 2.9x in 2019, based on EBITDA declining to under $200 million
from $2.2 billion on a sales decline of nearly 30% to $17.6
billion. Fitch recognizes that spring 2020 markdowns and heightened
promotional activity in 2020 could yield downside to Fitch's 2020
EBITDA projections; in this case, Macy's ability to sustain its
'BB' rating would depend on the operating rebound potential through
2022. Adjusted leverage is expected to be in the mid-4x range in
2021, assuming revenue declines of over 15% and EBITDA declines of
approximately 40% from 2019 levels. Leverage could return to under
4x in 2022 assuming a sustained topline recovery. A more protracted
or severe downturn or further rounds of store closures due to
coronavirus concerns could lead to additional rating actions.
Should Fitch's projections come to fruition, Macy's has sufficient
liquidity to manage operations through this downturn. The company
ended 2019 with $685 million of cash. Macy's replaced its $1.5
billion unsecured revolver with a $2.851 billion ABL facility and a
$300 million short-term bridge revolving credit facility secured by
a vast majority of Macy's owned inventory and will support
significant near-term liquidity needs in 2020 and 2021. The new
$1.3 billion secured notes backed by certain real estate assets
also provide additional liquidity, although the new permanent debt
increases Macy's leverage profile longer-term. The company has
approximately $530 million of debt maturing in January 2021 and
$450 million maturing in January 2022, which Fitch expects it could
pay down with cash on hand or ABL borrowings.
KEY RATING DRIVERS
Coronavirus Pandemic: Fitch expects the impact on revenues to the
global consumer discretionary sector from the coronavirus pandemic
to be unprecedented as mandated or proactive temporary closures of
retail stores in "non-essential" categories have severely depressed
sales. Numerous unknowns remain, including the length of the
current outbreak and potential future waves; economic conditions
exiting the pandemic including unemployment and household income
trends, the impact of government support of business and consumers;
and the impact the crisis will have on consumer behavior. Fitch
assumes the pandemic will yield a consumer spending recession that
lasts through much of 2021.
Fitch anticipates significant growth in 2021 against a weak 2020
but expects total 2021 discretionary sales could remain 8%-10%
below 2019 levels. Fitch has forecasted that department store
sales, which have been on a secular decline, will fare worse with
2021 sales projected to decline in the low to mid-teens. Given the
typical timing of a consumer downturn (four to six quarters),
revenue trends could accelerate somewhat exiting 2021, with 2022
projected as a modest growth year.
Assuming this scenario, Fitch expects Macy's revenue to decline
nearly 30% in 2020 with EBITDA declining to under $200 million from
$2.2 billion in 2019. EBITDA is expected to be materially negative
in first half 2020 given extended store closures and significant
markdowns required to clear spring inventory. In 2021, Fitch
expects revenue to decline over 15% and EBITDA to decline
approximately 40% from 2019 levels.
Macy's closed its stores nationwide on March 18, 2020. As the
company continues to monitor the situation case by case, management
developed a staggered store reopening plan with most stores open by
end of June and with sequencing driven by a location's current
external conditions and regulations as well as its expected
profitability and cash flow generation upon reopening.
Actions Taken by Macy's: On March 19, 2020, Macy's drew down on its
entire $1.5 billion credit facility due to expire in May 2024 and
suspended its dividend ($1.51 per share or approximately $470
million annually) beginning the second quarter of 2020. The company
announced an incremental $630 million of annual savings from
restructuring and cost cutting, on top of the $1.5 billion
announced as part of its restructuring plan in February 2020,
reduce inventory receipts especially as it goes into the important
holiday season and significantly pull back on capital expenditures.
Macy's has reduced its 2020 capex to approximately $450 million
from its initially targeted $1 billion.
The company put in place a $2.851 billion ABL facility and a $300
million short-term bridge revolving credit facility secured by
inventory, which will replace the existing $1.5 billion unsecured
credit facility with the same maturity of May 9, 2024 and $1.3
billion senior secured notes collateralized by certain real estate
assets.
Business Model Evolution: While most U.S. brick-and-mortar
retailers are battling competitive incursion from online and
value-oriented players, sales weakness is most pronounced for
mid-tier apparel and accessories retailers. While leading players
such as Macy's, Kohl's and Nordstrom have been able to largely
offset decline in in-store sales through the growth in their
e-commerce businesses, retailers are forced to invest heavily in
omni-channel platforms, which have driven down EBITDA margins and
reduced cash flow.
Successful retailers in the space are investing in the omni-channel
model, rightsizing their store footprint, and have a differentiated
product and service offering, including a well-developed value
message, to draw customers in. Financially and operationally
stronger department stores should be able to at least maintain
their share of the apparel and accessories space over the longer
term. These companies are expected to benefit from store closings
and restructuring activity from cash-constrained specialty apparel
players and department stores, which could further accelerate in a
downturn environment.
Longer-term, Fitch views Macy's as well positioned to gain share in
the mid-tier department store space as it continues to invest in
its omni-channel and other growth initiatives. In recent years, the
company has proactively rationalized its store footprint and
reduced its cost structure, using the expense savings and proceeds
from real estate monetization to invest in its digital business,
store-related growth strategies, its relaunched loyalty program,
and expansion of Bluemercury and Macy's Backstage. The company also
benefits from relationships with key national brand vendors,
especially given more acute challenges elsewhere in the department
store sector.
Intensified Strategy Highlights Secular Challenges: In light of
ongoing issues and lackluster 2019 performance, management
announced a three-year plan, which accelerates its recent strategy
of real estate rationalization, cost structure optimization and
targeted business re-investment. Major elements of the plan include
the closure of 125 (or around 20%) of Macy's lower-volume stores,
primarily in secondary or tertiary markets, to focus management
attention on its best performing assets.
These stores produced approximately $1.4 billion of revenue (less
than 10% of 2019 total), and Fitch assumes minimal EBITDA, and real
estate sales are expected to be a continued source of debt
reduction over the medium term. While Macy's has targeted $700
million in asset sale proceeds over the next three years,
dislocation in discretionary retail sales could have an adverse
impact in the near term, and so Fitch has assumed minimal asset
sale proceeds in its projections through 2022.
Fitch expects the 125 store closures and accelerated closures by
other anchor tenants such as J.C. Penney, which filed for Chapter
11 bankruptcy protection on May 15, 2020, and Nordstrom (which
announced 16 full line store closings) could have major
repercussions for the affected malls, particularly if reduced
traffic and co-tenancy clauses combine to trigger further tenant
departures. This would lead to the accelerated reshaping of the
mall landscape; which Fitch has anticipated given the ongoing
channel shifts to online and off-mall discount formats. Over time,
industry leaders, both in the mall and off-mall channel, that
continue to invest in omni-channel capabilities could benefit, as
unproductive apparel and accessories stores and malls in the U.S.
are rightsized. Benefits of reduced square footage include both
protection of market share and gross margins, given the need to
execute unplanned promotions in apparel and accessories
environments with excess inventory.
Macy's has experimented with new and off-mall formats. The company
had planned to expand its portfolio of standalone off-price
Backstage stores and test a new department store concept called
Market by Macy's, both in off-mall locations in 2020. Some of these
plans have likely been put on hold given the immediate liquidity
needs to manage through the coronavirus pandemic and a reduction in
consumer discretionary spending.
As part of its February analyst day, Macy's shared its target of
$1.5 billion in reductions to its cost structure. The company has
also targeted major savings in areas like supply chain
optimization, store expense reduction and marketing expense
efficiency. Gross margin opportunities total $600 million, while
SG&A opportunities provide the remaining $900 million. The company
also announced New York City will become the company's sole
corporate headquarters in a sweep of campus consolidation and
headcount reduction.
The $1.5 billion in cost reductions is designed to provide Macy's
with reinvestment opportunity that could be additional sources of
liquidity in the near term. Major areas of focus include Macy's
digital business, strengthening customer relationships, in-store
enhancements, and private label expansion. Macy's e-commerce
business was around $6 billion or 25% of sales in 2019, and the
company is targeting continued growth through site upgrades,
improving its mobile app, expanding omni-channel attributes such as
in-store or curbside pickup of online orders, and potential new
features like recommerce and customizable fashion.
While Fitch acknowledges Macy's proactive approach to real estate
portfolio rationalization and efforts to invest in defending share,
the heightened retrenchment of the store base and cost cutting
required to stabilize operations is evidence of the dislocation in
the business and ongoing secular pressure. In addition, a number of
these initiatives could be put on hold to preserve liquidity given
the current situation.
EBITDA Maintains Downward Trajectory: EBITDA in 2019 declined 13%
to $2.2 billion given a 0.8% comparable store sales decline and
margin declining to 8.6% from 9.8% in 2018. Prior to the recent
disruption, Fitch had expected merchandise revenue to decline below
$23 billion over the next two to three years on modest comp
declines and store closures, and for EBITDA to decline under $2.0
billion over the next three years despite cost reduction efforts.
Macy's has paid down over $3 billion in debt over the past four
years since 2016, with adjusted debt/EBITDAR ending at 2.9x in
2019. Macy's financial discipline and adherence to its publicly
stated financial policy (leverage of 2.5x to 2.8x, or 2.4x to 2.7x
on a Fitch-calculated basis) supported the company's credit profile
in the face of operational challenges, although Fitch expects it
could be outside of this range beyond 2022.
DERIVATION SUMMARY
Recent rating downgrades and Outlook revisions for U.S. department
stores reflect the significant business interruption from the
coronavirus and the implications of a downturn in discretionary
spending that Fitch expects could extend well into 2021. Ratings
actions have also resulted from decisions to add permanent debt to
balance sheets to support liquidity. Kohl's, Nordstrom, Macy's and
Dillard's are expected to have sufficient liquidity to manage
operations through this downturn, should Fitch's projections come
to fruition.
Macy's U.S. department store peers include Kohl's and Dillard's,
Inc.
Macy's (BB/Negative): Fitch anticipates a sharp increase in
leverage to over 15x in 2020 from 2.9x in 2019, based on EBITDA
declining to around $200 million from $2.2 billion on a sales
decline of nearly 30% to $17.6 billion. Spring 2020 markdowns and
heightened promotional activity in 2020 could yield downside to
Fitch's 2020 EBITDA projections; in this case, Macy's ability to
sustain its 'BB' rating would depend on the operating rebound
potential through 2022. Leverage could return to under 4x in 2022
assuming a sustained topline recovery.
Macy's ratings continue to reflect its position as the largest
department store chain in the U.S. and Fitch's view of a prolonged
timeframe for the company's operating trajectory to stabilize on a
lower EBITDA base, given weak mall traffic and heightened
competition from alternate channels that include online and
off-price. This follows sustained low single digit comparable store
sales declines, recent EBITDA margins well below expectations and
increased management urgency to address secular challenges, as
evidenced by the announcement of 125 store closures and $1.5
billion in cost reductions to support business reinvestment, prior
to the recent downturn.
Kohl's (BBB-/Negative): Fitch anticipates a sharp increase in
leverage to 8x in 2020 from 2.3x in 2019. This reflects EBITDA
declining to approximately $0.5 billion from $2 billion on a sales
decline of 20% to just under $16 billion, the full drawdown on its
$1.5 billion credit facility and recent $600 million bond issuance.
Adjusted leverage is expected to be high-3x in 2021, assuming
revenue declines of around 15% and EBITDA declines of around 40% in
2021 from 2019 levels and paydown of ABL borrowings. Leverage could
decline to under 3.5x in 2022 assuming a sustained topline
recovery.
Kohl's ratings reflect its position as the second largest
department store in the U.S. and Fitch's expectation that the
company should be able to able to accelerate market share gains
post the discretionary downturn. Kohl's, Nordstrom and Macy's
continue to invest aggressively in their businesses while
maintaining healthy cash flow. These retailers have well developed
omni-channel strategies, with online sales contributing close to
25% of total revenue (over 30% at Nordstrom), which should benefit
their top-line as retail sales continue to move online. Kohl's
off-mall real estate footprint provides some insulation from mall
traffic challenges.
Dillard's (BB/Negative): Fitch anticipates a sharp decline in
EBITDA to under $50 million in 2020 from $392 million in 2019 on a
revenue decline of over 20% to $5 billion. Adjusted leverage is
expected to be over 2x in 2021, assuming sales declines in the
low-teens and EBITDA of approximately $300 million or around 30%
lower compared to 2019 levels.
Dillard's ratings reflect the company's below-industry-average
sales productivity (as measured by sales psf), operating
profitability and geographical concentration relative to its larger
department store peers, Kohl's, Nordstrom and Macy's. The ratings
consider Dillard's strong liquidity and minimal debt maturities,
with adjusted debt/EBITDAR expected to return to the 2x range in
2021.
KEY ASSUMPTIONS
Below are Fitch's projections reflecting the significant business
interruption from COVID-19 and the ramifications for a likely
downturn in discretionary spending extending well into 2021:
-- Fitch projects Macy's 2020 sales could decline nearly 30% to
$17.6 billion and EBITDA could decline to under $200 million from
$2.2 billion, assuming store closures through mid-May and a slow
recovery in customer traffic for the remainder of the year. While
2021 revenue and EBITDA should significantly rebound from depressed
2020 levels, Fitch expects 2021 sales of approximately $20 billion
and EBITDA of around $1.3 billion to be over 15% and approximately
40%, respectively, lower than 2019 levels given Fitch's
expectations of a likely downturn in discretionary spending that
could extend well into late 2021.
-- Beginning 2022, Macy's could resume low-single digit topline
and EBITDA growth.
-- FCF is expected to be approximately negative $1 billion in
2020, largely due to a $2 billion reduction in EBITDA, somewhat
mitigated by lower cash taxes, significantly reduced capex and
potential working capital benefit. FCF in 2021 could approach
positive $400 million as EBITDA improves.
-- Adjusted debt/EBITDAR, which was 2.9x in 2019, could climb to
over 15x in 2020 and decline to the 5.0x range in 2021 on EBITDA
swings. The company has approximately $530 million of debt maturing
in January 2021 and $450 million maturing in January 2022, which
Fitch expects it could pay down with a drawdown on its ABL
facility.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A stabilization case would require Macy's to meet Fitch's
revised projections that include EBITDA increasing to $1.3 billion
in 2021 and adjusted debt/EBITDAR moderating to the mid 4x in 2021
and below 4x in 2022.
-- An upgrade could occur from sustained low single digit
positive comps, EBITDA growth in the low to mid-single digits with
EBITDA margins in the high single digits beginning 2022, combined
with adjusted debt/EBITDAR sustained below 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action could result on a more protracted or
severe downturn and reduced confidence In Macy's ability to return
to top line and profitability growth in 2022 such that adjusted
debt/EBITDAR is sustained above 4x.
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
Macy's ended 2019 with a cash balance of $685 million. On March 20,
2020, the company announced it had fully borrowed on its $1.5
billion revolver to enhance liquidity. Additionally, it announced
that it would suspend its quarterly dividend beginning the second
quarter of 2020. As of May 2, 2020, the company had $1.5 billion in
cash on hand.
The company put in place a $2.851 billion ABL facility and a $300
million short-term bridge revolving facility (maturing in December
2020) in June 2020, secured by inventory that replaced the existing
$1.5 billion unsecured credit facility with the same maturity of
May 9, 2024. Macy's also issued $1.3 billion of senior secured
notes collateralized by certain real estate assets.
In June 2020, MRH commenced an offer to bondholders holding an
aggregate of $466 million of outstanding senior unsecured debt (11%
of total unsecured debt) to tender debt in exchange for new second
lien secured notes to be issued by MRH for the validly tendered
outstanding notes/debentures. The debt under this tender and
exchange offer was under issued under a 1996 indenture and had
restrictions around the negative pledge covenant (including
restrictions on sales leaseback transactions) that could impact
secured debt issuance at MRH. On July 24, 2020, the company
announced the final results of the exchange offers. Of the total
$466 million, $360 million or 77% was tendered and the company
issued $360 million in second lien secured notes due between 2024
and 2030 in exchange for existing unsecured debt of the same
amount, coupon and maturity. The remaining $105 million of old
notes will have the same new covenants.
Of the total real estate and inventory assets Macy's currently
holds through MRH and subsidiaries, Macy's transferred some to new
SPVs to be the security for the ABL and the new secured notes. The
company's liens are limited to 15% of consolidated net tangible
assets, which caps the liens to $1 billion to $1.3 billion, based
on Fitch's calculation. The ABL and notes are issued outside of
MRH, so the limitation on liens does not apply to this transaction.
The CNTA basket could be applied to any future secured debt based
on the assets remaining at MRH and its subsidiaries.
The $2.851 billion ABL facility and $300 million short-term bridge
revolving loan facility at the newly created SPV, Macy's Inventory
Funding LLC, have a first lien priority on inventory. Borrowings
under the ABL facility are subject to a borrowing base based on 80%
of NOLV of inventory minus customary reserves (which would increase
to 90% at the earlier of March 31, 2021 or the date on which a new
appraisal and field exam is delivered. Prior to April 30, 2021,
Macy's must maintain excess availability of 10% and after April 30,
2021, borrowings are subject to a minimum springing fixed charge
coverage of 1x if availability is less than 10%.
The $1.3 billion new senior secured notes issued by Macy's Inc. in
June 2020 are secured on a first-priority basis by a pledge from
PropCo and a first mortgage/deed of trust in all real property
owned or to be owned by PropCo. The notes are also guaranteed on an
unsecured basis by MRH. The notes have first lien priority on
select real estate assets, based on a 2:1 loan value on recent
valuation (based on lit value) conducted by Eastdil. The real
estate collateral for the new secured notes has been transferred to
a newly created Propco. It includes three flagship stores (Union
Square, San Francisco; Brooklyn, New York; and State Street,
Chicago), 35 full-line mall locations (33 Macy's and two
Bloomingdales) in 'A' rated malls, and 10 distribution centers. The
$365 million in new notes issued by MRH in July 2020 will be
secured by a second-priority lien on the same collateral securing
the $1.3 billion senior secured notes.
Macy's owns a considerable amount of real estate, including 408
(312 owned and 96 ground leased) of its 544 Macy's full line stores
and 20 (13 owned and seven ground leased) of its Bloomingdales full
line stores. This amounts to 80% of Macy's full line square footage
and approximately 60% of total square footage. Post this
transaction, Macy's still has 390 unencumbered full line stores
(owned and ground leased) and five distribution centers, which are
at MRH and its subsidiaries.
The company has approximately $530 million of debt maturing in
January 2021 and $450 million maturing in January 2022, which Fitch
expects it could pay down with cash on hand or ABL borrowings.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes. The
$2.851 billion secured ABL facility and the $300 million short-term
bridge revolving credit facility are rated 'BBB-'/'RR1' and the
$1.3 billion senior secured notes are rated 'BB+'/'RR1', indicating
outstanding recovery prospects (91%-100%) and the unsecured notes
are rated 'BB'/'RR4', indicating average (31%-50%) recovery
prospects. The new $360 million second lien secured notes are rated
'BB'/'RR3', indicating above average (51%-70%) recovery prospects.
SUMMARY OF FINANCIAL ADJUSTMENTS
-- EBITDA adjusted to exclude stock-based compensation;
-- Operating lease cost capitalized by 8x to calculate historical
and projected adjusted debt.
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).
Macy's Retail Holdings, LLC
- LT IDR BB; Affirmed
- ST IDR B; Affirmed
- Senior unsecured; LT BB; Affirmed
- Senior Secured 2nd Lien; LT BB; New Rating
- Senior unsecured; ST B; Affirmed
Macy's Inc. LT IDR BB; Affirmed
- Senior secured; LT BB+; Affirmed
Macy's Inventory Funding LLC
- LT IDR BB; Affirmed
- Senior secured; LT BBB-; Affirmed
MACY'S INC: Moody's Affirms Ba3 CFR, Outlook Negative
-----------------------------------------------------
Moody's Investors Service affirmed Macy's, Inc.'s corporate family
rating at Ba3 and its probability of default rating at Ba3-PD. The
senior secured notes at Macy's, Inc. were affirmed at Ba1. The
senior unsecured notes at Macy's, Inc., May Department Stores
Company and Macy's Retail Holdings, Inc. were affirmed at B1. The
Macy's Retail Holdings, Inc. commercial paper rating was affirmed
at NP. The speculative grade liquidity rating remains SGL-2 and the
outlook remains negative.
Moody's also assigned a Ba2 to its new exchanged Macy's Retail
Holdings, Inc. senior secured notes. The newly exchanged notes will
have a second lien on the collateral which secures the Macy's Inc.
senior secured notes, which includes its San Francisco, Chicago,
and Brooklyn locations, 35 mall assets, and 10 distribution
centers. The newly exchanged notes are rated at Ba2, one notch
above its Ba3 CFR, reflecting the benefit of the collateral
provided by the second lien. The exchange notes are also a notch
below the senior secured notes reflecting their junior position to
the senior secured notes which have a first lien.
"The exchange enables Macy's to align certain covenants, including
its permitted liens, more closely with its recently issued senior
secured notes" said Christina Boni, Vice President. "Nonetheless,
it adds more secured debt which puts the remaining senior unsecured
notes in a more junior position", Boni added.
Assignments:
Issuer: Macy's Retail Holdings, Inc.
Senior Secured 2nd Lien Regular Bond/Debenture, Assigned Ba2
(LGD3)
Affirmations:
Issuer: Macy's Retail Holdings, Inc.
Senior Unsecured Commercial Paper, Affirmed NP
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Issuer: Macy's, Inc.
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Secured Regular Bond/Debenture, Affirmed Ba1 (LGD2)
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Issuer: May Department Stores Company (The)
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Outlook Actions:
Issuer: Macy's Retail Holdings, Inc.
Outlook, Remains Negative
Issuer: Macy's, Inc.
Outlook, Remains Negative
Issuer: May Department Stores Company (The)
Outlook, Remains Negative
RATINGS RATIONALE
Macy's Ba3 corporate family rating is supported by governance
considerations which include its suspension of common dividends and
share repurchases given the disruption of COVID-19 and its
historically conservative financial strategy which resulted in $2.6
billion in debt reduction over the past three years. The rating
also reflects its large scale with LTM net sales of roughly $22.1
billion and its market position as the US's largest department
store chain. Although Macy's integrated approach to its stores and
online, enhances its ability to meet the even more rapid change to
the competitive environment post COVID-19, the company was already
contending with reinvigorating its performance as it announced the
resizing of its footprint by closing 125 stores or 25% of its
Macy's branded stores. Secular trends include increased
acceleration of sales moving online, higher price transparency,
faster delivery, as well as intense competition from alternative
channels
Although Macy's also has good liquidity, the company will need to
utilize its new $2.851 billion revolver due 2024 (which also has an
additional $300 million available through December 2020) to fund
cash fall cash shortfalls in 2020. The company's financial strategy
is expected to remain conservative and debt reduction prioritized.
The negative outlook reflects that Macy's operating performance
will remain pressured in the face of COVID-19 and weaker consumer
demand. The outlook also reflects the challenge resizing its
business to meet a lower level of demand as the secular trends
affecting the department store sector prior to COVID-19
accelerate.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade in rating is unlikely given the negative outlook.
Ratings could be upgraded should comparable sales and operating
income to reflect sustained improvement in performance with the
maintenance of a conservative financial strategy. Quantitatively,
ratings could be upgraded should the operating performance be
positioned to return to 80% of 2019 EBITDA.
Ratings could be downgraded should the company experience
significant market share erosion relative to its peers, liquidity
deteriorates for any reason, or its unencumbered assets are
utilized for any purpose other than deleveraging, or cash is
utilized to fund shareholder returns. Quantitatively, ratings could
be downgraded should the operating performance not be positioned to
return to 70% of 2019 EBITDA with no material increase in debt.
