/raid1/www/Hosts/bankrupt/TCR_Public/201005.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 5, 2020, Vol. 24, No. 278
Headlines
24 HOUR FITNESS: Richards, O'Melveny Update on Crossholder Group
A.R.M. OPCO: Taps Phillips Organization as Accountant
ABCABCO INC: Files Voluntary Chapter 7 Bankruptcy Petition
ACADIA HEALTHCARE: S&P Assigns 'B-' Rating on New Unsecured Notes
ADMI CORP: S&P Affirms 'B' Issuer Credit Rating, Outlook Negative
ADVANCED POWER: Seeks Plan Exclusivity Extension Thru December 7
AKORN INC: Completes Sale to Term Loan Lenders, Exits Chapter 11
AKORN INC: Seeks Court Approval for $9M Stockholder Suit Deal
ALEXX BROWN: Gets Approval to Hire Goodman Law as Counsel
ALEXX BROWN: Seeks to Hire Moritt Hock as Special Counsel
AMERICAN AIRLINES: Fitch Cuts Ratings to B-, On Watch Negative
AMERICAN DENTAL: S&P Affirms 'B-' ICR, Off CreditWatch
ARENA ENERGY: Gets Approval to Hire Kirkland & Ellis as Counsel
ARENA ENERGY: Hires Alvarez & Marsal as Restructuring Advisor
ARENA ENERGY: Hires Evercore Group as Investment Banker
ARENA ENERGY: Seeks to Hire Jackson Walker as Co-Counsel
ARR INVESTMENTS: Taps Ncom Realty as Real Estate Broker
ATLANTA URBAN: S&P Rates Multifamily Housing Revenue Debt 'BB+'
AVA KYROLLOSS: Files Voluntary Chapter 7 Bankruptcy Petition
BALDWIN RISK: Moody's Assigns B2 CFR, Outlook Stable
BENEVIS CORP: Gets Court Approval to Sell to New Mountain
BIG ASS FANS: S&P Raises ICR to 'B-' on Steady Demand
BIONIK LABORATORIES: Sells New InMotion Device to VA Rehabilitation
BLACKRIDGE TECHNOLOGY: Hires Patagonia Capital as Investment Banker
BOY SCOUTS OF AMERICA: Victims Wants Limited Ch. 11 Asset Probe
BRIAN FAMILY: Case Summary & 4 Unsecured Creditors
BROOKFIELD RESIDENTIAL: S&P Alters Ratings Outlook to Stable
BURLESON HOME: Files Voluntary Chapter 11 Bankruptcy
CANCER GENETICS: Raju Chaganti Quits as Director
CARDILLE MUSHROOMS: Files Voluntary Ch. 11 Bankruptcy Petition
CEC ENTERTAINMENT: Akin Gump Updates on Term Lender Group
CEC ENTERTAINMENT: King & Spalding Updates on Noteholder Group
CEDAR FAIR: Moody's Rates Proposed $300M Senior Notes 'B3'
CEDAR FAIR: S&P Lowers ICR to 'B-', Off CreditWatch Negative
CENTRAL GARDEN: Fitch Assigns First-Time 'BB' IDR, Outlook Stable
CENTRIC BRANDS: Abandons Plan to Sell SWIMS Stake
CENTURY 21: Russell, Cullen Represent Utility Companies
CHAPARRAL ENERGY: Court Quickly Approves Debt-For-Equity Plan
CHESAPEAKE ENERGY: Taps Ernst & Young to Provide Audit Services
CLEAR THE WAY: Files Voluntary Chapter 11 Petition
CLEAR THE WAY: Seeks to Hire John E. Dunlap PC as Counsel
CLEVELAND-CLIFFS INC: Fitch Affirms 'B' LongTerm IDR, Outlook Pos.
CONNECTING CULTURES: Seeks to Hire Steinhilber Swanson as Counsel
COSMOLEDO LLC: Maison Kayser's U.S. Baking License Up for Auction
CYTODYN INC: All Four Proposals Passed at Annual Meeting
CYTODYN INC: Registers 25M Shares Under 2012 Incentive Plan
D & D CORPORATION: Seeks Approval to Hire Bankruptcy Attorney
D & D CORPORATION: Seeks Court Approval to Hire Accountant
DELCATH SYSTEMS: Appoints Gerard Michel as Chief Executive Officer
DELTA TOPCO: S&P Assigns 'B-' ICR Amid Warburg Pincus Acquisition
DENTALCORP HEALTH: S&P Affirms 'B-' ICR, Outlook Negative
DIOCESE OF CAMDEN: Case Summary & 20 Largest Unsecured Creditors
DIOCESE OF CAMDEN: Enters Ch. 11 Due to Losses, Payments to Victims
DIOCESE OF ROCKVILLE: Case Summary & 20 Top Unsecured Creditors
DIOCESE OF ROCKVILLE: Sexual Abuse Suits Lead to Chapter 11 Filing
E.B.J.T. ENTERPRISES: Case Summary & Unsecured Creditor
ENCOMPASS HEALTH: Moody's Rates New 2031 Sr. Unsecured Notes 'B1'
ENCOMPASS HEALTH: S&P Rates New $400MM Senior Unsecured Notes 'B+'
ETS OF WASHINGTON: Case Summary & 9 Unsecured Creditors
EVANGEL INT'L: Plan Exclusivity Period Extended Thru Nov. 15
FAHNESTOCK BUILDERS: Files Voluntary Chapter 7 Bankruptcy Petition
FAIRWAY GROUP: Court OKs Ch. 11 Plan, Saves 1,700 Jobs
FAIRWAY GROUP: Wins Two-Month Extension of Plan Exclusivity
FARR BUILDERS: Gets Approval to Hire Real Estate Broker
FF FUND I: Court Extends Plan Exclusivity Periods Until November 19
FLY LEASING: Moody's Rates New Senior Secured Term Loan 'Ba3'
FOOT LOCKER: Egan-Jones Hikes Senior Unsecured Ratings to BB-
FOXWOOD HILLS: Taps Elliott Davis as Accountant
FTE NETWORKS: Munish Bansal Serving as US Home Rentals CEO
FTE NETWORKS: Requires Additional Time to File its Form 10-Q
GARRETT MOTION: Jones Day Represents Shareholders
GENERAL MOTORS: Fitch Rates Series C Preferred Stock 'BB'
GLOBAL EAGLE: Committee Hires Akin Gump Strauss as Legal Counsel
GLOBAL EAGLE: Committee Hires Ashby & Geddes as Co-Counsel
GLOBAL EAGLE: Committee Hires Perella Weinberg as Investment Banker
GLOBAL HEALTHCARE: CFO Zvi Rhine Quits from All positions
GREENEDEN US II: Moody's Affirms B3 CFR on Dividend, Outlook Stable
GREENEDEN US II: S&P Affirms 'B-' ICR on Planned Debt Refinancing
GROW INC: October 14 Plan & Disclosure Statement Hearing Set
GRUPO AEROMEXICO: Bondholders and Apollo Clash Over $1B Loan
HAIRE TRUCKING : Files Voluntary Chapter 7 Bankruptcy Petition
HARRISBURG UNIVERSITY: S&P Rates 2020 University Revenue Bonds 'BB'
HAWAIIAN AIRLINES: Fitch Cuts Ratings to B-, On Watch Negative
HEARTLAND DENTAL: S&P Affirms 'CCC+' ICR & Alters Outlook to Stable
IANTHUS CAPITAL: Court Stalls Its $169M Debt Plan
IMAGEWARE SYSTEMS: Secures $2.2 Million Equity Advance
INSPIRED CONCEPTS: Taps Adamy Valuation as Expert Valuation Witness
INTELSAT SA: Examiner Hires Bernstein Shur Sawyer as Attorney
INTELSAT SA: Examiner Hires Tavenner & Beran as Local Counsel
IPC CORP: S&P Lowers ICR to 'CCC', Outlook Negative
IRON HORSE: Seeks Approval to Hire ARG Partners, Appoint CRO
J.C. PENNEY: Akin Gump Represents First Lien Minority Group
J.C. PENNEY: Court Delays $1-Mil. Shareholder Deal Ruling
J.C. PENNEY: Panel Seeks to Modify Compensation Terms for Jefferies
J2 GLOBAL: Moody's Rates New $1.2BB Senior Notes Due 2030 'Ba3'
JAGUAR HEALTH: Signs $5M Royalty Financing Transaction with Lender
JCP INDUSTRIES: Files Voluntary Chapter 7 Petition
JEFFERIES FINANCE: Fitch Rates $350MM Term Loan Due 2027 'BB'
JSAA REALTY: Case Summary & 4 Unsecured Creditors
KB US HOLDINGS: Ruling on Union CBAs Deferred Pending Bids
KLAUSNER LUMBER ONE: Hires Curtis Mallet-Prevost as Counsel
KNIGHTHOUSE MEDIA: Case Summary & 20 Largest Unsecured Creditors
LAREDO PETROLEUM: Moody's Lowers CFR to B3, Outlook Stable
LARIMER SKYVIEW: Subject to Involuntary Chapter 7 Petition
LATAM AIRLINES: Dechert LLP Represents 6 Unsecured Claimants
LATAM AIRLINES: Google Sues Airline for $8.2M Unpaid Services
LEHMAN BROTHERS: Junior Bondholders Will Get Payment After 12 Years
LIGADO NETWORKS: Seeks $4B Debt Deal to Avert Bankruptcy
LILIS ENERGY: Court OKs $1M Payment of Employee Bonus Plan
LITHIA MOTORS: S&P Alters Outlook to Stable & Affirms 'BB+' ICR
LONESTAR RESOURCES: Moody's Cuts PDR to D-PD on Bankruptcy Filing
LSC COMMUNICATIONS: Sale to Atlas for $63.4M Credit Bid Okayed
LUVU BRANDS: Swings to $860K Net Income in Fiscal 2020
M.C. TOWING & RECOVERY: Hires Consumer Law Attorneys as Counsel
MARZILLI MACHINE: Case Summary & 20 Largest Unsecured Creditors
MELISSAS' GOLF: Gets Approval to Hire Lori A. Sowers as Accountant
MENDENHALL AUTO: Seeks to Hire Sharrard McGee as Accountant
MOUNTAIN PROVINCE: Shareholders Approve Assignment of $25M Debt
MUSCLEPHARM CORP: Settles Lawsuit with Nutrablend
NEIMAN MARCUS: Texas Court OKs Investor Defamation Lawsuit
NEONODE INC: Stockholders Pass All Proposals at Annual Meeting
NEP/NCP HOLDCO: S&P Affirms 'B-' ICR on Improved Liquidity
NOBLE CORP: Gets Court Approval to Hire PwC as Auditor
NTHUS4 CORP: Seeks to Hire Joyce W. Lindauer as Legal Counsel
OASIS PETROLEUM: Moody's Cuts PDR to D-PD on Bankruptcy Filing
OASIS PETROLEUM: Porter, Paul Represent Noteholder Group
OCEANSHORE WINE: Files Voluntary Chapter 7 Petition
OLD COLD: Creditors That Buy Assets Keep Leftover Property Lien
ONEWEB GLOBAL: Court OKs Bankruptcy Plan After Creditor Settlement
OXBOW CARBON: Moody's Rates First-Lien Bank Credit Facilities 'B1'
OXBOW CARBON: S&P Affirms 'B+' ICR on Refinancing, Outlook Neg.
PACIFIC DRILLING: Says Restructuring Could Lead to Bankruptcy
PACIFIC MAINTENANCE: Files Voluntary Chapter 7 Bankruptcy Petition
PAE HOLDING: Moody's Hikes CFR to B2, Outlook Stable
PAE HOLDING: S&P Affirms 'B' ICR & Alters Outlook to Stable
PAPA'S 1 LLC: Files Voluntary Chapter 7 Bankruptcy Petition
PARKER'S QUALITY: Files Chapter 11 Bankruptcy Petition
PATRIOT NATIONAL: Court Rejects Delaware Agency's Appeal
PHI GROUP: Delays Form 10-K Filing Due to Impact of COVID-19
PHI GROUP: Engages M.S Madhava Rao as New Accountants
PHILADELPHIA SCHOOL OF MASSAGE: Files for Chapter 11 Bankruptcy
PLATINUM GROUP: Added to the S&P/TSX SmallCap Index
PREMIER DENTAL: S&P Affirms 'CCC+' ICR, Outlook Negative
PROSOURCE DENVER: Franchisee Files Chapter 11 Bankruptcy Protection
PURDUE PHARMA: Court OKs $26M Employee Retention Payments
PURDUE PHARMA: Senator Baldwin Raises Concerns on Court Location
RAVE RESTAURANT: Pizza Chains Fighting for Survival
REMINGTON OUTDOOR: Assets Sale Okayed Despite Sandy Hook Objection
REMINGTON OUTDOOR: Sturm Ruger Not Buying Facilities, Real Estate
REVLON INC: Asks Bondholders for More Debt Exchange Turnaround Time
RGN-GROUP HOLDINGS: Gets Court Approval to Hire Duff & Phelps
RGN-GROUP HOLDINGS: Hires Epiq as Administrative Advisor
RGN-NEW YORK LVIII: Case Summary & Unsecured Creditor
RGN-NEW YORK: Case Summary & Unsecured Creditor
SAEXPLORATION HOLDINGS: Rapp, Paul Represent Whitebox, 2 Others
SAEXPLORATION HOLDINGS: Taps Imperial Capital as Investment Banker
SAMSON OIL: Moss Adams LLP Dismissed as Accountants
SCULPTOR CAPITAL: Fitch Affirms B+ LongTerm IDR, Outlook Negative
SECURITY FIRST: Gets Approval to Hire Sullivan Hazeltine as Counsel
SELECTA GROUP: To Seek U.S. Recognition of UK Scheme of Arrangement
SERVICEMASTER COMPANY: Moody's Hikes CFR to Ba2, Outlook Stable
SESI LLC: Moody's Lowers CFR to Ca, Outlook Negative
SHAKER RD LLC: Taps Hire Fitzgerald Attorneys as New Counsel
SOUTHEAST SUPPLY: Moody's Cuts Senior Unsecured Rating to Ba1
SPIRIT AEROSYSTEMS: S&P Rates $400MM 1st Lien Secured Notes 'BB-'
SPON COMPUTER: Gets Court Approval to Hire Accountant
SUMMIT MIDSTREAM: Signs Support Agreement with Term Loan Lenders
SUPERIOR ENERGY: To File for Chapter 11 With Prepackaged Plan
SUPERIOR ENERGY: Will be Delisted from NYSE on Oct. 13
TAILORED BRANDS: Committee Hires Norton Rose as Co-Counsel
TAILORED BRANDS: Committee Hires Pachulski Stang as Counsel
TAILORED BRANDS: Committee Taps M-III Advisory as Financial Advisor
TAILORED BRANDS: Landlords & Creditors Object Bankruptcy Plan
TATUNG COMPANY: Hires David Agler Law as Special Tax Counsel
THG PROPERTIES: Plan Exclusivity Extended Thru January 11
TM HEALTHCARE: Seeks to Hire Shraiberg Landau as Bankruptcy Counsel
TMK HAWK: Moody's Cuts Senior Secured Credit Facilities to 'Ca/C'
TNT CRANE: Court Approves Debt-for-Equity Exit Plan
TOWN SPORTS: Authorized to Borrow $15-Mil. to Pay Rent
TOWN SPORTS: Boston Sports Club Closing Some Locations
TRANSPAC FOOD: Gets Approval to Hire Blythe Grace as Counsel
TUESDAY MORNING: Court Approves Bankruptcy Sale Procedures
TUNNEL HILL: Moody's Cuts CFR & Senior Secured Rating to Caa1
U.S. OUTDOOR: Seeks to Hire Vanden Bos & Chapman as Counsel
UC COLORADO: Plan Exclusivity Period Extended Until November 16
UNITED AIRLINES: Egan-Jones Lowers Senior Unsecured Ratings to B-
US REAL ESTATE: Case Summary & 18 Unsecured Creditors
US REAL ESTATE: Case Summary & 20 Largest Unsecured Creditors
VENUS CONCEPT: Signs 14th Amendment to Madryn Credit Agreement
VIPER ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
VIZITECH USA: Court Extends Plan Exclusivity Until October 23
WALKER COUNTY HOSPITAL: Wants Plan Exclusivity Extension Thru 2021
WATERTECH HOLDING: Sale to 3rd Party Despite Bad Faith Allegation
WESTJET: Fitch Lowers LongTerm IDR to 'B', Outlook Negative
WIRTA HOTELS 3: Owner Files Chapter 11 to Keep Hotel
WPX ENERGY: S&P Puts 'BB-' ICR on Watch Pos. on Devon Energy Merger
ZINC-POLYMER PARENT: S&P Raises ICR to 'B-', Outlook Stable
[*] Businesses Facing Uncertain Future Due to Covid-19 Pandemic
[*] House Judiciary Advances Bill That Limits Ch. 11 Exec. Bonuses
[*] Retail Closures and Bankruptcy Filings in DC Area in 2020
[*] Stone Point Escapes Antitrust Bankruptcy Fee Claims
[^] BOND PRICING: For the Week from Sept. 28 to Oct. 2, 2020
*********
24 HOUR FITNESS: Richards, O'Melveny Update on Crossholder Group
----------------------------------------------------------------
In the Chapter 11 cases of 24 Hour Fitness Worldwide, Inc., et al.,
the law firms of O'Melveny & Myers LLP and Richards, Layton &
Finger, P.A. submitted an amended joint verified statement under
Rule 2019 of the Federal Rules of Bankruptcy Procedure, to disclose
an updated list of Ad Hoc Group of Crossholders that they are
representing.
The ad hoc group of crossholders, comprised of institutions that
hold and/or manage accounts holding Term Loans and/or Revolving
Loans in each case made pursuant to that certain Credit Agreement,
dated as of May 31, 2018, by and among the Debtors, Morgan Stanley
Senior Funding, Inc., as administrative agent and collateral agent,
and the lenders party thereto; and/or 8.000% senior unsecured notes
due 2022 issued by 24 Hour Fitness Worldwide, Inc., as successor by
merger to 24 Hour Holdings III LLC pursuant to the indenture, dated
as of May 30, 2014, by and among the Debtors and the indenture
trustee party thereto; and/or senior secured term loans made
pursuant to that certain Superpriority Senior Secured
Debtor-in-Possession Credit Agreement, dated as of June 17, 2020.
