/raid1/www/Hosts/bankrupt/TCR_Public/200821.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, August 21, 2020, Vol. 24, No. 233
Headlines
24 HOUR FITNESS: Says Pandemic Closures Threaten Ch. 11 Case
60 91ST STREET: Trustee Sets Bidding Procedures for All Assets
ADAMIS PHARMACEUTICALS: Incurs $11.3M Net Loss in Second Quarter
AERO-MARINE: Superior Buying Punta Gorda Property for $410K
ANTERO RESOURCES: Fitch Affirms B LongTerm IDR, Outlook Negative
APEX LINEN: Sets Bidding Procedures for All Operating Assets
ARM MANAGEMENT: Voluntary Chapter 11 Case Summary
ARS REI USA: Case Summary & 7 Unsecured Creditors
AVIANCA HOLDINGS: Gets Court Permission to Pay Workers
B&G FOODS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
BAP PROPERTIES: Hernandez Buying Pleasanton Property for $3.2M
BERKELEY PROPERTIES: Selling 10 Berkeley Real Properties
BILTMORE 24 INVESTORS: Requests Exclusivity Extension to File Plan
BRIDGEWATER HOSPITALITY: Adcon Buying Houston Property for $4.25M
BRINKER INTERNATIONAL: S&P Affirms 'B+' ICR on Improved Liquidity
CALFRAC WELL SERVICES: Commences Proceedings in U.S. and Canada
CALIFORNIA RESOURCES: Consensual Plan to Give 100% to Unsecureds
CAMBRIAN HOLDING: Unsecureds to Get Up to 30% in Plan
CAPITAL TRUCK: Sets Bidding Procedures for All Assets
CBL & ASSOCIATES: Enters Into Restructuring Support Agreement
CBL & ASSOCIATES: Incurs $83.5 Million Net Loss in Second Quarter
CENTURION PIPELINE: S&P Rates Senior Secured Debt Add-on 'BB+'
CHASE MERRITT: Voluntary Chapter 11 Case Summary
CHASE MERRITT: Voluntary Chapter 11 Case Summary
CHESAPEAKE ENERGY: Royalty Payment Suit Delayed Due to Bankruptcy
CHINOS HOLDINGS: Seeks November 30 Extension of Plan Exclusivity
CHRISTOPHER S. HARRISON: Trustee Selling Ocean Isle Beach Property
CINEMARK USA: Moody's Cuts CFR to B3 on Convertible Notes Issuance
COMCAR INDUSTRIES: Florida Rock Buying All Assets for $4.1 Million
COMCAR INDUSTRIES: Twin Buying All CTTS Repair Assets for $823K
DEAN & DELUCA: Pace Devt. Offers $10M to Revive Company
DELTA COUNTY MEMORIAL HOSPITAL: S&P Affirms BB Revenue Bond Rating
DENTAL ARTS OF LOGAN: Not Current on UST Fees, Bills, Report Says
DESIGN MASSAGE: U.S. Trustee Unable to Appoint Committee
DOLPHIN ENTERTAINMENT: Incurs $2.94-Mil. Net Loss in 3rd Quarter
ELEMENTAL PROCESSING: HP Farms Files Counterclaims in Seed Row
ENSTAR FINANCE: Fitch Rates $350MM Junior Subordinated Notes 'BB+'
ENSTAR GROUP: S&P Rates $350MM Junior Subordinated Notes 'BB+'
EP ENERGY CORP: Files New Reorganization Plan
FAIRWAY GROUP: Bogopa Buying Westbury Store Assets for $900K
FENDER MUSICAL: S&P Affirms 'B' ICR on Strong 2nd-Quarter Results
FIELDWOOD ENERGY: U.S. Trustee Appoints Creditors' Committee
FLEETCOR TECHNOLOGIES: S&P Affirms 'BB+' ICR; Outlook Positive
FORUM ENERGY: S&P Raises ICR to 'CCC+' Following Debt Exchange
FRONTIER COMMUNICATIONS: E2 Capital Buying Four Florida Properties
GAIL HALPERN: King Buying Palm Beach Gardens Property for $1.05M
GENWORTH MORTGAGE: Moody's Rates $750MM Sr. Unsecured Notes 'Ba3'
GFL ENVIRONMENTAL: S&P Rates New Senior Secured Notes 'BB-'
HAIR CUTTERY: Permanently Closes 40 Locations in New England
HANNON ARMSTRONG: S&P Rates Senior Unsecured Notes 'BB+'
HENLEY PROPERTIES: Durans Buying Mountain View Property for $14K
HERITAGE HOTEL: Ally Buying Substantially All Assets for $8 Million
HI-CRUSH INC: U.S. Trustee Unable to Appoint Committee
IANTHUS CAPITAL: Aims to Reduce $169M Debt Despite Investor Suits
INGLES MARKETS: S&P Upgrades ICR to 'BB' on Debt Redemption
INTELSAT SA: SES Americom Seeks $1.8-Bil. Damage Costs
ISTAR INC: S&P Rates $400MM Senior Unsecured Notes 'BB'
J.C. PENNEY: Judge Balks at Lack of Progress in Sale
JAMES M THOMPSON: Florida Regulator Suspends Beverage License
JC PENNEY: Cuts Workforce, Amends Deadline of Business Plan
JUST ONE MORE: Family Feud Settled at Court
LATAM AIRLINES: Clashes with Creditors, Pushes for $9.8M DIP Fee
LLADRO GALLERIES: U.S. Arm of Figurine Maker Files in New York
LORENZ CORPORATION: Case Summary & 20 Largest Unsecured Creditors
LOWERY'S SEAFOOD: Case Summary & 20 Largest Unsecured Creditors
MAGNUM MRO: Palmer Buying 2016 Ford F150 for $16K
MEDIMPACT HOLDINGS: S&P Affirms 'B+' ICR; Outlook Stable
MTE HOLDINGS: Court Rejects Peter Shah's Administrative Claim
MUJI USA: Gets Court Approval to Tap Into Chapter 11 Financing
NCR CORP: S&P Rates $1.1BB Senior Unsecured Notes 'BB-'
NEIMAN MARCUS: A&G Marketing 4 Luxury Leases
NEIMAN MARCUS: Asks Court to Increase CEO Pay and 246 Others
NEW FORTRESS: Moody's Rates Proposed Senior Secured Notes 'B1'
NEW FORTRESS: S&P Rates $800MM Senior Secured Notes 'B+'
ON SEMICONDUCTOR: S&P Raises ICR to 'BB+'; Outlook Stable
ONEWEB GLOBAL LTD: Creditors Want $1.6B Investor Claims Waived
ONEWEB GLOBAL: Gets Court OK to Pay Satellite Vendor
PD-VALMIERA GLASS: Asks Court to Move Plan Exclusivity Thru Sept 9
PENA BUSINESS: Asks Court to Extend Plan Exclusivity Thru Sept. 10
PETASOS RESTAURANT: Unsec. Creditors to Have 6.49% Recovery in Plan
PIKE CORP: S&P Rates New $500MM Senior Unsecured Notes 'CCC+'
PLANTERS EXCHANGE: Case Summary & 3 Unsecured Creditors
PONCE REAL: Selling Two Ponce Properties for $160K
PUG LLC: Moody's Lowers CFR to B3, Outlook Negative
PURDUE PHARMA: Asks Court to Deny New Class Certifications
QUORUM HEALTH: Set for Growth After It Sheds 16 Hospitals
REMINGTON OUTDOOR: UMWA Seeks Appointment to Creditors' Committee
RIVERBEND ENVIRONMENTAL: Greenway Buying Assets for $5.13M Cash
RUBIE'S COSTUME: Sets Bidding Procedures for All Assets
SEMBLANCE MEDSPA: Case Summary & 18 Unsecured Creditors
SHADDEN LLC: Wumr Buying Greenwood Village Property for $1.8M
STAGE STORES: Gordon/Hilco Hold GOB Sales at 720 Stores
STEIN MART: U.S. Trustee Unable to Appoint Committee
STEM HOLDINGS: Reports $826K Net Loss for Third Quarter
SUREFUNDING LLC: Asks Court to Extend Plan Exclusivity Thru Nov 10
SUSTAINABLE RESTAURANT: Gets Court OK for $2M Bankruptcy Sale Plan
TATUNG COMPANY: Seeks 2-Month Exclusivity Extension
TEMPLAR ENERGY: Court Approves Ch. 11 Plan and $91M Asset Sale
THIRD COAST: S&P Lowers ICR to 'B-' on Near-Term Refinancing Risk
TIMBER PHARMACEUTICALS: Appoints Two New Members to Board
TIMBER PHARMACEUTICALS: Posts $15.3 Million Net Loss in Q2
TOUCHPOINT GROUP: Incurs $808K Net Loss in Second Quarter
TRANS-LUX CORP: Incurs $1.35 Million Net Loss in Second Quarter
TRUDY’S TEXAS STAR: To be Purchased for $6.5 Million
TTK RE ENTERPRISE: Madle Buying Somers Point Property for $217K
U.S.A. PARTS: Court Narrows Claims in Suit vs Chiacchieri, Corrado
URBAN MEDICAL: Case Summary & 12 Unsecured Creditors
VASCULAR ACCESS: May Borrow $650,000 from Gardner
VERDICORP INC: Capital City Buying Tallahassee Property
VIRTUAL CITADEL: CallTower Buying IP Assets for $5K
VOYAGER AVIATION: S&P Affirms 'CCC+' Issuer Credit Rating
VYCOR MEDICAL: Incurs $249K Net Loss in Second Quarter
WASHINGTON PRIME: Moody's Lowers CFR to Ca, Outlook Negative
WD WOLVERINE: S&P Alters Outlook to Negative, Affirms 'B' ICR
WITT RENTAL: Wins Confirmation of Exit Plan
[*] Can Malls Survive Pandemic, Permanent Store Closings?
[*] How New Law Could Help Smaller Restaurant Operators
[*] June Bankruptcy Filings in Hawaii Rose Amid Pandemic
[*] More Hospitals Could File Bankruptcy Because of COVID Losses
[*] Pandemic Forces 3 Frac Sand Companies to File Chapter 11
[*] Private Equity Owned Retailers Vulnerable During Pandemic
[*] Strategies for Acquisitions of Distressed Companies
[*] Z-Score Father Predicts Rise in ‘Mega’ Bankruptcies in 2020
[^] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
*********
24 HOUR FITNESS: Says Pandemic Closures Threaten Ch. 11 Case
------------------------------------------------------------
Jeff Montgomery, writing for Law360, reports that, already facing a
revolt from landlords who haven't been paid for months, bankrupt 24
Hour Fitness Worldwide Inc. confronted court questions about new
risks of insolvency after the return of COVID-19 business shutdowns
in California jeopardized the debtor's Delaware Chapter 11 budget
and delayed action on a $250 million case loan.
Ryan Preston Dahl of Weil Gotshal & Manges LLP, counsel to 24 Hour
Fitness, told U.S. Bankruptcy Judge Karen B. Owens that the
California order forced 151 of 158 centers in that state to close.
"Taking into account these closures, the debtors now have 102 clubs
open nationwide as of this moment. We cannot say with certainty, as
we sit here today, whether these closures will continue for the
long term," Mr. Dahl said mid-July. By comparison, the company was
operating 445 clubs -- all leased -- with 3.4 million members
across the country before the COVID-19 pandemic forced a closing of
all sites nationwide on March 16.
Reports on the closings and resulting revenue losses, and concerns
that others could follow in Texas, Florida and elsewhere, were
followed by objections from landlords seeking clearer assurances of
their eventual payment — even if it required concessions from
creditors and DIP lenders reluctant to take further risks.
"What I want to know is, if you eliminate all of your revenue from
your stores, essentially assume a complete rollback of your
operations, and putting aside professional fees, I just want a yes
or no on whether all of the disbursements in the budget will be
able to hypothetically be paid, or would you be insolvent?" Judge
Owens asked.
Mr. Dahl said the Debtors could run out of cash before the 13-week
case budget ends if all revenues dry up.
"To the extent you feel we should have an evidentiary hearing to
address my concerns with respect to the budget and the shifting
landscape, we have time for that," Judge Owens said later. "I'm not
foreclosing from putting on evidence and allaying my concerns with
respect to solvency."
The session was originally convened to secure final approval of a
$250 million debtor-in-possession bankruptcy funding loan and $250
million refinancing of prepetition secured debt.
It pivoted to talks on compromises with landlords and solvency
after the judge said she was unprepared to include in the DIP order
waivers of the debtor's right to tap secured creditor collateral or
security interests to cover some estate costs.
"If you're not getting any revenue from your stores, are you still
able to hypothetically fund all the post petition obligations to
your landlords, whether its closed stores or open stores?" Judge
Owens asked Dahl. "What is the certainty of payment with respect to
this budget?"
Ivan M. Gold of Allen Matkins Leck Gamble Mallory & Natsis LLP,
counsel to a large group of landlords — including many in
California — told Judge Owens that the change in the business and
bankruptcy landscape after California's shut-down order on Monday
was "tectonic," with the consequences for 24 Hour's Chapter 11
unclear.
"Your honor's concerns about the future of this case and
administrative insolvency are real," Gold said, adding that a
settlement agreement between the DIP lenders, unsecured creditors
and 24 Hour "places enormous stress and risk on the landlord
community."
Several compromises to the DIP agreement were filed on Monday ahead
of the hearing to address objections from unsecured creditors. That
group withdrew its objection despite noting that it secured only
some of its objectives. Unpaid leaseholders, meanwhile, argued for
more protections and urged the court not to approve a plan that cut
off their rights.
Gold said that debtor estimates of rent obligations have declined
from $32 million to $25 million, although the actual number could
be as high as $75 million. He also urged the judge to consider
continuing the debtor in possession loan on a second interim,
rather than final, basis, while also not limiting the options of
the debtor, such as a creditor-preferred waiver of the debtor's
ability to seek access to cash ordinarily secured for creditors if
needed for the case.
Among things landlords asked for on Tuesday included assurances
that they will be treated on the same footing as other
administrative expense creditors, and that 24 Hour will pay
post-petition rents and comply with requirements for accepting or
rejecting leases.
"The problem here is, we have no idea — forget about September
— we don't know what the world is going to look like on August
first," said Leslie C. Heilman of Ballard Spahr LLP, counsel to
several landlords. "The problem really is, so many locations are
closed even as of yesterday. There should be absolutely no way that
there is a pre-judgment now that the debtors can continue to not
reject a lease just because a club is closed."
Judge Owens asked the debtors, lenders, unsecured creditors and
landlords to discuss options, with another hearing scheduled for
Wednesday.
"Eventually this is going to have to come to a head," the judge
said. "At what point do the landlords have to stop shouldering the
optionality you and the debtors are gaining by not rejecting the
leases?"
About 24 Hour Fitness
24 Hour Fitness Worldwide, Inc., owns and operates fitness centers
in the United States. As of March 31, 2017, the company operated
426 clubs serving approximately 3.6 million members across 13
states and 23 markets, predominantly in California, Texas and
Colorado. For the 12 months ended March 31, 2017, the company
generated total revenue of about $1.4 billion. In May 2014, 24 Hour
Fitness was acquired by affiliates of AEA Investors LP, Fitness
Capital Partners and Ontario Teachers' Pension Plan for a total
purchase price of approximately $1.8 billion.
24 Hour Fitness Worldwide and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11558) on June 15,
2020. 24 Hour Fitness was estimated to have $1 billion to $10
billion in assets and liabilities as of the bankruptcy filing. The
Hon. Karen B. Owens is the case judge.
The Debtors tapped Weil, Gotshal & Manges, LLP as lead bankruptcy
counsel; Pachulski Stang Ziehl & Jones, LLP as local counsel; FTI
Consulting, Inc. as financial advisor; Lazard Freres & Co. LLC as
investment banker; and Prime Clerk, LLC as claims agent.
The ad hoc group of lenders is represented by Mark D. Collins,
Michael J. Merchant and David T. Queroli of Richards Layton &
Finger PA, and John J. Rapisardi, Adam C. Rogoff and Daniel S.
Shamah of O'Melveny & Myers LLP.
Morgan Stanley Senior Funding Inc., as lender administrative and
collateral agent, is represented by Andrew L. Magaziner of Young
Conaway Stargatt & Taylor LLP, and Richard A. Levy and James
Ktsanes of Latham & Watkins LLP.
60 91ST STREET: Trustee Sets Bidding Procedures for All Assets
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Heidi J. Sorvino, Chapter 11 Trustee for 60 91st Street Corp., asks
the US Bankruptcy Court for the Southern District of New York to
authorize the bidding procedures in connection with the auction
sale of substantially all of the Debtor's assets, consisting
primarily of the real property known as and located at 60 West 91st
Street, New York, New York.
The Trustee asks approval of the proposed Auction and the Sale
Terms to be used to ensure that she obtains the highest or
otherwise best offer or combination of offers for the Assets. If
approved, the Sale Terms will enable her to move expeditiously
towards a value-maximizing sale and confirmation of a bankruptcy
plan. The Sale Terms, and the related relief requested in the
Motion are in the best interests of the Debtor's bankruptcy estate
and its stakeholders.
In addition, the Trustee asks authorization for the sale of
substantially all of the Assets to the bidder with the highest or
otherwise best bid pursuant to the Sale Terms, free and clear of
all liens, claims, and encumbrances, including without limitation,
to the maximum extent permitted by applicable law, any unexpired
leases not expressly assumed by the Debtor and any other possessory
rights to occupy the Real Property or any portion thereof. All
such Liens to attach to the proceeds of the Sale.
The Real Property is encumbered by a mortgage held by 2386
Hempstead, Inc. Upon information and belief, the Debtor has not
made payments toward the Mortgage since October 2017. In its proof
of claim filed with the Bankruptcy Court, the Lender had asserted a
senior secured claim in the total amount of $3,016,316.
The New York State Department of Taxation and Finance filed a proof
of claim with the Bankruptcy Court to assert a claim for $223 for
unpaid taxes consisting of the principal amount of $7, penalty of
$111, and interest of $105.
The New York City Department of Finance filed a proof of claim with
the Bankruptcy Court to assert a secured claim for $166,909 for
unpaid real estate taxes consisting of the principal amount of
$140,896, interest of $25,962, and other fees of $51.
The New York City Water Board filed a proof of claim with the
Bankruptcy Court to assert a secured claim for $3,998 for unpaid
water services provided to the Property.
The Trustee is in the process of reviewing the claims asserted by
the Secured Government Creditors. At this time, she is not able to
acknowledge whether the Secured Government Creditors have an
interest in the Assets that is valid and perfected. To the extent
that the Secured Government Creditors have an interest in the
Assets, it is believed that Secured Claims would have priority over
the Lender's Claim.
Since her appointment, the Trustee has worked diligently to review
the Debtor's records, inspect and evaluate the Assets, and analyze
potential options for the Debtor to address the claims asserted by
creditors in the case. In doing so, she has held discussions with
the Lender, the US Trustee, and the Shareholder regarding the
Claims and how to maximize the recovery of stakeholders in the
Chapter 11 case.
As the Bankruptcy Court is well aware, the Shareholder has not been
willing to cooperate with the Trustee's efforts to manage the
Debtor's business and rental operations at the Real Property.
Options considered included pursuing potential financing to resolve
the Lender's Claim as well as all other claims in the case;
however, prospective lenders were not willing to extend financing
sufficient to resolve the Claims secured by the Assets.
The Trustee believes that the time periods proposed for marketing
the Assets and procedures leading up to the Auction as set forth in
the Motion and in the Sale Terms are reasonable and will provide
parties with sufficient time and information to submit competitive
bids for the Assets. The Sale Terms are designed to allow the
Chapter 11 Trustee sufficient time to conduct the Auction and Sale
while simultaneously ensuring that the Trustee efficiently carries
out her duties under the Bankruptcy Code.
The Assets, including the Real Property, are being sold "as is,
where is," and "with all faults"; however, those seeking to submit
bid will be given the opportunity to inspect and review the Real
Property and will have sufficient time to conduct independent
investigations of the Assets prior to making their bids. In light
of the foregoing, the Trustee determined that the Sale Terms are in
the best interests of the Estate, will establish whether and to
what extent a market exists for the Assets, and provide interested
parties with sufficient opportunity to participate.
The Auction, if held, will be conducted telephonically or by
videoconference and will commence at 12:00 p.m. (ET) on Oct. 29,
2020, or at such other time to be determined in the Trustee's
discretion following the Court's approval of the Sale Terms. The
Assets will be offered for inspection by appointment at reasonable
times, and subject to compliance with state and local orders as to
physical distancing, face coverings, and similar COVID-19-related
precautions, on request by the interested party to the Broker,
which will make such arrangements.
The Trustee, through the Brokers, will market the Real Property,
and solicit and negotiate offers to purchase the Assets. The
marketing efforts will include, but not necessarily be limited to:
(i) listing the sale of the Assets on the Brokers' websites; (ii)
inclusion of sale information concerning the Assets in e-mails to
the Brokers' proprietary lists; (iii) listing the Assets on the
local real estate websites; and (iv) other ads, if determined by
the Trustee, after consultation with the Brokers, to be
appropriate, placed in local or regional papers covering the New
York City area and/or the purchase of search keywords on Google®
and elated available advertising methods on Facebook® and/or
Twitter®.
The Trustee's obligation to pay a sales commission to the Brokers
will be the subject of a separate application to be heard by the
Bankruptcy Court upon appropriate notice.
The Trustee asks authority, as set forth in the Sale Terms and the
Sale Procedure Order, to (a) select a bidder to act as stalking
horse bidder in connection with the Auction and enter into a
purchase agreement with such Stalking Horse Bidder; and (b) in
connection with the Stalking Horse Agreement with a Stalking Horse
Bidder, (i) provide a breakup fee that will not exceed 3% and (ii)
agree to Expense Reimbursement that will not exceed $25,000.
Not later than one business day after the selection of a Stalking
Horse Bidder, the Trustee will file with the Court, and serve on
the Shareholder, the Stalking Horse Selection Notice. The Stalking
Horse Objection Deadline is three calendar days after service of
the Stalking Horse Selection Notice.
The 11 Trustee proposes the following timeline for the Sale, as
provided in the Sale Terms:
a. Service of Notice of Sale on Notice Parties - Within three
business days after entry of Sale Procedure Order
b. Bid Deadline - Oct. 27, 2020 at 12:00 p.m. (ET)
c. Auction (if applicable) - Oct. 29, 2020 at 12:00 p.m. (ET)
d. Deadline to file the Sale Declaration - Nov. 2, 2020 at
4:00 p.m. (ET)
e. Sale Objection Deadline (including objections to assumption
and assignment of executory contracts and unexpired leases) - Nov.
3, 2020 at 4:00 p.m. (ET)
f. Sale Hearing - Nov. 5, 2020 (or as soon thereafter as the
Bankruptcy Court may accommodate)
g. Sale Order Presentment - Nov. 5, 2020 at 4:00 p.m. (ET)
h. Closing Deadline - As soon after the Bankruptcy Court
enters the Sale Order as commercially practicable, but no later
than Dec. 3, 2020
The salient terms of the Sale Terms are:
a. Assets: The Assets sought to be included in the Auction and
Sale include the Real Property, as well as all executory contracts
and leases, to the extent assumable and assignable by the Debtor,
and the Debtor's books and records held by either the Chapter 11
Trustee or the Shareholder. The Assets may also include certain
building materials and other personal property of de minimis value
that belongs to the Debtor.
b. Bid Deposit: $250,000
c. Credit Bid: Secured Creditors, including the Lender, will
have the right to credit bid up to the full amount of their claims
secured by the Assets in the Auction and Sale contemplated by the
Sale Terms.
d. The Auction, if held, will be conducted telephonically or
by videoconference and will commence at 12:00 p.m. (ET) on Oct. 29,
2020.
e. Initial Bid Amount: If a Stalking Horse Bidder is selected,
the Initial Bid Amount will be equal to the purchase price agreed
to by the Stalking Horse Bidder plus the amount of any Bid
Protections as set forth in the Stalking Horse Agreement.
f. Bid Increments: To be set by the Brokers
g. Buyer's Premium: An amount equal to (i) 1% in the aggregate
of the Successful Bid, in the event that the Lender is the
Successful Bidder; or (b) 4.5% of the Successful Bid, in the event
the Assets are sold to a third-party other than the Lender
The Trustee asks that, in conjunction with the Sale of the Assets,
that she be permitted, but not required, to assign to the
successful purchaser(s) any and all executory contracts and
unexpired leases relating to the Assets.
A copy of the Bidding Procedures is available at
https://tinyurl.com/y4s2r2c5 from PacerMonitor.com free of charge.
About 60 91st Street Corp.
60 91st Street Corp. sought protection under chapter 11 of the
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 20-10338) on Feb. 4,
2020, listing under $1 million in both assets and liabilities.
Tenille Lewis, Esq., is the Debtor's counsel.
ADAMIS PHARMACEUTICALS: Incurs $11.3M Net Loss in Second Quarter
----------------------------------------------------------------
Adamis Pharmaceuticals Corporation filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q, reporting
a net loss of $11.26 million on $3.93 million of net revenue for
the three months ended June 30, 2020, compared to a net loss of
$7.74 million on $5.76 million of net revenue for the three months
ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss of $21.54 million on $8.59 million of net revenue compared to
a net loss of $16.62 million on $10.67 million of net revenue for
the six months ended June 30, 2019.
As of June 30, 2020, the Company had $39.70 million in total
assets, $16.58 million in total liabilities, and $23.12 million in
total stockholders' equity.
Dr. Dennis J. Carlo, president and chief executive officer of
Adamis Pharmaceuticals, stated, "Although we continue to be
negatively impacted by the pandemic and government required
operating restrictions, we are very excited about several
developments during the last quarter. First, we finalized our
agreement with Sandoz, Inc. to take back U.S. commercial rights for
our SYMJEPI products. More importantly, we executed a new
agreement with US WorldMeds, LLC (USWM) under which they have
assumed U.S. rights to market and distribute the SYMJEPI products
and, upon FDA approval which we believe will occur this year, will
have commercial rights for our ZIMHITM product. I strongly feel
USWM's commitment to detail SYMJEPI to allergists and
high-prescribing physicians will be a catalyst to bring broad
awareness and usage within the billion plus dollar anaphylaxis
market."
"Also, during the last quarter we acquired rights develop a novel
drug compound, Tempol, for certain indications including COVID-19
infections. We believe Tempol could be a powerful therapeutic
agent in combating COVID-19 and are committed to working with the
FDA and other agencies with a goal to begin testing Tempol in
patients as soon as practicable. I believe there are a number of
exciting near-term milestones for Adamis and I am very excited
about the second half of 2020 and beyond."
Going Concern
Adamis said, "The Company has significant operating cash flow
deficiencies. Additionally, the Company will need significant
funding before the end of fiscal 2020 for future operations and the
expenditures that it believes will be required to support
commercialization of its products and conduct the clinical and
regulatory activities relating to the Company's product candidates,
satisfy existing obligations and liabilities, and otherwise support
the Company's intended business activities and working capital
needs. The preceding conditions raise substantial doubt about the
Company's ability to continue as a going concern. The condensed
consolidated financial statements for the six months ended June 30,
2020, were prepared under the assumption that we would continue our
operations as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities during the normal
course of business. Our unaudited condensed consolidated financial
statements do not include any adjustments that may result from the
outcome of this uncertainty. Management's plans include attempting
to secure additional required funding through equity or debt
financings, sales or out-licensing of intellectual property assets,
products, product candidates or technologies, seeking partnerships
with other pharmaceutical companies or third parties to co-develop
and fund research and development efforts, or similar transactions,
and through revenues from existing agreements and sales of
prescription compounded formulations. There is no assurance that
the Company will be successful in obtaining the necessary funding
to meet its business objectives. In addition, the COVID-19
outbreak has resulted in a severe economic downturn, has already
significantly affected the financial markets of many countries and
has had an adverse impact on the Company. In light of the current
economic downturn that we believe affected the trading prices of
our Common Stock, we determined that it was more likely than not
that the fair value of our subsidiary, U.S. Compounding, Inc., or
USC, was less than its carrying value, which triggered the Company
to perform an interim impairment assessment as of March 31, 2020 to
test the carrying value of goodwill resulting in approximately
$3,143,000 of goodwill impairment charges. A severe or prolonged
economic downturn or political disruption could result in a variety
of risks to our business, including our ability to raise capital
when needed on acceptable terms, if at all."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/887247/000138713120007644/admp-10q_063020.htm
About Adamis Pharmaceuticals
Adamis Pharmaceuticals Corporation --
http://www.adamispharmaceuticals.com-- is a specialty
biopharmaceutical company primarily focused on developing and
commercializing products in various therapeutic areas, including
respiratory disease, allergy and opioid overdose. The company's
SYMJEPI (epinephrine) Injection 0.3mg and SYMJEPI (epinephrine)
Injection 0.15mg products were approved by the FDA for use in the
emergency treatment of acute allergic reactions, including
anaphylaxis.
Adamis reported a net loss of $29.31 million for the year ended
Dec. 31, 2019, compared to a net loss of $39 million for the year
ended Dec. 31, 2018. As of March 31, 2020, the Company had $45.28
million in total assets, $12.06 million in total liabilities, and
$33.21 million in total stockholders' equity.
Mayer Hoffman McCann P.C., in San Diego, California, the Company's
auditor since 2007, issued a "going concern" qualification in its
report dated March 30, 2020 citing that the Company has incurred
recurring losses from operations and is dependent on additional
financing to fund operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
AERO-MARINE: Superior Buying Punta Gorda Property for $410K
-----------------------------------------------------------
Joseph N. Vaughn and Theresa L. Vaughn, affiliates of Aero-Marine
Technologies, Inc., ask the U.S. Bankruptcy Court for Middle
District of Florida to authorize the sale of the real property
located at 8231 Burnt Store Rd, Punta Gorda, Florida to Superior
Quality Coatings, LLC for $410,000.
The parties have executed their Commercial Contract. The proposed
closing is Sept. 22, 2020.
The Debtors, as members of J & T Ventures, LLC, own the Real
Property, subject to liens in favor of Central Bank. Based on the
proof of claim filed by Central Bank (Claim No. 11), the Debtors
owe Central Bank $5,070,265. Central Bank consents to the sale of
the Real Property.
The Debtor proposes to pay Central Bank the net proceeds from the
sale of the Real Property after payment of the closing costs
specified in the Contract, including without limitation title
insurance, broker's commissions, and recording fees.
The sale will be free and clear of all liens, claims, encumbrances,
and interests.
The Debtors respectfully ask the Court to authorize (a) the sale of
the Real Property to the Purchasers free and clear of all liens,
claims, encumbrances, and interests, (b) the payment of the Closing
Costs, and (c) the distribution of the net sale proceeds to Central
Bank.
Finally, the Debtors ask that the Court waives the 14-day stay
requirement of Rule 6004(h) of Federal Rule of Bankruptcy
Procedure.
A copy of the Contract is available at https://tinyurl.com/yydslr6g
from PacerMonitor.com free of charge.
About Aero-Marine Technologies
Aero-Marine Technologies, Inc. --
https://www.aero-marinetechnologies.com/ -- provides total support
for waste and water system components found on Boeing, Airbus and
Embraer aircraft. Aero-Marine Technologies is a full-service
Maintenance, repair and overhaul (MRO) with a worldwide customer
base.
Aero-Marine Technologies sought bankruptcy protection under
Chapter
11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-07547) on
Aug. 9, 2019. The Debtor's case is jointly administered to that
of
Joseph N. Vaughn and Theresa L. Vaughn.
In the petition signed by Joseph N. Vaughn, president,
Aero-Marine's assets are estimated at $500,000 to $1 million, and
its liabilities at $1 million to $10 million.
The Hon. Caryl E. Delano is the case judge.
Stitchler, Riedel, Blain & Postler, P.A., is the Debtor's legal
counsel.
ANTERO RESOURCES: Fitch Affirms B LongTerm IDR, Outlook Negative
----------------------------------------------------------------
Fitch Ratings affirmed Antero Resources Corporation's Long-Term
Issuer Default Rating at 'B'. The rating has been removed from
Rating Watch Negative and assigned a Negative Outlook. Fitch also
affirmed AR's senior secured RBL at 'BB'/'RR1' and downgraded the
senior unsecured debt one notch to 'B-'/'RR5' from 'B'/'RR4'.
The revision from Rating Watch Negative to Negative Outlook
reflects AR's recent traction on asset sales, which, in conjunction
with the expected convertible issuance, has increased the ability
of the company to manage the nearest part of its maturity wall. The
company has now completed $751 million of its proposed $750
million-$1.0 billion program, and completed the first part of its
$525 million tender for 2021-2023 maturities. Natural gas and NGLs
prices have also risen in line with improving fundamentals. While
these measures have pushed out concerns about refinancing in the
near term, there are still concerns about the ability to de-risk
the balance sheet over the longer term, which is driving the
Negative Outlook.
Credit concerns for AR include limited availability on the
company's revolver, which heightens execution risk on the 2022 and
2023 maturities; the negative cash flow impacts of the Overriding
Royalty Interest and Volumetric Production Payment transactions on
netbacks; the risk of a second wave of coronavirus pandemic;
especially in the context of declining hedge coverage; and AR's
relatively unrestrictive bond covenants, which could allow for the
issuance of new secured debt.
These negatives are partly offset by the company's large size,
high-quality acreage position in the Marcellus/Utica, access to
higher priced NGL exports through Mariner East; and program to
lower cash costs through a range of efficiency measures and volume
growth.
KEY RATING DRIVERS
Progress on Asset Sales: AR has made material progress on asset
sales. This includes the sale of an ORRI to Sixth Street Partners,
LLC for total proceeds of $402 million, comprised of an initial
payment of $300 million (received prior to Q2) and two
volume-linked contingent payments of $51 million each over the next
12 months. The transaction consisted of a 1.25% ORRI in all proved
developed operating properties in West Virginia and Ohio, and 3.75%
ORRI in wells completed over the next three years. Once the partner
has achieved its 13% IRR and 1.5x cash-on-cash return, 85% of the
cash flows associated with ORRI properties revert back to AR. AR is
also entitled to two contingent payments of up to $51 million each
based on volume thresholds, which Fitch anticipates will be
achieved given the company's near term production is well hedged.
In addition, AR signed a VPP deal with an affiliate of JP Morgan.
Under that agreement, AR receives $220 million upfront in exchange
for revenues on a set of dry gas properties in West Virginia for a
seven-year term. Associated VPP net production is 75MMCF/d in 2021
and declines to 40MM CF/d by the end of the agreement.
These asset sales total $651 million, and in conjunction with the
$100 million sale of Antero Midstream stake in December 2019, put
the company at the lower end of its target range of $750
million-$1.0 billion.
Reductions in Cash Flow: While the sales of the ORRI and VPP
increased liquidity and help to address the maturity walls, these
sales come at a price and will result in a material decline in AR's
netbacks over the next few years, as the company pays associated
cash outflows. Fitch generally views ORRIs and VPPs as indicative
of a difficult market for sellers, and has concerns about the
impact these and future structured sales could have on the asset
base, as well as on the potential recoveries for senior unsecured
noteholders.
Execution Risk on AM: AR's stake in AM (139 million shares, 28.7%
stake) has recovered sharply in value since the last review and is
now worth approximately $950 million, versus less than $300 million
during the downturn. The increased value of AM provides comfort
around the company's ability to address its near-term security
wall. At the same time, the realization of this liquidity is
subject to execution risk, as AR might not sell in the hopes of
further increases in its value.
High Revolver Usage: AR leaned heavily on its revolver in the
current downturn, and revolver availability has been limited. As
calculated by Fitch, at June 30, availability was only about 37%
versus 55% at YE 2019. At June 30, total borrowings were $926
million, and LOCs of $730 million versus $2.64 billion in lender
commitments. Fitch anticipates proceeds from announced sales and
issuance will be used to restore availability on the revolver but
expects AR will continue to rely significantly on bank financing
until the senior unsecured market is restored. Fitch notes that
bank debt could be used to fund future tender offers for remaining
unsecured notes.
Hedge Protection Ending: AR has a peer-leading (although eroding)
gas hedge book. After recent hedge restructuring, current coverage
is 94% of expected gas production in 2020 at $2.87/MMBtu, and 100%
of expected 2021 production at $2.77/MMbtu, following monetization
of $29 million in hedges related to the company's recent ORRI
transaction. Both the gas strip and NGL forwards have risen in line
with improving fundamentals, producer capex cuts, and expectations
of lower associated production out of shale plays since mid-2Q.
DERIVATION SUMMARY
With average daily 2Q20 production of 587kboepd, AR is above
average in size when compared with Appalachian gas peers Range
Resources (NR, 391kboepd), Southwestern Energy (BB/Negative
368kboepd), and CNX (BB/Stable 210kboepd), but smaller than EQT
(BB/Positive, 633kboepd). AR's basin diversification is modest but
the company is significantly more levered to liquids than most of
its Appalachian peers (AR: 33%, SWN: 21%, CNX: 4%, EQT: 4%). This
provides uplift in a more normalized commodity environment.
Among its peers, AR's natural gas hedge coverage is also
peer-leading, with 94% coverage for 2020 natural gas production and
100% for 2021, respectively. However, coverage declines in the
outer years of the forecast. AR's unhedged cash netbacks are
depressed due to the collapse in natural gas and NGLs prices. For
fiscal 2019, AR's netbacks were $3.14/boe, which was below SWN
($3.67/boe) EQT ($6.00/boe) and CNX ($7.64/boe). AR has high
refinancing risk versus peers given its large maturity wall ($2.75
billion due 2021 to 2023, pro forma for the 2021 tender offer
completed at the end of August), while its unsecured bond market
access remains weak. Fitch believes proceeds from the VPP and
convertible notes offering as well as the tender offer for 2022s
and 2023s only partially alleviate refinancing concerns. No
parent-subsidiary linkage, country ceiling constraint or operating
environment influence was in effect for these ratings.
KEY ASSUMPTIONS
- WTI oil price of $32 for the remainder of 2020; $42 in 2021;
$50 in 2022; and $52 in 2023 and over the long term;
- Henry Hub natural gas prices of $1.85/mcf for the remainder of
2020; and $2.45/mcf across the rest of the forecast;
- Realized NGLs prices (including ethane) move broadly in line
with the base case price deck;
- Production of approximately 3.5 Bcfe/d in 2020, which remains
flat across the forecast;
- All in capex of $795 million in 2020, declining to $640 million
and remaining flat across the remainder of the forecast;
- Company completes just over $900 million in asset sales
proceeds in 2020, and just under $400 million in 2021, including
all recently completed sales;
- Outflows from VPP and ORRI incorporated into the forecast;
RECOVERY ANALYSIS
The recovery analysis assumes that AR would be reorganized as a
going-concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern Approach
-- The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
enterprise valuation.
-- The GC EBITDA assumption uses 2023 EBITDA of approximately
$731 million, which assumes low but recovering Henry Hub natural
gas prices of $2.25/mcf, and WTI oil price of $47/barrel.
-- The GC EBITDA also assumes lower production from an earlier
shift into maintenance mode, as well as the negative impact of the
ORRI and VPP on cash flows.
Fitch also used an EV multiple of 4.0x, which is applied to the GC
EBITDA to calculate a post-reorganization EV. The choice of the
multiple considered the following factors:
-- The historical case study exits multiples for peer companies
ranged between 2.8x and 7.0x, with an average of 5.6x and median of
6.1x;
-- Fitch lowered the EV multiple to 4.0x from 4.5x previously.
This reduction reflects the increased cash flow risk associated
with gas assets given the sharp volatility in pricing and demand;
and forward-looking concerns about the impact that recent
unconventional asset sales may have on asset quality, particularly
if additional ORRIs and VPPs are carved out of the asset base.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of
balance sheet assets that can be realized in sale or liquidation
processes conducted during a bankruptcy or insolvency proceeding
and distributed to creditors.
Fitch considers valuations such as SEC PV-10 and M&A transactions
for each basin including multiples for $/boe, $/acre, $/drilling
location and $/1P. Fitch used conservative estimates to observed
multiple given the lack of liquidity in the current asset sale
market (particularly the natural gas market) driven by weaker
prices and balance sheets for some Marcellus operators. Fitch
assumed a $618 million valuation for the company's midstream stake,
up from the $275 million level used last time, but discounted from
recent market levels given the high volatility of energy assets in
the pandemic, and uncertainty about when the company may monetize
its stake.
The senior secured revolver is assumed drawn at 85%. The revolver
is senior to the senior unsecured bonds in the waterfall. The
allocation of value in the liability waterfall results in recovery
corresponding to 'RR1' recover for the senior secured revolver and
a recovery corresponding to 'RR5' for the senior unsecured notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improved access to the unsecured market;
-- Additional progress toward repayment or refinancing of
maturity wall, including revolver balances;
-- Sustained debt/EBITDA below 3.0x;
-- Sustained FFO adjusted leverage below 3.25x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deteriorating liquidity or materially unfavorable borrowing
base redetermination;
-- Inability to de-risk the 2022 maturities (including the 2022
bond and revolver) by Sept 2021
-- Priming of the existing senior unsecured bonds;
-- Sustained debt/EBITDA above 3.5x;
-- Sustained FFO adjusted leverage above 3.75x.
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
Limited Liquidity: As of June 30, 2020, AR had $984 million of
availability under the revolving credit facility ($2.640 billion of
commitments; $2.850 billion borrowing base) and no cash on the
balance sheet. Fitch believes total liquidity is modestly improved,
pro forma for the VPP and convertible notes proceeds of $500
million and $192 million of validly tendered unsecured notes due
2021 and assuming the maximum $250 million number of unsecured
notes due 2022s and 2023s eligible for tender. The company's
borrowing base was re-determined down in April to $2.85 billion,
while lender commitments were unchanged at $2.64 billion.
Fitch believes that AR has de-risked the company's 2021 unsecured
note maturity and the springing trigger under the company's credit
facility, for now. The next possible maturity under the revolver
will be the earliest of Oct. 26, 2022 or 91 days prior to the
company's unsecured notes due Dec. 1, 2022. Fitch believes any
longer-term extension of the revolver credit facility will be
dependent on refinancing of the unsecured notes due 2022 and 2023,
which heightens execution risk over the next 24 months. As of June
30, 2020, AR had $1.5 billion of unsecured notes outstanding due in
2022 and 2023.
At June 30, 2020, AR had adequate headroom on the company's two
main financial covenants, a minimum current ratio of 1.0x and a
minimum interest coverage ratio of 2.5x. In terms of secured debt
issuance, Fitch notes the company's bond covenants, including
permitted liens clauses, are not restrictive and would allow the
potential issuance of new secured second lien 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).
APEX LINEN: Sets Bidding Procedures for All Operating Assets
------------------------------------------------------------
Apex Linen Service LLC, and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to authorize the
bidding procedures in connection with the sale of all their
operating assets to Breakwater Management LP, subject to overbid.
On Aug. 3, 2020, the Debtors filed their DIP Motion, in order to
permit the Debtors adequate funding to preserve both their
going-concern value and the jobs of their approximately 200
employees (despite the crippling of the Debtors' cash flow
resulting from the Covid-19 pandemic).
The secured lenders' consent to the DIP Motion requires that the
Debtors file the Motion, for hearing on Aug. 7, 2020 on an
expedited basis, asking the Court's entry of an order approving
bidding procedures, including approval of: (a) the right of the
Stalking Horse Bidder, as the collateral agent and administrative
agent for Western Alliance Bank, Breakwater Credit Opportunities
Fund I, LP, Breakwater Credit Opportunities Fund II, LP, and United
Insurance Co. of America ("DIP Lender"), to credit bid up to the
full amount of the Prepetition Obligations and the DIP Obligations;
and (b) the Agent as stalking horse bidder through a credit bid at
a purchase price agreed upon by the Debtors and the Agent.
he salient terms of the Bidding Procedures are:
a. Bid Deadline: Sept. 7, 2020 at 4:00 p.m. (EDT)
b. Initial Bid: The initial Overbid, if any, will provide for
total consideration to the Debtors with a value that exceeds the
value of the consideration under the Auction Baseline Bid by an
incremental amount that is not less than $50,000, and each
successive Overbid will exceed the then-existing Overbid by an
incremental amount that is not less than the Minimum Overbid
Increment.
c. Deposit: 2.5% of the purchase price contained in the
Modified Purchase Agreement
d. Auction: The Auction, if any, will take place on Sept. 9,
2020 at 12:00 noon (ET) at such physical location or
videoconference and time as the Debtors will notify all Qualified
Bidders and the Consultation Parties.
e. Bid Increments: $50,000
f. Sale Hearing: Sept. 11, 2020 at 10:00 a.m. (EDT)
g. Sale Objection Deadline and Assumption and Assignment
Objection Deadline: Sept. 7, 2020 at 4:00 p.m. (EDT)
h. Closing: Sept. 18, 2020
i. Notwithstanding anything else contained in the Bidding
Procedures, the DIP Lender and the lenders under the Debtors'
prepetition term loan facilities will have the right to credit bid
all or any portion of their allowed secured claims at the Auction
in accordance with the applicable provisions of the documents
governing such debt obligations.
j. The sale will be free and clear of any and all liens,
claims, interests and encumbrances.
Within two days after the entry of the Bidding Procedures Order or
as soon as reasonably practicable thereafter, the Debtors will
serve the Sale Notice, the Bidding Procedures Order, and the
Bidding Procedures, upon all Sale Notice Parties.
On the relevant date set by the Court, the Debtors will file with
the Court, and post on the website maintained for these Chapter 11
Cases at https://cases.stretto.com/ApexLinen/, the Notice of
Assumption and Assignment.
The Debtors believe that any Sale Transaction should be consummated
as soon as practicable to preserve and maximize value.
Accordingly, they ask that any Sale Order approving the sale of the
Assets and the assumption and assignment of the Designated ontracts
be effective immediately upon entry of such order and that the
14-day stay under Bankruptcy Rules 6004(h) and 6006(d) be waived.
A copy of the Bidding Procedures is available at
https://tinyurl.com/y28apy4u from PacerMonitor.com free of charge.
A hearing on the Motion is set for Aug. 7, 2020 at 2:00 p.m. (EDT).
About Apex Linen Service
Apex Linen Service LLC, based in Las Vegas, NV, and its
affiliates,
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
20-11774) on July 6, 2020.
In the petition signed by Chris Bryan, president and authorized
representative, the Debtor was estimated to have $10 million to
$50
million in both assets and liabilities.
The Hon. Laurie Selber Silverstein presides over the case.
GOLDSTEIN & MCCLINTOCK LLLP, serves as bankruptcy counsel to the
Debtors. GlassRatner Advisory & Capital Group LLC, is the chief
restructuring officer. Stretto, is the claims and noticing agent.
ARM MANAGEMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: ARM Management LLC
30101 Agoura Court #100
Agoura Hills, CA 91301-4372
Business Description: ARM Management is engaged in activities
related to real estate. It is the fee
simple owner of a residential rental
property in Malibu, California, having a
current value of $800,000.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Central District of California
Case No.: 20-11492
Debtor's Counsel: Grace R. Rodriquez, Eq.
LAW OFFICES OF R. GRACE RODRIGUEZ
21000 Devonshire Street, Suite 111
Chatsworth, CA 91311
Tel: (818) 734-7223
Email: ECF2@lorgr.com
Total Assets: $1,683,000
Total Liabilities: $1,671,020
The petition was signed by Akikur Reza Mohammad, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors, is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OCZDL4I/ARM_Management_LLC__cacbke-20-11492__0001.0.pdf?mcid=tGE4TAMA
ARS REI USA: Case Summary & 7 Unsecured Creditors
-------------------------------------------------
Debtor: ARS REI USA Corp.
DBA UNOde50
2807 Jackson Avenue, Floor 5
Long Island City, NY 11101
Business Description: ARS REI USA Corp. is in the business of
selling handcrafted jewelry manufactured
in Madrin, Spain by ARS REI S.L.,
exclusively in the United States.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 20-11937
Debtor's Counsel: Jeffrey A. Reich, Esq.
REICH REICH & REICH, P.C.
235 Main Street, 4th Floor
White Plains, New York 10601
Tel: (914) 949-2126
Email: jreich@reichpc.com
reichlaw@reichpc.com
Total Assets: $4,248,640
Total Liabilities: $3,904,607
The petition was signed by Jason McNary, CEO.
A copy of the petition containing, among other items, a list of the
Debtor's seven unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/RJOZ7XA/ARS_REI_USA_Corp__nysbke-20-11937__0001.0.pdf?mcid=tGE4TAMA
AVIANCA HOLDINGS: Gets Court Permission to Pay Workers
------------------------------------------------------
Josh Saul, writing for Bloomberg News, reports that the federal
bankruptcy judge granted bankrupt air carrier Avianca Holdings SA
permission to pay employee wages over the objection of the U.S.
Trustee. Judge Martin Glenn: "For the debtor to succeed in
reorganization, they need the support of their loyal employees and
I think this is an appropriate way to do that."
The company wants to pay 2,482 current employees and 22 retired
employees incentive payments of about $3.8m and 36 higher-level
employees retention payments of up to $1.2m, according to court
filing.
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.
B&G FOODS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
---------------------------------------------------------
S&P Global Ratings affirmed all of its ratings on for B&G Foods
Inc., including its 'B+' issuer credit rating, and revised its
outlook to stable from negative.
S&P expects demand tailwinds associated with the coronavirus will
persist, leading to robust revenue and profit growth for B&G. B&G's
organic revenue grew 34% in the second quarter ended June 27, 2020,
driven by strong demand for products across its portfolio,
including Green Giant canned and frozen vegetables. S&P expects
food-at-home consumption levels will moderate over the coming
quarters but that demand will remain strong as consumers eat more
meals at home. While stay-at-home orders have eased over the past
couple of months, there are still restaurant dining restrictions in
most regions and the rating agency believes many consumers remain
hesitant to dine at restaurants out of fear of contracting the
virus. In addition, high unemployment and weaker discretionary
income will likely drive increased consumer spending on B&G's
relatively affordable products.
"Notwithstanding these tailwinds, we expect revenue will decline in
2021 from 2020 levels due to tougher comparisons, as the company
will unlikely benefit from another round of lockdowns like those
imposed in the spring, and restrictions will likely further ease.
Nevertheless, we believe revenue will remain higher than 2019
levels for the next couple of years as working from home and remote
learning for schools remain more prevalent, resulting in more meals
consumed at home," S&P said.
The company's aggressive acquisition strategy and high dividend
payout will likely prevent further credit metric improvement. For
the 12 months ended June 27, 2020, debt leverage declined to 5.2x
compared with 6.2x for the 12 months ended March 28, 2020. The
sequential improvement was largely driven by the uptick in demand
from the pandemic. Management has stated that its near-term focus
is on deleveraging and it has announced it will make a $75 million
prepayment on its $450 million term loan B, which will likely
improve leverage to around 5x by fiscal year-end 2020.
Nevertheless, the company has historically been very acquisitive
and has also prioritized shareholder rewards over debt repayment.
Notwithstanding further deleveraging the company may achieve
through EBITDA growth in the next few quarters, S&P believes credit
metrics will modestly weaken over the next couple of years as the
company maintains a high risk appetite for acquisitions and
prioritizes maintaining its high dividend payout over debt
repayment. Historically, the company has increased debt leverage to
fund acquisitions, but quickly restored leverage to around 5.5x or
below through profit growth and debt repayment. The company has
also issued equity in the past to help restore credit metrics after
significant acquisitions.
S&P's forecast assumes B&G continues to manage supply chain risk
effectively and will meet demand going forward. B&G has thus far
faced minimal supply chain disruptions caused by the pandemic
throughout the U.S., though fill rates for canned vegetables fell
below 90% a few times during the quarter. This was due in part to
the initial surge in demand caused by consumer pantry loading and
the fact that industry vegetable orders are completed only once per
year (late spring/early summer), ahead of crop growing season.
"We believe fill rates could have been worse if the company had not
entered the pandemic with a higher-than-normal inventory position.
With consumption remaining strong, we understand that the company
has placed higher orders with vegetable packers this summer to
replenish inventory. We assume the company will meet ongoing demand
because consumption will be more predictable going forward," S&P
said.
Food input cost volatility is also a risk to profitability.
"We do not believe the increased demand for shelf-stable and frozen
vegetables has led to significant input cost inflation yet, but we
believe inflationary pressures could become a challenge for B&G if
industry supply chains are disrupted by significant COVID-19
outbreaks or poor crop seasons. We believe the company would have
difficulty fully offsetting rising costs with price increases
because of high private-label penetration and formidable
competition from companies such as Conagra in its frozen category,"
S&P said.
"The stable outlook reflects our expectation that B&G's currently
substantial sales and profit growth will decelerate over the next
12 months but remain well above 2019 levels, keeping leverage in
the low- to mid-5x area over the next couple of years," the rating
agency said.