Macy's, Inc., with its corporate office in New York, is one of the
nation's premier retailers, LTM net sales of roughly $22.1 billion.
The company operates 775 stores in 43 states, the District of
Columbia, Guam and Puerto Rico under the names of Macy's,
Bloomingdale's, Bloomingdale's Outlet, Macy's Backstage and
Bluemercury, as well as the macys.com, bloomingdales.com and
bluemercury.com websites. Bloomingdale's in Dubai and Kuwait are
operated by Al Tayer Group LLC under license agreements.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
MARY MALONE: $1.9M of Dallas Property to ColMat Approved
--------------------------------------------------------
Judge Harlin DeWayne Hale of the U.S. Bankruptcy Court for the
Northern District of Texas authorized Mary Malone's sale of her
piece of real property in Dallas, Texas known as 5414 Edlin, to
ColMat Holdings, LLC for $1,903,850.
Objections, if any, must be filed within 21 days from the filing of
the Motion.
The sale is free and clear of all liens, interests, claims and
encumbrances, except for the liens that secure 2020 ad valorem
taxes which will remain attached to the Property.
At Closing the Title company will be allowed to distribute funds to
the following parties:
A. all reasonable, customary and usual costs of Closing in the
sale of the Property including, without limitation, title policy
cost, ad valorem real property taxes for years prior to 2020,
attorney and documents fees, and a real estate commission;
B. the amount necessary to pay the lien claim of NewRez Bank;
C. The amount necessary to pay the lien of Chase Bank; and
D. All remaining proceeds will be held in the registry of
Court until further order of the Court.
All entities, governmental or otherwise, will accept and honor the
sale of the Property, in accordance with the Order and the
Bankruptcy Code.
The tax liens that secure all amounts ultimately owed for tax year
2020 ad valorem property taxes will remain attached to the Property
and become the responsibility of the purchaser.
The sale is final and will be effective and enforceable immediately
upon entry and will not be stayed pursuant to Bankruptcy Rule
6004(g).
A copy of the Contract is available at https://tinyurl.com/yd75vuse
from PacerMonitor.com free of charge.
Mary Malone sought Chapter 11 protection (Bankr. N.D. Tex. Case No.
20-30050) on Jan. 6, 2020. The Debtor tapped Eric Liepins, Esq.,
as counsel.
MERITAGE COMPANIES: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Meritage Companies, LLC.
About Meritage Companies
Meritage Companies, LLC, a land developer in Wasilla, Alaska,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Ariz. Case No. 20-07718) on June 30, 2020. At the time of the
filing, Debtor had estimated assets of less than $50,000 and
liabilities of between $10 million and $50 million. Judge Brenda
K. Martin oversees the case. Lamar D. Hawkins, Esq., at Guidant
Law, PLC, is Debtor's legal counsel.
MUSCLEPHARM CORP: COO Troy Bolotnick is No Longer an Employee
-------------------------------------------------------------
Troy Bolotnick, the chief operating officer of MusclePharm
Corporation, ceased to be an employee of the Company on July 22,
2020.
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTCQB:MSLP) -- http://www.musclepharm.com/and
http://www.musclepharmcorp.com/-- develops, manufactures, markets
and distributes branded nutritional supplements. Its portfolio of
recognized brands includes MusclePharm Sport Series, Essential
Series and FitMiss, as well as Natural Series, which was launched
in 2017. These products are available in more than 100 countries
worldwide. MusclePharm is an innovator in the sports nutrition
industry with clinically proven supplements that are developed
through a six-stage research process utilizing the expertise of
leading nutritional scientists, physicians and universities.
MusclePharm incurred a net loss of $10.97 million in 2017 compared
to a net loss of $3.47 million in 2016. As of Sept. 30, 2018, the
Company had $28.35 million in total assets, $45.82 million in total
liabilities, and a total stockholders' deficit of $17.48 million.
As previously disclosed in a Form 8-K filed on March 14, 2019,
during the preparation of its 2018 annual consolidated financial
statements, the Company determined that the systems, processes and
controls related to sales cut off were not sufficient to accurately
record revenue in the correct reporting period. This resulted in
errors in the Company's unaudited condensed consolidated financial
statements for the three and nine months ended Sept. 30, 2018. The
Company is in the process of restating its unaudited condensed
consolidated financial statements for the foregoing periods and
will file an amended Form 10-Q for the quarter ended Sept. 30,
2018. The Company will not be able to file its Form 10-K for the
year ended Dec. 31, 2018 or its Form 10-Q for the period ended
March 31, 2019 until after the filing of the amended Form 10-Q.
NETFLIX INC: S&P Raises ICR to 'BB'; Outlook Stable
---------------------------------------------------
S&P Global Ratings raised its ratings on Netflix, Inc., including
the issuer credit rating, by one notch to 'BB', reflecting
accelerated subscriber growth, improving margins, reduced
cumulative FOCF deficits over the next two years, and the positive
secular trends benefitting the streaming video on demand (SVOD)
industry.
The upgrade reflects S&P's improved view of Netflix's FOCF
trajectory. While Netflix will likely generate positive FOCF in
2020 due to delayed production stemming from the pandemic, it
believes the longer-term impact from the pandemic will be to reduce
the FOCF deficit in 2021 and to accelerate the FOCF break-even
point.
Over-the-top (OTT) adoption is accelerating, driving stronger
operating performance.
Consumers are spending more time at home due to the COVID-19
pandemic, resulting in increased engagement with video content.
This trend benefits the overall streaming video industry, including
Netflix, the industry leader. In the first half of 2020, Netflix
added 26 million subscribers compared with 12 million in the same
period last year. S&P now forecasts over 35 million net subscriber
additions for 2020, which would be the first time it exceeds 30
million.
The accelerated subscriber growth is driving stronger-than
-expected operating performance because Netflix is able to drive
significant operating leverage. S&P now expects adjusted EBITDA
margins to expand by about 400 bps in 2020 largely due to improved
marketing efficiency and no expectation for incremental content
spend due to higher revenue expectations for 2020. While S&P
doesn't expect the same level of operating improvement in 2021 as
subscriber growth slows and content investments ramp back up, the
company's financial metrics will be materially better than the
rating agency had previously forecast.
The improving FOCF trajectory is driving better credit metrics.
S&P's FOCF expectations over the next two years have dramatically
improved due to the stronger-than-expected revenue growth and
margin expansion coupled with lower cash content costs due to
production delays caused by COVID-19. The pandemic has resulted in
an industry-wide halt to production over the past several months
and while some production has resumed, S&P expects it to take a
while before it returns to pre-pandemic levels. As a result, S&P is
reducing its forecast for cash content spending by about $3 billion
in 2020. Even if Netflix is able to return to S&P's previous
expected cash content spending levels of about $19 billion in 2021,
it will still have over $3 billion less FOCF deficits cumulatively
over 2020 and 2021 than the rating agency previously expected. This
will reduce its funding needs over that time, resulting in less
debt, lower leverage, and a faster-than-expected path toward being
FOCF break-even on a sustained basis.
The sustainability of improving credit metrics depends on the
competitive landscape and Netflix's financial discipline.
The pandemic has improved the competitive dynamic for streaming
video services over the past several months; however, as the
effects of the pandemic eventually wane, the SVOD ecosystem will
likely become more competitive. Over the last 6-12 months, several
of the largest media companies in the world have launched SVOD
services (Disney+, HBO Max, Peacock, Apple TV+, etc.). S&P expects
these services to invest heavily in content and marketing to
increase subscribers. As this happens, the competition to attract
and retain subscribers could pressure Netflix to spend more
aggressively on programming or slow Netflix's subscriber growth or
its ability to raise prices, which could curb improving credit
metrics.
Netflix's path toward sustained credit metric improvements depends
more on its level of financial discipline, especially with respect
to content investments, than the pace of overall growth. If Netflix
manages the increasingly competitive streaming video ecosystem
without materially increasing its current programming spending
trajectory, S&P would expect it to sustain its better free cash
flow trajectory even if growth slows. However, if cash programming
spending grows substantially to maintain higher growth rates, it
could reverse the credit metric and FOCF improvement it is
currently experiencing.
"The stable outlook reflects our expectation that Netflix will
continue its solid global operating performance. We expect margins
to expand close to 300 bps per year on average and for leverage to
decline to the low 3x area in 2020 due to our improved FOCF
expectations. We expect the company to generate positive FOCF in
2020 due to production delays caused by COVID-19, but to return to
FOCF deficits in 2021 as it rapidly expands its original
programming content investments," S&P said.
S&P could raise the rating if Netflix maintains a strong leadership
position in the OTT marketplace, generates robust EBITDA growth and
has FOCF deficits of less than $1 billion on a sustained basis.
This would demonstrate the company's operating leveraging from its
expanding subscriber base and its financial discipline on
programming spend, despite the increasing number of SVOD
competitors.
S&P could lower the rating if EBITDA margin expansion slows and
FOCF deficits remain above $2 billion on a sustained basis. This
would likely occur if increased competition from new and existing
OTT platforms dampens subscriber growth or if content and marketing
investments are less effective at retaining subscribers.
NEVER SLIP: S&P Lowers ICR to 'D' on Distressed Restructuring
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
Never Slip Topco Inc. (the parent of slip-resistant footwear
provider, Shoes for Crews [SFC]) to 'D' from 'CCC'. S&P also
lowered its issue-level ratings on the company's first-lien debt to
'D' from 'CCC'.
S&P expects to raise the company's issuer credit rating (most
likely to the 'CCC' category) in the coming days after reevaluating
its business prospects under its amended capital structure.
The downgrade follows SFC's amendments with its full lender group
that allow it defer some cash payments and avoid a covenant
default. The amendment provides for a principal amortization
holiday and partial PIK interest on SFC's first-lien term loan for
two quarters, and full PIK interest on its second-lien term loan
for up to eight quarters. It also extends maturities of the
company's credit facilities to 2024 (30-month extension for its
primary revolver and 18-month extensions for its term loans and
secondary revolver). The amendment also replaces its springing
first-lien leverage covenant with a new minimum liquidity covenant
and minimum EBITDA covenant that commences in the second quarter of
2021. Without the amendment, in S&P's view SFC would have defaulted
on its springing first-lien leverage covenant for the quarter ended
June 30, 2020.
S&P views the amendment as tantamount to a default because lenders
are receiving less than originally promised without adequate
offsetting compensation, given that principal payments are being
deferred and cash interest payments are being replaced with PIK
interest. While lenders will receive higher pricing (including a
slightly higher margin, a LIBOR floor, and an amendment fee), S&P
does not believe this is adequate compensation for the risk
assumed.
As part of the transaction, financial sponsor CCMP Capital Advisors
L.P. and other existing shareholders are also contributing about
$20 million in incremental equity to the business. This should
enable the company to support its ongoing operations and meet its
obligations over the near term. Nevertheless, the company continues
to operate with unsustainable leverage in S&P's view and it has
significant exposure to industries severely impacted by the
pandemic. Liquidity could tighten again if spikes in coronavirus
cases cause consumers to avoid food away from home establishments
or governments tighten restrictions on restaurants, including
possible shutdowns.
NEW VENTURE 777: Unsecureds to Get $10K Pot in Plan
---------------------------------------------------
New Venture 777, LLC, filed a Plan and a Disclosure Statement.
Class 1 Secured Claim of the Business Backer, LLC, in the amount of
$144,867, is impaired. This claimant's secured claim will be paid
over 48 months with 1.5% interest, in equal monthly installments of
$536.94. The first payment will be on the Effective Date, and no
prepayments will apply. This claimant's general unsecured claim
($81,280) will be treated in Class 2.
General unsecured creditors are classified in Class 2, and will
receive a pro rate portion of a $10,000 "pot" to be distributed
over a period of four years, beginning on the Effective Date. This
amount will be paid with no interest, in quarterly installments for
four (4) years, beginning on the Effective date and every three (3)
months thereafter for a total of four years.
Class 3 Equity Interests are impaired. Membership/equity interests
in the debtor will be cancelled and reissued to Maksim Strijak and
Natalia Podlog in equal shares.
Payments and distributions under the Plan will be funded by the
following:
1. The Debtor will fund the Plan through his ordinary business
operations, to the extent available;
2. Funds held in the undersigned’s trust account for
confirmation, to the extent available;
3. New value guaranteed contribution payments personally
guaranteed by Maksim Strijak, Natalia Podlog, and Misha Podlog
under the Plan.
A full-text copy of the Disclosure Statement dated June 17, 2020,
is available at https://tinyurl.com/y9pfuynp from PacerMonitor.com
at no charge.
About New Venture 777
New Venture 777 LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-19719) on July 22,
2019. At the time of the filing, the Debtor was estimated to have
assets of less than $500,000 and liabilities of less than $1
million. The case has been assigned to Judge John K. Olson. The
Debtor is represented by Moffa & Breuer, PLLC.
NNN 400 CAPITOL: Reed Smith Represents Equity Investors
-------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Reed Smith LLP submitted a verified statement to
disclose that it is representing the Equity Investors in the
Chapter 11 cases of NNN 400 Capitol Center 16, LLC, et al.
As of July 29, 2020, each Equity Investor and their disclosable
economic interests are:
Elaine Florence Gordon Grantor
Trust dated 7/1/1994
5150 Shoshone Ave.
Encino, CA 91316-2557
* Approximate % of "Regions Center Tower": 2.66%
* NNN 400 Capitol Center LLC: 1
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Acquired ownership in 2006
Rod T. Fagundes
2130 Laguna Rd.
Santa Rosa, CA 95401-3725
* Approximate % of "Regions Center Tower": 2.8%
* NNN 400 Capitol Center LLC: 3
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Around the end of 2006
Edward & Rose Van Keulen Limited Partnership
13730 Highway 5; Norwood
Young America, MN 55397
* Approximate % of "Regions Center Tower": 3%
* NNN 400 Capitol Center LLC: 4
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: On or about August 8, 2006
Douglas & Katherine Bade Limited Partnership
340 Fifth Ave. N.
S. Saint Paul, MN 55075
* Approximate % of "Regions Center Tower": 1.5%
* NNN 400 Capitol Center LLC: 5
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: August 18, 2006
Carl William Kisner
72300 Rancho Road
Rancho Mirage, CA 92270-4933
* Approximate % of "Regions Center Tower": 2.875%
* NNN 400 Capitol Center LLC: 6
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: August 8, 2006
Joan M. Groff Trust
dated 6/23/2005
2820 Stromboli
Costa Mesa, CA 92626-4712
* Approximate % of "Regions Center Tower": 1.63%
* NNN 400 Capitol Center LLC: 8
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Acquired in 2006 and 2007
Wes Litzinger
495 Locust St.
Laguna Beach, CA 92651-1605
* Approximate % of "Regions Center Tower": 2.63%
* NNN 400 Capitol Center LLC: 9
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: In or around 2006
The Lynch Family Trust
dated September 9, 1999
1705 Ocean Ave.
Santa Monica, CA 90401
* Approximate % of "Regions Center Tower": 5.88%
* NNN 400 Capitol Center LLC: 10
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: 2007
Douglas L. Meyer
5318 Lake Bosworth Lane
Snohomish, WA 98290-7740
* Approximate % of "Regions Center Tower": 3%
* NNN 400 Capitol Center LLC: 13
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: On or about August 17, 2006
Gedeon Family Trust
dated 11/16/1992
1877 Derby Way
Upland, CA 91784-1518
* Approximate % of "Regions Center Tower": 3.5%
* NNN 400 Capitol Center LLC: 14
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Acquired ownership on or
about August 18, 2006
Charles D. Laird and Peggy Laird
Revocable Trust dated 4/21/1999
15951 Calle Rosas Way
Redding, CA 96001
* Approximate % of "Regions Center Tower": 7%
* NNN 400 Capitol Center LLC: 16
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: August 2006
Lorraine Bier
8017 Stillwood Lane
Austin, TX 78757
* Approximate % of "Regions Center Tower": .5%
* NNN 400 Capitol Center LLC: 17
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: July of 2006
Sparlon Hosiery Mills, L.L.C.
9041 NW 10th
Plantation, FL 33322-5010
* Approximate % of "Regions Center Tower": 2.63%
* NNN 400 Capitol Center LLC: 18
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: In or around 2006
Babian Family Trust
dated 10/3/1999
1313 Valley View Road
Apt. #314; Glendale, CA 91202-1765
* Approximate % of "Regions Center Tower": 1.375%
* NNN 400 Capitol Center LLC: 19
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: In or around September 2006
Coraci Family Revocable Trust
dated 12/21/1987
6104 Copper Rose St. NE
Albuquerque, NM 87111-8228
* Approximate % of "Regions Center Tower": 3.13%
* NNN 400 Capitol Center LLC: 20
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Late 2006
Guardian Records Storage, Inc.
P.O. Box 429
Wellsburg, NY 14894-0429
* Approximate % of "Regions Center Tower": 3.294%
* NNN 400 Capitol Center LLC: 21
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: December 2006
Bradford Bodley
19709 27th Ave.
Shoreline, WA 98177-2951
* Approximate % of "Regions Center Tower": 2.44%
* NNN 400 Capitol Center LLC: 22
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: 2006 or 2007
Barbara Hughes
1350 W. Horizon Ridge Pkwy.
Apt. #414; Henderson, NV 89012
* Approximate % of "Regions Center Tower": 2.38%
* NNN 400 Capitol Center LLC: 24
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: September 12, 2006
Z Eidel Realty, LLC
4724 Essex Drive
Doylestown, PA 18902
* Approximate % of "Regions Center Tower": 3.5%
* NNN 400 Capitol Center LLC: 26
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: In or about 2006
GM Limited Investments, L.L.C.
45635 Big Canyon St.
Indio, CA 92201
* Approximate % of "Regions Center Tower": 3%
* NNN 400 Capitol Center LLC: 27
Frances Taheri GST Exempt Trust FBO David Taheri and
Frances Taheri GST Exempt Trust FBO Linda Woodworth
14874 Kernite Court
Nevada City, CA 95959
* Approximate % of "Regions Center Tower": 6%
* NNN 400 Capitol Center LLC: 28
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: January 2019
The Lynch Family Trust dated September 9, 1999
1705 Ocean Ave.
Santa Monica, CA 90401
* Approximate % of "Regions Center Tower": 0.9%
* NNN 400 Capitol Center LLC: 35
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: 2017
Edgebrook Limited Partnership
30 Rushingwind
Irvine, CA 92614
* Approximate % of "Regions Center Tower": 2.97%
* NNN 400 Capitol Center LLC: 36
* Approximate Date or Year
When Equity Interest Was
Obtained in the Applicable Debtor: Late 2006
Reed Smith represents the Equity Investors solely with respect to
the (i) Motion of the United States Trustee to Revoke or Terminate
Retention of Rubin and Rubin, P.A. and Disallow Fees and Expenses
of Rubin and Rubin, P.A. and Seth Denison; (ii) Lender Defendants'
Joinder in Support of the Motion of the United States Trustee to
Revoke or Terminate Retention of Rubin and Rubin, P.A. and Disallow
Fees and Expenses of Rubin and Rubin, P.A. and Seth Denison, and
(iii) Somera Road Inc.'s Notice of Joinder in the Motion of the
United States Trustee to Revoke or Terminate Retention of Rubin and
Rubin, P.A. and Disallow Fees and Expenses of Rubin and Rubin, P.A.
and Seth Denison in these Cases.
Counsel for the Equity Investors can be reached at:
Kurt F. Gwynne, Esq.
REED SMITH LLP
1201 N. Market Street
Suite 1500
Wilmington, DE 19801
Tel: 302.778.7550
Fax: 302.778.7575
Email: kgwynne@reedsmith.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/mD5LqG
About NNN 400 Capitol Center 16
NNN 400 Capitol Center 16, LLC and 23 of its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 16-12728) on Dec. 9, 2016. The petitions were
signed
by Charles D. Laird & Peggy Laird on behalf of Charles D. Laird
and
Peggy Laird Revocable Trust dated April 21, 1999, member.
On June 5, 2017, NNN 400 Capitol Center, LLC and seven other
affiliates of NNN 400 Capitol Center 16 filed Chapter 11
petitions.
The cases are jointly administered under Case No. 16-12728.
The cases are assigned to Judge Kevin Gross.
Whiteford, Taylor & Preston, LLC, is the Debtors' bankruptcy
counsel while Rubin and Rubin, P.A. serves as their special
counsel.
At the time of filing, NNN 400 Capitol Center 16, NNN 400 Capitol
Center 10 and NNN 400 Capitol Center 11 estimated both assets and
liabilities at $10 million to $50 million each.
OFFSHORE MARINE: Court Sets Hearing for Plan & Disclosures
----------------------------------------------------------
Offshore Marine Contractors, Inc., filed with the U.S. Bankruptcy
Court for the Eastern District of Louisiana an ex parte motion for
conditional approval of Disclosure Statement.
On June 19, 2020, Judge Jerry A. Brown granted the motion and
ordered that:
* The proposed disclosure statement filed by the Debtor is
conditionally approved.
* The balloting and voting solicitation procedures proposed by
the Debtor are finally approved.
* July 30, 2020, at 10:30 a.m. to be heard telephonically or by
video is the combined hearing on the final approval of the
Debtor’s proposed disclosure statement and the confirmation of
the Debtor’s proposed plan.
* July 20, 2020, is the deadline to file objections to the
proposed plan and disclosure statement.
* July 20, 2020, is the deadline to file all ballots of those
entitled to vote on the acceptance of the proposed plan.
A copy of the order dated June 19, 2020, is available at
https://tinyurl.com/y7zyod9o from PacerMonitor.com at no charge.
About Offshore Marine Contractors
Offshore Marine Contractors -- http://offshoremarine.net/-- is a
family-owned and operated company that provides offshore,
self-propelled and self-elevating liftboats for the petroleum
exploration and transportation industries.
Offshore Marine Contractors sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. La. Case No. 19-13253) on Dec. 4,
2019. In the petition signed by its president, Raimy Eymard, the
Debtor disclosed $32,345,576 in assets and $69,280,946 in debt.
Judge Meredith S. Grabill oversees the case.
The Debtor tapped Stewart Robbins & Brown, LLC as legal counsel;
Bohman Morse, LLC as special maritime counsel; Baldwin Haspel Burke
& Mayer, LLC as special tax counsel; Pepperman, Emboulas, Schwartz,
& Todaro, LLC as accountant; and Stout Risius Ross, LLC as
financial advisor.
OFFSHORE MARINE: Unsecureds may Recover 0.0025% of Claims
---------------------------------------------------------
Offshore Marine Contractors, Inc., filed a restructuring plan.
According to the explanatory Disclosure Statement, the
restructuring proposed by the Debtor will provide substantial
benefits to the Debtor and its stakeholders, including, without
limitation, the following:
* The restructuring will leave the Debtor's business intact and
substantially de-levered, providing for the reduction of a
substantial amount of debt and the issuance of the New Equity
Interests to those entities making a Secured Creditor
Contribution.
* The Debtor's significantly improved balance sheet will enable
the Reorganized Debtor to maintain operations on a profitable
basis.
* The Restructuring will also provide the basis moving forward
for the Reorganized Debtor to continue to do business with many
current vendors and suppliers providing economic contribution to
the vendor and supplier community.
* The Restructuring will provide recovery to certain classes of
claims that could expect no or limited recovery if the Debtor were
liquidated under chapter 7 of the Bankruptcy Code, or if the
Holders of Secured Claims were to exercise foreclosure rights.