O'Melveny is a law firm that maintains offices at Times Square
Tower, Seven Times Square, New York, New York 10036, and has
additional offices in the United States and abroad. RLF is a law
firm that maintains offices at 920 North King Street, Wilmington,
Delaware 19801.
The Ad Hoc Group was formed prior to the Debtors' chapter 11 filing
when certain members of the Ad Hoc Group contacted and engaged
O'Melveny.
The Ad Hoc Group retained RLF as local counsel shortly before the
Debtors' chapter 11 filing in the United States Bankruptcy Court
for the District of Delaware.
Other than as disclosed herein, neither O'Melveny nor RLF (a)
represents or purports to represent any other entities with respect
to the Cases or (b) holds any claim against or interest in the
Debtors, except to the extent O'Melveny and/or RLF have claims
against the Debtors for fees and/or expenses arising from services
rendered in connection with their representation of the Ad Hoc
Group.
Although the Ad Hoc Group has retained Counsel to represent it
collectively as a group, each member of the Ad Hoc Group makes its
own decisions as to how it wishes to proceed and does not speak
for, or on behalf of, any other holder of Prepetition Loans, Senior
Notes, and or DIP Loans, including the other members of the Ad Hoc
Group in their individual capacities. In addition, the Ad Hoc Group
does not represent or purport to represent any other entities in
connection with the Cases.
As of Sept. 30, 2020, members of the Ad Hoc Group and their
disclosable economic interests are:
Canyon Capital Advisors LLC
2000 Avenue of the Stars, 11th Floor
Los Angeles, CA 90067
Attn: Jonathan Kaplan
* Senior Secured Loans: $4,445,377.46
* DIP Loans: $3,492,305.98
Canyon CLO Advisors LLC
2000 Avenue of the Stars,11th Floor
Los Angeles, CA 90067
Attn: Jonathan Kaplan
* Senior Secured Loans: $10,195,059.90
* DIP Loans: $8,009,279.04
Cyrus Capital Partners, L.P.
65 East 55th Street, 35th Floor
New York, NY 10022
Attn: John Rapaport
* Senior Secured Loans: $56,327,512.87
* DIP Loans: $44,758,363.85
* Senior Notes: $52,935,000.00
Franklin Advisers, Inc.
1 Franklin Pkwy Building 920 / 3rd Floor
San Mateo, CA 94403
Attn: Victoria Penfield
* Senior Secured Loans: $37,935,599.88
* DIP Loans: $29,802,356.15
HPS Investment Partners, LLC
40 West 57th Street, 6th Floor
New York, NY 10019
Attn: Jonathan Rabinowitz
* Senior Secured Loans: $35,747,686.13
* DIP Loans: $28,083,522.56
Keyframe Capital Partners, L.P.
65 East 55th Street, 35th Floor
New York, NY 10022
Attn: Ethan Goldsmith
* Senior Secured Loans: $14,142,530.87
* DIP Loans: $11,237,786.13
* Senior Notes: $19,065,000.00
Monarch Alternative Capital LP
535 Madison Ave, 26th Floor
New York, NY 10022
Attn: Patrick Fallon
* Senior Secured Loans: $81,421,584.19
* DIP Loans: $84,897,608.00
MSD Credit Opportunity Master Fund, L.P.
645 Fifth Avenue 21st Floor
New York, NY 10022
Attn: Simon Crocker
* Senior Secured Loans: $7,232,055.24
* DIP Loans: $5,681,530.99
* Senior Notes: $43,250,000.00
Nuveen Alternatives Advisors LLC
730 3rd Avenue
New York, NY 10017
Attn: Ji Min Shin
* Senior Secured Loans: $7,971,178.22
* DIP Loans: $6,262,188.91
Sculptor Capital Investments, LLC
9 West 57th Street, 39th Floor
New York, NY 10019
Attn: Norman Greenberg
* Senior Secured Loans: $188,754,197.80
* DIP Loans: $149,380,068.50
* Senior Notes: $254,363,000.00
Symphony Asset Management LLC
555 California Street, Suite 3100
San Francisco, CA 94104
Attn: Ji Min Shin
* Senior Secured Loans: $30,383,573.88
* DIP Loans: $23,869,454.91
Voya Investment Management Co. LLC
7337 E. Doubletree Ranch Rd, Suite 100
Scottsdale, AZ 85258
Attn: Robert Wilson
* Senior Secured Loans: $41,136,580.79
* DIP Loans: $29,771,295.66
Nothing contained in this Statement is intended to, or should be
construed to constitute (a) a waiver or release of any claims filed
or to be filed against or interests in any of the Debtors held by
any member of the Ad Hoc Group, its affiliates, or any other
entity, or (b) an admission with respect to any fact or legal
theory. Nothing herein should be construed as a limitation upon, or
waiver of, any rights of any member of the Ad Hoc Group to assert,
file, and/or amend any proof of claim in accordance with applicable
law and any order entered in these Cases.
From time to time, additional parties may become members of the Ad
Hoc Group, and certain members of the Ad Hoc Group may cease to be
members in the future. Counsel reserves the right to amend or
supplement this Statement as necessary for that, or any other,
reason in accordance with Bankruptcy Rule 2019.
The information contained herein is intended only to comply with
Bankruptcy Rule 2019 and is not intended for any other use or
purpose.
Counsel for the Ad Hoc Group can be reached at:
RICHARDS, LAYTON & FINGER, P.A.
Mark D. Collins, Esq.
Michael J. Merchant, Esq.
David T. Queroli, Esq.
920 North King Street
Wilmington, DE 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
Email: collins@rlf.com
merchant@rlf.com
queroli@rlf.com
- and -
O'MELVENY & MYERS LLP
John J. Rapisardi, Esq.
Daniel S. Shamah, Esq.
Diana Perez, Esq.
Times Square Tower
Seven Times Square
New York, NY 10036
Telephone: (212) 326-2000
Facsimile: (212) 326-2061
Email: jrapisardi@omm.com
dshamah@omm.com
dperez@omm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3leAjtG and https://bit.ly/34pyoeT
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.
A.R.M. OPCO: Taps Phillips Organization as Accountant
-----------------------------------------------------
A.R.M. OPCO, Inc. received approval from the U.S. Bankruptcy Court
for the Northern District of Ohio to employ The Phillips
Organization as its accountant and financial advisor.
The firm's services will include:
(a) assisting Debtor in fulfilling its duties;
(b) providing general accounting services as Phillips provided
before the petition date; and
(c) assisting Debtor by providing financial analyses necessary
for its plan of reorganization, disclosure statement, sale of any
assets, or other transaction related to its reorganization.
Phillips will be paid at hourly rates as follows:
Russell Phillips Jr., CPA, $230
Partners $200
Staff Services $130
Clerical Services $50
The firm holds a retainer in the amount of $5,000.
Phillips is a "disinterested person" within the meaning of sections
101(14) and 327 of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Russell Phillips Jr.
The Phillips Organization
3924 Cleveland Ave NW
Canton, OH 44709
Phone: +1 330-493-3928
About A.R.M. OPCO Inc.
A.R.M. OPCO Inc. is an equipment manufacturer in Canton, Ohio, with
the latest in CNC burning and forming capabilities, assembly bays,
finishing and painting systems all coupled with 3D computer-aided
design. The company manufactures TerrainPro M3, vacuum leaf, snow
and ice control, dump trucks, oil and gas equipment, septic and
pressure vessels, grappler trucks, and parts and service. Visit
https://www.toughequipment.com for more information.
A.R.M. OPCO sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Ohio Case No. 20-61308) on Aug. 20, 2020. A.R.M.
OPCO President William T. Blackerby Jr. signed the petition. At
the time of the filing, Debtor had estimated assets of $4,270,274
and liabilities of $10,680,090.
Judge Russ Kendig oversees the case.
Anthony J. DeGirolamo, Attorney at Law and Tzangas Plakas & Mannos
Ltd. serve as Debtor's bankruptcy counsel and special counsel,
respectively.
ABCABCO INC: Files Voluntary Chapter 7 Bankruptcy Petition
----------------------------------------------------------
ABCABCO Inc. filed for voluntary Chapter 7 bankruptcy protection
Aug. 28, 2020 (Bankr. W.D. Tex. Case No. 20-10962).
The Debtor's counsel:
Michael V. Baumer
Tel: 512-476-8707
E-mail: baumerlaw@baumerlaw.com
According to the Austin Business Journal, the debtor listed an
address of 11712 N. Lamar Blvd. #D, Austin, Texas. ABCABCO Inc.
listed assets up to $137,246 and debts up to $773,989. The filing's
largest creditor was listed as Wells Fargo Bank with an outstanding
claim of $577,852.
ABCABCO Inc., d/b/a Lone Star Cab Co., is a taxicab business.
ACADIA HEALTHCARE: S&P Assigns 'B-' Rating on New Unsecured Notes
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S&P Global Ratings assigned a 'B-' rating to inpatient and
outpatient behavioral and psychiatric health care provider Acadia
Healthcare Co. Inc.'s new senior unsecured notes. S&P's recovery
rating is '5', indicating prospects for a modest (10%-30%; rounded
estimate: 10%) recovery.
S&P said, "At the same time, we are raising our rating on the
company's senior secured debt to 'BB-' from 'B+', Our recovery
rating is '1' indicating prospects for very high (90%-100%, rounded
estimate 90%) recovery. We are affirming our 'B' issuer credit
rating."
The upgrade on Acadia's senior secured debt reflects the change in
the company's debt structure from the pending financing. The
refinancing of secured debt with unsecured debt reduces the total
amount of secured debt, increasing recovery prospects for senior
secured debt holders. Recovery prospects for the unsecured lenders
decreases slightly to 10% from 15%, but is consistent with the
current rating.
The company has weathered the trough of the patient decline but the
sale of the U.K. business has not yet occurred. S&P said, "We
believe the company has endured the low point of the pandemic but
there may be another wave. However, we don't expect significantly
reduced volume for Acadia's services over the next year. Further,
our current base case does not incorporate the sale of the U.K.
business, given the uncertainty around the timing of such a sale.
We expect organic revenue growth of around 3.5% in 2020, mostly
from bed additions at existing facilities, de novo facilities, and
maturing of previously added beds, offset by COVID-19 impact. We
expect the pace of growth, notwithstanding near-term disruption
from the pandemic, to exceed our expectation of low-single-digit
percentage organic growth for health care providers. We expect
Acadia to generate annual free operating cash flow of over $100
million, which will primarily be used to fund de novo bed expansion
at new and existing facilities." This results in debt to EBITDA of
about 5.5x in 2020 and 5.2x in 2021.
S&P said, "We expect leverage to remain above 5x, though we expect
Acadia to prioritize permanent debt repayment if it succeeds in
selling its U.K. business. While labor costs stabilized in the
U.K., profitability in this business remain constrained. The
business represents about 35% of Acadia's revenues, but only about
25% of EBITDA. Additionally, we expect the company to support its
already above-industry-average growth rate with significant capital
spending for additional beds and facility additions. We continue to
expect Acadia to prioritize growth, supporting our expectation it
will invest the majority of internally generated cash flows into
growth projects (600 to 700 new beds per year, likely 200 to 300 in
2020, to the current base of 18,200 across new and existing
facilities) and tuck-in acquisitions.
"The stable outlook reflects our view that Acadia will extend its
maturity profile as debt comes due. We note that deleveraging
meaningfully below 5x will require the successful sale of the U.K.
business, which we view as uncertain over the next year.
"While the pending refinancing extends Acadia's debt maturity
profile, it remains front-ended and compressed such that we expect
the company to refinance its term loan A and revolver in the near
term. We could lower the rating if the company fails to address its
2022 maturities over the next 12 months. This would, in our view,
indicate refinancing risk as those dates move closer.
"While Acadia temporarily suspended the sale of its U.K. business
until market conditions improve, if it uses such proceeds to pay
down its upcoming maturities, we expect leverage would fall below
our 5x upgrade trigger. Under this scenario, we would need to see
whether Acadia is able to maintain financial policies consistent
with sustaining leverage below 5x."
ADMI CORP: S&P Affirms 'B' Issuer Credit Rating, Outlook Negative
-----------------------------------------------------------------
S&P Global Ratings affirmed the 'B' rating on ADMI Corp. and
removed it from CreditWatch negative.
S&P's negative outlook reflects its view that the dental industry
remains susceptible to the risk of ongoing spread of coronavirus
cases.
ADMI and the supported practices were able to reduce costs and
preserve cash during the pandemic, thereby reducing the risk for a
potential downgrade. Temporary practice closures hurt
second-quarter revenues, declining 45% compared to the same period
last year, with a trough in April where revenues declined 85%
compared to April 2019. As states started to reopen and elective
dental procedures resumed in May, the company began to see a
significant recovery in demand, recording close to 90% of
prior-year same-period revenues in June.
ADMI also managed to lower costs in line with the revenue declines
through furloughs and reduced advertising by the independent
practices and other general and administrative expenses, thereby
preserving EBITDA margins in the second quarter. It also reduced
growth initiatives and capital expenditures to preserve cash,
opening just one new office in the second quarter compared to six
in the second quarter of last year.
The company has cash on the balance sheet of about $60 million and
the revolver, which was previously drawn in March, has been fully
repaid, resulting in $75 million of availability at June 30. S&P
expects the company to have adequate liquidity to cover its fixed
costs including financial obligations.
S&P said, "Although we now project ADMI's performance could reach
2019 levels by 2021 given the recent improvement, the longer-term
impact of the pandemic remains uncertain. While the practices'
revenues ramped up in the summer as practices reopened and patient
volumes increased, we believe after fulfilling the pent-up demand
from temporary closures earlier, there is still risk to the
sustainability of future demand while the pandemic continues."
Until there is a vaccine or cure for COVID-19, the longer-term
impact of any potential change in patient behavior will remain
uncertain, with some patients choosing to only seek care when
necessary, causing demand for preventative dental care to
fluctuate. Also, practices are geographically diverse, which could
provide some ability to mitigate geographically limited outbreaks.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "Our negative outlook reflects our view that the dental
industry remains susceptible to the risk of the ongoing spread of
coronavirus cases.
"We could revise the outlook to stable if we become more confident
that same-store visits have stabilized, resulting in leverage of
about 5x-6x, similar to pre-pandemic levels.
"We would consider a downgrade if performance weakens for a
prolonged period of time, leading to sustained negative free cash
flow. In our view, this scenario could result in the inability to
refinance debt as it comes due or, in the case of more severe cash
flow deficits, a liquidity crisis."
ADVANCED POWER: Seeks Plan Exclusivity Extension Thru December 7
----------------------------------------------------------------
Advanced Power Technologies, LLC, requests the U.S. Bankruptcy
Court for the Southern District of Florida, Fort Lauderdale
Division, to extend by 90 days the exclusive periods for filing a
Chapter 11 plan through and including December 7, 2020, and to
solicit acceptances through and including February 4, 2021.
The Debtor has only been in bankruptcy since March 11, 2020, and is
generally paying its post-petition debts as they come due.
The Debtor says negotiations are going on with its largest general
unsecured creditor regarding payment of its claim, including the
terms of exit financing with its primary secured creditor.
"We believe that these negotiations will dictate the substance of
what will be a consensual chapter 11 plan and we are not seeking
the extensions as a delay tactic or to pressure creditors," the
Debtor says.
The Court previously extended the exclusivity filing period and
exclusive solicitation period through September 7 and November 6,
2020, respectively.
About Advanced Power Technologies
Advanced Power Technologies, LLC --
http://www.advancedpowertech.com/-- offers interior and exterior
lighting, signage, and electrical service needs throughout the
United States and Canada. It works with commercial, hospitality,
industrial, institutional, restaurant, and retail clients to save
energy and reduce operating costs.
Advanced Power Technologies, LLC, based in Pompano Beach, Fla.,
filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 20-13304) on
March 11, 2020. In the petition signed by Devin Grandis,
president, the Debtor was estimated to have $1 million to $10
million in both assets and liabilities. Judge Paul G Hyman Jr.
oversees the case. Bradley S. Shraiberg, Esq., at Shraiberg Landau
& Page PA, serves as Debtor's bankruptcy counsel.
The U.S. Trustee was not able to appoint an Official Committee of
Unsecured Creditors for the Debtor.
AKORN INC: Completes Sale to Term Loan Lenders, Exits Chapter 11
----------------------------------------------------------------
Specialty pharmaceutical company Akorn announced Oct. 1, 2020, the
successful completion of its sale to certain of the Company’s
term loan lenders
The sale was approved by the United States Bankruptcy Court for the
District of Delaware on Sept. 2, 2020.
The closing of the sale marks the culmination of Akorn's Chapter 11
cases, with the Company well-positioned to continue to fulfill its
mission to improve patients’ lives through the quality,
availability and affordability of its products.
In tandem with the completion of the sale, Akorn's long-term debt
has been cut by more than half, and the Company has secured a
revolving credit line to ensure a stronger balance sheet and
operating flexibility as it looks to enter a new phase of growth.
Doug Boothe, Akorn's President and Chief Executive Officer,
commented, "Today marks the start of an exciting new chapter for
Akorn. We are moving forward with significantly reduced debt,
better cash flow, strong operations and a diverse product portfolio
that positions Akorn well for long-term growth and a brighter
future in the years to come. Our ability to achieve the goals we
set at the beginning of our restructuring process is a testament to
the hard work and support of our associates, as well as the
dedicated partnership of our lenders, customers and suppliers
throughout this process."
Following the official completion of the transaction, Akorn is now
operating as a private entity under the legal name of Akorn
Operating Company LLC.
About Akorn, Inc.
Akorn, Inc. (Nasdaq: AKRX) -- http://www.akorn.com/-- is a
specialty pharmaceutical company that develops, manufactures, and
markets generic and branded prescription pharmaceuticals, branded
as well as private-label over-the-counter consumer health products,
and animal health pharmaceuticals. Akorn is headquartered in Lake
Forest, Illinois, and maintains a global manufacturing presence,
with pharmaceutical manufacturing facilities located in Illinois,
New Jersey, New York, Switzerland, and India.
Akorn, Inc., and its affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-11178) on May 20, 2020.
As of March 31, 2020, the Debtors disclosed total assets of
$1,032,275,000 and total liabilities of $1,051,769,000.
The cases are assigned to Judge John T. Dorsey.
The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis
International LLP as their general bankruptcy counsel. Richards,
Layton & Finger, P.A., is the Debtors' local counsel.