S&P could lower the ratings if it believes leverage will weaken and
remain above 5.5x. This could occur if:
-- The company transacts debt-funded acquisitions or shareholder
payments; or
-- Its profitability weakens due to a sudden reversal in revenues
to pre-COVID levels or significant rise in commodity costs.
S&P could raise the rating if:
-- S&P believes B&G will improve and sustain leverage below 5x.
-- S&P views this as unlikely based on the company's current
financial policies and appetite for acquisitions.
-- S&P favorably reassesses its view of the company's business
risk, which could occur if it believes the company will maintain
healthy organic growth rates and solid profitability, including
EBITDA margins over 20%, over the long term.
BAP PROPERTIES: Hernandez Buying Pleasanton Property for $3.2M
--------------------------------------------------------------
BAP Properties, LLC, asks the U.S. Bankruptcy Court for the
Northern District of California to authorize the sale of the real
property located at 6308 Inspiration Terrace, Pleasanton,
California to Nicholas B. and Helga T. Hernandez for $3.205
million, cash, subject to overbids, free and clear of all liens and
interests, with such liens and interests to reattach to the
proceeds of sale.
The Debtor's principal assets are two parcels of real property, the
Inspiration Property and certain unimproved development land
located at 622 Happy Valley, Pleasanton, California. The Chapter
11 case was commenced on the eve of the foreclosure of the Happy
Valley Lot by the holder of the first deed of trust encumbering
that property.
The objective of the Debtor's Chapter 11 case generally, and the
sale specifically, is to provide the greatest possible recovery to
junior lienholders. The Debtor intends promptly to present a Plan
of Reorganization which provides it with specified amounts of time
within which to effect sales of its properties free and clear of
liens, permitting it thereafter to sort out the entitlements of the
various lien creditors. There is no need to defer the marketing
and sale process until the Plan of Reorganization can be presented
for confirmation. A favorable sale of the Inspiration Property has
been negotiated and can be implemented promptly. The objectives of
the bankruptcy estate and its creditors are best achieved by
implementing the sale promptly.
The likely alternative to the Debtor's Chapter 11 case generally
and the sale specifically is the foreclosure of the properties by
senior lienholders and the loss of any realistic recovery for
junior lienholders.
The Inspiration Property is the more valuable of the two
properties, and consists of a 7 bedroom, 7½ bath, 7420 square foot
home, constructed in 2019 on a lot almost 1 acre large, abutting
the Calippe Preserve Golf Course.
The Debtor purchased the Inspiration Property as an unimproved lot
and built the home on it. The home was completed in approximately
November of 2019, and the Inspiration Property has been on the
market ever since. Initial expectations were that it might sell
for as much as $4 million, but the results of marketing did not
sustain those expectations, and the listing price has steadily
declined. More recently, COVID-19 has increased uncertainty in the
market.
Dissatisfied with the results of prior marketing efforts, the
Debtor engaged Ranbir Atwal of Realty One Group American as its
broker in March of 2020. Through a separate accompanying Motion,
the Debtor asks an Order authorizing the employment of Realty One
Group American and its compensation from the proceeds of sale.
The Debtor proposes to sell the Inspiration Property to Hernandez
for $3.205 million. The Proposed Sale is all cash and, as of the
date of the hearing thereon, will be completely non-contingent.
Hernandez has no connection with the Debtor, its owner or
representatives, or its creditors (to the best of the Debtor's
knowledge). The parties have executed their Proposed Sale
agreement.
In order to fulfill its fiduciary duty to the estate to obtain the
highest and best price, the Debtor established a procedure for the
presentation of overbids to purchase the Inspiration Property. The
provisions for submitting an overbid and the auction thereon are
presented in the Notice of Opportunity for Overbid. The Debtor's
proposed broker has been actively marketing the Inspiration
Property for overbids.
At the hearing on Sept. 2, 2020 at 2:00 p.m., the Debtor will
present to the Court for confirmation either the sale to Hernandez
or to the winner of the auction.
The Atwal Declaration is a true and correct copy of a recent title
report for the Inspiration Property, identifying persons who hold
liens or encumbrances against the Inspiration Property,
specifically including the following: Alameda County Tax Collector;
Fremont Bank; Ram M. & Satya Saroay, as Trustees; PENSCO Trust
Company, LLC, Custodian FBO Gurpartap S. Basrai, IRA; PENSCO Trust
Company, LLC, Custodian FBO Amarjean S. Basrai; RAB Enterprises;
and Arun Mohindra ("Respondents"). The Respondents are presented
in their order of priority as reflected in the title report.
The Lienholders are requested to provide detailed pay-off demands
not later than the response deadline to the Motion, Aug. 19, 2020.
The Debtor intends to evaluate the pay-off demands in their order
of lien priority to determine whether prompt payment of senior
liens is appropriate. It will present its conclusions in that
regard at the hearing on Sept. 2, 2020. To the extent that a pay-
off demand is not timely presented or is appropriately subject to
challenge, the Debtor will submit that the lienholder's claim is in
"bona fide dispute." Notwithstanding the foregoing, the Debtor
discloses that it is highly likely to authorize the payment of
County property taxes out of escrow.
The Debtor asks that it be authorized to pay, directly from the
sale escrow respecting the Inspiration Property and prior to
consideration of any lienholder claims, all ordinary and
appropriate costs of sale, including those costs identified in the
Sale Offer. It specifically asks that it be authorized to pay out
of escrow (i) an aggregate broker's commission of 6%, and (ii)
reimbursement of sales and make-ready expenses in the amount of
$52,350 to the Seller's broker, Realty One AMR. The Debtor also
asks that it be authorized to withdraw from the proceeds of sale
and transfer to a separate trust account an estimate of fees and
costs incurred and likely to be incurred by the Subchapter V
Trustee in the amount of $15,000 subject ultimate approval by the
Court.
Finally, the Debtor asks that the Court waives the 14-day stay
periods under Rule 6004(h) or, in the alternative, if an objection
to the Sale is filed, reduces the stay period to the minimum amount
of time needed by the objecting party to file its appeal.
About BAP Properties
BAP Properties, LLC, owns properties located at 6308 Inspiration
Terrace, Pleasanton, Calif., and 622 Happy Valley, Pleasanton,
Calif.
BAP Properties filed a voluntary Chapter 11 petition (Bankr. N.D.
Cal. Case No. 20-41119) on July 1, 2020. The petition was signed
by Kuldeep Singh, member. At the time of the filing, Debtor
disclosed estimated assets of $1 million to $10 million and
estimated liabilities of the same range. Judge Roger L. Efremsky
oversees the case. St. James Law, P.C. serves as Debtor's legal
counsel.
BERKELEY PROPERTIES: Selling 10 Berkeley Real Properties
--------------------------------------------------------
Berkeley Properties, LLC, asks the U.S. Bankruptcy Court for the
Northern District of California to authorize the auction sale of
the following real property assets located in in Berkeley,
California: (i) 640 Gilman Street, (ii) 648 Page Street, (iii) 1310
3rd Street, (iv) 1333 2nd Street, (v) 1401 Eastshore Highway, (vi)
1420 2nd Street, (vii) 1421 2nd Street, (viii) 1305 Eastshore
Highway, (ix) 1314 2nd Street, and (x) 1320 2nd Street.
The Debtor has been marketing the Real Property for sale for
approximately two years, and has run into issues in reaching
agreement on sale terms, due to the fact that its secured creditor,
the CMTA – Glass, Molders, Pottery, Plastics & Allied Workers
(Local 164B) Pension Trust, has an asserted claim that appears to
exceed the value of the Real Property and has been unable to agree
on any resolution of its lien on the Real Property. Despite the
fact that the treatment of the Pension Trust's claim in the
confirmed 2015 Plan1 in the prior bankruptcy contemplates
foreclosure as its primary remedy, the Pension Trust has been
unwilling to foreclose
on the Real Property.
At the same time, the Pension Trust has been unable to agree on a
release price at which it would reconvey its deed of trust, and
insisted on terminating the contract of the Debtor's brokers as of
Dec. 31, 2019, so there are no brokers currently under contract to
the sell the Real Property. To make matters worse, the Pension
Trust now asserts that all of the Debtor's cash is comprised of
rents subject to the lien of its deed of trust -- even though it
did not revoke the Debtor's license to collect and apply rents
until July 24, 2020. The Debtor's remaining cash is actually
comprised of a reimbursement made to it for property related
expenses.
Other than a small $500 per month lease, the Debtor has not
received any rent for nearly two years. The Pension Trust is now
also unwilling to fund any property related expenses, requiring the
Debtor to maintain a property that has no benefit to it, while
simultaneously being unwilling to take any actions that would
facilitate a sale or simply take the Real Property back in
foreclosure.
With no upside to the Debtor to be achieved from a sale, the Real
Property has become burdensome to the Debtor and its estate as the
carrying costs exceed $100,000 per month. As it is vacant, except
for a small $500/month lease for storage area leased by a
neighboring business, the Real Property carries with it significant
carrying costs of taxes, insurance, security, property maintenance,
property management, regulatory expenses, and other matters, while
producing almost no income to pay for such items.
Under these facts, and given the Pension Trust's rights to the Real
Property in its deed of trust and under the confirmed 2015 Plan
from the prior bankruptcy, the Debtor submits that it would be
appropriate to immediately abandon the Real Property to the Pension
Trust directly in the event the Pension Trust does not consent to
the proposed sale described herein. Pursuant to the bid procedure
motion filed concurrently with the Motion, the Debtor asks that the
Court authorizes such immediate abandonment in the event that the
Pension Trust does not consent to the sale of the Real Property
proposed in the Motion.
Pursuant to the PSA, the Purchaser will acquire the Real Property
for a cash purchase price without any financing contingency. A
good-faith deposit equal to $1 million will also be delivered under
the PSA, which will be used as a credit toward the Purchase Price
subject to closing of the Sale to the Purchaser. The PSA provides
that the Sale to the Purchaser of the Real Property will be free
and clear of all liens, claims, encumbrances and other interests to
the fullest extent allowed by law.
The Debtor is aware of the following parties having liens asserted
against all or a portion of the Real Property: the CMTA – Glass,
Molders, Pottery, Plastics & Allied Workers (Local 164B) Pension
Trust and certain other parties which may potentially have
statutory or other unperfected liens, which are listed on the
updated title report that will be filed with the Court as a
Supplement to the Motion. The Debtor believes that conducting the
Sale of the Real Property pursuant to the Bid Procedures will allow
the Debtor to maximize the value of the Real Property for the
benefit of its creditors.
The PSA also contemplates the assumption and assignment to the
Purchaser of the certain contracts to be designated by the
Purchaser. The Debtor will file a supplement to this Motion
listing out the contracts that may be Assumed Contracts and the
proposed cure amounts, and a second supplement to this Motion that
provides the list of Assumed Contracts from the Purchaser.
Pursuant to the PSA, for the Purchaser to consummate the Sale of
the Real Property, the order(s) approving the Sale must (i) approve
the Sale of the Real Property to the Purchaser on the terms set
forth in the PSA, including that such Sale is free and clear of
encumbrances and claims, with any such liens, encumbrances, and
claims to attach only to the proceeds of the sale, and the
performance by the Debtor of its obligations under the PSA; (ii)
authorize and direct the Debtor to assume and assign to the
Purchaser all of the Assumed Contracts; and (iii) bar any third
parties from asserting claims (including any claims for successor
liability, including, without limitation, claims arising from
unassumed expired executory contracts), liens or encumbrances of
any kind or nature against the Purchaser or the Real Property that
arose prior to closing.
Finally, the Debtor asks the Sale Order provide that the provisions
of Fed.R.Bankr.P. 6004(h), which would otherwise stay any order
approving the Sale of the Real Property as requested in the Sale
Motion, be waived under the circumstances.
A copy of the Agreement is available at
https://tinyurl.com/y4xzgu75 from PacerMonitor.com free of charge.
About Berkeley Properties
Berkeley Properties, LLC -- a company engaged in renting and
leasing real estate properties -- sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 20-41235) on
July 27, 2020. Berkeley President Matthew English signed the
petition. At the time of the filing, Debtor disclosed estimated
assets of $10 million to $50 million and estimated liabilities of
the same range. The Debtor has tapped Sheppard Mullin Richter &
Hampton LLP as its legal counsel and Cushman & Wakefield of
California, Inc., as its real estate broker.
BILTMORE 24 INVESTORS: Requests Exclusivity Extension to File Plan
------------------------------------------------------------------
Biltmore 24 Investors and its affiliates request the U.S.
Bankruptcy Court for the District of Arizona to extend the Debtors'
exclusive periods to file and solicit acceptances to a Chapter 11
plan while the Debtors' pending Disclosure Statement is being
considered.
The Debtors filed a Plan of Reorganization on July 20, 2020, and an
Amended Plan of Reorganization on July 28. The Plan proposes to pay
all creditors in full through a sales process.
In the process of obtaining acceptance of the Plan, the Debtors
have continued to manage and run operations, manage their assets as
debtors-in-possession, and have been paying expenses as they come
due. They are also not aware of any party-in-interest that may seek
to propose an alternative plan.
Absent an extension, the Exclusivity Period was set to expire on
August 19, 2020.
About Biltmore 24 Investors
Biltmore 24 Investors SPE LLC and its affiliates, Gray Blue Sky
Scottsdale Residential Phase I LLC, Gray Guarantors I LLC, Gray
Guarantors II LLC, and Gray Guarantors III LLC, listed their
business as single asset real estate (as defined in 11 U.S.C.
Section 101 (51B)) and were formed for the purpose of real estate
acquisition and ownership.
On April 21, 2020, Biltmore 24 and its affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Ariz. Lead Case No. 20-04130). The petitions were signed
by Bruce Grey, manager. At the time of the filing, Debtors had
estimated assets of between $10 million and $100 million and
liabilities of between $50 million and $500 million.
Judge Brenda K. Martin oversees the cases.
Michael W. Carmel, Ltd. is the Debtors' bankruptcy counsel. The
Debtors also hired Kutak Rock, LLP, Beus Gilbert McGroder, PLLC,
and Cohen Dowd Quigley as their special counsel.
The Debtors filed a Plan of Reorganization on July 20, 2020, and an
Amended Plan of Reorganization on July 28. The Plan proposes to pay
all creditors in full through a sales process.
The Court has scheduled a hearing for September 16, 2020, to
approve the Disclosure Statement accompanying the Plan.
BRIDGEWATER HOSPITALITY: Adcon Buying Houston Property for $4.25M
-----------------------------------------------------------------
Bridgewater Hospitality, LLC, asks the U.S. Bankruptcy Court for
the Southern District of Texas to authorize the short sale of the
real property located at 220 Greens Landing Drive, Houston, Texas
and the adjacent unimproved land, to Adcon Petroleum, LLC for $4.25
million, pursuant to the Commercial Earnest Money Contract.
The Debtor owns the property. The property is currently under the
Contract with the Buyer, an unrelated third party. The Debtor has
been trying to find a buyer who would payoff Guaranty Bank & Trust,
N.A. in full but has been unable to locate such a buyer.
The Debtor proposes to sell the property to the Buyer for $4.25
million to be paid to the Debtor at closing. The Debtor is still
negotiating the terms of the Contract and should have final terms
before the hearing. The terms will not affect the purchase price.
The Earnest Money Contract does include a provision requiring the
Buyer's deposit in trust of earnest money in the amount of
$25,000within three days of execution of the Earnest Money Contract
by Buyer and Seller and approval of the Court.
The sale will be free and clear of all liens, claims and
encumbrances, and such liens, claims and encumbrances will attach
to the sales proceeds. The sales proceeds will be held by the
title company pending an order of distribution approved by the
Court. It is a short sale.
Guaranty has indicated it is willing to accept less than the amount
owed on its loan. Guaranty claims a lien on the property in excess
of $5,118,358.
The property is also encumbered with liens to the taxing
authorities for 2019 and 2020 ad valorem taxes.
The reasonable and necessary closing costs associated with the sale
will be paid at the time of closing along with the U.S. Trustee's
fees and any approved legal fees.
The Debtor may also ask payment of a reasonable Buyer's Broker's
fee upon successful closing of the sale pursuant to the terms of
the Earnest Money Contract; however, it is not aware of any broker
at this time.
The Debtor asks that the 14-day period following the entry of an
Order allowing the sale be waived.
Objections, if any, must be filed within 21 days from the date of
service of Motion.
A copy of the Contract is available at https://tinyurl.com/yysup5wn
from PacerMonitor.com free of charge.
About Bridgewater Hospitality
Bridgewater Hospitality, LLC, is a privately held company in the
traveller accommodation industry. Bridgewater Hospitality filed
its voluntary petition under Chapter 11 of the Bankruptcy Code
(Bankr. S.D. Tex. Case No. 20-31546) on March 2, 2020. The
petition was signed by Prashant Patel, manager and general partner.
At the time of filing, the Debtor was estimated to have $1 million
to $10 million in both assets and liabilities. Joyce Lindauer,
Esq. at JOYCE W. LINDAUER ATTORNEY, PLLC, is the Debtor's counsel.
BRINKER INTERNATIONAL: S&P Affirms 'B+' ICR on Improved Liquidity
-----------------------------------------------------------------
S&P Global Ratings affirmed all of its ratings on Dallas-based
casual dining restaurant company Brinker International Inc.,
including its 'B+' issuer credit rating.
The revised liquidity score reflects Brinker's improving cash flow
generation and revolver maturity extension. The company recently
secured an amendment to its credit agreement that extends the
maturity of its revolver to Dec. 12, 2022 from Sept. 12, 2021, in
exchange for a higher interest rate and a reduced borrowing limit
of $900 million (from $1 billion) beginning Sept. 12, 2021. In
S&P's view, the extended tenor outweighs the concessions and
provides the company with time to demonstrate stronger operating
results and potentially obtain more favorable terms during its next
refinancing.
Comparable restaurant sales improved sequentially during the latest
quarter as the return of on-premise dining supplemented the
company's off-premise sales channel. Notably, operating cash flow
turned positive in June as restaurant reopenings lifted sales
volumes above break-even thresholds.
"We expect cash flow generation will continue to improve as sales
levels recover, with the funds directed toward debt reduction and
restaurant development. Still, operating results continue to be
pressured by the coronavirus pandemic as comparable restaurant
sales remain negative and sales deleveraging strains profitability.
We expect guest traffic counts will stay pressured as consumers
remain leery of dining out while the spread of the coronavirus
remains uncontrolled," S&P said.
"We believe Brinker is vulnerable to downside risk because of its
high correlation to the health of the overall macroeconomic
environment. Further, the company operates in the highly
competitive casual dining sector, which is directly impacted by
social distancing under the pandemic and facing additional secular
challenges. Because of these risks, we apply a negative one-notch
comparable rating analysis modifier to our anchor. This results in
a similar rating to Brinker's closest rated peer, Bloomin' Brands
Inc.," S&P said.
The negative outlook reflects the risk of a lower rating if the
expected recovery in operating performance, cash flow generation,
and credit metrics this fiscal year is delayed.
S&P could lower the rating if:
-- The trajectory of Brinker's recovery stalls such that S&P's
views a substantial rebound in sales, earnings, and cash flow in
2021 as unlikely.
-- S&P expects leverage will exceed 5.5x through 2021.
S&P could revise the outlook to stable if:
-- Key performance indicators, including comparable restaurant
sales and margins, strengthen consistent with its forecast,
improving confidence that adjusted debt to EBITDA will be sustained
at or below 5.5x in 2021.
CALFRAC WELL SERVICES: Commences Proceedings in U.S. and Canada
---------------------------------------------------------------
Calfrac Well Services Ltd. filed for Chapter 15 protection to seek
recognition of its restructuring proceedings in Canada.
Calfrac had commenced in the Court of Queen's Bench of Alberta
(Calgary) proceedings under Sec. 192 of the Canadian Business
Corporation Act, R.S.C. 1985 ("CBCA").
Skyler Rossi, writing for Bloomberg Law, reports that Calfrac is
the latest energy company to go under following a steep decline in
crude prices.
The oilfield services provider had been firing workers and trimming
operations in North America in an effort to slash costs. The
Calgary-based company reported a net loss of C$123 million in the
first quarter, even after cutting operating spending by C$150
million.
The filing follows a plunge in crude prices as the Covid-19
pandemic dents global growth. The slump has already forced energy
service companies including Vista Proppants & Logistics Inc. and
Unit Corp. to seek court protection.
About Calfrac Well Services
Calfrac Well Services Corporation provides acidizing, hydraulic
fracturing, coiled tubing, nitrogen and carbon dioxide drilling and
completion services to the oil and gas exploration companies.
Calfrac Well Services Corp. filed a Chapter 15 case (Bankr. S.D.
Tex. Case No. 20-bk-33529) on July 13, 2020, to seek recognition of
its proceedings under Sec. 192 of the Canadian Business Corporation
Act, R.S.C. 1985 ("CBCA").
The Hon. David R Jones is the case judge.
The Debtor is represented by:
John F Higgins, IV
Porter Hedges LLP
Tel: 713-226-6648
E-mail: jhiggins@porterhedges.com
CALIFORNIA RESOURCES: Consensual Plan to Give 100% to Unsecureds
----------------------------------------------------------------
California Resources Corporation (OTC: CRCQQ) announced July 24,
2020, that it has entered into an amended and restated
Restructuring Support Agreement with approximately 85% of the
holders of its term loans due 2017 and 68% of the holders of its
unsecured and deficiency debt claims.
Reflecting this consensus, CRC has filed a plan of reorganization
in its chapter 11 case that provides for the elimination of over $5
billion of debt and mezzanine equity interest, the consolidation of
CRC's ownership in the Elk Hills power plant and cryogenic gas
plant, and the payment of all valid trade, employee, retiree,
customer, vendor, regulatory and contingent claims in full in cash
in the ordinary course of business.
The Company's Plan will pay general unsecured claims in full.
"We are thrilled for the additional support by our key creditors,
chiefly the funds holding our 2017 Term Loans that have played an
active role in the design and negotiation of such a successful
restructuring, as well as the new creditors that have joined the
Restructuring Support Agreement over the past week," said Todd A.
Stevens, President and Chief Executive Officer. "There is still
work to do, but CRC's path to emergence from chapter 11 is shorter
and clearer because of the support they have provided over the past
months working together collaboratively."
CRC also announced that it successfully closed a $1.1 billion
debtor-in-possession financing, consisting of a senior secured
superpriority debtor-in-possession revolving credit facility of up
to $483 million (the "Senior DIP Facility"), providing for $250
million in new money loans, $150 million to deem letters of credit
outstanding under CRC's existing revolving credit facility as being
issued under the Senior DIP Facility and a "roll-up" of $83 million
of commitments under CRC's existing revolving credit facility, as
well as a junior secured superpriority debtor-in-possession term
loan facility of $650 million (the "Junior DIP Facility"). The
proceeds of the Senior DIP Facility and the Junior DIP Facility on
the closing date were used to refinance and replace the Company's
existing revolving credit facility in full.
CRC's chapter 11 case has been filed in the Southern District of
Texas (Houston Division). All of the transactions described above
are subject to Court approval. CRC will not solicit approval of its
plan of reorganization unless and until a disclosure statement
providing adequate information about CRC and its plan of
reorganization has been approved by the Court. Creditors with the
right to vote to approve or reject the plan should refer to the
disclosure statement for more information as and when the
disclosure statement is so approved.
200 Oil Explorers in Bankruptcy
Steven Church, David Wethe, and Christine Buurma, writing for
Bloomberg News, report that California Resources joins more than
200 oil explorers that have filed for court protection since 2015,
and more may be coming in a matter of weeks. Denbury Resources
Inc. and Noble Corp. missed their July debt payments, and Chaparral
Energy Inc. asked lenders for more time, setting them on course for
a possible default.
About California Resources
California Resources Corporation -- http://www.crc.com/-- 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.
On July 15, 2020, California Resources and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. 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.
The Debtors 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.
CAMBRIAN HOLDING: Unsecureds to Get Up to 30% in Plan
-----------------------------------------------------
Cambrian Holding Company, Inc., et al., submitted a Joint Plan and
a Joint Disclosure Statement.
On June 26, 2019, the Office of the United States Trustee appointed
the Committee, consisting of the following members: TECO
Diversified, Inc., Austin Powder Co., Jones Oil Co., Inc./Jones
Petroleum Services, LLC, Kentucky River Properties, LLC,
Parsley’s General Tire, Inc., Whayne Supply Co., Kentucky Coal
Employers Self Insurance Guaranty Fund, Robert J. Zik
and Pamela Dotson Tester. On July 1, 2019, the Committee selected
Foley & Lardner LLP and Barber Law PLLC as its counsel. The
Committee thereafter selected B. Riley Financial as its financial
advisors.
Class 1 Other Priority Claims. This class is impaired with
estimated amount of claims of [$0-$1 million] and estimated return
of 100%, subject to outcome of litigation brought by the
Liquidating Trustee. A Holder of an Allowed Class 1 Claim shall
receive its Pro Rata Share of any remaining Liquidating Trust
Assets after providing for the payment in full of all Allowed
Secured Claims, Allowed Administrative Claims, and Allowed
Professional Fee Claims.
Class 3 Richmond Hill- Essex Claims. This class is impaired with
estimated amount of claims of $45,698,363 and estimated return of
0% to 10%. The Richmond-Hill Essex Claims shall receive the
treatment given to such claims under the Richmond- Hill Essex
Settlement Order.
Class 4 Prepetition ABL Agent Claims. This class is impaired with
estimated amount of claims of $3,349,272 and estimated return of 0%
to 20%, depending on whether the claim is allowed and, if so,
litigation recoveries by the Liquidating Trustee. The allowance of
the Class 4 Claims will be Disputed by the Liquidating Trustee. No
distributions shall be made on account of the Pre-Petition ABL
Claims unless a Final Order is entered allowing such claims.
Class 5 Prepetition Term Agent Claims. This class is impaired with
estimated amount of claims of $77,881,492 and estimated return of
0% to 10%, depending on whether the claim is allowed and, if so,
litigation recoveries by the Liquidating Trustee. The allowance of
the Class 5 Claims will be Disputed by the Liquidating Trustee. No
distributions shall be made on account of the Prepetition Term
Agent Claims unless a Final Order is entered allowing such claims.
Class 6 General Unsecured Claims totaling $50 million to $100
million will recover 0% to 30%, subject to outcome of litigation
brought by the Liquidating Trustee. A Holder of an Allowed General
Unsecured Claim shall receive its Pro Rata Share of any remaining
Liquidating Trust Assets after providing for the payment in full of
all Allowed Secured Claims, Allowed Administrative Claims, Allowed
Priority Tax Claims and Allowed Other Priority Claims.
Class 7 Equity Interests are impaired. Class 7 Equity Interests
will be canceled, released, and extinguished as of the Effective
Date, and will be of no further force or effect.
The Debtors' cash and the other Liquidating Trust Assets shall be
used to fund the Distributions to Holders of Allowed Claims against
the Debtors in accordance with the treatment of such Claims
provided in the Plan.
A full-text copy of the Joint Disclosure Statement dated July 15,
2020, is available at https://tinyurl.com/y6canpv5 from
PacerMonitor.com at no charge.
Counsel to the Debtors:
Patricia Burgess
FROST BROWN TODD LLC
250 West Main Street, Suite 2800
Lexington, Kentucky 40507
Telephone: (859) 231-0000
Facsimile: (859) 231-0011
E-mail: pburgess@fbtlaw.com
- and -
A.J. Webb
FROST BROWN TODD LLC
3300 Great American Tower
301 East Fourth Street
Cincinnati, Ohio 45202
Telephone: (513) 651-6800
Facsimile: (513) 651-6981
E-mail: awebb@fbtlaw.com
Counsel for the Official Committee of Unsecured Creditors of
Cambrian Holding Company, Inc. et al.:
Geoffrey S. Goodman
FOLEY & LARDNER LLP
321 North Clark Street, Suite 2800
Chicago, Illinois 60654
Telephone: (312) 832-4500
ggoodman@foley.com
T. Kent Barber, Esq.
BARBER LAW PLLC
2200 Burrus Drive
Lexington, KY 40513
Telephone: (859) 296-4372
kbarber@barberlawky.com
About Cambrian Holding
Belcher, Kentucky-based Cambrian Holding Company, Inc., and its
subsidiaries produce and process metallurgical coal and thermal
coal for use by utility providers and industrial companies located
primarily in the eastern United States and Canada. The company
began operations in 1991 and, over time, acquired various mines and
mining-related assets from major coal corporations.
Cambrian Holding Company and 18 of its affiliates each filed a
petition seeking relief under Chapter 11 of the Bankruptcy Code
(Bankr. E.D. Ky. Lead Case No. 19-51200) on June 16, 2019. At the
time of the filing, Cambrian Holding Company had estimated assets
and liabilities of less than $50,000. Judge Gregory R. Schaaf
oversees the cases.
The Debtors tapped Frost Brown Todd, LLC as bankruptcy counsel;
Whiteford, Taylor & Preston, LLP as litigation counsel; Jefferies,
LLC as investment banker; and FTI Consulting, Inc., as financial
advisor. Epiq Corporate Restructuring, LLC, is the notice, claims
and solicitation agent.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on June 26, 2019. The committee tapped Foley &
Lardner, LLP as legal counsel; Barber Law PLLC as local counsel;
and B. Riley FBR, Inc. as financial advisor.
CAPITAL TRUCK: Sets Bidding Procedures for All Assets
-----------------------------------------------------
Capital Truck, Inc., asks the U.S. Bankruptcy Court for the
Northern District of Florida to authorize to authorize the bidding
procedures in connection with the auction sale of all of its
assets, including its fixed assets, inventory, sales and servicing
agreements, its "Blue Sky" rights to the dealership and other
intangible assets.
The Debtor is an authorized Mack dealership located at 4740
Blountstown Highway, Tallahassee, Florida. It sells and services
new and used Mack trucks, Hino trucks, and Hitachi trucks.
The Debtor is a party to the Dealer Agreements with Mack Trucks,
Inc. and Hino Motors Sales U.S.A., Inc. The Dealer Agreements are
necessary for the continued operation of the Debtor's business and
the maximization of its value. With respect to its floorplan, the
Debtor is a party to financing agreements with Volvo Financial
Services ("VFS") and Hitachi Capital America Corp., which allowed
the Debtor to purchase new trucks.
The Debtor operates its dealership on real property, which is
leased from McKenzie Tank Lines, Inc., and the lease is
month-to-month. It does not own any real property.
Since the Petition Date, the Debtor has had numerous discussions
with several potential buyers in an effort to sell its assets to
pay its creditors. However, because the Debtor did not have a sale
in place as of the Petition Date, and because no sale agreements
have been entered into as of the date of the Motion after
soliciting offers for over three weeks, post-petition, the Debtor
has determined that the proposed sale of its assets pursuant to the
bid procedures proposed represents the best opportunity to maximize
the value of its estate for all creditors and parties in interest.
It intends to sell substantially all assets as promptly as
possible.
The Assets to be sold as part of the Debtor as a going concern
include, but are not limited to, primarily the following: (i)
inventory, equipment, parts, accessories, tools, products, office
furniture and fixtures; (ii) contract rights, policies, dealer
reserve accounts, manufacturer’s statements of origin or
certificates of title and/or ownership related to vehicles,
documents and general intangibles, including "Blue Sky" rights;
(iii) the Dealer Agreements between Mack Trucks and Hino Motors and
the Debtor and other executory contracts, if any exist; (iv) cash
and cash equivalents on hand and in banks; (v) accounts receivable
of the Debtor; (vi) any prepaid insurance, interests in any
employee benefit plans, interest, utilities, or rent accrued to the
benefit of the Debtor as of the Closing Date; (vii) the minute
book, corporate records, and corporate seal of the Debtor; and
(viii) any avoidance claims or causes of action under the
Bankruptcy Code or other Applicable Law.
Accordingly, the Debtor's right, title and interest in all of the
Assets will be sold free and clear of and liens, security
interests, claims, charges or encumbrances. Any such liens,
security interests, claims, charges, and/or encumbrances, other
than liabilities expressly assumed by the purchaser, will attach to
the amounts payable to the Debtor from the sale, and held by the
Debtor in its counsel's trust account, pending further Order of the
Court.
By the Motion, the Debtor asks approval and implementation of a
four-step sales process, as follows:
a. A Bid Procedures Hearing to be held on Aug. 20, 2020 at
which the Debtor will seek approval of the Bid Procedures;
b. An Auction to be conducted on Sept. 10, 2020 in accordance
with the Bid Procedures;
c. A hearing approving the sale to the Prevailing Bidder and
deeming the Prevailing Bidder a good-faith purchaser entitled to
the protections of 11 U.S.C. Section 363(m) immediately thereafter;
and
d. A Closing to complete the sale following final approval by
Mack Trucks of the Prevailing Bidder, with said sale expected to
occur no later than Oct. 15, 2020, unless Mack Trucks does not
approve the Prevailing Bidder.
The Debtor has and will solicit bids for the Assets from third
parties. Thus, it asks entry of an order scheduling an auction,
approving the Bid Procedures, and authorizing the solicitation and
submission of a qualified and competitive bid.
In order for a party to be a Qualified Bidder, an Interested Bidder
must comply with the following requirements:
a. Complete and submit to Mack Trucks a Bidder Qualification
Package ("BQP") which the Debtor anticipates will be provided by
Mack Trucks.
b. The Debtor will provide the BQP to all Interested Bidders
of which the Debtor is aware, or who has inquired regarding the
Debtor's Assets. Interested Bidders will be required to complete
the BQP such that it will be received by Mack Trucks no later than
Aug. 24, 2020. If Interested Bidders do not provide a complete BQP
by the BQP Deadline, they will be unable to participate in the sale
process. On Sept. 1, 2020, Mack Trucks will notify the Interested
Bidders and the Debtor, which Interested Bidders may have met the
requirements of Mack Trucks to be a Mack Trucks dealership Owner.
c. On Sept. 3, 2020, deliver to the Debtor's counsel an asset
purchase agreement that contains substantially similar provisions
to the APA to be filed as a supplement to the instant Motion, along
with adequate information regarding the Interested Bidder's
financial capability to close the transaction at the price
indicated, and a deposit of at least $50,000.
d. On the Bid Deadline, deliver to the Debtor's counsel
evidence reasonably satisfactory to the Debtor demonstrating the
Interested Bidder's financial stability to close and to consummate
an acquisition of the Purchased Assets.
e. On the Bid Deadline, disclose any connections or agreements
with the Debtor, any other potential prospective bidder or
Qualified Bidder, and/or any officer, director or equity security
holding of the Debtor; and
f. Confirm in writing its agreement to accept and abide by the
terms, conditions and procedures set forth in the order approving
the Bid Procedure.
Based upon the documents received, the Debtor will determine if an
Interest Bidder has submitted a Qualified Bid by Sept. 9, 2020.
The Auction will be governed by the following procedures:
a. Only the Qualified Bidders will be entitled to make any
subsequent bids at the Auction. Mack Trucks will have the right of
first refusal with respect to any bids;
b. Each Qualified Bidder will be required to confirm that it
has not engaged in any collusion with respect to the bidding or the
sale;
c. Each Qualified Bidder will appear in person at the Auction,
or through a duly authorized representative;
d. Bidding will commence at the amount of the best Qualifying
Bid submitted prior to the Auction (to be determined by the
Debtor);
e. Qualified bidders may then submit successive bids in
increments of $50,000;
f. All Qualified Bidders will have the right to submit
additional bids and make additional modifications to their
respective Proposed APAs, as applicable, at the Auction so long as
any such additional bids;
g. The Auction will be conducted openly and each Qualified
Bidder will be informed of the terms of the previous bid;
h. The Auction will continue until there is only one offer
that the Debtor determines, subject to Court approval, is the
highest and best offer from among the Qualified Bids submitted at
the Auction.
i. The bidding at the Auction will be transcribed.
j. Within five days after adjournment of the Auction, the
Prevailing Bidder will complete a Final Qualification Package for
Mack Trucks, if required, and Mack Trucks will determine if the
Prevailing Bidder is fully and finally qualified to be a Mack
Trucks dealer no later than 30 days after the Auction.
k. If Mack Trucks does not approve the Prevailing Bidder, this
matter can be put on before the Court on expedited notice to
interested parties to determine whether the Mack Dealer Agreement
is assumable and assignable to the Prevailing Bidder over the
objection of Mack Truck.
The Closing will occur within seven days after the entry of the
Court order approving the sale or such earlier date as the parties
may agree.
The Debtor asks that the Court approves the form of the notice of
the Bid Procedures. It will serve a copy of the Procedures Notice
within three business days following the entry of the Bid
Procedures Order on the Procedures Notice Parties.
The Debtor believes that the following entities may or do hold
valid liens against the Purchased Assets: (i) The First Bank, N.A.,
(ii) VFS, (iii) Hitachi Capital America Corp., (iv) Hino Motors,
and (v) Mack Trucks.
About Capital Truck
Capital Truck, Inc., based in Tallahassee, FL, filed a Chapter 11
petition (Bankr. N.D. Fla. Case No. 20-40287) on July 14, 2020.
In the petition signed by Mark Thomas, president, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. BRUNER WRIGHT, P.A., serves as bankruptcy counsel to
the Debtor.
CBL & ASSOCIATES: Enters Into Restructuring Support Agreement
-------------------------------------------------------------
CBL Properties has entered into a restructuring support agreement
with certain beneficial owners and/or investment advisors or
managers of discretionary funds, accounts, or other entities
representing in excess of 57% of the aggregate principal amount of
the Operating Partnership's 5.25% senior unsecured notes due 2023,
the Operating Partnership's 4.60% senior unsecured notes due 2024
and the Operating Partnership's 5.95% senior unsecured notes due
2026.
The terms of the RSA provide for a comprehensive restructuring of
the Company's balance sheet through an in-court process
contemplated to commence no later than Oct. 1, 2020. The Company
intends to continue collaborative negotiations with its senior,
secured lenders in the meantime to attempt to reach a consensual
arrangement with those lenders. In the event that such an
arrangement were reached, the Company would amend the RSA to
include its senior secured lenders. The agreement may be amended
by the Company and with the consent of noteholders representing at
least 75% of the Unsecured Notes that are held by noteholders that
are party to the RSA.
The Plan would eliminate the approximately $1.4 billion principal
amount of Unsecured Notes in exchange for the issuance of $500
million of new senior secured notes due June 2028, approximately
$50 million of cash and approximately 90% of the new common equity
of the Company to holders of the Unsecured Notes. As a result, the
Plan, if implemented, will result in the elimination of
approximately $900 million of debt, extension of the Company's debt
maturity schedule and a reduction in annual interest expense of
more than $20 million. The Plan also contemplates eliminating the
Company's more than $600 million obligation on its preferred stock
in exchange for new common equity and warrants. In sum, the Plan
will provide the Company with a significantly stronger balance
sheet by reducing total debt, extending debt maturities and
increasing liquidity while minimizing operational disruptions.
Through this process, all day-to-day operations and business of the
Company's wholly owned, joint venture and third-party managed
shopping centers will continue as normal. CBL's customers, tenants
and partners can expect business as usual at all of CBL's owned and
managed properties.
"Reaching this agreement with our noteholders is a major milestone
for CBL," said Stephen D. Lebovitz, chief executive officer of CBL.
"The agreement will significantly improve our balance sheet by
reducing leverage and increasing net cash flow and will simplify
our capital structure, providing enhanced financial flexibility
going forward.
"We also appreciate the confidence in the CBL organization and
leadership team shown by the noteholders as we've worked
collaboratively to find a solution that benefits all company
stakeholders. Our goal is for this process to proceed as smoothly
and as quickly as possible with no disruption to CBL's operations.
Once the process is complete, we will emerge as a stronger and more
stable company, with an enhanced ability to execute on our key
strategies of diversifying our sources of revenue and transforming
our properties from traditional enclosed malls to suburban town
centers. As a result, we will be better positioned to grow our
business over the near and long term."
CBL currently has approximately $220 million in cash on hand and
available for sale securities. The Company's cash position,
combined with positive cash flow generated by ongoing operations,
is expected to be sufficient to meet CBL's operational and
restructuring needs.
Certain subsidiaries, including CBL's joint ventures and CBL's
special purpose entities holding properties that secure mortgage
loans, are not contemplated to be included as part of the in-court
process. CBL anticipates continuing to meet all debt service and
other obligations, as required, under its property level secured
loans and joint venture partnerships.
About CBL Properties
CBL & Associates Properties, Inc. -- http://www.cblproperties.com
-- is a self-managed, self-administered, fully integrated REIT. The
Company owns, develops, acquires, leases, manages, and operates
regional shopping malls, open-air and mixed-use centers, outlet
centers, associated centers, community centers, office and other
properties. The Company's Properties are located in 26 states, but
are primarily in the southeastern and midwestern United States.
The Company has elected to be taxed as a REIT for federal income
tax purposes.
CBL & Associates reported a net loss of $131.72 million for the
year ended Dec. 31, 2019, compared to a net loss of $99.23 million
for the year ended Dec. 31, 2018.
* * *
As reported by the TCR on June 1, 2020, Moody's Investors Service
downgraded the ratings of CBL & Associates Limited Partnership,
including the corporate family rating to Ca from Caa1 and senior
unsecured debt to C from Caa3. The rating downgrade reflects
Moody's expectation that CBL's liquidity profile will erode rapidly
in the next two quarters.
CBL & ASSOCIATES: Incurs $83.5 Million Net Loss in Second Quarter
-----------------------------------------------------------------
CBL & Associates Limited Partnership filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q,
disclosing a net loss attributable to unitholders of $83.53 million
on $124.21 million of total revenues for the three months ended
June 30, 2020, compared to a net loss attributable to common
unitholders of $40.85 million on $193.38 million of total revenues
for the three months ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss attributable to common unitholders of $233.84 million on
$291.78 million of total revenues compared to a net loss
attributable to common unitholders of $98.81 million on $391.41
million of total revenues for the same period during the prior
year.
As of June 30, 2020, CBL & Associates had $4.65 billion in total
assets, $4 billion in total labilities, $525,000 in redeemable
common units, and $653.74 million in total capital.
Liquidity and Going Concern Considerations
CBL & Associates Limited Partnership and its subsidiaries (the
"Operating Partnership") received notices of default and
reservation of rights letters from the administrative agent under
the secured credit facility asserting that certain defaults and
events of default have occurred and continue to exist as of
June 30, 2020 by reason of the Operating Partnership's failure to
comply with certain restrictive covenants, including the liquidity
covenant, in the secured credit facility. As of
Aug. 17, 2020, the lenders under the secured credit facility have
not accelerated the outstanding amount due and payable on the loans
or commenced foreclosure proceedings, but they may seek to exercise
one or more of these remedies in the future.
Management has engaged Weil, Gotshal & Manges LLP and Moelis &
Company LLC to assist the Company in exploring several alternatives
to reduce overall leverage and interest expense and to extend the
maturity of its debt including (i) the senior secured credit
facility, which includes a revolving facility with a balance of
$675,925 and term loan with a balance of $447,500 as of June 30,
2020, that matures in July 2023 and (ii) the Notes with balances of
$450,000, $300,000, and $625,000, as of June 30, 2020, that mature
in December 2023 , October 2024 and December 2026, respectively, as
well as the cumulative unpaid dividends on the Company's preferred
stock and the special common units of limited partnership interest
in the Operating Partnership. The Advisors commenced discussions
in May 2020 with advisors to certain holders of the N otes and the
credit committee of the senior secured credit facility. Management
said it may pursue a comprehensive capital structure solution that
will address the Company's funded indebtedness and outstanding
equity interests that may result in the reorganization of the
Company.
"Given the impact of the COVID-19 pandemic on the retail and
broader markets, the ongoing weakness of the credit markets, and
the Operating Partnership's default of certain restrictive
covenants, the Company believes that there is substantial doubt
that it will continue to operate as a going concern within one year
after the date these condensed consolidated financial statements
are issued. The accompanying condensed consolidated financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course
of business. Accordingly, the condensed consolidated financial
statements do not reflect any adjustments related to the
recoverability of assets and satisfaction of liabilities that might
be necessary should the Company be unable to continue as a going
concern," CBL & Associates said.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/910612/000156459020040444/cbl-20200630.htm
About CBL Properties
CBL & Associates Properties, Inc. -- http://www.cblproperties.com
-- is a self-managed, self-administered, fully integrated REIT.
The Company owns, develops, acquires, leases, manages, and operates
regional shopping malls, open-air and mixed-use centers, outlet
centers, associated centers, community centers, office and other
properties. The Company's Properties are located in 26 states, but
are primarily in the southeastern and midwestern United States.
The Company has elected to be taxed as a REIT for federal income
tax purposes.
CBL & Associates reported a net loss of $131.72 million for the
year ended Dec. 31, 2019, compared to a net loss of $99.23 million
for the year ended Dec. 31, 2018.
* * *
As reported by the TCR on June 1, 2020, Moody's Investors Service
downgraded the ratings of CBL & Associates Limited Partnership,
including the corporate family rating to Ca from Caa1 and senior
unsecured debt to C from Caa3. The rating downgrade reflects
Moody's expectation that CBL's liquidity profile will erode rapidly
in the next two quarters.
CENTURION PIPELINE: S&P Rates Senior Secured Debt Add-on 'BB+'
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating and '1'
recovery rating to Centurion Pipeline Co. LLC's (BB-/Stable/--) $75
million senior secured incremental debt add-on to its $350 million
term loan. The company will use all of the proceeds from the new
debt to prefund capital expenditures for the Augustus and
Wink-to-Webster Pipeline projects and fees and expenses related to
general corporate purposes. This increase in debt will have an
immaterial effect on the company's S&P Global Ratings-adjusted
credit metrics and thus, the rating is unchanged.
S&P's issuer credit rating on Centurion Pipeline is based on
business risk characterized by creditworthy counterparties with
long-term, fixed-fee contracts, which the rating agency expects
will provide some insulation from market risks and macroeconomic
forces over the next few years.
"We expect the company's debt to EBITDA to average about 3x through
2021 as the company increases leverage to fund capital expenditures
but deleverages over time. However, our view of the company's
financial risk is based primarily on the controlling ownership by
private equity sponsor, EnCap Flatrock Midstream," S&P said.
"The outlook is based on our expectation that the company will
complete growth projects on time and on budget while maintaining
system utilization through new customer contracts and contract
extensions," the rating agency said.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
In S&P's default scenario, weak market prices for crude oil over
the next few years lead to lower demand for Centurion's services, a
drop in utilization, and difficulties in signing long-term
contracts with creditworthy counterparties at adequate pricing. S&P
also factored in some operational issues that stress the company's
EBITDA margin. This, in turn, leads to an inability to refinance
the revolving credit facility in 2023. S&P does not assume any
distressed asset sales, but assume a reorganization that results in
a level of emergent cash flow.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $75 million
-- EBITDA multiple: 7x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): ~$490
million
-- Secured first-lien debt claims: ~$505 million
-- Recovery expectations: 90%-100% (rounded estimate: 95%)
RATINGS SCORE SNAPSHOT
-- Issuer Credit Rating: BB-/Stable/--
-- Business risk: Fair
-- Country risk: Very low
-- Industry risk: Low
-- Competitive position: Fair
-- Financial risk: Aggressive
-- Cash flow/leverage: Aggressive
-- Anchor: bb-
Modifiers
-- Diversification/portfolio effect: Neutral (no impact)
-- Capital structure: Neutral (no impact)
-- Financial policy: FS-5 (no additional impact)
-- Liquidity: Adequate (no impact)
-- Management and governance: Fair (no impact)
-- Comparable rating analysis: Neutral (no impact)
-- Stand-alone credit profile: bb-
S&P calculated cash flow/leverage according to its medial
volatility table.
CHASE MERRITT: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Chase Merritt Global Fund LLC
19362 Fisher Ln
Santa Ana, CA 92705
Business Description: Chase Merritt Global Fund LLC is engaged in
activities related to real estate. The
Company is the owner of fee simple title to
a single-famiy residence located at 19362
Fisher Ln Santa Ana, CA 92705, having a
current value (lender appraisal) of $2.19
million. It also owns an improved vacant
land in Santa Ana, California having a
current value of $760,000.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Central District of California
Case No.: 20-12328
Debtor's Counsel: Thomas C. Nguyen, Esq.
LAW OFFICES OF THOMAS C NGUYEN, APC
8311 Westminster Ave Ste 310
Westminster, CA 92683
Tel: 714-897-0201
Email: Tomnguyen.attorney@gmail.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Paul Nguyen, manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/SYLN63I/Chase_Merritt_Global_Fund_LLC__cacbke-20-12328__0001.0.pdf?mcid=tGE4TAMA
CHASE MERRITT: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Chase Merritt Global Fund LLC
19362 Fisher Ln
Santa Ana, CA 92705
Business Description: Chase Merritt Global Fund LLC engages in
activities related to real estate.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Central District of California
Case No.: 20-12317
Debtor's Counsel: Thomas C. Nguyen, Esq.
LAW OFFICES OF THOMAS C NGUYEN, APC
8311 Westminster Ave Ste 310
Westminster, CA 92683
Tel: 714-897-0201
Email: Tomnguyen.attorney@gmail.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Paul Nguyen, manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/XAHYYBA/Chase_Merritt_Global_Fund_LLC__cacbke-20-12317__0001.0.pdf?mcid=tGE4TAMA
CHESAPEAKE ENERGY: Royalty Payment Suit Delayed Due to Bankruptcy
-----------------------------------------------------------------
Shane Hoover, writing for Canton Rep, reports that the lawsuit over
Chesapeake Energy’s royalty payments to Ohio landowners is on
hold after the company’s recent bankruptcy filing.
The class action lawsuit, filed in 2015 by a group of Columbiana
County landowners, claimed damages of at least $30 million on
behalf of 224 landowners. It is before a federal appeals court.
With the bankruptcy filing, “the odds of getting any money out of
Chesapeake are very long indeed,” said Dennis E. Murray Jr., an
attorney for the landowners.
But claims remain against other defendants in the case, and a
favorable appeals court ruling could help the same landowners in
their lawsuit against the company that purchased Chesapeake’s
Ohio assets.
Chesapeake pioneered the practice of drilling and fracking large
horizontal wells in Ohio’s Utica and Marcellus shales. But the
Oklahoma City-based company borrowed billions of dollars as it
drilled hundreds of new oil and natural gas wells.
The situation became untenable last month in the face of
persistently low oil and natural gas prices, and Chesapeake filed
June 28 for Chapter 11 bankruptcy. The company has said its
restructuring plan will eliminate $7 billion in debt, but has not
said how long the process will take.
Chesapeake cut its Ohio ties in 2018 when it sold its assets,
including a regional office building in Louisville, to Encino
Acquisition Partners for $2 billion. EAP is a partnership between
the Canada Pension Plan Investment Board and Encino Energy, a
private oil and gas company based in Houston.
But Chesapeake — along with French energy giant Total, and
Jamestown Resources and Pelican Energy, two companies connected to
late Chesapeake founder Aubrey McClendon — were being sued in
federal court by Ohio landowners who said the companies underpaid
royalties.
First lawsuit
After more than four years of legal wrangling, Chesapeake and the
other companies won the initial round of the court battle in March
2020.
Attorneys for the landowners had argued the companies had to pay
royalties on any gross proceeds from the sale of oil and natural
gas, without deducting post-production expenses, except taxes.
The companies said landowners weren’t entitled to royalties on
refined or processed products. The companies also said the leases
allowed them to deduct costs for transportation and refining when
they sold oil and gas from one subsidiary to another subsidiary
before selling it to a third party.
U.S. District Court Judge Benita Y. Pearson, in Youngstown, ruled
in favor of the companies and their interpretation of the drilling
leases.
The landowners appealed to the Sixth Circuit Court of Appeals in
Cincinnati. When Chesapeake filed for bankruptcy, the appeal was
automatically frozen.
Murray said the landowners’ were exploring ways to proceed with
the appeal against Total and the other companies.
Even if the landowners were to prevail, getting money out of
bankrupt Chesapeake would be a long shot, given the size of the
company’s debt and the number of creditors whose claims would
have priority before the plaintiffs, he said.
Encino lawsuit
The same plaintiffs and attorneys sued Encino Acquisition Partners
and its affiliates last year over royalty payments on the former
Chesapeake wells. The landowners alleged the new owners were
significantly underpaying royalties.
Encino has said it shares detailed information about royalty
calculations with all of its partners.
The landowners dismissed their case against Encino shortly after
Pearson’s unfavorable ruling, but can refile the lawsuit within a
year, Murray said. Both cases were assigned to the same judge and
involved interpretation of the same leases.
If the appeals court doesn’t rule in favor of the landowners,
there would be no reason to resume the case against Encino, Murray
said.
About Chesapeake Energy
Headquartered in Oklahoma City, Chesapeake Energy Corporation's
(NYSE: CHK) operations are focused on discovering and developing
its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the United
States.