Class 1 Bluehenge Secured Claim is impaired. Bluehenge asserts a
claim of $41,187,477 of which $23,989,000 will be allowed as a
secured claim. The creditor may recover approximately [100]% of
its allowed secured claim. Bluehenge will retain its rights in, to
and upon the cash collateral constituting the Lucas Proceeds in the
amount of $2,559,000 and the Debtor shall make monthly payments to
Bluehenge of interest at the rate of 3.25% per annum on the
outstanding balance until remitted to Bluehenge or used by the
Debtor. Of the remaining $21,430,000 of the total allowed Secured
Claim, the Debtor will pay as a debt obligation the sum of
$17,700,000 and the remaining $3,737,000 will constitute a secured
creditor contribution and be entitled to a pro rata share of the
new Equity interests. The remaining $17,198,477 of claims shall be
treated as a Class 7 General Unsecured Claim.
Class 2 Caterpillar Secured Claim L/B Raimy Eymard is impaired.
Caterpillar has claims of $7,821,729 of which $5,450,000 will be
allowed as a Secured Claim under the sale treatment. Creditor may
recover approximately [100]% of Allowed Secured Claim. The Plan
notes of alternative treatments:
* Sale Treatment. Caterpillar’s collateral shall be sold for
the sum of $5,450,000 and Caterpillar shall receive the proceeds of
the sale as its Allowed Secured Claim.
* Retention Treatment: In the absence of the above-described
sale, Caterpillar's collateral shall be valued by the Court which
will determine the amount of its allowed secured claim. The
allowed secured claim will bear interest at the rate of Wall Street
Journal Prime plus 2 and paid in equal monthly installments based
upon a 20-year amortization schedule with a maturity at 7 years.
Class 3 MRB Term Loans totaling $3,335,264 may recover
approximately [100]% of their allowed secured claims. MRB will
maintain its Liens in to and upon the Collateral securing the
allowed Class 3 Claims in the same rank and priority as existed
prepetition. On the Effective Date, the Allowed Class 3 claims
will be treated as fully secured and MRB shall maintain its Liens
in to and upon the MRB Collateral securing the Allowed Class 3
Claims in the same rank and priority as existed prepetition, and
the documentation surrounding the Allowed Class 3 Claims will not
be modified, save and except as provided.
Class 4 United Community Bank Secured Claim estimated at $779,010
is impaired. Creditor may recover approximately [100]% of Allowed
Secured Claim. The Debtor will pay the Allowed Class 4 Claim in
equal monthly payments based upon a 20-year amortization schedule,
with maturity of such obligation fixed at five years from the
Effective Date. The Allowed Class 4 Claim will bear interest at
the rate of 6.75% per annum as provided in the note forming the
basis for the Allowed Class 4 Claim.
Class 6 Trade Claims Unsecured Claims arising from Ordinary Course
of Business in excess of $50,000 are impaired. Class 6, projected
to total $265,707, may recover approximately [100]% of Allowed
Secured Claim. Reorganized Debtor will pay 100% of the principal
amount, without interest, of the Allowed Class 6 Claims in 8 equal
quarterly installments.
Class 7 Unsecured Claims are estimated to total $40,284,240. The
creditors may recover approximately [.0025]%. Holders will be
entitled to receive a Pro Rata share of the Class 7 Fund.
Class 8 Bourg Subordinated Claim totaling $9,030,671 is impaired.
The claim holder shall receive no property under the Plan, unless
if treated as a Class 7 Claim in the event of nonsubordination.
Class 9 Equity Interests will be cancelled, extinguished;
discharged.
The Reorganized Debtor shall fund Cash Plan Distributions with Cash
on hand, which may include Cash from operations, Cash borrowings,
the MRB Line of Credit, the Shareholder Repayment, and/or Used
Lucas Proceeds authorized by Bluehenge to be used by the Debtor, if
any.
A full-text copy of the Disclosure Statement dated June 17, 2020,
is available at https://tinyurl.com/y8muc33z from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Paul Douglas Stewart, Jr.
Brandon A. Brown
STEWART ROBBINS BROWN & ALTAZAN, LLC
One American Place
Post Office Box 2348
301 Main Street, Suite 1640
Baton Rouge, LA 70821-2348
Telephone: (225) 231-9998
About Offshore Marine Contractors
Offshore Marine Contractors -- http://offshoremarine.net/-- is a
family-owned and operated company that provides offshore,
self-propelled and self-elevating liftboats for the petroleum
exploration and transportation industries.
Offshore Marine Contractors sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. La. Case No. 19-13253) on Dec. 4,
2019. In the petition signed by its president, Raimy Eymard, the
Debtor disclosed $32,345,576 in assets and $69,280,946 in debt.
Judge Meredith S. Grabill oversees the case.
The Debtor tapped Stewart Robbins & Brown, LLC as legal counsel;
Bohman Morse, LLC as special maritime counsel; Baldwin Haspel Burke
& Mayer, LLC as special tax counsel; Pepperman, Emboulas, Schwartz,
& Todaro, LLC as accountant; and Stout Risius Ross, LLC as
financial advisor.
PAPER STORE: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------
The U.S. Trustee for Region 1 appointed a committee to represent
unsecured creditors in the Chapter 11 cases of The Paper Store, LLC
and TPS Holdings, LLC.
The committee members are:
1. Hallmark Marketing Company, LLC
c/o Phyllis G. Leach
2501 McGee Street
Kansas City, MO 64108
Tel: 816-602-2095
2. Vera Bradley Designs, Inc.
c/o Mark Dely
1420 Stonebridge Road
Roanoke, IN 46783
Tel: 260-207-5362
3. Gilli Clothing
c/o Claudio Suh
1100 S. San Pedro St. Suite # C-7
Los Angeles, CA 90015
Tel: 213-744-9808
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About The Paper Store
The Paper Store, LLC is a family-owned and family-operated
specialty gift retailer, with 86 stores in seven states and an
e-commerce business. The retail locations feature merchandise
comprising fashion, accessories, spa, home decor, stationery,
jewelry, sports and more from well-regarded brands such as Vera
Bradley, Lilly Pulitzer, Godiva, 47 Brands, Alex and Ani, Life is
Good, Vineyard Vines, and Sugarfina. Visit
http://www.thepaperstore.comfor more information.
Paper Store and its affiliate TPS Holdings, LLC sought Chapter 11
protection (Bankr. D. Mass. Case No. 20-40743) on July 14, 2020.
In the petition signed by CRO Don Van der Wiel, Paper Store was
estimated to have assets of $10 million to $50 million and debt of
$50 million to $100 million.
Judge Christopher J. Panos oversees the cases.
Debtors have tapped Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. as their legal counsel, G2 Capital Advisors as
restructuring advisor, SSG Capital Advisors as investment banker,
Verdolno & Lowet, P.C. as accountant, and Donlin, Recano & Co.,
Inc. as claims and noticing agent.
PARKING MANAGEMENT: Baker Donelson Represents Square 407, Landlords
-------------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Baker Donelson Bearman Caldwell & Berkowitz, PC
submitted a verified statement that it is representing Square 407
Limited Partnership and 17 M Associates in the Chapter 11 cases of
Parking Management, Inc.
Baker Donelson represents Truist Bank in connection with a
prepetition unsecured loan made to the debtor as more fully
described in Proof of Claim No. 1. Truist Bank has an address of
303 Peachtree Street, NE, 10th Floor, Atlanta, Georgia 30308.
Baker Donelson represents Square 407 Limited Partnership in
connection with a parking lease in Washington, D.C. as more fully
described in Proof of Claim No. 35. Square 407 Limited Partnership
has an address of 2200 Pennsylvania Avenue NW, Suite 200W,
Washington, DC, 20037.
Baker Donelson represents 17 M Associates, a District of Columbia
limited partnership, in connection with a parking lease in
Washington, D.C., as more fully described in Proof of Claim No. 33.
17 M Associates has an address of 2200 Pennsylvania Avenue NW,
Suite 200W, Washington, DC, 20037.
Baker Donelson represents DeSales Venture LLC in connection with
leases for office space and parking at the building located at 1725
DeSales Street NW, Washington, DC, 20036, as more fully described
in Proofs of Claim No. 53 and 54. DeSales Venture LLC has an
address of c/o Property Manager - JBG Smith, 1700 K Street NW,
Suite 100, Washington, DC 20006. Baker Donelson represents DeSales
Venture LLC in this case only with respect to the two leases for
nonresidential real property at 1725 DeSales Street NW, and not
with respect to any other matter.
Baker Donelson does not hold claims or interests against the
debtor.
Nothing in this Statement shall be construed as (i) a limitation
upon, or waiver of, any right of Truist or any of the Landlords,
including without limitation their respective rights to assert or
amend claims or interests in accordance with applicable law and any
orders entered in these cases, or (ii) an admission of any fact.
Baker Donelson reserves the right to amend this Statement at any
time, for any reason.
Counsel for Square 407 Limited Partnership and 17 M Associates can
be reached at:
J. David Folds, Esq.
Baker Donelson Bearman Caldwell & Berkowitz, PC
901 K Street NW, Suite 900
Washington, DC 20001
Telephone: 202-508-3441
Facsimile: 202-220-2241
E-mail: dfolds@bakerdonelson.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/Q2rsrO
About Parking Management
Parking Management, Inc. -- https://www.pmi-parking.com/ -- is a
parking operator in Washington, DC. It operates 88 leased or
managed properties throughout the Washington, DC and Baltimore
metropolitan areas, specializing in complex mixed-use properties
and has experience in all levels of commercial and residential
parking operations.
Parking Management sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Md. Case No. 20-15026) on May 7, 2020.
At the time of the filing, Debtor disclosed assets of between $1
million and $10 million and liabilities of the same range. Judge
Thomas J. Catliota oversees the case. Shulman, Rogers, Gandal,
Pordy & Ecker, PA, is the Debtor's counsel. JW Infinity
Consulting, LLC, is the Debtor's financial advisor.
PERMIAN HOLDCO 1: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------------
The U.S. Trustee for Region 3 on July 28, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Permian Holdco 1, Inc.
The committee members are:
1. Prosperity Bank
Attn: Joel Mattson, Esq.
1330 S. Harvard Ave.
Tulsa, OK 74112
Phone: 918-748-4257
Fax: 918-743-6256
Email: Joel.mattson@prosperitybankusa.com
2. Glen's Welding
Attn: Terry Malovets
415 S. 1st Street
Temple, TX 76504
Phone: 254-627-9031
Fax: 254-742-1606
Email: Malovets5@gmail.com
3. Sherwin Williams
Attn: Amanda Rico
2929 N. Central Expy., #220
Richardson, TX 75080
Phone: 214-907-3152
Fax: 216-774-1944
Email: Amanda.rico@sherwin.com
4. Ade-Wifco Steel Products, Inc.
Attn: LL Sanborn
P.O. Box 1325
Hutchinson, KS 67502
Phone: 620-543-2827 Ext. 120
Email: Les@wifcosp.com
5. Willbanks Metals
Attn: Eric Letz
1155 NE 28th
Fort Worth, TX 76106
Phone: 817-625-6161
Fax: 817-625-8487
Email: Eric.letz@willbanksmetals.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Permian Holdco
Permian Holdco 1, Inc. and its affiliates are manufacturers of
above-ground storage tanks and processing equipment for the oil
and natural gas exploration and production industry.
On July 19, 2020, Permian Holdco 1 and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-11822). The petitions were signed by Chris Maier,
chief restructuring officer. Hon. Mary F. Walrath presides over
the cases. At the time of the filing, Debtors listed under $50,000
in both assets and liabilities.
Debtors have tapped Young Conaway Stargatt & Taylor, LLP as their
legal counsel, Seaport Gordian Energy, LLC as investment banker,
and Epiq Corporate Restructuring, LLC as notice and claims agent.
PROVIDENT COMMONWEALTH: S&P Cuts 2016A Revenue Bond Rating to BB+
-----------------------------------------------------------------
S&P Global Ratings lowered its rating on Massachusetts Development
Finance Agency's series 2016A student housing revenue bonds, issued
for Provident Commonwealth Educational Resources Inc. (PCER) to
'BB+' from 'BBB-'. Provident is a not-for-profit corporation
organized for the sole purpose of constructing and operating a
housing facility on the University of Massachusetts Boston (UMass
Boston) campus, which is part of the University of Massachusetts
System (UMass System). The outlook is negative.
"The downgrade and negative outlook reflects operating pressure
that PCER faces due to our view of the loss of rental revenue as
students vacated the residence facility following the onset of the
COVID-19 pandemic and as UMass Boston transitioned to remote
learning," said S&P Global Ratings analyst Jessica Goldman. "In
addition, headcount enrollment has been declining year over year
with levels now below fall 2013."
The negative outlook reflects S&P's view that it is highly likely
the project will continue to generate weaker rental revenues and
the possibility that that the project will need to draw on debt
service reserve funds, with no clear ability to replenish these
funds, given the project was originally structured with a high 79%
academic year break-even occupancy, and no extraordinary support
from University of Massachusetts Building Authority or UMass Boston
to date.
PURDUE PHARMA: ASK LLP Updates on Individual Victims
----------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of ASK LLP submitted an amended verified statement to
disclose an updated list of Ad Hoc Group of Individual Victims that
it is representing in the Chapter 11 cases of Purdue Pharma L.P.
The Ad Hoc Group retained the law firm of White & Case LLP as
co-counsel. White & Case filed its Notice of Appearance on April
17, 2020. [Dkt. No. 1058]
The Ad Hoc Group has also expanded to include six new members:
Nicholas Boatman, Chad Sabora, Sharon Murillo, Julie Strickler,
Claire Rudy Foster, and Tiffinee Scott. The reconstituted Ad Hoc
Group has thirteen members. The current composition of the Ad Hoc
Group is as follows:
* Kathleen Scarpone. Kay's son, Sgt. Joseph Scarpone, served in the
United States Marine Corps from 2007 to 2011 and had a one-year
tour in Afghanistan during that time. A combination of PTSD and
opioid use led to his death in 2015. Kay serves on the Board of
Directors of Team Sharing, Inc., a national nonprofit organization
dedicated to parents who have lost a child to Substance Abuse
Disorder. Team Sharing provides grief services, advocacy, community
activism and a benevolence program for those in need of burial
services. Team Sharing was instrumental in obtaining the
proclamation of August 31 as National Overdose Awareness Day. Kay
has traveled to Washington DC to meet with the Interim Director of
the Drug Enforcement Administration to share her concerns with
respect to furthering education regarding substance abuse for our
youth.
* Robert F. List, Esq. Robert F. List, Esq. served as the 24th
Governor of Nevada from 1979 to 1983. Prior to being elected
Governor, he served for eight years as the elected Attorney General
of Nevada, following his service as the District Attorney of Carson
City. He was Chairman of both the Western Governors’ Association
and the Conference of Western Attorneys General and served as
President of the Nevada District Attorneys Association. Governor
List is Of Counsel at Jolley Urga Woodbury & Holthus, where he
focuses on public policy and government relations for corporate and
business clients on the federal, state, and local levels. He has
served as a Presidential or Cabinet Member appointee to boards and
commissions under six U.S. Presidents. Governor List is an advocate
for victims of the opioid epidemic. He serves as an advisory board
member of The Recovery Advocacy Project and he is also affiliated
with the Nevada Recovery PAC, The Foundation for Recovery, and Hope
for Prisoners. In 2019, he was designated as a Distinguished
Nevadan by the Board of Regents of the University of Nevada, the
University System's highest honor. Governor List received his B.S.
degree from Utah State University and his Juris Doctor degree from
the University of California, Hastings College of the Law. Governor
List serves as an agent for individual victims of Purdue who have
elected to remain anonymous. Anonymity is widely recognized as an
important component of the right to privacy of those in addiction.
* Jill Cichowicz. Jill lost her twin brother, Scott, to an
accidental overdose in February 2017. Scott was prescribed
OxyContin in connection with a back injury he sustained in 2014 and
he became addicted immediately. Scott entered treatment, but he
relapsed after he was released. Jill founded The Scott Zebrowski
Scholarship Fund at the McShin Foundation to help those suffering
from SUD to receive services that they could not afford otherwise.
The Fund recently won the Richmond Times Dispatch Best Charity of
2019. The Fund hosts monthly events to give back to the community,
such as serving dinner to individuals in recovery at The Healing
Place, volunteering at the Chesterfield Food Bank, mentoring the
women in the HARP Program at the Chesterfield County Jail, and
collecting items for those in recovery. Jill also educates others
through the website www.anightforscott.com.
* Diana Yoder. Dede was a single mom who raised her only child,
Chris, in suburban New York. Chris loved extreme sports such as
snowboarding, skateboarding, downhill mountain biking and more. As
a result of such sports, Chris had several knee injuries which led
to surgeries when he was 14 years old, followed by an emergency
appendectomy when he was 15. His doctors prescribed opioid
painkillers after each operation and Chris became addicted.
Eventually, Chris attempted rehab, enrolling in 8 different
programs over 4 years. In 2017, however, after a year of being in
recovery, Chris relapsed and died. He was 21 years old. Dede
received the call that her son had passed away while in Paris on
business. It took her 9 hours to fly home to arrange the funeral
for her only child. Dede is currently an Ambassador for
Shatterproof, a national nonprofit organization dedicated to ending
the devastation that opioid addiction causes families. Shatterproof
works on policy change, new federal legislation, programs that
educate and empower families, workplaces, and the general public,
evidence-based standards of care for addiction, and initiatives to
drive payment reform and accountability.
* Garrett Hade. Garrett was prescribed OxyContin at the age of 18
for minor injuries sustained while skateboarding. He became
addicted to these pills and his addiction impacted his life for
more than 10 years. Garrett found recovery in 2015. After losing
multiple friends to drug overdoses around that same time, Garrett
became involved in recovery advocacy. He is a founding member of
The Voices Project, a non-profit organization dedicated to
shattering the stigma associated with addiction and empowering
others to share their own stories. Garrett has spent the last few
years traveling around the country visiting communities affected by
the disease of addiction. He visits prisons, jails, hospitals and
treatment centers, and he advocates for better access to care,
ethical standards in the treatment industry, criminal justice
reform, and access to life saving medications. Garrett is also
dedicated to advocating and advancing policy reforms for the
treatment of SUD, helping to pass both state and federal laws that
protect people who have suffered from opiate addiction. The Voices
Project reaches over one million people per week.
* Will Allphin. Will worked in the aerospace industry as a
Process/MFG/Quality Engineer and Audit liaison for several
aerospace manufacturers. He has worked with the United States
Department of Defense, Boeing, Lockheed Martin and Learjet, among
others, to ensure procedural/specification compliance. Will was
prescribed OxyContin in connection with back injuries he sustained.
What began as dependence, ended with the loss of jobs, family and
nearly the loss of his life through overdose. There was a point
when Will was spending upwards of $800 a day on his OxyContin
addiction. Fortunately, Will has sustained recovery. He changed the
focus of his life's work towards the SUD and recovery fields based
on his desire to give back after having lost more than 20 friends
in a period of a just a few years to the opioid crisis. Will is
currently the Director of Programs for the Foundation for Recovery
in Las Vegas, NV. The Foundation’s mission is to foster a safe
and supportive environment for peer-centered education, services
and engagement. Its programs and partnerships open pathways to
recovery by removing social barriers and creating opportunities for
those seeking and maintaining long-term recovery.
* Lindsey Arrington. Lindsey was first introduced to OxyContin as a
minor and she became addicted. After enrolling in numerous
treatment facilities, having her son taken away from her by child
protective services, and almost losing her life, she was able to
recover and she has been in recovery for eight years. In 2013,
Lindsey founded Hope Soldiers, a non-profit organization based in
Everett, Washington, whose mission is to help individuals and
families affected by the OxyContin epidemic. Hope Soldiers' efforts
have been featured in the national media and on MTV and were
formally recognized by the White House.
* Nicholas Boatman. Nick is the President/Chairman of the Board at
Discovery Institute in Marlboro, NJ. Nick is a person in recovery
and has been with Discovery since 2017. With Nick's leadership,
Discovery has implemented innovative evidence-based clinical
programming, expanded community outreach to a national level,
launched several scholarship campaigns, and made access to
treatment more accessible to the surrounding community. Nick is
also the co-founder and Chief Marketing Officer of Sana Lake
Recovery based in St. Louis, MO. Nick is always striving to
maintain engaged and compassionate team members who will ensure
each client has the greatest opportunity at achieving success in
long term recovery.
* Sharon R. Murillo. Sharon is the Chief Executive Officer and
President of Serve You RX, a full-service pharmacy solutions
provider based in Milwaukee, Wisconsin that specializes in pharmacy
benefit management, mail order services, and specialty medication
management. Serve You Rx is a major sponsor of Mobilize Recovery, a
project of the Facebook Community Leadership Program, provided in
partnership with The Voices Project. Mobilize Recovery aims to
equip a network of emerging leaders from across the country with
tools, training, and a plan of action that will launch nationwide
to inspire recovery and end the preventable overdose crisis in
America. Mobilize Recovery's network of future changemakers
includes representation from each state and is comprised of more
than 150 individuals who were
selected from nearly 1,000 applicants.
* Chad Sabora. Chad is a person in recovery from substance use
disorder and due to his unique experience as a prosecutor and
former addict, he left the legal field to pursue drug policy reform
advocacy. Chad is the Co-Founder/Chief Development Officer for the
Sana Lake Recovery Center, Co-Founder/Executive Director of the
Missouri Network for Opiate Reform and Recovery, Co-Founder of Mo
Safe Project, Co- Founder/Board President of Rebel Recovery, on the
Board of Directors of the Discovery Institute for Addictive
Disorders and Owner/Managing Partner of Mo Better Living.
* Julie Strickler. Julie lost her 24-year old son, Nicholas, a
Corporal in the U.S.M.C., to an overdose in 2017. Julie has been a
committee member on a project to create a public education program
on opioids, the Berks Opioid Task Force, and on the international
task force, "Do the Portugal Flip," to flip addiction out of the
criminal justice system and into the primary care system. Julie is
a Certified Family Recovery Specialist. CFRSs work with families
who have loved ones in active addiction or recovery and families
who have lost a loved one to the disease. Additionally, Fox Studios
flew Julie out to Los Angeles to speak on a panel with the U.S.
Surgeon General, Dr. Jerome Adams, where she shared her family's
story with the executives, directors, and attorneys of Fox Studios.
Julie played a role in the movie and Broadway production of "Sno
Babies," the true story of two teenage girls living on the Mainline
of Philadelphia who became addicted to opioids. Julie has also
spoken before the U.S. Senate, provided local TV interviews, and
written articles regarding the opioid epidemic. Mark Zuckerberg's
film crew created a short documentary on Nicholas' opioid journey.
* Claire Rudy Foster. Foster was prescribed OxyContin for pain
following a dental procedure when he was 17 years old. He became
addicted, suffering his first near-fatal overdose in February 2002,
days after his 18th birthday. Foster struggled with opioid
addiction for the next five years, losing jobs, housing,
relationships, and opportunities due to his addiction. Foster is in
recovery from opioid addiction. His contributions to the recovery
movement include co-authoring a book on the opioid addiction crisis
and how to end it. He has also written speeches, letters, and
articles supporting equal rights for people with SUD, some of which
can be found in the Library of Congress and have been read on the
floor of the U.S. Senate. Foster developed, wrote, and hosted two
seasons of a leading recovery podcast called "Addiction
Unscripted," described as "This American Life" for people with SUD.
His writing about recovery has gone viral in The Huffington Post.