AlixPartners, LLP, serves as the Debtors' restructuring advisor,
and PJT Partners LP is the financial advisor and investment banker.
Kurtzman Carson Consultants, LLC, is the notice and claims agent.
AKORN INC: Seeks Court Approval for $9M Stockholder Suit Deal
-------------------------------------------------------------
Law360 reports that bankrupt biopharmaceutical company Akorn Inc.
sought a Delaware court's approval late Wednesday, September 30,
2020, for an at least $9 million global settlement of
holdout-stockholder suits targeting the company for regulatory and
data integrity failures that collapsed its $4.3 billion merger
agreement with Fresenius Kabi AG in 2017.
In a motion filed in U.S. Bankruptcy Judge Karen B. Owens' court,
Akorn said $9 million was the limit of its available insurance for
the cases, creating a cap on total payments available to
stockholders who sued. Savings on legal defense fees for directors
and officers could be added to the total, however.
About Akorn, Inc.
Akorn, Inc. (Nasdaq: AKRX) -- http://www.akorn.com/-- is a
specialty pharmaceutical company that develops, manufactures, and
markets generic and branded prescription pharmaceuticals, branded
as well as private-label over-the-counter consumer health products,
and animal health pharmaceuticals. Akorn is headquartered in Lake
Forest, Illinois, and maintains a global manufacturing presence,
with pharmaceutical manufacturing facilities located in Illinois,
New Jersey, New York, Switzerland, and India.
Akorn, Inc., and its affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-11178) on May 20, 2020.
As of March 31, 2020, the Debtors disclosed total assets of
$1,032,275,000 and total liabilities of $1,051,769,000.
The cases are assigned to Judge John T. Dorsey.
The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis
International LLP as their general bankruptcy counsel. Richards,
Layton & Finger, P.A., is the Debtors' local counsel.
AlixPartners, LLP, serves as the Debtors' restructuring advisor,
and PJT Partners LP is the financial advisor and investment banker.
Kurtzman Carson Consultants, LLC, is the notice and claims agent.
ALEXX BROWN: Gets Approval to Hire Goodman Law as Counsel
---------------------------------------------------------
Alexx Brown, LLC received approval from the U.S. Bankruptcy Court
for the Central District of California to hire Goodman Law Offices,
APC as its bankruptcy counsel.
The services that will be provided by the firm are as follows:
a. advise Debtor on the requirements of the Bankruptcy Code,
the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy
Rules and the requirements of the U.S. trustee pertaining to the
administration of its estate;
b. prepare legal papers;
c. protect and preserve the estate by prosecuting and
defending actions commenced by or against Debtor in the bankruptcy
court and by analyzing and preparing necessary objections to claims
filed against the estate;
d. investigate and prosecute preference, fraudulent transfer
and other activities arising under Debtor's avoiding powers;
e. advise Debtor with respect to any sale and disposition of
assets;
f. advise Debtor with respect to obligations under any
unexpired leases and executory contracts;
g. prepare Debtor's Chapter 11 plan; and
h. provide other legal services as the Debtor may require in
connection with its Chapter 11 case.
Goodman Law will be paid at the hourly rate of $430 and will be
reimbursed for out-of-pocket expenses incurred. The firm received
a pre-bankruptcy retainer of $16,717, including the filing fee.
Andrew Goodman, Esq., sole member of Goodman Law, assured the court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Goodman Law can be reached at:
Andrew Goodman, Esq.
Goodman Law Offices, APC
6345 Balboa Blvd., Suite I-300
Encino, CA 91316
Phones: 818-827-5169
Fax: 818-975-5256
Email: agoodman@andyglaw.com
About Alexx Brown LLC
Alexx Brown, LLC sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-17570) on Aug.
19, 2020, listing under $1 million in both assets and liabilities.
Judge Deborah J Saltzman oversees the case. Goodman Law Offices,
APC serves as Debtor's legal counsel.
ALEXX BROWN: Seeks to Hire Moritt Hock as Special Counsel
---------------------------------------------------------
Alexx Brown, LLC seeks authority from the U.S. Bankruptcy Court for
the Central District of California to hire Moritt Hock Hamroff &
Horowitz, LLP as its special litigation counsel.
The services that will be provided by the firm are as follows:
a. conduct investigations into certain facts and transactions
that may give rise to claims and causes of action for pre-petition
transfer of assets to third parties;
b. ensure that all available claims and causes of action for
the benefit of the Debtor's estate and its creditors are
investigated and, if necessary, pursued;
c. represent the Debtor at all hearings and other proceedings
before the court;
d. prepare pleadings in connection with certain transactions
that give rise to any claims and causes of action;
e. assist general bankruptcy counsel in any litigated or
contested matters which may arise during the course of the case;
and
f. perform other legal services as may be required.
Moritt Hock's hourly rates are as follows:
Partners $495-$715
Counsel Lawyers $265-$660
Associate Lawyers $295-$500
Paralegals $210-$310
Leslie A. Berkoff, Partner $615
Michael Re, Partner $600
Alexander Litt, Associate $395
The firm seeks a post-petition retainer in the amount of $25,000.
Ms. Berkoff disclosed in court filings that Moritt Hock is
"disinterested" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Leslie A. Berkoff,
Moritt Hock Hamroff Horowitz LLP
400 Garden City Plaza, Suite 202
Garden City, NY 11530
Tel: (516) 873-2000
Fax: (516) 873-2010
About Alexx Brown LLC
Alexx Brown, LLC sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-17570) on Aug.
19, 2020, listing under $1 million in both assets and liabilities.
Judge Deborah J Saltzman oversees the case. Goodman Law Offices,
APC serves as Debtor's legal counsel.
AMERICAN AIRLINES: Fitch Cuts Ratings to B-, On Watch Negative
--------------------------------------------------------------
Fitch Ratings has downgraded American Airlines to 'B-' from 'B'.
The downgrade is driven by a slower than expected rebound in air
travel related to the coronavirus pandemic. The likelihood that air
traffic will remain subdued for the next several years combined
with American's heavy debt load create significant pressure on
credit metrics throughout Fitch's forecast period. Reduced capacity
to raise new capital as many of the company's previously
unencumbered assets have already been pledged for secured
financings also contributes to the negative rating action. The
Negative Watch reflects the high degree of uncertainty remaining
around the recovery in air traffic from the coronavirus pandemic
and the possibility that American's cash flow and liquidity may
come under further pressure in the next year absent a rebound in
demand.
KEY RATING DRIVERS
Adequate Liquidity Offset by Cash Burn: American expects to end the
third quarter with more than $13 billion in total liquidity, which
Fitch considers to be sufficient to avoid near-term distress.
Liquidity is also well above Fitch's expectations from its prior
forecast as American has raised significant new capital over the
past several months. Liquidity is also bolstered by American's
recently secured $5.5 billion loan under the Coronavirus Aid,
Relief, and Economic Security (CARES) Act, which could expand up to
$7.5 billion. A potential extension of the Payroll Support Program
would also be positive for liquidity but is uncertain at this
time.
However, revenues remain stubbornly low and cash burn remains
material. American's most recently reported cash burn was $30
million/day at the end of June, but 3Q20 average cash burn is
likely to be higher based on the current pace of demand recovery.
The company has a publicly stated goal to be cash flow positive in
2021, but Fitch's more conservative forecasts indicate that the
company may still burn a significant amount of cash through next
year absent a more robust recovery in demand. American does not
have any major bullet maturities until its $750 million unsecured
bonds mature in June 2022, but still has a considerable amount of
principal amortization, interest costs and pension obligations to
cover in 2021, all of which will be a drain on cash.
The company has some remaining options to raise new capital,
providing a partial cushion against a slow recovery. However, the
capacity to raise new debt is now materially lower than it was
prior to the pandemic. Potential future funding includes up to $4
billion of additional pari passu debt allowed under the
(intellectual property) IP notes secured by American's brand name
and website domain name, additional capacity available under
existing term loans and secured bonds and an estimated $3.77
billion in unencumbered assets. Remaining unencumbered assets
primarily consist of aircraft, spare parts and equipment, and
corporate real estate.
Meaningful Cost Cutting Efforts: A slow recovery will be partly
offset by a massive industry-wide cost-cutting effort. American
reduced its non-fuel operating expenses by 33% in 2Q20 compared to
the same period in 2019. Variable costs will inevitably increase as
flying levels rebound from current lows, but some cost-cutting
efforts will prove longer lasting. For instance,
fleet-simplification will lower maintenance and training costs
while increasing fuel efficiency as older/less-efficient planes are
retired. American announced earlier this year that it would
permanently retire four aircraft types including its E-190s, 757s,
767s, and A330-300s along with older regional aircraft. The company
also placed aircraft into temporary storage, reducing its active
fleet count by more than 150 aircraft.
Significant Debt Load: American entered the crisis with a higher
debt load than competitor airlines following multiple years of
heavy capital spending and simultaneous share repurchases. Fitch
expects the company to end the year with a total debt balance
(including lease obligations) of nearly $47 billion, which is
likely to lead to leverage being sustained above levels consistent
with a 'B' rating through Fitch's forecast period. Fitch expects
American to end the year with both a higher debt burden than either
of its network competitors. Fitch rates United Airlines at 'BB-'
and Delta Air Lines at 'BB+'. Both carriers remain on Negative
Outlook, and their ratings may move lower as the downturn
persists.
Traffic Assumption Updates: Forecasting airline traffic beyond 2020
inherently involves a great deal of uncertainty due to unknowns
about future travel restrictions, the pace of new COVID cases, and
importantly the timing/rollout of potential vaccines and
treatments. Nevertheless, Fitch's prior scenario, which anticipated
CY 2021 global traffic down by roughly 20% from the 2019 baseline
has become less likely. The persistence of new COVID cases and
related travel restrictions are keeping travel at historically low
levels, albeit higher than the trough period experienced in April.
The most recent TSA data show daily passenger counts remaining some
60%-70% below the same period in 2019.
Fitch's updated forecast for American incorporates 2021 traffic
that is down by around 40% relative to 2019 levels. Traffic is
unlikely to return to 2019 levels by 2023. Recovery will diverge
between more domestic/leisure focused airlines and carriers with
heavier business travel and international exposure, which will be
slower to return. As a major network carrier, the lack of business
and international travel is a major headwind for American. This is
partly offset by the carriers' presence in Sun Belt markets that
are being supported by stronger leisure travel.
Forecasts for airline traffic diverge widely from Fitch's estimates
for recovery in the broader economy. Fitch's Global Economic
Outlook anticipates that U.S. GDP will grow by 4% in 2021 after a
4.6% decline in 2020. Fitch is not forecasting a similar rebound in
air traffic as health fears, travel restrictions and corporate
policies that limit business travel all dampen demand.
Fitch believes that a more optimistic scenario remains plausible,
wherein efficient distribution of an effective vaccine and/or more
successful containment of the virus in the early part of next year,
coupled with pent up demand, lead to a healthier recovery later in
2021. However, the current state of widespread travel restrictions
and virus outbreaks coupled with unknowns about future
treatments/vaccines make such a scenario too uncertain to be relied
upon in Fitch's rating base case. The agency's base case assumes
that a vaccine or treatment remains unavailable at scale through
2021, but that a combination of increased comfort with airlines'
efforts to mitigate risks from the virus, lower case numbers, and
quarantine-fatigue cause a modest rebound from 2020's very low
levels of demand. Fitch is also revising its stress case scenarios
to include the possibility of plateauing demand at levels well
below the 2019 base case, reflecting a potential outcome if little
progress is made towards controlling the coronavirus outbreak over
the next year.
Intense Competition to Impact Airline Profitability: The prolonged
recovery in business and long-haul international travel is leading
to intense competition for leisure traffic which may impact airline
profitability through Fitch's forecast period. The recent decision
by the three U.S. network carriers, to drop ticket change fees is
indicative of efforts carriers are willing to take to compete for a
much smaller traveler base. Per Bureau of Transportation Statistics
data, cancellation and change fees made up roughly 1.7% of total
revenue for the three network carriers in 2019. These types of
ancillary fees, which started with the introduction of checked bag
fees in 2008, have been major contributors to historically high
levels of profitability that the North American airlines have
produced over the past decade. Further erosion in these types of
fees in an effort to win market share in a smaller travel market
could cause longer-term damage to profitability.
Recovery Ratings: Fitch's recovery analysis assumes that American
would be reorganized as a going concern in bankruptcy rather than
liquidated. Fitch has assumed a 10% administrative claim. The going
concern (GC) EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganization EBITDA level upon which the agency
bases the enterprise valuation. Fitch uses a GC EBITDA estimate of
$5.5 billion and a 5.0x multiple generating an estimated GC
enterprise value (EV) of $25 billion after an estimated 10% in
administrative claims. Fitch has lowered its EBITDA multiple to 5.0
from 5.5x in its prior review to reflect the current levels of
stress on the industry. Fitch views its GC EBITDA assumption as
conservative as it remains below levels generated in 2014, the
first year after American last exited bankruptcy, but it
incorporates potential structural changes to the industry driven by
coronavirus. These assumptions lead to an estimated recovery for
senior secured positions in the 71%-90% (RR2) range and poor
recovery prospects (RR6) for unsecured positions.
EETC Ratings:
American's enhanced equipment trust certificate (EETC) ratings were
not covered in this review. Fitch intends to review American's EETC
ratings in the coming weeks. Ratings actions are likely,
particularly for subordinated tranches and for certificates
currently rated in the 'AA' category.
DERIVATION SUMMARY
American is rated lower than its major network competitors, Delta
and United, primarily due to the company's more aggressive
financial policies. American's debt balance has increased
substantially since its exit from bankruptcy and merger with US
Airways in 2013 as it has spent heavily on fleet renewal and share
repurchases. As such, American's adjusted leverage metrics are at
the high end of its peer group.
KEY ASSUMPTIONS
Key assumptions in Fitch's rating case include:
-- Airline traffic remaining substantially below historic levels
through 2021 with a modest rebound thereafter;
-- Jet fuel prices averaging around $1.50/gallon this year and
$1.65 in 2021;
-- Fitch's base case does not anticipate an extension of the
CARES Act.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Adjusted debt/EBITDAR below 5x;
-- FFO fixed-charge coverage sustained around 2x;
-- FCF generation above Fitch's base case expectations;
-- A faster than expected recovery in air traffic.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Failure to contain cash burn in 2021 leading to increased
pressure on liquidity;
-- Total liquidity falling towards or below $8 billion absent a
line of sight towards cash flow breakeven;
-- Inability to raise new capital in the event that liquidity
becomes strained;
-- Lack of recovery in passenger demand in 2021 possibly due to
an absence of effective COVID 19 vaccines or treatments.
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
AMERICAN DENTAL: S&P Affirms 'B-' ICR, Off CreditWatch
------------------------------------------------------
S&P Global Ratings affirmed the 'B-' issuer credit rating on
American Dental Association (ADA) and removed it from CreditWatch,
where S&P placed it with negative implications on March 30, 2020.
The outlook is negative.
American Dental managed to reduce costs primarily related to
salaries Second quarter revenue was adversely affected by the
temporary pandemic-induced clinic closures, with revenue declining
70% compared with the same period last year. As states started to
reopen and American Dental resumed elective dental procedures in
June, the company began to see a rapid recovery in patient volumes,
which reached about 90% of revenue compared with the same period
last year, in mid-August.
American Dental also managed to reduce variable costs through
furloughs, suspended advertising, and other general and
administrative expenses, but fixed costs such as rent have
compressed EBITDA margins.
Liquidity is tight and any further negative operations could cause
covenant issues. Although the company reduced growth-initiative
spending and capital expenditures to preserve cash, we believe the
company's liquidity remains tight. Its revolving credit facility
remains fully drawn, leaving it with no availability, and the
company has resumed rent payments that were deferred in the second
quarter, putting further strains on cash flows in the near term.
S&P said, "Although we now project American Dental's performance
could return to a more normal level given the recent improvement,
the longer-term impact of the pandemic remains uncertain. We view
the company's 2020 leverage metrics of close to 10x as temporarily
elevated due to COVID-19 but also project that the operational
metrics in 2021 might not fully return to the pre-pandemic level.
While revenue ramped up in the summer when clinics reopened and
patient volumes increased, we believe after fulfilling the pent-up
demand from closures earlier, there is still risk to the
sustainability of future demand in the midst of the pandemic."
Until there is a vaccine or cure for COVID-19, the longer-term
impact of any potential change in patient behavior will remain
uncertain, with some patients choosing to only seek care when
necessary, causing demand for preventive dental care to fluctuate.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "Our negative outlook reflects our view that the dental
industry remains susceptible to the risk of the ongoing spread of
the coronavirus.
"We would consider a downgrade if performance weakened for a
prolonged period of time, leading to EBITDA margin and free cash
flow deterioration and the increased risk of a liquidity crisis and
a covenant breach.
"We would consider a stable outlook when the company generates
sustained same store sales growth, credit metrics return to
pre-pandemic levels, and liquidity concerns are alleviated. We also
would like to see patient volumes stabilize, increasing the
predictability of the business."
ARENA ENERGY: Gets Approval to Hire Kirkland & Ellis as Counsel
---------------------------------------------------------------
Arena Energy, LLP, and its affiliates received approval from the US
Bankruptcy Court for the Southern District of Texas to hire
Kirkland & Ellis LLP and Kirkland & Ellis International LLP as
their legal counsel.
The Debtors require Kirkland & Ellis to:
a. advise the Debtors with respect to their powers and duties
as debtors in possession in the continued management and operation
of their businesses and properties;
b. advise and consult on the conduct of these chapter 11
cases, including all of the legal and administrative requirements
of operating in chapter 11;
c. attend meetings and negotiating with representatives of
creditors and other parties in interest;
d. take all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors, and
representing the Debtors in negotiations concerning litigation in
which the Debtors are involved, including objections to claims
filed against the Debtors' estates;
e. prepare pleadings in connection with these chapter 11
cases, including motions, applications, answers, orders, reports,
and papers necessary or otherwise beneficial to the administration
of the Debtors' estates;
f. represent the Debtors in connection with obtaining
authority to continue using cash collateral and postpetition
financing;
g. advise the Debtors in connection with any potential sale of
assets;
h. appear before the Court and any appellate courts to
represent the interests of the Debtors' estates;
i. advise the Debtors regarding tax matters;
j. take any necessary action on behalf of the Debtors to
negotiate, prepare, and obtain approval of a disclosure statement
and confirmation of a chapter 11 plan and all documents related
thereto; and
k. perform all other necessary legal services for the Debtors
in connection with the prosecution of these chapter 11 cases,
including: (i) analyzing the Debtors' leases and contracts and the
assumption and assignment or rejection thereof; (ii) analyzing the
validity of liens against the Debtors; and (iii) advising the
Debtors on corporate and litigation matters.