Chesapeake Energy reported a net loss of $308 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2019, the company had $16.19
billion in total assets, $2.39 billion in total current
liabilities, $9.40 billion in total long-term liabilities, and
$4.40 billion in total equity.
Chesapeake Energy and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-33233) on June 28, 2020, after
reaching terms of a Chapter 11 plan of reorganization to eliminate
approximately $7 billion of debt.
The Debtors tapped Kirkland & Ellis LLP as legal counsel, Jackson
Walker LLP as co-counsel and conflicts counsel, Alvarez & Marsal as
restructuring advisor, Rothschild & Co and Intrepid Financial
Partners as financial advisors, and Reevemark as communications
advisor. Epiq Global is the claims agent, maintaining the page
http://www.chk.com/restructuring-information.
Wachtell, Lipton, Rosen & Katz serves as legal counsel to
Chesapeake Energy's Board of Directors.
MUFG Union Bank, N.A., the DIP facility agent and exit facilities
agent, has tapped Sidley Austin LLP as legal counsel, RPA Advisors
LLC as financial advisor, and Houlihan Lokey Capital Inc. as
investment banker.
Davis Polk & Wardell LLP and Vinson & Elkins L.L.P. serve as legal
counsel to an ad hoc group of first lien last out term loan lenders
while Perella Weinberg Partners and Tudor, Pickering, Holt & Co.
serve as the group's investment bankers.
Franklin Advisers, Inc., has tapped Akin Gump Strauss Hauer & Feld
LLP as legal counsel, FTI Consulting, Inc. as financial advisor,
and Moelis & Company LLC as investment banker.
On July 9, 2020, the Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in Debtors' Chapter 11
cases. The unsecured creditors' committee has tapped Brown
Rudnick, LLP and Norton Rose Fulbright US, LLP as its legal
counsel, and AlixPartners, LLP as its financial advisor.
On July 24, 2020, the bankruptcy watchdog appointed a committee of
royalty owners. The royalty owners' committee is represented by
Forshey & Prostok, LLP.
CHINOS HOLDINGS: Seeks November 30 Extension of Plan Exclusivity
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Chinos Holdings, Inc and its affiliates request the U.S. Bankruptcy
Court for the Eastern District of Virginia, Richmond Division, to
extend by 90 days the periods within which the Debtors have the
exclusive right to file and solicit acceptances to a Chapter 11
plan of reorganization, through and including November 30, 2020,
and February 1, 2021, respectively.
Despite the unprecedented pandemic, the Debtors said they have made
meaningful efforts towards achieving their stated objective of
administering the cases with deliberate expediency and care and
prosecuting a Chapter 11 plan, which is currently supported by 95%
of the Debtors' secured lenders and various other stakeholders.
The Debtors obtained entry of an order approving the Disclosure
Statement as having adequate information as contemplated by the
Bankruptcy Code and began soliciting votes to approve the Plan on
July 17, 2020.
The Debtors successfully negotiated and executed over 80 trade
agreements with key merchandise trade vendors that have agreed to
provide ongoing goods and services to the post-emergence Debtors,
which is a cornerstone for the Debtors' successful reorganization.
The Debtors have paid administrative expenses in the ordinary
course of business and obtained final approval for a $400 million
debtor-in-possession financing facility and the consensual use of
cash collateral necessary to administer these Chapter 11 cases.
"To renegotiate the terms of their store leases with approximately
140 landlords and reject burdensome leases, a comprehensive
evaluation of our lease portfolio consisting of approximately 500
store leases undertook a broad-based effort", the Debtors added.
The Debtors said the requested extension has a proper purpose --
for the Debtors to engage constructively with their key
stakeholders in a reasonable timeframe to confirm the plan and not
to pressure creditors.
The hearing on confirmation of the Plan is currently scheduled to
commence on August 25, 2020. Although the Debtors are hopeful that
the Plan will be confirmed, the exclusive filing period is
currently scheduled to expire five business days' later, on
September 1, 2020.
About Chinos Holdings
Chinos Holdings, Inc., designs apparel, offering clothing for men,
women, and children, as well as accessories. It is a global company
with 500 retail stores in nearly every state, including the United
Kingdom and Canada, with nearly 99% of their merchandise sourced
from Asia or Europe, over 10,000 employees, approximately 33,600
creditors and parties in interest on a consolidated basis, and
approximately $2 billion in funded debt. J.Crew Group, Inc., is an
internationally recognized omnichannel retailer of Chinos Holding,
Inc.
Chinos Holdings, Inc. and its 17 related affiliates, including J.
Crew Group, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 20-32181) on May 4,
2020, after reaching an agreement with lenders on a deal that will
convert approximately $1.65 billion of the Company's debt into
equity.
As of May 4, 2020, the Company operated 181 J.Crew retail stores,
140 Madewell stores, jcrew.com, jcrewfactory.com, madewell.com, and
170 factory stores. The Debtors disclosed assets of between $1
billion and $10 billion and liabilities of the same range as of the
bankruptcy filing. Judge Keith L. Phillips oversees the cases.
The Debtors tapped Weil, Gotshal & Manges, LLP as bankruptcy
counsel; Hunton Andrews Kurth, LLP as local counsel; Lazard Freres
Estate, LLC as real estate advisor and investment banker; KPMG LLP
as tax consultant; and Omni Agent Solutions, LLC as claims,
noticing and solicitation agent and as administrative advisor.
AlixPartners, LLP was tapped as restructuring advisor.
The official committee of unsecured creditors appointed in the
Debtors' bankruptcy cases tapped Pachulski Stang Ziehl & Jones LLP
as legal counsel; Hirschler Fleischer, P.C as local counsel; and
Province, Inc. as financial advisor.
Anchorage Capital Group and other members of an ad hoc committee
are represented by Milbank LLP as legal counsel and PJT Partners LP
as an investment banker.
CHRISTOPHER S. HARRISON: Trustee Selling Ocean Isle Beach Property
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Holmes P. Harden, the Chapter 1 1 Trustee of Christopher S.
Harrison, asks the U.S. Bankruptcy Court for the Eastern District
of North Carolina to authorize the sale of the real property
located at 186 W. 4th Street, Ocean Isle Beach, North Carolina,
more particularly described as Being all of Lot 8 Ross Subdivision
as shown on Plat recorded in Plat Book Z, Page 149 in the Brunswick
County Registry, at public auction or private sale.
Said real property may be subject to the following liens:
a. Brunswick County Revenue Dept. (Attn: Managing Agent, P.O.
Box 29, Bolivia, NC 28422) - 2020 ad valorem taxes
b. AmeriCredit Financial Services, Inc. (Attn: Registered
Agent, 2626 Glenwood Avenue, Suite 550, Raleigh, NC 27608-1370) -
Judgment against the Debtor (only) in the principal amount of
$6,649 together with interest and costs.
c. GM Financial (Attn: Registered Agent, 6135 Park South
Drive, Suite 550, Charlotte, NC 28210)
d. Brandy S. Harrison (307 Forest Creek Drive, Fayetteville,
NC 28303-5492) - Any and all ownership interest of Brandy S.
Harrison as Tenant by the Entirety
e. The Debtor (307 Forest Creek Drive, Fayetteville, NC
28303-5492) - Any and all ownership interest of the Debtor as
Tenant by the Entirety
The exemption of the property by the Debtor is subject to an
objection filed by the Vivature Creditors on Feb. 20, 2020 and the
purchase of the property will be the subject of a fraudulent
transfer complaint to be filed by trustee in the near future.
The Trustee asks the Court to approve the sale of said property
free and clear of liens and interests at public auction or private
sale, with liens and interests attaching to proceeds of sale in
their respective priorities, subject to reasonable, necessary costs
and expenses of preserving and disposing of said property.
Objections, if any, must be filed within 14 days from the date of
the Notice.
Christopher S. Harrison sought Chapter 11 protection (Bankr. E.D.
N.C. Case No. 19-05730) on Dec. 13, 2019. The Debtor tapped
William P. Janvier, Esq., at Janvier Law Firm, PLLC, as counsel.
CINEMARK USA: Moody's Cuts CFR to B3 on Convertible Notes Issuance
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Moody's Investors Service downgraded Cinemark USA, Inc.'s Corporate
Family Rating to B3 from B2 and the Probability of Default Rating
to B3-PD from B2-PD. Concurrently, Moody's downgraded Cinemark
USA's bank credit facilities to Ba3 from Ba2 (consisting of a $100
million revolving credit facility (RCF) and $643 million
outstanding senior secured term loan), $250 million senior secured
notes to Ba3 from Ba2 and $1.16 billion of senior unsecured notes
to Caa1 from B3. The Speculative Grade Liquidity rating was
downgraded to SGL-3 from SGL-2. The outlook remains negative.
Cinemark USA is a wholly-owned subsidiary of Cinemark Holdings,
Inc. and its ratings derive support from the parent. Cinemark
recently announced issuance of $400 million senior unsecured
convertible notes due 2025 (unrated) at the holding company. The
new Holdco notes will be structurally subordinated to the debt
issued at Cinemark USA and contain a 15% over-allotment option that
increases the offering size to $460 million if the greenshoe is
elected. Net proceeds will be used to fund the convertible note
hedge with the remainder allocated for general corporate purposes,
which may include repaying outstanding borrowings under the
revolving credit facility and enhancing Cinemark's liquidity.
Following is a summary of its rating actions:
Ratings Downgraded:
Issuer: Cinemark USA, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
$100 Million Revolving Credit Facility due 2022, Downgraded to Ba3
(LGD2) from Ba2 (LGD2)
$643 Million Outstanding Senior Secured Term Loan B due 2025,
Downgraded to Ba3 (LGD2) from Ba2 (LGD2)
$250 Million 8.750% Senior Secured Notes due 2025, Downgraded to
Ba3 (LGD2) from Ba2 (LGD2)
$400 Million 5.125% Gtd. Senior Global Notes due 2022, Downgraded
to Caa1 (LGD5) from B3 (LGD5)
$225 Million 4.875% Gtd. Global Notes due 2023, Downgraded to Caa1
(LGD5) from B3 (LGD5)
$530 Million 4.875% Gtd. Global Notes due 2023, Downgraded to Caa1
(LGD5) from B3 (LGD5)
Speculative Grade Liquidity Actions:
Issuer: Cinemark USA, Inc.
Speculative Grade Liquidity, Downgraded to SGL-3 from SGL-2
Outlook Actions:
Issuer: Cinemark USA, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The downgrade action reflects Cinemark's increased financial
leverage in FY 2020 and FY 2021 resulting from the convertible
notes issuance as well as the higher interest burden, which will
further weaken Cinemark's negative free cash flow this year.
Governance risk is elevated because Moody's projects leverage will
remain at or above the 6x-6.5x range and FCF will remain negative
over the next two years given the company's profitability
challenges resulting from the novel coronavirus outbreak, economic
recession and secular pressures facing the cinema industry as well
as the potential for further debt entering the capital structure to
enhance liquidity. At June 30, 2020, leverage was 7x (Moody's
adjusted), or 7.7x pro forma for the new Holdco notes, and FCF to
adjusted debt was roughly -7%.
The downgrade also embeds the delayed reopening of the company's
theatres following the repeated postponement of several tentpole
films and Moody's expectation for weak moviegoer attendance when
theatres reopen. Moody's is also concerned that Disney's recent
decision to not pursue a wide theatrical release for its
long-awaited live-action blockbuster film, Mulan, will siphon
revenue from Cinemark and other cinema operators now that Disney
plans to release the film on its Disney+ video-on-demand streaming
platform as a premium offering. Moody's expects these events will
result in substantially depressed EBITDA in FY 2020 despite
aggressive cost actions taken by the company.
The B3 CFR reflects the economic impact on Cinemark's
profitability, debt protection measures and liquidity from the
forced closure of its global theatre circuit since mid-March as a
result of the COVID-19 pandemic. The ratings consider the five
months of nearly zero revenue generation arising from the
suspension of most of the company's theatre operations and the
possibility of further reopening delays and weaker-than-expected
moviegoer attendance after its theatres reopen.
As of July 31, 2020, 15 of Cinemark's US theatres had reopened to
show catalog content and test new safety protocols. Subject to
government mandates, the company currently expects to gradually
reopen most of its domestic theatres in August. Given that the
reopening of Latin American economies appears to be behind the US,
Cinemark currently expects its theatres in that region to commence
a phased reopening by late-August/early-September.
Initially, the company planned to reopen its theatres by June,
however this was subsequently postponed to July and then pushed to
August because the debut of two blockbuster films, Tenet and Mulan,
were repeatedly postponed due to the pandemic. Warner Bros.' Tenet
was released on August 6, 2020 in overseas markets and will debut
on September 3, 2020 in the US. In July, Disney pulled Mulan from
its August 21, 2020 revised release date and recently announced
that the film will be released on its Disney+ VOD streaming
platform as a premium offering beginning September 4, 2020 in
countries where Disney+ is currently available and in theatres in
those countries that currently do not have access to Disney+.
Disney+ currently has 60.5 million paid subscribers (including Hulu
and ESPN, Disney has more than 100 million subscribers) [1]. If
Disney's strategy proves successful, Disney could debut its other
big films on Disney+, and the other big studios could follow and
release many of their tentpole films directly to streaming
platforms as well.
Notably, Moody's expects OTT video streaming services will reap
benefits and siphon revenue from movie exhibitors as film studios
increasingly release movies exclusively to online platforms,
concurrently with their theatrical release or very soon thereafter
as entertainment shifts back home during the pandemic. In late
July, AMC Entertainment Holdings, Inc. signed a multi-year
agreement with Universal Pictures that gives Universal the option
to significantly shorten the theatrical window to only 17 days, or
a film's third weekend in theatres, from the typical 60 to 75 days.
The theatrical window gives cinema operators exclusivity to show a
film in its theatres for a period of time before the studios
release the film to on-demand streaming platforms. In exchange,
Universal will share a percentage of its streaming rental revenue
with AMC.
Additionally, with the global economy in recession this year
combined with the prospect of extended business closures, layoffs
and high rates of unemployment, an erosion of consumer confidence
will lead to a reduction in discretionary consumption. Given these
economic realities, even when Cinemark's theatres reopen, Moody's
expects moviegoer demand will remain challenged as some consumers
will avoid public gatherings to avoid the virus. Attendance will
also be affected by reduced seating capacity and social distancing
guidelines.
Further, the supply of movies has also been impacted since the
major film studios have postponed numerous releases that were
scheduled to open during the summer months and production of films
were also halted (though some have recently resumed production as
certain regions have reopened). As such, the expected timing for
reopening the company's theatres will negatively impact ticket
sales, especially because cinema operators generate the majority of
their annual revenue during the important May to early September
box office season.
Cinemark benefits from its position as the third largest movie
exhibitor in the US. The company has national scale and geographic
diversity buttressed by operations in 42 US states and 15 countries
in Latin America. Positive considerations include Cinemark's
variable cost structure that facilitated meaningful cost reductions
in the short-run, as well as its business line diversity with
admissions historically representing approximately 55% of total
revenue and higher margin concessions accounting for 35%.
The negative outlook reflects Moody's expectation for lower revenue
and EBITDA this year and next year (compared to 2019) coupled with
weakened liquidity as a result of the temporary closure of
Cinemark's theatre circuit and the secular attendance challenges
facing the theatre industry. It also incorporates the numerous
uncertainties related to the social considerations and economic
impact from COVID-19 on Cinemark's cash flows, especially if: (i)
the virus continues to spread in certain regions or resurfaces
later this year, forcing Cinemark to keep some of its theatres
closed for a protracted period; (ii) the company experiences a
second suspension of its operations; or (iii) the major film
studios continue to postpone release of their movies, increasingly
release them to streaming platforms much sooner or avoid theatrical
release altogether.
The negative outlook embeds Moody's view that Cinemark will
experience negative operating cash flows in 2020 and potentially in
early 2021 despite the company's efforts to reduce operating costs
and plan to reopen most of its theatres in August. Moody's is
concerned that Cinemark's liquidity could be exhausted in 2021,
which would require the company to seek additional external
financing and increase debt further if it is unable to reopen most
of its theatres as currently planned and/or moviegoer demand is
weaker-than-expected when theatres reopen.
Following Cinemark's nearly full draw under its $100 million
revolving credit facility (RCF) in March, the 4.25x net senior
secured leverage maintenance covenant was triggered. At Q2 2020,
the company was in compliance with a 1.9x ratio. In conjunction
with the closing of the $250 million senior secured notes issued in
April, Cinemark obtained a waiver from its banks for the Q3 2020
and Q4 2020 periods to protect against decreasing covenant headroom
due to the expected decline in EBITDA.
Given the movie exhibitor's delayed reopening of its theatres and
continued operating challenges, the company is seeking to extend
the covenant waiver through Q3 2021, in connection with the Holdco
notes offering. The waiver would also be effective beginning Q4
2021 through Q2 2022 to the extent the covenant would have been
satisfied if the calculation substituted EBITDA from certain 2021
quarters with EBITDA from the respective 2019 quarters to compute
LTM EBITDA for Q4 2021 through Q2 2022.
An important provision in the proposed waiver agreement restricts
Cinemark from upstreaming cash from Cinemark USA to the parent to
service the new Holdco notes as along as the RCF borrowings remain
outstanding. Over the near term, Moody's expects the cash proceeds
from the Holdco notes will be retained at the parent level to help
service the semi-annual interest payments. To the extent Cinemark
USA's liquidity were to weaken in the future, Moody's expects
Cinemark will downstream cash to the operating company to bolster
liquidity.
The SGL-3 rating reflects adequate liquidity. Moody's projects
negative free cash flow generation of approximately -$175 million
to -$200 million in FY 2020, as well as negative FCF over the next
four quarters. This is chiefly due to meaningful EBITDA shortfalls
and negative operating cash flow resulting from theatre closures
and weak moviegoer attendance when theatres reopen in the second
half of 2020. It also results from Cinemark's increased interest
expense burden as a result of its leveraged balance sheet. The
company's pro forma cash burn rate is roughly $156 million per
quarter ($52 million per month) inclusive of the new Holdco notes.
Pro forma cash balances as of June 30, 2020 were roughly $970
million inclusive of the $400 million Holdco notes issuance (or
approximately $850 million by the end of August taking into account
transaction costs and the monthly cash burn). Cinemark believes its
cash position will allow it to sustain operations through 2021 if
its theatres remained closed for a protracted period.
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. Its action reflects the
impact on Cinemark of the deterioration in credit quality it has
triggered, given its exposure to the US and overseas economies,
which has left it vulnerable to shifts in market demand and
sentiment in these unprecedented operating conditions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating outlook could be revised to stable if Cinemark reopens
the majority of its theatres as currently planned, attendance
revives to profitable levels and the company returns to positive
operating cash flow.
A ratings upgrade is unlikely over the near-term given the
expectation for weak operating performance and challenged debt
protection measures. Over time, an upgrade could occur if the
company experiences positive growth in box office attendance,
stable-to-improving market share, higher EBITDA and margins, and
enhanced liquidity, and exhibits prudent financial policies that
translate into an improved credit profile. An upgrade would also be
considered if financial leverage as measured by total debt to
EBITDA was sustained below 6x (Moody's adjusted) and free cash flow
as a percentage of total debt improved to the 2% area (Moody's
adjusted).
The ratings could be downgraded if there was: (i) prolonged closure
of Cinemark's cinemas leading to a longer-than-expected cash burn
period, an exhaustion of the company's liquidity resources or an
inability to access additional sources of liquidity to cover higher
cash outlays; (ii) poor execution on timely implementing further
cost reductions, as necessary; or (iii) limited prospects for
operating performance recovery in H2 2020 and 2021. A downgrade
could also be considered if total debt to EBITDA was sustained
above 7.5x (Moody's adjusted) or free cash flow generation remains
negative on a sustained basis.
Headquartered in Plano, Texas, Cinemark USA, Inc. is a wholly-owned
subsidiary of Cinemark Holdings, Inc., a leading movie exhibitor
that operates 534 theaters and 5,977 screens worldwide with 332
theatres and 4,522 screens in the US across 42 states and 202
theatres and 1,455 screens in Latin America across 15 countries.
Revenue totaled approximately $2.2 billion for the twelve months
ended June 30, 2020, which reflects closure of the company's
theatres since mid-March 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
COMCAR INDUSTRIES: Florida Rock Buying All Assets for $4.1 Million
------------------------------------------------------------------
Comcar Industries, Inc., and its affiliated debtors ask the U.S.
Bankruptcy Court for the District of Delaware to authorize them to
enter into and consummate their Asset Purchase Agreement with
Florida Rock & Tank Lines, Inc. and its designee in connection with
the going concern sale of substantially all of the assets of CCC
Transportation, LLC for $4,075,000, subject to overbid.
Prior to the Petition Date, the Debtors began to explore strategic
transactions to recapitalize or restructure their businesses. To
that end, in March 2020, they engaged Bluejay Advisors, LLC as
investment banker to advise them with respect to strategic
alternatives. As part of that process, Bluejay prepared
confidential information memoranda for each of the Debtors'
business segments and conducted a marketing process. Despite their
efforts in the marketing process, the Debtors only received two
indications of interest and offers for the combined assets of CCC
and Commercial Truck and Trailer Sales, Inc. However, one of the
parties lowered their offer and sought to impose closing expenses
on the Debtors that rendered the offer unacceptable.
Accordingly, the Debtors engaged in negotiations with the remaining
prospective purchaser, CWI Logistics, LLC, an affiliate of
Commercial Warehousing, Inc. ("CWI") and R. Mark Bostick. On May
22, 2020, the Debtors filed the CCC/CTTS Sale Motion. On June 24,
2020, the Debtors filed the Notice of Filing Asset Purchase
Agreement to CCC Sale Motion, asking to enter into a purchase
agreement with CWI Logistics ("CWI APA") in accordance with the
CCC/CTTS Sale Motion.
However, the CWI APA failed to account for the Debtors' valuable
interests in the Equipment. As a result, the Debtors and the
Committee jointly filed a motion to terminate the CWI APA. An
order granting the Joint Motion to Terminate was entered on July
20, 2020.
Following the termination of the CWI APA, Bluejay and the Debtors
recommenced marketing of the CCC and CTTS Repair assets and
contacted parties that had expressed interest in CCC during the
prepetition marketing period as well as parties that reached out to
the Debtors following the filing of the Joint Motion to Terminate.
As a result of substantial arms'–length, good faith negotiations
between the Purchaser and the Debtors, the Purchaser agreed to
purchase the Acquired Assets, retain all 80 employees of CCC, and
assume the Assumed Contracts for the Purchase Price. The
negotiations also resulted in a transaction structure that could
close promptly on terms favorable to the Debtors.
The Purchaser has funded an initial deposit of $407,500 into an
escrow account designated by the parties. Upon the closing of the
sale of the Acquired Assets, the Deposit will be released to the
Sellers and applied against the Purchase Price.
The sale will be free and clear of all claims, liens, encumbrances
and interests with all such liens to attach to the net cash
proceeds of the sale of the Acquired Assets in the order of their
priority and to the extent and validity as of immediately prior to
such sale.
To ensure that the Debtors' achieve maximum value for the Acquired
Assets, the Acquired Assets will be put to auction on Aug. 5, 2020
in accordance with the bidding procedures filed July 31, 2020. The
Purchase Agreement does not contemplate a right to credit bid.
None of the Prepetition ABL Agent, Prepetition Term Agent or DIP
Agent has expressed any desire or intent to submit a credit bid for
the Acquired Assets.
Given that the sale of the Acquired Assets has already been subject
to significant and costly delays, and that (a) the Acquired Assets
will be subject to the Auction, (b) nothing in the Purchase
Agreement prohibits the Debtors from consummating any alternative
transaction arising from the Auction that, in the Debtors' business
judgement in consultation with the Consultation Parties will
maximize the value of their estates, and (c) the Purchase Agreement
contains no break-up fee or expense reimbursement payable to the
Purchaser in the event that the Debtors consummate an alternative
transaction, the Debtors ask to sell the Acquired Assets and assign
the Assumed Contracts to the Purchaser, or to the Successful Bidder
at the conclusion of the Auction, free and clear of all liens,
claims, encumbrances and other interests. For these reasons, the
relief sought by the Motion should be granted.
The Debtors are asking relief from the 14-day stay imposed by
Bankruptcy Rule 6004(h) for the private sale.
A hearing on the Motion is set for Aug. 21, 2020 at 2:00 p.m. (ET).
The objection deadline is Aug. 17, 2020 at 4:00 p.m. (ET).
About Comcar Industries
Comcar Industries -- https://comcar.com/ -- is a transportation and
logistics company headquartered in Auburndale, Fla., with over 40
strategically-located terminal and satellite locations across the
United States.
On May 17, 2020, Comcar Industries and related entities sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11120). In
the petitions signed by CRO Andrew Hinkelman, Comcar Industries
was
estimated to have $50 million to $100 million in assets and
liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the presiding judge.
Debtors tapped DLA Piper LLP (US) as counsel; FTI Consulting,
Inc.,
as financial advisor; and Bluejay Advisors, LLC, as investment
banker. Donlin Recano & Company, Inc., is the claims agent.
COMCAR INDUSTRIES: Twin Buying All CTTS Repair Assets for $823K
---------------------------------------------------------------
Comcar Industries, Inc., and its affiliated debtors ask the U.S.
Bankruptcy Court for the District of Delaware to authorize them to
enter into and consummate their Asset Purchase Agreement with Twin
State Trailers, LLC in connection with the going concern sale of
substantially all of the assets of Commercial Truck and Trailer
Sales, Inc. ("CTTS Repair") for $822,500, subject to overbid.
Prior to the Petition Date, the Debtors began to explore strategic
transactions to recapitalize or restructure their businesses. To
that end, in March 2020, they engaged Bluejay Advisors, LLC as
investment banker to advise them with respect to strategic
alternatives. As part of that process, Bluejay prepared
confidential information memoranda for each of the Debtors'
business segments and conducted a marketing process. Despite their
efforts in the marketing process, the Debtors only received two
indications of interest and offers for the combined assets of CCC
Transportation, LL and CTTS Repair. However, one of the parties
lowered their offer and sought to impose closing expenses on the
Debtors that rendered the offer unacceptable.
Accordingly, the Debtors engaged in negotiations with the remaining
prospective purchaser, CWI Logistics, LLC, an affiliate of
Commercial Warehousing, Inc. ("CWI") and R. Mark Bostick. On May
22, 2020, the Debtors filed the CCC/CTTS Sale Motion. On June 24,
2020, the Debtors filed the Notice of Filing Asset Purchase
Agreement to CCC Sale Motion, asking to enter into a purchase
agreement with CWI Logistics ("CWI APA") in accordance with the
CCC/CTTS Sale Motion.
However, the CWI APA failed to account for the Debtors' valuable
interests in the Equipment. As a result, the Debtors and the
Committee jointly filed a motion to terminate the CWI APA. An
order granting the Joint Motion to Terminate was entered on July
20, 2020.
Following the termination of the CWI APA, Bluejay and the Debtors
recommenced marketing of the CCC and CTTS Repair assets and
contacted parties that had expressed interest in CCC during the
prepetition marketing period as well as parties that reached out to
the Debtors following the filing of the Joint Motion to Terminate.
As a result of substantial arms'–length, good faith negotiations
between the Purchaser and the Debtors, the Purchaser agreed to
purchase the Acquired Assets for the Purchase Price. The
negotiations also resulted in a transaction structure that could
close promptly on terms favorable to the Debtors. CTTS Repair
employs 20 people.
The Purchaser has funded an initial deposit of $205,625 into an
escrow account designated by the parties. Upon the closing of the
sale of the Acquired Assets (the “Closing”), the Deposit will
be released to the Sellers and applied against the Purchase Price.
The sale will be free and clear of all claims, liens, encumbrances
and interests with all such liens to attach to the net cash
proceeds of the sale of the Acquired Assets in the order of their
priority and to the extent and validity as of immediately prior to
such sale. All Liens will attach to the proceeds, which will be
distributed pursuant to the Sale Order or further order of this
Court.
To ensure that the Debtors' achieve maximum value for the Acquired
Assets, the Acquired Assets will be put to auction on Aug. 5, 2020
in accordance with the bidding procedures filed July 31, 2020. The
Purchase Agreement does not contemplate a right to credit bid.
None of the Prepetition ABL Agent, Prepetition Term Agent or DIP
Agent has expressed any desire or intent to submit a credit bid for
the Acquired Assets.
The Debtors expect to obtain the consent of the DIP Lender and the
Prepetition Term Loan Lender, as well as CSB, such that section
363(f)(2) will apply. They contend that no other party holds a
valid, enforceable, unavoidable, perfected lien on or interest in
the
Acquired Assets.
Pursuant to the Purchase Agreement, the Sellers and the Purchaser
will enter into agreements for the purchase and sale of the
Sellers' interest in the Terminal Properties:
a. 306 Old Winter Haven Road, Auburndale, FL 338238 - Purchase
Price: $300,000, Deposit: $30,000
b. 9160 Sidney Hayes Road, Orlando, FL - Purchase Price:
$700,000, Deposit: $70,000
c. 6801 East Broadway Avenue, Tampa, FL 3361910 - Purchase
Price: $900,000, Deposit: $90,000
d. 5310 New Kings Road, Jacksonville, FL 3220911 - Purchase
Price: $1,900,000, Deposit: $190,000
e. 513 Madison Road, Mocksville, NC 2702912 - Purchase Price:
$200,000, Deposit: $20,000
The Debtors expect that CWI will assert an interest in the Terminal
Property located at 9160 Sidney Hayes Road, Orlando, FL and any
other CWI property subject to the Option Agreements ("Option
Properties") to the extent included in the Successful Bid. The
Debtors contend that the terms of the sale-leaseback and Option to
Purchase agreements relating to each of the Option Properties, each
dated Dec. 30, 2013, by and between CWI, as grantor, and Comcar
Properties, Inc. and Comcar Industries, Inc., as grantee ("Option
Agreements"), constitute disguised financing transactions, and that
any interest that CWI may hold in the Option Properties or the
limited liability companies that hold title to the Option
Properties is unperfected.
In the alternative, pursuant to the Option Agreements, the Debtors
may, at any time, exercise the option to purchase any of the Option
Properties. The Debtors may, therefore, sell the Option Properties
free and clear of all liens, encumbrances and other interests and
place the proceeds of such sales in escrow to satisfy the adequate
protection requirements of section 363(e), which proceeds may be
used to purchase the Option Properties from CWI if so directed by
the Court.
Given that the sale of the Acquired Assets has already been subject
to significant and costly delays, and that (a) the Acquired Assets
will be subject to the Auction, (b) nothing in the Purchase
Agreement prohibits the Debtors from consummating any alternative
transaction arising from the Auction that, in the Debtors' business
judgement in consultation with the Consultation Parties will
maximize the value of their estates, and (c) the Purchase Agreement
contains no break-up fee or expense reimbursement payable to the
Purchaser in the event that the Debtors consummate an alternative
transaction, the Debtors ask to sell the Acquired Assets and assign
the Assumed Contracts to the Purchaser, or to the Successful Bidder
at the conclusion of the Auction, free and clear of all liens,
claims, encumbrances and other interests. For these reasons, the
relief sought by the Motion should be granted.
The Debtors are asking relief from the 14-day stay imposed by
Bankruptcy Rule 6004(h) for the private sale.
A hearing on the Motion is set for Aug. 21, 2020 at 2:00 p.m. (ET).
The objection deadline is Aug. 17, 2020 at 4:00 p.m. (ET).
About Comcar Industries
Comcar Industries is a transportation and logistics company
headquartered in Auburndale, Fla., with over 40
strategically-located terminal and satellite locations across the
United States. For more information, visit https://comcar.com/
On May 17, 2020, Comcar Industries and related entities sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11120). In
the petitions signed by CRO Andrew Hinkelman, Comcar Industries
was
estimated to have $50 million to $100 million in assets and
liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the presiding judge.
Debtors tapped DLA Piper LLP (US) as counsel; FTI Consulting, Inc.
as financial advisor; and Bluejay Advisors, LLC as investment
banker. Donlin Recano & Company, Inc. is the claims agent.
DEAN & DELUCA: Pace Devt. Offers $10M to Revive Company
-------------------------------------------------------
Lisa Fickenscher, writing for NY Post, reports that Pace
Development, the company that drove Dean & Deluca into bankruptcy
is offering $10 million for another shot at running the gourmet
grocer.
Thailand-based real estate company, Pace Development, which sunk
millions into a failed Dean & Deluca expansion before filing for
Chapter 11 bankruptcy protection in April, outlined its plan for a
second chance at selling $165 jars of caviar and other high-priced
goods in a Manhattan federal court filing.
The plan calls for $5 million of a $10 million investment to be
used to pay off $26.5 million owed to vendors and other creditors,
court papers show. The company didn’t say what it will do with
the remaining $5 million, but it will presumably use the money to
relaunch stores, experts said.
"Dean & Deluca over expanded and lost what made them special,"
distressed debt experty Adam Stein Sapir told The Post. "But if
they can bring it back to its former glory with a smaller
footprint, it has a lot of potential."
The company, founded in Manhattan's Soho neighborhood in 1977,
filed for bankruptcy protection on March 31 at the start of the
coronavirus pandemic. But it’s problems started well before
then.
After buying the grocery for $140 million in 2014, Pace plowed $240
million into expanding it around the world at a time of growing
competition in the gourmet food industry. By 2018, upscale vendors
like Ceci Cela Patisserie and Elenis bakery had sued Dean & Deluca
for not paying its bills, and by mid-2019 Pace shuttered all of its
owned retail outlets and its e-commerce website.
By last year, the company's franchisee-owned stores were its only
source of income — but even that spigot has dried up, the filing
said. Just two stores, both in Honolulu, remain open and neither
has paid Pace royalty fees for months, the company lamented.
Ceci Cela Patisserie owner, Laurent Dupal, who last year received
$30,000, or about half of what he was owed by Dean & Deluca, told
The Post he would consider doing business with the company again if
he is paid on delivery. If other vendors follow suit, that could
limit Pace’s ability to reopen more than just a handful of
stores.
"A company like mine would take any business that comes in front of
us right now," Dupal said. "We are not being picky, but we would
ask for payment on delivery if Dean & Deluca approached us and I'd
suggest that all companies that would work with them do the same so
the pressure is on and no one gets screwed again.”"
Pace's court filing failed to detail how many Dean & Deluca stores
it might reopen, but acknowledged that its brand has plummeted in
value due to the mass store closures. The company now values the
brand at $12 million down from the $55 million it had claimed when
it filed for Chapter 11.
"The value of the intellectual assets have declined materially,"
the filing said.
The filing said the reorganization would reduce the debt, much of
which is owed to Pace, from $311 million to $11 million. If the
reorganization plan is not approved, however, Dean & Deluca could
be forced to file a Chapter 7 liquidation.
That would be sad end to the legacy left behind by Joel Dean and
Giorgio DeLuca, who's first store quickly earned the nickname
"museum of fine food" for its mouth-watering displays of exotic
goods, which back then included things like radicchio, balsamic
vinegar and sun-dried tomatoes — all first introduced in the US
at Dean & Deluca, the grocer has claimed.
About Pace Development
Pace Development Corporation Public Company Limited is a
Thailand-based real estate developer. The Company is involved in
the development of both commercial and residential real estate. It
operates six principal business segments, namely the property
development segment, which develops and sells condominium units;
the investment segment, which invests in shares of the Company's
group businesses; the hotel segment, which operates hotel business;
the luxury condominium segment, which develops and sells luxury
condominium units; the shopping center segment, which develops and
leases out shopping centers, and the food and beverage segment,
which operates food and beverage retail business.
About Dean & Deluca New York
Dean & DeLuca New York, Inc., is a multi-channel retailer of
premium gourmet and delicatessen food and beverage products under
the Dean & DeLuca brand name. It traces its roots to the opening
of the first Dean & DeLuca store in the Soho district of
Manhattan,
New York City by Joel Dean and Giorgio DeLuca in 1977.
Affiliate Dean & DeLuca, Inc. was incorporated in Delaware in
1999.
On Sept. 29, 2014, Pace Development Corporation, through its
wholly
owned subsidiary, Pace Food Retail Co., Ltd., acquired 100% of the
shares of Dean & DeLuca, Inc. from its then shareholders.
Dean & DeLuca New York and six affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-10916) on March 31, 2020. At the time of the filing, the
Debtors had estimated assets of between $10 million and $50
million
and liabilities of between $100 million and $500 million.
The Debtors tapped Brown Rudnick LLP as their legal counsel,
Stretto as claims and noticing agent, and Saul Ewing Arnstein &
Lehr LLP as special counsel.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' bankruptcy cases. The committee
is
represented by Arent Fox, LLP.
DELTA COUNTY MEMORIAL HOSPITAL: S&P Affirms BB Revenue Bond Rating
------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term rating on Delta
County Memorial Hospital District (doing business as Delta County
Memorial Hospital, or DCMH), Colo.'s $10.4 million series 2010
revenue bonds, and removed the rating from CreditWatch, where it
was placed with negative implications May 22, 2019. The outlook is
negative.
"The resolution of the CreditWatch and return to a negative outlook
reflects the receipt of information from management regarding the
debt service coverage covenant violation for fiscal 2019," said S&P
Global Ratings credit analyst Blake Fundingsland.
DENTAL ARTS OF LOGAN: Not Current on UST Fees, Bills, Report Says
-----------------------------------------------------------------
Dental Arts of Logan Square, LLC, has filed with the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania its
monthly operating reports for small businesses for the months of
April, May and June.
Lynda Bard, the responsible party for the Debtor, disclosed that
the Debtor has not paid its bills on time and isn't current on its
quarterly fee payments to the U.S. Trustee.
Bard said net cash flow was $0 and cash on hand at the end of the
month is $0.
The Debtor paid $2,500 in professional fees related to the
bankruptcy case in June.
About Dental Arts of Logan Square
Based in Philadelphia, Pennsylvania, Dental Arts of Logan Square,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Pa. Case No. 20-11507) on March 10, 2020, listing under $1
million in both assets and liabilities. The Debtor has won court
approval to hire the Law Offices of Dimitri L. Karapelou, LLC as
its Chapter 11 counsel.
On March 12, 2020, the United States Trustee appointed as
Sub-chapter V trustee for the Debtor:
Leona Mogavero, Esq.
FRIEDMAN SCHUMAN, PC
101 Greenwood Avenue, Fifth Floor
Jenkintown, PA 19046
Tel: (215) 690-3826
Facsimile: (215) 635-7212
E-mail: LMogavero@fsalaw.com
Effective March 19, Mogavero stepped down as trustee, saying the
Debtor amended its bankruptcy petition on or about that date so
that the case is no longer a case under Subchapter V of Chapter
11.
In May 2020, the Court granted the Debtor's request to waive the
appointment of a patient care ombudsman.
DESIGN MASSAGE: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee on Aug. 18, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Design Massage Therapy,
LLC.
About Design Massage Therapy
Design Massage Therapy, LLC sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Mo. Case No. 20-41167) on June 23,
2020. At the time of the filing, Debtor had estimated assets of
between $100,001 and $500,000 and liabilities of between $50,001
and $100,000. Judge Brian T. Fenimore oversees the case. John L.
Lentell JD MBA, LLC is Debtor's legal counsel.
DOLPHIN ENTERTAINMENT: Incurs $2.94-Mil. Net Loss in 3rd Quarter
----------------------------------------------------------------
Dolphin Entertainment, Inc., filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q, disclosing
a net loss of $2.94 million on $5.19 million of total revenues for
the three months ended June 30, 2020, compared to a net loss of
$796,650 on $6.27 million of total revenues for the three months
ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss of $869,754 on $11.83 million of total revenues compared to a
net loss of $674,042 on $12.60 million of total revenues for the
same period in 2019.
As of June 30, 2020, the Company had $49.75 million in total
assets, $30.21 million in total liabilities, and $19.54 million in
total stockholders' equity.
The Company had an accumulated deficit of $96,902,603 as of June
30, 2020. As of June 30, 2020, the Company had a working capital
deficit of $2,380,135 and therefore does not have adequate capital
to fund its obligations as they come due or to maintain or grow its
operations. In addition, several of the Company's subsidiaries
operate in industries that have been adversely affected by the
government mandated work-from-home, stay-at-home and
shelter-in-place orders as a result of the novel coronavirus
COVID-19. As a result, the Company's revenues have been negatively
impacted by a reduction in the services it provides to clients
operating in these industries.
Dolphin Entertainment said, "The Company has taken measure such as
a freeze on hiring, salary reductions, staff reductions and cuts in
non-essential spending to mitigate the reduction in revenues. The
Company is dependent upon funds from the issuance of debt
securities, securities convertible into shares of Common Stock,
sales of shares of Common Stock and financial support of certain
shareholders. The continued spread of COVID-19 and uncertain
market conditions may limit the Company's ability to access
capital. If the Company is unable to obtain funding from these
sources within the next 12 months, it could be forced to curtail
its business operations or liquidate. These factors raise
substantial doubt about the ability of the Company to continue as a
going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1282224/000155335020000768/dlpn_10q.htm
About Dolphin Entertainment
Headquartered in Coral Gables, Florida, Dolphin Entertainment, Inc.
-- http://www.dolphinentertainment.com-- is an independent
entertainment marketing and premium content development company.
Through its subsidiaries, 42West LLC, The Door Marketing Group LLC
and Shore Fire Media, Ltd, the Company provides expert strategic
marketing and publicity services to many of the top brands, both
individual and corporate, in the entertainment, hospitality and
music industries.
Dolphin Entertainment reported a net loss of $1.19 million for the
year ended Dec. 31, 2019, compared to a net loss of $2.91 million
for the year ended Dec. 31, 2018. As of March 31, 2020, the
Company had $41.19 million in total assets, $28.57 million in total
liabilities, and $12.62 million in total stockholders' equity.
BDO USA, LLP, in Miami, Florida, the Company's auditor since 2014,
issued a "going concern" qualification in its report dated March
30, 2020 citing that the Company has suffered recurring losses from
operations from prior years, has an accumulated deficit, and a
working capital deficit that raise substantial doubt about its
ability to continue as a going concern.
ELEMENTAL PROCESSING: HP Farms Files Counterclaims in Seed Row
--------------------------------------------------------------
Law360 reports that an Oregon farm has once again filed
counterclaims in a dispute with a now-bankrupt Kentucky CBD
producer over $44 million in allegedly worthless hemp seeds, after
the producer amended its complaint to include the farm's owner.
HP Farms LLC on July 16, 2020, reiterated many of the arguments in
previously filed counterclaims, saying Elemental Processing LLC
failed to monitor the sex of its hemp plants, allowing a $44
million crop to be fertilized and rendering it worthless. The farm
said it was still owed money for the seeds, which it insisted were
adequately feminized.
About Elemental Processing
Elemental Processing, LLC -- https://www.elementalprocessing.com/
-- is a producer of Scientifically Advanced Cannabidiol (CBD). The
Company's licensed Industrial Hemp processing plant has led the
way
in expanding the cannabinoid industry and has supplied a vast
portion of the CBD market with oils, distillates and isolates used
to create a multitude of retail products, such as: capsules,
tinctures, skincare, beverages, and health care products.
Elemental Processing filed its voluntary petition under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Ky. Case No. 20-50640) on
April
20, 2020. The petition was signed by Tony Struyk, its chief
executive officer (CEO) and chief financial officer (CFO). At the
time of the filing, the Debtor disclosed total assets of
$8,157,100
and total liabilities of $56,701,255. The Hon. Tracey N. Wise
oversees the case. The Debtor tapped Bunch & Brock, PSC as its
bankruptcy counsel.
ENSTAR FINANCE: Fitch Rates $350MM Junior Subordinated Notes 'BB+'
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to the $350 million 5.75%
fixed-rate reset junior subordinated notes due 2040 issuance by
Enstar Finance LLC, a wholly owned subsidiary of Enstar Group
Limited (Long-Term Issuer Default Rating 'BBB'; senior unsecured
notes 'BBB-'). Enstar Group has fully and unconditionally
guaranteed the notes on a junior subordinated basis.
KEY RATING DRIVERS
The company intends to use the net proceeds from the offering to
repay approximately $350 million of borrowings outstanding under
its term loan facility, with any remaining net proceeds for general
corporate purposes, including, but not limited to, funding for
acquisitions, working capital and other business opportunities.
Enstar Group's financial leverage ratio of 23.0% as of June 30,
2020 remains approximately unchanged following the subordinated
debt issuance and repayment of its term loan facility. Fitch
considers the junior subordinated notes to have "minimal"
nonperformance risk with notching set two below the Enstar Group
IDR based on 'Poor' recovery expectations, with no additional
notching for nonperformance.
Fitch views the junior subordinated debt as dated deferrable
securities, receiving 100% debt treatment in the FLR. The notes are
expected to qualify for Tier 2 treatment by the Bermuda Monetary
Authority and as such would receive 100% regulatory override equity
credit in Fitch's Prism factor-based model.
RATING SENSITIVITIES
The ratings remain sensitive to any material change in Fitch's
Rating Case assumptions with respect the coronavirus pandemic.
Periodic updates to Fitch's assumptions are possible given the
rapid pace of changes in government actions in response to the
pandemic and the pace with which new information is available on
the medical aspects of the outbreak.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- A material adverse change in Fitch's ratings assumptions with
respect to the coronavirus impact;
-- Failure to generate continued material levels of favorable
non-life runoff reserve development; additional capital needs to
support the current runoff business; significant new transaction(s)
that Fitch views as materially increasing the overall risk profile;
net leverage ratio above 3.5x; declines in the financial strength
of active business; FLR approaching 30%; fixed-charge coverage
below 5.0x;
-- Enstar's preference share ratings could also be lowered by one
notch to reflect higher nonperformance risk if Fitch views
Bermuda's regulatory environment as becoming more restrictive in
its supervision of (re)insurers with respect to hybrid features.
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- A positive rating action is prefaced by Fitch's ability to
reliably forecast the impact of the coronavirus pandemic on the
financial profile of the U.S. Property/Casualty insurance and
global reinsurance sectors, and on Enstar;
-- Maintaining an FLR at or below 25%; fixed-charge coverage of
at least 8.0x; sustained risk-adjusted capital growth with a
capitalization score under Fitch's Prism factor-based model of at
least 'Very Strong'; a net leverage ratio at or below 2.5x;
-- Any potential future upgrade would likely be limited to one
notch. However, the nature of the company's business model in
acquiring large blocks of runoff business can materially alter the
company's balance sheet. While this risk has been managed well to
date, it adds potential capital, earnings and business/exposure mix
variability at levels greater than experienced by most insurance
companies operating under more traditional business models.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond 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.
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.
ENSTAR GROUP: S&P Rates $350MM Junior Subordinated Notes 'BB+'
--------------------------------------------------------------
S&P Global Ratings said it assigned its 'BB+' issue-level rating to
Enstar Group Ltd.'s (BBB/Stable/--) $350 million 5.75% junior
subordinated notes due 2040. The notes are issued by Enstar Finance
LLC and are fully and unconditionally guaranteed on a junior
subordinated basis by Enstar Group Ltd.
S&P's issue-level rating is two notches below its long-term issuer
credit rating on Enstar, reflecting subordination and mandatory
deferability of interest payment. These notes are contractually
subordinated to policyholder obligations and to all existing and
future unsecured senior debt of Enstar. The notes rank pari passu
with all existing and future unsecured junior subordinated
indebtedness of the company.
"Enstar intends to use net proceeds from this offering to repay its
$350 million borrowings outstanding under its current term loan.
Therefore, we expect financial leverage will remain unchanged at
about 30% with fixed-charge coverage at about 4x in 2020," S&P
said.
"We expect these metrics to improve to about 25% and above 5x,
respectively, in 2021-2022. We believe the run-off market will
remain buoyant during the next two years, which will contribute to
Enstar's prospective earnings accretion and improve its coverage
ratios," the rating agency said.
The proposed issuance has received Tier 2 capital treatment under
the Bermuda Monetary Authority's capital requirement rules. S&P
assigns intermediate equity content to these junior subordinated
notes.
EP ENERGY CORP: Files New Reorganization Plan
---------------------------------------------
Steven Church, writing for Bloomberg News, reports that EP Energy
Corp. filed a new reorganization plan that cuts $4.4 billion in
debt and hands the company to bondholders owed about $1 billion.
Bankruptcy exit plan comes after the company canceled a previous
proposal that had won court approval in March because of a drop in
oil prices and the Covid 19 pandemic.
Under new proposal, holders of the so-called 1.25L notes will
recover about 38.5% of what they are owed; lower-ranking, unsecured
creditors who are owed more than $3.5 billion will get back nothing
under the plan, which must be approved by U.S. Bankruptcy Judge
Marvin Isgur.
About EP Energy Corp.
EP Energy Corporation and its direct and indirect subsidiaries(OTC
Pink: EPEG) -- http://www.epenergy.com/-- are a North American oil
and natural gas exploration and production company headquartered in
Houston, Texas. The Debtors operate through a diverse base of
producing assets and are focused on the development of drilling
inventory located in three areas: the Eagle Ford shale in South
Texas, the Permian Basin in West Texas, and Northeastern Utah.
EP Energy Corporation and its subsidiaries sought Chapter 11
protection on Oct. 3, 2019, after reaching a deal with Elliott
Management Corporation, Apollo Global Management, LLC, and certain
other noteholders on a bankruptcy exit plan that would reduce debt
by 3.3 billion.
The lead case is In re EP Energy Corporation (Bankr. S.D. Tex. Lead
Case No. 19-35654).
EP Energy was estimated to have $1 billion to $10 billion in assets
and liabilities as of the bankruptcy filing.
Judge Marvin Isgur oversees the case.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
Evercore Group L.L.C. as investment banker; and FTI Consulting,
Inc. as financial advisor. Prime Clerk LLC is the claims agent.
On Jan. 13, 2020, Judge Marvin Isgur entered findings of fact,
conclusion of law, and order confirming the Fourth Amended Joint
Chapter 11 Plan of EP Energy Corporation and its Affiliated
Debtors.
FAIRWAY GROUP: Bogopa Buying Westbury Store Assets for $900K
------------------------------------------------------------
Fairway Group Holdings Corp., and debtor affiliates, ask the U.S.
Bankruptcy Court for the Southern District of New York to authorize
the sale of the store located at 1258 Corporate Drive, Westbury,
New York and related assets to Bogopa Enterprises, Inc., pursuant
to their Asset Purchase Agreement, dated as of Aug. 3, 2020, for
$900,000, subject to adjustments.
The consideration for the Acquired Assets will be (i) an aggregate
Dollar amount equal to the sum of (A) $1.78 million, subject to
adjustment, plus (B) the Seller Proration Amount, if any, minus (C)
the Buyer Proration Amount, if any, and (ii) the Buyer's assumption
of the Assumed Liabilities.
The Debtors commenced these chapter 11 cases with the support of an
ad hoc group of Prepetition Lenders holding over 91% of all
outstanding obligations of the Debtors under the Prepetition Credit
Agreement (and in excess of 66.67% of each tranche of debt
thereunder). On Jan. 22, 2020, the Debtors executed a
restructuring support agreement ("RSA") with members of the Ad Hoc
Group, pursuant to which the members of the Ad Hoc Group agreed to
support a chapter 11 plan.
In accordance with the Court's Bidding Procedures Order for the
Debtors' Assets, the Debtors ask entry of the Sale Order: (i)
authorizing the sale of the Westbury Store, free and clear of
liens, claims, interests, and encumbrances to Bogopa, pursuant to
the Westbury APA.
The Debtors have been seeking potential buyers for the Westbury
Store. Although some parties have shown interest from time to
time, no definitive executable bids were received. Ultimately, the
Debtors received a viable proposal from Bogopa and the parties
executed the Westbury APA with respect to the terms of the sale of
the Westbury Store.
The salient terms of the Westbur APA are:
a. Acquired Assets: Westbury store, leasehold interest,
inventory, furniture, fixtures, and equipment, cash, prepaid
expenses, and other related assets for a cash purchase price of
$900,000 (subject to adjustments)
b. Assumption of Lease and Cure Costs: The lease for the
Westbury Store will be assumed and assigned to Bogopa and Bogopa
will assume all Cure Costs up to $300,000 and is entitled to a
$150,000 purchase price credit. The Debtors will be responsible
for any additional Cure Costs but retain the right to terminate the
Westbury APA if the Cure Costs exceed $400,000. is not purchasing)
c. Letter of Credit: Bogopa will replace the Debtors' letter
of credit associated with the Westbury Store, which is posted in
the amount of $2 million, and facilitate the return of the
Debtors’ existing letter of credit, and will be paid $1.5 million
from the proceeds of such letter of credit received by the
Debtors.
d. Inventory Valuation Formula: 100% of the Debtors' cost,
except for specified categories of excluded inventory (which the
Buyer is not purchasing)
e. Treatment of Labor Agreements; Offers of Employment: With
respect to the Debtors' employees under collective bargaining
agreements, the Buyer will engage in good faith negotiations to
reach satisfactory amendments to the collective bargaining
agreements. The Buyer is obligated to offer employment to
substantially all, but in any event, no less than 90% of union
employees at the Acquired Stores.