* Tiffinee Scott. Tiffinee lost her daughter due to complications
from sickle cell disease and prescription medication, along with
complex somatic health concerns surrounding opioids. Tiffinee is a
Certified Peer Recovery Specialist, advocate, and trainer for Peer
Recovery Support Services for CCAR Recovery Coach Academy, Forensic
Peer Support, Wellness Recovery Action Plan, Family Peer Support,
and Overdose Prevention, among others. In addition, Tiffinee is an
active member of the Maryland Addiction and Behavioral Health
Professional Certification Board, the National Association for
Addiction Professionals, Copeland Center for Wellness and Recovery,
the National Association of Drug Court Professionals, National
Council of NCADD Think Tank for Peer Recovery Services, National
Alliance on Mental Illness, Recovery Action Project and founder of
the Maryland Peer Advisory Council. She is the Maryland Lead for
Mobilize Recovery. Tiffinee has spoken at conferences, honored as
Maryland Advocate of the Year, and received a Governor's citation
which focused on her recovery community efforts.
The members of the Ad Hoc Group hold claims against the Debtors'
estates.
Additionally, since filing the Verified Statement, Fred Muench
resigned from the Ad Hoc Group.
As of July 21, 2020, members of the Ad Hoc Group and their and
their disclosable economic interests are:
Kathleen Scarpone
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $5 million on the
basis of wrongful death
Robert F. List, Esq.
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Jill Cichowicz
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $5 million on the
basis of wrongful death
Diana Yoder
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $5 million on the
basis of wrongful death
Garrett Hade
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Will Allphin
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Lindsey Arrington
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Chad Sabora
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Nicholas Boatman
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Sharon Murillo
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Julie Strickler
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $5 million on the basis
of wrongful death
Claire Rudy Foster
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $2.5 million on the
basis of personal injury
Tiffinee Scott
c/o Edward Neiger ASK LLP
151 W. 46th Street, 4th Floor
New York, NY 10036
* Unliquidated unsecured claim of at least $5 million on the basis
of wrongful death
Counsel to the Ad Hoc Group of Individual Victims of Purdue Pharma
L.P., et al. can be reached at:
ASK LLP
Edward E. Neiger, Esq.
Jennifer A. Christian, Esq.
151 West 46th Street, 4th Floor
Tel: (212) 267-7342
Fax: (212) 918-3427
E-mail: eneiger@askllp.com
jchristian@askllp.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/Ey99cL and https://is.gd/lZDltN
About Purdue Pharma
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell LLP and Dechert LLP as
legal counsel; PJT Partners as investment banker; AlixPartners as
financial advisor; and Prime Clerk LLC as claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A. represent the
official committee of unsecured creditors appointed in Debtors'
bankruptcy cases.
David M. Klauder, Esq., was appointed as fee examiner. The fee
examiner is represented by Bielli & Klauder, LLC.
PYXUS INTERNATIONAL: U.S. Trustee Appoints Equity Committee
-----------------------------------------------------------
The U.S. Trustee for Region 3 on July 28, 2020, appointed a
committee to represent equity security holders in the Chapter 11
cases of Pyxus International, Inc.
The committee members are:
1. Hongchao Sun
322 Stonehurst Court
New Castle, DE 19720
Phone: 301-473-6949,
Email: bullrongrong@gmail.com
2. Elvis Viskovic
3470 Keele Street, Unit 306
Toronto, Ontario
Canada m3j 3l8
Phone: 416-473-9951
Email: elvisviskovic3@gmail.com
3. James V. Vu
5728 Brianhead Drive
Corona, CA 92880
Phone: 714-471-3049
Email: jvvan93@gmail.com
Pyxus International previously asked the U.S. Bankruptcy Court for
the District of Delaware to reconsider its July 20 order, which
granted the motion filed by a shareholder of the company to appoint
an equity committee.
The company said the court's apparent conclusion that its current
equity holders could potentially be "in the money" by March 31 next
year is a mistake of fact resulting from a lack of clarity in the
explanations that were provided to the court during a remote
Hearing.
Pyxus International expressed concern that the appointment of the
equity committee and the resulting rescheduling of the hearing on
confirmation of its Chapter 11 plan to Aug. 18 will have negative
consequences to its finances and operations.
Wilmington Trust, National Association and an ad hoc group called
"The Ad Hoc Crossholder Group" also urged the court to reconsider
its July 20 order and to approve Pyxus International's proposed
schedule for the equity committee's completion of any discovery and
the filing of any objection to confirmation of the plan.
Hongchao Sun, the shareholder who sought the appointment, argued in
her motion that Pyxus International's total assets are "in the
money" and that the rights of shareholders were "significantly
violated" by the company on the ground of bad faith.
The motion drew objections from various groups including the ad hoc
group of first lien noteholders and the U.S. trustee who argued
that Ms. Sun wasn't able to prove that the appointment is warranted
in Pyxus International's bankruptcy case.
Wilmington Trust is represented by:
Eric J. Monzo, Esq.
Brya M. Keilson, Esq.
Morris James LLP
500 Delaware Avenue, Suite 1500
P.O. Box 2306
Wilmington, DE 19801-1494
Telephone: (302) 888-6800
Facsimile: (302) 571-1750
emonzo@morrisjames.com
bkeilson@morrisjames.com
-- and --
Todd C. Meyers, Esq.
Gianfranco Finizio, Esq.
Kelly E. Moynihan, Esq.
Kilpatrick Townsend & Stockton LLP
1114 Avenue of the Americas
New York, NY 10036-7703
Telephone: (212) 775-8700
Facsimile: (212) 775-8800
tmeyers@kilpatricktownsend.com
gfinizio@kilpatricktownsend.com
The Ad Hoc Crossholder Group is represented by:
Joshua A. Feltman, Esq.
Amy R. Wolf, Esq.
Angela K. Herring, Esq.
Benjamin S. Arfa, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
jafeltman@wlrk.com
arwolf@wlrk.com
akherring@wlrk.com
bsarfa@wlrk.com
-- and --
Derek C. Abbott, Esq.
Paige N. Topper, Esq.
Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street, Suite 1600
Wilmington, DE 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
dabbott@mnat.com
ptopper@mnat.com
The first lien noteholders are represented by:
Bradford J. Sandler, Esq.
James E. O'Neill, Esq.
Pachulski Stang Ziehl & Jones, LLP
919 North Market Street
17th Floor
Wilmington, DE 19801
Telephone: (302) 652-4100
Facsimile: (302) 652-4400
Email: bsandler@pszjlaw.com
joneill@pszjlaw.com
-- and --
Kristopher M. Hansen
Jonathan D. Canfield
Matthew G. Garofalo
Joanne Lau
Stroock & Stroock & LAVAN LLP
180 Maiden Lane
New York, New York 10038-4982
Telephone: (212) 806-5400
Facsimile: (212) 806-6006
Email: khansen@stroock.com
jcanfield@stroock.com
mgarofalo@stroock.com
jlau@stroock.com
About Pyxus International
Pyxus International Inc. -- http://www.pyxus.com/-- is a global
agricultural company with 145 years of experience delivering
value-added products and services to businesses, customers and
consumers.
Pyxus reported a net loss of $71.17 million for the year ended
March 31, 2019, compared to net income of $51.91 million for the
year ended March 31, 2018. As of March 31, 2019, Pyxus had $1.86
billion in total assets, $1.67 billion in total liabilities, and
$192.02 million in total stockholders' equity.
On June 15, 2020, Pyxus and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
20-11570). Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped Simpson Thacher & Bartlett, LLP as general
bankruptcy counsel; Young Conaway Stargatt & Taylor, LLP as
Delaware bankruptcy counsel; and Lazard Freres & Co. LLC and RPA
Advisors, LLC as restructuring advisors. Prime Clerk, LLC is the
claims and noticing agent and administrative advisor.
REVLON INC: S&P Cuts Rating on $880MM Term Loan to 'CCC-'
---------------------------------------------------------
S&P Global Ratings lowered issuer credit rating on Revlon Inc. to
'CC' from 'CCC-'. Concurrently, S&P lowered its issue-level rating
on the company's $880 million Brandco first lien term loan to
'CCC-' from 'CCC' and maintain '2' recovery rating. In addition,
S&P lowered its issue-level rating on the remaining tranches of
secured debt to 'C' from 'CC' and maintained '5' recovery rating.
Lastly, S&P affirmed its 'C' issue-level rating on the company's
two tranches of unsecured notes, the '6' recovery ratings remain
unchanged.
The negative outlook reflects S&P's expectation that it will lower
its issuer credit rating on Revlon to 'SD' (selective default) and
its issue-level rating on its February 2021 notes to 'D' after the
transaction closes.
The downgrade follows Revlon's announcement that it commenced an
offer to exchange any and all of its outstanding amounts of 5.75%
notes due February 2021 for a combination of new 5.75% notes due
February 2024 and an early tender/consent fee. The existing
noteholders will receive $750 principal amount of new notes for
every $1,000 of existing notes tender and $50 of cash as an early
tender/consent fee. Holders who tender their existing notes after
the early tender deadline (Aug. 7, 2020) will receive only $750
principal amount of new notes for every $1,000 principal amount of
existing notes tendered.
"We view the exchange as tantamount to a default because lenders
are receiving less than the original promise of the security. In
addition, Revlon's operating performance has been poor over the
past few years, and it faces additional debt maturities that it
must address in the upcoming months. Specifically, its $400 million
asset-based loan (ABL) is coming due September 2020, while its
foreign ABL facility (both not rated) became current this July,"
S&P said.
"The negative outlook reflects our expectation that we will lower
our issuer credit rating on Revlon to 'SD' and our issue-level
rating on its February 2021 notes to 'D' after the transaction
closes. Subsequently, we will reevaluate all of our ratings on
Revlon once the transaction closes, and we will likely raise our
issuer credit rating on the company to 'CCC-', given its still
highly leveraged capital structure, negative cash flow generation,
and near-term debt maturities," the rating agency said.
RITE AID: Fitch Rates New $850MM Secured Notes Due 2026 'BB-/RR1'
-----------------------------------------------------------------
Fitch rates Rite Aid's new secured notes 'BB-'/'RR1' and affirms
the company's remaining ratings, including its Long-Term Issuer
Default Rating at 'B-'. The Rating Outlook is Stable.
Rite Aid's new $850 million of 8% secured notes due November 2026,
plus approximately $202 million in cash will be issued in exchange
for approximately $1.06 billion of the company's existing 6.125%
guaranteed, unsecured notes due 2023.
The new notes are pari passu with the company's recently issued
$600 million of secured notes, which were issued for a like amount
of unsecured 2023 notes. The notes have a second lien on ABL
collateral, which largely includes inventory, prescription files
and some receivables, and a first lien on most remaining assets.
The exchange reduces the principal amount of Rite Aid's next
maturity, unsecured notes due April 2023, from $1.15 billion to $91
million. Assuming the company uses ABL borrowings to fund most of
the cash portion of the exchange, the transaction is essentially
leverage-neutral although a modest negative to liquidity, which
remains ample at a projected pro forma level of $1.5 billion
compared with $1.7 billion as of May 30, 2020.
Rite Aid's ratings reflect continued operational challenges, which
have heightened questions regarding the company's longer term
market position and the sustainability of its capital structure.
Persistent EBITDA declines have led to negligible to modestly
negative FCF and elevated adjusted debt/EBITDAR in the low- to
mid-7.0x range in recent years, despite some signs of pharmacy
sales stabilization over the past year.
Fitch believes that operational challenges include both a
challenged competitive position in retail and, more recently,
sector-wide gross margin contraction resulting from reimbursement
pressure.
A new leadership team, installed over the past year, is
implementing initiatives to drive growth across the business while
streamlining costs. Recent results have shown some early evidence
of a stabilizing trajectory despite operational challenges related
to the coronavirus pandemic, which is expected to somewhat
negatively impact 2020 EBITDA.
Mitigating factors to these concerns continue to including Rite
Aid's ample liquidity of well over $1 billion, supported by a rich
asset base of pharmaceutical inventory and prescription files.
Other positives include the somewhat more stable EnvisionRx
pharmacy benefits manager business, representing around 30% of
total EBITDA, and Rite Aid's good real estate position in local
markets, somewhat mitigated by lack of broad-based national
presence. The company also has no near-term maturities, with
nothing due prior to its approximately $91 million (following the
$1.06 billion exchange) notes maturity in April 2023.
KEY RATING DRIVERS
Coronavirus Pandemic: The coronavirus pandemic has caused
significant changes to both near term U.S. consumer behavior and
Fitch's expectations around U.S. retail sales through the next 12
to 18 months. Since shelter in place activity began in March,
staples retailers like Rite Aid have seen sales uplift as consumers
purchase essential general merchandise items like grocery and
cleaning. Retailers which have experienced topline uplifts have
also seen operating expense growth, due largely to higher employee
wages and 'hero' bonuses as well as enhanced cleaning expenses.
Higher online order penetration has also raised operating costs
given incremental delivery expense.
In addition to the trends, Rite Aid has been negatively impacted by
declines in high-margin acute prescription counts, which are
correlated to reduced doctor visits during shelter-in-place
activities. These declines have been somewhat mitigated by strong
mail-order prescription growth at EnvisionRx, which is in the
process of being rebranded to 'elixir'.
Rite Aid's adjusted EBITDA for the quarter ending May 30, 2020 was
essentially flat to the prior year at $100 million, with the
company indicating a net negative EBITDA impact from the pandemic
of $30 million.
This negative impact was offset by growth in Medicare Part D
enrollment at EnvisionRx and operating expense management. Fitch
expects the negative EBITDA impact to subside during the remainder
of 2020, given expectations of improving acute prescription trends
and reduced employee bonuses. EBITDA in 2020 could therefore grow
modestly from the $530 million level in 2019, largely due to
enrollment growth at EnvisionRx.
Fitch expects a U.S. consumer spending slowdown through much of
2021, given the likelihood of weak macroeconomic factors including
unemployment and wage growth exiting the pandemic. The consumer
spending slowdown is expected to have limited impacts to Rite Aid's
pharmacy and EnvisionRx businesses, though could modestly,
negatively impact its front-end business given potential share
shifts to lower price alternatives to the drugstore channel.
Rite Aid has maintained good liquidity through the pandemic. As of
May 30, 2020, Rite Aid's $1.7 billion of liquidity included
approximately $200 million in cash and $1.5 billion in availability
on its $2.7 billion revolver, after deducting $1.3 billion in
borrowings and $100 million in outstanding letters of credit. Rite
Aid's ample liquidity, and lack of maturities prior to April 2023,
when $91 million of unsecured notes mature, should enable the
company to manage through any near-term challenges related to the
pandemic or related slowdowns in consumer spending.
Competition Intensifying: Drug retail competition is intensifying
from current and newer players. Existing participants are exploring
partnerships and M&A to reduce costs and strengthen customer
connections. CVS Health Corp's acquisition of insurer Aetna Inc.
and Walgreens' numerous partnerships across healthcare, retail and
technology are examples of leading drug retailers exploiting their
scale to fortify share. These retailers are also increasingly
negotiating narrow and preferred networks to fortify market share.
Finally, there exists some threat of new entrants, most notably
from Amazon.com, Inc. (A+/Positive), which acquired online pharmacy
Pillpack in 2018.
Rite Aid Structurally Disadvantaged: While Rite Aid has good local
market share positions, its scale and geographic concentration
relative to Walgreens and CVS may negatively impact its ability to
compete for inclusion in pharmaceutical contracts, particularly as
these players explore preferred and narrow contracts. Following the
transfer of approximately 40% of its store base to Walgreens in
2017/2018, Rite Aid's footprint includes approximately 2,500
stores, almost half of which are in four states, compared with the
national footprints of approximately 10,000 and 9,300 for CVS
(including pharmacies within Target stores) and Walgreens U.S.,
respectively. In addition, Rite Aid's limited FCF generation yields
reduced ability to make customer-facing investments to drive
loyalty and traffic.
Gross Margin Pressure: Reimbursement pressure on gross margin is
intensifying across the retail pharmacy industry. Structural margin
pressure has been a consequence of increased penetration of the
government as a pharmaceutical payer under the Medicare and
Medicaid programs, ongoing pressure from commercial payers and a
mix shift toward the "90-day at retail" offering. Growth in
preferred/narrow networks may also be a factor, as players
sacrifice margin for network inclusion to drive volume. This
pressure was somewhat mitigated by the growth in generic
penetration over the last few years, though this has tapered off
somewhat given a lighter calendar of branded expirations.
Weakened Retail Operations: Rite Aid's pro forma EBITDA steadily
declined from approximately $850 million in 2015 to approximately
$525 million in the TTM ending May 30, 2020. Weak pharmacy trends
drove overall pro forma same store sales to negative 2.2% in 2016
and negative 2.9% in 2017, though SSS improved to 0.5% in 2018 and
1.1% in 2019 as pharmacy sales improved but front-end sales
worsened. Negative SSS and declining reimbursement rates drove
EBITDA margins to approximately 2.3% in the TTM ending May 30,
2020, from the 4% range in 2015. Fitch believes a protracted
transaction process with Walgreens, which originally proposed to
acquire Rite Aid in October 2015, created uncertainty about Rite
Aid's future, affecting its strategic planning and pharmacy
contract negotiations.
Relatively Stable PBM Business: Results at EnvisionRx have been
more stable than retail albeit somewhat disappointing relative to
original expectations, with around $186 million of EBITDA in the
TTM ending May 30, 2019, similar to full-year EBITDA of around $190
million in 2016 and 2017. The 2015 acquisition of EnvisionRx
allowed Rite Aid to diversify its business and provide exposure to
the relatively faster growing specialty pharmaceuticals business
and the mail-order channel. Fitch believes this business was also
negatively impacted by the Walgreens transaction process. Revenue
and EBITDA trends have recently begun to improve, however, with
4Q19 and 1Q20 EBITDA up 33% and nearly 70%, respectively, as recent
initiatives to drive enrollment appear to be bearing fruit.
New Initiatives Could Support EBITDA Stabilization: A new
management team, installed over the past year, is undertaking a
number of initiatives to improve topline and expense management. To
drive revenue growth, the company sees opportunities to cross
market its PBM and retail assets to mid-market employers, Medicare
Part D participants, and other target groups. The company is also
investing in a more holistic care approach with its pharmacy
customers to drive loyalty and incremental purchases, and is adding
omnichannel capabilities like improved digital/mobile shopping
experience and in-store pick-up options like lockers. At the same
time, the company has undertaken actions including headcount
reductions, advertising and shrink to reduce expenses by
approximately $100 million on an annualized basis; Fitch expects
some of these savings will be used to support spending on growth
initiatives.
Rite Aid's initiatives appear to be showing some signs of traction,
albeit somewhat obfuscated by the coronavirus pandemic. For
example, EBITDA was essentially flat around $100 million in the
quarter ending May 30, 2020, despite an estimated net negative $30
million impact from the pandemic. Growth in Medicare Part D
enrollment, good pharmacy trends excluding acute prescriptions, and
cost reductions mitigated these temporary challenges. With the
negative impact of the coronavirus pandemic expended to lessen over
the coming quarters, Fitch expects EBITDA could grow modestly in
2020 to around $550 million from around $530 million in 2019, and
grow modestly toward $570 million in 2022.
Limited FCF: FCF has been somewhat volatile in recent years due to
working capital and other balance sheet movements related both to
the store sale to Walgreens and periodic sales of receivables.
Fitch expects Rite Aid's annual FCF to be near breakeven on
average, given Fitch's EBITDA assumptions and around $225 million
and $300 million of interest expense and capex, respectively. FCF
in 2020 could be close to $100 million on working capital swings
given efforts to reduce inventory levels. Rite Aid's minimal cash
flow generation limits its ability to invest in its business
relative to better-capitalized peers, and address its capital
structure.
Elevated Leverage; Opportunistic Repayments: Adjusted debt/EBITDAR,
which was elevated at around 7.0x in 2016 prior to store
divestitures, was approximately 7.1x in 2019 and could modestly
improve to the high-6.0x range given some EBITDA growth beginning
2020. Following Rite Aid's July 2020 exchange, its next maturity is
$91 million (of notes due April 2023, but it will need to address
this debt prior to Dec. 31, 2022; otherwise the company's ABL
revolver and First-In, Last-Out term loan mature on this date.
In October 2019, the company announced a below-par tender for up to
$100 million principal amount of its 2027/2028 notes and indicated
that it privately repurchased $84 million principal amount of these
notes from a seller, also below par. The company tendered for
approximately $73 million of the unguaranteed unsecured notes
maturing 2027/2028 in October and November of 2019. Fitch views
these actions as opportunistic as it is using asset sale proceeds
to proactively reduce the debt balance. In January 2020, the
company exchanged $600 million of unsecured notes due April 2023
for a like number of secured notes due November 2026.
Strong Liquidity and Asset Base: Rite Aid's ample liquidity of over
$1 billion should provide flexibility to navigate through its
current operating challenges. Given the reduced store portfolio,
Rite Aid replaced its $3.7 billion revolving credit facility with a
$2.7 billion facility, adding a $450 million FILO term loan in
December 2018. Proceeds from the FILO term loan were used to reduce
revolver borrowings, providing Rite Aid with additional liquidity.
Rite Aid's asset value is supported by the 11.5x EBITDA multiple
implied by Walgreens' original offer to buy it in 2015 for $17.2
billion and the 16.0x multiple Walgreens ultimately paid for 1,932
stores.
Complex Industry Fundamentals: Despite projections of continued
modest growth in pharmaceuticals revenue, the healthcare industry
remains complex given intricate relationships between critical
constituents in the industry, strategic initiatives by large
players and regulatory overlay. Rite Aid benefits from close
relationships with end customers, which Fitch believes is a
critical structural advantage for drug retailers, and some business
diversification through EnvisionRx. However, Rite Aid's challenged
operations and regional focus following its store divestiture has
weakened its competitive positioning, particularly given the rise
of preferred and narrow pharmaceutical networks.
DERIVATION SUMMARY
Rite Aid's 'B-' rating incorporates its weak position in the
relatively stable U.S. drug retail business and its high lease
adjusted leverage (capitalizing rent expense at 8x) at around 7x.
The company's drug retail business, representing approximately
two-thirds of total EBITDA following the sale of roughly 43% of
stores to Walgreens Boots Alliance, Inc. (BBB-/Stable), is expected
to continue losing share, although the company's EnvisionRx PBM --
representing Rite Aid's remaining EBITDA -- should grow modestly
over time.
Rite Aid has significantly smaller scale and weaker operating
metrics than Walgreens and CVS Health Corp., which may have a
negative impact on its relative ability to compete for inclusion in
pharmacy networks. Rite Aid's cash flow is minimal to modestly
negative, and its leverage profile is significantly higher than its
larger peers, limiting its ability to invest meaningfully in its
business.
Rite Aid's 'B'-rated retail peers include Signet Jewelers Limited.
Signet's 'B' IDR and Negative Outlook reflect the significant
business interruption from the coronavirus and the implications of
a downturn in discretionary spending that Fitch expects could
extend well into 2021. Fitch anticipates a sharp increase in
adjusted leverage to the mid-10.0x range in 2020 from 5.3x in 2019
based on EBITDA declining to approximately $70 million from $470
million in 2019 on a nearly 30% sales decline to $4.4 billion.
Adjusted leverage could improve to around mid-5x in 2021, assuming
sales declines of around 10% and EBITDA declines of around 15% to
20% from 2019 levels. Excluding Signet's recent revolver draw,
which Fitch assumes is repaid in 2021, 2020 adjusted leverage would
be closer to 9.0x.
KEY ASSUMPTIONS
-- Fitch expects 2020 revenue to grow around 5% to $23 billion
from $22 billion in 2019, given strength in grocery and cleaning
supplies through the coronavirus pandemic and growth at EnvisionRx
from increased enrollment and mail order volume. EBITDA could
similarly be up around 5% to the $550 million range from
approximately $530 million in 2019, with margins remaining near the
prior year's 2.4% as increased operating costs due to the pandemic
are mitigated by expense management efforts.