Kirkland's hourly rates for matters related to the cases are as
follows:
Partners $1,075 - $1,845
Of Counsel $625 - $1,845
Associates $610 - $1,165
Paraprofessionals $245 - $460
The firm received $498,757.34 from Debtors on April 2 as an advance
payment retainer. Subsequently, Debtors paid the firm additional
advance payment retainer totaling $4,567,156.95.
Brian E. Schartz, P.C., a partner at Kirkland & Ellis and Kirkland
& Ellis International, disclosed in court filings that the firms
are a "disinterested person" within the meaning of Section 101(14)
of the Bankruptcy Code.
Mr. Schartz also made the following disclosures in response to the
request for additional information set forth in Paragraph D.1 of
the Revised U.S. Trustee Guidelines:
a. Question: Did Kirkland agree to any variations from, or
alternatives to, Kirkland's standard billing arrangements for this
engagement?
Answer: No.
b. Question: Do any of the Kirkland professionals in this
engagement vary their rate based on the geographic location of the
Debtors' chapter 11 cases?
Answer: No.
c. Question: If Kirkland has represented the Debtors in the 12
months prepetition, disclose Kirkland's billing rates and material
financial terms for the prepetition engagement, including any
adjustments during the 12 months prepetition. If Kirkland's billing
rates and material financial terms have changed postpetition,
explain the difference and the reasons for the difference.
Answer: Kirkland's current hourly rates for services
rendered on behalf of the Debtors range as follows:
Billing Category U.S. Range
Partners $1,075 - $1,845
Of Counsel $625 - $1,845
Associates $610 - $1,165
Paraprofessionals $245 - $460
d. Question: Have the Debtors approved Kirkland's budget and
staffing plan, and, if so, for what budget period?
Answer: Pursuant to the DIP Order, professionals proposed
to be retained by the Debtors are required to provide bi-weekly
estimates of fees and expenses incurred in these chapter 11 cases.
The firms can be reached through:
Brian E. Schartz, Esq.
Brian E. Schartz, P.C.
Kirkland & Ellis LLP
Kirkland & Ellis International LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
About Arena Energy LLP
Arena Energy, LLP, and its affiliates are collectively the most
active drillers of new oil and gas wells of all current offshore
upstream oil and gas exploration companies operating on the Gulf of
Mexico Outer Continental Shelf.
Headquartered in The Woodlands, Texas, Arena Energy, LLP, and its
affiliates filed their voluntary petitions for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34215)
on August 20, 2020. At the time of filing, the Debtors estimated
$50,000,001 to $100 million in assets and $1,000,000,001 to $10
billion in liabilities.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP
represent the Debtors as attorneys. The Debtors tapped Jackson
Walker LLP as co-counsel and conflicts counsel; Alvarez & Marsal
North America, LLC as restructuring advisor; and Evercore Group
L.L.C. as investment banker.
ARENA ENERGY: Hires Alvarez & Marsal as Restructuring Advisor
-------------------------------------------------------------
Arena Energy, LLP and its affiliates received approval from the US
Bankruptcy Court for the Southern District of Texas to hire Alvarez
& Marsal North America, LLC as their restructuring advisor.
The services that will be provided by Alvarez & Marsal are as
follows:
(a) assist in liquidity management efforts and development of
a 13-week cash flow forecast;
(b) assist in the evaluation of the Debtors' current business
plan and cost savings measures in connection with preparation of a
13-week cash flow forecast and presentation of such forecast to the
Debtors' management team, two independent directors and creditors;
(c) assist in evaluation and examination of affiliate and
related-party transactions, and the arms-length nature of same and
presentation of findings to the Independent Directors and any other
person or entity the Independent Directors permit;
(d) assist in financing issues including assistance in
preparation of reports and liaison with creditors;
(e) attend or participate in meetings of the Debtors' Board of
Directors (the "Board") with respect to matters on which A&M has
been engaged to advise the Company pursuant to the Engagement
Letter;
(f) assist with preparation for any potential filing under
chapter 11 of the Bankruptcy Code;
(g) provide testimony, as necessary, with respect to matters
on which A&M has been engaged, in any proceedings under the
Bankruptcy Code, any similar judicial proceedings, or any related
mediation, arbitration, or other process;
(h) report to the Board as desired or directed by the
Independent Directors or members of the Debtors' management team;
and
(i) render such other general business consulting or such
other assistance as the Debtors' management or counsel may deem
necessary consistent with the role of a restructuring advisor to
the extent that it would not be duplicative of services provided by
other professionals in this proceeding.
The firm will be paid at hourly rates as follows:
Restructuring:
Managing Directors $900 - $1,150
Directors $700 - $875
Analysts/Associates $400 - $675
Investigation Services:
Managing Directors $825 - 975
Directors $625 - 825
Managers $500 - 625
Associates $250 - 500
Case Management Services:
Managing Directors $850 - $1,000
Directors $675 - $825
Analysts/Associates $400 - $625
Alvarez & Marsal will also be reimbursed for out-of-pocket expenses
incurred.
The firm received $300,000 as a retainer. In the 90 days prior to
the petition filing, Alvarez & Marsal received payments totaling
$1,746,620.02. As of the petition filing, the firm holds an
unapplied residual retainer of $318,275.
Ryan Omohundro, a managing director at Alvarez & Marsal, disclosed
in court filings that the firm is a "disinterested person" within
the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Ryan Omohundro
Alvarez & Marsal North America, LLC
700 Louisiana Street, Suite 3300
Houston, TX 77002
Tel: +1 713 571 2400
Fax: +1 713 547 3697
About Arena Energy LLP
Arena Energy, LLP, and its affiliates are collectively the most
active drillers of new oil and gas wells of all current offshore
upstream oil and gas exploration companies operating on the Gulf of
Mexico Outer Continental Shelf.
Headquartered in The Woodlands, Texas, Arena Energy, LLP, and its
affiliates filed their voluntary petitions for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34215)
on August 20, 2020. At the time of filing, the Debtors estimated
$50,000,001 to $100 million in assets and $1,000,000,001 to $10
billion in liabilities.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP
represent the Debtors as attorneys. The Debtors tapped Jackson
Walker LLP as co-counsel and conflicts counsel; Alvarez & Marsal
North America, LLC as restructuring advisor; and Evercore Group
L.L.C. as investment banker.
ARENA ENERGY: Hires Evercore Group as Investment Banker
-------------------------------------------------------
Arena Energy, LLP and its affiliates received approval from the
U.S. Bankruptcy Court for the Southern District of Texas to hire
Evercore Group L.L.C. as their investment banker.
The services that will be provided by Evercore are as follows:
a. review and analyze the Debtors' business, operations and
financial projections;
b. advise and assist the Debtors in a Restructuring,
Financing, and/or Sale, if the Debtors determine to undertake such
a transaction;
c. provide financial advice in developing and implementing a
Restructuring,
including:
i. evaluate transaction alternatives and the financial
implications on the Debtors' capital structure and financial
condition;
ii. assist the Debtors in structuring and effecting any
transaction;
iii. advise the Debtors on tactics and strategies for
negotiating with various stakeholders regarding a Restructuring;
iv. communicate with stakeholders, as appropriate;
v. assist the Debtors in developing a restructuring plan or
plan of reorganization;
vi. provide testimony, as necessary, with respect to matters
on which Evercore has been engaged to advise the Debtors in any
proceedings under the Bankruptcy Code that are pending before the
Court; and
vii. provide the Debtors with other financial restructuring
advice as the Parties may deem appropriate.
d. If the Debtors pursue a Financing, assist the Debtors in:
i. structure and effect a Financing;
ii. identify potential Investors and, at the Debtors'
request contacting such Investors; and
iii. work with the Debtors in negotiating with potential
Investors.
e. If the Debtors pursue a Sale, assist the Debtors in:
i. structure and effect a Sale;
ii. identify interested parties and/or potential acquirors
and, at the Debtors' request, contacting such interested parties
and/or potential acquirors; and
iii. advise the Debtors in connection with negotiations with
potential interested parties and/or acquirors and aiding in the
consummation of a Sale transaction.
Evercore will be compensated as follows:
a. A monthly fee of (i) $400,000 payable on the first day of
every month beginning May 1, 2020 through July 1, 2020, and (ii)
$175,000 payable on the first day of every month beginning August
1, 2020 until the earlier of the consummation of a Restructuring
transaction or the termination of Evercore’s engagement. 100% of
each Monthly Fee earned and paid beginning with the Monthly Fee
payable May 1, 2020 until the Monthly Fee payable September 1,
2020, and 50% of each Monthly Fee earned and paid beginning with
the Monthly Fee payable October 1, 2020, shall be credited (without
duplication) against any Restructuring Fee, and/or Financing Fee
subsequently earned and payable; provided, that, in the event of a
chapter 11 filing, any such credit of fees contemplated by this
sentence shall only apply to the extent that all such Monthly Fees,
Restructuring Fee, and/or Financing Fee (as applicable) are
approved in their entirety by the Court pursuant to a final order
not subject to appeal.
b. A fee of $5,500,000, payable upon the consummation of a
Restructuring, including for the avoidance of doubt, pursuant to a
Sale.
c. A fee (a "Sale Process Milestone Fee") of (i) $500,000,
payable upon the distribution of initial marketing materials
(including a "teaser") in any sale process of the Debtors and/or
all or substantially all of its assets and (ii) an additional
$750,000, payable upon the initial bid deadline of such sale
process (regardless of participation). 100% of any Sale Process
Milestone Fees paid shall be credited (without duplication) against
any Restructuring Fee; provided, that, in the event of a chapter 11
filing, any such credit of fees contemplated by this sentence shall
only apply to the extent that all such Sale Process Milestone Fees,
Restructuring Fee, and/or Financing Fee subsequently earned and
payable (as applicable) are approved in their entirety by the Court
pursuant to a final order not subject to appeal.
d. A fee (a "Financing Fee"), payable upon consummation of
any Financing and incremental to any Sale Process Milestone Fee or
Restructuring Fee, equal to the applicable percentage(s) as set
forth in the table below:
Financing As a Percentage of Financing Gross
Proceeds
New Tariff Financing 1.00%
Indebtedness secured by a First Lien 1.00%
(including "Last-Out" First Lien or
Debtor-in-Possession ("DIP") financing)
Indebtedness Secured by a Junior Lien, 1.75%
Unsecured and/or Subordinated
Equity or Equity-linked 3.00%
Securities/Obligations
The portion of any Financing Fee that is provided by either
affiliates of the Debtors or by existing lenders to the Debtors
shall reduce by 50% the amount of any Financing Fee attributable to
such portions. However, any financing raised in the form of a new
tariff or similar arrangement imposed by any of Rosefield Pipeline
Company, LLC and/or its subsidiaries (collectively, "Rosefield")
(any such Rosefield transaction, a "New Tariff Financing") shall
result in a Financing Fee of 1.00% of gross proceeds from any such
New Tariff Financing regardless of the source of such capital.
e. In addition to any fees that may be payable to Evercore
and, regardless of whether any transaction occurs, the Debtors
shall promptly reimburse to Evercore (a) all reasonable expenses
(including travel and lodging, data processing and communications
charges, courier services and other appropriate expenditures) not
to exceed $75,000 without prior written authorization from the
Debtors, and (b) other documented reasonable fees and expenses,
including expenses of counsel, if any, not to exceed $100,000
without prior written authorization from the Debtors; provided,
however, the maximum reimbursement by the Debtors under this
provision shall be $250,000 unless expressly agree to in writing by
the Debtors, and any costs or expenses incurred beyond that shall
be borne solely by Evercore provided that such limitation shall in
no way affect or limit the obligations of the Debtors. Evercore
also agrees to provide the Debtors with an accounting of all such
fees and expenses on a monthly basis.
f. If a Restructuring is to be completed, in whole or in part,
through a pre-packaged plan, partial prepackaged plan, or
pre-arranged plan (each a "Prepackaged Plan"), (i) 50% of the fees
pursuant to subparagraphs 18(b) and 18(c) above shall be earned and
shall be payable upon obtaining the execution of definitive
agreements or delivery of binding consents from one or more of the
Debtors’ key creditor classes that is sufficient, in the
Debtors’ discretion, to justify filing such Prepackaged Plan and
(ii) the remainder of such fees shall be earned and shall be
payable upon consummation of such Prepackaged Plan; provided,
further, that in the event that Evercore is paid a fee in
connection with a Prepackaged Plan, and such Prepackaged Plan is
not thereafter consummated, then such fee previously paid to
Evercore may be credited by the Debtors against any subsequent fee
that becomes payable by the Debtors to Evercore.
g. If a Restructuring is to be completed in whole or in part,
pursuant to a Sale or foreclosure (including as part of a
Prepackaged Plan), the Restructuring Fee shall be paid from the
proceeds from such Sale, or if the Sale is consummated pursuant to
a credit bid or foreclosure, payment of such Restructuring Fee
shall be made at closing, and in any case any Sale or foreclosure
shall be conditioned upon payment of the Restructuring Fee and be
evidenced in the definitive documentation related thereto.
Evercore is a "disinterested person" within the meaning of section
101(14) of the Bankruptcy Code, as required by section 327(a) of
the Bankruptcy Code, and does not hold or represent an interest
materially adverse to the Debtors' estates; and has no connection
to the Debtors, their creditors or other parties in interest in
these chapter 11 cases, according to court filings.
Evercore can be reached through:
Stephen Goldstein
Evercore Group, LLC
55 East 52nd Street
New York, NY 10055
Tel: +1 212-857-3100
About Arena Energy, LLP
Arena Energy, LLP, and its affiliates are collectively the most
active drillers of new oil and gas wells of all current offshore
upstream oil and gas exploration companies operating on the Gulf of
Mexico Outer Continental Shelf.
Headquartered in The Woodlands, Texas, Arena Energy, LLP, and its
affiliates filed their voluntary petitions for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34215)
on August 20, 2020. At the time of filing, the Debtors estimated
$50,000,001 to $100 million in assets and $1,000,000,001 to $10
billion in liabilities.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP
represent the Debtors as attorneys. The Debtors tapped Jackson
Walker LLP as co-counsel and conflicts counsel; Alvarez & Marsal
North America, LLC as restructuring advisor; and Evercore Group
L.L.C. as investment banker.
ARENA ENERGY: Seeks to Hire Jackson Walker as Co-Counsel
--------------------------------------------------------
Arena Energy, LLP, and its affiliates seek authority from the US
Bankruptcy Court for the Southern District of Texas to hire Jackson
Walker LLP as their co-counsel and conflicts counsel.
Arena Energy requires Jackson Walker to:
-- provide legal advice and services regarding local rules,
practices, and procedures, including Fifth Circuit law;
-- provide certain services in connection with administration of
the chapter 11 cases, including, without limitation, preparing
agendas, hearing notices, witness and exhibit lists, and hearing
binders of documents and pleadings;
-- review and comment on proposed drafts of pleadings to be filed
with the Court;
-- at the request of the Debtors, appear in Court and at any
meeting with the United States Trustee, and any meeting of
creditors at any given time on behalf of the Debtors as their local
and conflicts bankruptcy co-counsel;
-- perform all other services assigned by the Debtors to the Firm
as local and conflicts bankruptcy co-counsel; and
-- provide legal advice and services on any matter on which K&E
may have a conflict or as needed based on specialization.
The Debtors provided a retainer to the Firm in the amount of
$300,000 for services performed and to be performed.
The firm's hourly rates are:
Partners $575-900
Associates $420-565
Paraprofessionals $175-185
Matthew D. Cavenaugh's hourly rate is $750.
Matthew Cavenaugh, Esq., a partner at Jackson Walker, disclosed in
court filings that the firm is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed postpetition, explain the
difference and the reasons for the difference.
Response: Mr. Cavenaugh's hourly rate is $750. The rates for
other restructuring attorneys at the firm range from $445 to $895
an hour while the paraprofessional rates range from $175 to $185
per hour. The firm represented Debtors during the weeks immediately
before the petition date using those rates.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: The Firm has not prepared a budget and staffing
plan.
Jackson Walker can be reached through:
Matthew D. Cavenaugh, Esq.
Jackson Walker LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
About Arena Energy LLP
Arena Energy, LLP, and its affiliates are collectively the most
active drillers of new oil and gas wells of all current offshore
upstream oil and gas exploration companies operating on the Gulf of
Mexico Outer Continental Shelf.
Headquartered in The Woodlands, Texas, Arena Energy, LLP, and its
affiliates filed their voluntary petitions for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34215)
on August 20, 2020. At the time of filing, the Debtors estimated
$50,000,001 to $100 million in assets and $1,000,000,001 to $10
billion in liabilities.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP
represent the Debtors as attorneys. The Debtors tapped Jackson
Walker LLP as co-counsel and conflicts counsel; Alvarez & Marsal
North America, LLC as restructuring advisor; and Evercore Group
L.L.C. as investment banker.
ARR INVESTMENTS: Taps Ncom Realty as Real Estate Broker
-------------------------------------------------------
ARR Investments, Inc. and Arista Academy, Inc. received approval
from the U.S. Bankruptcy Court for the Middle District of Florida
to hire Ncom Realty, LLC to assist in the sale of a real property
located at 2765 East Atlanta Road, Ellenwood, Ga.
Ncom will get a 6 percent commission from the sale of the property,
which is being sold for $817,000.
Eric Aiken, a broker at Ncom, disclosed in court filings that the
firm is disinterested as defined in Section 101(14) of the
Bankruptcy Code.
The broker can be reached through:
Eric Aiken
Ncom Realty, LLC
426 Winged Foot Dr
McDonough, GA 30253
Phone: +1 770-507-0665
About ARR Investments
ARR Investments, Inc., and its subsidiaries --
http://www.arr-learningcenters.com/-- offer learning centers for
infants, toddlers, preschoolers and Voluntary Pre-Kindergarten in
Orlando, Florida. The Learning Centers provide computer labs;
dance, yoga, music classes; aerobics; foreign language instruction;
before/after school transportation; certified lifeguard and safety
instructor for swim lessons and play; and mini-camp breaks and
summer camp.