Pursuant to the Westbury APA, the Debtors will assume and assign
the lease for the Westbury Store to Bogopa. In connection
therewith, Bogopa has agreed to assume cure cost obligations, up to
$300,000, under the lease for the Westbury Store and will be
entitled to a purchase price credit of $150,000. The Debtors will
be responsible for additional cure costs, but retain the right to
terminate the Westbury APA if the cure costs exceed $400,000.
A sale of the Westbury Store to Bogopa is the Debtors' only
practical option for a going concern sale of the store, which will
maximize recoveries for their economic stakeholders and preserve
jobs. If the Westbury Store is liquidated, they would be forced to
terminate the employees at the store and incur related severance
and other costs, recover far less on their inventory on a
liquidation basis, and likely surrender their letter of credit in
full associated with the Westbury Lease. Accordingly, pursuing
entry into and performance under the Westbury APA represents a
reasonable exercise of the Debtors' business judgment and is in the
best interests of all parties.
The Westbury Sale Transaction has the support of the Creditors'
Committee, the Ad Hoc Group, and the Union for employees at the
Westbury Store. In addition, the Debtors understand that the
Westbury landlord is supportive of the Westbury Sale Transaction
while Bogopa and the Westbury landlord negotiate the terms of an
amendment to the current lease which will be assumed and assigned.
Having already completed the Global Auction and given many
potential bidders numerous opportunities to bid on the stores, the
Debtors are grateful to have received Bogopa's bid and the Westbury
Sale Transaction presents a great opportunity for them and their
stakeholders to realize significant benefits at these late stages
of their sale process. Under the circumstances, they've determined
that a further auction is not necessary or in the best interests of
their estates.
The assumption of the unexpired lease associated with the Westbury
Store in connection with the Westbury Sale Transaction is an
exercise of the Debtors' sound business judgment. Assignment of
such lease allows Bogopa to operate the Westbury Store and is
essential to obtaining the highest or otherwise best offer for the
Westbury Store. The Debtors understand that the Westbury landlord
is supportive of the Westbury Sale Transaction while Bogopa and the
Westbury landlord negotiate the terms of an amendment to the
current lease which will be assumed and assigned.
In light of the current circumstances and financial condition of
the Debtors, the Westbury Sale Transaction must be consummated as
soon as practicable. Accordingly, the Debtors ask that the Sale
Order be effective immediately upon entry of each such order and
that the 14-day stay periods under Bankruptcy Rules 6004(h) and
6006(d) be waived.
A copy of the Westbury APA is available at from
https://tinyurl.com/y496waro PacerMonitor.com free of charge.
About Fairway Group
Fairway Group -- https://www.fairwaymarket.com/ -- is a food
retailer operating 14 supermarkets across the New York, New Jersey
and Connecticut tri-state area, including two with freestanding
wine and liquor stores (the Stamford and Pelham locations) and two
with in-store wine and liquor stores (the Woodland Park and Paramus
locations). The company's flagship store is located at Broadway
and West 74th Street, on the Upper West Side of Manhattan,
featuring a cafe, Sur la Route, and state of the art cooking
school. Fairway's stores emphasize an extensive selection of
fresh, natural, and organic products, prepared foods, and
hard-to-find specialty and gourmet offerings, along with a full
assortment of conventional groceries.
Fairway Group Holdings Corp. and 25 affiliated companies sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-10161) on
Jan. 23, 2020.
In the petitions signed by CEO Abel Porter, the Debtors were
estimated to have $100 million to $500 million in assets and
liabilities.
Judge James L. Garrity, Jr., is assigned to the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
Peter J. Solomon and Mackinac Partners, LLC as financial advisor;
and Omni Agent Solutions as claims, noticing and solicitation
agent.
FENDER MUSICAL: S&P Affirms 'B' ICR on Strong 2nd-Quarter Results
-----------------------------------------------------------------
S&P Global Ratings affirmed all ratings on Fender Musical
Instruments Corp. (including the 'B' issuer credit rating) and
removed them from CreditWatch, where the rating agency placed them
with negative implications on April 6, 2020.
Fender posted revenue growth in the high-single-digits despite the
disruption the pandemic caused, leading to better-than-expected
credit measures. Fender faced headwinds in the retail channel in
the second quarter, with most if its brick-and-mortar customers
such as Guitar Center and Sam Ash temporarily closed because of the
pandemic. S&P anticipated the pandemic would have a significant
negative impact on Fender's sales because of the store closures and
consumers pulling back on discretionary purchases because of
uncertainty about the economy. Fender overcame these headwinds and
increased its sales about 7% in the quarter, led by online sales of
entry-level guitars, including its acoustic guitars and Squier
electric guitar brand. Fender likely benefited from the lack of
entertainment options available to consumers during the
stay-at-home orders, and it appears many consumers used the period
as an opportunity to learn a new instrument. S&P has revised its
forecast upward significantly, reflecting the solid year-to-date
results. While S&P expects the trend to slow modestly in the second
half of the year, and sales growth around the holidays could be
slower than usual because of the heavy buying earlier in the year,
the rating agency still expects Fender to finish the year with good
sales growth in the mid- to high-single-digit percentage area.
Although gross margin declined during the first half due to costs
related to idle factories, higher tariffs, a modest negative mix
shift, and other one-time costs, S&P still expects EBITDA to grow
in the 10% area. S&P is now projecting Fender will improve its
leverage to the 4x area by the end of the year. S&P's measure of
Fender's leverage includes a put option held by its majority owner,
Servco Pacific, which the rating agency treats as a debt-like
obligation. Excluding the put option, S&P forecasts leverage will
be in the high-2x area in 2020 and 2021."
Higher ratings depend on Fender demonstrating the ability and
willingness to maintain this level of leverage. Although Fender's
current leverage might otherwise indicate a higher rating, S&P
remains somewhat uncertain about Servco's financial policy and its
commitment to maintaining leverage at this level. Servco was fairly
conservative with Fender's leverage until it issued a large
debt-financed dividend in 2018, at a time when Fender was incurring
start-up losses related to its new Fender Digital segment. The
incremental debt from the dividend and the lower EBITDA from the
Digital losses combined to increase S&P's measure of leverage to
the high-7x area (including the put option) in 2018. S&P believes a
dividend that increases leverage to those levels is less likely
since financial sponsor TPG Growth exited its ownership position
earlier this year. Nevertheless, S&P will not likely consider
higher ratings until it has a longer track record demonstrating
that Servco will not take a dividend that causes leverage to
spike.
In addition, higher ratings depend on Fender continuing to deliver
good operating performance. Fender's leverage was relatively
moderate before the dividend in 2018, but credit measures were
somewhat volatile from year to year, and the company's sales tend
to drop during recessions much like other discretionary consumer
products. Fender has weathered the pandemic very well so far, but
there is still significant longer-term economic uncertainty. If
unemployment remains high for a prolonged period, likely because of
a significant second wave of COVID-19 infections or a delay in the
availability of an effective vaccine, consumers could meaningfully
cut back discretionary purchases and S&P believes that would hurt
Fender's sales.
The stable outlook on Fender reflects S&P's forecast for the
company's leverage to be in the 4x area (high-2x area excluding the
put option) through the next two years, driven by continued healthy
demand for its guitars and amplifiers given consumers are
increasingly seeking in-home entertainment options amid the
pandemic. S&P expects the company will have significant cushion
compared with the rating agency's downgrade threshold of 8.5x (or
approximately 7x excluding the put option).
S&P could raise the rating if it believes Fender and its owners are
committed to a more conservative financial policy such that the
company sustains debt to EBITDA below 5.5x (4x excluding the put
option). Positive rating actions are also contingent on S&P's
confidence that Fender will maintain its good operating performance
even in the presence of a second wave of COVID-19 infections and a
potentially prolonged period of high unemployment.
Although unlikely over the next 12 months given the company's
recent performance and its leverage cushion compared to S&P's
downgrade thresholds, S&P could lower the ratings if Fender
sustains EBITDA interest coverage below 2x, or if it sustains debt
to EBITDA above 8.5x (approximately 7x excluding the put option).
This could result from continued high unemployment as a result of
the pandemic that causes a decline in consumer spending on
discretionary items like guitars.
FIELDWOOD ENERGY: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------------
The Office of the U.S. Trustee on Aug. 18, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 cases
of Fieldwood Energy, LLC and its affiliates.
The committee members are:
1. Oceaneering International, Inc.
11911 FM 529
Houston, TX 77041
David Lawrence
713-329-4912
dlawrence@oceaneering.com
2. Subsea 7 US LLC
17220 Katy Frwy, Suite 100
Houston, TX 77094
Laura Butler
713-461-0039
laura.butler@subsea7.com
3. Halliburton Energy Services, Inc.
3000 N. Sam Houston Pkwy E
Houston, TX 77032
Elba Parra
281-988-2193
elba.parra@halliburton.com
4. TETRA Technologies. Inc.
24955 I-45 North
The Woodlands, TX 77380
Kristy Woolsey
281-364-2201
kwoolsey@tetratec.com
5. Workstrings International, L.L.C.
1001 Louisiana, Suite 2900
Houston, TX 77002
Jean Paul Overton
713-654-2276
jeanpaul.overton@superiorenergy.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 Fieldwood Energy
Fieldwood Energy is a portfolio company of Riverstone Holdings
focused on acquiring and developing conventional assets, primarily
in the Gulf of Mexico region. It is the largest operator in the
Gulf of Mexico owning an interest in approximately 500 leases
covering over 2 million gross acres with 1,000 wells and 750
employees. Visit https://www.fieldwoodenergy.com for more
information.
Fieldwood Energy and its 13 affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded by $1.626 billion. Fieldwood was estimated to have $1
billion to $10 billion in assets and debt.
Fieldwood and its affiliates have tapped Weil, Gotshal & Manges LLP
as their legal counsel, Evercore Group LLC as their financial
advisor, and Opportune LLP as their restructuring advisor. Prime
Clerk LLC is the claims and noticing agent.
The First Lien Group has employed O'Melveny & Myers LLP as its
legal counsel and Houlihan Lokey Capital, Inc. as its financial
advisor.
The RBL lenders have employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
The Cross-Holder Group has tapped Davis Polk & Wardwell LLP as its
legal counsel and PJT Partners LP as its financial advisor.
FLEETCOR TECHNOLOGIES: S&P Affirms 'BB+' ICR; Outlook Positive
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' issuer credit rating on
FleetCor Technologies Inc. and its 'BB+' issue rating on the
company's senior secured notes. The outlook remains positive. The
recovery rating on the notes remains '3' (65% recovery
expectation).
S&P's rating affirmation follows FleetCor's second-quarter results
and reflects its view that the fundamental business model, strong
cash flow generation, and ability to control leverage remain
broadly intact despite continued risks to earnings as a result of
slower economic activity caused by the COVID-19 pandemic.
FleetCor's business was not immune to the economic shock caused by
COVID-19. Revenue in the second quarter declined 19% to $525.1
million from $647.1 million for the same period in 2019. The
largest contributors to the revenue decline are fuel cards (down
15.4%), corporate payments (down 27.1%), and tolls (down 24.8%).
FleetCor reported $289 million of adjusted EBITDA in the quarter,
down from $393.7 million for the same period in 2019, a 27%
decline. EBITDA margin contracted to 55% from 60.8% for the same
period. Although management expects third- and fourth-quarter
earnings will be stronger than the second quarter, S&P expects
full-year earnings will be 8% to 12% lower than 2019.
Net debt to adjusted EBITDA was 2.78x on a rolling-12-month basis,
which is down slightly from 2.89x at the end of the first quarter
but up from 2.53x at the end of 2019. Net debt declined in the
second quarter due higher cash balances from shrinking working
capital, lower draws on the line of credit, and lower debt
outstanding on the securitization facility. S&P takes a positive
view that the company was able to lower its net debt when earnings
were under pressure.
With strong cash flow generation and modest capital expenditure
needs, S&P believes the company has the capacity to sustain net
debt to EBITDA of 2.0x to 3.0x. However, a substantial acquisition
or meaningful share buybacks could cause S&P to revisit its
outlook.
The company has said that leverage could exceed 3.0x based on its
covenants to pursue an acquisition and that it would seek to return
below 3.0x in due course. There are some minor differences in
leverage between the company's covenants and S&P Global Ratings'
calculation. S&P Global Ratings includes the company's
securitization facility in debt ($654 million at second-quarter
2020) and nets all unrestricted cash ($765.8 million at
second-quarter 2020). The company's term loan covenants exclude the
securitization facility in debt and only allows $200 million of
cash netting.
Management has stated there are five or six assets that the company
has coveted for some time but did not disclose a potential range of
costs. FleetCor has completed several acquisitions since going
public in 2010. FleetCor's largest acquisitions were Comdata for
$3.64 billion in 2014. Servicos e Technologia de Pagamentos (STP)
for $1.23 billion in 2016, and Cambridge Mercantile Corp. for $716
million in 2017. Since then, all other transactions were largely
tuck-in, complementary to existing segments, and didn't have an
effect on leverage.
Although less likely, FleetCor could also breach S&P's upper rating
threshold through share buybacks. FleetCor repurchased $530 million
of stock in the first quarter and $27 million in the second
quarter; S&P believes most of the buybacks occurred in January and
February before market participants understood the full extent of
COVID-19.
Notwithstanding the above, S&P is unlikely to raise the rating
until the company resolves its ongoing litigation with the Federal
Trade Commission (FTC) due to uncertainty about the range of
possible outcomes. In December 2019, the FTC filed a lawsuit
against FleetCor alleging that it charged customers at least
hundreds of millions of dollars in hidden fees after making false
promises about helping customers save on fuel costs. FleetCor has
not accrued any reserve for these claims as of second-quarter 2020
because it believes the FTC's claims are without merit and it's
unable to estimate a possible loss or range.
"The positive outlook reflects our view that there is at least a
one-in-three chance that we may raise the ratings on FleetCor over
the next 12 months if we expect the company to maintain leverage
comfortably below 3.0x on a sustained basis while maintaining
strong financial performance across its reportable segments. At the
same time, we are unlikely to upgrade the company until there is a
resolution to its pending legal matters with the FTC," S&P said.
"We could revise the outlook to stable over the next 12 months if
large acquisitions, share repurchases, or depressed economic
conditions weaken FleetCor's financial profile, hurting its
leverage and debt-service metrics. Specifically, we could revise
the outlook to stable if net debt to adjusted EBITDA rises to
3x-4x, without a credible plan to reduce it. We could also revise
the outlook to stable if the company's EBITDA margins deteriorate
significantly, which we view as unlikely," the rating agency said.
FORUM ENERGY: S&P Raises ICR to 'CCC+' Following Debt Exchange
--------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Houston-based
oilfield products and services provider, Forum Energy Technologies
Inc., to 'CCC+' from 'SD' (selective default) after the company
completed its debt exchange for the majority of its 6.25% senior
unsecured notes due 2021.
The company exchanged $315 million of its existing unsecured notes
for new 9% convertible secured notes due 2025, which S&P considered
less than the original promise and tantamount to default.
S&P is assigning its 'CCC+' issue-level rating to the company's new
9% convertible secured notes due 2025. The '4' recovery rating
indicates S&P's expectation for average (30%-50%; rounded estimate:
30%) recovery of principal in the event of a payment default.
At the same time, S&P is raising its issue-level rating on the
company's senior unsecured debt to 'CCC-' from 'D'. S&P has revised
the recovery rating to '6' from '4', which indicates its
expectation for negligible (0%-10%; rounded estimate: 0%) recovery
of principal in the event of a payment default.
S&P's 'CCC+' rating reflects the company's unsustainable leverage.
Although the debt exchange resolved issues around the need for a
debt refinancing in 2021, overall debt levels are unchanged and
leverage metrics remain weak. The company's previous cash tender
for debt at below-par, which was completed in May 2020, reduced net
debt outstanding by about $35 million. Following the two debt
transactions, the company has about $315 million of its new 9%
convertible secured notes due 2025 outstanding and $13 million of
its existing 6.25% senior unsecured notes due 2021. S&P expects the
company will repay its remaining 2021 notes with cash over the next
six months.
The company recently had an amendment made to its credit facility
which reduced the lender commitments to $250 million from $300
million. The amount available is limited by inventory sublimits and
therefore the total amount available at June 30, 2020, was $133
million. The credit facility will mature in October 2022 assuming
the remaining 2021 notes are repaid by July 2021, which S&P expects
to be the case, otherwise the credit facility maturity will spring
forward to that date.
The oilfield services sector continues to face weak demand. S&P
expects oil and gas drilling and completion activity to remain
subdued at least through the remainder of 2020 and likely in the
first half of 2021, as producers take a cautious approach to
increasing activity levels--particularly onshore North America
which is Forum's largest market. S&P now projects Forum's revenues
will decline about 45% in 2020, compared with 2019, and that
adjusted EBITDA will approach zero before improving only modestly
in 2021.
Equity conversion feature could lower debt levels if Forum's stock
price recovers. The company's new notes carry a 9% coupon, of which
6.25% is payable in cash and the remaining 2.75% is payable in cash
or in kind. In addition, $150 million principal amount of the new
notes, about 46% of total debt outstanding, will be mandatorily
convertible into common stock upon meeting certain trading
thresholds which would result in an improved leverage scenario. The
company's stock currently trades at around one-third of the $1.50
per share price needed for the conversion to occur.
The negative outlook reflects Forum's unsustainable leverage and
the risk that liquidity could deteriorate notwithstanding a broad
improvement in sector conditions. Due to S&P's expectation that
Forum will generate minimal EBITDA in 2020, it projects average FFO
to debt of about 0% and debt to EBITDA of well over 10x over the
next 12 months.
"We could lower the rating if the company's liquidity deteriorated
or if we believed there was a heightened risk of a broader
financial restructuring. This would most likely result from
sustained low commodity prices affecting exploration and production
(E&P) spending levels and drilling activity, reducing demand for
products and services offered by Forum," S&P said.
"We could revise the outlook to stable if Forum improved its
leverage to a more sustainable level, including FFO to debt above
12%. This would most likely result from an improvement in commodity
prices leading to higher demand for Forum's products and services
and the possible conversion of Forum's new convertible notes into
equity," the rating agency said.
FRONTIER COMMUNICATIONS: E2 Capital Buying Four Florida Properties
------------------------------------------------------------------
Frontier Communications Corp. and affiliates filed with the U.S.
Bankruptcy Court for the Southern District of New York a notice of
their proposed Purchase and Sale Agreements with E2 Capital, LLC in
connection with the private sale of Frontier Florida, LLC's real
properties located in St. Petersburg, Tampa, and Sarasota, Florida,
free and clear of Liens, Claims and Interests.
On Jan. 31, 2020, the Buyer and the Seller reached an agreement in
principle regarding the purchase and sale of certain properties
located in St. Petersburg, Tampa, and Sarasota, Florida, and on
April 10, 2020, they reached an agreement in principle for the sale
of property located in Clearwater, Florida. The aggregate
purchase price of these properties is undisclosed.
Pursuant to the Purchase and Sale Agreements, and the applicable
Lease-Back Leases and Easement Agreements, the Buyer will lease
back to the Seller, the portion of the applicable property occupied
by the Seller on the terms set forth in the applicable
Lease-Back-Lease and Easement Agreement, so that the Debtors may
continue operations thereon.
Pursuant to the St. Petersburg Purchase and Sale Agreement, and
subject to Court approval, the Buyer will provide the undisclosed
purchase price to the Seller in exchange for those parcels of land
located in St. Petersburg, Pinellas County Florida having parcel
identification numbers 19-31-17-48654-006-0010 (comprised of
approximately 1.16 acres) and 19-31-17-48654-003-0110 (comprised of
approximately .77 acres).
Pursuant to the Tampa Purchase and Sale Agreement, and subject to
Court approval, the Buyer will provide the agreed purchase price to
the Seller in exchange for those parcels of land located in Tampa,
Hillsborough County Florida having folio numbers 193404-0000
(comprised of approximately 1.01 acres) and 193402-0000 (comprised
of approximately .82 acres).
Pursuant to the Sarasota Purchase and Sale Agreement, and subject
to Court approval, the Buyer will provide the undisclosed purchase
price to the Seller in exchange for those parcels of land located
in Sarasota, Sarasota County Florida having parcel identification
numbers 2027-07-0001 (comprised of approximately .84 acres) and
2027-07-0057 (comprised of approximately .78 acres).
Pursuant to the Clearwater Purchase and Sale Agreement, and subject
to Court approval, the Buyer will provide their agreed purchase
price to the Seller in exchange for that parcel of land located in
Clearwater, Pinellas County Florida having parcel identification
number 15-29-15-65250-002-0010.
Pursuant to the Purchase and Sale Agreements and the applicable
Lease-Back Leases described therein, the Buyer will lease back to
the Seller a portion of the applicable Florida Property to allow
the Seller to continue operating thereon. The Seller will also
reserve, and the Buyer agrees to the reservation by the Seller of,
certain easements across certain portions of the Florida Properties
in accordance with the terms of the applicable Easement Agreements
described in the Purchase and Sale Agreements.
The Debtors evaluated the Purchase Price and the Florida Properties
and determined that selling the Florida Properties on the terms set
forth in the Purchase and Sale Agreements would maximize value to
the Debtors. Ultimately, the Buyer's offer constituted the highest
and otherwise best offer for the Florida Properties.
The Debtors believe the Purchase Price is reasonable in light of
market conditions and they have no reason to believe that a higher
price could be obtained. For these reasons, the Debtors ask
approval to enter into the Purchase and Sale Agreement to sell
their interest in the Florida Properties.
To maximize the value received for the Florida Properties, the
Debtors propose to close the Sale as soon as possible after the
hearing. Accordingly, they ask that the Court waives the 14-day
stay period under Bankruptcy Rules 6004(h).
A hearing on the Motion was set for Aug. 21, 2020 at 10:00 a.m.
(ET). The Objection Deadline is Aug. 14, 2020, at 4:00 p.m. (ET).
A copy of the Agreements is available at
https://tinyurl.com/yyywtlsx from PacerMonitor.com free of charge.
The Purchaser:
E2 CAPITAL, LLC
200 2nd Ave. S., Unit 466
St. Petersburg, FL 33701
Attn: Jonathan Daou, President
E-mail: jon@eastmanequity.co
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.
GAIL HALPERN: King Buying Palm Beach Gardens Property for $1.05M
----------------------------------------------------------------
Gail Halpern asks the U.S. Bankruptcy Court for the Southern
District of Florida to authorize the sale of the real property
located at 3827 Toulouse Drive, Palm Beach Gardens, Florida to Don
King as set forth in their Contract for Purchase and Sale for $1.05
million.
The Debtor proposes to sell the property free and clear of all
liens and encumbrances to the Buyer and pay the proceeds, after
payment of closing costs and taxes (including tax certificates), to
the first mortgagee Alpha Partners (in an agreed-to reduced
amount), Frenchmen's Creek HoA, Floor Specialists and the Palm
Beach County Tax Collector.
The purchase price will be made as follows:
i. Initial deposit to be held by the Seller's Closing Agent,
Gary Nagle: $10,000
ii. Additional $95,000 deposit due 10 days from the effective
date of the Agreement to be added to the fund
iii. Private Mortgage: $0
iv. Balance to close: $945,000
v. Total: $1.05 million
The proposed sale is an arm's-length transaction. The Closing of
the property is set for Oct. 31, 2020.
The continued viability of the Debtor's case and the success of the
Debtor's reorganization efforts hinge upon approval of the
Agreement. Absent the Agreement, the Debtor will simply lose the
property to foreclosure sale for an amount less than proposed which
will in turn be to the detriment of all parties in interest in this
Chapter 11 case.
Approval of the Agreement will allow the Debtor to maximize the
value of the sale of its property to the benefit of all creditors.
In light of the Debtor's financial situation, the Debtor submits
that entry into the Agreement is appropriate and should be
approved.
A hearing on the Motion is set for Aug. 12, 2020.
A copy of the Agreement is available at
https://tinyurl.com/y6j6bn3c from pacerMonitor.com free of charge.
Gail Halpern sought Chapter 11 protection (Bankr. S.D. Fla. Case
No. 19-23411) on Oct. 4, 2019. The Debtor tapped Malinda L. Hayes,
Esq., at Markarian & Hayes as counsel.
GENWORTH MORTGAGE: Moody's Rates $750MM Sr. Unsecured Notes 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service has affirmed the Baa3 insurance financial
strength rating of Genworth Mortgage Insurance Corporation. In
addition, Moody's assigned a Ba3 issuer rating to Genworth Mortgage
Holdings, Inc. and a Ba3 rating to $750 million of senior unsecured
notes being issued by the company.
The new notes will have a 5-year maturity and rank senior to all
other senior unsecured debt at the issuer's parent Genworth
Holdings, Inc. (Holdings, senior debt B3, developing), a subsidiary
of Genworth Financial Inc. (unrated), the ultimate holding company
for Holdings. A portion of the net proceeds will be retained at
GMHI to service debt and improve liquidity at the mortgage
operations, with the remaining amount expected to be up-streamed to
Holdings to bolster its liquidity resources for debt maturities due
in 2021.
The debt issuance is in reaction to continuing delays to close the
planned acquisition of the company by China Oceanwide Holdings
Group Co. Ltd. (unrated) including obtaining the required
regulatory approvals which underlines the risks to consummate the
transaction, and the significantly higher volatility in the global
financial markets due to the coronavirus pandemic which will
challenge the company's ability to build liquidity.
RATINGS RATIONALE
Moody's said the assignment of the rating on GMHI and the
affirmation of GMICO is based on the company's strong position in
the US mortgage insurance market with an approximate 19% market
share, good client diversification, its consistent GSEs' PMIERs
sufficiency ratio 143% as of June 30, 2020), and consistent
profitability that has increased liquidity at the company.
These strengths are tempered by the commodity-like nature of the
mortgage insurance product, the potential for price competition in
the US mortgage insurance market, the potential implications on the
company's credit profile from the contraction of the US economy due
to coronavirus-related shutdown and deteriorating economic
conditions, and Genworth's weak financial flexibility that exposes
the company to event risk from Genworth's inability to address its
debt ladder and restructure its organization. Following the
issuance of the new senior notes, GMHI's pro forma adjusted
financial leverage as of June 30, 2020 would be around 18%.
The stable outlook on GMHI and its rated insurance subsidiaries is
stable reflecting a healthy level of capital adequacy, a more
comprehensive reinsurance coverage on its entire insured portfolio,
a conservative investment portfolio, together with underwriting
discipline aimed at improved profitability and market presence.
Additionally, Moody's expects GMHI to balance shareholder, creditor
and policyholder considerations, with respect to product risk,
financial flexibility ratios consistent with its peers,
profitability, capital and liquidity management, including economic
capital and stress scenarios, consistent with its understanding
underlying its current ratings.
Moody's notes that GMICO's mortgage insurance business will see
higher losses due to the contraction of the US economy from
coronavirus-related shutdowns that have resulted in a significant
increase in the unemployment rate and deteriorating macroeconomic
conditions for the US housing market. While the fiscal stimulus and
policy measures taken will mitigate the negative impact, Moody's
expects mortgage loan delinquency rates to spike higher in the
coming months. The longer-term impact on GMICO will depend on the
length and depth of the economic contraction, as well as the
efficacy of mortgage loan payment forbearance programs implemented
by Fannie Mae and Freddie Mac in reducing foreclosures, and by
extension, ultimate mortgage insurance claim rates.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the company's business and financial profile and the
uncertainty related to key drivers of mortgage credit performance
in the current economic downturn, there is unlikely to be an
upgrade of ratings at the mortgage operations over the near to
medium term. However, the following factors could positively
influence the firm's credit profile: 1.) A top tier market position
in the US mortgage insurance market; 2.) GMHI maintaining adjusted
financial leverage in the 20% range, or below; 3.) Maintaining
comfortable compliance with PMIERs and a sufficiency ratio great
than 110%; 4.) Improvement in Genworth's financial flexibility,
including a clear path to managing debt maturities in 2021; and 5.)
Profitability metrics consistent with those of its peers, or return
on capital above 10%
Factors that could lead to a downgrade include: 1.) Genworth does
not complete its acquisition with China Oceanwide and the
associated actions to address its high debt leverage and weakening
financial flexibility; 2.) Adjusted financial leverage above 30%;
3.) Non-compliance with the PMIERs; 4.) Significant deterioration
in the US MI's profitability metrics; and 5.) Failure to build
comprehensive reinsurance coverage on its entire insured portfolio
AFFECTED RATINGS
The following ratings have been affirmed:
Genworth Mortgage Insurance Corporation: insurance financial
strength at Baa3;
Outlook Actions:
Issuer: Genworth Mortgage Insurance Corporation
Outlook, Stable
The following ratings have been assigned:
Genworth Mortgage Holdings, Inc. - issuer rating at Ba3, senior
unsecured notes at Ba3,
Outlook Actions:
Issuer: Genworth Mortgage Holdings, Inc.
Outlook, Assigned Stable
GMHI, through its subsidiaries, provides private mortgage insurance
and other mortgage credit risk management services. Through the six
months of 2020, Genworth's US mortgage insurance business reported
$469 million of net premiums earned and $145 million of net
income.
The principal methodology used in these ratings was Mortgage
Insurers Methodology published in November 2019.
GFL ENVIRONMENTAL: S&P Rates New Senior Secured Notes 'BB-'
-----------------------------------------------------------
S&P Global Ratings said it assigned its 'BB-' issue-level rating
and '2' recovery rating to GFL Environmental Inc.'s proposed senior
secured notes due 2025. GFL plans to raise US$600 million in this
private offering, but S&P believes the amount could be upsized to
as high as US$750 million if market conditions are favorable. The
'2' recovery rating on the notes indicates its expectation for
substantial (70%-90%; rounded estimate: 70%) recovery in the event
of default.
S&P believes GFL intends to use proceeds from this debt issuance
(C$800 million-C$1 billion) along with the issuance of about US$600
million (C$800 million) of convertible preferred shares, which the
rating agency treats as debt in its adjusted credit measures,
primarily to finance the acquisition of WCA Waste Corp. for about
US$1.6 billion. This announcement comes about two months after GFL
entered into an agreement to acquire, for about US$863.5 million,
the divested assets resulting from the Waste Management Inc.
acquisition of Advanced Disposal Services Inc. These acquisitions,
which S&P expects to close in the second half of 2020, should
increase GFL's annual revenue and adjusted EBITDA by about 25%, and
expand the company's operations in the U.S. Midwest and Southeast
(particularly in Wisconsin, Texas, Missouri, and Florida).
"In our view, these operations should improve GFL's scale and
diversifications while maintaining relatively stable profitability
and positive free operating cash flow generation beyond 2020," S&P
said.
GFL's financing plan is consistent with S&P's view that the company
should continue to expand its operating breadth through primarily
debt-funded acquisitions. S&P continues to forecast adjusted
debt-to-EBITDA on a pro forma basis will be 6.0x-6.5x and adjusted
EBITDA interest coverage will be about 3.0x over the next couple of
years. These forecast credit measures are commensurate with S&P's
issuer credit rating (ICR) on GFL and incorporate a modest adverse
impact on earnings this year from COVID-19 disruptions,
particularly on the company's commercial and industrial segments,
which comprise about one-third of revenue.
S&P's 'B+' ICR and stable outlook on GFL reflect the company's
position as the fourth-largest waste management company in North
America with pro forma annual revenue of more than C$5 billion
(about two-thirds generated in the U.S. with the remainder in
Canada).
"In our view, the environmental services industry has low risk
characteristics stemming from the essential nature of its solid
waste services that are less exposed to cyclical downturns than
many other industries. GFL also benefits from high revenue
visibility due to multiyear service contracts and high renewal
rates across a diversified customer base, which should contribute
to low-single-digit annual organic revenue growth with stable
earnings and operating cash flow generation," S&P said.
These positive characteristics are partially offset by S&P's view
that GFL is exposed to cyclical demand in certain segments such as
infrastructure and soil remediation (about 16% of 2019 revenue),
and liquid waste (about 10% of 2019 revenue). S&P also believes
there remains some integration risk in the near term from the
significant number of acquisitions the company completed over the
past couple of years, which have more than tripled GFL's size
(based on revenue).
"We could lower our ratings on the company within the next 12
months if adjusted debt-to-EBITDA increases above 6.5x on a pro
forma basis, with poor prospects of deleveraging within the
subsequent 12 months, or we expect EBITDA interest coverage to be
below 2.0x. In our view, this could result from a higher level of
acquisitions than we currently forecast, poor execution of
integrating acquisitions, volume and pricing pressure from tough
market conditions, or operating inefficiencies that contribute to
weaker-than-expected earnings and cash flow," S&P said.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The '2' recovery rating on GFL's senior secured debt indicates
S&P's expectation for substantial (70%-90%; rounded estimate: 70%)
recovery in the event of default.
-- The '6' recovery rating on the company's senior unsecured debt
indicates S&P's expectation for negligible (0%-10%; rounded
estimate: 0%) recovery in default.
-- S&P's simulated default scenario contemplates a default in
2024, stemming from a loss of customer contracts, heightened
competition, and margin erosion caused by an unexpected increase in
costs related to acquisition integration issues.
-- In this scenario, GFL is unable to service its financial
obligations, prompting the need for its restructuring as a going
concern.
-- S&P's recovery analysis assumes a reorganization value for the
company of about C$4.4 billion, reflecting emergence EBITDA of
about C$740 million and a 6x multiple.
-- S&P assumes there is no debt outstanding at GFL's subsidiaries,
resulting in all the value of the company's U.S. operations flowing
up to GFL creditors.
-- The company's C$628 million revolving credit facility is 85%
drawn at the time of default.
-- The company issues up to US$750 million of secured notes in
addition to the US$500 million issued earlier this year.
Simulated default assumptions
-- Simulated year of default: 2024
-- Revolver to be 85% drawn at default
-- LIBOR at 2.5% in S&P's assumed default year
-- Emergence EBITDA: C$740 million
-- Multiple: 6x
-- Gross recovery value: C$4.44 billion
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): C$4.22
billion
-- Total value available to secured first-lien debt claims: C$4.22
billion
-- Secured first-lien debt claims: C$5.82 billion
-- Recovery expectations: 70%-90% (rounded estimate: 70%)
-- Total value available to unsecured claims: 0
-- Senior unsecured debt and pari passu claims: C$2.79 billion
-- Recovery expectations: 0%-10% (rounded estimate: 0%)
All debt amounts include six months of prepetition interest.
HAIR CUTTERY: Permanently Closes 40 Locations in New England
------------------------------------------------------------
WCVB reports that Hair Cuttery is permanently closing nearly down
40 locations in New England.
After almost a year in business, the Hair Cuttery's salon at
Milford Crossing has permanently closed, along with its 21 other
locations in Massachusetts, the Milford Daily News reported.
"At first it was just going to be a few salons closing and we would
be able to transfer, but that turned out not to be the case,
sadly," said Christina Hender, who was an assistant salon leader at
the Hair Cuttery at 128 Medway Road in Milford.
On June 5, Hender - and every other employee working at a Hair
Cuttery salon in Massachusetts and the rest of New England - was
officially terminated by the company, she said, which includes at
least eight workers per salon, plus district and regional
managers.
Due to financial problems caused by the COVID-19 pandemic, owners
of the unisex hair salon - Creative Hairdressers, Inc. - sold the
company, she said, which resulted in the mass closings.
"We were all devastated - it was very sad packing up the salon,"
she said about the location that opened last year, sandwiched
between Chipotle and Eros Nails & Spa. "We are all just hoping that
eventually we will be able to get in contact with our clients so
they can find their stylist somewhere else."
The 38 other Hair Cuttery locations across the New England
landscape have also closed, though some have since reopened under a
new name or under the new company - HC Salon Holdings, Inc.
Included are locations in Framingham and Worcester, 13 salons in
Connecticut, two in New Hampshire and two in Rhode Island,
according to the official Hair Cuttery website.
A request for the full list of closed locations made to Ratner
Companies, which founded Creative Hairdressers, Inc. back in 1974,
was not returned.
According to records of business licenses under the state Board of
Registration of Cosmetology and Barbering, the Hair Cuttery in
Framingham at 50 Worcester Road was first issued its license in
1986 and was set to have it renewed at the end of this year. A call
made to the Framingham location and Worcester location at 1135
Grafton St. went directly to a message by Phil Horvath, president
of Ratner Companies, about the company temporarily closing its
locations due to the pandemic. At least four other calls made to
other New England locations never went to voicemail and just
continuously rang.
The second Hair Cuttery location in Worcester at 1078 W Boylston
St. was reopened by its former salon leader under a new name -
Unity Hair Studios.
About a dozen other Hair Cuttery locations nationwide have also
closed, and the remaining 750 locations were sold to HC Salon
Holdings, Inc. in June after Creative Hairdressers, Inc. filed for
Chapter 11 bankruptcy in April.
In May 2020, Creative Hairdressers Inc., which also operates
BUBBLES and Salon Cielo, was ordered to pay more than $1.1 million
in back wages to 7,500 employees across 15 states after failing to
provide its employees’ final paychecks after first closing its
locations back in March 2020.
About Hair Cuttery
Creative Hairdressers, Inc. -- http://www.ratnerco.com/-- operates
over 750 salons nationwide under the trade names Hair Cuttery,
BUBBLES, and Salon Cielo. The company began in 1974 to create a
quality whole-family salon where stylists could make a good living.
Today, the family of salons continues to share this commitment
with a transparent, people-first culture that offers the best
career trajectory in the industry for salon professionals, field
leaders and corporate employees.
Creative Hairdressers and Ratner Companies, L.C., sought Chapter 11
protection (Bankr. D. Md. Case No. 20-14583 and 20-14584) on April
23, 2020.
Creative Hairdressers was estimated to have $1 million to $10
million in assets and $10 million to $50 million in liabilities.
Creative Hairdressers is represented by Shapiro Sher Guinot &
Sandler. Carl Marks Advisors is acting as strategic financial
advisor to assist the Company in the process. A&G Realty Partners
is the real estate advisor. Epiq Bankruptcy Solutions is the
claims agent.
HC Salon Holdings, Inc., is represented by DLA Piper LLP (US).
HANNON ARMSTRONG: S&P Rates Senior Unsecured Notes 'BB+'
--------------------------------------------------------
S&P Global Ratings assigned its 'BB+' senior unsecured debt rating
to the $125 million convertible senior notes due 2023 being issued
by Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI;
(BB+/Stable/--), as well as the $350 million senior unsecured notes
due 2030 being offered by HAT Holdings I LLC (HAT I) and HAT
Holdings II LLC (HAT II) as co-issuers. The senior unsecured notes
due 2030 will be fully and unconditionally guaranteed by HASI. HAT
I and HAT II are HASI's taxable real estate investment trust
subsidiaries. HASI intends to use net proceeds from the offerings
to acquire or refinance, in whole or in part, eligible green
projects.
Pro forma for these offerings, S&P expects debt to adjusted total
equity (ATE) to increase to about 2.65x from 2.15x as of June 30,
2020--closer to the rating agency's downside trigger of 2.75x. Over
the coming quarters, S&P expects leverage to gradually decline with
retained earnings and future issuances under HASI's "at-the-market"
equity distribution program. Longer term, the rating agency thinks
HASI's convertible bonds will convert to equity. S&P deducts HASI's
nonservicing intangibles (including lease intangibles), net
operating loss tax carryforwards, and the residual interest in
off-balance-sheet securitizations from reported equity in the
rating agency's measure of ATE.
The ratings reflect HASI's relatively low leverage, conservative
underwriting standards, and experienced management. The company
typically operates with leverage below its target of up to 2.5x
debt to equity and has had a strong underwriting record on a
diverse portfolio of infrastructure investments. Partly offsetting
these strengths are HASI's niche position relative to larger
competitors, such as banks and insurers, and some large
single-investment exposures. Year to date, HASI has maintained
steady operating performance, sound asset quality, and bolstered
funding and liquidity despite the general economic decline stemming
from the COVID-19 pandemic.
Over the next 12 months, S&P could lower its ratings on HASI if:
-- Debt to ATE rises above 2.75x;
-- Its investment portfolio quality deteriorates, as shown by
rising credit losses, impairments, or nonaccruals; or
-- Access to funding or liquidity deteriorates.
"We could raise the ratings if HASI continues to build its business
position and reduces large single-investment portfolio
concentrations relative to ATE. Although we don't expect this, we
could also raise the ratings if HASI operates with debt to ATE
below 1.5x on a sustained basis," S&P said.
HENLEY PROPERTIES: Durans Buying Mountain View Property for $14K
----------------------------------------------------------------
Henley Properties, LLC, asks the U.S. Bankruptcy Court for the
Western District of Missouri to authorize the sale of the real
property located at Lot 13, Round Bottom Pool Estates, Mountain
View, Arkansas to Darrell and Teresa Duran for $14,000, free and
clear of liens.
On April 28, 2020, the Debtor filed a motion to sell Lot 13 Round
Bottom Pool Estates, no objections were filed after notice and
opportunity for hearing and the Court entered an Order granting the
motion on May 20, 2020. The proposed sale did not close.
The Debtors have obtained a new contract, with prospective
purchasers, the Durans. The $14,000 proposed sale price is the
same as approved in the Court's prior Order.
The following sales costs, liens of record, and other charges and
expenses related to the sale are to be paid out of the sale
proceeds at the time of closing, on Sept. 3, 2020, in the estimated
amounts as indicated:
(a) Recorded liens of record in the amounts indicated: Lien of
Bancorp South securing note of Floyd W. Henley, individually in the
amount of $52,563 net sales proceeds to be applied to reduce loan
balance;
(b) 2020 real estate taxes (prorated); and
(c) Commission in the amount of 8%, to be divided between
selling and listing agents pursuant to agreement.
Based on the prior order approving the sale of the property at the
price of $14,000, the Debtors ask that the Court waives the 21-day
notice requirement.
About Henley Properties
Henley Properties, LLC, owns and operates weddings and events
venue. Henley Properties sought Chapter 11 protection (Bankr. W.D.
Mo. Case No. 19-30422) on Aug. 6, 2019. In the petition signed by
Floyd W. Henley and Rebecca L. Henley, members, the Debtor
disclosed total assets at $2,973,329 and $1,192,562 in debt. The
case is assigned to Judge Brian T. Fenimore. The Debtor tapped
Mariann Morgan, Esq., at Checkett & Pauly, as counsel.
HERITAGE HOTEL: Ally Buying Substantially All Assets for $8 Million
-------------------------------------------------------------------
Heritage Hotel Associates, LLC, asks the U.S. Bankruptcy Court for
the Middle District of Florida to authorize the sale of
substantially all assets to Ally Capital Group, LLC for $8 million
cash, plus the assumption of liabilities, in accordance with their
Hotel Purchase and Sale Agreement dated as of July 27, 2020,
subject to overbid.
CCP SP Hotel, LLC, as successor in interest to Valley National
Bank, has a first mortgage on the Debtor's real property and a
first priority lien on the Debtor's personal property. The
principal amount of the debt owed to CCP is approximately $5
million. Additional charges owed to CCP are disputed with the
amounts ranging from approximately $350,000 to $1.5 million.
The Small Business Administration holds a second mortgage on the
Debtor's real property with a principal balance owed of
approximately $554,636. There are third mortgages on the Debtor's
real property in favor of BayStar Hotel Group, George Glover and
Henry Glover that were collaterally assigned to Valley (and now to
CCP). The amounts owed under the third mortgages total
approximately $898,034.
The Debtor also (i) owes real estate taxes to the Pinellas County
Tax Collector for 2018 and 2019 in the amounts of approximately
$139,112 and $151,949, respectively, and (i) will owe real estate
taxes to the Pinellas County Tax Collector prorated for 2020 for
the period from Jan. 1, 2020 through the date of closing under the
Purchase Agreement.
The Debtor has determined, in the exercise of its business
judgment, that it would be in the best interests of its creditors
and its estate to maximize value through a sale of substantially
all of its assets pursuant to Section 363 of the Bankruptcy Code.
Absent such a sale, the Debtor will most likely be facing a
liquidation under Chapter 7 of the Bankruptcy Code which would
achieve far less for creditors than a sale as a going concern. As
presently contemplated, the sale will be pursuant to Section 363 of
the Bankruptcy Code, and the closing of the sale will occur under
the Debtor's existing plan of liquidation on file with the Court
with the distribution of available sale proceeds to its creditors
as provided in the Plan.
The Debtor has engaged Berkadia Real Estate Advisors, LLC to market
and sell its assets. After several months of diligently working to
locate potential purchasers for the Debtor, the Debtor received an
offer from the Purchaser to purchase substantially all of the
assets.
In connection with the proposed sale, on Aug. 4, 2020, the Court
entered the Bid Procedures Order. In addition, in the Bid
Procedures Order, the Court approved the Purchaser as the "stalking
horse bidder" and approved the offer of the Purchaser as set forth
in the Purchase Agreement as the "stalking horse bid." All parties
are directed to review the procedures set forth in the Bid
Procedures Order for the process governing submission of competing
bids and the bid deadline.
On July 27, 2020, the Debtor and the Purchaser executed a Hotel
Purchase and Sale Agreement, which provides for the sale by the
Debtor, and the purchase by the Purchaser, of substantially all of
the assets for a total cash purchase price of $8 million plus the
assumption by the Purchaser of certain liabilities of the Debtor.
On Aug. 4, 2020, the parties executed a First Amendment to Hotel
Purchase and Sale Agreement.
The Purchaser has delivered an escrow deposit to the Escrow Agent
in the amount of $300,000. Subject to the terms and conditions of
the Purchase Agreement and the Ancillary Agreements, Purchaser will
and agrees to assume, pay, perform and discharge when due the
following Liabilities of Seller to the extent related to the
Business or the Hotel or the Property.
If the Sale Order is entered by the Court on Aug. 25, 2020 and
becomes a Final Order on Sept. 9, 2020, then the Closing will occur
by no later than Sept. 14, 2020.
The Debtor's assets will be sold, transferred and conveyed by the
Debtor to the Purchaser at Closing free and clear of all
Encumbrances. The Encumbrances of any creditors or claimants of
any kind whatsoever will attach to the sale proceeds. The closing
of the sale will occur under the Plan, and the available sale
proceeds will be distributed to the Debtor's creditors as provided
in the Plan.
At the Sale Hearing, the Debtor will ask that the Court enters an
order waiving the 14-day stays set forth in Rules 6004(h) and
6006(d) of the Federal Rules of Bankruptcy Procedure and providing
that the orders granting the Motion and the Contracts Motion be
immediately enforceable and that the closing under the Purchase
Agreement may occur immediately.
A hearing on the Motion is set for Aug. 25, 2020, at 3:00 p.m. Any
objection to the relief requested must be filed with the Court by
no later than Aug. 20, 2020 at 5:00 p.m.
A copy of the Agreement is availble at https://tinyurl.com/yyat6wek
from PacerMonitor.com free of charge.
About Heritage Hotel Associates
Heritage Hotel Associates, LLC, is a single asset real estate
debtor (as defined in 11 U.S.C. Section 101(51B)). Heritage Hotel
Associates sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Case No. 19-09946) on Oct. 21, 2019. At
the
time of the filing, the Debtor was estimated to have assets of
between $10 million and $50 million, and liabilities of between $1
million and $10 million.
Johnson Pope Bokor Ruppel & Burns, LLP, is the Debtor's legal
counsel. Berkadia Real Estate Advisors, LLC, is the real estate
agent.
HI-CRUSH INC: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The Office of the U.S. Trustee on Aug. 18, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Hi-Crush Inc.
About Hi-Crush
Hi-Crush Inc. is a fully-integrated provider of proppant and
logistics services for hydraulic fracturing operations, offering
frac sand production, advanced wellsite storage systems, flexible
last mile services, and innovative software for real-time
visibility and management across the entire supply chain.
Hi-Crush and its affiliates sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 20-33495) on
July 12, 2020. As of March 31, 2020, Debtors had total assets of
$953.082 million and total liabilities of $699.137 million.
Judge David R. Jones oversees the cases.
Debtors have tapped Hunton Andrews Kurth LLP and Latham & Watkins
LLP as their legal counsel, Alvarez & Marsal North America LLC as
financial advisor, and Lazard Freres & Co. LLC as investment
banker. Kurtzman Carson Consultants LLC is the claims and noticing
agent and solicitation agent.
IANTHUS CAPITAL: Aims to Reduce $169M Debt Despite Investor Suits
-----------------------------------------------------------------
Law360 reports that the embattled cannabis company iAnthus Capital
Holdings Inc. unveiled a restructuring support deal on July 13,
2020, that would wipe out nearly $70 million in debt and resolve a
creditor lawsuit in Canadian court as the company looks to fend off
litigation over its financing practices.
iAnthus' outstanding $169 million debt would be reduced to $101
million under the plan, which includes $14 million in interim
financing from certain lenders. The company would also issue $20
million worth of stock to lenders and bondholders under the deal,
which will require approval by a Canadian court.
About iAnthus Capital
iAnthus Capital Holdings, Inc. (CSE: IAN, OTCQX: ITHUF) --
https://www.iAnthus.com/ -- owns and operates licensed cannabis
cultivation, processing and dispensary facilities throughout the
United States, providing investors diversified exposure to the U.S.
regulated cannabis industry. Founded by entrepreneurs with decades
of experience in operations, investment banking, corporate finance,
law and healthcare services, iAnthus provides a unique combination
of capital and hands-on operating and management expertise. iAnthus
currently has a presence in 11 states and operates 33 dispensaries
(AZ-4, MA-1, MD-3, FL-14, NY-3, CO-1, VT-1 and NM-6 where iAnthus
has minority ownership).
INGLES MARKETS: S&P Upgrades ICR to 'BB' on Debt Redemption
-----------------------------------------------------------
S&P Global Ratings raised its rating to 'BB' from 'BB-' on
U.S.-based grocer Ingles Markets Inc., which recently reported
continued improvement in operating performance, including
substantial free operating cash flow generation that the company
has earmarked for the redemption of a significant face value in
unsecured debt.
S&P expects improved credit protection measures to remain
sustainable following the debt redemption. Credit metrics should
continue to improve over the next 12 months, driven by positive
comparable-store sales, elevated adjusted EBITDA margins, and debt
redemption, according to the rating agency.
Ingles has continued to generate high-single-digit percent
comparable-store sales growth largely attributable to its effective
merchandising strategy and ongoing investments in its store base in
the latest quarter. This resulted in high-single-digit percent
revenue growth and a larger adjusted EBITDA base on a
trailing-12-month basis (June ended fiscal 2020). Moreover,
adjusted EBITDA margins improved about 140 basis points (bps) to
7.7% over the past year thanks to management's lower promotional
cadence and manageable food price inflation.
Robust free operating cash flow generation uses will primarily
include debt reduction and ongoing store-improvement initiatives,
as well as investments in digital efforts.
"We expect free operating cash flow of about $215 million in 2020
from $50 million in fiscal 2019 because of sales leverage and
margin growth. We also project free operating cash after capital
expenditures (capex) of about $60 million. The company will use
excess cash flow and balance sheet cash primarily to redeem $250
million in unsecured notes. We view this debt reduction positively
and expect lower interest expenses in future years," S&P said.
In addition, management will continue to use a significant portion
of internally generated operating cash flows to fund modest new
store development (approximately one to two new stores per year),
remodels, relocations, and other real estate investments, along
with general maintenance spending and other in-store initiatives.
"Although we believe continued investment in store upgrades is
critical to Ingles' leading market position in core regional
markets, we also believe the company's investments in digital
customer experiences remain limited, posing a medium- to long-term
risk, considering the increasing penetration of nontraditional
grocers," S&P said.
Asset ownership and store investments support the company's
regional competitiveness and provide financial flexibility.
Ingles owns a majority of its small-town shopping centers, which
S&P believes provides both operating and financial flexibility.
"In our view, the company has achieved sustained long-term
relatively consistent comparable sales growth by increasing average
basket size through effective merchandising and in-store
experience. In addition, Ingles continues to leverage use of The
Ingles Advantage Savings and Rewards Card to increase comparable
store sales by tailoring offers to customer shopping patterns," S&P
said.
"We also expect Ingles' 108 pharmacies and 104 fuel stations to
continue to help drive recurring store traffic. Although we
anticipate pharmacy profitability to continue to be somewhat
squeezed in the coming year because of lower reimbursements, the
segment, in our opinion, contributes to customer loyalty," the
rating agency said.
S&P also expects ongoing benefits from loyalty customer-card use,
which comprises 80% of grocery sales, and see benefits from the
fluid dairy plant that supplies about 80% of milk products the
company sells. Ingles sells 75% of its products to third parties,
which provides an additional source of revenue and traffic
drivers.