-- Beginning 2021, Rite Aid's topline could grow around 1%
annually assuming some of its topline initiatives gain traction.
Pharmacy and EnvisionRx revenue could grow in the low-single
digits, with flattish to modestly negative growth at Rite Aid's
front-end given ongoing competition from discount and online
channels. Assuming some ongoing cost reduction efforts mitigate
continued industry gross margin pressures in the pharmacy, EBITDA
could grow modestly faster than revenue toward around $570 million
in 2022. Modest EBITDA growth is expected at both Rite Aid's retail
operation and at EnvisionRx.
-- FCF, which has been somewhat volatile in recent years
following working capital movements related to the asset sale to
Walgreens and a 2019 sale of receivables, is expected to be
positive at around $90 million in 2020, largely due to management
efforts to control inventory levels. Fitch expects FCF to be near
breakeven beginning 2021, assuming EBITDA of $550 million to $570
million, and approximately $225 million and $300 million of
interest and capex, respectively.
-- Adjusted debt/EBITDAR (capitalizing leases at 8x), could trend
in the high-6.0x range beginning 2020, slightly below the 7.1x
level from 2020 on modest EBITDA growth and FCF deployment toward
debt reduction in 2020. The company has recently announced the
results of an exchange where $1.06 billion of unsecured notes are
being exchanged for $850 million of new secured notes and
approximately $202 million of cash. Fitch expects Rite Aid could
fund the cash portion from ABL borrowings although use FCF to repay
revolver balances as the year progresses.
-- Fitch has not currently modeled any impact on total coverage,
volume or pricing based on potential changes to the Affordable Care
Act or other legislative activity affecting the pharmaceutical
industry.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Evidence of positive results from Rite Aid's recently
announced topline initiatives, yielding sustained positive revenue
trends, stabilized EBITDA in the mid-$500 million level, modestly
positive FCF, and adjusted debt/EBITDAR (capitalizing leases at 8x)
around 7x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deteriorating sales and profitability trends that lead to
EBITDA sustained below $500 million, consistently negative FCF and
adjusted debt/EBITDAR (capitalizing leases at 8x) toward 8.0x. Rite
Aid's inability to stabilize operations would raise concerns
regarding the company's capital structure sustainability, which is
more representative of the 'CCC' category.
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
Ample Liquidity: Rite Aid had liquidity of $1.7 billion as of May
30, 2020, supported by $1.5 billion in availability under the $2.7
billion ABL facility, net of letters of credit, and approximately
$200 million in cash on hand. The company refinanced its prior
credit facility with a $2.7 billion ABL and a $450 million FILO
term loan in December 2018, extending maturities to December 2023.
The company's closest debt maturity is the remaining $91 million
(following the $1.06 billion exchange) 6.125% guaranteed unsecured
notes which mature April 2023. However, the company will face a
springing maturity under the secured credit facility on Dec. 31,
2022 if they fail to refinance the 6.125% notes prior to this
date.
On Oct. 15, 2019, Rite Aid announced a tender offer to repurchase
up to $100 million of the unguaranteed unsecured notes maturing
2027/2028. The company ultimately repurchased approximately $73
million principal amount of the unguaranteed unsecured notes in
October and November of 2019 for approximately $50 million. During
3Q19, the company also privately repurchased $84 million principal
amount of these notes for approximately $50 million in cash. Debt
repurchases were funded with available liquidity, inclusive of an
estimated $150 million in cash proceeds from asset sales to
Walgreens. In February 2020, the company exchanged $600 million of
unsecured notes due 2023 for a like amount of new, secured notes
due July 2025.
The company is closing an exchange whereby $1.06 billion of
unsecured notes due April 2023 will be exchanged for $850 million
in new secured notes due November 2026 and approximately $202
million in cash. The new notes are pari passi with the recently
issued $600 million of notes; these notes are secured by a second
lien on ABL collateral - which includes most working capital assets
such as inventory and receivables as well as prescription files -
and a first lien on most of Rite Aid's remaining assets, including
property, plant and equipment. Fitch expects Rite Aid to fund the
cash portion with ABL borrowings but could use its projected $90
million of FCF in 2020 to pay down revolver balances.
On a pro forma basis following the exchange, Rite Aid's capital
structure would include a projected $1.5 billion in ABL borrowings,
its $450 million FILO term loan which is secured by ABL collateral,
$1.45 billion in senior secured notes, $91 million of guaranteed
unsecured notes, and $266 million of unguaranteed unsecured notes.
Fitch expects ABL borrowings are seasonally elevated and projects
year-end 2020 borrowings to be around $800 million, compared with
$650 million at the end of 2019. Given this assumption, Fitch
projects total adjusted debt/EBITDAR to be around 6.9x in 2020.
Rite Aid maintains solid liquidity given its valuable asset base,
despite a history of operating challenges. The value of Rite Aid's
asset base is supported by the 11.5x EBITDA multiple implied by
Walgreen's original offer to buy Rite Aid in October 2015 for $17.2
billion and the 16.0x multiple Walgreens paid for 1,932 stores.
Following the transfer Walgreens announced plans to close 600 of
these stores and transfer prescription files to nearby Walgreens
locations, further illustrating the value placed on prescription
files.
Recovery:
Rite Aid's business profile could yield a distressed enterprise
value of approximately $4.6 billion on Rite Aid's estimated $3.4
billion liquidation value on inventory, receivables, prescription
files, owned real estate and a $1.2 billion enterprise value for
EnvisionRx. Fitch notes that its approximately $7.25 value ascribed
per prescription file could prove conservative given current
transaction multiples in the low- to mid-teens. The $1.2 billion
for the healthy EnvisionRx business values the company at 7.0x
EBITDA of $170 million, slightly above the $168 million Rite Aid
reported in 2019. This is well below the $2 billion, or 13.0x
EBITDA Rite Aid paid for the business in 2015. PBM valuations have
declined over the past several years, although Express Scripts
Holding Co. (BBB/Stable) was acquired by Cigna Corporation at an
enterprise valuation of approximately 9.0x TTM EBITDA.
The $4.6 billion in resulting liquidation value exceeds Fitch's
assessment of Rite Aid's $3.0 billion valuation as a going concern.
The going concern valuation is based upon $500 million in
distressed EBITDA, modestly below the current run rate, as Fitch
views Rite Aid's current operating trajectory as somewhat
distressed. Fitch assumes Rite Aid could generate a 6.0x EBITDA
multiple in a going-concern sale, somewhat lower than valuations
implied in the Walgreens process due to ongoing declines in the
company's operations.
The company replaced its $3.7 billion ABL facility with a new $2.7
billion ABL facility, given lower collateral levels, and
subsequently issued a $450 million FILO term loan in late December
2018. From Aug. 31, 2019 to Nov. 30, 2019, the company reduced
principal borrowings of the unguaranteed notes maturing 2027/2028
by $157 million through various tender offers and open market
repurchases. Additionally, in February 2020, the company completed
an exchange whereby $600 million of the guaranteed unsecured notes
maturing 2023 were exchanged for new 7.5% secured notes maturing
2025.
The new notes are secured by a second lien on ABL collateral -
which includes most working capital assets and prescription files -
and a first lien on most of Rite Aid's remaining assets, including
property, plant and equipment. The company is currently completing
an exchange whereby approximately $1.06 billion of the remaining
guaranteed unsecured notes will be exchanged into $850 million of
new 8% secured notes maturing November 2026 and approximately $202
million of cash.
Following the completion of the exchange, Rite Aid's pro forma
capital structure includes the $2.7 billion credit facility, $450
million FILO term loan due 2023, $1.45 billion of secured notes due
2025/2026, $91 million in guaranteed unsecured notes due 2023 and
$266 million in nonguaranteed unsecured notes due 2027/2028.
Given a $4.6 liquidation value and a 10% reduction for
administrative claims, the ABL - which Fitch assumes to be 80%
drawn -, $450 FILO term loan and $1.45 billion in secured notes
would be expected to have outstanding recovery prospects (91%-100%)
and are thus rated 'BB-'/'RR1'. The $91 million of remaining
guaranteed unsecured notes would be expected to have superior
recovery prospects (71%-90%) and are rated 'B+'/'RR2'. The
approximately $266 million unsecured nonguaranteed notes would be
expected to have poor (0%-10%) recovery prospects and are therefore
rated 'CCC'/'RR6'.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation and exclude charges related to LIFO
adjustments, mergers & acquisitions, restructuring, and legal
settlements. For example, Fitch added back $13 million in non-cash
stock-based compensation and $14 million in other excluded net
charges to its EBITDA calculation for the LTM period ended May 30,
2020. Fitch has adjusted historical and projected debt by adding 8x
yearly operating lease expense.
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).
ROSEHILL RESOURCES: Commences Voluntary Chapter 11 Cases in Texas
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Rosehill Resources Inc. and Rosehill Operating Company, LLC, on
July 27 disclosed that they have commenced voluntary Chapter 11
cases under the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the Southern District of Texas, pursuant to
the terms of the previously announced Restructuring Support
Agreement (the "RSA") between the Company, the lenders under
Rosehill's revolving first lien credit facility, holders of
Rosehill's second lien notes and the Company's Series B Preferred
Stock, and Tema Oil and Gas Company, as the holder of approximately
66.8% of the equity interests in the Company and 35.2% of the
equity interests in Rosehill Operating and party to the Company's
Tax Receivable Agreement (collectively, the "Consenting
Creditors").
In connection with the Chapter 11 Cases, Rosehill has filed
customary motions authorizing it to proceed with its operations in
the ordinary course, including to enter into a $17.5 million junior
convertible secured debtor-in-possession delayed-draw term loan
facility and use cash collateral. The Company currently expects
that the DIP facility will provide sufficient liquidity to meet its
financial obligations during the duration of the Chapter 11 Cases.
The Company expects to continue to operate its business during the
Chapter 11 Cases without material disruption to its vendors,
partners or employees.
As previously announced, under the RSA, Rosehill and the Consenting
Creditors have reached an agreement on the terms of a prepackaged
plan of reorganization (the "Plan"). Following consummation of the
Plan, the Company's equity will be owned solely by certain of the
Consenting Creditors and holders of the Company's preferred stock,
and holders of general unsecured claims, including the Company's
trade creditors and vendors, will pass through the Chapter 11 Cases
with their claims unimpaired by the bankruptcy and being satisfied
in full. Additionally, pursuant to the Plan, all of the common
equity of the Company will be cancelled and receive no recovery.
For more information on the RSA or the Plan, please read the
Company's Current Report on Form 8-K, to be filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's SEC
filings are available publicly on the SEC's website at
www.sec.gov.
Court filings and information about the Chapter 11 Cases can be
found at a website maintained by Rosehill's claim agent, Epiq
Corporate Restructuring, LLC, at https://dm.epiq11.com/rosehill, or
by calling 1-866-897-6433 (Domestic) or 1-646-282-2500
(International).
In connection with the Chapter 11 Cases and pursuant to the Plan,
on July 24, 2020 the Company notified the Nasdaq Stock Market LLC
("Nasdaq") of its intention to voluntarily delist its Class A
Common Stock, Class A Common Stock Public Warrants and Class A
Common Stock Public Units (the "Listed Securities") from Nasdaq.
The Company further requested that Nasdaq file a Form 25 with the
SEC, and expects that the Listed Securities will cease trading on
Nasdaq on or about August 13, 2020. Following the delisting from
Nasdaq, the Company intends to voluntarily deregister its Listed
Securities and cease its public reporting obligations with the
SEC.
Advisors to Rosehill
Gibson, Dunn & Crutcher LLP and Haynes and Boone, LLP are acting as
legal counsel, and Jefferies LLC and Opportune LLP are acting as
financial advisors to Rosehill in connection with the
Chapter 11 Cases.
About Rosehill Resources Inc.
Rosehill Resources Inc. (NASDAQ:ROSE, ROSEW, ROSEU) --
http://www.rosehillresources.com/-- is an independent oil and gas
exploration company with assets positioned in the Delaware Basin
portion of the Permian Basin. The Company's strategy includes the
focused development of its multi-bench assets in the Northern
Delaware Basin and the Southern Delaware Basin, as well as adding
economic drilling inventory to support future growth.
RTW RETAILWINDS: Weltman & Moskowitz Represents Multiple Parties
----------------------------------------------------------------
In the Chapter 11 cases of RTW Retailwinds, Inc., et al, the law
firm of Weltman & Moskowitz, LLP provided notice under Rule 2019 of
the Federal Rules of Bankruptcy Procedure, to disclose that it is
representing the following parties:
5304 Fifth Ave., Associates, LLC
1305 E. Michelle Street,
West Covina, California 91790
Fabco Enterprises, Inc.
52-55 74th Street
Elmhurst, New York 11373
These are separate representations. They are not under, or in
connection with, the firm's clients acting together pursuant to, a
deposit agreement, proxy or committee arrangement. Information
about the claims held by the firm’s clients will be filed in
their respective proofs of claims.
The firm may also represent other clients in matters pertaining to
RTW Retailwinds, Inc., et al., and in the future may undertake
other engagements. Those representations may or may not result in
representations in these bankruptcy cases; if they come to involve
representation in the bankruptcy cases, this Statement will be
supplemented.
Counsel for 5304 Fifth Ave., Associates, LLC and Fabco Enterprises,
Inc. can be reached at:
WELTMAN & MOSKOWITZ, LLP
Richard E. Weltman, Esq.
18 Columbia Turnpike, Suite 200
Florham Park, NJ 07932
Tel: (201) 794-7500
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/sInKKY
About RTW Retailwinds
RTW Retailwinds, Inc. [OTC PINK:RTWI], formerly known as New York
&
Company, Inc., is a specialty women's omni-channel retailer with a
powerful multi-brand lifestyle platform providing curated fashion
solutions that are versatile, on-trend, and stylish at a great
value. The specialty retailer, first incorporated in 1918, has
grown to now operate 378 retail and outlet locations in 32 states
while also growing a substantial eCommerce business. The
Company's
portfolio includes branded merchandise from New York & Company,
Fashion to Figure, and Happy x Nature. The Company's branded
merchandise is sold exclusively at its retail locations and online
at http://www.nyandcompany.com/,http://www.fashiontofigure.com/,
http://www.happyxnature.com/,and through its rental subscription
businesses at http://www.nyandcompanycloset.com/and
http://www.fashiontofigurecloset.com/
RTW Retailwinds, Inc. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-18445)
on July 13, 2020. The petitions were signed by Sheamus Toal, CEO,
CFO and treasurer.
As of July 13, 2020, the Debtors reported total assets of
$405,356,610 and total liabilities of $449,962,395.
The Hon. John K. Sherwood presides over the cases.
Michael D. Sirota, Esq., Stuart Komrower, Esq., Ryan T. Jareck,
Esq., and Matteo W. Percontino, Esq. of Cole Schotz P.C. serve as
counsel to the Debtors. Berkeley Research Group, LLC has been
tapped as financial advisor to the Debtors; B. Riley FBR, Inc. as
investment banker; and Prime Clerk, LLC as claims and noticing
agent.
RUSSELL CLARK: $135K Sale of Heavener Property to Vang Approved
---------------------------------------------------------------
Judge Tom R. Cornich of the U.S. Bankruptcy Court for the Eastern
District of Oklahoma authorized the private sale by Russell Scott
Clark and Cheryn Blair Clark of 34 acres and three chicken houses
located on Reichert Summerfield Road in Heavener, Oklahoma to Chao
Vang for $135,000.
The Buyers will execute a Deed as reflected in the Exhibit A.
FNB has a properly perfected secured lien in and to the Property;
FNB's lien attaches to the proceeds of sale of the Property; the
Debtors will provide FNB the proposed closing statement and FNB
will be paid at closing.
The 14-day stay of the Order is waived pursuant to F. R. Bankr. P.
6004(h).
A copy of the Exhibit A is available at
https://tinyurl.com/y2xgclp4 from PacerMonitor.com free of charge.
Russell Scott Clark and Cheryn Blair Clark sought Chapter 11
protection (Bankr. E.D. Okla. Case No. 18-81371) on Dec. 13, 2018.
On May 1, 2019, Charles Greenough was appointed Chapter 11 Trustee.
RYMAN HOSPITALITY: S&P Downgrades ICR to 'B-'; Outlook Negative
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Ryman
Hospitality Properties Inc. by one notch, to 'B-' from 'B'. At the
same time, S&P lowered the senior secured rating to 'B+' from
'BB-', and the senior unsecured rating to 'B' from 'B+'.
The downgrade reflects S&P's lowered base case assumption for
Ryman's revenue and EBITDA because it believes group travel will
not begin to recover until 2021, causing leverage to be very high
and interest coverage to be very thin through 2021. S&P expects the
company's leverage to spike very high in 2020 because it generated
near-zero revenue while its properties were closed. Additionally,
while the Gaylord Texan, Gaylord Opryland, Gaylord Palms, and
Gaylord Rockies have reopened, they will likely operate at low
occupancy levels for the remainder of the year. The properties that
have reopened will have limited ability to generate EBITDA and cash
flows due to capacity constraints, social distancing, increased
cleaning costs, and severely depressed demand. S&P expects that
group travel will be slower to recover than the broader travel
industry, and that travel volumes could be very depressed until
there is a medical solution to the virus. Additionally, S&P's
economists forecast a significant decline in U.S. GDP in 2020,
which could weigh on any potential recovery in leisure and business
travel.
Under S&P’s revised base case, it expects that Ryman's
lease-adjusted leverage could remain very high below 9x in 2021
even if its group business is able to recover and total revenue per
available room (RevPAR) is about 20% below 2019. Many areas of the
U.S. have begun to reinstate some restrictions, and the path to
recovery could be slow and uneven. Additionally, a second wave of
the pandemic occurring later in 2020 or 2021 could substantially
impede the company's recovery.
As a hotel owner, Ryman could raise liquidity through asset sales,
but would face a limited pool of buyers for its large
group-oriented hotels under good economic circumstances. If it
needed to raise liquidity, Ryman could sell one of its Gaylord
branded properties or one of the properties within its
entertainment segment. However, current depressed market conditions
would likely reduce the pool of potential buyers to very small
number. Additionally, in a scenario where group travel faces a slow
and prolonged path to recovery, Ryman could be forced to sell at a
highly distressed valuation if it were able to find a buyer at
all.
Once group travel demand recovers, Ryman could be well-positioned
because of its asset quality, but will also likely face a very
competitive market. The company owns high-quality properties that
target groups and convention customers. The growth in the demand
for this type of lodging had been outpacing the expansion of supply
prior to the pandemic, allowing Ryman to generate
above-industry-average total RevPAR growth. In addition, customers
for these properties typically book far in advance, providing good
revenue visibility, which should allow Ryman to fare better than
some of its peers in a typical recessionary environment. When group
travel demand begins to recover, the market will likely be very
competitive, and supply could outpace demand for some time.
If the group market is highly competitive, hotels in Las Vegas, for
example, may be able to offer lower daily rates than Ryman due to
the market's ability to generate significant gambling revenues.
Additionally, the company has limited asset diversity because it
derives the majority of its revenue from its five Gaylord-branded
properties. The cyclicality of the lodging space and the earnings
volatility associated with its owned-hotel portfolio also increase
the potential for a negative earnings shock under adverse market
conditions. Additionally, the company occasionally makes
significant capital investments in properties that increase its
leverage.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
The negative outlook reflects the possibility S&P could lower the
rating if Ryman's properties do not recover as expected in 2021,
causing the company's revenue, EBITDA, and cash flow to
underperform the rating agency's base case in a manner that causes
its capital structure to become unsustainable.
"We would likely consider lowering ratings if we believe the
pandemic will prolong group demand recovery well in 2021, or if we
believe the company cannot sustain its capital structure. We will
continue to monitor the efforts to contain the virus and assess how
the pandemic might alter or weaken the volume of group travel to
Ryman's properties over the next several months. If we no longer
believe Ryman will be able to generate cash flows sufficient to
sustain its capital structure, we could lower our ratings," S&P
said.
"It is unlikely that we will revise our outlook on Ryman to stable
for the duration of the pandemic due to the disruption of leisure
travel. Although unlikely within the next 12 months, we could raise
ratings on the company if we believe it will sustain leverage below
7x," the rating agency said.
SAEXPLORATION HOLDINGS: Extends Forbearance Agreement Until Aug. 31
-------------------------------------------------------------------
SAExploration Holdings, Inc. and certain of its subsidiaries
previously entered into a series of forbearance agreements on April
13, 2020, with:
* certain lenders of approximately 98% of the outstanding
principal amount of the loans under the Third Amended and
Restated Credit and Security Agreement, dated as of
Sept. 26, 2018, by and among SAExploration Inc., a
subsidiary of the Company, as the borrower, the Company, the
other Guarantors from time to time party thereto, the
Lenders from time to time party thereto and Cantor
Fitzgerald Securities, as the agent;
* certain lenders of approximately 82% of the outstanding
principal amount of the term loans under the Term Loan and
Security Agreement, dated as of June 29, 2016, by and among
the Company, as the borrower, the Guarantors from time to
time party thereto, the Lenders from time to time party
thereto and Delaware Trust Company, as the collateral agent
and as the administrative agent; and
* certain holders of approximately 98% of the outstanding
principal amount of the Company's 6.00% Senior Secured
Convertible Notes due 2023 issued pursuant to the indenture,
dated as of Sept. 26, 2018, by and among the Company, the
Guarantors from time to time party thereto and Wilmington
Savings Fund Society, FSB, as trustee and collateral
trustee.
Pursuant to the Forbearance Agreements, the Forbearing Parties
agreed to refrain from exercising their rights and remedies under
the Debt Instruments and applicable law with respect to existing
defaults and other events of default that have occurred and are
continuing as further specified in the Forbearance Agreements until
5:00 p.m. (New York City time) on the earlier of (a) May 31, 2020
and (b) the date the Forbearance Agreements otherwise terminate in
accordance with their terms.
On June 29, 2020, the Company, certain of its subsidiaries and
certain of the Forbearing Parties extended the effectiveness of the
Forbearance under the Forbearance Agreements until the earlier of
(i) July 31, 2020 and (b) the date the Forbearance Agreements
otherwise terminate in accordance with their terms.
On July 27, 2020, the Company, certain of its subsidiaries and
certain of the Forbearing Parties extended the effectiveness of the
Forbearance under the Forbearance Agreements until the earlier of
(i) Aug. 31, 2020 and (b) the date the Forbearance Agreements
otherwise terminate in accordance with their terms.
About SAExploration Holdings
SAExploration Holdings -- http://www.saexploration.com-- is an
international oilfield services company offering a full range of
vertically-integrated seismic data acquisition, data processing and
interpretation, and logistical support services throughout North
America, South America, Asia Pacific, Africa, and the Middle East.
In addition to the acquisition of 2D, 3D, time-lapse 4D and
multi-component seismic data on land, in transition zones and
offshore in depths reaching 3,000 meters, SAE offers a full suite
of data processing and interpretation services utilizing its
proprietary, patent-protected software, and also provides in-house
logistical support services, such as program design, planning and
permitting, camp services and infrastructure, surveying, drilling,
environmental assessment and reclamation, and community relations.
SAE operates crews around the world, performing major projects for
its blue-chip customer base, which includes major integrated oil
companies, national oil companies and large independent oil and gas
exploration companies. With its global headquarters in Houston,
Texas, SAE supports its operations through a multi-national
presence in the United States, United Kingdom, Canada, Peru,
Colombia, Bolivia, Malaysia, and Singapore.