ARR Investments and three of its subsidiaries filed voluntary
petitions seeking relief under Chapter 11 of the Bankruptcy Code
(Bankr. M.D. Fla. Lead Case No. 19-01494) on March 8, 2019. The
petitions were signed by Alejandrino Rodriguez, president. At the
time of filing, the Debtors estimated under $10 million in both
assets and liabilities. Jimmy D. Parrish, Esq., at Baker &
Hostetler LLP, serves as the Debtors' counsel.
ATLANTA URBAN: S&P Rates Multifamily Housing Revenue Debt 'BB+'
---------------------------------------------------------------
S&P Global Ratings lowered its rating on Atlanta Urban Residential
Finance Authority, Ga.'s multifamily housing revenue debt, issued
for CHC Trestletree LLC's Trestletree Village apartments project,
two notches to 'BB+' from 'BBB'. The outlook is negative.
The rating action partially reflects the implementation of our
criteria, titled "Methodology for Rating U.S. Public Finance Rental
Housing Bonds," published April 15, 2020, on RatingsDirect. The
rating is no longer under criteria observation.
The rating also reflects S&P's opinion of the project's:
-- Deteriorating physical condition due to deferred maintenance,
evidenced by a recently low, but passing, Real Estate Assessment
Center score of 78c, assigned by U.S. Department of Housing & Urban
Development during its most recent inspection in February 2020,
down from 85b;
-- Adequate-to-weak management and governance, respectively, based
on our view of the owner's limited experience, evidenced by the
lack of a strategic or succession plan and informal financial
policies and practices; and
-- Low liquidity reserves with a debt-service-reserve fund that
only covers 50% of maximum annual debt service.
"We could lower the rating further within the two-year outlook if
fiscal 2020 operations were to generate lower coverage or the
project's physical condition were to deteriorate significantly,"
said S&P Global Ratings credit analyst Emily Avila. "Although
unlikely during the outlook, we could raise the rating or revise
the outlook to positive if coverage were to increase significantly
and occupancy were to remain high."
High 98% average occupancy and strong demand in the property's
local housing market somewhat offset project weaknesses.
S&P said, "We have analyzed the project's environmental, social,
and governance risks relative to coverage and liquidity, management
and governance, and market position. We consider the obligor's
governance risk higher than average compared with the sector based
on its lack of risk-mitigation policies and strategic plans,
leaving the project vulnerable to operational volatility.
Environmental risks are in-line with the sector standard because
there are no elevated environmental threats present in the project
area. Meanwhile, we consider social risks in-line with the sector
standard. We consider health-and-safety concerns related to
COVID-19 a social risk under our environmental, social, and
governance factors; in our view, what effect those risks have on
timely debt-service payments will be minimal for subsidized
affordable-housing multifamily properties. Therefore, in our
opinion, the project's social risks are in-line with the sector
standard."
AVA KYROLLOSS: Files Voluntary Chapter 7 Bankruptcy Petition
------------------------------------------------------------
Ava Kyrolloss Inc. filed for voluntary Chapter 7 bankruptcy
protection Sept. 2, 2020 (Bankr. E.D. Pa. Case No. 20-13573).
According to the Philadelphia Business Journal, the debtor listed
an address of 1614 Cecil B. Moore Ave. 1st Fl. #B, Philadelphia.
Ava Kyrolloss Inc. listed assets ranging from $100,001 to $500,000
and debts ranging from $100,001 to $500,000. The filing did not
identify a largest creditor.
Ava Kyrolloss Inc.was founded in 2004. The company's line of
business includes the manufacturing of surgical appliances and
supplies.
The Debtor's counsel:
CAROL B. MCCULLOUGH
Mccullough Eisenberg, LLC
Tel: 215-957-6411
e-mail: mccullougheisenberg@gmail.com
BALDWIN RISK: Moody's Assigns B2 CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family rating
and a B2-PD probability of default rating to Baldwin Risk Partners,
LLC (BRP), the operating subsidiary of publicly traded BRP Group,
Inc. (NASDAQ: BRP). Moody's also assigned B2 ratings to the
company's existing $400 million senior secured revolving credit
facility and new $400 million senior secured term loan. The company
plans to use the net proceeds of the term loan to repay revolver
borrowings, fund near-term acquisitions and pay related fees and
expenses. The rating outlook for BRP is stable.
RATINGS RATIONALE
BRP's ratings reflect its growing presence in property & casualty
insurance brokerage, with a smaller presence in employee benefits
and Medicare-related products, according to Moody's. BRP offers a
range of insurance products to middle market businesses and
individuals through distinct channels across four business
segments: Middle Market, Specialty, MainStreet and Medicare. The
company generates strong organic growth by having tailored client
engagement in each operating group and focusing resources on
attractive market niches, notably including renter's insurance sold
through sub-agent partners and property management software
providers. BRP also seeks acquisitions with favorable growth
prospects. BRP has committed to its shareholders to operate with
moderate net financial leverage (target range of 3.5x-4.0x per
company calculations). The ratings reflect Moody's expectation that
BRP will maintain its stated financial policy, and use a
combination of equity and debt to fund internal growth and
acquisitions.
These strengths are offset by the BRP's limited scale and
geographic scope relative to other rated insurance brokers. Other
challenges include significant financial leverage (per Moody's
calculations), modest interest coverage, and lower EBITDA margins
compared to similarly rated peers. BRP's acquisition strategy
carries execution and integration risks and could heighten the
firm's exposure to errors and omissions, a risk inherent in
professional services.
Following the proposed transaction, Moody's estimates that BRP will
have a pro forma debt-to-EBITDA ratio of 6.5x or higher, with
(EBITDA - capex) interest coverage of 1.5x-2.5x and a
free-cash-flow-to-debt ratio in the low single digits. These pro
forma metrics include Moody's adjustments for contingent earnout
liabilities, operating leases, run-rate earnings from acquisitions
and certain non-recurring items. Moody's expects that BRP will
reduce its leverage below 6x through capital management and EBITDA
growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the company's limited scale and its geographic concentration,
an upgrade of BRP's ratings is unlikely in the intermediate term.
Factors that could contribute positively to the company's credit
profile include: (i) profitable growth with further geographic
diversification, (ii) debt-to-EBITDA ratio below 5.0x, (iii)
(EBITDA - capex) coverage of interest exceeding 2.5x, and (iv)
free-cash-flow-to-debt ratio exceeding 5%.
The following factors could lead to a downgrade of BRP's ratings:
(i) disruptions to existing or newly acquired operations given the
company's rapid growth, (ii) debt-to-EBITDA ratio remaining above
6.0x, (iii) (EBITDA - capex) coverage of interest below 1.5x, or
(iv) free-cash-flow-to-debt ratio below 3%.
Moody's has assigned the following ratings (and loss given default
(LGD) assessments) to BRP:
Corporate family rating at B2;
Probability of default rating at B2-PD;
$400 million senior secured first-lien revolving credit facility
maturing in September 2024 at B2 (LGD3);
$400 million seven-year senior secured first-lien term loan at B2
(LGD3).
The outlook for BRP is assigned at stable.
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in June 2018.
Based in Tampa, Florida, BRP ranks as the 32nd-largest US insurance
broker based on 2019 revenue, according to Business Insurance. The
company's product mix includes commercial and personal insurance,
with some employee benefits and Medicare-related products, all
distributed to middle market businesses and individuals. BRP
generated pro forma revenue of $213 million for the 12 months
through June 2020.
BENEVIS CORP: Gets Court Approval to Sell to New Mountain
---------------------------------------------------------
Max Reyes of Bloomberg News reports that Benevis won approval from
a U.S. bankruptcy judge Oct. 2, 2020, for a sales plan that would
see it and its related companies purchased by an affiliate of New
Mountain Finance Corp. Judge Marvin Isgur signed the order. New
Mountain Finance and its affiliates were among the company's
pre-petition lenders and DIP lenders, and the company acted as a
stalking horse bidder in the sale.
About Benevis Corp.
Benevis Corp. -- https://www.benevis.com/ -- provides non-clinical,
business support services to dental practices in 17 states.
Benevis and its affiliates sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 20-33918) on
Aug. 2, 2020.
At the time of the filing, Debtors had estimated assets of between
$100 million and $500 million and liabilities of between $1 billion
and $10 billion.
Judge David R. Jones oversees the cases.
Debtors have tapped Jackson Walker LLP as their legal counsel,
Conway MacKenzie Management Services, LLC as restructuring advisor,
and Lincoln Partners Advisors, LLC as financial advisor.
BIG ASS FANS: S&P Raises ICR to 'B-' on Steady Demand
-----------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
residential and commercial fan manufacturer Big Ass Fans Inc. (BAF)
to 'B-' from 'CCC+'. The outlook is stable.
S&P said, "At the same time, we are raising our rating on the
company's first-lien term loan and its revolving credit facility to
'B-' from 'CCC+'. The recovery rating is '3'.
"The stable outlook on BAF reflects our expectation for leverage to
be in the 7x range over the next 12 months as a result of overall
adequate performance across its lines of business. We expect the
company to maintain adequate liquidity during this time with solid
free operating cash flow (FOCF) generation.
"BAF outperformed our earlier expectations but leverage is expected
to remain high. BAF's sales were down only 20% in the second
quarter, significantly better than we had anticipated. The
company's residential and e-commerce customers buoyed a challenging
quarter for the company's commercial customers, which were hurt
from government-mandated shutdowns.
The company successfully managed its profitability through
proactive cost-cutting measures and maintained adequate liquidity
through the second quarter. Given this stronger-than-expected
performance during the company's peak selling season, a gradual
reopening of "non-essential" U.S. businesses and a generally
improved macroeconomic backdrop, S&P now expects the company's
leverage to hover near the 7x area, while generating significant
FOCF.
S&P said, "We expect liquidity to remain adequate over the forecast
period. The company reported during the second quarter that it had
paid down much of its outstanding revolver balance, which it had
initially drawn as a precautionary measure. Given our forecast for
sustained healthy FOCF generation over the near term, we expect
that the company should be able to pay the entirety of its
revolving credit facility (RCF) by the end of the year. As well,
the company maintains adequate cushion under its covenants and has
no near-term maturities.
"The stable outlook on BAF reflects our expectation for leverage to
be within the 7x area over the next 12 months given relatively
supportive end-market performance. We expect the company will be
able to maintain adequate liquidity during this time with plenty of
free cash flow generation.
"We could lower our ratings on BAF if its end markets perform
materially worse than we expect, potentially due to large losses
among major customers, resulting in negative FOCF on a sustained
basis. In addition, we could also downgrade the company if we
believe BAF's capital structure were to become unsustainable, in
our view, which could result from aggressive debt-financed
acquisitions.
"We could raise our ratings on BAF if we would come to expect debt
to EBITDA of below 6x for a sustained period. We believe this would
likely be the result of a supportive demand environment along with
a disciplined financial policy, inclusive of M&A and shareholder
returns to support leverage at these levels."
BIONIK LABORATORIES: Sells New InMotion Device to VA Rehabilitation
-------------------------------------------------------------------
BIONIK Laboratories Corp. reports that the VA Rehabilitation
Research & Development funded Center for Neurorestoration and
Neurotechnology, known as CfNN, has purchased a second BIONIK
InMotion ARM/HAND Interactive Therapy System, following its first
purchase in 2018, as part of its mission to develop and test new
approaches for restoring the physical function of Veterans with
neurologic disease or injury.
As part of CfNN's focus area on restoring communication and
mobility, CfNN is working with one of its academic hospital
partners, Massachusetts General Hospital, in Boston, to develop and
test a next-generation system for the rehabilitation of arm and
hand function. Capitalizing on CfNN, MGH, and Brown University's
long history in brain-computer interface research and development
as part of the BrainGate consortium, the team is now working on a
powerful EEG interface to learn more about stroke recovery and
promoting more rapid restoration of arm and hand function after
stroke.
InMotion robotic systems have been sold in more than 15 countries
to help stroke survivors and those with other neurological
conditions to regain arm and hand movement by training shoulder
protraction/retraction, flexion/extension, abduction/adduction,
internal/external rotation, elbow flexion/extension and hand
grasp/release. InMotion robotic therapy guides the patient through
specific tasks, aiming to improve motor control of the arm and hand
by increasing strength, range of motion and coordination, and
assisting with the provision of efficient, effective, intensive
sensorimotor therapy.
"The InMotion ARM/HAND Interactive Therapy System, use of which is
already part of the VA's stroke rehabilitation guidelines for
moderate to severe patients with upper extremity disability, is
also a valuable research tool," said Dr. Eric Dusseux, CEO, BIONIK.
"We are thrilled that Providence VA Medical Center and its
collaborators have acquired again a new system and we are looking
forward to working with them to explore the frontiers of
neurorestoration science."
About BIONIK Laboratories
BIONIK Laboratories -- http://www.BIONIKlabs.com/-- is a robotics
company focused on providing rehabilitation and mobility solutions
to individuals with neurological and mobility challenges from
hospital to home. The Company has a portfolio of products focused
on upper and lower extremity rehabilitation for stroke and other
mobility-impaired patients, including three products on the market
and three products in varying stages of development.
Bionik reported a net loss and comprehensive loss of US$25.02
million for the year ended March 31, 2020, compared to a net loss
and comprehensive loss of US$10.56 million for the year ended March
31, 2019. As of June 30, 2020, the Company had $18.71 million in
total assets, $6.99 million in total current liabilities, and
$11.72 million in total shareholders' equity.
MNP LLP, in Toronto, Ontario, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated June 25,
2020, citing that the Company's accumulated deficit, recurring
losses and negative cash flows from operations raise substantial
doubt about its ability to continue as a going concern.
BLACKRIDGE TECHNOLOGY: Hires Patagonia Capital as Investment Banker
-------------------------------------------------------------------
Blackridge Technology International and its affiliates seek
approval from the U.S. Bankruptcy Court for the District of Nevada
to hire Patagonia Capital Advisors as their investment banker.
The services that will be provided by the firm are as follows:
a. study and review the business, operations and assets of
Debtors so as to enable the firm to market them for eventual sale;
and
b. lend the firm's expertise in creating a successful auction
of the assets.
Debtors will pay the firm at the sale closing a cash fee in an
amount equal to 5 percent of the total gross cash proceeds for the
first $1.6 million and 10 percent over $1.6 million.
Patagonia Capital is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Facundo Rowson
Patagonia Capital Advisors
375 Park Ave.
New York, NY 10022
About Blackridge Technology International
Blackridge Technology International develops, markets and supports
a family of products that provide a next generation cyber security
solution for protecting enterprise networks and cloud services.
Blackridge Technology International filed a voluntary Chapter 11
petition (Bankr. D. Nev. Case No. 20-50314) on March 13, 2020. In
the petition signed by Robert J. Graham, president, Debtor
estimated $10 million to $50 million in both assets and
liabilities. Judge Bruce T. Beesley oversees the case. Stephen R.
Harris, Esq., at Harris Law Practice LLC, is Debtor's legal
counsel.
BOY SCOUTS OF AMERICA: Victims Wants Limited Ch. 11 Asset Probe
---------------------------------------------------------------
Law360 reports that a sexual abuse victims committee in the Boy
Scouts of America's Delaware bankruptcy case sought court approval
late Tuesday, Sept. 29, 2020, for a limited Chapter 11 examination
of local troop assets, rosters and insurance coverage, saying some
requests for details had been slow-walked or ignored.
The committee's motion for the "Rule 2004" probe said that failure
to secure the materials quickly could stymie efforts to reach an
agreement on a bankruptcy plan and other issues under a mediation
order approved in early June 2020. Attorneys for the tort claimants
group said the committee needs details about restricted-purpose
assets, such as properties and funds.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets at least $500 million in liabilities as of the
bankruptcy filing.
The Debtors tapped Sidley Austin LLP as general bankruptcy counsel;
Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel; and
Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
BRIAN FAMILY: Case Summary & 4 Unsecured Creditors
--------------------------------------------------
Debtor: Brian Family, LLC
dba Cristina's Fine Mexican Restaurant;
fdba Senor Locos;
fdba Senor Locos Tex Mex Ice House;
fdba Coppell Senor Locos
5105 Eldorado Parkway, #120
Frisco, TX 75033
Business Description: Brian Family, LLC owns and operates a
restaurant chain specializing in Mexican
cuisine.
Chapter 11 Petition Date: October 1, 2020
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 20-42064
Judge: Hon. Brenda T. Rhoades
Debtor's Counsel: Michael S. Mitchell, Esq.
DEMARCO MITCHELL, PLLC
1255 West 15th St., 805
Plano, TX 75075
Tel: (972) 578-1400
Email: mike@demarcomitchell.com
Total Assets: $150,020
Total Liabilities: $1,104,868
The petition was signed by David Anthony Brian, president &
managing member.
A copy of the petition containing, among other items, a list of the
Debtor's four unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2JAWONA/Brian_Family_LLC__txebke-20-42064__0001.0.pdf?mcid=tGE4TAMA
BROOKFIELD RESIDENTIAL: S&P Alters Ratings Outlook to Stable
------------------------------------------------------------
S&P Global Ratings revised its outlook on Calgary, Canada-based
homebuilder Brookfield Residential Properties Inc. (BRPI) to stable
from negative, and affirmed its 'B' issuer credit rating.
S&P said, "We are also affirming our rating on the company's senior
unsecured notes at 'B+'; our '2' recovery rating is unchanged,
indicating our expectation for substantial recovery (70%-90%;
rounded estimate: 80%) for debtholders in the event of a default."
Brookfield's new revolver agreement is an important boost to
liquidity. In September 2020, the company extended its $675
million credit facility to September 2022. Thus, S&P now expects
the company's sources of cash to exceed its uses by more than 5x
over the next 12 months, as it considers the $540 million of
availability on its facility, its ongoing free cash flows of nearly
$40 million over that span, and cash balances of almost $100
million at the time of their most recent results (June 30, 2020).
S&P said, "Reduced land spend should help offset the sharp profit
decline that we expect in 2020. We forecast a more than 30% drop
in the company's EBITDA in 2020, due primarily to the COVID-19
pandemic and a significant pull-back in land-sale profits. However,
we think free cash flows will swing positive, to more than $100
million, this year due to reduced land reinvestment as the company
works down its massive land bank."