Ingles' lower-cost structure from its nonunionized work force is
tempered by store-level metrics that trail peers. The company's
core markets have experienced rising competition over the past year
or two, and formidable German hard-discounter Lidl (not rated) is
expanding in Ingles' core markets. Another risk is that S&P expects
petroleum costs to result in volatility in utility and distribution
expenses. In addition, retail gasoline costs and retail prices will
continue to be volatile, affecting the company's gasoline sales and
gross margin.
Ingles will remain geographically concentrated in a mature and
increasingly competitive industry with threats from both
traditional and nontraditional participants.
Ingles is a regional grocer with about 200 stores centered around
its Asheville, N.C., headquarters.
"The company's owned distribution center ultimately, in our
opinion, limits expansion options to areas with the distribution
footprint. Moreover, the southeast region has become increasingly
crowded in recent years with significantly larger competitors,
including Kroger Co., Wegmans Food Markets Inc., Walmart Inc., and
others, which poses a risk to Ingles' competitive position in its
core market over the long term," S&P said.
"We believe the grocery industry will become increasingly
aggressive in merchandising over the next few years after the
effects of the coronavirus pandemic wind down. We believe large
traditional grocers will progressively use scale to invest in price
to maintain store traffic over the long term," the rating agency
said.
In addition, S&P thinks nontraditional grocers will compete in
areas such as convenience and enhanced product selection, further
upsetting the competitive environment. These trends and risk could
weaken Ingles' competitive position over the next few years, and is
one reason why S&P maintains its negative comparable ratings
analysis modifier.
In addition, Ingles will likely see rising competition in its core
market after the pandemic.
"Ingles' store count, though relatively stable, is much smaller
than similarly rated peers and we do not think management has plans
to expand beyond its current footprint. We also believe Ingles'
store productivity trails larger competitors, partly due to lower
population density in its core markets. Although we expect
unit-level metrics to improve modestly as the company continues to
upgrade its stores, we believe its owned distribution center
significantly limits expansion options to areas within the
distribution footprint," S&P said.
"The stable outlook on Ingles reflects our expectation for
consistent operating performance over the next 12-24 months,
including normalized comparable sales in the low- to
mid-single-digit percent range and EBITDA margins of 7% or better.
We also expect better credit protection measures following the
redemption of debt, including funds from operation s(FFO) to debt
in the high-30% to low-40% range," the rating agency said.
S&P could raise the rating if it believed Ingles would sustain
substantial free operating cash flow generation and better credit
protection metrics, including FFO to debt greater than 45%, over
the long term. This scenario would likely occur in conjunction
with:
-- Significant increase in the company's competitive position that
occurs along with substantially profitable store expansion.
-- Increased investment in digital initiatives.
-- Sustained low- to mid-single-digit percent increase in sales
and EBITDA margins in the mid-8% area or better.
S&P could lower the ratings if operating performance deteriorates
because of increased competition both from traditional and
nontraditional grocers in Ingles' regional markets. This scenario
would likely include:
-- Sales falling at a low- to mid-single-digit percent rate;
-- EBITDA margins contracting 150 bps or more; and
-- FFO to debt below 30% and leverage approaching 3x on a
sustained basis.
S&P would also consider lowering the rating if activist investors
pressure the company to incur debt-financed dividends or share
buybacks.
INTELSAT SA: SES Americom Seeks $1.8-Bil. Damage Costs
------------------------------------------------------
Katherine Doherty of Bloomberg News reports that SES Americom Inc.
is seeking as much as $1.8 billion in damage claims from bankrupt
satellite company Intelsat SA for an alleged breach of contract
entered into related to the sale of the C-Band network.
According to filing, satellite operator SES claims that Intelsat
and its various entities are in violation of their contract and
fiduciary duties related to the so-called consortium agreement,
according to filing. The company looks to collect compensatory and
punitive damages. It also asserts unliquidated claim for pre-and
post-petition interest, as well as attorney fees, costs and other
expenses incurred in connection to litigating the claim.
About Intelsat SA
Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held
operator of satellite services businesses, which provides a
diverse
array of communications services to a wide variety of clients,
including media companies, telecommunication operators, internet
service providers, and data networking service providers. The
Company is also a provider of commercial satellite communication
services to the U.S. government and other select military
organizations and their contractors. The Company's administrative
headquarters are in McLean, Virginia, and the Company has
extensive
operations spanning across the United States, Europe, South
America, Africa, the Middle East, and Asia.
Intelsat S.A., based in L-1246 Luxembourg, and its
debtor-affiliates sought Chapter 11 protection (Bankr. E.D. Va.
Lead Case No. 20-32299) on May 14, 2020. The petition was signed
by David Tolley, executive vice president, chief financial
officer,
and co-chief restructuring officer. In its petition, the Debtor
disclosed $11,651,558,000 in assets and $16,805,844,000 in
liabilities.
The Debtors tapped KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as
counsel; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring
advisor; PJT PARTNERS LP as investment banker; STRETTO as claims
and noticing agent.
ISTAR INC: S&P Rates $400MM Senior Unsecured Notes 'BB'
-------------------------------------------------------
S&P Global Ratings said it assigned its 'BB' issue rating to iStar
Inc.'s new $400 million senior unsecured notes. The company intends
to use the proceeds to repay its $400 million senior notes maturing
in 2022. While the issuance has no impact on S&P's ratings on
iStar, it views positively iStar's proactive debt management, as it
will have no debt maturities until its convertible notes due
September 2022.
The outlook remains negative and over the next 12 months, S&P could
lower its ratings on iStar if it expects:
-- Leverage to be above 2.75x on a sustained basis, or
-- Asset quality, profitability, or liquidity to deteriorate
materially.
Over the same time horizon, S&P could revise the outlook to stable
if the macro environment improves, iStar's asset quality is
relatively stable, and the company maintains leverage below 2.75x.
J.C. PENNEY: Judge Balks at Lack of Progress in Sale
----------------------------------------------------
Maria Halkias of Dallas News reports that U.S. Bankruptcy Court
Judge David Jones issued an order calling in all the lawyers for
the company, lenders, creditors and the ad hoc equity committee to
his courtroom Aug. 19 .
Judge Jones doesn't mince words in his public hearings and
apparently will deliver a strong message because the hearing is
sealed to the public. He's even said he opposes sealed hearings
and documents and has ruled that way consistently.
"At the initial hearings in this case, the court expressed its
concern about the proposed timeline in this case. That concern has
escalated due to the lack of progress in the sale process," Jones
said in his order.
"Thousands of jobs and the very essence of the country's
infrastructure are at risk. The parties have reached the end of the
court's patience," he said.
"Negotiating postures and egos will be put aside," he said.
Specifically, he called the lead lawyers for the debtors, the
unsecured creditors’ committee, the secured lenders' group and
the ad hoc equity committee to appear.
"The parties should be prepared to have a frank discussion about
the status of the case and whether relief should be granted from
orders previously entered by the court," he said.
Sale negotiations have been going on for weeks, and several
hearings set to deal with it have been delayed with assurances from
lawyers that negotiations are progressing.
"What is the judge's motivation here? Does the judge just want to
keep the fire under the parties? There's a danger to forcing the
issue and pushing parties to no middle ground," said David Tawil,
president of hedge fund Maglan Capital.
Unlike Toys R Us, which turned into a liquidation, Penney's lenders
aren't pushing for that to happen, he said. "The judge is being a
little overzealous."
Tawil said while he isn't a debt or equity investor in Penney, he
is interested in Penney's fate from the perspective of the rest of
retail.
Tawil and others who are interested in retail and real estate are
following the case because they're looking at how it will affect
other retailers and major vendors. Also, they're looking at
whether Sephora will end up as a free agent. Penney now houses 650
Sephora shops inside its stores in markets that sometimes are too
small for Sephora to open a freestanding store. The contract is in
effect until 2024.
While Penney had $1.25 billion in cash on hand when it last
reported in July, this is an expensive case. Administrative costs
are running up. Ten lawyers for the unsecured creditors' committee
on Tuesday filed a "notice of increase of the hourly rates of
professionals." Rates that ranged from $265 to $990 an hour are
rising to $290 to $1,050 an hour.
About JC Penney
J.C. Penney Corporation, Inc., is an American retail company,
founded in 1902 by James Cash Penney and today engaged in marketing
apparel, home furnishings, jewelry, cosmetics, and cookware. The
company was called J.C. Penney Stores Company from 1913 to 1924,
when it was reincorporated as J.C. Penney Co.
On May 15, 2020, JCPenney announced that it has entered into a
restructuring support agreement with lenders holding 70% of
JCPenney's first lien debt. The RSA contemplates agreed-upon terms
for a pre-arranged financial restructuring plan that is expected to
reduce several billion dollars of indebtedness. To implement the
Plan, the Company and its affiliates on May 15, 2020, filed
voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182).
Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving
as financial advisor, and AlixPartners LLP is serving as
restructuring advisor to the Company. Prime Clerk is the claims
agent, maintaining the page http://cases.primeclerk.com/JCPenney
JAMES M THOMPSON: Florida Regulator Suspends Beverage License
-------------------------------------------------------------
An emergency suspension of the alcoholic beverage license of James
M. Thompson Two LLC d/b/a Rusty's Raw Bar and Grill was issued by
Department of Business and Professional Regulation of the State of
Florida on the evening of August 10, 2020, the same day the Debtors
filed a motion to extend their exclusivity periods.
On March 20, 2020, to protect the public health, safety, and
welfare from the dangers associated with COVID-19, Florida Governor
Ron DeSantis suspended all sales of alcoholic beverages for
consumption on the premises by all vendors licensed to sell
alcoholic beverages for consumption on the premises.
On June 3, 2020, under Executive Order 20-139, Phase 2 issued by
Governor DeSantis, restaurants, bars and other vendors licensed to
sell alcoholic beverages for consumption on the premises, were
permitted to operate at 50% of their indoor capacity, excluding
employees. But when positive cases increased significantly during
the rest of the month, and some of it involved younger individuals,
establishments with the said license were being suspected.
On July 1, 2020, the Department issued Amended Emergency Order
2020-09 clarifying the vendors licensed but not licensed to offer
food service must suspend sales of alcoholic beverages for
consumption on the premises.
On August 8, 2020, JMT2, which operates as a special food service
establishment, was found operating in violation the State's mandate
that restaurants limit capacity to 50% of its normal capacity, when
more than 200 patrons were observed inside the premises with a long
line outside and social distancing measures were not being
enforced.
According to the Debtors, the emergency suspension "obviously
created significant disruption" to their operations.
JMT2 is in the process of appealing the DBPR Order.
The Debtors have sought an extension of their exclusivity periods.
The Debtors said they could have filed a Joint Plan of
Reorganization and Joint Disclosure Statement on the August 12th
deadline, however, the Debtors, specifically JMT2, now need
additional time to make adjustments to their financial affairs.
The Debtors said they have security camera footage and other
resources that will demonstrate that JMT2 was in compliance with
the 50% capacity ordinance, but they are unable to complete the
necessary financial disclosures at this time.
The Debtors expect a formal proceeding will be promptly instituted
and acted upon in compliance with sections 120.569, 120.57, and
120.60(6) Florida Statutes.
About James M. Thompson Enterprises
James M. Thompson Enterprises, Inc., is the parent company of
several entities. James M. Thompson, Jr. controls the majority
ownership in all of the companies by way of his ownership of JMTE.
On Oct. 1, 2019, JMTE and five affiliates filed Chapter 11
bankruptcy petitions (Bankr. M.D. Fla. Lead Case No. 19-09351) in
Fort Myers, Florida. JMTE estimated assets of not more than
$50,000 and liabilities of between $500,000 and $1 million.
The affiliates are James M. Thompson One, LLC (Case No.19-09353);
James M. Thompson Two, LLC (Case No. 19-093540; James M. Thompson
Three, LLC (Case No. 19-09355); James M. Thompson Four, LLC (Case
No.19-093570; and James M. Thompson Cape Coral, LLC (Case No.
19-09358).
Dal Lago Law is the Debtor's legal counsel.
JC PENNEY: Cuts Workforce, Amends Deadline of Business Plan
-----------------------------------------------------------
Law360 reports that bankrupt retailer J.C. Penney announced a
1,000-employee reduction in its workforce on July 15, 2020, the
latest development in a nearly 850-store restructuring strategy
launched with the company's retreat into Chapter 11 on May 15 in
Texas bankruptcy court.
The announcement followed the company's report on June 4 that it
would close more than 150 stores and surfaced just a day after a
disclosure that the retailer and its lenders agreed to extend by
about two weeks plan approval deadlines established in its Chapter
11 loan agreements. Workforce cuts will focus on corporate, field
management and international positions, the company said.
About JC Penney
J.C. Penney Corporation, Inc., is an American retail company,
founded in 1902 by James Cash Penney and today engaged in marketing
apparel, home furnishings, jewelry, cosmetics, and cookware. The
company was called J.C. Penney Stores Company from 1913 to 1924,
when it was reincorporated as J.C. Penney Co.
On May 15, 2020, JCPenney announced that it has entered into a
restructuring support agreement with lenders holding 70% of
JCPenney's first lien debt. The RSA contemplates agreed-upon terms
for a pre-arranged financial restructuring plan that is expected to
reduce several billion dollars of indebtedness. To implement the
Plan, the Company and its affiliates on May 15, 2020, filed
voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182).
Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving
as financial advisor, and AlixPartners LLP is serving as
restructuring advisor to the Company. Prime Clerk is the claims
agent, maintaining the page http://cases.primeclerk.com/JCPenney
JUST ONE MORE: Family Feud Settled at Court
-------------------------------------------
Daniel Gill, writing for Bloomberg Law, reports that the dispute
over the Palm steakhouse's controlling stake was settled at court.
A group of minority shareholders of the Palm steakhouse operator
will gain a controlling stake after a bankruptcy court approved
their settlement with current majority shareholders, an agreement
that ends a years-long dispute among the Palm founders'
descendants.
Their settlement, approved by Judge Caryl E. Delano, was filed June
17 jointly in four bankruptcy proceedings—the Chapter 11 cases of
Just One More Restaurant Corp. (JOMR) and affiliate Just One More
Holding Corp. (JOMH), and the individual Chapter 7 cases of the
companies’ two majority shareholders and Palm creators’
grandsons, Bruce E. Bozzi, Sr. and Walter J. Ganzi, Jr.
About Just One More Restaurant
Just One More Restaurant Corp. holds the Palm Restaurant
steakhouse's intellectual property -- a series of trademarks and
service marks, design elements of the Palm. JOMR licenses the Palm
IP to the Palm Restaurants through individual licensing agreements.
There are 24 Palm Restaurants currently operating in the United
States and Mexico. They do not own any of the Palm Restaurants.
Just One More Restaurant Corp. and Just One More Holding Corp.
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
M.D. Fla. Lead Case No. 19-01947) on March 7, 2019. At the time of
the filing, Just One More Restaurant estimated assets of between
$100 million and $500 million and liabilities of between $10
million to $50 million. Just One More Holding estimated assets and
liabilities of between $1 million and $10 million.
The Debtors tapped Berger Singerman LLP as their legal counsel, and
McHale, P.A., as their restructuring advisor.
LATAM AIRLINES: Clashes with Creditors, Pushes for $9.8M DIP Fee
----------------------------------------------------------------
Law360 reports that LATAM Airlines Group clashed with creditors on
July 15, 2020, as it told a New York bankruptcy judge that a
"modest" $9.75 million breakup fee is needed to secure a $1.3
billion debtor-in-possession financing package. At a hearing via
telephone, LATAM told U.S. Bankruptcy Judge James Garrity Jr. that
the fee is a small but necessary price to pay for a needed
financial package, while unsecured creditors and bondholders argued
that the fee brings no benefits to the company and could chill
attempts to seek alternative financing.
About LATAM Airlines
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise.
LATAM Airlines Group S.A. is the largest passenger airline in South
America. Before the onset of the COVID-19 pandemic, LATAM offered
passenger transport services to 145 different destinations in 26
countries, including domestic flights in Argentina, Brazil, Chile,
Colombia, Ecuador and Peru, and international services within Latin
America as well as to Europe, the United States, the Caribbean,
Oceania, Asia and Africa.
LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25,
2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United
States are part of the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general
bankruptcy counsel; FTI Consulting as restructuring advisor; and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. Prime Clerk LLC is the claims agent.
LLADRO GALLERIES: U.S. Arm of Figurine Maker Files in New York
--------------------------------------------------------------
Max Reyes of Bloomberg Law reports that the U.S. retail arm of
Spanish porcelain figurine maker Lladro SA filed for bankruptcy.
Lladro Galleries' Chapter 11 filing in New York was estimated to
have assets of no more than $100,000 and liabilities of more than
$1 million.
No other entities are linked to the retail arm's bankruptcy,
according to an email from the company's general bankruptcy
counsel, Nelson Mullins Riley & Scarborough. The retailer has four
locations. A Chapter 11 filing typically allows a company to stay
in business while it works out a plan to pay its bills.
About Lladro Galleries
Lladro Galleries, Inc., is a dealer of art galleries and supplies.
Lladro Galleries sought Chapter 11 protection (Bankr. S.D.N.Y. Case
No. 20-11618) on July 14, 2020. The Debtor was estimated to have
assets of $50,000 to $100,000 and liabilities of $1 million to $10
million. The Hon. Shelley C. Chapman is the case judge. NELSON
MULLINS RILEY & SCARBOROUGH LLP, led by Alan F. Kaufman, is the
Debtor's counsel.
LORENZ CORPORATION: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: The Lorenz Corporation
FDBA Show What You Know, LLC
FDBA BRAINEPOWER, LLC
FDBA Show What You Know Online, LLC
DBA Heritage Music
DBA Heritage Music Press
DBA Heritage Music Publishing
DBA Holmes Sheet Music
DBA Lorenz
DBA Lorenz Corp.
DBA Lorenz Corporation
DBA Lorenz Educational Press
DBA Lorenz Group
DBA Lorenz Press
DBA Lorenz Publishing
DBA Lorenz Publishing Co.
DBA Lorenz Publishing Company
DBA Medallion
DBA Medallion Music
DBA Milliken Publishing Co.
DBA Monarch Music
DBA Roger Dean Publishing Company
DBA Sacred Music Press
DBA Show What You Know Publishing
DBA SoundForth
DBA Teaching & Learning Co.
DBA The Lorenz Corp.
DBA Word Music & Church Resources
DBA Word Choral Club
DBA WMCR LLC
DBA Celebration Hymnal, LLC
DBA Gathering Songs Music Publishing LLC
DBA Family Gathering Songs LLC
DBA Gathering Songs LLC
DBA Gathering Together Songs LLC
DBA WMCR Direct LLC
501 East Third Street
Dayton, OH 45402
Business Description: The Lorenz Corporation --
https://www.lorenz.com -- previously known
as Lorenz Publishing Company, is a music
publisher located in Dayton, Ohio. It is
best known for its publication of church
music for smaller congregations served by
amateur musicians. Founded by the Lorenz
family in 1890, the Company publishes
choral, keyboard, handbell, and instrumental
music in support of many worship traditions
and choral music and general music teaching
resources.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Southern District of Ohio
Case No.: 20-31952
Debtor's Counsel: Tami Hart Kirby, Esq.
PORTER WRIGHT MORRIS & ARTHUR LLP
One South Main Street, Suite 1600
Dayton, OH 45402-2028
Tel: 937-449-6810
Total Assets: $1,397,950
Total Liabilities: $7,078,205
The petition was signed by Reiff Lorenz, chief executive officer.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2KWGHGY/The_Lorenz_Corporation__ohsbke-20-31952__0001.0.pdf?mcid=tGE4TAMA
LOWERY'S SEAFOOD: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Lowery's Seafood Restaurant, Inc.
528 Church Lane
Tappahannock, VA 22560
Business Description: Lowery's Seafood Restaurant, Inc. owns and
operates a seafood restaurant.
Chapter 11 Petition Date: August 20, 2020
Court: United States Bankruptcy Court
Eastern District of Virginia
Case No.: 20-33529
Debtor's Counsel: Mark J. Dahlberg, Esq.
WOEHRLE DAHLBERG YAO, PLLC
2016 Lafayette Blvd., Ste 101
Fredericksburg, VA 22401
Tel: (540) 898-8881
E-mail: mark.dahlberg1@gmail.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by William Lowery, IV, authorized
representative.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/23Z34RA/Lowerys_Seafood_Restaurant_Inc__vaebke-20-33529__0001.0.pdf?mcid=tGE4TAMA
MAGNUM MRO: Palmer Buying 2016 Ford F150 for $16K
-------------------------------------------------
Magnum MRO Systems, Inc., asks the U.S. Bankruptcy Court for the
Northern District of Texas to authorize the sale of its 2016 Ford
F150 truck, VIN 1FTEW1CG9GKF97442, to Joyce Palmer for $16,000,
free and clear of all interest.
As of the Petition Date, the Debtor is in possession of the
Vehicle. It has downscaled its operations significantly over the
course of the Chapter 11 case and no longer needs the Vehicle for
its current business model. As such, the Vehicle is now simply a
burden to the estate. The best course of action is to sell the
Vehicle and recover the greatest possible value for the Debtor and
its creditors.
The Vehicle is subject to a secured claim by Ford Motor Credit Co.,
LLC ("FMC") and a secured claim by the U.S. Small Business
Administration that is junior to FMC's lien. The current amount
owed to FMC on the Vehicle is $14,612.
The Debtor has entered into a written agreement with a prospective
buyer to sell the Vehicle for $16,000.
In the Debtor's business judgment, the direct, negotiated sale of
the Vehicle represents a fair and reasonable method by which to
obtain the best possible price for the sale. The sale will
unburden the Debtor by fully satisfying FMC's claim on the Vehicle
and bring in additional funds to the Debtor's estate.
Finally, the Debtor asks that the Court waives the 14-day pursuant
to Bankruptcy Rule 6004(h) with respect to the sale of the
property.
Objections, if any, must be filed within 21 days from the date of
service.
A copy of the Agreement is available at
https://tinyurl.com/y4ogerrw from PacerMonitor.com free of charge.
The Purchaser:
Joyce Palmer
P.O. Box 122
Sulphur Springs, TX 75483
About Magnum MRO Systems
Magnum MRO Systems Inc. was formed in Texas on Jan. 12, 2012 and
specializes in industrial supplies and hydraulics.
Magnum MRO Systems filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-40033) on Jan. 3, 2020. At the time of filing, the Debtor
estimated $1,000,001 to $10 million in both assets and
liabilities.
Mark A. Castillo, Esq., at Curtis Castillo PC, serves as the
Debtor's counsel.
MEDIMPACT HOLDINGS: S&P Affirms 'B+' ICR; Outlook Stable
--------------------------------------------------------
S&P Global Ratings affirmed the 'B+' issuer credit rating on
MedImpact Holdings Inc. The outlook remains stable.
"Our 'B+' issuer credit rating reflects the company's modest scale
in the pharmacy benefit managers market, weaker-than-peer corporate
governance, and some recent client attritions. These are partially
offset by our expectation that leverage will remain below 3.0x
while it sustains an FFO-to-debt ratio of between 20% and 30% over
the next 12 months," S&P said.
S&P is withdrawing all ratings at the issuer's request.
MTE HOLDINGS: Court Rejects Peter Shah's Administrative Claim
-------------------------------------------------------------
Bankruptcy Judge Christopher S. Sontchi denies Peter I. Shah's
Motion for Payment of Administrative Claim and Motion to Allow ECF
Filings.
On Oct. 22, 2019, MTE Holdings LLC filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code. On October 23,
2019, Olam Energy Resources I LLC and MTE Partners LLC filed
voluntary petitions for relief under chapter 11. The remaining
debtors, including MDC Energy LLC, filed their chapter 11 petitions
on Nov. 8, 2019.
Mr. Shah is the owner of real property, lots 31, 32, 33, and 34,
Section 8, Block C-18 in Reeves County, Texas.
Pursuant to certain lease agreements, MDC leases the mineral
rights, such as those for oil and gas interests, beneath the
surface of the Shah Property. In accordance with its rights as
lessee, MDC advised Mr. Shah in July 2019 that it would require
access to the Shah Property to, among other things, build a tank
battery and a network of pipelines in support of its oil and gas
drilling activities.
In response to MDC's notice, Mr. Shah asserted that MDC has no
right of access to his property and sought exorbitant payments to
consent to MDC's exercise of its rights. To resolve the dispute,
MDC offered Mr. Shah $30,000. Mr. Shah rejected the offer.
On Feb. 11, 2020, Mr. Shah sent a letter to the Court, accusing MDC
of attempting to strong-arm him and demanding an emergency
injunction to prevent MDC from entering onto and operating on his
property. Mr. Shah attached to the Letter correspondence detailing
settlement negotiations with MDC and his damages claim.
On Feb. 18, 2020, the Court held a telephonic hearing on Mr. Shah's
request for an immediate injunction to prevent MDC from entering
his property. The Court explained that sending the Letter to
chambers was not the proper procedure for requesting a temporary or
preliminary injunction and also explained that Mr. Shah could
choose to file an administrative expense claim for damages
resulting from the installation of the Tank Battery.
On Feb. 25, 2020, Mr. Shah filed his Motion for Allowance and
Immediate Payment of Administrative Claim Pursuant to 11 U.S. Code
section 503 seeking an administrative claim of $50,000 for the
construction of the Tank Battery.
On May 26, 2020, Mr. Shah submitted (1) the Motion seeking an
administrative claim of $436,350 for the 145.45 RODs of pipeline
constructed on the Shah Property, and (2) the ECF Filings Motion.
On June 8, 2020, the Court entered a final order, denying Mr.
Shah's Original Motion because Mr. Shah failed to establish that he
suffered any cognizable harm under either Texas law or the
Bankruptcy Code.
Prior to performing construction upon the Shah Property, MDC
provided Mr. Shah with a draft Surface Use Agreement dated Nov. 10,
2019. The Surface Use Agreement itemized MDC's planned construction
and specifically included the installation of both the Tank Battery
and the pipe network. Mr. Shah attached the Surface Use Agreement
as Exhibit B to this Motion and as Exhibit A to his Original
Motion.
In his Original Motion, Mr. Shah sought an administrative claim for
post-petition construction of the Tank Battery. That motion was
denied in the June 8 Order. Now, Mr. Shah seeks an administrative
claim for post-petition construction of the pipe network. Mr. Shah
also claims, for the first time, that MDC does not have a valid
mineral lease to the Shah Property. Additionally, Mr. Shah seeks to
make use of the Court's Electronic Filing System, pursuant to his
ECF Filings Motion.
Claim preclusion is a legal doctrine which provides that "[a] final
judgment on the merits of an action precludes the parties or their
privies from relitigating issues that were or could have been
raised in that [prior] action." The purpose of claim preclusion is
to "relieve parties of the cost and vexation of multiple lawsuits,
conserve judicial resources, and, by preventing inconsistent
decisions, encourage reliance on adjudication."
The Court states that claim preclusion applies where there is "(1)
a final judgment on the merits in a prior suit[, (2) involving] the
same parties or their privies, and (3) a subsequent suit based on
the same cause of action." "A determination of whether two cases
have 'the same cause of action' for purposes of claim preclusion
'[t]urns on the essential similarity of the underlying events
giving rise to the various legal claims' in both actions."
With respect to Mr. Shah's claim, the Court noted that it already
entered a final judgment on the merits when it issued the June 8
Order denying Mr. Shah's Original Motion. Second, the same parties
involved in Mr. Shah's Original Motion are involved in this Motion,
and are involved in the same orientation. Third, both the Original
Motion and this Motion seek administrative claims for post-petition
construction on the Shah Property. Importantly, the Original Motion
dealt with the construction of a Tank Battery. But, as MDC argues,
the pipe network is necessary in order to make use of the Tank
Battery. Indeed, the Schlumberger Oilfield Glossary, upon which the
Fifth Circuit has relied, defines a "tank battery" as "[a] group of
tanks that are connected to receive crude oil production from a
well or a producing lease," inside of which, "the oil volume is
measured and tested before pumping the oil into a pipeline system."
Because the pipe network was a necessary, obvious, and foreseeable
consequence of the Tank Battery's construction -- and one about
which Mr. Shah had notice, pursuant to the Surface Use Agreement --
its construction clearly turns on essentially similar events to
those which gave rise to Mr. Shah's Original Motion. As such, the
elements of claim preclusion are clearly met. Thus, the Court
denies Mr. Shah's Motion.
Mr. Shah also moves for the opportunity to file documents on the
Court's ECF System. In support of his ECF Filings Motion, Mr. Shah
relies on an April 1, 2020 statement made by the United States
District Court for the District of New Jersey regarding its ECF
procedure for pro se litigants in light of COVID-19. According to
Judge Sontchi, the Court is not that court and that statement does
not provide for ECF accounts for pro se filers. Rather, it
established an email address to which filings may be sent. Here,
the Court's Administrative Procedures for Electronically Filed
Cases clearly state that non-attorneys "shall be entitled to an ECF
system password to permit the filing of a limited scope of
documents such as Reaffirmation Agreements and Requests for Service
Notices." Mr. Shah is a pro se litigant and a non-attorney. As
such, he is not entitled to file the documents he wishes to file
via the ECF System.
A copy of the Court's Order dated July 30, 2020 is available at
https://bit.ly/30ZHZsq from Leagle.com.
About MTE Holdings LLC
MTE Holdings LLC is a privately held company in the oil and gas
extraction business. MTE sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 19-12269) on Oct. 22,
2019. In the petition signed by its authorized representative,
Mark
A. Siffin, the Debtor disclosed assets of less than $50 billion
and
debts of $500 million.
Judge Karen B. Owens has been assigned to the case.
The Debtor tapped Kasowitz Benson Torres LLP as its bankruptcy
counsel; Morris, Nichols, Arsht & Tunnell, LLP as its local
counsel; Greenhill & Co., LLC, as financial advisor and investment
banker; Ankura Consulting LLC, as chief restructuring officer; and
Stretto as its claims and noticing agent.
MUJI USA: Gets Court Approval to Tap Into Chapter 11 Financing
--------------------------------------------------------------
Law360 reports that a Delaware judge on July 14, 2020, gave the
American unit of Japanese home goods retailer Muji the go-ahead to
tap into a $22 million postpetition loan in its Chapter 11 as the
company moves forward with plans to restructure nearly $73 million
in debt. During a virtual hearing, U.S. Bankruptcy Judge Mary F.
Walrath gave her nod for Muji USA Ltd. to access $2. 6 million of
debtor-in-possession funds on an interim basis with the approval of
the full DIP to be considered at a future hearing.
About Muji U.S.A. Limited
Muji U.S.A. Limited is a retailer of a wide variety of products,
including household goods, apparel and food. It was originally
founded in Japan in 1980. Visit https://www.muji.com/ for more
information.
Muji U.S.A. sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case No. 20-11805) on July 10, 2020. At the
time of the filing, Debtor disclosed assets of between $50 million
and $100 million and liabilities of the same range. Judge Mary F.
Walrath oversees the case.
The Debtor tapped Greenberg Traurig LLP as its legal counsel,
Mackinac Partners LLC as financial advisor, B. Riley Real Estate
LLC as real property lease consultant, and Donlin, Recano & Company
Inc. as claims and noticing agent.
NCR CORP: S&P Rates $1.1BB Senior Unsecured Notes 'BB-'
-------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level and '4' recovery
ratings to NCR Corp.'s proposed $1.1 billion of senior unsecured
notes. S&P expected the company will use the net proceeds, along
with $200 million of cash, to refinance $1.3 billion of existing
senior unsecured debt due in 2022 and 2023. S&P expected the
company will have debt maturities of $8 million in 2020
(amortization on the secured term loan) and $308 million in 2021
(amortization plus trade receivables securitization facility
maturity) upon close of the proposed transaction. S&P expected the
transaction will be leverage neutral and will not affect its 'BB-'
issuer credit rating on NCR.
The stable outlook reflects S&P's expectation that NCR will manage
a period of weak operational performance during the COVID-19
pandemic while maintaining stable margins and adequate liquidity.
S&P expects leverage to remain above 5x over the next 12 months.
"We could lower the rating if leverage exceeds 6.5x or free
operating cash flow to debt stays in the low-single-digit percent
area. Weakness in credit metrics could occur if NCR's end markets
remain weak due to continued macroeconomic weakness, or if NCR's
customer base or competitive position considerably weaken," S&P
said.
"We could raise the rating if NCR sustains leverage below 5x.
Business factors such as a moderating level of cost restructuring,
sustained revenue growth and margin improvements, and a greater
percentage of revenues coming from recurring businesses could lead
to an upgrade," the rating agency said.
Issue Ratings--Recovery Analysis
Key analytical factors
S&P's simulated default scenario assumes a default in 2024 due to
disruption in new payment technologies, affecting the company's ATM
business and increasing competition at the point-of-sale from
payment processors and other merchant vendors.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $510 million
-- EBITDA multiple: 6x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $2.83
billion
-- Valuation split (obligors/nonobligors) 50%/50%
-- Collateral value available to secured creditors: $2.2 billion
-- First-lien debt: $1.7 billion
-- Recovery expectations: 80%-100% (rounded estimate: 95%)
-- Recovery expectations for unsecured debt: 30%-50% (rounded
estimate: 30%)
NEIMAN MARCUS: A&G Marketing 4 Luxury Leases
--------------------------------------------
A&G Real Estate Partners, working on behalf of Neiman Marcus Group
in the retailer's bankruptcy proceedings, is marketing four luxury
department store leases in California, Washington, Florida and
Washington, D.C.
Offering long-term, multiple-option leases, the buildings are
situated in prime, high-visibility retail districts or shopping
centers, said Emilio Amendola, Co-President of Melville-based A&G,
which provides real estate advisory services to many of the
nation's most prominent retailers and corporations in both healthy
and distressed situations.
"Real estate is a long-term play. These leases represent an
incredible opportunity for retailers and investors to gain a
foothold in markets that, under normal conditions, are renowned for
their traffic and sales—as well as for their high barriers to
entry," Amendola said. "Additionally, some of these locations are
particularly promising for conversion to hotel, office or
residential use."
The leases are for the following Neiman Marcus stores:
1275 Broadway Plaza, Walnut Creek, California
Building: 87,608 square feet
Term: Expires March 31, 2032 (options available through March 31,
2112).
Mazza Gallerie, 5300 Wisconsin Ave. NW., Washington D.C.
Building: 126,296 square feet
Term: Expires November 30, 2027 (options available through May 31,
2051)
151 Worth Ave., Palm Beach, Florida
Building: 48,661 square feet
Term: Expires May 31, 2026 (options available through May 31,
2051)
Shops at Bravern, 11111 NE 8th St., Bellevue, Washington
Building: 124,637 total square feet
Term: Expires January 1, 2040 (options available through January
31, 2090)
Dallas-based Neiman Marcus Group this past May announced that it
had commenced voluntary Chapter 11 proceedings in the U.S.
Bankruptcy Court for the Southern District of Texas, Houston
Division. As part of the process, Neiman Marcus Group has secured
debtor-in-possession financing of $675 million from creditors to
enable business continuity throughout the proceedings. The luxury,
multi-branded, omni-channel fashion retailer operates under the
Neiman Marcus, Bergdorf Goodman, Neiman Marcus Last Call, and
Horchow brand names.
About A&G Real Estate
A&G is a team of seasoned commercial real estate professionals and
subject matter experts that delivers strategies designed to yield
the highest possible value for clients' real estate. Key areas of
expertise include real estate due diligence, valuations,
dispositions, lease restructurings, acquisitions, structured
investment sales, and facilitation of growth opportunities.
Utilizing its marketing knowledge, reputation and advanced
technology, A&G has advised the nation's most prominent retailers
and corporations in both healthy and distressed situations. Founded
in 2012, A&G is headquartered in Melville, N.Y., with offices
throughout the country. For more information, please visit:
http://www.agrep.com/
About Neiman Marcus Group
Neiman Marcus Group LTD, LLC -- https://www.neimanmarcus.com/ --
is
a luxury omni-channel retailer conducting store and online
operations principally under the Neiman Marcus, Bergdorf Goodman,
and Last Call brand names. It also operates the Horchow
e-commerce
website offering luxury home furnishings and accessories. Since
opening in 1907 with just one store in Dallas, Neiman Marcus and
its affiliates have strategically grown to 67 stores across the
United States.
Weeks after being forced to temporarily shutter stores due to the
coronavirus pandemic, Neiman Marcus Group and 23 affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-32519) on
May 7, 2020, after reaching an agreement with a significant
majority of our creditors to undergo a financial restructuring
that
will substantially reduce the Company's debt load, and provide
access to considerable financing to ensure business continuity.
Judge David R. Jones oversees the cases.
Kirkland & Ellis LLP is serving as legal counsel to the Company,
Lazard Ltd. is serving as the Company's investment banker, and
Berkeley Research Group is serving as the Company's financial
advisor. Stretto is the claims agent, maintaining the page
https://cases.stretto.com/NMG
The Extended Term Loan Lenders are represented by Wachtell,
Lipton,
Rosen & Katz as legal counsel, and Ducera Partners LLC as
investment banker.
The Noteholders are represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP as legal counsel and Houlihan Lokey as investment
banker.
NEIMAN MARCUS: Asks Court to Increase CEO Pay and 246 Others
------------------------------------------------------------
Maria Halkias, writing for the Dallas News, reports that retailer
Neiman Marcus is asking the bankruptcy court to give raises to
chief executive officer Geoffroy van Raemdonck, seven additional
executives who make up the C-suite and as many as 239 key
employees.
Increased workloads and recent departures were given as the reasons
for the higher pay for key staff, while the company still targets a
November exit from bankruptcy.
The proposed retention and performance-based compensation plan
covers staff who are "critical to day-to-day operations," the
company's financial performance and the success of its
restructuring in bankruptcy, according to a court filing.
Maximum compensation for van Raemdonck and seven others would reach
$9.95 million if the company's reorganization plan is confirmed by
Sept. 15 and drops to $2.49 million if the plan is confirmed on
Nov. 15. Most of that additional compensation would go to van
Raemdonck, who would receive a minimum award of $1.5 million and a
maximum of $6 million.
Neiman Marcus filed for bankruptcy protection in May after the
coronavirus closed its stores and as it was already preparing for a
court-led reorganization of its $5 billion of debt that credit
markets considered unsustainable.
In February, van Raemdonck received a $4 million bonus and
restricted stock award of $750,000. He received another bonus of
$500,000 on April 17 that was returned on April 24 as the company
announced pay cuts.
Along with eight named executives, the plan covers 17 senior vice
presidents, 82 vice presidents, 40 directors and up to 100
additional key employees identified by the CEO as eligible. That
additional group of 100 employees can earn awards of up to $30,000
each. The maximum total additional compensation to the 239 eligible
employees outside the C-suite is $8.7 million.
Neiman Marcus CEO Geoffroy van Raemdonck spoke during a VIP party
for the art exhibit "Dior: From Paris to the World" at the Dallas
Museum of Art in Dallas a year ago. (Vernon Bryant / Staff
Photographer)
The group has seen "a substantial increase in their workloads
without any concomitant increase in their compensation," the
company said in the filing.
U.S. Bankruptcy Court David Jones will consider the new
compensation proposed in a June filing at a hearing on Friday.
The filing notes that van Raemdonck waived his April salary and has
taken a 25% cut since May. The rest of the top executives also had
their salaries cut 25% starting in April.
The other named executives are Svetlana Todorovich, president and
chief merchant officer; Chris Sim, executive vice president and
chief operating officer; David Goubert, president and chief retail
officer; Eric Severson, executive vice president and chief people
officer; Tracy Preston, executive vice president and chief legal
officer; Brandy Richardson, executive vice president and chief
financial officer; and Darcy Penick, president of Bergdorf
Goodman.
Since April, three senior vice presidents and three vice presidents
have left the company, according to the filing.
The company said it faces "severe business pressures due to recent
challenges in the retail market and in particular the unprecedented
and unforeseen disruptions to the debtors’ business caused by
COVID-19."
"In light of these pressures and the additional challenges of the
Chapter 11 filing, it is critical that the debtors implement the
KEIP [plan] immediately to ensure that key employees remain with
the debtors," the filing said.
The jobs require more intense negotiations with customers, vendors
and employees to convey a "business as usual" message needed for
its balance-sheet restructuring, the company said. The COVID-19
pandemic has "further exacerbated" their jobs and made it more
difficult to operate a company in bankruptcy.
About Neiman Marcus
Neiman Marcus Group LTD, LLC -- https://www.neimanmarcus.com/ -- is
a luxury omni-channel retailer conducting store and online
operations principally under the Neiman Marcus, Bergdorf Goodman,
and Last Call brand names. It also operates the Horchow e-commerce
website offering luxury home furnishings and accessories. Since
opening in 1907 with just one store in Dallas, Neiman Marcus and
its affiliates have strategically grown to 67 stores across the
United States.
Weeks after being forced to temporarily shutter stores due to the
coronavirus pandemic, Neiman Marcus Group and 23 affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-32519) on
May 7, 2020, after reaching an agreement with a significant
majority of our creditors to undergo a financial restructuring
that
will substantially reduce the Company's debt load, and provide
access to considerable financing to ensure business continuity.
Kirkland & Ellis LLP is serving as legal counsel to the Company,
Lazard Ltd. is serving as the Company's investment banker, and
Berkeley Research Group is serving as the Company's financial
advisor. Stretto is the claims agent, maintaining the page
https://cases.stretto.com/NMG
Judge David R. Jones oversees the cases.
The Extended Term Loan Lenders are represented by Wachtell, Lipton,
Rosen & Katz as legal counsel, and Ducera Partners LLC as
investment banker.
The Noteholders are represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP as legal counsel and Houlihan Lokey as investment
banker.
NEW FORTRESS: Moody's Rates Proposed Senior Secured Notes 'B1'
--------------------------------------------------------------
Moody's Investors Service's assigned a B1 rating to New Fortress
Energy Inc.'s proposed senior secured notes. Other ratings of NFE,
including B1 corporate family rating, B1-PD probability of default
rating are being affirmed and the SGL-3 Speculative Grade Liquidity
rating remains unchanged. The outlook is stable.
NFE plans to use the proceeds from the placement of the new senior
secured notes to fully repay the $800 million senior secured term
loan due 2023. The B1 rating of the term loan will be withdrawn
when the term loan is fully repaid.
Assignments:
Issuer: New Fortress Energy Inc.
Senior Secured Notes, Assigned B1 (LGD3)
Affirmations:
Issuer: New Fortress Energy Inc.
Probability of Default Rating, Affirmed B1-PD
Corporate Family Rating, Affirmed B1
Outlook Actions:
Issuer: New Fortress Energy Inc.
Outlook, Remains Stable
RATINGS RATIONALE
NFE's senior secured notes are rated B1, at the same level as the
CFR. The notes will be guaranteed by international operating
companies representing about 68% of assets and most of the revenue
as of end of June 2020 and secured by the pledge of operating
assets of the guarantors. The notes will comprise the substantial
majority of the company's consolidated debt.
NFE's B1 CFR is underpinned by Moody's expectations of rising sales
of LNG, backed by long term contracts and proprietary downstream
infrastructure appended to power generation facilities in Jamaica
and Puerto Rico, as well as Mexico and Nicaragua, and by the
expectation of rapid deleveraging in 2021.
The company's ratings also reflect Moody's views on the credit
quality of its customers. NFE plans to improve its customer and
geographic diversification in 2020-2021, but its operating cash
flow retains high dependence on a few key utility customers in
Jamaica and Puerto Rico. The rating assumes a relatively low
volatility in earnings, underpinned by a high level of contracted
revenues, including some take-or-pay and minimum volume
commitments, expected volume growth, as well as above market
contracted prices that support strong cash margins.
NFE is a high growth business. The B1 CFR reflects its expectation
that the company will maintain a conservative balance of debt and
equity funding while executing on numerous growth opportunities.
NFE's financial policy targets reasonable financial leverage of
debt/EBITDA of 3x, to be supported by reinvestment of growing
operating cash flow and equity issuance to help fund growth
investments. The company expects to more than double its earnings
in 2021 as a result of launching new facilities in Nicaragua and
Mexico in the second half of 2020. This should result in leverage
declining rapidly to below 3x in 2021 from the 6.2x debt/EBITDA
that Moody's expects in 2020.
NFE maintains adequate liquidity, reflected in its SGL-3 rating,
that is supported by substantial cash balances, that at the end of
June 2020 stood at $167 million (or about 18% of its long-term
debt). With all operating facilities generating substantial
operating cash margin, NFE's principal financing needs are driven
by its growth capital investment.
The rating assumes that NFE will maintain a sizable cash balance in
2020-21 and will continue to proactively raise additional financing
to support growth investment requirements. The adequate liquidity
position is also supported by substantial alternate liquidity
sources, including growing infrastructure power assets, as well as
the demonstrated ability to raise equity to support growth. The
company also benefits from the extended maturity profile of its
debt, with the new notes maturing in 2025.
The stable outlook on all ratings assumes continued robust
execution on growth plans and strong operating performance across
the expanding asset base that should deliver a step up in operating
cash flows in the second half of 2020 and strengthen the leverage
profile in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The B1 CFR could be upgraded if the company sustains growth in
EBITDA and builds a strong operating track-record. The upgrade
would require an improvement in the credit profile of the customer
base, including through broader earnings diversification or larger
exposures to higher rated customers and jurisdictions. Also, the
company will need to demonstrate its commitment to equity
co-funding of future growth projects and its ability to operate
within the stated financial policy with debt/EBITDA below 3x.
The ratings may be downgraded if the deleveraging trend is reversed
as a result of a decline in operations or regulatory interference
with debt/EBITDA not trending below 5x or if liquidity position
weakens. Failure to resolve FERC dispute in Puerto Rico in a timely
manner may cause a significant disruption to operations and lead to
a negative outlook or a downgrade of the ratings.
New Fortress Energy Inc is a US-listed, high growth energy
infrastructure company with downstream LNG operations in Jamaica,
Puerto Rico and in the US.
The principal methodology used in these ratings was Midstream
Energy published in December 2018.
NEW FORTRESS: S&P Rates $800MM Senior Secured Notes 'B+'
--------------------------------------------------------
S&P Global Ratings assigned a 'B+' rating and '3' recovery rating
to New Fortress Energy Inc.'s proposed $800 million senior secured
notes due in 2025. The '3' recovery rating indicated its
expectation for meaningful recovery (50%-70%; rounded estimate:
65%) recovery in the event of a default.
S&P views this transaction as a liability management operation. New
Fortress will issue $800 million in senior secured notes due 2025
to repay the existing $800 million credit agreement due 2023. Any
remaining net proceeds (if any) would be used for general corporate
purposes, including the financing of the operations. The existing
credit agreement has an interest rate of LIBOR floor of 1.5% +
6.25% with a step up in margin of 1.5% in 2021 and another 1.5% in
2022. The transaction would be credit positive if New Fortress
secures lower financing cost, thereby increasing interest coverage
ratios.
Collateral on the new notes will include:
-- The issued share capital of each guarantor that is owned by the
issuer or a guarantor;
-- The issued share capital of each subsidiary of the issuer
organized under the laws of the U.S. (or a state thereof) that is
owned by the issuer or a guarantor;
-- The issued share capital of each foreign subsidiary that is
owned by the issuer or a guarantor; and substantially all material
assets of the issuer and each guarantor, including the Montego Bay
Facility, the Old Harbour Facility, the San Juan Facility (except
that New Fortress may not be able to obtain a leasehold mortgage)
and the Miami Facility.
ISSUE RATINGS—RECOVERY ANALYSIS
Key analytical factors
S&P's simulated default scenario for NFE contemplates a default
arising from a prolonged period of unfavorable natural gas and LNG
prices, coupled with sustained lower volumes, which could result in
a default. It assumes a default to happen in early 2023. S&P used
the EBITDA multiple valuation approach to assess recovery prospects
and applied a 7x multiple to its estimated post-default run-rate
EBITDA.
Simulated default assumptions
-- Simulated default year: early 2023
-- EBITDA multiple: 7x
Simplified waterfall
-- Net enterprise value: $704 million (after 5% administrative
costs related to bankruptcy)
-- Value available to secured term loan: $563 million
-- Total first-lien debt claims, including a six-month prepetition
interest: $841 million
-- Recovery expectation: 65% rounded estimate;'3' recovery rating
ON SEMICONDUCTOR: S&P Raises ICR to 'BB+'; Outlook Stable
---------------------------------------------------------
S&P Global Ratings upgraded its issuer credit rating on ON
Semiconductor Corp. to 'BB+'. S&P also raised its issue-level
rating on the company's senior secured debt to 'BB+' and its
issue-level rating on the company's notes to 'BB'. S&P assigned its
'BB' issue-level rating to the company's proposed $500 million
senior unsecured notes.
"The upgrade is driven by our expectation that ON Semiconductor's
performance will improve over the next 12 months, as well as our
view that the company will maintain leverage below 3x while
pursuing its acquisition and share buyback plans. The upgrade is
also supported by ON Semiconductor's business scale and diversity,
and our expectation that the company will generate free cash flow
of $600 million or more over the next 12 months," S&P said.
ON Semiconductor faced performance weakness in line with the
semiconductor industry in 2019, manufacturing disruptions due to
COVID-19-related factory shutdowns, and completed two significant
acquisitions in 2019. While leverage has increased by a turn to the
high-2x area, S&P views this to be a peak for leverage and expect
the company's financial metrics to improve over the next 12 months
due to free cash flow generation, settlement of the $690 million
2020 convertible, and a temporary hiatus on substantial share
buybacks.
ON Semiconductor is a leading supplier in the power management
semiconductor market. The company benefits from good end-market
diversification and large customer and product bases. The company
has grown through acquisitions, notably Fairchild Semiconductor in
2016 and Quantenna Communications in 2019. The auto and industrial
end markets represent 60% of the company's business, and S&P views
this exposure as positive because of the long design cycles and
overall better margins. While its auto business was down
significantly (about 25% year over year) due to COVID-19-related
factory closures and supply constraints, S&P expects the auto
business to rebound in 2021. ON Semiconductor's exposure to
industrial end markets has also been growing, driven by image
sensors for machine vision and robotic applications, as well as
efficient power modules for industrial systems and industrial
internet-of-things (IoT) applications. The company has been
aggressively reducing Opex to sustain margins, and S&P also expects
the company's Capex to be lower in 2021, following two years of
above-average capex investments.
ON Semiconductor is exposed to pricing pressure for commodity
products. The company generates nearly 20%-25% of revenues from
commodity, multisourced products with alternative suppliers
available. These tend to be standard, catalog-based, analog
integrated circuits and discrete components with low average
selling prices and limited technological differentiation. In
periods of excess supply, such as during 2019, these products could
come under pricing pressure as all participants chase market share
to maintain a full manufacturing load. These products carry gross
margins significantly lower than the corporate average. Standard
products could also be less predictable as they are difficult to
keep.
"Our view of ON Semiconductor's financial risk reflects S&P Global
Ratings-adjusted net leverage in the high-2x area as of
second-quarter 2020. Financial risk metrics were pressured in 2019,
given the challenging environment in the semiconductor industry
over the past 12 months and also because of merger and acquisition
activities," S&P said.
ON Semiconductor closed the Quantenna acquisition (purchase price
of $1.04 billion) and the purchase of Globalfoundries' fab (for
$430 million, $100 million paid in 2019 and $330 million due in
2022).
S&P anticipates ON Semiconductor's adjusted net leverage falling to
the 2x-area over the next 12 months, partly driven by EBITDA growth
and partly due to the settlement of the 1% convertible notes (due
in December 2020).
The stable outlook reflects S&P's expectation that ON
Semiconductor's performance and free cash flow will improve over
the next 12 months. S&P expects the company to have enough cushion
within the rating to pursue any acquisition and shareholder return
objectives while maintaining leverage below 3x.
"We could lower the rating over the next 12 months if leverage is
sustained above 3x or free cash flow to debt is sustained below 15%
due to either continued semiconductor industry downturn or large,
debt-financed acquisitions," S&P said.
"Although unlikely over the next 12 months, we could raise our
rating on ON Semiconductor over the longer term if the company can
improve its profitability, scale, and margins, and we believe it
can pursue its acquisition and shareholder return objectives and
absorb a cyclical downturn while maintaining leverage below 1.5x,"
the rating agency said.
ONEWEB GLOBAL LTD: Creditors Want $1.6B Investor Claims Waived
--------------------------------------------------------------
Leslie A. Pappas, writing for Bloomberg Law, reports that OneWeb
Global Ltd.'s creditors are asking a bankruptcy court to waive $1.6
billion of company investors' claims or grant derivative standing
to pursue claims against them.
Investors bought about $1.6 billion in "purported promissory notes"
from the bankrupt satellite operator in the two years leading up to
its bankruptcy filing, and the investments amount to equity
interest, not debt, the committee of unsecured creditors said in a
filing Monday.