SAExploration recorded a net loss of $22.61 million in 2019
compared to a net loss of $59.56 million in 2018. As of March 31,
2020, the Company had $136.03 million in total assets, $149.8
million in total current liabilities, $6.34 million in long-term
debt and finance leases, $5.09 million in other long-term
liabilities, and a total stockholders' deficit of $25.15 million.
Pannell Kerr Forster of Texas, P.C., in Houston, Texas, the
Company's auditor since 2014, issued a "going concern"
qualification in its report dated April 13, 2020 citing that the
Company has experienced recurring losses from operations and has
been unable to renegotiate its expiring senior loan facility which
raises substantial doubt about its ability to continue as a going
concern.
SALUBRIO LLC: Trustee Hires Bridgehead Networks as Consultant
-------------------------------------------------------------
Eric Terry, the court-appointed Subchapter V trustee for Salubrio,
LLC, seeks authority from the the U.S. Bankruptcy Court for the
Western District of Texas to hire Bridgehead Networks, Inc. as his
accounting consultant.
The firm will provide the following services:
a. advise the trustee regarding his powers and duties in the
liquidation of Debtor's business and management of its property;
b. advise the trustee on accounting matters related to its
liquidating plan, including the formulation of plan projections and
estimation of claims; and
c. prepare weekly and monthly operating reports and other
required reports.
Bridgehead's hourly rates are as follows:
Harry Nass $200
Gretchen Kinnear, CPA $125
Bridgehead is "disinterested" within the meaning of Section 101(14)
of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Harry Nass
Gretchen Kinnear, CPA
Bridgehead Networks Inc
2810 N Flores St
San Antonio, TX 78212
Phone: +1 210-224-2436
About Salubrio LLC
Salubrio, LLC, which conducts business under the name Brio San
Antonio, is a medical diagnostic imaging center in San Antonio,
Texas. It offers patients innovative and timely onsite technology
for musculoskeletal and traumatic brain injury diagnostics.
Salubrio specializes in weight-bearing MRI installed by Esaote USA.
For more information, visit https://salubriomri.com
Salubrio sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Texas Case No. 20-50578) on March 11, 2020. At the
time of the filing, Debtor disclosed assets of between $1 million
and $10 million and liabilities of the same range. Judge Ronald B.
King oversees the case.
Debtor has tapped the Law Offices of Martin Seidler as its legal
counsel, and M B Lawhon Law Firm, PLLC as its special counsel.
Eric Terry was appointed as Subchapter V trustee for Salubrio. He
is represented by Spencer Fane, LLP.
SEAWORLD PARKS: Moody's Affirms B3 CFR, Outlook Negative
--------------------------------------------------------
Moody's Investors Service affirmed SeaWorld Parks & Entertainment,
Inc.'s B3 corporate family rating and assigned a Caa2 rating to the
proposed $400 million second priority senior secured notes due
2025. The existing senior secured credit facility and secured notes
were upgraded to B2 from B3 and the probability of default rating
was upgraded to B3-PD from Caa1-PD. The outlook remains negative.
Net proceeds of the second priority secured note will be used
primarily to repay $311 million outstanding on the revolving credit
facility due 2023 and add cash to the balance sheet. The
transaction increases pro forma leverage to 6x from 5.8x as of Q1
2020 (which includes the $228 million senior secured notes issued
in April 2020) and raises annual interest expense by approximately
$40 million depending on final pricing. Liquidity will improve as
SeaWorld will have access to approximately $465 million of cash and
an undrawn $332.5 million revolver as of Q2 2020. Moody's expects
that the enhanced liquidity will help SeaWorld manage through 2021
even if the pandemic continues to disrupt operation of the parks.
The upgrade of the first lien credit facility and notes reflects
the addition of second lien debt which provides loss absorption
cushion. With the dual class debt structure, the senior secured
credit facilities rank senior to the second lien debt, resulting in
a one notch lift above the B3 CFR. The PDR was also upgraded to
reflect an average family recovery of 50%, as opposed to the
previous 65% recovery assumption when there was only one class of
first lien debt. While cash and revolver availability will improve
following the transaction, the speculative grade liquidity rating
remains unchanged overall at SGL-3.
Affirmations:
Issuer: SeaWorld Parks & Entertainment, Inc.
Corporate Family Rating, Affirmed B3
Upgrades:
Issuer: SeaWorld Parks & Entertainment, Inc.
Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
Senior Secured Bank Credit Facility, Upgraded to B2 (LGD3) from B3
(LGD3)
Senior Secured Regular Bond/Debenture, Upgraded to B2 (LGD3) from
B3 (LGD3)
Assignments:
Issuer: SeaWorld Parks & Entertainment, Inc.
Senior Secured 2nd priority Regular Bond/Debenture, Assigned Caa2
(LGD5)
Outlook Actions:
Issuer: SeaWorld Parks & Entertainment, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The B3 CFR reflects the negative impact of the coronavirus outbreak
on SeaWorld's ability to operate its parks, which Moody's projects
will lead to substantially higher leverage and weigh on liquidity
for as long as the parks continued to be constrained by the
pandemic. Moody's projects SeaWorld will have more than enough
liquidity to manage through 2021 even if normal operation of the
parks is disrupted or perform well below historical levels for a
prolonged period of time. SeaWorld has concentrated exposure to
Florida and to a lesser extent California, which elevates risks to
performance.
In addition, some of the company's larger parks are more likely to
face competition from destination parks. While SeaWorld has focused
on attracting guests from nearby markets in recent years, guest
traffic from national and international customers are likely to
remain weak and take longer to recover due to the effects of the
global pandemic on travel and leisure activities. Attendance levels
at parks that are open are projected to remain well below normal
levels due to the need to maintain social distancing and additional
safety pre-cautions due to the pandemic. Attendance may also be
negatively affected by consumer reluctance to engage in group
activities in the near term. Cost saving efforts to support
liquidity may also slow the rate of improvement in performance.
SeaWorld competes for discretionary consumer spending from an
increasingly wide variety of other leisure and entertainment
activities as well as cyclical discretionary consumer spending. The
parks are highly seasonal and sensitive to weather conditions,
changes in fuel prices, terrorism, public health issues (such as
the coronavirus) as well as other disruptions outside of the
company's control. Pro forma debt to EBITDA leverage is 6x as of Q1
2020 (including Moody's standard adjustments) and is expected to
increase materially as parks operate on a limited basis or remain
closed for a significant portion of the summer operating season.
There is also limited visibility on when SeaWorld's parks in
California will be able to open as a result of the pandemic.
SeaWorld benefits from its portfolio of parks in key markets
including SeaWorld, Busch Gardens, Sesame Place as well as
separately branded parks that typically generate meaningful annual
attendance. SeaWorld faces negative publicity due to its orca
attractions, but performance improved materially prior to the
coronavirus outbreak after several years of declines. Significant
expenditures on new rides and attractions that were scheduled to
open in 2020, are expected to support performance after the rides
are opened and lessen the need for capital expenditures in the near
future. Moody's expects performance in 2021 to improve and for
leverage levels to be in the in the 6x range by the end of 2021,
absent any additional extended park closures.
The rapid spread of the coronavirus outbreak, deteriorating global
economic outlook, low oil prices, and high asset price volatility
have created an unprecedented credit shock across a range of
sectors and regions. Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety. The credit profile
reflects the impact on SeaWorld of the deterioration in credit
quality the pandemic has triggered, given the company's exposure to
consumer entertainment. This has left the company vulnerable to
shifts in market demand and sentiment in these unprecedented
operating conditions.
A governance impact that Moody's considers is the resignation of
SeaWorld's past two CEOs after a brief tenure with the company. The
CFO will act as interim CEO at least through the resumption of
operations at all the company's theme parks. The Board will review
the CEO role after operations resume on a normalized basis.
SeaWorld is a publicly traded company listed on the NYSE.
The negative outlook reflects the impact of the coronavirus
outbreak which has limited SeaWorld's ability to operate its
amusement parks and Moody's expectation of operating losses and
negative free cash flow in 2020. The uncertainty over the depth and
duration of the pandemic will continue to pressure the company's
liquidity position and lead to materially higher leverage levels in
2020. A weak economic environment, the need for consumers to
maintain social distancing, and reduced travel activity will
continue to weigh on performance for parks that are open.
SeaWorld's SGL-3 rating reflects Moody's expectation of materially
negative free cash flow in 2020, but the company will have about
$465 million of cash and an undrawn $332.5 million revolver due
2023 pro forma for the transaction as of Q2 2020. Moody's expects
liquidity will deteriorate during the rest of 2020 from negative
free cash flow, but remain adequate through 2021 even if the parks
are unable to operate as planned for an extended period. Excess
cash is likely to be used to repay debt after the effect of the
pandemic subsides and park performance improves.
SeaWorld spent $195 million on capex in 2019 on new rides and
attractions, but Moody's projects SeaWorld will be focused on
managing liquidity and will reduce capex spending materially in the
near term. The large number of new rides and attractions which have
not been open to the public, reduce the need for capex in the near
term and may support attendance when the parks open. The parks are
divisible and could be sold individually, but all of the company's
assets are pledged to the credit facility and asset sales trigger
100% mandatory repayment if proceeds are not reinvested within 12
months.
The term loan is covenant light, but the revolver is subject to a
springing maximum first lien secured leverage covenant ratio of
6.25x when greater than 35% is drawn. SeaWorld executed an
amendment to exempt the company from the financial covenant through
2021 and allow the use of quarterly Adjusted EBITDA from the last
three quarters of 2019 in place of the last three quarters of 2021
beginning in Q1 of 2022. SeaWorld will be subject to a minimum
liquidity test of a minimum of $75 million until the earlier of Q3
2022 or when the company starts using actual Adjusted EBITDA in the
covenant calculation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade is unlikely as long as the coronavirus outbreak
limits the ability to operate SeaWorld's' amusement parks. The
outlook could change to stable if the parks are projected to
operate as scheduled and SeaWorld maintains a good liquidity
profile with leverage levels maintained below 6.5x. Comfort that
there are not any significant legislative, legal, regulatory, or
activist actions that would materially impact operations would also
be required. An upgrade could occur if the parks were operated as
scheduled and Moody's expected leverage to be sustained under 6x,
with positive revenue and EBITDA growth, and an adequate liquidity
profile.
The ratings could be downgraded due to ongoing cash usage or poor
operating performance that led to an elevated risk of default.
Leverage sustained above 8x, or an EBITDA minus capex to interest
ratio below 1x could also lead to a downgrade. Concern that
SeaWorld may not be able to obtain an amendment to its covenants if
needed in the future would also lead to a downgrade.
SeaWorld Entertainment, Inc., through its wholly-owned subsidiary,
SeaWorld Parks & Entertainment, Inc., own and operate twelve
amusement and water parks located in the US. Properties include
SeaWorld (Orlando, San Diego and San Antonio), Busch Gardens (Tampa
and Williamsburg) and Sesame Place (Langhorne, PA in addition to
one new location in the near term). The Blackstone Group
(Blackstone) acquired SeaWorld in 2009 in a leverage buyout for
$2.4 billion (including fees). SeaWorld completed an initial public
offering in 2013 and Blackstone exited its ownership position in
2017. SeaWorld's annual revenue was approximately $1.3 billion as
of Q1 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SPEEDCAST INT'L: Creditors' Committee Members Disclose Claims
-------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Hogan Lovells US LLP and Husch Blackwell LLP
submitted a verified statement to disclose that they are
representing the Official Committee of Unsecured Creditors in the
Chapter 11 cases of Speedcast International Limited, et al.
On May 6, 2020, the Office of the United States Trustee for the
Southern District of Texas, Houston Division filed its Notice of
Appointment of Official Committee of Unsecured Creditors [ECF No.
154]. On May 12, 2020, the U.S. Trustee filed its Notice of
Reconstitution of the Official Committee of Unsecured Creditors
[ECF No. 178].
As of July 21, 2020, each Committee members and their disclosable
economic interests are:
APT Satellite Company Limited
22 Dai Kwai Street
Tai Po, New Territories
Hong Kong
* Claims against Speedcast Limited and Speedcast Singapore PTE
Limited in the aggregate amount of approximately
US$1,976,338.00, on account of prepetition services rendered to
such Debtors pursuant to a Master Services Agreement dated 1
February 2016, as amended, and the relevant Bandwidth Service
Orders entered into between each such Debtor and APT Satellite
Company Limited respectively.
Asia Satellite Telecommunications Co. Ltd
15 Dai Kwai Street
Tai Po Industrial Estate Tai Po
New Territories
Hong Kong
* Claim in the amount of approximately US$2,275,135 arising under
various Transponder Utilization Agreements entered into between
SpeedCast Limited and Asia Satellite Telecommunications Company
Limited for the provision of satellite transponder capacity.
* Claim in the amount of approximately US$10,175 for 5G filters
sale.
* Claim in the amount of approximately US$4,241 under the Teleport
Service Agreement dated Sept 21, 2017 by and between the Debtor
and AsiaSat for the provision of teleport services.
Inmarsat Global Limited
99 City Road
London, EC1Y AX UK
* Claims against the Debtors in the amount of approximately
$26,805,280 on account of prepetition services rendered to such
Debtors pursuant to agreements between Inmarsat Global Limited
and the various Debtor entities. Affiliates of Inmarsat Global
Limited have additional claims against various Debtors.
Intellian
11 Studebaker
Irvine, CA 92618
* Claim against the Debtors totaling not less than $2,111,195
arising under purchase orders issued to Intellian by the Debtors
for products delivered by Intellian to the Debtors in complete
accordance with the purchase orders.
New Skies Satellites, B.V.
Rooseveltplantsoen 4
2517 KR The Hague
* Claim in the amount of approximately $3,917,242.02 arising under
satellite capacity and related services owed by multiple Debtor
entities to New Skies Satellites B.V.
* Claim in the amount of approximately $3,013,463.80 arising under
satellite capacity and related services owed by multiple Debtor
entities to O3b Networks B.V.
* Claim in the amount of approximately $1,440,279.02 arising under
satellite capacity and related services owed by Globecomm
Networks Services Corp. to SES Government Solutions
* Claim in the amount of approximately $5,040.75 arising under
satellite capacity related terrestrial services owed by
Speedcast Singapore Pte Ltd. to Mx1 Ltd.
Telesat Canada
160 Elgin Street, Suite 2100
Ottawa, ON Canada K2P2P7
* Multiple affiliated entities of Telesat Canada may hold claims
against and/or interests in the Debtors arising out of
applicable agreements, law or equity pursuant to their
respective relationships with the Debtors' estates.
* To date, the amounts of their respective claims are not fixed.
Thrane & Thrane A/S Cobham SATCOM
Lundtoftegaardsvej 93 D
DK-2800 Kgs. Lyngby
Denmark
* Claims against the Debtors totaling not less than $1,245,000 on
account of various contracts between Thrane & Thrane A/S and the
Debtors for the delivery of various satellite communication
equipment.
* Claims against the Debtors totaling not less than $1,250,000 on
account of various contracts between Seatel Inc. and the Debtors
for the delivery of various satellite communication equipment.
* Cobham Limited has provided a limited guarantee of up to
$1,500,000 of certain of the Debtors' payment obligations under
a credit facility used by the Debtors to acquire satellite
communications equipment. Cobham Limited holds a contingent
claim against the relevant Debtors to the extent they do not
satisfy their payment obligations and the bank guarantee is
enforced.
Counsel to the Official Committee of Unsecured Creditors can be
reached at:
HOGAN LOVELLS US LLP
David P. Simonds, Esq.
Ronald J. Silverman, Esq.
John D. Beck, Esq.
390 Madison Avenue
New York, NY 10017
Telephone: (212) 918-3000
Facsimile: (212) 918-3100
Email: david.simonds@hoganlovells.com
ronald.silverman@hoganlovells.com
john.beck@hoganlovells.com
- and -
HUSCH BLACKWELL LLP
Randall A. Rios, Esq.
Timothy A. Million, Esq.
600 Travis, Suite 2350
Houston, TX 77002
Telephone: (713) 647-6800
Facsimile: (713) 647-6884
Email: randy.rios@huschblackwell.com
tim.million@huschblackwell.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/DpOqbz
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.
The 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.
STONE OAK MEMORY: J&M Family Objects to Disclosure Statement
------------------------------------------------------------
J&M Family Management f/k/a TLG Family Management, LLC, files this
objection to the Stone Oak Memory Care, LLC's Disclosure Statement
for Debtor's Plan of Reorganization.
According to TLGFM, the Disclosure Statement Fails to Meet the
Standard for Approval.
TLGFM points out that the Disclosure Statement is deficient with
respect to critical plan-related issues and fails to provide
necessary information for the impaired classes to make informed
decisions when voting on the Plan.
TLGFM asserts that the Disclosure Statement is materially
misleading on certain points and wholly lacking in others.
TLGFM complains that the Disclosure Statement wholly fails to
insert or attach the Debtor's pro forma income statement and
balance sheet statement and is virtually devoid of any financial
information necessary for a creditor’s evaluation of the Plan.
According to TLGFM, the Disclosure Statement Fails to Describe a
Confirmable Plan.
TLGFM points out that the Disclosure Statement fails to demonstrate
how the Debtor will satisfy the absolute priority rule and
Bankruptcy Code section 1129(9)(A).
TLGFM asserts that the Disclosure Statement describes a Plan that
may be patently unconfirmable in violation of the absolute priority
rule because equity is retained at confirmation while more senior
creditors are not paid in full.
Attorneys for J&M Family Management, LLC f/k/a TLG Family
Management, LLC:
Katharine Battaia Clark
Mackenzie M. Salenger
Thompson Coburn LLP
1919 McKinney Ave., Suite 100
Dallas, Texas 75201
Tel: (972) 629-7100
Fax: (972) 629-7171
E-mail: KClark@ThompsonCoburn.com
MSalenger@ThompsonCoburn.com
About Stone Oak Memory Care
Stone Oak Memory Care, LLC, d/b/a Autumn Leaves of Stone Oak, owns
and operates an adult memory care facility in Dallas, Texas.
Stone Oak Memory Care sought Chapter 11 protection (Bankr. W.D.
Tex. Case No. 19-52375) on Sept. 30, 2019 in San Antonio, Texas.
The petition was signed by Darryl Freling, Pres. of MedProperties
Stone Oak Mgr, LL. As of the Petition Date, the Debtor was
estimated to have $1 million to $10 million in assets and
liabilities. Judge Ronald B. King oversees the Debtor's case. The
LAW OFFICES OF RAY BATTAGLIA, PLLC, is counsel to the Debtor. HMP
Advisory Holdings, LLC d/b/a Harney Partners, is the financial
advisor.
STRUCTURED CABLING: Unsecureds Will Get 2% of its Claims
--------------------------------------------------------
Structured Cabling Solutions, Inc., submitted a Plan and a
Disclosure Statement.
The filing of the Chapter 11 relived Debtor from the collection
litigation of City National Bank of Florida ("CNB"), captioned NB
v. SCS at 2019-026568CA in Miami-Dade County and Communications
Supply Corporation (CSC), captioned CSC v. SCS at CACE 19020136,
filed in Broward County. CNB has filed two claims in the
bankruptcy: POC-4 and POC-5. Each claim is for the same amount of
money: $1,460,607. But Claim 4 is a secured claim and Claim 5 is
an unsecured claim. The Debtor and CNB have agreed that the
bank’s secured claim shall be set at $1,200,000, payable in the
Plan in Class 1, at 5% interest, amortized over 120 months, payable
for 59 months at $12,728 per month, with a balloon payment in month
60 for the balance of the $1,200,000 still due and owing at that
time. The balance of CNB's claim of $260,607 ($1,460,607 to
$1,200,000), shall be classified as a general unsecured claim and
treated as part of Class 4. CNB's Claim 5 is disallowed in its
entirety.
CSC also filed two claims, each for $529,240. POC-21 is an
unsecured claim and POC-22 is a secured claim. On May 26, 2020,
Debtor filed an Objection to Claim #22 (secured claim) requesting
that the Court strike and disallow the claim in its entirety. This
objection is still pending. In addition, Debtor filed a Motion To
Value and Determine Secured Status of Lien On Personal Property
Held By CSC at DE 52 ("MTV"). Per Order at DE 54, CSC was required
to file a Response to the MTV by May 18, 2020 if it contested the
MTV. No response was filed by CSC. This matter is still pending.
In fact, as alleged in the MTV, the lien of CNB's UCC-1 attaches to
all of the assets of Debtor as collateral for the two loans that
CNB extended to Debtor. CNB is undersecured, resulting in
$260,607.14 of its claim being treated in Class 4, General
Unsecured Creditors. As a result, CSC's claim is wholly unsecured,
and is being treated in the Plan as a member of Class 4 (General
Unsecured Claims).
At the time of the filing of the Plan, the Debtor owed each class
the following sums:
* Class 1 - City National Bank of Florida ("CNB") (secured):
$1,200,000
* Class 2 - Nissan Acceptance Corporation (secured): $81,297
* Class 3 - IRS (priority): $200
* Class 4 – General Unsecured: $2,308,951
* ADM CVH Law Group- Est fees: $48,000
Plan Payments Upon Effective Date
Payments to be made by Debtor to each class under the Plan upon
Effective Date is as follows:
CLASS CREDITOR Treatment AMOUNT
1 CNB Monthly payment then
$12,727.86
balloon payment
2 Nissan Acceptance Corp. Being paid in current
$2,443.12
budget
3 IRS (Priority) Lump sum
$200.00
4 General unsecured at 2% Quarterly payment
$2,295.00
ADM U.S. Trustee Fees Estimated For Quarter
$4,875.00
ADM Van Horn Law Group Lump sum
$48,000.00
Monthly Plan Payments by Class
Monthly Payments to be made by Debtor to each class under the Plan
is as follows:
CLASS CREDITOR TERM OF PAYMENT AMOUNT
----- -------- --------------- ------
1 CNB 59 months* $12,728
2 Nissan Acceptance Various Terms** $2,443
3 IRS (Priority) Lump sum $0
4 General unsec. at 2% 60 months $765
A full-text copy of the Disclosure Statement dated June 17, 2020,
is available at https://tinyurl.com/y8bynkbm from PacerMonitor.com
at no charge.
Attorney for the Debtor:
Chad Van Horn, Esq.
Van Horn Law Group, P.A.
330 N. Andrews Ave., Suite 450
Fort Lauderdale, Florida 33301
Telephone: (954) 765-3166
Facsimile: (954) 756-7103
Email: Chad@cvhlawgroup.com
About Structured Cabling Solutions
Structured Cabling Solutions, Inc., is a telecommunication
contractor in Miami Gardens, Fla.
Structured Cabling Solutions filed a voluntary petition under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
20-12551) on Feb. 26, 2020. In the petition signed by Syed A. Shah,
its president, the Debtor disclosed $944,176 in assets and
$3,273,790 in liabilities.
The case is assigned to Judge Robert A. Mark.
The Debtor tapped Chad Van Horn, Esq., at Van Horn Law Group Inc.
as its counsel, and Carlos de la Osa, C.P.A., P.A., as its
accountant.
TD HOLDINGS: Appoints Wei Sun as New CFO to Fill Vacancy
--------------------------------------------------------
Effective July 28, 2020, TD Holdings, Inc.'s board of directors
appointed Ms. Wei Sun as chief financial offier of the Company to
fill the vacancy created by the resignation of Ms. Yang An.
Ms. An resigned from her position as CFO effective July 28, 2020.
Ms. An's resignation is not as a result of any disagreement with
the Company relating to its operations, policies or practices.