Modest but steady expected increases in the company's debt starting
in 2021 are largely due to investment outside of its core
homebuilding and land development activities. BRPI's continuing
investments in two existing mixed-use development projects will
cause its debt levels to increase in 2021. Whether the buildings
are ultimately leased and retained by Brookfield or sold outright,
we expect them to provide only modest contributions to the
company's performance before 2022. S&P said, "Nonetheless, we
expect a rebound in core homebuilding and land-sale profitability
in the coming year to both help fund these new operations and
offset the leverage increases required. Finally, our B issuer
credit rating additionally accounts for the company's low
profitability and high leverage in relation to competitors at the
higher B+ rating."
S&P said, "We expect that Brookfield's ongoing recovery in its
orders for homes will translate into higher profitability entering
2021 and cause its debt to EBITDA to recover toward a still very
high 9x over the coming year. Our higher forecasted profits will
also likely lift its S&P Global Ratings-adjusted EBITDA to interest
coverage levels to about 2x in 2021.
"We could downgrade BRPI's rating to 'B-' if the U.S. housing
market failed to show continued signs of recovery by early 2021 or
if planned capital deployments into its long-term, mixed-use
projects were accelerated. If that were the case, EBITDA coverage
of fixed charges would likely remain firmly below 2x and keep
overall debt to EBITDA above 10x.
"We could raise our rating on BRPI to 'B+' if leverage reverts to
below 7x. We believe the company could achieve this lower leverage
if profits from land sales approach levels of the recent past
(i.e., greater than $100 million as recently as 2019) or if gross
margins from core home sales were to approach the 22% level last
seen in 2018. An upgrade would require that BRPI retain these
increased profits rather than use them for incremental growth."
BURLESON HOME: Files Voluntary Chapter 11 Bankruptcy
----------------------------------------------------
Burleson Home Furnishings Corp. filed for voluntary Chapter 11
bankruptcy protection Aug. 27, 2020 (Bankr. W.D. Tex. Case No.
20-10960).
According to the Austin Business Journal, the debtor listed an
address of 1008 S. Main St., Georgetown, and is represented in
court by attorney Charlie Shelton. Burleson Home Furnishings Corp.
listed assets ranging from $500,001 to $1,000,000 and debts ranging
from $1,000,001 to $10,000,000. The filing did not identify a
largest creditor.
Burleson Home Furnishings Corp. designs, manufactures and sells
quality furniture pieces. This company currently has 10 to 20
employees and annual sales of $1,000,000 to $4,999,999.
The Debtor's counsel:
Herbert C Shelton, II
Hajjar Peters
Tel: 512-637-4956
E-mail: cshelton@legalstrategy.com
CANCER GENETICS: Raju Chaganti Quits as Director
------------------------------------------------
Dr. Raju S.K. Chaganti submitted his resignation from the Board of
Directors of Cancer Genetics, Inc., effective as of Sept. 24, 2020.
Dr. Chaganti's resignation was not the result of any disagreement
with the Company on any matters relating to the Company's
operations, policies or practices.
About Cancer Genetics
Through its vivoPharm subsidiary, the Cancer Genetics --
http://www.cancergenetics.com/-- offers proprietary pre-clinical
test systems supporting clinical diagnostic offerings at early
stages, valued by the pharmaceutical industry, biotechnology
companies and academic research centers. The Company is focused on
precision and translational medicine to drive drug discovery and
novel therapies. vivoPharm specializes in conducting studies
tailored to guide drug development, starting from compound
libraries and ending with a comprehensive set of in vitro and in
vivo data and reports, as needed for Investigational New Drug
filings. vivoPharm operates in The Association for Assessment and
Accreditation of Laboratory Animal Care International (AAALAC)
accredited and GLP compliant audited facilities.
Cancer Genetics reported a net loss of $6.71 million for the year
ended Dec. 31, 2019, compared to a net loss of $20.37 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$11.79 million in total assets, $6.68 million in total liabilities,
and $5.10 million in total stockholders' equity.
Marcum LLP, in Houston, Texas, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated May 29,
2020, citing that the Company has minimal working capital, has
incurred significant losses and needs to raise additional funds to
meet its obligations and sustain its operations. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern.
CARDILLE MUSHROOMS: Files Voluntary Ch. 11 Bankruptcy Petition
--------------------------------------------------------------
The Philadelphia Business Journal reports that Cardile Mushrooms
Inc. and Cardile Mushrooms C&M LLC filed for voluntary Chapter 11
bankruptcy protection Sept. 18, 2020, in the Eastern District of
Pennsylvania.
The Debtor listed an address of 8790 Gap Newport Pike, Avondale,
and are represented in court by attorney Paul J. Winterhalter.
Each Debtor listed assets ranging from $0 to $50,000 and debts
ranging from $1,000,001 to $10,000,000. The filing did not
identify a largest creditor.
About Cardile Mushrooms
Cardile Mushrooms C&M LLC is a family owned and operated company
that packs and distributes fresh mushrooms like Whites/Buttons,
Portabella, Criminis, Oysters and Shiitakes.
Cardile Mushrooms Inc. and Cardile Mushrooms C&M, LLC sought
Chapter 11 protection (Bankr. E.D. Pa. Case Nos. 20-13776 and
20-13778) on Sept. 18, 2020. The cases are jointly administered
under lead case In re C&C Entity, L.P. (Baknr. E.D. Pa. Case No.
20-13775).
The Debtors' counsel:
PAUL J. WINTERHALTER
Offit Kurman, P.A.
267-338-1370
pwinterhalter@offitkurman.com
CEC ENTERTAINMENT: Akin Gump Updates on Term Lender Group
---------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Akin Gump Strauss Hauer & Feld LLP submitted an
amended verified statement to disclose an updated list of Ad Hoc
Lender Group that it is representing in the Chapter 11 cases of CEC
Entertainment, Inc. et al.
The Ad Hoc Lender Group comprised of certain unaffiliated holders
of (i) the term loans and revolving loans outstanding under that
certain First Lien Credit Agreement, dated as of August 30, 2019,
among Debtor CEC Entertainment, Inc., as borrower, Debtor Queso
Holdings Inc., the Term Facility Lenders, the Revolving Facility
Lenders, Credit Suisse AG, Cayman Islands Branch, as administrative
agent, and other financial institutions party thereto and (ii) the
8.00% Senior Notes due 2022, issued by Debtor CEC Entertainment,
Inc. pursuant to that certain Indenture, dated as of February 19,
2014.
The Ad Hoc Lender Group engaged Akin Gump Strauss Hauer & Feld LLP
on April 14, 2020 to represent it in connection with a potential
restructuring of the Debtors.
The Ad Hoc Lender Group filed the Verified Statement of the Ad Hoc
Lender Group Pursuant to Bankruptcy Rule 2019, dated July 8, 2020.
[Docket No. 241]. The Ad Hoc Lender Group submits this Amended
Verified Statement to amend information disclosed in the Verified
Statement.
Akin Gump represents only the Ad Hoc Lender Group. Akin Gump does
not represent the Ad Hoc Lender Group as a "committee" and does not
undertake to represent the interests of, and is not a fiduciary
for, any creditor, party in interest or other entity that has not
signed a retention agreement with Akin Gump. In addition, the Ad
Hoc Lender Group does not represent or purport to represent any
other entities in connection with the Debtors' chapter 11 cases.
As of Sept. 29, 2020, members of the Ad Hoc Lender Group and their
disclosable economic interests are:
Arbour Lane Capital Management
777 3rd Avenue
14th Floor
New York, NY 10017
* First Lien Term Loans: $32,030,898.42
* Revolving Loans: $14,500,000
Bank of Montreal
115 S. LaSalle Street 25th Floor
Chicago, IL 60614
* Revolving Loans: $19,000,000
Carlson Capital, L.P.
2100 McKinney Avenue, Suite 1800
Dallas, TX 75201
* First Lien Term Loans: $15,241,955
Credit Suisse AG
Cayman Islands Branch
Eleven Madison Avenue
New York, NY 10010
* Revolving Loans: $17,500,000
Fidelity Management & Research Co.
200 Seaport Blvd, V13H
Boston MA 02210
* First Lien Term Loans: $33,460,615
GSO Capital Partners LP
GSO / Blackstone
Debt Funds Management LLC
345 Park Avenue
31st Floor
New York, NY 10154
* First Lien Term Loans: $58,063,250.15
Hill Path Capital
150 E. 58th Street 32nd Floor
New York, NY 10155
* First Lien Term Loans: $64,320,890
* Unsecured Notes: $29,962,000
Indaba Capital Fund, L.P.
One Letterman Drive
Building D, Suite DM700
San Francisco, CA 94129
* First Lien Term Loans: $49,255,507.85
ICG Debt Advisors
600 Lexington Avenue
New York, NY 10022
* First Lien Term Loans: $35,583,095.21
Jefferies Finance LLC
520 Madison Avenue 16th Floor
New York, NY 10022
* Revolving Loans: $5,000,000
JMB Capital Partners,
Master Fund, LP
205 South Martel Avenue
Los Angeles, CA 90036
* First Lien Term Loans: $44,421,891
* Unsecured Notes: $20,219,000
Monarch Alternative Capital LP
535 Madison Avenue 26th Floor
New York, NY 10022
* First Lien Term Loans: $108,675,000
* Revolving Loans: $47,000,000
MSD Capital, L.P.
645 Fifth Avenue
21st Floor
New York, NY 10022-5910
* First Lien Term Loans: $24,875,000
MSD Partners, L.P.
645 Fifth Avenue
21st Floor
New York, NY 10022-5910
* First Lien Term Loans: $17,941,518.34
Octagon Credit Investors, LLC
250 Park Avenue 15th Floor
New York, NY 10177
* First Lien Term Loans: $38,221,145.71
RFG-Clover LLC
1250 Fourth Street
5th Floor
Santa Monica, CA 90401
* First Lien Term Loans: $70,758,727.86
* Revolving Loans: $11,846,271.93
Scoggin International Fund, Ltd.
660 Madison Avenue 20th Floor
New York, NY 10065
* First Lien Term Loans: $28,940,000
* Unsecured Notes: $10,596,000
Scoggin Worldwide Fund, Ltd.
660 Madison Avenue 20th Floor
New York, NY 10065
* Unsecured Notes: $1,000,000
Second Lien LLC
200 Greenwich Avenue
Greenwich, CT 06830
* First Lien Term Loans: $59,700,000
WhiteStar Asset Management
c/o Meredith Hinton
200 Crescent Court Suite 1175
Dallas, TX 75201
* First Lien Term Loans: $18,763,231.20
Akin Gump reserves the right to amend or supplement this Amended
Verified Statement in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel to the Ad Hoc Lender Group can be reached at:
AKIN GUMP STRAUSS HAUER & FELD LLP
Marty L. Brimmage, Jr., Esq.
Lacy M. Lawrence, Esq.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Telephone: (214) 969-2800
Facsimile: (214) 969-4343
Email: mbrimmage@akingump.com
llawrence@akingump.com
- and -
Ira S. Dizengoff, Esq.
Philip C. Dublin, Esq.
Jason P. Rubin, Esq.
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Email: idizengoff@akingump.com
pdublin@akingump.com
jrubin@akingump.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2So3zSo
About CEC Entertainment
CEC Entertainment -- http://www.chuckecheese.com/-- is a family
entertainment and dining company that owns and operates Chuck E.
Cheese and Peter Piper Pizza restaurants. As of Dec. 31, 2019,
CEC
Entertainment and its franchisees operate a system of 612 Chuck E.
Cheese restaurants and 129 Peter Piper Pizza stores, with locations
in 47 states and 16 foreign countries and territories.
CEC Entertainment recorded a net loss of $28.92 million for the
year ended Dec. 29, 2019, compared to a net loss of $20.46 million
for the year ended Dec. 30, 2018. As of Dec. 29, 2019, CEC
Entertainment had $2.12 billion in total assets, $1.90 billion in
total liabilities, and $213.78 million in total stockholders'
equity.
On June 24, 2020, CEC Entertainment and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Lead Case No. 20-33163). Judge Marvin Isgur oversees the
cases.
The Debtors tapped Weil, Gotshal & Manges, LLP as bankruptcy
counsel; FTI Consulting, Inc. as financial advisor; PJT Partners LP
as investment banker; Hilco Real Estate, LLC as real estate
advisor; and Prime Clerk, LLC, as claims, noticing and solicitation
agent.
CEC ENTERTAINMENT: King & Spalding Updates on Noteholder Group
--------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of King & Spalding LLP submitted an amended verified
statement to disclose an updated list of Noteholder Group that it
is representing in the Chapter 11 cases of CEC Entertainment, Inc.,
et al.
In May 2020, certain holders, or investment advisors, sub-advisers
or managers of the account of such holders, of the 8.000% Senior
Notes due 2022, issued by CEC Entertainment, Inc. pursuant to that
certain Indenture, dated as of February 19, 2014, between the
Company and Wilmington Trust, National Association, as trustee,
engaged King & Spalding LLP to represent them in connection with
the potential restructuring of the Debtors.
K&S represents only the Ad Hoc Noteholders and does not represent
or purport to represent any entities other than the Ad Hoc
Noteholders in connection with the Debtors' chapter 11 cases. In
addition, the Ad Hoc Noteholders, both collectively and through the
individual members, do not represent or purport to represent any
other entities in connection with the Debtors' chapter 11 cases.
As of Sept. 29, 2020, members of the Ad Hoc Noteholder and their
disclosable economic interests are:
Prudential Financial, Inc.
655 Broad Street, 19th Floor
Newark, NJ 07102
Attn: Gregory Cass
Phone: (973) 802-6000
* Notes: $90,469,000
* Term Loans: $16,600,000
Resource Credit Income Fund
717 Fifth Ave, 14th Fl
New York, NY 10022
Attn: Mike Terwilliger
Phone: (212) 506-3899
* Notes: $11,549,000
Westchester Capital Management
100 Summit Lake Drive
Valhalla, NY 10595
Attn: Steve Tan
Phone: (914) 741-5600
* Note: $11,500,000
K&S does not own, nor has it ever owned, any claims against the
Debtors except for claims for services rendered to the Ad Hoc
Noteholders. K&S may at some future time seek to have its fees and
disbursements incurred on behalf of the Ad Hoc Noteholders paid by
the Debtors' estates pursuant to title 11 of the United States Code
or as otherwise permitted in the Debtors' chapter 11 cases. K&S
does not perceive any actual or potential conflict of interest with
respect to the representation of the Ad Hoc Noteholders in the
Debtors' chapter 11 cases.
All of the information contained herein is intended only to comply
with Bankruptcy Rule 2019 and is not intended for any other
purpose. Nothing contained in this Verified Statement should be
construed as a limitation upon, or waiver of, any Ad Hoc
Noteholders' right to assert, file and/or amend its claims in
accordance with applicable law and any orders entered in the
Debtors' chapter 11 cases.
The Ad Hoc Noteholders, through their undersigned counsel, further
reserve the right to supplement and/or amend this Verified
Statement in accordance with the requirements set forth in
Bankruptcy Rule 2019 at any time in the future.
Counsel to the Ad Hoc Noteholder Group can be reached at:
KING & SPALDING LLP
Arthur J. Steinberg, Esq.
Michael Rupe, Esq.
1185 Avenue of the Americas
NY, NY 10036
Telephone: (212) 556-2135
Email: asteinberg@kslaw.com
mrupe@kslaw.com
- and -
Matthew L. Warren, Esq.
Lindsey Henrikson, Esq.
353 North Clark Street, 12th Floor
Chicago, IL 60654
Telephone: (312) 764-6921
(312) 764-6924
Email: mwarren@kslaw.com
lhenrikson@kslaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2GA9sJC
About CEC Entertainment
CEC Entertainment is a family entertainment and dining company that
owns and operates Chuck E. Cheese and Peter Piper Pizza
restaurants. As of Dec. 31, 2019, CEC Entertainment and its
franchisees operate a system of 612 Chuck E. Cheese restaurants and
129 Peter Piper Pizza stores, with locations in 47 states and 16
foreign countries and territories. Visit
http://www.chuckecheese.com/for more information.
CEC Entertainment recorded a net loss of $28.92 million for the
year ended Dec. 29, 2019, compared to a net loss of $20.46 million
for the year ended Dec. 30, 2018. As of Dec. 29, 2019, CEC
Entertainment had $2.12 billion in total assets, $1.90 billion in
total liabilities, and $213.78 million in total stockholders'
equity.
On June 24, 2020, CEC Entertainment and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Lead Case No. 20-33163).
Judge Marvin Isgur oversees the cases.
The Debtors have tapped Weil, Gotshal & Manges, LLP as bankruptcy
counsel, FTI Consulting, Inc. as financial advisor, PJT Partners LP
as investment banker, Hilco Real Estate, LLC as real estate
advisor, and Prime Clerk, LLC, as claims, noticing and solicitation
agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on July 13, 2020. The committee has tapped Kelley Drye &
Warren, LLP and Womble Bond Dickinson (US), LLP as its legal
counsel, and Alvarez & Marsal North America, LLC as its financial
advisor.
CEDAR FAIR: Moody's Rates Proposed $300M Senior Notes 'B3'
----------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Cedar Fair,
L.P.'s proposed $300 million senior note. All other ratings,
including the B2 Corporate Family Rating (CFR), Ba2 senior secured
note and credit facility ratings, and B3 rating on the existing
senior notes, remain unchanged. The outlook remains negative.
The net proceeds of the proposed $300 million senior notes due 2028
will be used to add cash to the balance sheet and further enhance
Cedar Fair's liquidity position. Cedar Fair is expected to have
approximately $870 million of liquidity pro forma for the
transaction including over $500 million of cash and $359 million of
revolver availability as of September 27th, 2020. Moody's expects
Cedar Fair to have adequate liquidity to manage through the
pandemic, but the transaction will result in the already very high
leverage levels to increase further (13.2x pro forma for the
transaction as of Q2 2020 including Moody's standard adjustments)
and interest expense to rise. Cedar Fair also recently extended the
maturity date for part of the $375 million revolver to December
2023 from April 2022 and completed an amendment to extend out the
covenant suspension period until the end of 2021.
A summary of Moody's actions are as follows:
Assignments:
Issuer: Cedar Fair, L.P.