The notes should be recharacterized, subordinated, or disallowed,
according to the committee's filing with the U.S. Bankruptcy Court
for the Southern District of New York.
About OneWeb Global Ltd.
Founded in 2012, OneWeb Global Limited is a global communications
company developing a low-Earth orbit satellite constellation system
and associated ground infrastructure, including terrestrial
gateways and end-user terminals, capable of delivering
communication services for use by consumers, businesses,
governmental entities, and institutions, including schools,
hospitals, and other end-users whether on the ground, in the air,
or at sea.
OneWeb's business consists of the development of the OneWeb System,
which has included the development of small-next generation
satellites that have been mass-produced through a joint venture and
the development of specialized connections between the satellite
system and the internet and other communications networks through
the SNPs. For more information, visit https://www.oneweb.world/
OneWeb Global Limited and its affiliates ought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-22437) on March 27, 2020. At the time of the filing, Debtors
disclosed assets of between $1 billion and $10 billion and
liabilities of the same range.
ONEWEB GLOBAL: Gets Court OK to Pay Satellite Vendor
----------------------------------------------------
Caleb Henry, writing for Space News, reports that OneWeb received
permission from a U.S. bankruptcy court to pay its satellite vendor
to resume building spacecraft for the company's broadband
megaconstellation.
The U.S. Bankruptcy Court for the Southern District of New York
approved the payment during a July 10 hearing that clears the way
for the sale of OneWeb to the British government and Bharti Global,
which bid together July 3 as BidCo 100 Ltd. to acquire the bankrupt
megaconstellation startup and return it to operations.
The court also approved BidCo 100's plan to replace SoftBank and
Grupo Elektra as OneWeb's interim financial backer and provide up
to $50.7 million in financing to allow work to resume at OneWeb
Satellites, the joint venture Airbus and OneWeb created in 2016 to
build hundreds and potentially thousands of satellites for the
OneWeb constellation.
BidCo plans to invest $1 billion in OneWeb, which filed for Chapter
11 bankruptcy protection in March. Around $640 million will be
available to fund OneWeb operations after subtracting
administrative costs, debt payments and interim financing,
satellite industry analysts Quilty Analytics estimated July 8.
OneWeb told the court before the July 10 hearing that making
pre-payments to OneWeb Satellites will allow the joint venture to
"preserve its supply chain and resume constructing the satellites,
as envisioned and required" under the terms of BidCo's acquisition.
The number of satellites to be built was not specified. OneWeb
Satellites spokesperson Molly Townsend said July 13 that the
companies are still working out changes to a contract that
originally covered 648 satellites. She declined to say how many
satellites were built before OneWeb largely suspended its
operations upon filing for bankruptcy.
As of January, OneWeb Satellites was producing two satellites per
day at its Florida factory. In March, OneWeb launched 34
satellites, raising its on-orbit total to 74. Prior to filing for
bankruptcy that month, OneWeb said it would pause its launch
campaign until May, when it planned to put up another 30 or more
satellites.
While the OneWeb Satellites factory was built expressly for the
purpose of mass producing OneWeb satellites, it's unclear the
extent of manufacturing that will stay in Florida given the British
government’s desire to see the U.K. play a more meaningful role
in building the constellation.
Alok Sharma, the U.K.'s secretary of state for business, energy and
industrial strategy, said July 9 that a near-term benefit of buying
OneWeb is securing British jobs already tied to the project.
OneWeb's U.K.-based suppliers include component supplier Teledyne
Defence & Space and mission planning software specialist Scisys
(now CGI).
"Longer term, we would want to look and see what we can do in terms
of direct manufacturing," Sharma said during a meeting of the U.K
Parliament's Business, Energy and Industrial Strategy Committee.
Sharma said the U.K. government is also considering how it could
use OneWeb as a global satellite navigation system, or GNSS.
"There's been debate around GNSS — and that wasn't the rationale
for this particular investment — but we are of course exploring
how OneWeb may be able to contribute to [position, navigation and
timing] resilience in the future," he said.
The U.K. government continues to rely on the Galileo satellite
navigation system its industry helped build. However, the U.K. has
been exploring domestic alternatives since its decision to leave
the European Union raised questions about assured access to
Galileo’s military-grade encrypted signals.
Sharma said the U.K. government's main reasons for investing in the
company were commercial and strategic, with the commercial
rationale being "the provision of broadband to people in remote
areas," as well as on planes and boats. He said OneWeb provides
"strategic geopolitical opportunities for the U.K." as Britain
seeks to become "a world leader in the space sector."
About OneWeb Global
Founded in 2012, OneWeb Global Limited is a global communications
company developing a low-Earth orbit satellite constellation system
and associated ground infrastructure, including terrestrial
gateways and end-user terminals, capable of delivering
communication services for use by consumers, businesses,
governmental entities, and institutions, including schools,
hospitals, and other end-users whether on the ground, in the air,
or at sea.
OneWeb's business consists of the development of the OneWeb System,
which has included the development of small-next generation
satellites that have been mass-produced through a joint venture and
the development of specialized connections between the satellite
system and the internet and other communications networks through
the SNPs. For more information, visit https://www.oneweb.world
OneWeb Global Limited and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-22437) on March 27, 2020. At the time of the filing, the
Debtors disclosed assets of between $1 billion and $10 billion and
liabilities of the same range.
Judge Robert D. Drain oversees the cases.
The Debtors tapped Milbank, LLP as legal counsel; Guggenheim
Securities, LLC, as investment banker; FTI Consulting, Inc., as
financial advisor; and Omni Agent Solutions as claims, noticing and
solicitation agent.
PD-VALMIERA GLASS: Asks Court to Move Plan Exclusivity Thru Sept 9
------------------------------------------------------------------
P-D Valmiera Glass USA Corp. requests the U.S. Bankruptcy Court for
the Northern District of Georgia, Atlanta Division, to extend the
exclusive periods for filing a Chapter 11 plan and solicit
acceptances through and including September 9 and November 13,
2020, respectively.
For the fourth time, the Court extended the Debtor's exclusive
filing period and exclusive solicitation period through and
including August 14 and October 13, respectively.
The Debtor said it has recently closed on a sale of substantially
all of its assets and is in the process of addressing post-closing
items. The Debtor and the purchaser are parties to an Operating
Services Agreement which will impact the structure and terms of a
proposed Chapter 11 plan.
About P-D Valmiera Glass USA Corp.
P-D Valmiera Glass USA Corp. –- https://www.valmiera-glass.com/
-- manufactures fiberglass and fiberglass products. P-D Valmiera
Glass USA sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. N.D. Ga. Case No. 19-59440) on June 17, 2019.
At the time of the filing, the Debtor was estimated to have assets
of between $100 million and $500 million and liabilities of the
same range. The case is assigned to Judge Paul W. Bonapfel. The
Debtor is represented by Scroggins & Williamson, P.C. SC&H Capital
acted as the Debtor's exclusive investment banker.
The U.S. Trustee for Region 21 appointed creditors to serve on the
Official Committee of unsecured creditors on July 8, 2019. The
committee hired Kilpatrick Townsend & Stockton LLP as its legal
counsel and Dundon Advisers LLC as its financial advisor.
Troutman Sanders LLP is counsel to SEB Banka.
On April 27, 2020, the Court entered an Order approving a sale of
substantially all assets of the estate to Saint-Gobain Adfors
America, Inc. and the transaction closed on June 2.
PENA BUSINESS: Asks Court to Extend Plan Exclusivity Thru Sept. 10
------------------------------------------------------------------
Pena Business Services, Inc., requests the U.S. Bankruptcy Court
for the Northern District of Texas, Fort Worth Division, to extend
the exclusive periods for filing a Chapter 11 plan through and
including September 10, 2020, and the exclusive solicitation period
through and including November 10, 2020.
On March 11, 2020, the World Health Organization announced COVID-19
as a pandemic. COVID-19 caused unexpected and massive cancellation
of the Debtor's services and also interfered with the Debtor's
performance of routine tasks associated with this bankruptcy.
The Debtor anticipates completing the Disclosure Statement and Plan
of Reorganization no later than September 10.
About Pena Business
Pena Business Services, Inc., is a provider of residential and
commercial cleaning services.
The Debtor filed Chapter 11 Petition (Bankr. N.D. Tex. Case No.
20-40634) on Feb. 13, 2020, listing under $1 million in both assets
and liabilities. Alice Bower, Esq. of the Law Offices of Alice
Bower is the Debtor’s counsel.
The Honorable Mark X. Mullin oversees the case.
PETASOS RESTAURANT: Unsec. Creditors to Have 6.49% Recovery in Plan
-------------------------------------------------------------------
Debtor Petasos Restaurant Corp. filed an Amended Disclosure
Statement for Small Business under Chapter 11 for Plan of
Reorganization dated July 14, 2020.
The Plan will be funded by a $95,000 new value contribution to be
made by Konstantinos Matsangos and Konstantinos Tsamounieris.
After payment of administrative and priority claims, the balance of
the plan fund will be distributed to unsecured creditors. General
unsecured creditors are classified in Class 1 and will receive a
distribution of approximately 6.49% of their allowed claims to be
distributed as a lump sum payment on the effective date of the
Plan.
Class 1 General Unsecured Claims will be paid a distribution from a
plan fund of $95,000, after all administrative and priority claims
have been paid in full. The Debtor estimates that approximately
$42,349 will be available for unsecured creditors and that
unsecured creditors will receive a distribution of 6.49% of their
claims.
The Debtors equity in Class 2 is owned 50% by Konstantinos
Matsangos and 50% by Konstantinos Tsamounieris who will retain
their equity interests in exchange for a new value contribution in
the total amount of $95,000 to be funded in the amount of $47,500
by each of the equity interest holders. The new value contribution
was funded on or about June 19, 2020 and is currently being held in
escrow by Morrison Tenenbaum PLLC. The Debtor believes that the
contribution to the reorganization of capital in the amount of
$95,000 satisfies the new value exception to the absolute priority
rule.
Payments and distributions under the Plan will be funded by a
$95,000 contribution by the Debtor's principals Konstantinos
Matsangos and Konstantinos Tsamounieris to be paid from their
personal funds to be paid 50% each.
A full-text copy of the Amended Disclosure Statement dated July 14,
2020, is available at https://tinyurl.com/y3tjkvkm from
PacerMonitor at no charge.
The Debtor is represented by:
LAWRENCE F. MORRISON
BRIAN J. HUFNAGEL
MORRISON TENENBAUM PLLC
87 Walker Street, Floor 2
New York, New York 10013
Telephone: (212) 620-0938
Facsimile: (646)390-5095
About Petasos Restaurant Corp.
Petasos Restaurant Corp., operates a restaurant known as Emphasis
Restaurant located at 6820 Fourth Avenue, Brooklyn, New York.
Petasos Restaurant sought Chapter 11 protection (Bankr. E.D.N.Y.
Case No. 19-45410) on Sept. 10, 2019, listing under $1 million in
both assets and liabilities. The Hon. Elizabeth S. Stong is the
case judge. The Debtor tapped Morrison Tenenbaum PLLC as its
counsel.
PIKE CORP: S&P Rates New $500MM Senior Unsecured Notes 'CCC+'
-------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level and '1' recovery
ratings to Pike Corp.'s proposed revolving credit facility and $336
million first-lien term loan and its 'CCC+' issue-level and '6'
recovery ratings to the company's proposed $500 million of senior
unsecured notes. The '1' recovery rating indicated S&P's
expectation for very high recovery (90%-100%; rounded estimate:
90%), and the '6' recovery rating indicated its expectation for
negligible recovery (0%-10%; rounded estimate: 0%) in the event of
a payment default.
Pike's credit measures benefit from debt repayment in 2020, cash
flows generated by good operating performance, and recent project
wins. Recurring maintenance work provides the company with
relatively stable growth prospects and good revenue visibility.
Despite the effects of COVID-19 and the current U.S. recessionary
environment, S&P expects demand for outsourced services from its
utilities customers and higher-margin storm work this year will
help it maintain EBITDA margins in the high-teens percent area.
S&P assumes strong FOCF generation in 2020, followed by a decrease
in cash flow relative to its debt balances over the next two years.
While S&P believes Pike has a relatively flexible cost structure,
which allows it to flex down its spending to preserve cash, the
rating agency anticipates the company's recent project awards will
lead to working capital swings as it completes project work. As a
result, FOCF to debt could decline to about 5% or below over the
next two years. However, Pike's cash flows should benefit from its
relatively low capital intensity, with maintenance capital
expenditures (capex) of about 1% of revenue in 2020.
S&P's rating on Pike reflects the company's smaller scale relative
to other globally diversified engineering and construction
companies, as well as its concentrated customer base. However, the
company's established positions and favorable reputation in its
core service offerings will likely enable it to sustain its growing
revenue base and contracts despite adverse economic conditions this
year. Pike's other competitive advantages include its ability to
quickly relocate crews to storm-affected areas (at higher margins
than its core business), which strengthens its customer
relationships and provides opportunities to build new ones.
However, this revenue stream can be volatile due to the
unpredictable nature of weather-related events.
The stable outlook on Pike reflects S&P's expectation of continued
improvement in its earnings following the acquisitions it completed
in 2019. The rating agency expects the company will maintain
healthy EBITDA margins with S&P Global Ratings-adjusted debt to
EBITDA below 5x and FOCF to debt of above 5% in 2020. This will
provide Pike with some headroom at the current rating if working
capital swings cause its FOCF to debt to decline to below 5% in
2021.
"We could raise our rating on Pike if the company's leverage
declines and remains comfortably below 5x on a sustained basis and
its FOCF to adjusted debt remains above 5%. We would also need to
assume Pike would maintain credit measures at these levels. This
could occur if the company maintains EBITDA margins of about 20%
and allocates excess cash flow toward debt repayment," S&P said.
"We could lower our rating on Pike over the next 12 months if the
company's leverage approaches 6x or if we believe that FOCF to debt
would decline below 2%-3% on a sustained basis. We believe this
could occur if the company's EBITDA margins deteriorate
significantly due to uncompetitive pricing or the loss of a key
contractual relationship. Alternatively, the company's debt to
EBITDA could weaken from unanticipated debt-financed transactions,"
the rating agency said.
PLANTERS EXCHANGE: Case Summary & 3 Unsecured Creditors
-------------------------------------------------------
Debtor: The Planters Exchange, Inc.
204 2nd Street
Havana, FL 32333
Business Description: The Planters Exchange, Inc. sells used
merchandise such as clothing, antiques,
furniture, books, and jewelry.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Northern District of Florida
Case No.: 20-40322
Debtor's Counsel: Allen P. Turnage, Esq.
LAW OFFICE OF ALLEN TURNAGE, P.A.
PO Box 15219
Tallahassee, FL 32317
Tel: (850) 224-3231
Email: service@turnagelaw.com
Total Assets: $1,074,500
Total Liabilities: $405,000
The petition was signed by Wayne H. Gregory, president.
A copy of the petition containing, among other items, a list of the
Debtor's three unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/6TL6DSY/The_Planters_Exchange_Inc__flnbke-20-40322__0001.0.pdf?mcid=tGE4TAMA
PONCE REAL: Selling Two Ponce Properties for $160K
--------------------------------------------------
Ponce Real Estate Corp. asks the U.S. Bankruptcy Court for the
District of Puerto Rico to authorize the private sale of the real
properties located (i) at 72 Vives St., Ponce, Puerto Rico, (lot
3,370), for $110,000, and (ii) at 74 Vives St., Ponce, Puerto Rico,
(lot 13,170), for $50,000 to Pedro Antonio Gonzalez and Cassandra
Lee Aponte.
There is a promissory note recorded against the property. The Note
was paid off but Eurobank ceased to exist, the Note will be
cancelled through ordinary means through the process for "lost
notes" as known in Spanish as "Pagaré extraviado."
There are real estate property taxes owed to CRIM in the
approximate amount of $1,644 as of July 1, 2020 for Property 1 and
the amount of $20,371 as of July 1, 2020 for Property 2.
In addition, closing costs are estimated to be approximately $1,252
for Property 1 and $816.50 for Property 2. Notarial Fees and
stamps for the purchase deed will be paid at closing by the
Purchaser.
Unless a party in interest files a written objection within 21 days
from the date of the Notice, the Debtor will complete the sale and
adjudicate it upon the terms set forth in the Motion. All sales
are made "as is, where is," without warranty of any kind, and free
and clear of liens and encumbrance. All risk of loss will pass to
the Buyer upon consummation of the sale.
Payment of the Sale Price and execution of the closing deeds will
be made as soon as practicable from the entry of the order
approving the sale of the Properties. Failure to pay the full
price as provided herein will entitle the Debtor to void the sale.
A copy of the Offer is available at https://tinyurl.com/y5kcstvj
from PacerMonitor.com free of charge.
About Ponce Real Estate Corp.
Ponce Real Estate Corp. as registered in the Department of State
of
Puerto Rico on February 11, 1955, under registry number 4514, as a
domestic for-profit-corporation, operating the business of owning
to lease real estate properties for commercial and/or residential
purposes. Its principal place of business is located at 49 Mendez
Vigo Street, Ponce, Puerto Rico 00730, which is property of PRE.
Mr. Francisco I. Vilarino Rodriguez a/k/a Frank Vilarino is the
sole owner and president.
Ponce Real Estate Corp. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. P.R. Case No. 18-06805) on Nov. 24,
2018.
At the time of the filing, the Debtor was estimated to have assets
of $1 million to $10 million and liabilities of the same range.
The Debtor tapped EMG Despacho Legal, CRL as its legal counsel,
and
Tamarez CPA, LLC as its accountant.
PUG LLC: Moody's Lowers CFR to B3, Outlook Negative
---------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating of
PUG LLC to B3 from B2. The downgrade reflects Moody's expectation
that Viagogo will report lower than previously expected revenue
declines for 2020 combined with continuing uncertainty regarding
timing for a meaningful rebound in demand for live events and
secondary tickets due to the coronavirus outbreak and restrictions
on large gatherings globally. The outlook is negative.
A summary of its action follows:
Issuer: PUG LLC (Viagogo)
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured 1st lien Bank Credit Facility (USD), Downgraded to
B3 (LGD4) from B2 (LGD4)
Senior Secured 1st lien Bank Credit Facility (Euro), Downgraded to
B3 (LGD4) from B2 (LGD4)
Outlook Actions:
Issuer: PUG LLC (Viagogo)
Outlook, Negative
RATINGS RATIONALE
Despite Viagogo's asset-lite business model, revenues remain
dependent on the timing and number of live events globally as well
as attendance at venues which is expected to remain below
historical capacity based on social distancing mandates and
consumer sentiment. Accordingly, debt ratings continue to be
pressured by cancellations and postponement of live events globally
(e.g. sports, concerts, and theater).
Moody's projects Viagogo's secondary ticket sales revenue will
remain well below 2019 levels over the next several months followed
by a gradual recovery around mid-2021; however, there are further
downside risks in the event demand for live events remains
depressed beyond mid-2021 in a scenario in which COVID-19 is not
contained.
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 Moody's ESG framework, due to the substantial
implications for public health and safety. Given Viagogo's reliance
on live events and secondary ticket sales which have been
significantly affected by restrictions on crowd gatherings and
given the company's exposure to the global economy and consumer
spending, Viagogo remains vulnerable to shifts in market demand and
sentiment in these unprecedented operating conditions.
Viagogo's B3 CFR incorporates adequate liquidity, supported by the
company's cash balances (over $400 million) plus up to 35% of
availability under the company's $125 million of revolver (usage
exceeding 35% subjects the company to a 5.70x first lien leverage
test). Viagogo has completed a substantial portion of its cost
reduction plans with insignificant amounts expected to be paid for
remaining restructuring and severance costs.
Given a reduced monthly burn rate, cash balances provide Viagogo
the ability to operate with only nominal amounts of revenue for
over 12 months. Moody's base case projections include revenues
growing gradually in the first half of 2021 as a greater number of
live events get scheduled across the globe next year. Tickets sales
occur a few months in advance of events which typically generates
cash inflows and positive working capital.
Moody's expects a gradual return to cash flow growth given a
portion of live events in 2021 will represent postponed events for
which tickets have already been sold, although incremental
secondary ticket selling is likely to occur. Given the time needed
to ramp revenues in 2021 to approach historical levels,
particularly as permitted attendance will be kept below venue
capacity to allow social distancing and consumers remain cautious
about large social gatherings, Moody's expects revenues in 2021
will remain well below 2019 levels.
Over 60% of Viagogo's operating costs, including sales and
marketing, is variable and tied to revenue and transaction volume.
As demand for secondary tickets declined in the past few months,
the company incurred reduced performance marketing spend (customer
acquisition costs, lower bid pricing), reduced spending on offline
marketing including brand promotion, and deferred product
development costs to reduce its monthly cash burn rate and preserve
liquidity.
Notwithstanding the impact of COVID-19, Viagogo's credit profile
benefits from its large scale with leading market positions in most
major global regions including North America and asset-lite
business model. Financial metrics are supported by historically
attractive adjusted EBITDA margins, typically positive working
capital cash flows, and minimal capex leading to good conversion of
EBITDA to free cash flow.
Moody's believes these benefits support Viagogo's ability to exceed
historical margins and free cash flow generation when live events
and secondary tickets sales eventually approach 2019 levels. Given
the significant equity investment in the company by its investors
less than one year ago, there is the potential for sponsor support
in the event the outbreak is prolonged and further liquidity is
needed.
Viagogo's adequate liquidity is supported by more than $400 million
of unrestricted cash balances, working capital inflows from upfront
cash receipts in advance of reimbursements to ticket sellers,
minimal capital expenditures, and 35% availability under the $125
million revolving credit facility due 2025. Given the springing
covenant in the revolver, Moody's assumes the remaining portion of
the revolver will be unavailable over the next few quarters.
Payments due to ticket sellers totaling $170 million is expected to
be stable through 1Q2021, with the roll-off of historical payments
due to sellers expected to be largely offset by cash inflows from
new receipts. The company indicates that remaining severance and
other restructuring costs are not significant.
The ticketing industry faces regulatory scrutiny and the potential
for legislation that could adversely impact Viagogo's business
model. Social risks include concerns regarding ticket prices in the
secondary market both in the U.S. and abroad. There is also the
potential for changes in consumer practices or regulations that
could reduce profitability or require greater disclosures for the
sector evidenced by prior regulatory actions taken against
secondary ticket providers, including StubHub, Ticketmaster, and
Viagogo.
Concentrated voting control, lack of public financial disclosure,
and the absence of board independence are also incorporated in
Viagogo's B3 CFR. Moody's treats the preferred shares as equity;
however, initial investors in the preferred shares have the right
to request that Viagogo conduct a sale process if an IPO or public
listing of common stock has not occurred within 8 years of the
February 2020 acquisition.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook for Viagogo is driven primarily by significant
uncertainty regarding the depth and duration of the current decline
in global demand for live events and secondary tickets. The lack of
visibility regarding timing for a meaningful increase in live
events and attendance levels is exacerbated by restrictions on
group gatherings and is dependent on when local authorities
globally will allow group gatherings.
Furthermore, consumers may be reluctant to attend large events
without a vaccine widely available. Viagogo should be able to
manage cash outflows as the company has significantly reduced
discretionary expenses including performance marketing, branding,
and product development. The outlook does not include changes to
regulations or consumer practices in major regions that could have
a negative impact on secondary ticket sales. To the extent revenue
growth tracks below Moody's revised base case projections, or a
gradual recovery in demand by mid-2021 is not considered likely,
there could be additional downward pressure on ratings.
Given the pressure on the business and live entertainment industry,
an upgrade is unlikely over the near term. Beyond 2020, ratings
could be upgraded if Moody's is assured demand for live events and
secondary tickets is recovering meaningfully. Viagogo would also
need to execute its operating strategy and produce consistent top
line growth such that adjusted debt to EBITDA approaches 6x without
addbacks. Viagogo would also need to maintain good liquidity (net
of payments due to ticket sellers) with adjusted EBITDA margins
approaching 25%.
Ratings could be downgraded if the impact of COVID-19 is not
contained leading Moody's to expect a gradual recovery in demand
will occur after mid-2021 or if the liquidity cushion significantly
erodes. Beyond 2021, there would also be downward rating pressure
if adjusted EBITDA margins deteriorate, or if regulatory actions or
developments in the competitive landscape adversely affect
Viagogo's profitability or market share.
Viagogo provides an online marketplace for secondary tickets along
with payment support, logistics, and customer service. With the
acquisition of StubHub, the combined company is a leading ticket
marketplace globally. Viagogo is majority owned by Madrone Capital
Partners, Bessemer Venture Partners, and Eric Baker, CEO and
founder, with Mr. Baker holding majority voting control.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
PURDUE PHARMA: Asks Court to Deny New Class Certifications
----------------------------------------------------------
Law360 reports that Purdue Pharma asked a New York bankruptcy judge
July 16, 2020, to reject requests to allow five claims by classes
of alleged opioid victims in its Chapter 11 case, saying adding new
classes would be an unnecessary, last-minute complication.
Purdue said in its filing that additional class certifications are
unnecessary, arguing that the putative class members — schools,
hospitals, insurance ratepayers, Native American tribes and the
parents of children with neonatal abstinence syndrome, or NAS, a
condition caused by neonatal drug withdrawal — are, at this
point, on notice of their ability to file individual claims against
the drugmaker.
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 facing the Company.
The Company's consolidated balance sheet at Aug. 31, 2019, showed
$1.972 billion in assets and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain, in White Plains, New York, has
been assigned to oversee Purdue's Chapter 11 case.
Davis Polk & Wardwell LLP and Dechert LLP are serving as legal
counsel to Purdue. PJT Partners is serving as investment banker,
and AlixPartners is serving as financial advisor. Prime Clerk LLC
is the claims agent.
QUORUM HEALTH: Set for Growth After It Sheds 16 Hospitals
---------------------------------------------------------
According to Nashville Business Journal, Brentwood, Tenn.-based
Quorum Health recently emerged from Chapter 11 bankruptcy. The
for-profit hospital operator's new CEO says the company is now set
up for growth.
Since spinning off from Franklin, Tenn.-based Community Health
Systems in 2016, Quorum's hospital portfolio has shrunk. The
company operated 38 hospitals in 2016 and is now down to 22.
After years of downsizing, Quorum entered Chapter 11 bankruptcy in
April. The company exited bankruptcy earlier this month with a
lighter debt load and a new CEO.
The company's new CEO, Joey Jacobs, most recently served as chair
and CEO of Franklin, Tenn.-based Acadia Healthcare. Under Mr.
Jacobs' leadership, Acadia grew from seven behavioral healthcare
facilities in 2011 to nearly nearly 600 facilities in 2018 when Mr.
Jacobs departed, according to the report.
Mr. Jacobs says he's ready to help Quorum expand its footprint
after exiting bankruptcy.
"Quorum has downsized, but it's a great company, the remaining
pieces ... Our equity holders want the company to grow and we will
make selective acquisitions," he told the Nashville Business
Journal. "We want to grow and we have the resources now."
About Quorum Health
Headquartered in Brentwood, Tennessee, Quorum Health (NYSE: QHC) --
http://www.quorumhealth.com/-- is an operator of general acute
care hospitals and outpatient services in the United States.
Through its subsidiaries, the Company owns, leases or operates a
diversified portfolio of 24 affiliated hospitals in rural and
mid-sized markets located across 14 states with an aggregate of
1,995 licensed beds. The Company also operates Quorum Health
Resources, LLC, a leading hospital management advisory and
consulting services business.
Quorum Health incurred net losses attributable to the company of
$200.25 million in 2018, $114.2 million in 2017, and $347.7 million
in 2016.
As of Sept. 30, 2019, Quorum Health had $1.52 billion in total
assets, $1.72 billion in total liabilities, $2.27 million in
redeemable non-controlling interest, and a total deficit of $203.36
million.
On April 7, 2020, Quorum Health Corporation and 134 affiliates
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
20-10766) to seek confirmation of a pre-packaged plan.
The Debtors hired McDermott Will & Emery LLP and Wachtell, Lipton,
Rosen & Katz as legal counsel, MTS Health Partners, L.P. as
financial advisor, and Alvarez & Marsal North America, LLC. as
restructuring advisor. Epiq Corporate Restructuring, LLC, is the
claims agent, maintaining the Web site https://dm.epiq11.com/Quorum
REMINGTON OUTDOOR: UMWA Seeks Appointment to Creditors' Committee
-----------------------------------------------------------------
The United Mine Workers of America asked the U.S. Bankruptcy Court
for the Northern District of Alabama to issue an order directing
the appointment of the labor union to the official committee of
unsecured creditors in Remington Outdoor Company Inc.'s Chapter 11
case.
In court papers, UMWA's attorney R. Scott Williams, Esq., at
Rumberger, Kirk & Caldwell, PC, said the "size and substantial
interests of the claims represented by the UMWA will be important
voices in shaping the outcome of the case."
"This bankruptcy proceeding is in its infancy and such an important
creditor constituency should not be overlooked as a threshold
matter," Mr. Williams said.
The UMWA represents approximately one-third of the workforce of
Remington.
The National Labor Relations Board had previously initiated a
complaint against the company for its alleged violation of its
collective bargaining agreement with the labor union. The damages
arising from the company's actions against UMWA members is
conservatively estimated in excess of $300,000.
"Despite the knowledge of this dispute, [Remington] failed to
identify the UMWA on the top 40 list of unsecured creditors filed
with this court," Mr. Williams said.
Mr. Williams can be reached at:
R. Scott Williams, Esq.
Frederick D. Clarke, III, Esq.
Rumberger, Kirk & Caldwell, PC
2001 Park Place North, Suite 1300
Birmingham, Alabama 35203
Telephone: 205.327.5550
Facsimile: 205.326.6786
Email: swilliams@rumberger.com
fclarke@rumberger.com
About Remington Outdoor Company
Remington Outdoor Company, Inc. and its affiliates are
manufacturers of firearms, ammunition and related products for
commercial, military, and law enforcement customers throughout the
world. They operate seven manufacturing facilities located across
the United States. The companies' principal headquarters are
located in Huntsville, Alabama.
Remington Outdoor Company and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ala. Lead Case
No. 20-81688) on July 27, 2020. At the time of the filing, Debtord
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Judge Clifton R. Jessup Jr. oversees the cases.
Debtors have tapped O'Melveny & Myers LLP as their bankruptcy
counsel, Burr & Forman LLP as local counsel, M-III Advisory
Partners LP as financial advisor, Ducera Partners LLC as investment
banker, and Prime Clerk LLC as notice, claims and balloting agent.
The U.S. Bankruptcy Administrator for the Northern District of
Alabama appointed a committee of unsecured creditors on August 6,
2020. The committee is represented by Fox Rothschild, LLP and
Baker Donelson Bearman Caldwell & Berkowitz, PC.
RIVERBEND ENVIRONMENTAL: Greenway Buying Assets for $5.13M Cash
---------------------------------------------------------------
Riverbend Environmental Services, LLC, asks the U.S. Bankruptcy
Court for the Southern District of Mississippi to (i) authorize the
private sale of its solid waste landfill, real property and other
assets located in Jefferson County, Mississippi; Warren County,
Mississippi; and East Baton Rouge Parish, Louisiana, other than
those assets specifically excluded, and all easements and rights
appurtenant thereto, as designated in their Asset Purchase
Agreement with Greenway Environmental Services, LLC, for $5.13
million, cash; (ii) authorize the Purchaser's operation of the
Purchased Assets as designated in the Operation Agreement as
required by the Mississippi Department of Environmental Quality
("MDEQ") in the Agreed Order and authorizing the Debtor's joinder
in such Agreed Order; and (iii) grant the Purchaser a superpriority
administrative expense claim for its Operations Period Expenses and
Breakup Fee, and a senior, priming lien in all of the Debtor's real
property for its Remediation Expenses, in the event that the
proposed sale is not closed with the Purchaser as required under
the Agreement, and for its Breakup Fee, in the event that a Sale
should be closed with a different purchaser.
For the better part of a year, the Debtor's management has
diligently sought to obtain a stalking horse for the purchase of
the Purchased Assets. Their marketing efforts yielded one bid for
the Baton Rouge transfer station only, and one bid, that of the
Purchaser, for the Purchased Assets as a whole. They determined
that the bid of the Purchaser was the only bid for the Purchased
Assets that could close within the time allotted under the cease
and desist deadline set forth in Order No. 7053-20 issued by the
MDEQ on July 7, 2020, that requires it to discontinue waste
acceptance activities by no later than Aug. 6, 2020, and was
otherwise the highest and best bid for the Purchased Assets.
As such, the Debtor believes, in its business judgment, that the
marketing process has demonstrated that it is unlikely an auction
would lead to a higher and better bid for the Purchased Assets and
seeks to sell the Purchased Assets to the Purchaser pursuant to a
private sale free and clear of all Liens, Claims, Encumbrances and
Interests.
The Debtor owns a commercial solid waste landfill located at 4451
Highway 61 North, Fayette, Mississippi in Jefferson County, which
has been issued Solid Waste Management Permit No. SW0320040549, as
well as air and wastewater, stormwater and pretreatment permits by
the Mississippi Environmental Quality Permit Board.
On Oct. 25, 2018, in response to unresolved violations at the
Landfill of the Permit and of Rule 1.4 of the Mississippi
Nonhazardous Solid Waste Management Regulations, the Debtor and the
Commission entered into Agreed Order No. 689918. While the Debtor
has made its best efforts to comply with A0 6899 18, due to the
persistent lack of capitai necessary to address the Violations, it
has been unable to do so. Hence, the Order 7053-20.
The Purchaser had been conducting its due diligence for some time
when Order 7053-20 was issued. The Purchaser and the Debtor have
accelerated the sale process to arrive at the Agreement and the
MDEQ Agreed Order for which the Debtor asks approval though the
Motion. Under the MDEQ Agreed Order, prior to Closing, as an
accommodation to MDEQ and the Debtor, the Purchaser is willing to
assume all of the operations of the Purchased Assets, as authorized
by the Court through the Sale Order.
Absent the Purchaser's willingness to assume responsibility for
continued operations after Aug. 6, 2020, the Debtor will lose the
prospect of realizing the going concern value of its assets and
operations.
The salient terms of the Stalking Horse APA are:
a. Purchased Assets: All assets other than those excluded,
including without limitation, all interests of the Debtor and
co—owners in the Co-Owned Property, the Governmental
Authorizations, the Personal Property, Assumed Contracts, and other
assets as described in Section 2.02(A).
b. Purchase Price: Cash of $5.13 million
c. Holdback Deposit: $300,000
d. Assumed Liabilities: The Purchaser is not assuming any
liabilities of the Debtor other than certain Assumed Contracts
listed in Exhibit A.
e. Warranty: The Sale is "as is, where is" with no warranty
other than title, as contained in Section 2.01.
f. Operations of the Landfill: Under the Agreed Order, the
Purchaser is required to operate the landfill and to make certain
capital repairs and improvements prior to closing.
g. Breakup Fee: $500,000
h. Closing Date: A date two days after all conditions of
closing have been satisfied or such date as mutually agreed-to by
the Parties, as indicated in Section 9.01.
i. The Debtor asks relief from the stay imposed by Bankruptcy
Rule 6004(h).
The Debtor believes that a private sale of the Purchased Assets is
the only possibility that will provide for the Estate to receive
the going concern value of the Purchased Assets, while at the same
time avoiding the anticipated $15 million plus remediation claim
from the MDEQ that will most certainly occur should Order 7053-20
go into effect on Aug. 6, 2020 without a Sale. Accordingly, it
believes that the Purchase Price is a fair and reasonable value for
the Purchased Assets.
The Debtor asks that the Court approves the Sale of the Purchased
Assets as free and clear on any liens, claims and interests whether
now known, with any such liens, claims and interests attaching
instead to the proceeds of any such Sale.
All creditors and interested parties will receive notice of the
Sale and will be provided with an opportunity to be heard. The
Debtor submits that such notice is adequate for entry of an order
approving the Motion and waiving the 14 days waiting period under
Bankruptcy Rule 6004(h).
A copy of the Agreement is available at
https://tinyurl.com/y2kpkl6z from PacerMonitor.com free of charge.
About Riverbend Environmental Services
Riverbend Environmental Services, LLC, based in Fayette, MS,
sought
Chapter 11 protection (Bankr. S.D. Miss. Case No. 19-03828) on
Oct.
25, 2019. In the petition signed by Jackie McInnis, manager, the
Debtor was estimated to have $10 million to $50 million in assets
and $1 million to $10 million in liabilities. The Hon. Katharine
M. Samson oversees the case. Craig M. Geno, Esq., of the Law
Offices of Craig M. Geno, PLLC, serves as bankruptcy counsel to
the
Debtor. Watkins & Eager, PLLC is special counsel.
RUBIE'S COSTUME: Sets Bidding Procedures for All Assets
-------------------------------------------------------
Rubie's Costume Company, Inc., and its debtor affiliates ask the
U.S. Bankruptcy Court for the Eastern District of New York to
authorize the bidding procedures in connection with the sale of
substantially all assets to a joint venture of a
multi-billion-dollar investment fund and a strategic operator,
subject to overbid.
The total Purchase Price is comprised of: (i) the payment by the
Buyer and/or NewCo of the full amount of the estates' indebtedness
under the DIP Loan (as of the closing date, anticipated to be
approximately $45 million, plus interest and fees) and to the
Debtors' pre-petition lenders, the Bank Group (approximately
$35,725,000, plus interest and fees) plus pay or assume the $5
million SWAP liability as well as replace $11.7 million of undrawn
letters of credit; (ii) the Buyer and/or NewCo's assumption of all
post-petition non-professional obligations of the Debtors' estates;
and (iii) NewCo will pay the Debtors' estates $2 million for the
payment of the estates’ creditors pursuant to the provisions of a
plan of liquidation.
By DIP Financing Order dated July 15, 2020, the Court approved the
Debtors' proposed DIP Financing and set various deadlines for the
Debtors marketing efforts for either sale or exit financing.
Specifically, the DIP Financing Order sets forth the following
deadlines:
i. Aug. 1, 2020: The Debtors were required to execute a
letter of intent for a purchase or a term sheet generating proceeds
sufficient to pay all pre-petition secured indebtedness.
ii. Aug. 4, 2020: The Debtors are required to file (a) a
letter of intent for a purchase or a term sheet, (b) a motion
seeking approval of procedures governing a sale of the Debtors’
assets, and (c) file a report indicating the Debtors’ compliance
with the guidelines set forth in the DIP Financing Order.
iii. Sept. 11, 2020: The Debtors will have obtained Court
approval of the Sale.
iv. Sept. 25, 2020: The Debtors will have held a closing on
the Sale and, with the proceeds therefrom, satisfied the Bank Group
Indebtedness and the DIP Loan, in full.
The Debtors intend and are poised to launch a process for the sale
of substantially all of their assets as a going concern to the
Buyer, or such other buyer which makes a higher or better offer.
They anticipate that within a very tight timeframe -- by Sept. 25,
2020, as required by the DIP Financing Order -- all secured debt
(of both the DIP Lender and the Bank Group) will be paid in full,
all postpetition trade payables will be assumed and paid in the
ordinary course of business, and most of their employees will be
retained by the Buyer.
The Beige Shareholders will receive a minority interest in NewCo,
the entity to be formed to acquire the Assets on behalf of the
Buyer. The Buyer has determined that the continued active
involvement and participation of the Beige Shareholders is critical
for going concern purposes in light of their decades -- long
experience with the company and in the costume industry, and key
relationships with licensors, vendors, customers and other parties.
To be sure, the Beige Shareholders are making a substantial
contribution to make the Sale happen, including waiver of
approximately $7 million in pre- and post-petition rent claims,
waiving up to $1.5 million in post-closing rental obligations,
depositing $75,000 in personal funds against the Buyer's due
diligence expenses, and backstopping the Buyer's due diligence and
other expenses if the Bid Protections are not approved by the
Court.
The relief sought by the Motion encompasses a two-part request
pursuant to which the Debtors are asking to sell substantially all
of their assets, other than their projected cash on hand at closing
of $7 million to the Buyer (or its designee(s)), subject to higher
or better offers and the Court's approval. After a marketing
process and extensive negotiations, the Debtors and the Buyer have
entered into a letter of intent dated July 31, 2020 ("LOI").
As an initial matter, the Debtors are asking entry of the Bid
Procedures Order approving among other things (i) the Bid
Procedures, (ii) the time, date, and place for the Auction of the
Acquired Assets and the Sale Hearing, (iii) the Sale Notice, and
(iv) approval of, and authorization to pay, Bid Protections to the
Buyer in accordance with the terms of the LOI.
By the second prong of the Motion, the Debtors ask entry of the
Sale Order approving, among other things, at the conclusion of the
Sale Hearing, (i) the sale of the Acquired Assets, free and clear
of all liens, claims, encumbrances, and other interests with such
liens, claims and encumbrances and other interests to attach to the
proceeds of such sale, and the assumption and assignment of the
Assigned Contracts to the Buyer or any other Successful Bidder at
the Auction; and (ii) the segregation of funds for the payment of
the Bid Protections, as may be allowed by the Court.
By a purchase agreement, which is currently being drafted, subject
to confirmatory due diligence, and which is required by the LOI to
be executed by Aug. 28, 2020, the Buyer, by and through a newly
formed entity ("NewCo"), will purchase the Acquired Assets. The
salient economic provisions of the proposed Sale, as it pertains to
the creditors of the estates, are: (i) the Buyer will provide funds
sufficient to satisfy the outstanding amounts due under the DIP
Loan and the secured obligations to the Bank Group, and will assume
all outstanding letters of credit; (ii) the Buyer will assume all
post-petition, non-professional trade liabilities of the Debtors;
(iii) the Buyer will provide $25 million of equity financing to
NewCo: (iv) pay $2 million in cash which will be paid to the
Debtors' estates in order to effectuate a plan of liquidation; and
(v) the Debtors' estates will retain $7 million in cash on hand, to
be utilized by the Debtors to effectuate a plan of liquidation.
The proceeds of the Sale will fund substantial payments to
creditors, including the complete satisfaction of the pre- and
post-petition secured indebtedness of the Debtors and the
assumption and payment in full of all post-petition
non-professional obligations of the Debtors by NewCo, and create a
$9 million pool of cash to fund a liquidating plan and make
distributions on the Debtors' pre and post-petition claims.
The LOI, which is the culmination of extensive marketing by the
Debtors and their investment banker SSG Advisors, LLC which
commenced on May 15, 2020, represents the best offer received by
the Debtors to date after a rigorous and extensive marketing
process, and
is in the best interests of creditors of the estates.
Notwithstanding the rigorous and extensive marketing process run by
SSG, the Proposed Purchase Agreement will be subject to higher and
better offers pursuant to the proposed Bid Procedures consistent
with the Debtors' fiduciary duties, and thus the Debtors may obtain
a new offer that is more favorable to the estates' creditors.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: TBD at 4:00 p.m. (EST)
b. Initial Bid: A value greater than the sum of (i) the Cash
Consideration of the Debtors' selected Stalking Horse Bid (ii) the
amount outstanding under the DIP Loan and the Bank Group
Indebtedness; (ii) the Break-Up Fee, (iii) the Expense
Reimbursement, (iv) any assumed liabilities contained in the
Stalking Horse Bid, and (v) a minimum Bid increment of $2 million
c. Deposit: $2 million
d. Auction: The Auction, if necessary, will take place on
Sept. (TBD), 2020 at (TBD) (EST) by Zoom videoconference, or in
such other manner (phone and/or other video platform) as the
Debtors will notify all Qualified Bidders that have submitted
Qualified Bids and the Consultation Parties.
e. Bid Increments: $1 million
f. Sale Hearing: Sept. 10, 2020, at 9:30 a.m. (EST)
g. Sale Objection Deadline: 4:00 p.m. (ET) seven days prior to
the Sale Hearing
h. Break-up Fee: 3% of the purchase price
i. Expense Reimbursement: $500,000
In the absence of the Sale, it is likely that the Debtors will no
longer be able to continue as a going concern, resulting in the
probable liquidation of the Debtors. Accordingly, the Debtors
submit that the Court should approve the proposed transaction and
bid procedures and, ultimately, approve the sale to the Buyer or
such other purchaser as may be deemed to have submitted the highest
or best offer for their assets.
Finally, the Debtors ask that the Court waives the 14-day stay
period required under Rule 6004(h).
A copy of the LOI and the Bidding Procedures is available at
https://tinyurl.com/y3htqgmv from PacerMonitor.com free of charge.
About Rubie's Costume Company
Rubie's Costume Company Inc. is a distributor, manufacturer and
designer of costume and party-related accessories that serve over
2,000 retail accounts. It also maintains licensing partnerships
with top studios like Nickelodeon, Warner Bros, Lucasfilm, Marvel,
and Disney for products inspired by WWE, Ghostbusters, Stranger
Things, DC Comics, JoJo Siwa, Harry Potter, and Star Wars.
Rubie's Costume Company and its affiliates sought Chapter 11
protection (Bankr. E.D.N.Y. Lead Case No. 20-71970) on April 30,
2020. Rubie's Costume was estimated to have $100 million to $500
million in assets and $50 million to $100 million in liabilities
as
of the filing.
Judge Alan S. Trust oversees the cases.
Debtors have tapped Meyer, Suozzi, English & Klein, P.C. and
Togut,
Segal & Segal LLP as bankruptcy counsel; BDO USA, LLP as
restructuring advisor; and SSG Capital Advisors LLC as investment
banker. Kurtzman Carson Consultants is the claims agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 18, 2020. The committee is represented by Arent
Fox, LLP.
SEMBLANCE MEDSPA: Case Summary & 18 Unsecured Creditors
-------------------------------------------------------
Debtor: Semblance Medspa LLC
59 North Pearl Street, Suite #2
Albany, NY 12207
Business Description: Semblance Medspa LLC provides medical spa
services in Albany, New York. It offers
body sculpting & contouring, skin
tightening, injectables, laser skin
rejuvination, aesthetic treatments, PRP
treatments, laser hair removal, laser vein
treatment, skin care products, and IV
hydration.
Chapter 11 Petition Date: August 19, 2020
Court: United States Bankruptcy Court
Northern District of New York
Case No.: 20-11110
Judge: Hon. Robert E. Littlefield Jr.
Debtor's Counsel: Justin A. Heller, Esq.
NOLAN HELLER KAUFFMAN LLP
80 State Street, 11th Floor
Albany, NY 12207
Tel: 518-449-3300
Email: jheller@nhkllp.com
Total Assets: $462,553
Total Liabilities: $1,551,854
The petition was signed by Farah Sajid, owner.
A copy of the petition containing, among other items, a list of the
Debtor's 18 unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/P2HKJIQ/Semblance_Medspa_LLC__nynbke-20-11110__0001.0.pdf?mcid=tGE4TAMA
SHADDEN LLC: Wumr Buying Greenwood Village Property for $1.8M
-------------------------------------------------------------
Shadden, LLC, asks the U.S. Bankruptcy Court for the District of
Colorado to approve its Contract to Buy and Sell Real Estate
(Residential) in connection with the sale of its real property and
improvements located at 9689 E. Prentice Circle, Greenwood Village,
Colorado to Scott Wurm for $1.8 million.
The Property is encumbered by several secured claims totaling
approximately $2,743,339 as follows: (i) 1st lien held by
Hunter-Kelsey I, LLC in the amount of $1,500,821; (ii) 2nd lien
held by Joseph Janetty in the amount of $1 million; and (iii) 3rd
lien held by West Rock Property Group in the amount of $200,000;
(iv) teal property taxes plus interest for the year 2019 to the
Arapahoe County Public Trustee in the amount of approximately
$15,550; (v) unredeemed liens to Arapahoe County Treasurer in the
amount of approximately $28,554; (vi) pro-rated 2020 real property
taxes through 8/28/20 in the amount of $10,099; (vii) Denver Water
for unpaid water plus escrow totaling $5,751; (viii) title
insurance - $2,939; and (ix) title escrow fee - $180.
During the course of its Chapter 11 case, the Debtor has been
actively marketing the Property in an attempt to sell the Property.
It has hired Compass Colorado, LLC as its broker, and filed a
motion to approve the listing contract and to employ Compass. The
deadline to object to the Compass motion was Aug. 5, 2020 and no
objections were filed. The Debtor intends to file a non-contested
certificate requesting an order from the Court as to Compass.
In connection with the marketing of the Property, the Debtor filed
a motion to approve a $100,000 post-petition loan from Compass to
fund improvements to the Property in order to bring it to sale
condition. The Office of the United States Trustee objected
("UST"). The Debtor and the UST entered into a stipulation
resolving the UST objections, which has been approved by the Court.
The terms of the Stipulation limit the repayment of the
post-Petition Date loan, and require the Debtor to pay a certain
amount to unsecured creditors after the sale of the Property.
The Debtor has entered into a Contract to Buy and Sell Real Estate
(Residential) dated July 20, 2020, as amended. The Agreement
provides for the sale of the Property to the Buyer for a purchase
price of $1.8 million. It also provides as follows: (i) $100,000
earnest money deadline of July 22, 2020; (ii) $250,000 cash at
closing; (iii) $1.44 million new loan for the purchase; (iv)
closing date of Aug. 28, 2020; and (v) various other deadlines and
stipulations.
At closing, the Debtor proposes to pay certain claims, with the
remainder to be sorted out through the Bankruptcy process. The
Debtor intends to pay at closing the following: (i) 1st lien held
by Hunter-Kelsey in the amount of $1.56 million (a discounted
payoff from additional interest that has accrued post-Petition
Date); (ii) real property taxes plus interest for the year 2019 to
the Arapahoe County Public Trustee in the amount of approximately
$15,550; (iii) payment of unredeemed liens to Arapahoe County
Treasurer in the amount of approximately $28,554; (iv) payment of
pro-rated real property taxes for 2020 - $10,099; (v) payment to
Denver Water for unpaid water plus escrow totaling $5,751; (vi)
realtor commissions of approximately $40,000 to 60,000; (vii) title
insurance - $2,939; (viii) and title escrow fee - $180.
This totals approximately $1,683,073. All of these figures are
provided by the title company and are the closest estimates of
these amounts. The remaining funds, or approximately $116,927 will
be held in trust at the Debtor's Bankruptcy counsel's office
pending further order from the Court. All valid liens will attach
to the remaining funds.
The following are not being paid at the closing of the Property,
but may be paid either in full or a portion of the stated amounts
pursuant to a confirmed Chapter 11 Plan as required under the
Stipulation with the UST: (i) $70,000 - post-Petition Date loan;
(ii) $25,000 - priority administrative fees and costs for the
estate (Bankruptcy counsel); and (iii) $38,000 - (or all remaining
net funds): general unsecured creditors. These amounts total
$133,000. The remaining funds of approximately $116,927 after
Closing Payments are paid are not sufficient to pay the entire
$133,000, however, the Debtor anticipates a further reduction of
payment from one or all of the creditors or set of creditors.
The post-Petition Date lender is the member of the Debtor, and as a
result, the category appears to be flexible. The Bankruptcy
counsel fees are estimated, and may not total $25,000. The only
way that the unsecured creditors receive less than $38,000 would be
an amendment to the stipulation with the UST. An unexpected
additional $10,099 was added to the tax liability in the past week,
and additional corrections were made to date. Nevertheless, the
Debtor believes the best course of action is to sell the Property,
and hold the proceeds from the sale, after payment of Closing
Payments, in trust for the benefit of the estate. Any further
payment will be made through a confirmed Chapter 11 plan and
pursuant to the Stipulation.
The second and third lien holders are not receiving any payment on
account of their secured claims. The Debtor has filed a Section
506 motion with respect to West Rock Property Group to deem that
secured interest as $0. The Debtor may also file a Section 506
motion as to the Janetty secured claim, however this may or may not
be necessary. These two claimants are anticipated to participate
in a payout of approximately $38,000 as part of the general
unsecured creditor class in the Debtor's anticipated Chapter 11
plan. The Hunter-Kelsey secured claim in the first position, with
interest through July 10, 2020, and not including costs of
collection, totals
$1,726,162. With the $54,000 in real property taxes owed on the
Property, and the realtor commission of $60,000, there is no equity
to secure the second and third liens held by Janetty and West Rock
Property Group.
The Purchase Price is the highest and best offer received by the
Debtor post-petition and is an arms'-length transaction. The
Debtor therefore asks authorization to sell the Property free and
clear of all liens, claims, and encumbrances.
A copy of the Contract is available at https://tinyurl.com/y4clscob
from PacerMonitor.com free of charge.
About Shadden LLC
Shadden LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 19-18726) on Oct. 8, 2019. At the
time of the filing, the Debtor had estimated assets of less than
$50,000 and liabilities of between $1 million and $10 million.
The
case has been assigned to Judge Kimberley H. Tyson. The Debtor
tapped Keri L. Riley, Esq., at Kutner Brinen, P.C., as its legal
counsel.