Ms. Wei Sun has served as a director on the Company's Board since
May 14, 2020. She has been serving as the executive director of
China National Culture Group Limited in Hong Kong since 2014. From
2011 to 2014, Ms. Sun served as the financial accounting manager of
China Highways Holdings Limited in Hong Kong. She obtained her
Bachelor's Degree in English Education from Shanghai International
Studies University and her Master's Degree in Finance from Clark
University in 2009.
Ms. Sun does not have a family relationship with any director or
executive officer of the Company and has not been involved in any
transaction with the Company during the past two years that would
require disclosure under Item 404(a) of Regulation S-K.
Ms. Sun also entered into an executive employment agreement with
the Company, which sets her annual compensation at $50,000 and
establishes other terms and conditions governing her service to the
Company.
About TD Holdings
Headquartered in Beijing, People's Republic of China, TD Holdings,
Inc., (formerly known as Bat Group, Inc.) operates a luxurious car
leasing business as well as a commodities trading business
operating in China.
As of March 31, 2020, the Company had $12.61 million in total
assets, $5.36 million in total liabilities, and $7.26 million in
total equity.
For the year ended Dec. 31, 2019, the Company incurred net loss
from continuing operations of approximately $6.94 million, and
reported cash outflows of approximately $2.17 million from
operating activities. These factors caused concern as to the
Company's liquidity as of Dec. 31, 2019.
TESLA INC: S&P Raises ICR to 'B+'; Outlook Stable
-------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Tesla Inc. to
'B+' from 'B-'. S&P also raised its issue-level ratings on its
unsecured debt to 'B+' from 'B-'.
Tesla's performance in Q2 shows improving profitability and cash
flow generation, benefiting its competitive position. Despite U.S.
light-vehicle sales being down about 35% year-over-year in Q2,
Tesla's deliveries were down only 5%. Also, to offset the financial
impact of suspended operations, the company took actions to reduce
its costs, helping it reach a GAAP operating margin of 5.4% and
$418 million in free operating cash flow.
Though recent improvements were partially driven by an increase in
regulatory credit revenue (which accounted for nearly 30% of its
automotive gross profit in the first half of 2020), S&P expects
ongoing improvements in product and manufacturing costs, driven by
Model Y and China-made Model 3, and improved aftermarket software
and connectivity revenue. This should help the company sustain
EBITDA margins over 10% over the next two years, which should
support improved cash flow metrics.
Specifically, S&P sees debt to EBITDA in the range of 3.5x to 4.0x
in 2020 and moving below 3.5x in 2021. It also views the company's
cash flow generation capacity as improving; this, and the $8.6
billion of cash on its balance sheet at the end of Q2, should
support greater financial flexibility to fund the expansion of its
manufacturing footprint and address its maturing convertible debt
over the next 12 months.
"The stable outlook reflects our view that Tesla's financial
performance will stay in line with our expectations, namely debt to
EBITDA below 4x and positive free operating cash flow (FOCF)
generation, even as the company expands its manufacturing footprint
around the world," S&P said.
"We could consider raising the ratings if the company continues to
ramp up its production of the Model 3 and Y globally, with
consistent operational improvements, such that EBITDA margins
remain over 10%," the rating agency said.
S&P would also expect demand for Tesla's electric vehicles to grow,
even as the number of EV models from competing automakers
proliferate. Alternatively, the rating agency would look to
financial metrics as confirming Tesla's strengthening market
position, such as increasing gross margins and a debt to EBITDA
ratio of below 3.0x on a sustained basis.
"We could lower the rating if the company encountered problems
expanding its manufacturing footprint, if demand for electric
vehicles did not match the newly installed capacity, or competition
from traditional automakers intensified and drew customers away
from buying Tesla's vehicles. Also we could lower the ratings if
the debt-to-EBITDA ratio exceeded 4.5x on a sustained basis," S&P
said.
"We expect governance and social risk factors to remain high and
have an increasing influence on Tesla's credit quality. Its
environmental risks are minimal relative to other automakers, given
its focus on fully electric vehicles and ambitions to expand
aggressively into heavy-duty trucks and energy storage markets,"
the rating agency said.
Governance risks will remain a bigger negative for credit quality
than environmental and social risks, given the risk that CEO Elon
Musk violates securities laws on fair disclosure and the recent
high rate of senior executive turnover. S&P views the effectiveness
of the committee that oversees Mr. Musk's communications as poor,
given the rising risks from current and future litigation (as
demonstrated by the 2018 subpoenas from the U.S. Securities
Exchange Commission and related investigations from the U.S.
Department of Justice). S&P views key-man risk as very high for
Tesla, given Mr. Musk's dominant role in the company. In late 2018,
the settlement with the SEC, under which Mr. Musk resigned as
chairman of the board of directors but remained CEO, averted a
significant disruption to Tesla's operations.
"Social risks will intensify into the next decade as potential
accidents, fires, and cybersecurity breaches could increase the
risk of product liability, government scrutiny, and further
regulation. Until those risks abate, in our view, Tesla's progress
toward improving safety through the successful deployment of its
autopilot technology will at best remain credit neutral for the
foreseeable future," S&P said.
From an environmental risk perspective, S&P thinks Tesla has an
advantage over competitors given its battery and powertrain
technology, the superior range per kilowatt hour (kWh, as rated by
the U.S. Environmental Protection Agency) of its vehicles compared
with upcoming launches, and ability to improve vehicle performance
through over-the-air software updates.
Given its high reliance on batteries and other customized
components, Tesla's limited and often single-source supply chain
exposes it to multiple potential sources of delivery failure or
component shortages. This happened in 2012 and 2016 in connection
with production delays for the Model S and Model X.
TONOPAH SOLAR: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Tonopah Solar Energy, LLC
11 Gabbs Pole Line Road
Tonopah, NV 89049
Business Description: Tonopah Solar Energy, LLC owns and operates
a net 110-megawatt concentrated solar energy
power plant located near Tonopah in Nye
County, Nevada. The Power Plant is also
known as the Crescent Dunes Solar Energy
Project. The Project is the first utility-
scale concentrated solar power plant in the
United States to be fully integrated with
energy storage technology. The Power Plant
uses solar power technology to concentrate
and convert sunlight into heat energy, which
is stored and converted, through a series
of heat exchangers, to generate high-
pressure steam.
Chapter 11 Petition Date: July 30, 2020
Court: United States Bankruptcy Court
District of Delaware
Case No.: 20-11884
Judge: Hon. Karen B. Owens
Debtor's
Bankruptcy
Counsel: Matthew B. Lunn, Esq.
Edmon L. Morton, Esq.
Allison S. Mielke, Esq.
Jared W. Kochenash, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square, 1000 N. King Street
Wilmington, Delaware 19801
Tel: (302) 571-6600
Email: mlunn@ycst.com
emorton@ycst.com
amielke@ycst.com
jkochenash@ycst.com
Debtor's
Bankruptcy
Counsel: Matthew A. Feldman, Esq.
Paul V. Shalhoub, Esq.
Andrew S. Mordkoff, Esq.
Ciara A. Copell, Esq.
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, NY 10019-6099
Tel: (212) 728-8000
Fax: (212) 728-8111
Email: mfeldman@willkie.com
pshalhoub@willkie.com
amordkoff@willkie.com
ccopell@willkie.com
Debtor's
Turnaround
Management
Services
Provider: FTI CONSULTING, INC.
Debtor's
Investment
Banker: HOULIHAN LOKEY, INC.
Debtor's
Notice,
Claims,
Solicitation,
Balloting
Agent and
Administrative
Advisor: EPIQ CORPORATE RESTRUCTURING, LLC
https://dm.epiq11.com/case/tonopah/info
Estimated Assets: $500 million to $1 billion
Estimated Liabilities: $100 million to $500 million
The petition was signed by Justin D. Pugh, treasurer.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/LQyNqx
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. PIC Group, Inc. Trade Debt $1,220,714
1165 Northchase Pkwy, Ste 400
Marietta, GA 30067
Contact: Accounts Receivable Manager
Tel: 770 850 0100
Email: ar@picgroupinc.com
2. Ryan Mechanical Inc. Trade Debt $318,932
3335 Wynn Road
Las Vegas, NV 89102
Contact: Bret Anderson
Tel: 702 631 7777
Email: bret@ryan-mechanical.com
3. DXP Enterprises Inc. Trade Debt $174,771
DBA Cortech Engineering
PO Box 1697
Houston, TX 77251-0169
Contact: Carl Cioffi
Tel: 951-415-4540
Email: carl.cioffi@dxpe.com
4. Uintah Machine & Mfg Co Trade Debt $147,978
521 West Main - P.O. Box 8
Duchesne, UT 84021
Contact: Roland Hamilton
Tel: 435-738-2453
Email: rfhamilton@uintahmachine.com
5. NYE County Assessor - Tax $115,558
Real Property Taxes
PO Box 473
Tonopah, NV 89049-0473
Contact: John Prudhont
Tel: 775 482 8147
Email: treasurer@co.nye.nv.us
6. DP Systems, LLC Trade Debt $109,979
1919 West 2300 South
West Valley City, UT 84119
Contact: Robert Scott Luks
Tel: 702 997 5209
Email: scottl@dpindustrialinc.com
7. NYE County Assessor - Tax $101,792
Personal Property Taxes
160 N. Floyd Drive
Pahrump, NV 89060
Contact: Marie Becht
Tel: 775 751 7066
Email: mbecht@co.nye.nv.us
8. Flippins Trenching Inc. Trade Debt $93,452
2645 Marion Drive
Las Vegas, NV 89115
Contact: Ken Flippin
Tel: 702 643 2211
Email: kenjr@flippins.com
9. Mertec Engineering, CMP Sales Trade Debt $92,963
Corporation
1232 Monte Vista Ave 9
Upland, CA 91786
Contact: Jordan Riccardi
Tel: 909 373 0526
Email: jordanr@mertec.net
10. General Electric Trade Debt $77,909
International, Inc.
4200 Wildwood Parkway
Atlanta, GA 30339
Contact: Raymond Frank
Tel: 713 303 1780
Email: raymond.frank@ge.com
11. Blair-Martin Co., Inc. Trade Debt $77,526
1500 E. Burnett Street
Signal Hill, CA 90755
Contact: Wayne Depew
Tel: 562 595 8773
Email: wdepew@blairmartin.com
12. Bay Valve Service & Trade Debt $54,499
Engineering, LLC
3948 Teal Ct.
Benicia, CA 94510-1202
Contact: Scott Shultz
Tel: 7074487166
Email: scotts@bay-valve.com
13. Nevada Department of Taxation Tax $49,853
1550 College Parkway, Suite 115
Carson City, NV 89706
Tel: 775 684 2000
Email: nevadaolt@tax.state.nv.us
14. GE Steam Power, Inc. Trade Debt $31,158
175 Addison Road
Windsor, CT 06095
Contact: Andy Johnson
Tel: 505 386 603
Email: andrew.johnson1@ge.com
15. Edwards Vacuum, LLC Trade Debt $23,480
6416 Inducon Dr
Sanborn, NY 14132
Contact: Dominic Minassian
Tel: 626 418 2121
Email: dominic.minassian@edwardsvacuum.com
16. Sunbelt Rentals, Inc. Trade Debt $18,394
P.O. Box 409211
Atlanta, GA 30384-9211
Contact: Casey Countryman
Tel: 916 210 8282
Email: casey.countryman@sunbeltrentals.com
17. MSC Industrial Supply Inc. Trade Debt $11,740
PO Box 953635
St Louis, MO 63195
Contact: Terry Staggs
Tel: 813 432 3700
Email: branchphx@mscdirect.com
18. Cashman Equipment Company Trade Debt $9,855
3306 St Rose Pkwy
Henderson, NV 89052
Contact: Jordan Clary
Tel: 775 332 5450
Email: jordanclary@cashmanequipment.com
19. Flowserve Corp Trade Debt $7,800
1909 E Cashdan St
Rancho Dominguez, CA 90220
Contact: Roger Chavex
Tel: 310 667 4200
Email: rochavez@flowserve.com
20. United Rentals Trade Debt $7,658
(North America), Inc.
File 51122
Los Angeles, CA 90074-1122
Contact: Gerald Granata
Tel: 775 359 6660
Email: ggranata@ur.com
TRUE RELIGION: Unsec. Creditors to Get Full Payment in Joint Plan
-----------------------------------------------------------------
True Religion Apparel, Inc. and certain of its affiliated debtors
filed with the U.S. Bankruptcy Court for the District of Delaware a
Joint Chapter 11 Plan of Reorganization and a Disclosure Statement
on June 19, 2020.
On March 10, 2020, the Prepetition ABL Agent, Holdings and the ABL
Borrowers entered into the First Amendment to ABL Loan and Security
Agreement, pursuant to which the Prepetition ABL Lenders agreed to
modify the borrowing base under the Prepetition ABL Facility. In
connection therewith, Farmstead Master Fund, Ltd. and certain of
its affiliates agreed to cause a standby letter of credit in the
aggregate face amount of $3,000,000 to be issued as additional
credit support for the benefit of the Prepetition ABL Agent.
In connection with the Prepetition ABL Credit Agreement, the
Debtors entered into a Copyright Security Agreement, Patent
Security Agreement, and Trademark Security Agreement, each dated as
of November 15, 2019, by and between the Debtors, as grantors, and
the Prepetition ABL Agent, as collateral agent for the Prepetition
ABL Secured Parties.
The Prepetition Agents are parties to that certain Intercreditor
Agreement, dated as of Nov. 15, 2019. The Intercreditor Agreement,
among other things, provides for the relative priority of the
respective prepetition liens and security interests of the
Prepetition Agents in and to the ABL Facility Priority Collateral
and the Term Loan Priority Collateral.
Holders of Allowed Class 6 Claims will receive distributions of
Cash from the Avoidance Actions pursuant to the terms of the Plan
and the Avoidance Actions Trust Agreement.
On the Effective Date, all Equity Interests in Class 7 will be
cancelled and discharged. Holders of Interests in Class 7 will not
receive a Distribution on account of such Interests.
All Cash necessary for the Reorganized Debtors to make payments
required pursuant to the Plan will be obtained from the Exit Term
Facility, New ABL Facility and the Reorganized Debtors’ Cash
balances, including Cash from operations. Cash payments to be made
pursuant to the Plan will be made by the Reorganized Debtors.
A full-text copy of the Disclosure Statement dated June 19, 2020,
is available at https://tinyurl.com/y79xzz39 from PacerMonitor at
no charge.
The Debtors are represented by:
COLE SCHOTZ P.C.
Justin R. Alberto
500 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801
Telephone: (302) 652-3131
E-mail: jalberto@coleschotz.com
– and –
Seth Van Aalten
1325 Avenue of the Americas, 19th Floor
New York, New York 10019
Telephone: (212) 752-8000
E-mail: svanaalten@coleschotz.com
About True Religion Apparel
Founded in Los Angeles, Calif., in 2002, True Religion Apparel,
Inc. and its affiliates design, market, sell and distribute premium
fashion apparel centered on their core denim products using the
brand names "True Religion" and "True Religion Brand Jeans." The
companies' products are distributed through wholesale and retail
channels and through the website at www.truereligion.com. On a
global basis, the companies had 87 retail stores and over 1,000
employees as of April 13, 2020.
True Religion Apparel and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
20-10941) on April 13, 2020. At the time of the filing, Debtord
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Judge Christopher S. Sontchi oversees the cases.
The Debtors tapped Cole Schotz P.C. as legal counsel; Akin Gump
Strauss Hauer & Feld, LLP as corporate counsel; Province, Inc. as
financial advisor; Retail Consulting Services, Inc. as real estate
advisor; and Stretto as claims and noticing agent. Richard Lynch
of HRC Advisory, LP is Debtors' interim chief financial officer.
TTK RE ENTERPRISE: $335K Sale of Egg Harbor Property to Pham Okayed
-------------------------------------------------------------------
Judge Jerrold N. Poslusny, Jr., of the U.S. Bankruptcy Court for
the District of New Jersey authorized TTK RE Enterprises, LLC's
sale of the real property located at 401 Glenn Avenue, Egg Harbor
Township, New Jersey to David Pham for $335,000, as set forth in
their Contract for Sale.
A hearing on the Motion was held on July 28, 2020 at 11:00 a.m.
The sale is free and clear of any and all liens, security
interests, encumbrances and claims including, but not limited to,
(i) Federal Tax Lien against non-Debtor Emily K. Vu, Instrument No.
2019048118 dated Sept. 9, 2019 in the amount of $1,228 and recorded
on Sept. 27, 2019;(ii) Federal Tax Lien against non-Debtor(s) Emily
K Vu and David Phan, Instrument No. 2019048119 dated Sept. 9, 2019
in the amount of $12,298, and recorded on Sept. 27, 2019; (iii) Fox
Capital Judgment dated Aug. 9, 2019 in the amount of $193,708
against non-Debtor Emily K. Vu; and (iv) Financing Statement
Instrument No. 2017058750 recorded on Oct. 24, 2017 against
non-Debtor TTK RE Investments, LLC by Sentinel Security Life
Insurance Co. which appear on the Title Report.
At the time of closing the proceeds of the sale of the Property
will be paid as follows:
a. Normal costs attendant with closing on the sale of the
Property, with the final closing statement setting forth all costs
attendant with closing being subject to the approval of Corevest
American Finance Lender, LLC;
b. 5% of the Purchase Price ($16,750) commission to Century
21, to be split equally with any participating broker in connection
with the sale of the Property; and
c. All remaining proceeds to Situs on account of its Secured
Claim secured by a mortgage against the Property.
The stay of the Order granting the Motion under Bankruptcy Rule
6004(h) is waived for cause.
After closing the proceeds of the sale of the Property will be paid
by wire transfer to Situs or as may be otherwise agreed by the
Title Company and Situs without further order of the Court and
applied as stated in the Situs loan documents.
About TTK RE Enterprise
TTK RE Enterprise LLC is a privately held company in Somers Point,
New Jersey. The Company is the 100% owner of 48 real estate
properties in New Jersey having a total current value of
$9,265,000.
TTK RE Enterprise sought Chapter 11 protection (Bankr. D.N.J. Case
No. 19-30460) on Oct. 29, 2019 in Camden, New Jersey. In the
petition signed by Emily K. Vu, president, the Debtor disclosed
total assets of $9,269,950, and total liabilities of $6,432,457.
Judge Jerrold N. Poslusny Jr. oversees the case. FLASTER GREENBERG
PC - CHERRY HILL is the Debtor's counsel.
UNIQUE TOOL: Aug. 11 Hearing on Disclosure Statement
----------------------------------------------------
Judge Mary Ann Whipple has ordered that the hearing to consider the
approval of the disclosure statement of Unique Tool & Manufacturing
Co., Inc., will be held at Courtroom No. 2, Room 103, United States
Courthouse, 1716 Spielbusch Avenue, Toledo, Ohio, on August 11,
2020, at 9:30 a.m.
August 3, 2020, is fixed as the last day for filing with the court
and serving written objections to the disclosure statement.
Counsel for the Debtor:
Eric R. Neuman
Diller & Rice
1105-1107 Adams
Toledo, OH 43604
(419) 724-9047
About Unique Tool & Manufacturing
Unique Tool & Manufacturing Co., Inc. -- http://www.uniquetool.com/
-- is a custom metal stamping company formed in 1963, which
supplies stampings to the satellite, communications, electrical,
appliance, refrigeration and automotive industries throughout the
United States, Canada and Mexico. It specializes in tool and die
manufacturing, brazing, welding, plating and more.
Unique Tool & Manufacturing sought Chapter 11 protection (Bankr.
N.D. Ohio Case No. 19-32356) on July 26, 2019. At the time of the
filing, the Debtor was estimated to have up to $50,000 in assets
and $1 million to $10 million in liabilities.
The Hon. Mary Ann Whipple is the case judge.
Diller and Rice, LLC, is the Debtor's legal counsel.
The U.S. Trustee for Region 9 appointed a committee of unsecured
creditors on Sept. 5, 2019. The Creditors' Committee retained
Wernette Heilman PLLC as its legal counsel.
UNIT CORPORATION: Aug. 6 Plan & Disclosure Hearing Set
------------------------------------------------------
Unit Corporation and its debtor affiliates filed with the U.S.
Bankruptcy Court for the Southern District of Texas, Houston
Division, a motion for entry of an order conditionally approving
the Disclosure Statement.
On June 19, 2020, Judge David R. Jones conditionally approved the
Disclosure Statement and ordered that:
* August 6, 2020 at 3:30 p.m. in Courtroom 400 of the United
States Bankruptcy Court for the Southern District of Texas, 515
Rusk Street, Houston, Texas 77002 is the Combined Hearing, at which
time the Court will consider, among other things, the adequacy of
the Disclosure Statement and confirmation of the Plan.
* July 31, 2020, is fixed as the last day to file any objections
to the approval of the Disclosure Statement on a final basis or
confirmation of the Plan.
* July 29, 2020, at 5:00 p.m. is the deadline by which Ballots
must be received by the Debtors’ Voting Agent.
* Aug. 3, 2020 is the deadline by which the Debtors shall file a
declaration of the Voting Agent attesting to the voting on the
Plan.
* Aug. 3, 2020 is the deadline by which the Debtors may file a
brief in support of final approval of the Disclosure Statement and
confirmation of the Plan and a reply to any objections.
* The Debtors are authorized to take or refrain from taking all
actions necessary to effectuate the relief granted pursuant to this
Order in accordance with the Motion without seeking further order
from the Court.
A full-text copy of the Order dated June 19, 2020, is available at
https://tinyurl.com/ya4eaot5 from PacerMonitor.com at no charge.
The Debtors are represented by:
VINSON & ELKINS LLP
Harry A. Perrin
Paul E. Heath
Matthew J. Pyeatt
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: 713.758.2222
Fax: 713.758.2346
E-mail: hperrin@velaw.com
pheath@velaw.com
mpyeatt@velaw.com
- and -
David S. Meyer
Lauren R. Kanzer
1114 Avenue of the Americas, 32nd Floor
New York, NY 10036
Tel: 212.237.0000
Fax: 212.237.0100
E-mail: dmeyer@velaw.com
lkanzer@velaw.com
About Unit Corporation
Unit Corporation (NYSE- UNT) -- http://www.unitcorp.com/-- is a
Tulsa-based, publicly held energy company engaged through its
subsidiaries in oil and gas exploration, production, contract
drilling and natural gas gathering and processing.
On May 22, 2020, Unit Corporation and five affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. 20-32740) with a
pre-negotiated plan that reduces debt by $650 million.
Unit Corp. disclosed $2,090,052,000 in assets and $1,034,417,000 in
debt as of Dec. 31, 2019.
Vinson & Elkins L.L.P. is serving as legal advisor, Evercore Group
L.L.C. is serving as investment banker, and Opportune LLP is
serving as restructuring advisor to the Company. Prime Clerk LLC
is the claims agent, maintaining the page
https://cases.primeclerk.com/UnitCorporation
Weil, Gotshal & Manges LLP is serving as legal advisor and
Greenhill & Co., LLC, is serving as financial advisor to an ad hoc
group of holders of subordinated notes.
VIRGINIA TRUE: Up to 87% for Unsecureds in Diatomite Plan
---------------------------------------------------------
Diatomite Corporation of America, filed a proposed Chapter 11
Creditor Plan of Liquidation for debtor Virginia True Corporation.
In April 2017, Debtor acquired from Diatomite a 977-acre parcel of
undeveloped land located within the environmentally-protected Fones
Cliffs area in Richmond County, Virginia (the "Property"), with the
intent to develop a resort and build a hotel, luxury condominiums,
housing, a golf course, a commercial village, and attendant
amenities. At closing, Virginia True paid Diatomite approximately
$5 million of the purchase price in cash or cash-equivalents, i.e.,
a wire transfer of immediately available funds. The remaining $7
million of the $12 million purchase price was seller-financed
through a purchase money promissory note, dated April 27, 2017,
made by Debtor and payable to Diatomite (the "Diatomite Note").