$300 million Senior notes due 2028, assigned B3 (LGD5)
RATINGS RATIONALE
Cedar Fair's B2 CFR reflects the negative impact of the coronavirus
outbreak on the ability to operate its parks, which Moody's
projects will lead to higher leverage and negative free cash flow
until the summer operating season in 2022. In the near term, EBITDA
is expected to be negative and cash burn is expected to be $30 to
$40 million a month as only 7 of Cedar Fair's 15 parks opened
during the summer season. Parks that were able to open, operated at
limited capacity due to health regulations and the need to maintain
social distancing. The pace of recovery may be slow as some
consumers may be reluctant to participate in group events and
season pass sales may take time to recover given the disruption in
the park operating schedule.
Cedar Fair benefits from its typically sizable attendance (27.9
million in 2019) and revenue generated from a geographically
diversified regional amusement park portfolio. EBITDA margins and
operating cash flows historically have been good, and its parks
have high barriers to entry. Cedar Fair's large portfolio of
regional amusement parks in the US and Canada are less likely to be
impacted by reduced travel activity as most guests are within
driving distance of the parks. Cedar Fair owns the land under all
but one of its parks which is a material positive. While recovery
to prior levels may not occur until 2022 or 2023, Moody's expects
the positive attributes of the parks to support an improvement in
performance over time in line with historical levels.
A governance impact that Moody's considers in Cedar Fair's credit
profile is the change in financial policy. Cedar Fair previously
pursued an aggressive financial plan that led to substantial
dividend payments and minimal or negative free cash flow, but
Moody's expects the company will operate with a more moderate
financial policy with the goal to reduce leverage after the impact
of the coronavirus subsides. Cedar Fair is an MLP and is a publicly
traded company listed on the New York Stock Exchange.
Cedar Fair' speculative grade liquidity rating of SGL-3 reflects
the potential for sizable negative free cash flow in the near term.
Cedar Fair will have over $500 million of cash and full access to
the $375 million revolving credit facility ($16 million of L/Cs
outstanding) as of September 27, 2020. Cedar Fair extended $300
million of its revolver maturity to December 2023 and the remaining
$75 million will mature in April 2022. Moody's projects Cedar Fair
to have just over 2 years of liquidity at the midpoint of the $30
to $40 million a month cash burn rate, but the cash usage rate will
improve in 2021 as additional parks can open and operate and with
higher capacity levels. However, Moody's does not expect free cash
flow to turn positive until the summer operating season of 2022.
Cedar Fair traditionally spent material amounts on capex each year
($180 million spent in 2019, excluding the purchase of the land at
its park in Santa Clara for $150 million), but the company is
expected to reduce capex by $75 to $100 million in 2020 in response
to the pandemic. The significant historical capex on rides,
attractions, and lodging reduces the need for spending in the near
term. The dividend was also suspended to preserve liquidity.
Cedar Fair recently completed an amendment that extends the
suspension of the testing of the senior secured leverage financial
maintenance covenant through the end of 2021. Starting with the
first quarter of 2022, through the fourth quarter of 2022, Cedar
Fair can calculate the senior secured leverage covenant using
Adjusted EBITDA from the second, third and fourth quarters of 2019.
Cedar Fair will be subject to a minimum liquidity covenant of $125
million through the end of 2022.
The negative outlook incorporates Moody's expectation of
significant operating losses and cash usage due to the coronavirus
outbreak's impact on Cedar Fair's ability to operate its parks as
scheduled. While Cedar Fair is projected to have over two years of
available liquidity at existing cash burn rates, Moody's expects
the improvement in park performance to be gradual and that leverage
levels will remain at very high levels until 2022 or 2023 depending
on the depth and duration of the pandemic and economic recession.
The very high leverage levels leave Cedar Fair poorly position to
withstand any future weakness in performance.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
An upgrade is unlikely if the coronavirus limits the ability to
operate Cedar Fair's amusement parks. The outlook could change to
stable if the parks are opened and Cedar Fair maintains an adequate
liquidity profile with leverage levels projected to be maintained
below 6x. Expectations that Cedar Fair would remain in compliance
with its covenants would also be required. An upgrade could occur
if leverage was projected to be maintained below 5x with a free
cash flow to debt ratio of about five percent.
The ratings could be downgraded if there were any further increases
in debt to enhance liquidity to manage through the impact of the
pandemic or if Moody's expected sustained leverage above 6.5x. A
significant deterioration in Cedar Fair's liquidity position or
elevated concern that Cedar Fair may not be able to obtain an
amendment to its covenants if needed may also lead to a downgrade.
Cedar Fair, L.P. (Cedar Fair), headquartered in Sandusky, Ohio, is
a publicly traded Delaware master limited partnership (MLP) formed
in 1987 that owns and operates amusement parks, water parks, and
hotels in the U.S. and Canada. Properties include its four largest
parks, Cedar Point (OH), Knott's Berry Farm (CA), Canada's
Wonderland (Toronto), and Kings Island (OH). In June 2006, Cedar
Fair acquired Paramount Parks, Inc. from CBS Corporation for a
purchase price of $1.24 billion. In 2019, Cedar Fair bought two
water parks in Texas for approximately $261 million. Revenue for
the LTM ending Q2 2020 was approximately $1 billion.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
CEDAR FAIR: S&P Lowers ICR to 'B-', Off CreditWatch Negative
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
regional theme park operator Cedar Fair L.P. by two notches to 'B-'
from 'B+' and removed its ratings on the company from CreditWatch,
where S&P placed them with negative implications on April 20, 2020,
because it materially reduced its assumed recovery pace for its
attendance, revenue, and EBITDA. In S&P's view, this will delay the
company from improving its credit measures and cause it to burn
cash through 2021.
S&P said, "At the same time, we are lowering our issue-level rating
on Cedar Fair's senior secured notes and senior secured credit
facility by two notches to 'B' from 'BB-' and our issue-level
rating on its existing senior unsecured notes by two notches to
'CCC' from 'B-'.
"The negative outlook reflects the possibility we could lower our
rating on Cedar Fair if its recovery is slower than we forecast and
its revenue, EBITDA, and cash flow underperform our base-case
assumptions such that we come to believe its capital structure may
be unsustainable.
"The downgrade reflects the substantial reduction in our base-case
assumptions for a recovery in Cedar Fair's attendance, revenue, and
EBITDA, which leads us to anticipate that its leverage could remain
very high through 2021.
"We assume COVID-19 will remain a threat until a vaccine or
effective treatment becomes widely available, which could occur
around mid-2021. Therefore, we lowered our attendance assumptions
for Cedar Fair's parks to reflect our forecast that its visitation
may not begin to recover until its seasonally important third
quarter in 2021. However, we anticipate that the company's
attendance will remain substantially below its 2019 attendance
levels in 2021. The 'B-' issuer credit rating reflects our
expectation that the company's EBITDA will be only modestly
positive while its leverage remains very high through 2021. In
addition, we expect Cedar Fair to burn significant amounts of cash
in both 2020 and 2021. Furthermore, we expect that the company's
leverage could remain very high, potentially as high as 7x in 2022,
following a presumed partial recovery in its attendance beginning
in the second half of 2021. Although our preliminary estimate is
for Cedar Fair's leverage to be below our 7.5x upgrade threshold in
2022, there is too much uncertainty around its performance and we
do not expect it to have a large enough cushion to support a higher
rating given limited visibility.
"We believe the company's regional theme parks may face an extended
period of depressed demand through 2021 because of consumer fears
around entering public spaces due to COVID-19 until there is a
vaccine or effective medical treatment.
"Although Cedar Fair has reopened some of its parks, its attendance
levels remain very depressed and are lower than we had previously
assumed because of cautious consumer behavior among its target
family segments, discomfort with wearing masks for extended periods
in warm outdoor weather, and its implementation of social
distancing measures. Additionally, Knott's Berry Farm and Canada's
Wonderland, two of the company's four largest parks, remain closed
and we expect that they may not reopen in 2020. To preserve its
liquidity, Cedar Fair has trimmed its planned capital expenditure
significantly below historical levels. While we typically would
view its diminished capital spending as potentially impairing the
historically high asset quality of its parks or deterring a rebound
in its attendance, we believe Cedar Fair made substantial
investments prior to the crisis and anticipate its asset base can
probably weather a couple of years of low capital spending. The
company has chosen to extend the privileges of its 2020 season pass
holders through the end of the 2021 season. This extension could
benefit its customer retention and quicken the recovery in its
attendance by encouraging pass holders to return to its parks
sooner, although this will depend on how consumers respond to
safety measures to limit the spread of the virus next summer if a
vaccine is not widely distributed by then. Due to this extension,
the company will likely forgo some 2021 season pass revenue and we
expect it to report a sizable working capital outflow in the fourth
quarter of 2021 related to revenue recognition for prior sales.
Partially offsetting these risk factors are the company's portfolio
of drive-to assets, which may recover faster than
destination-oriented properties due to consumer aversion to air
travel amid the pandemic. Additionally, regional theme parks have
historically exhibited some resiliency in recessions due to a shift
in consumer preference toward lower-cost and closer-to-home
experiences.
"We believe Cedar Fair will have adequate liquidity through 2021.
"As of June 30, 2020, Cedar Fair had about $301 million of
unrestricted cash on hand and $360 million available under its
revolving credit facility. We assume the company burns on average
about $30 million-$40 million per month over the next six months
while its parks remain closed, before its cash burn begins to
moderate with parks reopening in 2021. We also expect that it has
sufficient liquidity to weather its cash burn at the current rate
until the end of 2021, if necessary. Cedar Fair also has no
material debt maturities until 2024, which provides it with some
cushion against credit market volatility. Additionally, the company
generated substantial cash flows from operations prior to the
pandemic. If Cedar Fair's attendance begins to recover following
the release of a widely distributed medical solution to COVID-19,
we believe it could generate positive cash flow from operations in
2022. We view the company's geographically diversified portfolio of
high-quality assets as positioning it to begin reducing its
leverage following a presumed recovery from the pandemic."
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "The negative outlook reflects the possibility we could
lower our rating on Cedar Fair if its recovery is slower than we
forecast and its revenue, EBITDA, and cash flow underperform our
base-case assumptions such that we believe its capital structure
may be unsustainable.
"We would likely lower our rating on Cedar Fair if it underperforms
our current base case and is unable to generate sufficient cash
flows to sustain its capital structure. We could also lower our
ratings if its ongoing cash burn reduces its liquidity below levels
we consider to be adequate.
"It is unlikely that we will revise our outlook on Cedar Fair to
stable for the duration of the pandemic. However, longer term we
could raise our ratings on the company if we believe it will
sustain leverage of less than 7.5x."
CENTRAL GARDEN: Fitch Assigns First-Time 'BB' IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BBB-'/'RR1' rating to Central Garden
& Pet Company's $400 million ABL revolver and a 'BB'/'RR4' rating
to its $700 million unsecured bonds and new 2030 notes. Fitch
expects the new notes to be used for early redemption of the 2023
bonds and general corporate purposes. The Rating Outlook is
Stable.
Central's 'BB' rating reflects the company's strong market
positions within the pet and lawn and garden segments, ample
liquidity supported by robust FCF and moderate leverage offset by
limited scale with EBITDA below $300 million. Fitch expects modest
organic revenue growth over the medium term supplemented by
acquisitions, with EBITDA margins in the 10% range and annual FCF
of $150 million to $200 million. Gross leverage (total debt/EBITDA)
is expected to trend around 2.5x in fiscal 2020 (ending September
2020) and around 2.8x in fiscal 2021, down from 3.2x in fiscal
2019, given the top line and EBITDA benefit from the coronavirus.
Over time, Fitch expects the company to manage gross debt/EBITDA
within its targeted range of 3.0x to 3.5x, reflecting debt financed
acquisitions as Central continues to diversify its portfolio and
increase scale within its segments.
KEY RATING DRIVERS
Adequate Diversification Within Narrow Set of Verticals: While
Central competes in fewer verticals than peers like Newell Brands
(BB-/Negative) and Spectrum Brands (BB/Stable), the company's
product portfolios within those verticals are broad. Within pet
(58% of FY19 revenue, 55% of operating income before corporate
expenses), the company produces products for a variety of animals
across an array of products including food, treats, toys, habitats,
medical products, and grooming supplies. Within the garden segment
(42% of revenue, 45% of operating income), the company's portfolio
is diversified across seeds, fertilizer, pest control, live plants
and furniture and decor.
Strong Positioning Mitigates High Customer Concentration: With
nearly 50% of revenues derived from the company's top five
customers, customer concentration is high, particularly within the
lawn and garden segment where 65% of revenue is derived from
Walmart (AA/Stable), The Home Depot (A/Stable) and Lowe's. The high
customer concentration is mitigated by strong market share held by
Central who, along with peers Scotts Miracle-Gro and Spectrum
Brands, dominate the space. This dynamic has resulted in stable
share for Central with these retail customers over time. Central's
ability to produce private label products for its customers has
enabled it to strengthen these relationships and protect share,
albeit at lower margin contribution. The customer base within the
pet business is more diverse with Central's sales more evenly
spread across national pet chains, independent pet retailers,
grocery stores, warehouse clubs, mass retailers and internet
retailers. The company's track record of innovation and in some
cases, proprietary formula ownership, has helped cement leading
positions in many of the categories in which it competes.
Distribution Business Provides Unique Competitive Advantage: Over
20% of Central's revenue in both the lawn and garden and pets
businesses is derived from product distribution where the company
manages the delivery and logistics for not only its products but
also third-party products. Fitch believes Central's distribution
capabilities adds an extra layer of stickiness to its customer
relationships and provides insights into its customers' and
competitors' business. These insights have also been key in helping
the company identify potential acquisition targets, supporting the
company's growth profile.
Strong Demand Through the Coronavirus Pandemic: Central's
performance in fiscal 3Q20 (ending June 2020), the first full
quarter following the start of the coronavirus pandemic, was strong
with revenue up 18% yoy and EBITDA up 44%. The pet segment
benefited from increased demand as consumers confined to their
homes spent more on their pets while the prospect of an extended
period at home drove more pet adoptions. This dynamic could support
the pet segment over the medium term due to higher demand levels
over the life cycle of pet ownership. The garden segment also
benefited from shelter-in-place mandates as consumers, faced with
more time at home, redirected spend from travel and leisure
activities to maintaining their outdoor living spaces, though Fitch
believes this boost could prove more transitory as consumer
spending starts to return to prior patterns.
While the Lawn & Garden segment tends to be more cyclical, pet
industry sales have historically been more stable through downturns
as pet ownership has remained stable and a large percent of pet
spending is on non-discretionary products like food, medication,
pest protection and waste management. Growth in the sector has been
supported by a trend toward "pet humanization" whereby pet owners
increasingly treat their pets as family resulting in greater
spending. According to the American Pet Products Association, while
overall consumer spending declined during the 2008-2010 period
encompassing the last recession, spending on pets rose 12% during
that timeframe. Central's pet product sales declined around 6.4%
from fiscal 2008 to fiscal 2010 in part due to a portfolio that
skewed toward more discretionary pet products.
Acquisitive Strategy, Well Executed: Central seeks to broaden its
portfolio and fortify its competitive positioning through strategic
acquisitions and has historically been a very active acquiror,
having completed over 50 acquisitions in the past 25 years. The
company's recent acquisition of Midwest distributor General Pet
Supply helped Central fill in its national distribution footprint
while other acquisitions including Bell Nursery (live plants) and
Arden Companies (outdoor cushions and pillows) provide the company
with new growth vehicles in adjacent markets. The company's status
as one of the few strategic buyers within the pet and garden
industries allows the company to be selective and disciplined.
Central's large cash balance provides the company dry powder for
future acquisitions.
Moderate Leverage, Disciplined Financial Policy: Central's
management targets 3.0x-3.5x leverage (gross debt/EBITDA) and Fitch
expects the company to manage leverage in this range over time.
Central does not pay a dividend and has no plans to institute one
for the foreseeable future given robust growth opportunities within
its sectors. FCF has been consistent in the $100 million to $200
million range and share repurchases have historically remained well
within FCF. Liquidity is ample with nearly $500 million in cash and
a $400 million undrawn ABL credit facility at the end of fiscal
3Q20. Pro forma the expected redemption of the $400 million of
senior notes due 2023, the company's earliest funded maturity is
its $300 million of senior notes due 2028.
DERIVATION SUMMARY
Central's 'BB' rating reflects the company's strong market
positions within the pet and lawn and garden segments, ample
liquidity supported by robust FCF and moderate leverage offset by
limited scale with EBITDA below $300 million. Fitch expects modest
organic revenue growth over the medium term supplemented by
acquisitions, with EBITDA margins in the 10% area and annual FCF of
$150 million to $200 million. Gross leverage (total debt/EBITDA) is
expected to trend around 2.5x in fiscal 2020 (ending September
2020) and around 2.8x in fiscal 2021, down from 3.2x in fiscal
2019, given the top line and EBITDA benefit from the coronavirus.
Over time, Fitch expects the company to manage leverage within its
targeted range of 3.0x to 3.5x, reflecting debt financed
acquisitions as Central continues to diversify its portfolio and
increase scale within its segments.
Similarly rated credits in Fitch's consumer portfolio include ACCO
Brands Corporation (BB/Stable), Spectrum Brands, Inc. (BB/Stable)
and Newell Brands Inc (BB/Negative Outlook). ACCO's IDR of 'BB'
reflects the company's consistent FCF and reasonable gross leverage
around 3x given ongoing debt repayment post recent acquisitions.
The ratings are constrained by secular challenges in the office
products industry and channel shifts within the company's customer
mix, along with the risk of further debt-financed acquisitions.
Spectrum's 'BB' rating reflects the company's diversified portfolio
across products and categories with well-known brands, and
commitment to maintain leverage (net debt/EBITDA) between 3.5x and
4.0x, which equates to a similar gross debt/EBITDA target assuming
around $150 million in cash. Relative to Central, Spectrum benefits
from greater scale across business lines. The rating incorporates
expectations for modest organic revenue growth over the long term,
reasonable profitability with EBITDA margins near 15%, compared
with Central at around 10%.
Newell's 'BB' rating and Negative Outlook reflect elevated leverage
(total debt/EBITDA) of 4.4x following the completion of its asset
divestiture program and ongoing topline challenges in several its
categories. The ratings also reflect the significant business
interruption from the coronavirus pandemic and the potential of a
downturn in discretionary spending that Fitch expects could extend
well into 2021, which could derail further deleveraging. Total
debt/EBITDA could increase to the 6x range in 2020 before returning
to under 4.5x in 2022, assuming EBITDA in the $1.2 billion range in
2021/2022 and paydown of upcoming debt maturities.