STAGE STORES: Gordon/Hilco Hold GOB Sales at 720 Stores
-------------------------------------------------------
Joint venture partners Gordon Brothers and Hilco Merchant Resources
announced that they have commenced "Going-Out-of-Business" sales at
720 Stage Stores, Inc. locations including Gordmans and all
associated brand stores across the United States. The Company filed
for Chapter 11 bankruptcy protection in May in order to explore
recapitalization options as part of a larger restructuring
strategy. The challenging preexisting market conditions were
exacerbated by the COVID-19 pandemic and prevented the retailer
from obtaining the required financing to continue operating stores
outside of bankruptcy. While the Company continues to follow a dual
path, going-out-of-business sales have now commenced across all
Gordmans and Stage stores as well as Bealls, Goody's, Palais Royal
and Peebles stores.
Beginning today, customers can take advantage of storewide
discounts of up to 60 percent off original ticketed prices. This
includes all new merchandise arrivals in Home, Missy, Women's,
Maternity, Men's, Kid's, Footwear and much, much more.
A spokesperson from Gordon Brothers and Hilco Merchant Resources
stated, "Customers can shop confidently, as stores have implemented
protocols to ensure a safe "easy in, easy out" shopping
environment. We encourage customers to take advantage of
significant discounts and shop early for the best selection. Store
teams remain committed to providing customers with the same great
experience, while offering even better deals and value."
About Stage Stores
Stage Stores, Inc. (SSI) and its affiliates --
http://www.stagestoresinc.com/-- are apparel, accessories,
cosmetics, footwear, and home goods retailers that operate
department stores under the Bealls, Goody's, Palais Royal, Peebles,
and Stage brands and off-price stores under the Gordmans brand.
Stage Stores operates approximately 700 stores across 42 states.
Stage's department stores predominately serve small towns and rural
communities, and its off-price stores are mostly located in
mid-sized Midwest markets.
Stage Stores, Inc. and affiliate Specialty Retailers, Inc., sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-32564) on
May 10, 2020.
The Company disclosed $1,713,713,000 of total assets and
$1,010,210,000 of total debt as of Nov. 2, 2019.
The Hon. David R. Jones is the case judge.
The Debtors tapped Kirkland & Ellis LLP as bankruptcy counsel;
Jackson Walker L.L.P. as local bankruptcy counsel; PJ Solomon,
L.P., is investment banker; Berkeley Research Group, LLC as
restructuring advisor; and A&G Realty Partners, LLC as real estate
consultant. Gordon Brothers Retail Partners, LLC, will manage the
Company's inventory clearance sales. Kurtzman Carson Consultants
LLC is the claims agent.
The Official Committee of Unsecured Creditors appointed in these
Chapter 11 Cases tapped Cooley LLP and Cole Schotz P.C. as
co-counsels and Province, Inc. as financial advisor.
STEIN MART: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------
The Office of the U.S. Trustee on Aug. 18 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 cases of Stein Mart Inc. and its
affiliates.
About Stein Mart
Stein Mart Inc. and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. M.D. Fla. Case Nos. 20-02387 to
20-02389) on Aug. 12, 2020. As of May 2, 2020, the Debtors had
total assets of $757.539 million and total liabilities of $791.248
million. Judge Jerry A. Funk oversees the cases. Debtors have
tapped Foley & Lardner LLP as their legal counsel, Clear Thinking
Group LLC as financial advisor, and Stretto as claims and noticing
agent.
STEM HOLDINGS: Reports $826K Net Loss for Third Quarter
-------------------------------------------------------
Stem Holdings, Inc., filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q, disclosing
a net loss attributable to the Company of $826,000 on $5.20 million
of net revenue for the three months ended June 30, 2020, compared
to a net loss attributable to the Company of $3.69 million on
$621,000 of net revenue for the three months ended June 30, 2019.
For the nine months ended June 30, 2020, Stem Holdings reported a
net loss attributable to the Company of $8.57 million on $8.82
million of net revenue compared to a net loss attributable to the
Company of $10.38 million on $1.31 million of net revenue for the
same period a year ago.
As of June 30, 2020, the Company had $46.39 million in total
assets, $17.72 million in total liabilities, and $28.67 million in
total shareholders' equity.
Stem Holdings said, "The existence of a worldwide pandemic, the
fear associated with COVID-19, or any, pandemic, and the reactions
of governments in response to COVID-19, or any, pandemic, to
regulate the flow of labor and products and impede the travel of
personnel, may impact our ability to conduct normal business
operations, which could adversely affect our results of operations
and liquidity. Disruptions to our supply chain and business
operations disruptions to our retail operations and our ability to
collect rent from the properties which we own, personnel absences,
or restrictions on the shipment of our or our suppliers' or
customers' products, any of which could have adverse ripple effects
throughout our business. If we need to close any of our facilities
or a critical number of our employees become too ill to work, our
production ability could be materially adversely affected in a
rapid manner. Similarly, if our customers experience adverse
consequences due to COVID-19, or any other, pandemic, demand for
our products could also be materially adversely affected in a rapid
manner. Global health concerns, such as COVID-19, could also
result in social, economic, and labor instability in the markets in
which we operate. Any of these uncertainties could have a material
adverse effect on our business, financial condition or results of
operations.
"These conditions raise substantial doubt as to the Company's
ability to continue as a going concern. Should the United States
Federal Government choose to begin enforcement of the provisions
under the Act, the Company through its wholly owned subsidiaries
could be prosecuted under the Act and the Company may have to
immediately cease operations and/or be liquidated upon their
closing of the acquisition or investment in entities that engage
directly in the production and or sale of cannabis.
"Management believes that the Company has access to capital
resources through potential public or private issuances of debt or
equity securities. However, if the Company is unable to raise
additional capital, it may be required to curtail operations and
take additional measures to reduce costs, including reducing its
workforce, eliminating outside consultants and reducing legal fees
to conserve its cash in amounts sufficient to sustain operations
and meet its obligations. These matters raise substantial doubt
about the Company's ability to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1697834/000149315220016022/form10-q.htm
About Stem Holdings
Headquartered in Boca Raton, Florida, Stem Holdings, Inc. --
http://www.stemholdings.com/-- is a multi-state, vertically
integrated, cannabis company that purchases, improves, leases,
operates and invests in properties for use in the production,
distribution and sales of cannabis and cannabis-infused products
licensed under the laws of the states of Oregon, Nevada,
California, and Oklahoma.
Stem Holdings reported a net loss of $28.98 million for the year
ended Sept. 30, 2019, compared to a net loss of $8.70 million for
the year ended Sept. 30, 2018. As of March 31, 2020, the Company
had $44.45 million in total assets, $16.58 million in total assets,
$27.87 million in total shareholders' equity.
LJ Soldinger Associates, LLC, in Deer Park, IL, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated March 1, 2020, citing that the Company and its
affiliates reported net losses of $28.985 million and $8.698
million, negative working capital of $2.635 million and $2.273
million and accumulated deficits of $37.082 million and $11.533
million as of and for the year ended Sept. 30, 2019 and 2018,
respectively. In addition, the Company has commenced operations in
the production and sale of cannabis and related products, an
activity that is illegal under United States Federal law for any
purpose, by way of Title II of the Comprehensive Drug Abuse
Prevention and Control Act of 1970, otherwise known as the
Controlled Substances Act of 1970. These factors raise substantial
doubt as to the Company's ability to continue as a going concern.
SUREFUNDING LLC: Asks Court to Extend Plan Exclusivity Thru Nov 10
------------------------------------------------------------------
SureFunding LLC asks the U.S. Bankruptcy Court for the District of
Delaware to extend the Debtor's exclusive right to file a Chapter
11 plan by 90 days, through and including November 10, 2020, and
the exclusive right to solicit acceptances to the plan also by 90
days, through and including January 10, 2021.
On June 1, 2020, the Court entered an oral order that, among other
things, suspended this case pending a ruling by the Nevada state
court on the Debtor's motion to reconsider the order appointing a
receiver. Proceedings have progressed with a hearing held on July
9, 2020, and the Court denied the Motion to Reconsider.
On July 22, 2020, the Debtor filed for a Motion to Stay Pending
Appeal and for Reconsideration of the Form of Receivership Order
and the Nevada state court granted a 30-day stay period for appeal
on July 30. With that, the Debtor is fully engaged and focused on
litigating a satisfactory resolution in Nevada, and as such has not
had the ability to fully devote all its resources to the
preparation of adequate information for the proposal of a chapter
11 plan.
The Debtor explains it needs a reasonable extension of its
exclusive right to undertake a plan confirmation process without
the costly disruption that would occur if competing plans were to
be proposed. Accordingly, the extension request, the Debtor
contends, is without prejudice to its creditors and will instead
benefit the Debtor's estate, its creditors, and all other key
parties-in-interest.
About SureFunding LLC
SureFunding, LLC, sought Chapter 11 protection (Bankr. D. Del. Case
No. 20-10953) on April 14, 2020. The Debtor was estimated to have
$10 million to $50 million in assets and liabilities.
Las Vegas-based SureFunding was founded by Jason and Justin
Abernathy in 2014 as a private investment vehicle. SureFunding
opened to outside investors -- many of which were family, friends
or business acquaintances -- in 2015. The Debtors' investments are
in short-term, high-yield assets.
Fox Rothschild LLP is the Debtor's bankruptcy counsel. Ted Gavin
of Gavin/Solmonese LLC is the chief restructuring and liquidation
officer.
Bayard, P.A. represents an Ad Hoc Committee of SureFunding
Noteholders.
SUSTAINABLE RESTAURANT: Gets Court OK for $2M Bankruptcy Sale Plan
------------------------------------------------------------------
Law360 reports that a Delaware bankruptcy judge on July 15, 2020,
approved West Coast sushi chain Sustainable Restaurant Holdings' $2
million asset sale bankruptcy plan, over the objections of the
company's recently fired CEO.
At a telephonic hearing, U.S. Bankruptcy Judge John Dorsey overrode
former CEO Kristofor Lofgren's objections to the sale process and
the plan's liability releases, saying the going concern sale was
"fair and reasonable" considering the impact of the COVID-19
pandemic on the restaurant industry. "I think the result here is
outstanding for the debtors and everyone else involved in the
case," he said.
About Sustainable Restaurant Holdings
Sustainable Restaurant Holdings was founded in 2008 together with
the launch of Bamboo Sushi, regarded as the world's first
sustainable sushi chain. In 2016,, it added quick-service poke
chain QuickFish. And in 2019, the company expanded in California by
opening the San Ramon location. It also has big plans of building
two more Bay Area restaurants, that include a waterfront Bamboo
Sushi on San Francisco's Embarcadero.
Sustainable Restaurant Holdings, Inc. and its debtor affiliates --
https://sustainablerestaurantgroup.com/ -- currently maintains 10
restaurants located in Oregon, Washington, Arizona, California, and
Colorado and operates under the "Bamboo Sushi" and "Quickfish"
brand names.
On May 12, 2020, Sustainable Restaurant Holdings and its affiliates
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
20-11087).
Sustainable Restaurant was estimated to have $10 million to $50
million in assets and $1 million to $10 million in liabilities as
of the bankruptcy filing.
The Debtors tapped KLEHR HARRISON HARVEY BRANZBURG LLP as legal
counsel; SSG ADVISORS, LLC, as investment banker; and GETZLER
HENRICH & ASSOCIATES LLC as restructuring advisor. OMNI AGENT
SOLUTIONS is the claims agent.
TATUNG COMPANY: Seeks 2-Month Exclusivity Extension
---------------------------------------------------
Tatung Company of America, Inc. asks the U.S. Bankruptcy Court for
the Central District of California in Los Angeles to extend the
periods within which the Company has the exclusive right to file a
plan of reorganization and obtain acceptances to the Plan for
approximately two months, to and including October 28 and December
28, 2020, respectively.
The Debtor explains that its efforts to preserve and maintain its
relationship with its suppliers and customers, and to streamline
and optimize its business operations have been slowed down by the
emergence of the Covid-19 pandemic, with its impact negatively
affected the Debtor's ability to reopen and operate its business
and the recent termination of the Debtor's contract with its
largest customer, HP Inc.
Still, the Debtor has been continuing to operate its business to
the extent possible, working tirelessly to identify feasible
restructuring strategies that will facilitate a successful exit
from the case, and has been paying, and will continue to pay its
post-petition operating expenses as they become due.
Now, the Debtor identified a feasible exit strategy, which provides
for the assignment of the claim of the Debtor's largest unsecured
creditor, Hemlock Semiconductor Operations LLC, to a third party.
The Debtor said discussions are still ongoing, with an agreement in
principle reached believed by the Debtors. The said strategy will
potentially pave the way for the filing of a confirmable Plan that
the Debtor hopes will be fully supported by East West Bank, the
Debtor's primary secured creditor, and the Official Committee of
Unsecured Creditors.
The Debtor's exclusive periods to file a Plan and obtain
acceptances will expire on August 28, 2020, and October 26, 2020,
respectively, absent an extension.
About Tatung Company of America
Founded in 1972, Tatung Company of America, Inc., is a privately
held California corporation headquartered in Long Beach,
California, that specializes in the manufacturing and distribution
of technology products for computers and electronics original
equipment manufacturers like personal computer monitors, home
appliances, point-of-sale equipment, air conditioners, coolers, and
purifiers.
The company also provides tech-solutions for some of the leading PC
system manufacturers and original equipment manufacturers (OEM)
around the world, including offerings like third-party logistics
and procurement services to individuals and corporate customers
globally.
The company expanded its market scope to provide world-class
products and services to the industrial and educational sectors.
Predominantly a business-to-business enterprise, it also
manufactures and distributes a variety of display products to the
gaming, educational, and security industries.
Tatung Company of America sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-21521) on Sept. 30,
2019. In the petition signed by CRO Jason Chen, the Debtor was
estimated to have $10 million to $50 million in both assets and
liabilities.
Judge Neil W. Bason is assigned to the case.
LEVENE, NEALE BENDER, YOO & BRILL L.L.P serves as the Debtor's
counsel. RSR Consulting, LLC, is the financial advisor.
Jason Chen is currently the acting Chief Restructuring Officer for
Tatung Company of America, Inc. The consulting firm E & W
Consulting LLC was retained by the Debtor shortly before the
commencement of the bankruptcy case on Sept. 13, 2019.
TEMPLAR ENERGY: Court Approves Ch. 11 Plan and $91M Asset Sale
--------------------------------------------------------------
Law360 reports that oil and gas driller Templar Energy LLC received
court approval July 16, 2020, from a Delaware bankruptcy judge for
its prepackaged Chapter 11 plan that is centered around an asset
sale that brought in $91 million.
During a virtual confirmation hearing, U.S. Bankruptcy Judge
Brendan L. Shannon overruled a plan objection from Templar's former
CEO David D. LeNorman and confirmed the Chapter 11 plan just 45
days after the company filed for bankruptcy. The plan will
distribute the proceeds of a $91 million sale of assets that Judge
Shannon also approved, with Presidio Investment Holdings LLC
emerging as winning bidder from a competitive auction.
About Templar Energy
Templar Energy LLC and its affiliates, founded in 2012, are
independent exploration and production companies, with a core focus
on the development and acquisition of oil and natural gas reserves
in the Greater Anadarko Basin of Western Oklahoma and the Texas
Panhandle.
Templar Energy and its operating subsidiaries --
http://templar.energy/-- have acquired substantial assets in the
Mid-Continent region covering, as of the Petition Date, 273,400 net
acres by directly leasing oil and gas interests from mineral
owners.
Templar Energy LLC and its affiliates sought Chapter 11 protection
(Bankr. D. Del. Case No. 20-11441) on June 1, 2020.
Templar Energy was estimated to have $100 million to $500 million
in assets and $500 million to $1 billion in liabilities.
Guggenheim Securities, LLC is acting as the Company's investment
banker, Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as
legal counsel, and Alvarez & Marsal North America, LLC, is acting
as financial advisor. Young Conaway Stargatt & Taylor, LLP, is
local co-counsel. Kurtzman Carson Consultants LLC is claims agent,
maintaining the page http://www.kccllc.net/TemplarEnergy
THIRD COAST: S&P Lowers ICR to 'B-' on Near-Term Refinancing Risk
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Texas-based
midstream company Third Coast Midstream LLC to 'B-' from 'B'. At
the same time, S&P continued to keep the ratings on CreditWatch,
where it placed them on April 24, 2020, with negative
implications.
S&P affirmed the 'B' issue-level rating on the senior unsecured
notes. It has revised the recovery rating to '2' from '3'. The '2'
recovery rating on the company's senior unsecured debt indicates
S&P's expectation for substantial (70%-90%; rounded estimate: 70%)
recovery in the event of payment default.
"We believe Third Coast faces several refinancing hurdles over the
next 18 months despite the significant reduction in debt. The
rating action reflects our view of near-term refinancing risks and
constrained liquidity in light of the approaching revolver expiry
in December 2020," S&P said.
Even if the company extends the revolving credit facility maturity,
the rating is constrained by the refinancing risks associated with
the $425 million of senior unsecured notes due in December 2021.
The revolver does not have enough available capacity to refinance
the notes.
"While we acknowledge the positive steps Third Coast has taken over
the past six months to deleverage its balance sheet, in our opinion
the risks associated with extension of the revolver and senior
unsecured notes remain given the company's indirect exposure to
lower energy commodity prices, which are materially lower due to
the COVID-19 pandemic. This has also significantly affected the
capital markets and access for the midstream industry," the rating
agency said.
S&P recognizes Third Coast has faced this refinancing risk before.
In July 2019, the company successfully extended the maturity date
of its revolver due in September 2019 to Dec. 16, 2020. However,
the rating agency also believes refinancing in the current market
environment is much more challenging than it was a year ago.
The company has taken multiple proactive actions to significantly
deleverage and reduce outstanding balances on its revolving credit
facility. Over the past two years, Third Coast paid down over $500
million of revolver debt and about $90 million of non-recourse
debt, which S&P has excluded from its debt calculations. The
company primarily used proceeds from non-core asset sales,
including the Bakken assets and the Lavaca gas gathering system, to
reduce indebtedness. As of March 31, 2020, the company had $210
million outstanding on its revolving credit facility due Dec. 16,
2020. S&P recognizes leverage significantly decreased to 4.1x as of
March 31, 2020 from over 10x as of fiscal year-end 2018.
S&P expects the company will continue to sell off non-core assets
to pay down the outstanding revolver balance. Third Coast recently
announced the sale of its portfolio of remaining natural gas
transmission assets to Black Bear Transmission. S&P expects the
company would use proceeds from this and other non-core asset
divestitures to pay down further revolver debt. However, the rating
agency believes Third Coast has limited options for paying down the
remaining balance on the revolver and the $425 million outstanding
on the senior unsecured notes due in December 2021. S&P's forecast
lowers throughput and earnings expectations for Third Coast's
assets, and the rating agency expects leverage to remain below 4x
over the next 12 months.
The business has transformed to concentrate on its offshore
pipelines and services business segment. In the past two years,
Third Coast divested the majority of its onshore assets.
Simultaneously, Third Coast also increased its interests in its
unconsolidated affiliates, including the Delta House floating
production system and the Pascagoula gas processing plant.
"We expect Third Coast will continue to derive most of its cash
flows from its offshore assets in the U.S. Gulf Coast and Gulf of
Mexico region. While this weakens our diversity assessment, we also
consider offshore activities as higher risk relative to onshore,
given their specialized nature and unique challenges. However, we
expect the remaining business to have lower capital requirements
compared to the prior onshore gathering asset business," S&P said.
The CreditWatch with Negative implications reflects near-term risks
associated with the extension of Third Coast's revolver due in
December 2020, as well as refinancing risks related to the senior
unsecured notes due in December 2021. S&P believes the company's
liquidity will be constrained given its upcoming debt payments are
sizable relative to its internal cash flow generation.
TIMBER PHARMACEUTICALS: Appoints Two New Members to Board
---------------------------------------------------------
Timber Pharmaceuticals, Inc. reports the appointment of David
Cohen, M.D. and Lubor Gaal, Ph.D. to its board of directors.
"We continue to add expertise and talent in the areas of drug
development and delivery to our team at Timber and welcome Dr.
Cohen and Dr. Gaal to the Board," said John Koconis, chief
executive officer of Timber. "Dr. Cohen is a renowned
dermatologist who has contributed to the development of global
treatment guidelines and has played an important role in advancing
research in many rare dermatologic conditions. Meanwhile, Dr. Gaal
has extensive experience as a biotech entrepreneur with a
successful track record in securing assets and executing licensing
and partnering transactions. We look forward to working closely
with both as we advance our clinical development pipeline."
Dr. Cohen is the Charles C. and Dorothea E. Harris Professor of
Dermatology at New York University School of Medicine, where he
also serves as Chief of Allergy and Contact Dermatitis, Vice
Chairman of Clinical Affairs, and Director of Occupational and
Environmental Dermatology. He was a founding board member for the
American Acne and Rosacea Society and previously served as
President of the American Dermatological Association, the American
Contact Dermatitis Society, the Dermatology Section of the New York
Academy of Medicine, and the New York Dermatological Association.
Dr. Cohen has also served on numerous boards including Kadmon,
Dermira, Vyteris, and Connetics. He received a B.S. in biomedical
science from the City University of New York, an M.D. from State
University of New York at Stony Brook School of Medicine, and an
M.P.H. in environmental science from Columbia University School of
Public Health.
Dr. Gaal brings more than two decades of business development,
external innovation, and licensing experience in biotechnology and
biopharmaceuticals. He is currently Senior Vice President and Head
of Europe for Locust Walk where he is responsible for executing
licensing, M&A, and financing transactions for biopharma companies
around the globe. Dr. Gaal previously served as Head of External
Innovation and Licensing for Almirall and held various roles at
Bristol-Myers Squibb including Head of Europe, Global Search and
Business Development. He has also held executive management roles
at NEURO3D, Vectron Therapeutics, Berlex Laboratories, Burrill &
Company, and Sandoz. Dr. Gaal has a B.Sc. in Neurobiology from the
University of Sussex and a Ph.D. in Neurosciences from the
University of California.
About Timber Pharmaceuticals, Inc.
Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation --
www.timberpharma.com -- is a biopharmaceutical company focused on
the development and commercialization of treatments for orphan
dermatologic diseases. The Company's investigational therapies
have proven mechanisms-of-action backed by decades of clinical
experience and well-established CMC (chemistry, manufacturing and
control) and safety profiles. The Company is initially focused on
developing non-systemic treatments for rare dermatologic diseases
including congenital ichthyosis (CI), facial angiofibromas (FAs) in
tuberous sclerosis complex (TSC), and localized scleroderma.
BioPharmX recorded a net loss and comprehensive loss of $9.69
million for the year ended Jan. 31, 2020, compared to a net loss
and comprehensive loss of $17.26 million for the year ended Jan.
31, 2019. As of June 30, 2020, the Company had $14.80 million in
total assets, $16.96 million in total liabilities, $1.84 million in
series A convertible preferred stock, and a total members' and
stockholders' deficit of $3.99 million.
BPM LLP, in San Jose, California, the Company's auditor since 2014,
issued a "going concern" qualification in its report dated March
23, 2020 citing that the Company's recurring losses from
operations, available cash and accumulated deficit raise
substantial doubt about its ability to continue as a going concern.
TIMBER PHARMACEUTICALS: Posts $15.3 Million Net Loss in Q2
----------------------------------------------------------
Timber Pharmaceuticals, Inc., filed with the Securities and
Exchange Commission its quarterly report on Form 10-Q, disclosing
a net loss attributable to common stockholders of $15.28 million on
$0 of grant revenues for the three months ended June 30, 2020,
compared to a net loss attributable to common stockholders of
$194,194 on $0 of grant revenues for the three months ended
June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss attributable to common stockholders of $18.83 million on
$26,907 of grant revenues compared to a net loss attributable to
common stockholders of $282,995 on $0 of grant revenues for the
same period during the prior year.
As of June 30, 2020, the Company had $14.80 million in total
assets, $16.96 million in total liabilities, $1.84 million in
series A convertible preferred stock, and a total members' and
stockholders' deficit of $3.99 million.
"Since Timber became a public company in mid-May, we have continued
to execute on our strategic plan to develop and commercialize
treatments for orphan and rare dermatologic diseases. Orphan and
rare dermatology remains a very attractive market for Timber, as we
believe the seven years of U.S. market exclusivity provided for the
drugs in our strategic pipeline will enable them to reach
considerable value in the marketplace," said John Koconis, chief
executive officer of Timber.
"During the second quarter we announced that all 11 sites in the
CONTROL trial are open for TMB-001, and a significant portion have
also opened for TMB-002, enabling us to expand the enrollment of
patients in each of the Phase 2b clinical trials. We expect to
complete the enrollment of patients in both the TMB-001 and TMB-002
studies during the early months of 2021. We are also working to
advance the strategic options for the two assets we obtained in the
merger with BioPharmX. We believe these efforts are strengthened
by the notice we recently received from the European Patent Office
(EPO) that it intends to grant a patent for the Company's topical
composition of pharmaceutical tetracycline (including minocycline)
for dermatological use. Patents covering the BPX-01 and BPX-04
assets have previously been granted in the United States, South
Africa and claims related to the patents have been allowed in
Australia."
"We encountered significant one time charges and expenses in
connection with our merger and financing which are now behind us.
We expect that our cash balance of nearly $14 million will fund our
trials and operations through the completion of both the current
TMB-001 and TMB-002 studies, which are expected to conclude in Q3
2021. With the merger-related costs now behind us, the Phase 2b
clinical trials well underway, and supported by a strong balance
sheet, we believe that Timber is well positioned to achieve its
goals," concluded Mr. Koconis.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1504167/000110465920096506/tm2026692-1_10q.htm
About Timber Pharmaceuticals
Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation --
http://www.timberpharma.com/-- is a biopharmaceutical company
focused on the development and commercialization of treatments for
orphan dermatologic diseases. The Company's investigational
therapies have proven mechanisms-of-action backed by decades of
clinical experience and well-established CMC (chemistry,
manufacturing and control) and safety profiles. The Company is
initially focused on developing non-systemic treatments for rare
dermatologic diseases including congenital ichthyosis (CI), facial
angiofibromas (FAs) in tuberous sclerosis complex (TSC), and
localized scleroderma.
BioPharmX recorded a net loss and comprehensive loss of $9.69
million for the year ended Jan. 31, 2020, compared to a net loss
and comprehensive loss of $17.26 million for the year ended Jan.
31, 2019. As of Jan. 31, 2020, the Company had $2.13 million in
total assets, $2.47 million in total liabilities, and a total
stockholders' deficit of $339,000.
BPM LLP, in San Jose, California, the Company's auditor since 2014,
issued a "going concern" qualification in its report dated March
23, 2020 citing that the Company's recurring losses from
operations, available cash and accumulated deficit raise
substantial doubt about its ability to continue as a going concern.
TOUCHPOINT GROUP: Incurs $808K Net Loss in Second Quarter
---------------------------------------------------------
Touchpoint Group Holdings, Inc., filed with the Securities and
Exchange Commission its quarterly report on Form 10-Q, disclosing
a net loss of $808,000 on $150,000 of revenue for the three months
ended June 30, 2020, compared to a net loss of $1.15 million on
$48,000 of revenue for the three months ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss of $846,000 on $190,000 of revenue compared to a net loss of
$1.84 million on $48,000 of revenue for the same period a year
ago.
As of June 30, 2020, the Company had $4.63 million in total assets,
$3.06 million in total liabilities, $605,000 in temporary equity,
and $966,000 in total stockholders' equity.
Touchpoint said, "Historically, the Company has incurred net losses
and negative cash flows from operations which raise substantial
doubt about the Company's ability to continue as a going concern.
The Company has principally financed these losses from the sale of
equity securities and the issuance of debt instruments.
"The Company said it will be required to raise additional funds
through various sources, such as equity and debt financings. While
the Company believes it is probable that such financings could be
secured, there can be no assurance the Company will be able to
secure additional sources of funds to support its operations, or if
such funds are available, that such additional financing will be
sufficient to meet the Company's needs or on terms acceptable to
us."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/225211/000121390020022572/f10q0620_touchpointgroup.htm
About Touchpoint
Touchpoint Group Holdings, Inc., headquartered in Miami, Florida,
-- http://www.touchpointgh.com/-- is a media and digital
technology acquisition and software company, which owns Love Media
House, a full-service music production, artist representation and
digital media business. The Company also and holds a majority
interest in 123Wish, a subscription-based, experience marketplace,
as well as majority interest in Browning Productions &
Entertainment, Inc., a full-service digital media and television
production company.
Touchpoint Group reported a net loss of $6.63 million for the year
ended Dec. 31, 2019, compared to a net loss of $14.58 million for
the year ended Dec. 31, 2018. As of March 31, 2020, the Company
had $4.49 million in total assets, $2.52 million in total
liabilities, $605,000 in temporary equity, and $1.37 million in
total stockholders' equity
Cherry Bekaert LLP, in Tampa, Florida, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
April 24, 2020 citing that the Company has recurring losses and
negative cash flows from operations that raise substantial doubt
about its ability to continue as a going concern.
TRANS-LUX CORP: Incurs $1.35 Million Net Loss in Second Quarter
---------------------------------------------------------------
Trans-Lux Corporation filed with the Securities and Exchange
Commission its quarterly report on Form 10-Q, disclosing a net loss
of $1.35 million on $2.05 million of total revenues for the three
months ended June 30, 2020, compared to a net loss of $365,000 on
$3.75 million of total revenues for the three months ended June 30,
2019.
For the six months ended June 30, 2020, the Company reported a net
loss of $2.39 million on $3.96 million of total revenues compared
to a net loss of $888,000 on $7.35 million of total revenues for
the six months ended June 30, 2019.
As of June 30, 2020, the Company had $10.78 million in total
assets, $14.94 million in total liabilities, and a total
stockholders' deficit of $4.15 million.
Trans-Lux said, "Due to the onset of the coronavirus in the six
months ended June 30, 2020, the Company experienced delays in
shipments from suppliers in Asia, followed by a brief shutdown of
our manufacturing facility in Missouri, as well as a reduction in
sales orders from customers. As a result, the Company incurred a
net loss of $2.4 million in the six months ended June 30, 2020 and
had a working capital deficiency of $5.1 million as of June 30,
2020.
"The Company is dependent on future operating performance in order
to generate sufficient cash flows in order to continue to run its
businesses. Future operating performance is dependent on general
economic conditions, as well as financial, competitive and other
factors beyond our control, including the impact of the current
economic environment, the spread of major epidemics (including
coronavirus) and other related uncertainties such as government
imposed travel restrictions, interruptions to supply chains and
extended shut down of businesses. In order to more effectively
manage its cash resources, the Company had, from time to time,
increased the timetable of its payment of some of its payables,
which delayed certain product deliveries from our vendors, which in
turn delayed certain deliveries to our customers.
"There is substantial doubt as to whether we will have adequate
liquidity, including access to the debt and equity capital markets,
to operate our business over the next 12 months from the date of
issuance of this Form 10-Q. A stockholder of the Company has
committed to providing additional capital up to $2.0 million, to
the extent necessary to fund operations. The Company continually
evaluates the need and availability of long-term capital in order
to meet its cash requirements and fund potential new
opportunities."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/99106/000151316220000177/form10q.htm
About Trans-Lux
Headquartered in New York, New York, Trans-Lux Corporation --
http://www.trans-lux.com/-- designs and manufactures TL Vision
digital video displays for the financial, sports and entertainment,
gaming, education, government, and commercial markets. With a
comprehensive offering of LED Large Screen Systems, LCD Flat Panel
Displays, Data Walls and scoreboards (marketed under Fair-Play by
Trans-Lux), Trans-Lux delivers comprehensive video display
solutions for any size venue's indoor and outdoor display needs.
Trans-Lux reported a net loss of $1.40 million for the year ended
Dec. 31, 2019, compared to a net loss of $4.69 million for the year
ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $12.25
million in total assets, $13.99 million in total liabilities, and a
total stockholders' deficit of $1.74 million.
TRUDY’S TEXAS STAR: To be Purchased for $6.5 Million
------------------------------------------------------
Ben Coley of FSR reports that private equity firm Hargett Hunter
Capital Management has agreed to purchase Texas-based chain Trudy's
Texas Star out of bankruptcy for $6.5 million.
The firm prevailed at an auction on July 23. A hearing to approve
the transaction was slated Aug. 17. The North Carolina-based firm
outbid Austin restaurant Steiner Steakhouse, which bid $6.45
million.
The brand operates Trudy's North Star, Trudy's Texas Star, Trudy's
South Star, and South Congress Cafe. It was founded in 1977 by
Gary Wayne Truesdell. Due to health concerns, he recently stepped
aside and allowed his son, Gary Stephen Truesdell, to run the
restaurant.
The restaurant filed for bankruptcy on Jan. 22. According to the
filing, its financial woes began with the opening of Trudy's Four
Star in 2011, which included a 13,000-square-foot main floor as
well as a basement and rooftop patio. The unit lost almost $1
million per year until it closed in January 2019.
The losses from the store placed a "substantial debt" on the
company. Soon, the organization became delinquent on payroll
taxes, state taxes, and obligations to suppliers and employees.
The filing states Trudy's filed bankruptcy in response to a levy
from the IRS, which froze the brand's credit card receipts.
At the time of the filing, Trudy's employed 275 full and part-time
employees at its three operating locations. When one location
temporarily closed in November because of a fire, its employees
were reassigned to other Trudy's locations.
Jeff Brock, Hargett Hunter's founder and managing partner, told the
Austin Business Journal that his firm will "put some tender loving
care into the facilities" and ensure "we update everything." He
said the private firm doesn't have any plans for major expansion.
"What we want to do is get it right," Brock told the publication.
"Everything else will fall into place."
Hargett Hunter currently has six restaurant brands in its
portfolio, including Marugame Udon, Cajun Steamer Bar & Grill,
Live.Eat.Surf Restaurants, Original ChopShop Co., Bellagreen, and
STACKED.
The brand has reportedly been hit hard by the pandemic. Steve
Sather, attorney for Trudy's, said earlier in July that sales were
about 25 percent to 30 percent of prior year volumes, according to
the Austin Business Journal.
Gary Stephen Truesdell referred to it as living paycheck to
paycheck.
"We got to the point a couple of times where we wondered if we were
going to be able to make payroll,” he said to to media outlet.
"We're keeping our employees employed and we’re paying our
taxes."
About Trudy's Texas Star
Trudy's Texas Star, Inc., an Austin, Texas-based company that
operates a chain of restaurants, filed a Chapter 11 petition
(Bankr. W.D. Tex. Case No. 20-10108) on Jan. 22, 2020. At the time
of the filing, the Debtor was estimated to have $1 million to $10
million in both assets and liabilities. The petition was signed by
Stephen Truesdel, authorized representative. Judge Tony M. Davis
oversees the case. Stephen W. Sather, Esq., at Barron & Newburger,
PC, is Debtor's bankruptcy counsel.
TTK RE ENTERPRISE: Madle Buying Somers Point Property for $217K
---------------------------------------------------------------
TTK RE Enterprises, LLC, filed with the U.S. Bankruptcy Court for
the District of New Jersey a notice of its proposed private sale of
the residential property located at 122 Devon Road, Somers Point,
New Jersey to JoAnne Madle for $217,000.
The Debtor owned approximately 48 residential properties in
southern New Jersey as of the Petition Date. Its business consists
of acquiring and leasing of residential real properties. Among the
rental units owned by Debtor is the Property.
As of the Petition Date, the Debtor was indebted to Corevest
American Finance Lender, LLC in the amount of $2,144,457 as set
forth in Proof of Claim No. 44 filed by Situs on Jan. 7, 2020. The
Situs Claim is secured by a mortgage against 19 of the Debtors real
properties, including the Property as of the Return Date. The
Situs mortgage against the Property dated April 25, 2018 was
recorded on July 25, 2018 in the Atlantic County Clerk's Office, as
Instrument #2018037889. The Situs Claim is also secured by the
rents from the real properties against which Situs possesses a
mortgage(s), including the Property.
According to the Title Report, the Property is also subject to the
following:
(a) Tax Sale Certificate (Cert No. 11-00050) sold to FNA
Jersey Lien Services, LLC on March 24, 2011, recorded on April 14,
2011, as Instrument No. 2011024465, in the amount of $93 for 2010
sewer charges;
(b) Tax Sale Certificate (Cert No. 1300077) sold to US Bank
Cust for ProCap II, LLC on March 21, 2013, recorded on May 29,
2013, as Instrument No. 2013032918, in the amount of $172.16 for
2012 sewer charges;
(c) Tax Sale Certificate (Cert No. 14-00058 sold to Mark
Naughton on Dec. 11, 2014, recorded on Jan. 5, 2015 as Instrument
No. 2015000356, in the amount of $97 for 2013 sewer charges (Tax
Sale Certificates);
(d) judgment dated Nov. 6, 2019 (subsequent to the Petition
Date) in favor of Fox Capital Group, Inc. in the amount of
$193,708 against non-debtor entity by the name of TTK Real Estate
Investments LLC, which entity is also owned by the Debtor's
principal, Emily Vu; and
(e) judgment dated Dec. 30, 2019 (subsequent to the Petition
Date) in favor of John M. Applegate in the amount of $619,140
against non-debtor entity by the name of TTK Real Estate
Investments LLC, which entity is also owned by the Debtor's
principal, Emily Vu which appear on the Title Report.
The Situs mortgage against the Property being far in excess of the
value of the Property.
The Debtor proposes to sell the Property free and clear of all
liens, encumbrances, claims, and interests that may be asserted by
any entity claiming an interest therein including, but not limited
to, the Fox Capital Judgment and Applegate Judgement, both of which
were entered against a non-debtor entity and subsequent to the
Debtor's Petition Date, with the net proceeds of the sale of the
Property, after normal costs attendant with closing, Sotheby's
real estate commission and any amounts owed on account of the Tax
Sale Certificates to be paid to Situs on account of the Situs
Mortgage in exchange for Situs' release of the Situs Mortgage
against the Property.
The Property has been listed for sale with Soleil Sotheby's
International Realty and has been actively marketed by Sotheby's,
pursuant to an Order of the Court authorizing the Debtor's
retention of Sotheby's.
As the result of the efforts of Sotheby's, the Debtor has entered
into a Contract for Sale of the Property with the Buyer for the sum
of $217,000, subject to the approval of the Court, which would
entitle Sotheby's to a commission of $10,850 at the time of closing
on the Sale of the Property. d
Except for any transfer Taxes associated with the sale or as
otherwise provided for in the Agreement, all costs relating to the
sale and settlement of the Property, including all searches and
title search fees, all survey fees, all title company settlement
charges and title insurance costs, will be the obligation of the
Purchaser at the time of closing.
All property taxes, all public utility charges, rents and like
charges, if any, relating to the Property will be pro-rated as of
Closing. Settlement at Closing will be made on proration of
estimates of such taxes and charges with net balances payable by
either Party at the time of closing.
The Debtor submits that at the time of closing the proceeds of the
sale of the Property should be paid as follows:
a. Normal costs attendant with closing on the sale of the
Property (real estate, taxes, utilities, et.), subject to Situs
review and approval prior to closing on the sale of the Property;
b. 5% of the Purchase Price ($10,850) to Sotheby’s, to be
split equally with any participating/cooperating broker in
connection with the sale of the Property;
c. Tax Sale Certificates; and
d. All remaining proceeds to Situs on account of the Situs
Secured Claim.
The Debtor believes the proposed sale price to represent the
highest and best price which can be obtained for the Property, and
Situs has consented to the proposed sale of the Property to the
Purchaser for $217,000. Because the Debtor believes the $217,000
purchase price for the Property is the highest and best offer which
the Debtor will receive for the Property, it is in the Debtor's
best business judgment to proceed with the sale of the Property to
the Purchaser.
Finally, the Debtor asks that the stay of an order granting the
Motion under Bankruptcy Rule 6004(h) be waived for cause because
the Purchaser intends to close on Aug. 3, 2020 and the Debtor is
concerned that the Purchaser will refuse to close if he cannot do
so by that date. Contemporaneously with the Motion, the Debtor is
filing an Application to have the Motion heard on an expedited
basis.
A copy of the Contract is available at https://tinyurl.com/y4zz7ndt
from PacerMonitor.com free of charge.
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.
U.S.A. PARTS: Court Narrows Claims in Suit vs Chiacchieri, Corrado
------------------------------------------------------------------
Defendants Michael Chiacchieri and Christopher Corrado in the case
captioned U.S.A. PARTS SUPPLY, CADILLAC U.S.A. AND OLDSMOBILE
U.S.A. LIMITED PARTNERSHIP, Plaintiff, v. MICHAEL CHIACCHIERI and
CHRISTOPHER CORRADO, Defendants, AP No. 3:20-ap-00024 (Bankr.
N.D.W.Va.) seek the dismissal of the adversary complaint filed
against them by Debtor U.S.A. Parts Supply, Cadillac, U.S.A. and
Oldsmobile U.S.A. Limited Partnership. In their motion, the
Defendants contend that the court should dismiss the adversary
proceeding because the court lacks subject matter jurisdiction and
because the Debtor otherwise fails to state a claim upon which the
court can grant relief.
In opposition, the Debtor contends that its Amended Complaint
should survive the motion to dismiss.
Bankruptcy Judge David L. Bissett grants the Defendants' motion to
dismiss Count I but denies the motion as to Counts II and III.
The Debtor is a Maryland limited partnership with its principal
place of business in Kearneysville, West Virginia. The Defendants
purport to be limited partners of the Debtor. On August 7, 2018,
the Defendants filed a complaint against the Debtor and Michael
Cannan in the Circuit Court for Montgomery County, Maryland, to
place the Debtor in receivership. The Defendants alleged numerous
actions against the Debtor and Mr. Cannan which seemingly arose
from Mr. Cannan's management of the Debtor. On Feb. 13, 2019, after
the Debtor admittedly failed to defend in the MD Receivership
Proceeding, the court ordered the appointment of Cheryl E. Rose as
Receiver to conduct an accounting, pursue avoidable transfers under
state law, wind-up the Debtor's business with court approval,
collect all sums the Debtor was entitled to recover from Mr. Cannan
and third parties, and otherwise undertake the duties of a receiver
under the laws of Maryland.
On Oct. 10, 2019, the Maryland court entered summary judgment for
the Defendants and found the Debtor and Mr. Cannan jointly and
severally liable to the Defendants for the sum of $300,000. Of the
total sum, the court awarded "the Plaintiffs who [pursued that]
action" $100,000 as an administrative expense of the Receivership
for expenses they incurred associated with the action and $200,000
as an "allowed general unsecured claim against the Receivership
Estate . . . ." Moreover, the Summary Judgement Order stated that
the Receiver "shall continue to perform her duties" in accordance
with the Maryland court's prior order. On Dec. 18, 2019, the
Defendants allegedly domesticated the Summary Judgment Order in
Jefferson County, West Virginia.
On March 22, 2020, the Debtor filed its voluntary petition for
Chapter 11 relief. On May 26, 2020, the Debtor filed its Complaint
which began this adversary proceeding. On June 4, 2020, the
Defendants filed their first motion to dismiss in the adversary
proceeding. The court subsequently entered an order in the
bankruptcy case that narrowed the issues in this adversary
proceeding. However, the court permitted an Amended Complaint,
which the Debtor filed on June 18, 2020. Additionally, on June 8,
2020, the Debtor filed its Objection to Proof of Claim 4, which
relates to this proceeding. The Debtor's Claim Objection appears to
address similar, if not identical, issues as in its Amended
Complaint in this adversary proceeding. On July 2, 2020, the
Defendants filed their response to the Debtor's Claim Objection,
which appears to also address similar, if not identical, issues as
in this adversary proceeding.
The Defendants contend the court lacks subject matter jurisdiction
and the Debtor failed to state a claim upon which relief can be
granted. By its Amended Complaint, the Debtor seeks three forms of
relief: (1) to invalidate the Defendants' lien because the MD
Receivership Proceeding did not result in a final order, (2) to
invalidate the Defendants' lien because the Defendants failed to
comply with the Uniform Enforcement of Judgments Act and other
aspects of West Virginia law, and (3) that the court relegates the
Defendants to unsecured status based upon the Maryland Commercial
Receivership Act and the plain language in the Summary Judgment
Order.
According to Judge Bissett, Count I is substantially the same, if
not identical, to the issue resolved by this court in its June 10,
2020 Order. Based upon the court's analysis there, the court does
not perceive the need to analyze Count I. The court will grant the
Defendant's motion in that regard based on the strength of the
court's June 10, 2020 Order.
Regarding Count II, the Debtor stated a plausible cause of action.
Specifically, it asserted that the Defendants failed to record the
Summary Judgment Order with the "Circuit Clerk" of Jefferson County
as required by the UEFJA and that the Defendants failed to follow
the proper notice requirements. However, the Debtor notably
conceded facts surrounding the Defendants' attempt to domesticate
the Summary Judgment Order in Jefferson County, West Virginia by
recording with the "County Clerk." Nevertheless, the Debtor claims
that the Defendants violated the requirements to record the
judgment such that they do not possess a valid judgment lien.
Notably, the Defendants' motion to dismiss contains zero support or
argument regarding the claim that they failed to comply with the
UEFJA or other West Virginia law. Specifically, the Defendants do
not contend that they first recorded their judgment in the Circuit
Court of Jefferson County in compliance with the UEFJA. They merely
state that the Debtor had notice and the Clerk never raised any
deficiencies with the judgment's recordation in the County Court.
Thus, after construing the Amended Complaint in the light most
favorable to the Debtor, taking all factual allegations as true,
and drawing all reasonable inferences in favor of the Debtor, the
court finds that the Debtor stated a plausible claim. The
Defendants failed to convince the court otherwise. The court will
not dismiss Count II.
The Defendants argue that Count III is subject to dismissal because
the Debtor failed to state a claim upon which relief can be
granted.
The Court notes that the Debtor's Amended Complaint seems to rely
upon the Maryland Commercial Receivership Act. The Court points out
that the MCRA prohibits creditors, upon the court's entry of a
receivership order, from obtaining a perfected lien on the
receivership debtor's property. However, there are exceptions. For
example, "[a]n act to perfect, maintain, or continue the perfection
of an interest in receivership property" is not stayed by the
MCRA.
The Court perceives no basis to grant the Defendant's motion to
dismiss. Specifically, the Defendants did not put into controversy
the MCRA's operation or how their conduct was excepted therefrom.
Without further argument by the Defendants, the Court believes that
the Debtor stated a plausible claim upon which relief can be
granted, because the MCRA seems to enact a stay against the
creation, perfection, or enforcement a lien or other claim against
the receivership property. In addition, the Summary Judgment Order
explicitly provides for an unsecured claim of $200,000 against the
Receivership Estate. While it is unclear to the court what impact
the MCRA or the express language of the Summary Judgment Order has
on the Debtor's action here, the court believes that the Debtor
stated a plausible claim, and it will not dismiss Count III.
A copy of the Court's Memorandum Opinion dated July 30, 2020 is
available at https://bit.ly/2E5z1AS from Leagle.com.
About U.S.A. Parts Supply
U.S.A. Parts Supply, Cadillac U.S.A. and Oldsmobile U.S.A. LP
(formerly doing business as Cadillac U.S.A. Parts Supply LP) is an
auto parts supplier in Kearneysville, W. Va.
U.S.A. Parts Supply filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. N.D.W.V. Case No. 20-00241) on March
22, 2020. The petition was signed by Michael Cannan, sole
shareholder and officer of Gen Partner CUSAPS, Inc. At the time of
filing, Debtor estimated $1 million to $10 million in both assets
and liabilities.
James P. Campbell, Esq. at Campbell Flannery, P.C., is the Debtor's
legal counsel.
URBAN MEDICAL: Case Summary & 12 Unsecured Creditors
----------------------------------------------------
Debtor: Urban Medical Center, Inc.
95 Martin Luther King, Jr., Drive
Jersey City, NJ 07305
Business Description: Urban Medical Center, Inc. is a medical
group practice located in Jersey City, NJ
that specializes in Family Medicine.
Chapter 11 Petition Date: August 20, 2020
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 20-19750
Debtor's Counsel: Stuart D. Gavzy, Esq.
STUART D. GAVZY, ESQUIRE
8171 E. Del Barquero Drive
Scottsdale, AZ 85258
Tel: 973-256-6080
Email: stuart@gavzylaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Hyacinth Ucheagwu, MD, principal.
A copy of the petition containing, among other items, a list of the
Debtor's 12 unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/6TA3VHI/Urban_Medical_Center_Inc__njbke-20-19750__0001.0.pdf?mcid=tGE4TAMA
VASCULAR ACCESS: May Borrow $650,000 from Gardner
-------------------------------------------------
Judge Ashely M. Chan of the United States Bankruptcy Court for the
Eastern District of Pennsylvania has entered an interim order
authorizing the Chapter 11 trustee of Vascular Access Centers, L.P.
to enter into a third post-petition credit agreement with William
Whitfield Gardner.
The lender has agreed to provide up to $650,000 to the Debtor, with
an initial disbursement of $500,000. The loan matures in 90 days.
The loan incurs interest at the Prime Rate (as published in the
Wall Street Journal on the Closing Date) plus 1% per annum.
The lender is granted a first superpriority lien on all
collateral.
The Court will hold a final hearing on the Motion for Post-Petition
Financing on September 23, 2020, at 12:30 p.m.
According to Chapter 11 Trustee Stephen V. Falanga, the Lender
desires to support a reorganization of the Debtor and, as the
majority owner of the Debtor, the Lender has a substantial interest
in the outcome of the bankruptcy case.
Among other expenses, the Debtor is required to fund ongoing
payroll obligations and other employee expenses, professional
supplies for use at the Debtor's affiliated centers needed to
perform the procedures that generate the Debtor's revenue, rent and
equipment lease obligations, and continuing malpractice insurance
premiums, all of which are essential to the Debtor's ability to
continue operating. These expenses are in addition to the costs
associated with the Trustee's administration of this bankruptcy
case including payment of professional fees and expenses.
According to the Trustee, since the Covid-19 pandemic in
particular, the Debtor's daily and weekly cash collections have
decreased substantially and absent a further infusion of liquidity
the Debtor's current revenue will be insufficient to timely satisfy
the Debtor's obligations. As such, the additional Post-Petition
Financing is required for the Trustee to address immediate
operational and financial needs while he pursues strategic
alternatives to maximize value for the Debtor's creditors and
stakeholders.
Currently, however, the Debtor is without an adequate source of
working capital to fund its operations while in bankruptcy over the
next 30 to 60 days. Depending on the Debtor's continued revenue
collections, the Trustee may require additional financing within
the next 60 days to satisfy operating expenses.
The Chapter 11 Trustee was previously authorized to borrow from
Gardner $350,000, a substantial portion of which was used by the
Trustee to fund the required down payment and first installment of
the Debtor's renewed malpractice insurance policy premium, which
was necessary for the Debtor to continue operating.
Then the Trustee was authorized to borrow from the Lender an
additional $500,000, which was used by the Trustee to fund the
Debtor's continued post-petition business operations and to satisfy
the July 2020 settlement payment due to the Department of Justice
in the amount of $201,250.
Falanga was appointed Chapter 11 trustee in February. Judge Chan
denied the U.S. Trustee's motion to dismiss the case and, instead,
granted Gardner's motion to appoint a trustee. A conflict arose
between Dr. James McGuckin and William Whitfield Gardner based upon
Gardner's growing concern that McGuckin was engaging in
impermissible self-dealing transactions and violating his duties as
sole member of the General Partner. The Court held that McGuckin
was not credible and untrustworthy, and consistently puts his own
interests ahead of VAC. McGuckin failed to devote efforts to
saving VAC's Philadelphia center and, instead, opened his own
competing center in Philadelphia through an entity owned solely by
him, Philadelphia Peripheral Vascular Institute, without presenting
this opportunity to the limited partners.
About Vascular Access Centers
Vascular Access Centers -- https://www.vascularaccesscenters.com/
-- provides comprehensive dialysis access maintenance including
thrombectomy and thrombolysis, fistulagrams, fistula maturation
procedures, vessel mapping, central venous occlusion treatment and
complete catheter services. Its centers offer an alternative
setting for a wide spectrum of vascular interventional procedures,
including central venous access for oncology, nutritional and
medication delivery, venous insufficiency (including venous ulcer
and non-healing ulcer treatments), peripheral arterial disease
(PAD), limb salvage, uterine fibroid embolization and pain
management.
On Nov. 12, 2019, an involuntary petition was filed against
Vascular Access Centers under Chapter 11 of the Bankruptcy Code
(Bankr. E.D. Pa. Case No. 19-17117). The petition was filed by
creditors Philadelphia Vascular Institute, LLC, Metter & Company
and Crestwood Associates, LLC. David Smith, Esq., at Smith Kane
Holman, LLC, is the petitioner's counsel.
On Nov. 13, 2019, the Debtor consented to the relief sought under
Chapter 11.
Judge Ashely M. Chan is the presiding judge.