In the three years since purchasing the Property, Debtor has not
made any meaningful progress toward achieving its plan. But for
the illegal clearing of approximately 13-acres of the Property
(which resulted in pending environmental litigation, remediation,
civil penalties and more stringent compliance measures and expenses
on a go-forward basis), the Debtor has yet to break ground or even
obtain proper rezoning approval and the authorizations and/or
permits needed to do so. The Property is presently the Debtor's
sole valuable asset.
Diatomite has asserted a $7,280,000 Claim, pursuant to the
Diatomite Note. See Proof of Claim No. 8-1. In addition, Diatomite
has asserted an unliquidated claim for damages arising out of the
Debtor's breach of its agreement with Diatomite by encumbering the
Property to secure the Cipollone Note without the requisite prior
written consent of Diatomite, as the purchase money lender.
General Unsecured Claims (Class 2) will recover 87% in Plan. Each
holder of an allowed general unsecured claim, except for the
Diatomite Unsecured Claim (Class 3), will be paid as follows:
* If the Plan Proponent (or its affiliate or other designee) is
the Purchaser of the Property, Holders of Allowed General Unsecured
Claims in Class 2 shall receive their Pro Rata Share of any
remaining Creditor Plan Funding.
* If a Third-Party Purchaser is the Purchaser of the Property,
Holders of Allowed General Unsecured Claims in Class 2 and the
Holder of the Diatomite Unsecured Claim in Class 3 shall be treated
as a single category or class and shall each receive their Pro Rata
Share of any remaining Sale Proceeds.
Diatomite's unsecured claim (Class 3) is impaired. The claim will
be paid as follows:
* If the Plan Proponent (or its affiliate or other designee) is
the Purchaser of the Property, the Holder of the Diatomite
Unsecured Claim shall receive the Property free and clear of all
Liens, claims, charges, encumbrances or interests of any kind or
nature, as provided in the Asset Purchase Agreement.
* If a Third-Party Purchaser is the Purchaser of the Property,
then, on the Closing Date, or as soon thereafter as is reasonably
practicable, the Plan Proponent will be repaid the Creditor Plan
Funding amount in full from the Sale Proceeds, and, after the
Creditor Plan Funding is repaid in full from the Sale Proceeds and
all senior Allowed Claims are paid in full, Holders of Allowed
General Unsecured Claims in Class 2 and the Holder of the Diatomite
Unsecured Claim in Class 3 will each receive their Pro Rata Share
of any remaining Sale Proceeds.
Subordinated Claims (Class 4) are impaired. Holders of Allowed
Subordinated Claims will not receive any Distributions on account
of such Subordinated Claims unless and until all Allowed Claims in
Classes 1, 2, and 3 have been paid in full, in which case, each
Holder of an Allowed Class 4 Subordinated Claim shall receive such
Holder’s Pro Rata Share of the remaining Sale Proceeds.
Interests (Class 5) are impaired. After payment in full to all
Creditors holding Allowed Claims has been made under this Creditor
Plan, and appropriate amounts have been reserved for Disputed
Claims, any excess Available Cash shall be distributed to the
Holders of Allowed Interests in Debtor.
In order to fund Distributions under this Creditor Plan, the Plan
Proponent will provide the Plan Funding and the Property will be
sold pursuant to the Bid Procedures to the Purchaser pursuant to
Sections 363 and 1123(a)(5) of the Bankruptcy Code, free and clear
of any and all Liens, Claims, and encumbrances to the fullest
extent provided by the Bankruptcy Code or other applicable law.
A full-text copy of the Disclosure Statement dated June 17, 2020,
is available at https://tinyurl.com/y7zecmnx from PacerMonitor.com
at no charge.
Counsel for Diatomite Corporation of America:
Rishi Kapoor
VENABLE LLP
Rockefeller Center
1270 Avenue of the Americas, 24th Floor
New York, New York 10020
Telephone: (212) 307-5500
Facsimile: (212) 307-5598
E-mail: rkapoor@venable.com
About Virginia True Corporation
Virginia True Corporation, a New York-based golf resort owner and
developer, sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 19-42769) on May 3, 2019. At the
time of the filing, the Debtor was estimated to have assets of
between $10 million and $50 million and liabilities of the same
range. Judge Nancy Hershey Lord oversees the case. Pick & Zabicki
LLP is the Debtor's legal counsel.
VISTA PROPPANTS: Committee Hires Kilpatrick Townsend as Counsel
---------------------------------------------------------------
The official committee of unsecured creditors of Vista Proppants
and Logistics, LLC, and its affiliates seeks authority from the
U.S. Bankruptcy Court for the Northern District of Texas to retain
Kilpatrick Townsend & Stockton, LLP as its legal counsel.
The firm will provide the following services:
a) advise the committee regarding its organization, duties and
powers in Debtors' Chapter 11 cases;
b) assist the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of Debtors,
and in reviewing any proposed asset sales or dispositions;
c) attend telephonic meetings of the committee and meetings
with Debtors and secured creditors, and participate in
negotiations;
d) take all necessary actions to protect and preserve the
interests of the committee, including possible prosecution of
actions on its behalf and investigations concerning litigation in
which Debtors are involved;
e) assist the committee in the review, analysis, and
negotiation of any post-petition financing or use of cash
collateral;
f) assist the committee with respect to communications with
the general unsecured creditor body about significant matters in
Debtors' cases;
g) review and analyze claims filed against the Debtors'
bankruptcy estates;
h) represent the committee in hearings before the bankruptcy
court, appellate courts and other courts;
i) prepare legal papers; and
j) assist the committee in the review, formulation, analysis
and negotiation of any plan of reorganization and accompanying
disclosure statement.
The firm's hourly rates are:
Partners $690 - $1,160
Associates $515 - $550
Paralegals $315
Todd Meyers, Esq., a partner at Kilpatrick, disclosed in court
filings that he and other members of the firm are "disinterested"
as that term is defined in Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Mr.
Meyers disclosed that:
-- Kilpatrick has not agreed to any variations from, or
alternatives to, its standard or customary billing arrangements for
the engagement;
-- no Kilpatrick professional included in the engagement has
varied his rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the committee in the 12 months
prior to Debtors' bankruptcy filing; and
-- the committee and its legal counsel are currently in the
process of formulating a budget.
Kilpatrick can be reached through:
Todd C. Meyers, Esq.
Kilpatrick Townsend & Stockton, LLP
The Grace Building
1114 Avenue of the Americas
New York, NY 10036
Tel: (212) 775-8700
Fax: (212) 775-8800
Email: tmeyers@kilpatricktownsend.com
About Vista Proppants and Logistics
Vista Proppants and Logistics, LLC is a pure-play, in-basin
provider of frac sand solutions in producing regions in Texas and
Oklahoma, including the Permian Basin, Eagle Ford Shale and
SCOOP/STACK. It is Headquartered in Fort Worth, Texas. For more
information, visit https://vprop.com
Vista Proppants and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Texas Lead Case No.
20-42002) on June 9, 2020. At the time of the filing, Vista
Proppants had estimated assets of less than $50,000 and liabilities
of between $100 million and $500 million.
Judge Edward L. Morris oversees the cases.
Debtors have tapped Haynes and Boone, LLP as legal counsel, Alvarez
& Marsal North America, LLC as chief restructuring officer, and
James Lanter P.C. and Wickes Law, PLLC as special litigation
counsel. Kurtzman Carson Consultants, LLC is the claims, noticing,
balloting and solicitation agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 23, 2020. The committee is represented by
Kilpatrick Townsend & Stockton LLP.
VISTA PROPPANTS: Committee Hires Province Inc. as Financial Advisor
-------------------------------------------------------------------
The official committee of unsecured creditors of Vista Proppants
and Logistics, LLC, and its affiliates seeks authority from the
U.S. Bankruptcy Court for the Northern District of Texas to retain
Province, Inc. as its financial advisor.
The firm's services will include:
a. analyzing Debtors' cash collateral budget, assets and
liabilities, and overall financial condition;
b. assisting the committee in determining how to react to
Debtors' restructuring plan or in formulating and implementing its
own plan;
c. preparing or reviewing avoidance action and claim
analyses;
d. assisting the committee in reviewing Debtors' financial
reports;
e. advising the committee on the current state of Debtors'
Chapter 11 cases;
f. advising the committee in negotiations with Debtors and
third parties;
g. participating as a witness in hearings before the
bankruptcy court.
The firm's standard hourly rates are as follows:
Principal $880 - $975
Managing Director $670 - $790
Senior Director $600 - $670
Director $550 - $600
Vice President $510 - $550
Senior Associate $430 - $510
Associate $360 - $430
Analyst $240 - $430
Paraprofessionals $185
Walter Oh, a managing director at Province, disclosed in court
filings that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Walter Oh
Province Inc.
2360 Corporate Circle, Suite 330
Henderson, NV 89074
Tel: (702) 685-5555
About Vista Proppants and Logistics
Vista Proppants and Logistics, LLC is a pure-play, in-basin
provider of frac sand solutions in producing regions in Texas and
Oklahoma, including the Permian Basin, Eagle Ford Shale and
SCOOP/STACK. It is Headquartered in Fort Worth, Texas. For more
information, visit https://vprop.com
Vista Proppants and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Texas Lead Case No.
20-42002) on June 9, 2020. At the time of the filing, Vista
Proppants had estimated assets of less than $50,000 and liabilities
of between $100 million and $500 million.
Judge Edward L. Morris oversees the cases.
Debtors have tapped Haynes and Boone, LLP as legal counsel, Alvarez
& Marsal North America, LLC as chief restructuring officer, and
James Lanter P.C. and Wickes Law, PLLC as special litigation
counsel. Kurtzman Carson Consultants, LLC is the claims, noticing,
balloting and solicitation agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 23, 2020. The committee is represented by
Kilpatrick Townsend & Stockton LLP.
WESTERN GLOBAL: Fitch Assigns 'B+(EXP)' LT IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings expects to assign Western Global Airlines, LLC a
Long-Term Issuer Default Rating of 'B+(EXP)'. Fitch also expects to
assign a rating of 'B+'/'RR4' (EXP) to the company's new senior
unsecured notes. The Rating Outlook is Stable.
Fitch has provided ratings in connection with the partial sale of
WGA to the company's new employee stock ownership plan. WGA plans
to use $420 million of senior unsecured notes and $80 million of
senior secured term loan borrowings to facilitate the transaction.
The funds will be held in escrow until the transaction is
completed, which is expected in 3Q20.
KEY RATING DRIVERS
Net Positive Pandemic Impact: WGA and other freight-focused
airlines are benefiting from the steep drop off in cargo capacity
in passenger airlines which has outpaced the decline in demand for
shipments. This imbalance, while temporary, should support outsized
performance in 2020 and potentially extend through 2021, depending
on the recovery in capacity and demand dynamics. The boost is
materializing in the form of higher block rates and capacity
utilization which Fitch estimates could lead to revenues increasing
by around 70% in 2020.
Fitch expects a subsequent decline as the industry rebalances,
however, there is some uncertainty as to where performance levels
out. Industry risk factors include international trade conflicts,
which have seemed to stagnate after driving industry performance
lower in 2019, and a persistently weak freight environment coupled
with a return in air cargo capacity that could pressure the
long-term balance. Factors moderating these concerns include the
growth in e-commerce shipments and WGA's geographic expansion
strategy.
Small Size and Market Position: Key constraining factors to WGA's
ratings are its relatively small size and concentrated customer
base. Prior to the pandemic, the company has historically generated
under $300 million of annual revenue, which is concentrated in
chartering freight aircraft. Its active fleet is made up of 12
MD-11s and 2 B747s, and unexpected downtime across a few planes
could drive significant operating volatility, as observed in 2019.
WGA also has significant customer concentration among larger
shippers and the U.S. Department of Defense. While it is common for
freight airlines to have a high degree of customer concentration,
the large customers could induce competitive pressures or expand
internal capacity. Concerns are somewhat softened by the blue-chip
nature of WGA's large customers, and the flexibility WGA's services
offer over internalizing.
Volatile Demand Characteristics: Fitch believes WGA is exposed to
cyclicality associated with the global freight industry,
particularly in the company's role of transporting excess cargo for
large customers. While there is some comfort in the recurring
nature of regular peak season demand and a good proportion of U.S.
Department of Defense business, Fitch sees a risk of high
fluctuations in block rates and hours. WGA has contracted service
in place for periods that may span under six months to one to two
years, though there is also a high degree of one-time charter
revenue.
High Profitability and Fixed Cost Structure: EBITDA margins are
uniquely high for the industry reflecting business model
differences such as a fully-owned aircraft fleet, economics of
MD-11 aircraft for WGA's services, a freight focused operation and
nonunionized workforce. WGA has also ramped up a large MRO facility
with heavy maintenance capabilities that supports lower maintenance
costs. WGA's cost structure benefits from factors including the
contract terms that effectively pass through all of its largest
operating expense, fuel costs, and the absence of foreign exchange
risks. The remaining portion of its cost structure is highly fixed
which will likely drive some margin variability through demand
cycles.
Strong FCF: Fitch expects FCF generation to be sustainably positive
going forward with notable benefits from high demand levels and
profitability in the near term. Forecasted FCF margins are strong
compared to other similarly rated air carriers. Over the last two
years, FCF was pressured by heavy capex for completing and ramping
up the new MRO facility along with one-time fleet wide upgrades in
2019 that drove higher costs and downtime. Periods of unexpected
downtime are an ongoing risk to FCF while ideally the new MRO
facility moderates these challenges.
Good Leverage Position: The company is issuing $500 million of debt
after previously operating debt free (including no aircraft
leases), and while leverage is expected to rise, it should remain
relatively strong for the rating level. Fitch expects WGA's
debt/EBITDA to range around the mid-to-high 2x. The low leverage
reflects near-term operating strength and a conservative financial
policy. The company has articulated a desire for a conservative
financial profile, ultimately targeting net leverage below 1.0x.
Concentrated Ownership: Fitch considers the company to be subject
to typical risks associated with a highly concentrated ownership
structure, such as a concentrated decision making and lack of
independent oversight. The founder and CEO (and family) will
continue to control a majority stake in the business following the
transaction with WGA's ESOP controlling the remaining portion.
ESG CONSIDERATIONS
WGA has an ESG Relevance Score of 4 for Governance Structure due to
its highly concentrated ownership structure, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
Except for the matters discussed, 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,
either due to their nature or to the way in which they are being
managed by the entity.
DERIVATION SUMMARY
When comparing WGA to passenger airlines such as Spirit Airlines
'BB-', Hawaiian Holdings 'B+' and American Airlines 'B', Fitch
considers the business profile differences in freight airlines and
industry structure. The passenger airline industry is also in a
state of flux following the wide scale drop in passenger travel
which is also directly tied to the near-term strength of WGA.
Looking through the cycle, Fitch believes WGA's rating of 'B+'
reflects the relative strengths of its profitability and plan to
manage with low leverage, moderated by business profile factors
such as a relatively small aircraft fleet size, high concentration
of large customers and secondary market position. These relative
characteristics hold true when compared to air freight peers, Air
Transportation Services Group and Atlas Air Group, though it is
common for freight airlines to have high customer concentration.
KEY ASSUMPTIONS
-- A shortage of industry-wide air freight capacity supports
strong but temporary growth in block hours and rates in 2020.
Additional capacity is added to the industry and the favorable
dynamic unwinds over the following two years;
-- Two aircraft are added to WGA's active fleet by YE 2020, and
it sees some sustainable success in its geographic expansion
strategy;
-- EBITDA margins follow revenue trends though there are some
structural profitability improvements from higher utilization and a
fully operating MRO facility;
-- The company does not incur significant one-time costs or
experience further operational challenges after 2019;
-- The company prepays $80 million of term loan borrowings by YE
2021.
Recovery Analysis
The recovery analysis for WGA reflects Fitch's expectation that the
enterprise value of the company, and recovery rates for creditors,
would be maximized as a going concern rather than through
liquidation. Fitch has assumed a 10% administrative claim.
A going concern EBITDA estimate of approximately $65 million
reflects Fitch's view of a sustainable post-reorganization EBITDA.
Fitch considers a bankruptcy scenario that could be caused by
increased competitive pressures, the loss of a large customer and
aircraft maintenance challenges driving higher downtime.
An enterprise value multiple of 5.5x is used to calculate the
post-reorganization valuation. The multiple considers the
reorganization of Atlas World Wide which was expected to be
reorganized at about 6.0x EBITDA, according to its plan of
reorganization. Additionally, Fitch considered various other
airline bankruptcies which have historically reorganized around
3.1x - 6.8x EBITDA.
The $40 million secured revolving credit facility is assumed to be
fully drawn upon default. The credit facility and term loan are
senior to the senior unsecured notes in the waterfall. The analysis
results in 'RR4' for the senior unsecured notes, corresponding to
an average recovery prospect of (31%-50%).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Debt/EBITDA sustained around the low 2.0x;
-- Strong success in growth strategies that support sustainably
higher capacity utilization rates and profitability;
-- Greater customer diversification;
-- Larger scale that reduces risk of severe impacts from
unexpected aircraft downtime.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Debt/EBITDA sustained above 3.5x;
-- The loss of a large customer leads to a sustainably smaller
scale of operations;
-- Significant competitive pressures or persistent operating
challenges drives EBITDA margins meaningfully lower and/or FCF
margin in the single-digits or below.
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
Total liquidity, pro forma for the transaction is $70 million
including $30 million of cash and a $40 million undrawn revolver.
WGA's liquidity position is also supported by expectations of
positive FCF. Near term maturities are minimal, made up of term
loan amortization.
The planned $420 million of senior unsecured notes and $80 million
of term loan borrowings are expected to be used to fund the sale of
a minority stake to the company's employee stock ownership plan.
WGA has been previously managed without debt financing. Unlike
other airlines Fitch rates, operating leases are not capitalized
reflecting the company's full ownership of its aircraft fleet.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has made no material adjustments that are not disclosed
within the company's financial statements.
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.
WIN BIG DEVELOPMENT: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Win Big Development, LLC.
About Win Big Development
Win Big Development, LLC, a company based in Scottsdale, Ariz.,
filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 20-07495) on
June 24, 2020. In the petition signed by James Guajardo, manager,
the Debtor was estimated to have $1 million to $10 million in both
assets and liabilities. Judge Daniel P. Collins oversees the case.
Richard W. Hundley, Esq., at The Kozub Law Group, PLC, is Debtor's
bankruptcy counsel.
[*] Bankruptcy Filings Fall 11.8% for Year Ending June 30
---------------------------------------------------------
Despite a sharp rise in unemployment related to the coronavirus
(COVID-19) pandemic, personal and business bankruptcy filings fell
11.8% for the 12-month period ending June 30, 2020, according to
statistics released by the Administrative Office of the U.S.
Courts. Annual bankruptcy filings totaled 682,363, compared with
773,361 cases in the year ending June 2019.
Business filings remained virtually identical to a year before, at
22,482. However, non-business bankruptcy filings fell by 12.1%, to
659,881 in the year ending June 30, 2020, compared with 750,878 in
the year ending June 2019.
Bankruptcy filings tend to escalate gradually after an economic
downturn starts, the statement noted. Following the Great
Recession, new filings escalated over a two-year period until they
peaked in 2010.
Some filing activity also may have been affected by
pandemic-related disruptions to bankruptcy courts, many of which
have limited public building access since mid-March, the statement
added.
BUSINESS AND NON-BUSINESS FILINGS,
YEARS ENDING
JUNE 30, 2016-2020
Year Business Non-Business Total
---- -------- ------------ -----
2020 22,482 659,881 682,363
2019 22,483 750,878 773,361
2018 22,245 753,333 775,578
2017 23,443 772,584 796,037
2016 25,227 793,932 819,159
TOTAL BANKRUPTCY FILINGS BY CHAPTER,
YEARS ENDING
JUNE 30, 2016-2020
Year Chapter
---- ----------------------------------
7 11 12 13
---- ----------------------------------
2020 440,593 7,355 580 233,644
2019 479,043 7,007 535 286,635
2018 479,151 7,141 475 288,741
2017 489,011 6,999 482 299,398
2016 509,769 7,928 459 300,858
[^] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
-------------------------------------------------------------
Author: Warren E. Agin
Publisher: Bowne Publishing Co.
List price: $225.00
Review by Gail Owens Hoelscher
Red Hat Inc. finds itself with a high of 151 5/8 and low of 20 over
the last 12 months! Microstrategy Inc. has roller-coasted from a
high of 333 to a low of 7 over the same period! Just when the IPO
boom is imploding and high-technology companies are running out of
cash, Warren Agin comes out with a guide to the legal issues of the
cyberage.
The word "cyberspace" did not appear in the Merriam-Webster
Dictionary until 1986, defined as "the on-line world of computer
networks." The word "Internet" showed up that year as well, as "an
electronic communications network that connects computer networks
and organizational computer facilities around the world."
Cyberspace has been leading a kaleidoscopic parade ever since, with
the legal profession striding smartly in rhythm. There is no
definition for the word "cyberassets" in the current
Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in
Cyberspace tells us what cyberassets are and lays out in meticulous
detail how to address them, not only for troubled technology
companies, but for all companies with websites and domain names.
Cyberassets are primarily websites and domain names, but also
include technology contracts and licenses. There are four types of
assets embodied in a website: content, hardware, the Internet
connection, and software. The website's content is its fundamental
asset and may include databases, text, pictures, and video and
sound clips. The value of a website depends largely on the traffic
it generates.
A domain name provides the mechanism to reach the information
provided by a company on its website, or find the products or
services the company is selling over the Internet. Examples are
Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the
value of a domain name is comparable to valuing trademark rights.
Domain names can come at a high price! Compaq Computer Corp. paid
Alta Vista Technology Inc. more than $3 million for "Altavista.com"
when it developed its AltaVista search engine.
The subject matter covered in this book falls into three groups:
the Internet's effect on the practice of bankruptcy law; the ways
substantive bankruptcy law handles the impact of cyberspace on
basic concepts and procedures; and issues related to cyberassets as
secured lending collateral.
The book includes point-by-point treatment of the effect of
cyberassets on venue and jurisdiction in bankruptcy proceedings;
electronic filing and access to official records and pleadings in
bankruptcy cases; using the Internet for communications and
noticing in bankruptcy cases; administration of bankruptcy estates
with cyberassets; selling bankruptcy estate assets over the
Internet; trading in bankruptcy claims over the Internet; and
technology contracts and licenses under the bankruptcy codes. The
chapters on secured lending detail technology escrow agreements for
cyberassets; obtaining and perfecting security interests for
cyberassets; enforcing rights against collateral for cyberassets;
and bankruptcy concerns for the secured lender with regard to
cyberassets.
The book concludes with chapters on Y2K and bankruptcy; revisions
in the Uniform Commercial Code in the electronic age; and a
compendium of bankruptcy and secured lending resources on the
Internet. The appendix consists of a comprehensive set of forms for
cyberspace-related bankruptcy issues and cyberasset lending
transactions. The forms include bankruptcy orders authorizing a
domain name sale; forms for electronic filing of documents;
bankruptcy motions related to domain names; and security agreements
for Web sites.
Bankruptcy and Secured Lending in Cyberspace is a well-written,
succinct, and comprehensive reference for lending against
cyberassets and treating cyberassets in bankruptcy cases.
*********
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.
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Monthly Operating Reports are summarized in every Saturday edition
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The Sunday TCR delivers securitization rating news from the week
then-ending.
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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.
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*** End of Transmission ***