The Debtor tapped Dilworth Paxson LLP as its legal counsel.
Stephen V. Falanga, the Chapter 11 Trustee, has retained as
counsel:
Christopher M. Hemrick, Esq.
Peter J. Pizzi, Esq.
WALSH PIZZI O'REILLY FALANGA LLP
Center Square, East Tower
1500 Market Street, 12th Floor
Tel: 973-757-1100
Fax: 973-757-1090
E-mail: chemrick@walsh.law
VERDICORP INC: Capital City Buying Tallahassee Property
-------------------------------------------------------
Verdicorp, Inc., asks the US Bankruptcy Court for the Northern
District of Florida to authorize the sale of its sole remaining
asset, a 15,000-square foot commercial building located at 4030 N.
Monroe Street, Tallahassee, Florida, to Capital City Bank free and
clear of all liens, claims, and encumbrances.
Capital City Bank recently had the Property appraised for $815,000.
The Property is subject to a first mortgage lien held by Capital
City Bank in the amount of $830,614 (Claim No. 17-1). Capital City
Bank recently had a title search performed on the Property which
revealed that there are no other liens on the Property.
The Debtor previously agreed to deed the Property to Capital City
Bank in lieu of foreclosure, in exchange for a release of all
claims and potential liabilities relating to the Property.
However, it has been unable to reach agreement with Capital City
Bank as to the form of a deed for the Property.
The Debtor believed it could only provide a Quit Claim deed absent
specific authority pursuant to Section 362(b) of the Bankruptcy
Code. To resolve the dispute, the Debtor now asks authority
pursuant to Section 362(b) to execute a Special Warranty Deed, in a
format acceptable to the Bank. Following the conveyance of the
Deed to the Bank, the Bank has agreed to allow the Debtor and the
prevailing purchaser Multistack International Limited, up to 60
days to remove its property and vacate the premises.
The Debtor previously attempted to market and sell the Property,
and received two offers for the purchase of the property. However,
both offers would not generate much, if any, recoveries for the
estate due to the size of Capital City Bank’s outstanding
mortgage on the Property.
The Debtor asks that any Sale Order provide for a waiver of the
automatic 14-day stay imposed by Bankruptcy Rule 6004(h) because
the property at issue lacks equity. It will provide notice of the
Motion and the proposed sale of Assets to all creditors listed on
the mailing matrix filed with the Court with a deadline for any
objections. The Debtor asks that the notice period be shortened to
correspond with the hearing date on the Motion.
A hearing on the Motion is set for Aug. 11, 2020 at 11:00 a.m.
Objections, if any must be filed no later than three days before
the sale hearing.
About Verdicorp Inc.
Verdicorp Inc. -- http://www.verdicorp.com/-- is an innovation
company formed in 2009. Its areas of interest include heating,
ventilation and air-conditioning (HVAC), energy generation,
recovery and storage systems, and water desalination, treatment
and
pumping.
Verdicorp sought protection under Chapter 11 of the Bankruptcy
Code
(Bankr. N.D. Fla. Case No. 19-40427) on Aug. 14, 2019. At the
time
of the filing, the Debtor had estimated assets of between $500,000
and $1 million and liabilities of between $10 million and $50
million. The case has been assigned to Judge Karen K. Specie. The
Debtor is represented by Michael H. Moody Law Firm PLLC.
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case.
VIRTUAL CITADEL: CallTower Buying IP Assets for $5K
---------------------------------------------------
Virtual Citadel, Inc. and affiliates ask the U.S. Bankruptcy Court
for the Northern District of Georgia to authorize the sale of two
ranges of Internet Protocol Addresses numbered as ranges
208.52.155.0/24 and 208.52.156.0/24, along with associated
Autonomous System Numbers, to CallTower, Inc. or its designee for
$5,000.
The process of selling or transferring an IP Assets involves an
interaction among the Seller, the Buyer, and an organization known
as the American Registry for Internet Numbers, Ltd. ("ARIN"). ARIN
is a non-profit, member-based organization formed in 1997 that
supports the operation and growth of the internet. ARIN's core
service is the management and distribution of IP Addresses and
Autonomous System Numbers. ARIN exclusively performs the core
service in the United States, Canada, and many Caribbean and North
Atlantic islands.
An IP address cannot be "owned" in a physical sense; rather, to own
an IP address means to have the exclusive right to register the IP
Address with ARIN. By the Motion, the Debtors propose to transfer
the exclusive right to register the IP Addresses with ARIN from the
Debtor to the Purchaser, including, but not limited to, the right
to "SWIP" (Shared Whois Project) the IP Addresses to submit
reassignment information relating thereto to ARIN.
The Debtors have almost completed the process of liquidating all of
their assets and winding up their affairs and no longer need the IP
Assets. They, in their business judgment, believe that the
Purchase Price is fair and reasonable consideration for the IP
Assets.
The Debtors propose to remit the sale proceeds from the sale of the
IP Assets, after payment of closing costs and expenses, to Bay
Point Capital Partners II, LLC, their DIP Lender, which holds a
first priority lien on substantially all of their assets. The
Debtors believe that the arrangement will benefit their estates
because it will facilitate the liquidation of their remaining
assets and the wind up of their affairs.
A telephonic hearing on the Motion is set for Aug. 27, 2020 at
10:00 a.m. Objections, if any, must be filed at least two business
days before the hearing.
About Virtual Citadel
Virtual Citadel, Inc. -- https://vcitadel.com -- is a
comprehensive
turnkey enterprise hosting provider in Atlanta, Georgia. vCitadel
owns and operates tier 1 and tier 2 data centers throughout the
metro Atlanta area. Founded in 1990, vCitadel provides custom
hosting solutions for cloud, data, and co-location applications.
Virtual Citadel, Inc., and four affiliates sought Chapter 11
protection (Bankr. N.D. Ga. Case No. 20-62725) on Feb. 14, 2020.
The Debtors tapped POLSINELLI PC as counsel; BAKER DONELSON
BEARMAN, CALDWELL & BERKOWITZ, PC as conflicts counsel; and GLASS
RATNER as financial advisor.
VOYAGER AVIATION: S&P Affirms 'CCC+' Issuer Credit Rating
---------------------------------------------------------
S&P Global Ratings affirmed all its ratings on aircraft operating
lessor Voyager Aviation Holdings LLC, including the 'CCC+' issuer
credit rating and 'CCC-' issue-level rating (recovery rating
remains '6').
S&P is revising its liquidity assessment to weak from less than
adequate as the company's $415 million senior unsecured notes
mature Aug. 15, 2021, in less than one year. The weak liquidity
assessment reflects S&P's expectation that Voyager's sources of
liquidity account only for around 0.2x uses over the next 12
months, including this maturity. Key sources of liquidity include
cash and funds from operations (FFO), while major uses include the
upcoming unsecured notes maturity, as well as repayment of secured
debt.
"We remain uncertain regarding Voyager's prospects for refinancing
the upcoming senior unsecured notes maturity. Voyager has no
unencumbered assets or access to credit facilities unlike other
aircraft lessors we rate," S&P said.
"Many of them have a substantial amount of unencumbered assets,
access to credit facilities, and have recently raised unsecured
debt in the capital markets. Additionally, since all of the
company's aircraft are already pledged to financings, the company
would need to use any proceeds from the sale of aircraft to repay
the associated debt first," the rating agency said.
The CreditWatch developing status reflects uncertainty regarding
the company's ability to refinance its senior unsecured notes due
August 2021. S&P expects to resolve the CreditWatch when there is
further clarity on the company's refinancing plans.
S&P could lower the ratings if:
-- S&P believes Voyager will likely be unable to refinance its
notes; or
-- S&P expects the company to enter into an exchange offering that
it would view as distressed.
S&P could raise the ratings if:
-- Voyager can refinance its notes on satisfactory terms; and
-- The company's rate of lease payment deferrals from its airline
customers is in line with or exceeds its expectations over the next
year.
VYCOR MEDICAL: Incurs $249K Net Loss in Second Quarter
------------------------------------------------------
Vycor Medical, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q, disclosing a net loss
of $248,887 on $244,266 of revenue for the three months ended June
30, 2020, compared to a net loss of $185,304 on $411,902 of revenue
for the three months ended June 30, 2019.
For the six months ended June 30, 2020, the Company reported a net
loss of $423,835 on $574,505 of revenue compared to a net loss of
$365,602 on $738,509 of revenue for the six months ended June 30,
2019.
As of June 30, 2020, the Company had $1.01 million in total assets,
$2.58 million in total current liabilities, $100,141 in operating
lease liability, and a total stockholders' deficiency of $1.67
million.
The Company has incurred losses since its inception and has not
generated sufficient positive cash flows from operations. As of
June 30, 2020 the Company had a working capital deficiency of
$634,822, excluding related party liabilities of $1,505,100. The
Company said these conditions, among others, raise substantial
doubt regarding its ability to continue as a going concern.
The Company stated it is executing on a plan to achieve a reduction
in cash operating losses. Included within the working capital
deficiency above is a term note for $300,000 to EuroAmerican
Investment Corp., together with accrued interest of $304,699, which
has a maturity date of Dec. 31, 2020, having been extended on a
number of occasions from its initial due date of June 11, 2011. At
this time, it is not known whether any further extension of the
note beyond Dec. 31, 2020 will be available. However, the Company
believes it may not have sufficient cash to meet its various cash
needs through Aug. 31, 2021 unless the Company is able to obtain
additional cash from the issuance of debt or equity securities.
Fountainhead, the Company's largest shareholder, has provided
working capital funding to the Company on an as-needed basis,
although there is no guarantee that this will continue to be the
case. The Company said it may consider seeking additional equity
or debt funding, although there is no assurance that this would be
available on acceptable terms or at all. If adequate funds are not
available, the Company may have to delay or curtail development or
commercialization of products, or cease some of its operations.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1424768/000149315220016016/form10-q.htm
About Vycor Medical
Vycor Medical (OTCQB: VYCO) -- http://www.vycormedical.com/-- is
dedicated to providing the medical community with innovative and
superior surgical and therapeutic solutions. The company has a
portfolio of FDA cleared medical solutions that are changing and
improving lives every day. The company operates two business
units: Vycor Medical and NovaVision, both of which adopt a
minimally or non-invasive approach.
Vycor Medical reported a net loss available to common shareholders
of $1.12 million for the year ended Dec. 31, 2019, compared to a
net loss attributable to common shareholders of $1.70 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$1.09 million in total assets, $2.45 million in total current
liabilities, and a total stockholders' deficiency of $1.35
million.
Prager Metis CPAs, LLC, in Hackensack, New Jersey, the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated March 27, 2020 citing that the Company has incurred
net losses since inception, including a net loss of $796,202 and
$1,379,356 for the years ended Dec. 31, 2019 and 2018 respectively,
and has not generated cash flows from its operations. As of Dec.
31, 2019, the Company had working capital deficiency of $541,070,
excluding related party liabilities of $1,248,904. These factors,
among others, raise substantial doubt regarding the Company's
ability to continue as a going concern.
WASHINGTON PRIME: Moody's Lowers CFR to Ca, Outlook Negative
------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of Washington
Prime Group, L.P., including its corporate family rating to Ca from
Caa3 and its senior unsecured rating to C from Caa3. Washington
Prime Group, L.P. is the main operating subsidiary of Washington
Prime Group Inc. The speculative grade liquidity rating remains
unchanged at SGL-4 and the rating outlook remains negative.
The ratings downgrade reflects WPG's modification of its credit
facility agreement, which includes an immediate waiver of certain
financial covenants (and less restrictive thresholds thereafter) in
exchange for temporary partial collateral with release beginning in
3Q21 subject to certain conditions. Accordingly, WPG's unencumbered
NOI will decline by approximately 50% to about 26-27% (from 54%) of
total NOI (as of 1Q20), reducing its financial flexibility and
coverage of its unsecured debt.
The downgrade also reflects WPG's substantial cash flow declines as
the coronavirus is impacting its retail tenants' ability to pay
rents. Moody's expects the REIT to experience continued pressure as
the weak retail environment prompts store closures that will have a
disproportionate impact on its lower quality mall portfolio. WPG's
limited liquidity and high leverage make it especially vulnerable
to these operating risks, and the negative outlook reflects its
view that the existing capital structure is unsustainable. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety.
The following ratings were downgraded:
Issuer: Washington Prime Group, L.P.
- Senior unsecured debt to C from Caa3
- Corporate family rating to Ca from Caa3
The following ratings were affirmed:
Issuer: Washington Prime Group Inc.
- Preferred stock at C
- Preferred stock shelf at (P)C
- Preferred stock shelf non-cumulative at (P)C
Outlook Actions:
Issuers: Washington Prime Group, L.P.; Washington Prime Group Inc.
- Outlooks remain negative
RATINGS RATIONALE
WPG's Ca corporate family rating reflects its large, geographically
diversified portfolio of retail assets, which includes a mix of
enclosed malls (63% of 2Q20 Comp NOI) and open-air centers (37%)
across the US. The REIT's open-air portfolio is a key credit
strength as it provides it with more stable, higher quality cash
flows, offsetting challenges associated with its mall portfolio.
WPG also benefits from solid fixed charge coverage and a modest
number of unencumbered assets.
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. Its action reflects the
impact on Washington Prime Group of the deterioration in credit
quality it has triggered, given its exposure to the retail
industry, which has left it vulnerable to shifts in market demand
and sentiment in these unprecedented operating conditions.
Key credit concerns include WPG's unsustainably high debt levels
considering the deteriorating operating outlook. The REIT's total
comp NOI declined 45% for 2Q20, as its retail tenants experienced
substantial loss in sales due to temporary property closures forced
by the pandemic. Even as most properties have now reopened, Moody's
expects weak sales trends to persist (particularly for mall
tenants) as a result of the weak macroeconomic environment and
accelerating competitive challenges related to the growth in
e-commerce. Moody's expects an increasing number of tenant
bankruptcies and store closures will cause continued cash flow
pressure for WPG in the coming months.
WPG's SGL-4 rating reflects its weak liquidity, limited access to
capital, and the potential for it to breach its bond covenants,
particularly the maintenance test related to its unsecured debt
coverage. The REIT's liquidity is limited, as it effectively drew
down the remaining capacity on its $650mm unsecured facility and
had $144mm of cash as of the end of 2Q20. The REIT will need to
access external capital and strengthen its financial position as it
looks to refinance its revolver that has an original maturity date
in December 2021 (plus two six-month extension options) and $350
million term loan due in December 2022. Positively, Moody's notes
that WPG has suspended its common dividend, which will provide
incremental capital to fund its strategically important development
pipeline (in conjunction with modest outparcel sales).
The negative outlook reflects its expectation that WPG's existing
capital structure is unsustainable given its escalating operating
challenges and limited liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the REIT's weak operating outlook and liquidity risks, an
upgrade is unlikely in the foreseeable future until Moody's sees
signs of material growth in mall cash flows and stronger liquidity.
WPG's ratings would likely be downgraded should its liquidity
position further erode or if it were to execute a distressed
exchange of its unsecured bonds.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in September 2018.
Washington Prime Group Inc. [NYSE: WPG] is a retail REIT that owns
a mix of enclosed malls and open-air community centers across the
United States. Gross assets totaled $7.7 billion including pro rata
share of JVs as of 2Q20.
WD WOLVERINE: S&P Alters Outlook to Negative, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings affirmed the 'B' issuer credit rating given the
WD Wolverine Holdings LLC's still-solid liquidity and recent
business momentum. S&P also revised the outlook to negative from
stable, reflecting the potential for a permanent rebasing of the
company's EBITDA.
Lower-than-expected rebate collection could permanently reduce
EBITDA and cash flow. S&P estimates the rebate issue could cut
WellDyneRx's annual EBITDA by approximately $30 million, or nearly
one-third compared with the rating agency's original forecast, if
the lower rebate rates persist. Resolution of this issue likely
requires a significant amount of management's time, potentially
impacting other aspects of the businesses such as winning new
clients.
Furthermore, S&P believes the company may be at risk of having cash
deficits on a normalized basis. The rating agency thinks a
permanent rebasing would cause quarterly EBITDA (after adding back
share-based compensation) run-rate to decline to roughly $16
million." After accounting for annual interest expense of $30
million, capital expenditures of $10 million (including about $3
million in capex related to automation projects), a modest working
capital outflow, and $13 million mandatory term loan amortization,
the net change in cash could get close to zero.
Taking a step back, the rebate aggregator issue demonstrates a key
weakness of sub-scale pharmacy benefit managers (PBMs) such as
WellDyneRx. S&P has observed several disputes between PBMs and
their rebate aggregators over the past few years. These PBMs
typically do not have the negotiating clout to extract attractive
rebates from drug manufacturers and therefore usually rely on
third-party "rebate aggregators," which are effectively group
purchasing organizations that gather the script volumes of multiple
PBMs to negotiate better rebates with drugmakers than any one PBM
could've done on its own. PBMs usually pay a service fee to these
aggregators. However, by doing so, PBMs lose some control over this
critical function because they effectively tag on the aggregators'
rebate contracts with drug manufacturers and sometimes these
contracts are not well understood (e.g., payment rates for
different channels and exclusion criteria), which could lead to
lower-than-expected payments.
In comparison, larger PBMs can negotiate attractive rebates with
drug manufacturers on their own because of the script volumes they
can generate. In fact, CVS Caremark, Express Scripts, and OptumRx
also operate their own rebate aggregation services for other
smaller PBMs. Other major rebate aggregators include Gateway Health
Partners (owned by Maxor National Pharmacy) and Prescient Holdings
Group (owned by MedImpact).
The company has gained some business momentum recently after
gaining a number of new clients, which has led to double-digit
top-line growth year to date, although this rebate issue could
hinder further business gains. S&P thinks that if the company
receives lower rebates than anticipated, it may need to increase
prices to its customers at renewal. However, this may be difficult
given the highly competitive environment.
Although this issue could affect results and cash flow this year,
S&P believes the company could still pursue the uncollected
rebates, renegotiate the rebate aggregator contract, switch to a
new rebate aggregator, and reduce costs.
Liquidity still supports the 'B' issuer credit rating. Despite the
possibility of generating a net cash deficit this year, S&P still
affirmed the 'B' issuer credit rating because it believes this
issue could only affect cash flow temporarily. In addition, the
liquidity position should help the company weather the shortfall,
at least over the next 12 months. As of June 30, 2020, WellDyneRx
had $62 million in cash and an undrawn revolver ($50 million
commitment). The revolver is subject to a springing covenant test
(net first-lien leverage ratio of no more than 6.5x) when it's more
than 35% drawn, and S&P believes the company will maintain more
than 15% covenant cushion. However, if this issue is not resolved,
then the company may have trouble refinancing debt maturing in
August 2022 or have to pay higher interest, which would affect cash
flow.
The negative outlook reflects the potential for a permanent
rebasing of the company's EBITDA.
S&P could lower its rating if:
-- The rebate issue leads to a permanent reduction in the
company's EBITDA, such that the free-cash-flow-to-debt ratio
consistently dips below 5% and the company may have difficulty
covering term loan amortization.
-- The rebate issue worsens further, such that it threatens the
company's ability to cover its term loan amortization and
refinancing its 2022 maturities.
-- S&P could consider a stable outlook if WellDyneRx resolves the
rebate issue such that it regains confidence that the company will
be able to maintain a free-cash-flow-to-debt-ratio solidly above
5%.
WITT RENTAL: Wins Confirmation of Exit Plan
-------------------------------------------
Judge John P. Gustafson has confirmed the consensual Small Business
Subchapter V plan proposed by Witt Rental, Inc.
The Plan proposes to pay creditors of the Debtor from the future
cash flow of its business operations. Non-priority unsecured
creditors holding allowed claims will receive estimated
distributions over the length of the Plan of $28,706.84 which the
proponent of this Plan has valued at approximately 10.68 cents on
the dollar. The Debtor estimated general unsecured claims at
roughly $268,743.
The Plan was confirmed pursuant to an order dated August 3, 2020.
A copy of the Plan dated June 4, 2020, is available at
https://bit.ly/3aGTmIW from PacerMonitor.com.
About Witt Rental, Inc.
Witt Rental Inc., a retail company based at 4508 E State Route 113,
Norwalk, Ohio, sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ohio Case No. 20-30702) on March 11,
2020. At the time of the filing, the Debtor disclosed under $1
million in both assets and liabilities.
The Hon. John P. Gustafson is the case judge.
The Debtor tapped Eric R. Neuman, Esq. at Diller and Rice, LLC, as
its counsel and Jeffrey Colvin as its accountant.
The United States Trustee appointed as Sub-chapter V trustee:
Frederic P. Schwieg
2705 Gibson Drive
Rocky River, OH 44116-3008
Tel: (440) 499-4506
E-mail: fschwieg@schwieglaw.com
[*] Can Malls Survive Pandemic, Permanent Store Closings?
---------------------------------------------------------
Nathan Bomey and Kelly Tyko of USA TODAY report that just when many
shopping malls had finally figured out how to adapt to the era of
digital retail, the coronavirus pandemic upended everything.
Having seen their recent move toward dining, entertainment, fitness
and personal services come to a screeching halt -- a pivot that was
supposed to help them survive the Amazon age -- malls throughout
America are suddenly running out of time.
With J.C. Penney trying to avoid liquidation, smaller retailers
closing or requesting rent relief, and venues like theaters still
temporarily shut down due to COVID-19, anywhere from 1 in 4 malls
to 1 in 2 could go out of business altogether, analysts projected.
"The whole business model of a mall, which is about pulling in as
many people as you can and getting them to stay for as long as you
can, has just unraveled," said Neil Saunders, managing director of
consultancy GlobalData Retail.
The bleak turn of events has provided more fuel to online retailers
already swiping market share away from malls that were relying on
diminishing foot traffic to apparel shops and department stores in
particular.
"There are malls that this crisis will accelerate their closure, no
doubt," said Kat Cole, president and chief operating officer of
Focus Brands, parent company of mall classics like Cinnabon and
Auntie Anne's. "How many is anybody's guess, but we're hoping it's
a minority."
Analysts at Coresight Research, which tracks retail closures,
projected that about 25% of America's malls would disappear within
the next three to five years.
But that could rise to as many as 50% "if we can't stop the
bleeding," Coresight CEO Deborah Weinswig said in an interview.
"That ends up changing the face of America."
In general, analysts say that high-end "A" malls are in the best
shape because their luxury retail tenants have higher profit
margins and thus are better able to withstand the downturn. But
so-called "B" and "C" malls, which have lower-priced stores and
more vacancies, are facing a high risk of closure.
"They're trying to plug the holes in a dam," Weinswig said.
Even malls that bet big on in-person experiences that were
considered to be extremely resilient in the age of digital retail
are suddenly experiencing nothing but pain.
"A lot of the things that malls have built-in like gyms, movie
theaters and restaurants, food service are just not able to operate
and pull in customers the way they once did," Saunders said.
"They're either having to shut down or limit capacity or customers
are very reluctant to go there."
Mall occupancy rates hit their lowest level in at least a decade in
the second quarter of 2020 at 94.4%, according to CoStar Group,
which tracks real estate.
Of the nation's 1,793 enclosed shopping malls, nearly 500 "are at
risk due to their location being poor" or "due to their dependence"
on office workers or tourism for foot traffic, CoStar senior
consultant Kevin Cody said.
[*] How New Law Could Help Smaller Restaurant Operators
-------------------------------------------------------
Joanna Fantozzi, writing for Restaurant Hospitality, reports that a
bankruptcy attorney explains how a new law could help smaller
restaurant operators seek reorganization and keep control of their
business
In the restaurant industry, bankruptcy has long been seen as a last
resort for small business owners, indicative of admitting defeat
and likely resulting in liquidating assets and closing up shop for
good.
But thanks to a new law passed shortly before the coronavirus
pandemic began -- the Small Business Reorganization Act -- it's
easier and less expensive for small businesses with less than $2.7
million in debt to file for Chapter 11 bankruptcy.
We spoke with Joseph Pack, a New York and Florida-based bankruptcy
attorney and founder of Pack Law, about destigmatizing bankruptcy
for small businesses, and what restaurant owners can and should do
if they find they can't pay their rent, vendors, or lenders during
the ongoing COVID-19 pandemic crisis.
Get on the phone and renegotiate with your lenders
When trying to get out of the hole of massive debt, the most
important skill is clear and honest communication with your
landlord, vendors, bank and investors.
"Owners should be getting on the phone with their bank and other
lenders," Pack said. "If they can afford to pay off their debt,
they might want to enter a new modification of the loan than they
had before that's subject to realistic projections. Get on the
phone with your lenders, even the person you bought your stove or
espresso machine from, and figure out what their attitude is toward
your reduced revenues."
Pack broke it down with a simple example: If you're paying off a
high-end commercial espresso machine with $400 in monthly payments
and now, because of the COVID-19 pandemic, you are unable to make
your monthly payments, then get on the phone with the espresso
machine seller and ask for a “modification of obligation."
"The lender is thinking, 'I could get $5,000-$6,000 for this
$10,000 machine, or this restaurant owner could go into bankruptcy
and their assets will be auctioned and then I’ll be lucky if I
get $250 from that,' "Pack said. "Then the lender will be probably
more likely to work with you than ever before."
He warned, however, that business owners should be careful to not
just ask for payment forgiveness because that's just temporary.
"It's not just about making payments; it's also about debt
covenants [agreements that a debtor will operate within the
paradigms of a loan]," Pack said. "You have to make certain
requirements on a monthly basis. The loan could still be in default
even with payment forgiveness. There needs to be a sit-down and
discussion about renegotiating obligation."
Do not consolidate your debt
One of the most common solutions struggling business owners
consider is to consolidate debt. Even though that might sound like
a smart way to mitigate a growing mountain of debt, Pack said, "I
have never met a business operator who said, 'Boy, I'm glad I
consolidated my debts! That was a real lifesaver!'"
"Let's say you have a loan at 1% interest, and you have another
loan at 10% interest, and you go to a loan consolidation company
and they combine those two loans into one $2 million loan at 5%
interest," Pack said. "Now, if you somehow come into $1 million and
can pay down your debt, instead of paying off the original loan
with 10% interest and only having to pay the loan at 1% interest,
now you're stuck with paying off half of a loan at 5% interest."
Pack added that leaving your loans unconsolidated also benefits
businesses filing for bankruptcy because it's always in the
debtor's favor to have multiple lenders to "pick off" obligations
and debt. With one large debt, you are "basically at their whim"
and don't have room to negotiate.
If you have to file for Chapter 11 bankruptcy, do so under the new
Subchapter V of the bankruptcy code
Pack said that he wanted to destigmatize the concept of filing for
bankruptcy, which -- contrary to popular belief -- does not mean
you have to sell your business or close your doors completely.
Filing for Chapter 11 has previously been mostly associated with
larger companies that can afford federal court proceedings. But a
new law, the Small Business Reorganization Act, which was passed in
August 2019 and went into effect in February, helps small business
approaching bankruptcy options.
The new Subchapter V of the Chapter 11 bankruptcy code allows small
businesses with up to $7.5 million in debt to seek reorganization
with the goal of keeping control of their business and their
equity. Before the pandemic, the maximum debt was $2,725,625, but
the eligibility standard was temporarily expanded under the
Coronavirus Aid, Relief and Economic Security, or CARES Act, in
March.
Small businesses don’t have to pay their lenders in full as long
as they create a payment plan based on their balance sheet and cash
flow within 90 days of filing, give their discretionary income to
their creditors, and pay off as much of the loan as they can within
three to five years.
"The [bankruptcy court] knows no one can run your Italian
restaurant other than you and that you need to be there to make the
pizza," Pack said. "If the business is sold off to some private
equity firm who have no idea what they're doing, no one is going to
want to eat the pizza and the restaurant will close anyway. [This
plan] lets you keep your equity and your restaurant as long as you
do your best to pay what you can over the next few years."
[*] June Bankruptcy Filings in Hawaii Rose Amid Pandemic
--------------------------------------------------------
Dave Segal of Star Advertiser reports that the bankruptcy filings
in Hawaii in June 2020 increased due to COVID-19 pandemic.
The anticipated increase in Hawaii bankruptcies finally might be
emerging as the state's extended tourism lockdown and severe
unemployment crisis take their toll.
Bankruptcy cases in June jumped 21.8% to 151 from 124 in the
year-ago period to reach their highest monthly total this year and
end a decline of four straight months, according to new data
released by the U.S. Bankruptcy Court, District of Hawaii. The 151
cases were up nearly 35% from May 2020 and were the most since
there were 162 filings in October 2019.
Economists and bankruptcy attorneys had been projecting an
increase, but the numbers had been muted due to federal aid
programs and unemployment benefits that were keeping individuals
and businesses from going under.
"It's definitely going up," Honolulu bankruptcy attorney Greg Dunn
said Tuesday. "I think I had about 30 of those 151 cases in June,
if not more."
Mr. Dunn said he expects the pace of filings to keep increasing and
is pessimistic for the remainder of the year as the COVID-19
pandemic persists.
"With the federal unemployment compensation (of $600 a week) being
terminated at the end of the month, unless there's any federal
assistance or state government assistance, it may get worse in
Hawaii because there's still a lockdown," he said. "There's still
a lot of people not working."
He said the one-time federal stimulus check of $1,200 for eligible
individuals and $2,400 for eligible married couples was
short-lived.
"That stimulus check everybody was getting can only go so far," he
said. "You pay your rent and you're done with it. Hawaii is so
dependent on the tourism industry, and that's not even opening up
now. It doesn't look good for the rest of the year."
Dunn said it's uncertain what’s going to happen to people after
the $600 additional weekly unemployment payment expires on July
25.
"There's not going to be enough money for people to pay their
expenses," he said.
He said anxiety levels are rising, and by the time people come to
see him, they view filing for bankruptcy as a last resort.
"A lot of them are nervous wrecks right now, especially now that
the federal unemployment compensation is going to be terminated,"
he said. "They don't know where the money is going to come from
next. This lady I was just talking to was getting $863 a week from
the state and federal unemployment and on July 25 her weekly
unemployment will go down $600. So that's only going to leave her
$263 a week so she's a nervous wreck. The only thing she’ll be
able to rely on is help from her family."
Federal aid programs and the additional $600 weekly unemployment
payment that helped keep businesses and individuals afloat through
the first few months of this year resulted in bankruptcies being
down 6.3% at midyear from the same time in 2019.
But while some people made more money through unemployment thanks
to the $600 weekly federal unemployment benefit, others made less
than before.
"I'm seeing people who own homes because the unemployment payments
are still not enough for them," he said. "When they were working,
they were making more money. The unemployment benefit from the
federal government is not enough for a homeowner in many cases."
In June 2020, Chapter 7 liquidation filings — the most common
type of bankruptcy — soared 50.6% to 128 from 85 in the
year-earlier period. It was the most Chapter 7 filings in any month
since there were 136 in August 2013.
Chapter 13 filings, which allow individuals with regular sources of
income to set up plans to make installment payments to creditors
over three to five years, declined 43.6% to 22 from 39.
There was one Chapter 11 reorganization filing last month compared
with none in the year-earlier period.
Bankruptcies rose in all of the four major counties. Honolulu
County filings rose to 107 from 95, Hawaii County filings increased
to 14 from five, Maui County filings rose to 24 from 21 and Kauai
County filings doubled to six from three.
SEEKING RELIEF
According to the U.S. Bankruptcy Court for the District of Hawaii,
bankruptcy filings in June 2020 rose from a year ago.
2020 2019 PERCENTAGE CHANGE
Chapter 7 128 (2020) 85 (2019) 50.6%
Chapter 11 0 (2020) 1 (2019) 0.0%
Chapter 13 22 (2020) 39 (2019) -43.6%
----------- ---------- ------
Total 151 (2020) 124 (2019) 21.8%
[*] More Hospitals Could File Bankruptcy Because of COVID Losses
----------------------------------------------------------------
David Hogberg of Washington Examiner reports that more and more
hospitals are in danger of going bankrupt the longer the
coronavirus surge lasts.
Through June of this year, 29 hospitals have declared bankruptcy.
In 2019, there were 30 such bankruptcies.
As the pandemic grew in March 2020, hospitals saw steep revenue
declines in their most profitable areas. Many states restricted
the ability of hospitals to perform elective surgeries and
outpatient procedures. Additionally, emergency room volumes
dropped as more people did not visit the hospital for fear of COVID
infection.
"Hospitals were left with critical care and inpatient services, and
that is the least profitable revenue for hospitals," said Nathan
Kaufman, managing director of Kaufman Strategic Advisors. "That
puts hospitals in a very precarious financial position ...
hospitals in difficult financial condition prior to COVID are now
in dire straits."
The hospital industry has been on rocky terrain financially for
years. The Posnelli-TrBK Distress Index measures the distress in an
industry based on recent Chapter 11 filings in that industry. The
closer the index is to zero, the healthier the industry. In the
first quarter of 2020, the index for hospitals stood at 233.
Over 260 hospitals furloughed employees to make ends meet between
March and June. Most notably, the esteemed Mayo Clinic furloughed
and reduced the hours of 30,000 employees to offset an estimated $3
billion in losses.
According to the American Hospital Association, hospitals
nationwide lost over $161 billion due to canceled surgeries and
other services from March to June of this year. In March and April,
55% fewer people sought care at hospitals, while visits from the
uninsured rose 114%, according to Strata Decision Technology.
Yet hospitals are still struggling with ER volume, even in areas
where the pandemic has abated.
Kaufman, who does a lot of work in Connecticut, said, "In hospitals
in Connecticut where the COVID threat has been minimized, we still
don’t see the emergency department volumes back to where they
were pre-COVID. That’s important because most inpatients enter
through a hospital's ER."
As COVID has surged again in parts of the Southern and Western
United States, many hospitals are faced with a repeat of
difficulties they experienced in the spring.
Thus far, Texas is the only state to reimpose a pause on elective
surgery, with Gov. Greg Abbott ordering hospitals in 100 counties
to stop nonessential procedures unless they can meet certain COVID
preparedness standards. Some hospitals in Florida and Arizona have
done so voluntarily.
"COVID-19 has had significant negative financial impact on Texas
hospitals," said Stephen Love, president and CEO of the Dallas-Fort
Worth Hospital Council. "Some hospitals may file bankruptcy or even
close, especially rural hospitals."
Congress has given hospitals financial assistance through the CARES
Act, including boosting Medicare payments 20% for treating COVID
and granting additional funds for hospitals that have treated 100
or more COVID patients.
But Love said it is not enough: "Even though there was some relief
provided for hospitals, which we greatly appreciate, it did not
make up for the significant reductions in margins thus far and may
well extend into the future."
Rural hospitals will be the most at risk for bankruptcy. Private
insurance usually offers the highest reimbursement rates, and rural
hospitals have seen fewer and fewer patients with private coverage
in the last decade. More than 70 rural hospitals have closed since
2010, and over 1 in 5 are at risk of closing, according to the
Chartis Center for Rural Health, a Chicago-based
management-consulting firm.
Titus Medical Center, a rural hospital in Mount Pleasant, Texas,
was hit with a triple whammy. Not only did elective and outpatient
procedures and ER volume dry up, but Titus was not able to avail
itself of increased Medicare reimbursements for treating COVID
patients.
"We only had 20 COVID patients in April and May combined," said
Titus CEO Terry Scoggin.
Titus is located about two hours east of Dallas. Four hospitals in
a 45-mile radius have closed in the last five years, according to
Scoggin. Titus took a substantial hit during the pandemic.
"We expected a $3.6 million loss at the beginning. Right now,
we’re estimating a $7 million loss," said Scoggin. "We’ve
received about $6.6 million in stimulus money, [and] we’ve
managed our expenses very well. It’s going to be close, but we
are not going to come out of it any better off."
Titus hospital has never been close to bankruptcy, Scoggin said,
but it is considered "at risk" since it has less than 75 days of
cash reserves.
[*] Pandemic Forces 3 Frac Sand Companies to File Chapter 11
------------------------------------------------------------
Sergio Chapa of Houston Chronicle reports that the downturn in the
natural gas and oil industry brought by the coronavirus pandemic
has forced three frac sand companies to file for Chapter 11
bankruptcy over the past five weeks.
Houston frac sand company Hi-Crush Inc. filed or Chapter 11
reorganization in Houston's bankruptcy court on Sunday, July 12,
2020. The company owns more than $953 million of assets but has
more than $699 million of debt, bankruptcy filings show.
The bankruptcy filing was required as part of a financial
restructuring agreement with 94 percent of Hi-Crush's senior note
holders, the company reported.
"The agreement will allow Hi-Crush to maintain normal operations
and continue delivering high quality services to our customers,"
Hi-Crush CEO Robert Rasmus said in a statement. "We will also
significantly improve our balance sheet and enhance our Company's
financial flexibility over the near and long-term."
Hi-Crush is the third frac sand company to file for bankruptcy this
year as the record low crude prices caused by the coronavirus
pandemic have dramatically cut demand and forced the closure of
mines across the United States.
Ohio-based frac sand company Covia filed for Chapter 11
reorganization on June 30, 2020. The company is seeking to shed
more than $1 billion in debt and fixed costs.
Seeking to shed nearly $394 million of debt, Fort Worth frac sand
company Vista Proppants filed for Chapter 11 on June 9, 2020.
[*] Private Equity Owned Retailers Vulnerable During Pandemic
-------------------------------------------------------------
Ben Unglesbee, writing for Retail Dive, reports that takeovers by
financial firms have dropped off, but there are many companies from
past buyouts in distress now, as debt and the pandemic take their
toll.
Combine two leveraged buyouts with $5 billion in debt. Add a
pandemic. Stir.
If anyone, for whatever reason, were in need of a recipe for retail
bankruptcy, the above is as good as any. It was enough to send
Neiman Marcus into court to seek relief. Two private equity
buyouts, funded by billions in debt, led to years of distress and
ultimately bankruptcy this year.
J. Crew, acquired by Leonard Green and partners for $3 billion in
2011, is another that hovered at the brink for years, cutting deals
with lenders to buy time until, finally, the pandemic derailed its
latest plan to ease its balance sheet.
So far at least, 2020 is not the year of mass bankruptcies among
private equity retailers, but many are struggling and many others
already collapsed in years past. Seven of the 19 major retail
bankruptcies tracked by Retail Dive as of July 9 were private
equity-owned at the time that they filed. By comparison, in years
past, private equity-owned retailers made up a majority of retail
bankruptcies.
According to Pitchbook, the private equity-owned retailers that
filed for bankruptcy in 2020 include Centric Brands, Neiman Marcus,
J. Crew, True Religion, Art Van Furniture, Lucky Brand, and Sur La
Table.
Past years saw similarly high numbers of Chapter 11s among private
equity-backed retailers. Toys R Us. Payless ShoeSource. Gymboree.
Brookstone. H.H. Gregg. Nine West. The Limited. Charlotte Russe.
Shopko. The list goes on. Dozens of retailers -- burdened by debt
from leveraged buyouts and left vulnerable as retail modernized and
competed fiercely with online and discount players -- have filed,
many of them liquidating their physical presence.
Of 104 retailers that have been through a private equity
acquisition at some point since 2002, 34 have filed for Chapter 11
at least once as of July 9. That's about one-third that have gone
bankrupt, with most of those filings coming in the past three
years.
Of debt and distress
Debt has made some retailers more vulnerable than ever.
Guitar Center, which has been through multiple leveraged buyouts,
recently avoided a default, cutting a bond exchange deal with
lenders that effectively pushed out interest payments, only after
it missed a payment on a group of bonds.
Party City, which today is publicly traded but has also gone
through two previous leveraged buyouts by private equity firms, is
also struggling under its debt load as it wrestles with sales
declines and profit losses.
While the number of private equity-backed companies in bankruptcy
this year, so far, is more modest relative to past years, the list
of private equity-owned retailers in distress is long. Among retail
companies with Moody's ratings of B3 and lower that fall into
Retail Dive's coverage area, two-thirds are owned by private equity
or have been at some point.
According to Pitchbook, the private equity-owned retailers facing
distress include PetSmart, Academy Sports, Bob's Discount
Furniture, Talbots Sycamore, Belk Sycamore, 99 Cents Only, Petco,
At Home, Joann, and Guitar Center.
For those in distress, private equity owners are typically (though
not always) incentivized to stay out of bankruptcy, so they can
maintain their investment. And firms that deal deeply in finance
are adept with tools that can help keep their companies out of
Chapter 11. That includes distressed debt exchanges and in-kind
interest, which trades out cash interest payments now to free
liquidity and adds them to later payments on debt.
"Those are the kinds of things private equity firms go back to the
table and negotiate in times of stress," Mickey Chadha, vice
president with Moody's, said in an interview. "They do want to
avoid Chapter 11, because that has a bigger chance of wiping out
their equity."
As they try to keep their companies liquid and out of court,
private equity firms can also be aggressive in how they interpret
documentation around those companies' debt. "Private equity firms
are notorious in exploiting any documentation weaknesses in their
benefit," Chadha said. "That's been the case for as long as I can
remember."
Fortunately for those retailers in distress, credit markets remain
relatively liquid and open to refinancing deals, which wasn't a
given by any means when the COVID-19 crisis began and markets went
into free fall. Refinancing could keep retailers out of bankruptcy
court, and potentially make a company healthier, if the deal eases
its balance sheet.
In April, Chadha and other Moody's analysts authored a report
speculating that, absent government help, many retailers may be at
the mercy of their private equity owners and those firms'
willingness to put up capital. For now, Chadha said, private equity
firms haven't injected much new equity capital, favoring instead
the kinds of debt maneuvers discussed above.
"In general, private equity's predilection is not to put in new
equity if they don't have to," he said. "It's as a last resort."
Of course, retail's travails aren't exclusive to private
equity-owned companies. Among this year's bankruptcies are
prominent publicly traded retailers, including Pier 1 and J.C.
Penney. Same goes for those retailers that are on the brink of
potential bankruptcy, a list that includes the publicly traded
Tailored Brands, Ascena and Stein Mart (which was nearly acquired
by a private equity firm this year). That shows just how wide and
deep some retail segments have been struggling, both before and
after the COVID-19 crisis.
The number of private equity-owned retailers is also smaller than
it might otherwise be, given the rash of bankruptcies in recent
years, which knocked out many private equity-backed retailers.
There has also been a measurable lull in private equity's interest
since bankruptcies have rattled the sector.
'Evolving' interest in retail plays
After a (second) binge on retail that began roughly in 2011,
private equity acquisitions in the industry slowed after 2016.
After private equity acquisitions of retail companies hit 33 in
2016, they have remained below 30 deals per year since, according
to Mergermarket data provided to Retail Dive.
The total dollar value of deals has also plummeted, from above $8
billion a year in 2015 through 2017, to $2.5 billion or less in the
years since.
"There has been a lay off on traditional, mall-based stores.
However, there has been continued interest in discount retailers
and specialty retailers and e-commerce," Perry Mandarino, head of
restructuring and co-head of investment banking for B. Riley FBR,
said in an interview. "I don't think there's no interest. It's that
the interest has evolved, just like the rest of retail."
Private equity firms have also learned the hard way about the
potentially toxic mixture of high debt levels and fierce price and
technology competition in the retail industry, which was low-margin
and difficult to execute in even before Amazon and other
competitors added to the challenges. "It's very difficult, if not
impossible, to lever up retail companies," Mandarino said.
The investors that provide the debt capital to finance leveraged
buyouts are also wary of the industry. Some investors say, "'We
don't like retail,'" Will Caiger-Smith, associate editor for
leveraged finance at Debtwire, said in an interview.
"It's an area where people are very, very careful what they get
involved in," Caiger-Smith said. "The sentiment around retail has
been pretty circumspect for some time."
The challenges have only sharpened in the COVID-19 era. "It's
difficult to finance a leveraged buyout of a retailer, especially
if there's not going to be much cash flow," Reshmi Basu,
restructuring editor with Debtwire, said in an interview. "It's
still a challenging market. Nobody's reporting terrific numbers at
all, unless you were deemed essential."
During the closure period, two of the few recent major private
equity acquisition deals in retail fell apart. Sycamore Partners
and L Brands terminated their agreement, after a brief legal
tussle, that would have given Sycamore a majority stake in
Victoria's Secret, and Stein Mart and Kingswood Capital Management
broke off their merger.
Even among distressed and bankrupt retailers, interest has been
sparse. Pier 1, for example, sought a buyer before and during
bankruptcy, and couldn't find one. The retailer's cash burn, and
market share and sales declines were so problematic that likely no
private equity firm could conjure a thesis to profitably take the
company over, analysts said earlier this year, well before the
pandemic made retail even more difficult.
But the landscape is not completely devoid of activity. Sycamore
has reportedly mulled a bid for J.C. Penney as well as Pier 1's
e-commerce unit (after no buyer emerged for the retailer's full
business). Sur La Table recently filed for bankruptcy with a bid in
hand to be sold in Chapter 11 to a pair of private equity firms.
"You will see transactions, I don’t think it's going to go away,"
Brien Rowe, a managing director with D.A. Davidson's investment
banking group, said in an interview. He noted there is still
interest in need-based retailers, like those that sell work apparel
and supplies, as well as in retail brand assets and e-commerce
operations.
Private equity interest in retail could also take a different form
than the previous era's buyouts. Debtwire's Caiger-Smith said that
since the pandemic crisis began, some large private equity firms
— many of which also invest in corporate debt — have been
"ploughing" money into "opportunistic credit investments." That is,
lending to companies rather than buying an ownership stake in them,
or providing hybrid capital such as convertible bonds or preferred
equity.
"They understand the leveraged credit space," Caiger-Smith said.
"They understand how these companies work and what it means to lend
to these companies."
There is some of that in the market already. WHP Global, a brand
management firm backed by two private equity stalwarts (BlackRock
and Oaktree Capital), agreed to provide a secured loan to fund
Brooks Brothers through its bankruptcy.
Rowe said he is working with some private equity clients now that
are in the process of setting up credit funds that could start
making loans to companies in the fall, including to retailers. "You
might see a multi-pronged approach" to investing in retail, he
added.
[*] Strategies for Acquisitions of Distressed Companies
--------------------------------------------------------
Ann Marie Uetz and John A. Simon of Foley & Lardner LLP wrote that
six months after the onset of the coronavirus pandemic, many merger
and acquisition transactions remain delayed or sidelined. As
companies report their Q2 financial results, investors are also
focused on opportunities to acquire promising businesses that may
face near-term financial and operational challenges, at lower
valuations than were available prior to the pandemic. While these
deals may appear to be hard to come by, shrewd investors will be
well served by considering both out-of-court and bankruptcy
acquisitions of distressed companies. This client alert describes
some of the fundamental deal considerations, and highlights the
pros and cons, associated with each of these strategies.
Out-of-Court Acquisition
-------------------------
* Often structured like a normal asset deal.
* Due diligence is even more critical to understand, and where
possible, avoid and creatively address, potential liabilities.
* Specify assumed liabilities and excluded liabilities.
* Include indemnification and escrow where possible (but seller
might not be able to perform under indemnification).
* Negotiations with creditor constituencies can reduce
exposure.
Pros:
* Fast, no court approvals required.
* Less expensive than a court process.
* Buyer can sometimes achieve more control/certainty and
purchase protections than in a court process.
* Can obtain traditional M&A protections (e.g., escrow, rep and
warranty insurance, indemnity).
* Typically does not require an auction with competitive
bidding.
* Potentially easy on customer/supplier relationships (subject
to contract terms).
Cons:
* Cannot "cherry pick" contracts as easily as in bankruptcy.
* Cannot force support from and bind non-consenting creditors
(e.g., lenders).
* Risk of possible successor liability (vs "free and clear" sale
in bankruptcy).
* Need shareholder consent.
* Fraudulent transfer risk where seller does not receive
reasonably equivalent/fair value while insolvent, but consider
these protections:
-- Arm's-length sale process with consents of key parties.
-- Valuation opinion.
-- Structure through a friendly foreclosure/Article 9 sale.
Bankruptcy Sale
---------------
* Buyers often seek to avoid possible successor liability and
other risks and require the sale to occur in a Chapter 11 to
maximize buyer protections/rights.
* Section 363 of the Bankruptcy Code permits a debtor to sell
substantially all of its assets if supported by reasonable business
judgment, free and clear of all liens, claims, and encumbrances.
* Section 365 of the Bankruptcy Code permits a debtor to assume
and assign, or reject, certain contracts and unexpired leases
notwithstanding restrictions on assignment in such contracts.
* Upon a bankruptcy filing, the "automatic stay" arises and
protects the seller's assets from creditor collection efforts and
contract terminations to enable a transaction to occur.
Pros:
* Court approved sale is "free and clear" of liabilities and
balance sheet is clean.
* Shareholder approval not required.
* Eliminates fraudulent transfer risk.
* Enhanced successor liability protection.
* Contracts can be "cherry picked" and bad ones left behind,
regardless of consent.
* Fast (sales can be approved within 30-60 days after a
bankruptcy filing).
* Closing likely regardless of objecting creditors.
* Buyer can achieve "stalking horse" advantages: enhanced
information, bid protections to protect itself and enhance purchase
prospects (e.g., breakup fee (~3-3.5%) and expense reimbursement,
and bid increased by same), minimum bid increments and tight
timeline for the sale.
* Tactic: If buyer owns secured debt – it can credit bid for
increased control.
Cons:
* Sale will be to the "highest and best bid"; an auction is
generally required and, notwithstanding stalking horse advantages,
marketing process may yield an alternative winning bidder.
* Secured lender can credit bid its debt to set the floor.
* More expensive than an out-of-court acquisition.
* Unsecured Creditor Committee appointed in Chapter 11 may delay
sale and seek to extract more value.
* Purchase is "as is" – diminished escrow/no indemnity.
[*] Z-Score Father Predicts Rise in ‘Mega’ Bankruptcies in 2020
-------------------------------------------------------------------
Denise Wee, writing for Bloomberg News, reports that the New York
University professor who developed one of the best-known formulas
for predicting corporate insolvencies has a warning for U.S. credit
investors: this year's spate of "mega" bankruptcies is just getting
started.
More than 30 American companies with liabilities exceeding $1
billion have already filed for Chapter 11 since the start of
January, and that number is likely to top 60 by year-end after
businesses piled on debt during the pandemic, according to Edward
Altman, creator of the Z-score and professor emeritus at NYU's
Stern School of Business. Companies globally have sold a record
$2.1 trillion of bonds this year, with nearly half coming from U.S.
issuers, data compiled by Bloomberg show.
While the stimulus-fueled rally in credit markets since March has
helped borrowers stay afloat during the coronavirus crisis, Altman
and others have warned that many companies are just delaying an
inevitable reckoning. Fitch Ratings estimates worldwide corporate
bond defaults this year could exceed levels reached during the
global recession in 2009.
"There was a huge buildup in corporate debt by the end of 2019 and
I thought the market would gain some much needed de-leveraging with
the Covid-19 crisis," said Altman, who is also director of credit
and debt market research at the NYU Salomon Center. "Now, seems
like companies again are exploiting what seems to be a crazy
rebound."
'Deeper Recession'
As new waves of the coronavirus keep planes from flying and curb
consumer spending, pressures on the global economy are increasing.
The International Monetary Fund downgraded its outlook for the
world economy in June 2020, projecting a deeper recession and
slower recovery than it previously anticipated.
Chesapeake Energy Corp., the pioneer of the shale gas revolution,
and retailer Brooks Brothers Group Inc. have filed for bankruptcy
in the U.S. in recent weeks. Defaults in the Asia-Pacific region
include Virgin Australia Holdings Ltd. and Shanghai-headquartered
Hilong Holding Ltd., an oil equipment and services firm.
Man Group Plc, the world's largest publicly listed hedge fund, has
warned of the risk to bond buyers. The World Bank has also forecast
that more than 90% of economies will experience contractions this
year, higher than the rate seen at the height of the Great
Depression.
"The speed and magnitude of the increase in corporate debt this
year poses various risks to an already fragile global economic
outlook," said Ayhan Kose, director of the World Bank Group's
Prospects Group. Countries where a large proportion of the
borrowings are in foreign currencies or for shorter periods are
particularly vulnerable, as they face risks of fluctuating exchange
rates and also having to roll over the debt more quickly, he said.
Xavier Jean, senior director for corporate ratings at S&P Global
Ratings, said some firms are being proactive, as they are uncertain
if they can raise funds during the second half. But for those that
face tremendous stress in their operations, the increased borrowing
heightens risks if things don't turn around as quickly, he said.
In the U.S., the Federal Reserve has provided unprecedented
support, such as buying corporate bonds, including the debt of
firms that were cut from investment-grade to junk.
For Altman, some of the debt sold "kicks the can down the road" for
firms that don’t deserve support.
Companies are doing the opposite of what they should be doing,
which is to de-leverage as the banks did after the global financial
crisis of 2008, he said. "When there is an increase in insolvency
risk, what you do not need is more debt. You need less debt."
[^] 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.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2020. All rights reserved. ISSN: 1520-9474.
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