KEY ASSUMPTIONS
-- Revenue for FY20 (ending September) increases over 10% yoy as
revenue growth in FY4Q20 remains in-line with the 18% growth
recorded in FY3Q20. Revenue declines in FY21 on difficult comps
though remains around 6.5% higher than FY19 given continued
near-term benefit from increased pet adoptions and disrupted
spending patterns. Organic growth in FY22 returns to the low
single-digits;
-- EBITDA margins in FY20 increase to 10.5%, up from 9.2% in FY19
on fixed cost leverage from strong revenue performance but returns
towards 10% in FY21 on sales declines and remain in that area going
forward;
-- Following reduced spend in FY20 due to the pandemic, Fitch
assumes capex increases to around 2.0% of sales resulting in annual
FCF in the $150 million to $200 million range. Fitch assumes that
FCF is deployed toward share buybacks or acquisitions;
-- Leverage (gross debt/EBITDA) dips to the mid-2x area in FY20
due to the positive impact of the pandemic on EBITDA, increasing to
the high-2x area the following year as sales and EBITDA decline due
to the tough comp. Over the medium-term Fitch expects leverage to
return to the company's targeted levels of 3.0x to 3.5x, supporting
acquisitions and/or share buybacks.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade could be considered if the company committed to
maintaining gross leverage (total debt/EBITDA) below 3.0x while
maintaining strong top line growth reflecting low single-digit
organic growth and tuck-in acquisitions with EBITDA margin in the
10% range;
-- Fitch would also consider an upgrade if the company executed
more transformative acquisitions that meaningfully increased the
company's scale with EBITDA approaching $500 million while
maintaining gross leverage at or under 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Gross leverage sustained above 4.0x as a result of financial
performance below Fitch's expectations, such as EBITDA trending
toward $175 million;
-- A change in financial policy or a transformative debt financed
acquisition, absent a concrete plan to reduce gross leverage below
4.0x within 24 months of acquisition close, could also lead to
negative rating actions.
LIQUIDITY AND DEBT STRUCTURE
Ample Liquidity: Liquidity at June 27, 2020 consisted of $495
million of cash and equivalents (net of $14 million of restricted
cash) and full availability on a $400 million asset-based revolving
credit facility maturing September 2024. The ABL is secured by
substantially all assets of the borrowing parties and is subject to
a borrowing base calculated using a formula based on eligible
receivables and inventory minus certain reserves. The ABL contains
an accordion feature which, at the request of the company and
provided approval of the lenders, allows up to an additional $200
million principal amount available. The company borrowed $200
million under its ABL revolver towards the beginning of the
pandemic, but repaid the full amount prior to June 27, 2020. Fitch
expects the elevated cash balances to be opportunistically deployed
for acquisitions and/or share buybacks.
Debt Structure: As of June 27, 2020, the company's debt structure
included the undrawn secured ABL revolver, $400 million 6.125%
senior unsecured notes due November 2023 and $300 million 5.125%
senior unsecured notes due February 2028.
Recovery Considerations
Fitch has assigned Recovery Ratings (RRs) to the various debt
tranches in accordance with Fitch criteria, which allows for the
assignment of RRs for issuers with IDRs in the 'BB' category. Given
the distance to default, RRs in the 'BB' category are not computed
by bespoke analysis. Instead, they serve as a label to reflect an
estimate of the risk of these instruments relative to other
instruments in the entity's capital structure. Fitch has assigned
the first-lien secured ABL a rating of 'BBB-'/'RR1', notched up two
from the IDR and indicating outstanding recovery prospects
(91%-100%) in a default scenario. Central's unsecured bonds have
been assigned a rating of 'BB'/'RR4', in line with the company's
IDR, indicating average recovery (31%-50%) recovery prospects.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch adjusts for non-cash stock-based compensation and intangible
asset impairment. For example, Fitch added back $14.7 million in
stock-based compensation and $2.5 million in impairment charges to
its EBITDA calculation for the year ended September 2019.
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).
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.
CENTRIC BRANDS: Abandons Plan to Sell SWIMS Stake
-------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that bankrupt Centric
Brands Inc. has abandoned a plan to sell its stake in Scandinavian
footwear and apparel company SWIMS AS.
SWIMS generated interest from five bidders, but none submitted a
qualified bid under Centric's court-approved bidding procedures,
the company's attorney, Cristine Pirro Schwarzman of Ropes & Gray
LLP, said Thursday at a hearing in the U.S. Bankruptcy Court for
the Southern District of New York.
The clothing designer canceled its auction after failing to
negotiate an acceptable sale price despite extending the bidding
deadlines twice, Schwarzman said.
About Centric Brands
Centric Brands Inc. designs, produces, merchandises, manages and
markets kids wear, accessories, and men's and women's apparel under
owned, licensed and private label brands. Currently, the company
and its affiliates license over 100 brands, including AllSaints,
BCBG, Buffalo, Calvin Klein, Disney, Frye, Herve Leger, Jessica
Simpson, Joe's, Kate Spade, Kenneth Cole, Marvel, Michael Kors,
Nautica, Nickelodeon, Spyder, Timberland, Tommy Hilfiger, Under
Armour, and Warner Brothers. The companies sell licensed products
through both retail and wholesale channels.
Centric Brands and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-22637)
on May 18, 2020. As of March 31, 2020, Debtors disclosed
$1,855,722,808 in total assets and $2,014,385,923 in total
liabilities.
Judge Sean H. Lane oversees the cases.
The Debtors tapped Ropes & Gray, LLP as bankruptcy counsel; PJT
Partners, Inc. as investment banker; Alvarez & Marsal, LLC as
financial advisor; and Prime Clerk, LLC as notice, claims and
balloting agent.
The Official Committee of Unsecured Creditors appointed to these
Chapter 11 cases tapped McDermott Will & Emery LLP as its counsel
and Berkeley Research Group, LLC as its financial advisor.
CENTURY 21: Russell, Cullen Represent Utility Companies
-------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the Law Firm of Russell R. Johnson III, PLC and Cullen and Dykman
LLP submitted a verified statement to disclose that they are
representing the utility companies in the Chapter 11 cases of
Century 21 Department Stores LLC, et al.
The names and addresses of the Utilities represented by the Firm
are:
a. Consolidated Edison Company of New York, Inc.
Attn: Rosalie Zuckerman
Con Edison Law Department
Attn: Bankruptcy, l8th Floor
4 Irving Place
New York, New York 10003
b. Constellation NewEnergy, Inc.
Attn: Mark J. Packel
Assistant General Counsel
2301 Market Street, 23rd Floor
Philadelphia, PA 19103
c. Jersey Central Power & Light Company
Attn: Kathy M. Hofacre
FirstEnergy Corp.
76 S. Main St., A-GO-15
Akron, OH 44308
d. Public Service Electric and Gas Company
Gary R. Studen, Esq.
Assistant Counsel — Litigation
80 Parle Plaza-T5D
Newark, New Jersey 07102
The nature and the amount of claims of the Utilities, and the times
of acquisition thereof are as follows:
a. The following Utilities have unsecured claims against the
above-referenced Debtors arising from prepetition utility usage:
Constellation NewEnergy, Inc., Jersey Central Power & Light Company
and Public Service Electric and Gas Company.
b. Consolidated Edison Company of New York, Inc. held
prepetition cash deposits that secured all prepetition debt.
c. For more information regarding the claims and interests of
the Utilities in these jointly-administered cases, refer to the
Objection of Certain Utility Companies To the Motion of Debtors
Requesting Entry of An Order (I) Approving Debtors Proposed Form of
Adequate Assurance of Payment To Utility Providers (II)
Establishing Procedures For Determining Adequate Assurance of
Payment For Future Utility Services and (III) Prohibiting Utility
Providers From Altering Refusing, or Discontinuing Utility Service
filed in the above-captioned, jointly-administered, bankruptcy
cases.
The Law Firm of Russell R. Johnson III, PLC was retained to
represent the foregoing Utilities in August and September 2020. The
circumstances and terms and conditions of employment of the Firm by
the Companies is protected by the attorney-client privilege and
attorney work product doctrine.
Co-Counsel for Consolidated Edison Company of New York, Inc., et
al. can be reached at:
Thomas R. Slome, Esq.
Michael Kwiatkowski, Esq.
CULLEN AND DYKMAN LLP
100 Quentin Roosevelt Boulevard
Garden City, NY 11530
Telephone: (516) 296-9165
Facsimile: (516) 357-3792
Email: tslome@CullenandDykman.com
mkwiatkowski@CullenandDykman.com
- and -
Russell R. Johnson III, Esq.
John M. Craig, Esq.
LAW FIRM OF RUSSELL R. JOHNSON III, PLC
2258 Wheatlands Drive
Manakin-Sabot, VA 23103
Telephone: (804) 749-8861
Facsimile: (804) 749-8862
Email: russell@russelljohnsonlawfirm.com
john@russel1johnsonlawfirm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/36lN1m9
About Century 21
Century 21 Department Stores LLC, et al. --
http://www.c21stores.com/-- are pioneers in off-price retail
offering access to designer brands at amazing prices. They opened
their iconic flagship location in downtown Manhattan in 1961. As
of the Petition Date, the Debtors have 13 stores across New York,
New Jersey, Pennsylvania and Florida and an online retail presence,
operate seasonal pop-ups, and employ other innovative retail
concepts.
Century 21 Department Stores LLC and its affiliates sought Chapter
11 protection (Bankr. S.D.N.Y. Lead Case No. 20-12097 on Sept. 10,
2020).
Century 21 was estimated to have $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
The Hon. Shelley C. Chapman is the case judge.
The Debtors tapped PROSKAUER ROSE LLP as counsel; and BERKELEY
RESEARCH GROUP, LLC as financial advisor.
STRETTO is the claims agent. HILCO MERCHANT RESOURCES, LLC, is the
liquidation consultant.
CHAPARRAL ENERGY: Court Quickly Approves Debt-For-Equity Plan
-------------------------------------------------------------
Law360 reports that Chaparral Energy Inc. took a speedy trip
through its second bankruptcy in the past five years as a Delaware
judge approved its debt-for-equity Chapter 11 plan Thursday,
October 1, 2020, with the company saying it plans to emerge from
its latest bankruptcy as soon as next week.
During a short virtual hearing, U.S. Bankruptcy Judge Mary F.
Walrath had words of praise for Chaparral and its stakeholders for
moving through the bankruptcy quickly and "seamlessly," and for
coming into Thursday's hearing with a fully consensual plan that
was supported by creditors who voted on it.
About Chaparral Energy
Chaparral Energy, Inc. is an independent oil and natural gas
exploration and production company headquartered in Oklahoma City.
Founded in 1988, Chaparral Energy is focused in the oil window of
the Anadarko Basin in the heart of Oklahoma. On the Web:
http://www.chaparralenergy.com/
Chaparral Energy, Inc., and its 10 affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 16-11144) on May 9, 2016. The Debtors tapped Latham & Watkins
LLP; and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,
as counsel. On March 2017, the Court approved the Company's
chapter 11 plan, which provided that Chaparral's unsecured
bondholders and general unsecured creditors will own 100% of the
company's ownership interest, subject to some dilution.
On Aug. 16, 2020, Chaparral Energy and its debtor affiliates filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Lead Case No. 20-11947). Charles Duginski,
chief executive officer, signed the petitions.
At the time of the filing, the Debtors disclosed total assets of
$595,167,000 and total liabilities of $522,288,000 as of June 30,
2020.
Judge Mary F. Walrath oversees the present cases.
The Debtors tapped Davis Polk & Wardwell LLP and Richards, Layton &
Finger, P.A. as counsel, Intrepid Partners, LLC as investment
banker, Rothschild & Co. as financial advisor, and Opportune LLP as
restructuring advisor. Kurtzman Carson Consultants LLC is the
claims and noticing agent and administrative advisor.
CHESAPEAKE ENERGY: Taps Ernst & Young to Provide Audit Services
---------------------------------------------------------------
Chesapeake Energy Corporation and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Texas to
employ Ernst & Young LLP to provide restructuring, accounting, tax
and audit services.
The Debtors anticipate that Ernst & Young will perform the
following services:
A. Restructuring Services
a. prepare statutorily required filings such as the Schedule
of Financial Affairs and Statement of Assets and Liabilities; and
b. advise and assist with the form and content of the reports
that will be submitted to the Bankruptcy Courts on a monthly and
periodic basis and those required by the official committee of
unsecured creditors and other stakeholders.
B. Accounting Services
a. advise the Debtors on general and technical accounting
matters around the Debtors' financial reporting and documentation
of various accounting matters and policies in connection with
Debtors' preparation of financial statements and related SEC
filings.
b. provide assistance with the assessment of the accounting
impact of emergence from bankruptcy, including income tax
accounting, to allow the Debtors to apply fresh start accounting in
accordance with ASC 852.
c. The scope of the accounting services for fresh start and
Emergence will be delivered in two phases. Phase I will include
services related to fresh start accounting and the accounting
impact of Emergence prior to the confirmation of the Company's
ownership structure at Emergence. Phase II will include potential
services after confirmation of the Company's ownership structure
and related independence restrictions at the Emergence.
C. Tax Services
a. advise the Debtors with understanding the tax issues
related to the Chapter 11 Cases, for U.S. federal and state/local
tax purposes, and the tax implications of the reorganization and
emergence.
D. Advisory Services
a. assist the Debtors' Internal Audit department in the
execution of the Debtors' SOX program.
E. Sales and Use Tax Services
a. assist the Debtors with the sales and use tax refund review
by identifying refunds, filing refund claims, and resolving or
defending refund claims with the appropriate taxing jurisdiction.
The restructuring services will be billed based on the firm's
hourly rates for such services, which currently are as follows:
Partner/Principal $995
Managing Director $850
Senior Manager $795
Manager $675
Senior $560
Staff $365
The accounting services will be billed based on the firm's hourly
rates for such services, which currently are as follows:
Subject Matter Resource Partner $820
Partner/Principal $725
Managing Director $675
Senior Manager $600
Manager $500
Senior $370
Staff $275
The tax services will be billed based on the firm's hourly rates
for such services, which currently are as follows:
Partner/Principal/Managing Director $650-$955
Senior Manager $575-$875
Manager $465-$785
Senior $355-$495
Staff $245-$280
The sales and use tax services will be provided for contingent
fees, which are as follows:
Entity: Chesapeake Operating, LLC
Period: Oct. 1, 2012 - Dec. 31, 2015
Jurisdictions: Louisiana, Oklahoma, Pennsylvania, Texas
Fee Terms: The greater of: (1) 10% "Net Refunds" or (2) 8%
"Gross Refunds"
Entity: Chesapeake Operating, LLC
Period: Jan. 1, 2016 - Dec. 31, 2019
Jurisdictions: Louisiana, Oklahoma, Pennsylvania, Wyoming
Fee Terms: The greater of: (1) 10% "Net Refunds" or (2) 8%
"Gross Refunds"
Entity: Chesapeake Operating, LLC
Period: Jan. 1, 2016 - Mar. 31, 2019
Jurisdiction: Texas
Fee Terms: The greater of: (1) 15% "Net Refunds" or (2) 12%
"Gross Refunds"
Entity: Chesapeake Operating, LLC
Period: Apr. 1, 2019 - Dec. 31, 2019
Jurisdiction: Texas
Fee Terms: The greater of: (1) 10% "Net Refunds" or (2) 8%
"Gross Refunds"
Entity: WildHorse Resources Management Company, LLC
Period: Jan. 1, 2019 - Dec. 31, 2019
Jurisdiction: Texas
Fee Terms: The greater of: (1) 10% "Net Refunds" or (2) 8%
"Gross Refunds"
Provision of the services pursuant to the Advisory Statement of
Work will be provided for a fixed fee of $804,804.
Thierry Caruso, Esq., a partner at Ernst & Young, disclosed in
court filings that the firm is "disinterested person," as such term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Thierry Caruso, Esq.
Ernst & Young LLP
Suite 2500 210 Park Avenue
Oklahoma City, OK 73102
Telephone: (405) 278-6800
Facsimile: (405) 278-6823
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.
CLEAR THE WAY: Files Voluntary Chapter 11 Petition
--------------------------------------------------
Clear the Way Supportive Housing Corp. filed for voluntary Chapter
11 bankruptcy protection Sept. 4, 2020 (Bankr. W.D. Tenn. Case No.
20-24352).
According to the Memphis Business Journal, the debtor listed an
address of 5018 Expressway Drive S. #204, Ronkonkama, New York, and
is represented in court by attorney John Dunlap. Clear the Way
Supportive Housing Corp. listed assets up to $2,915,914 and debts
up to $150,000. The filing's largest creditor was listed as the
City of Memphis, with an outstanding claim of $75,000.
Clear the Way Supportive Housing Corp. is a not for profit 501(C) 3
organization housing counseling agency that provides temporary
shelter for people who have no permanent housing.
The Debtor's counsel:
John Edward Dunlap
Tel: 901-320-1603
E-mail: jdunlap00@gmail.com
CLEAR THE WAY: Seeks to Hire John E. Dunlap PC as Counsel
---------------------------------------------------------
Clear The Way Supportive Housing Corp. seeks authority from the
U.S. Bankruptcy Court for the Western District of Tennessee to hire
the Law Office of John E. Dunlap PC as its legal counsel.
The Debtor requires the firm to:
a. advise the debtor with respect to his powers and duties as
debtor in possession in the continued management and operation of
his business;
b. attend meeting of creditors and negotiate with
representatives of creditors and other parties in interest and
advise and consult on the conduct of the case, including all of the
legal and administrative requirements of operating in Chapter 11;
c. take all necessary action to protect and preserve the
debtor's estate, including prosecution of actions on his behalf,
the defense of any actions commenced against him, negotiate
concerning all litigation in which the debtor is involved, and
objections to claims filed against the estate;
d. prepare on behalf of the debtor all motions, applications,
answers, orders, reports and papers necessary to the administration
of the estate;
e. negotiate and prepare on the debtor's behalf a plan of
reorganization, disclosure statements, and all related agreements
and documents and take all necessary action on behalf of the debtor
to obtain confirmation of such a plan;
f. advise the debtor in connection with the sale of assets;
g. appear before the bankruptcy court, appellate courts and
the U.S. Trustee; and
h. perform all other necessary legal services and provide all
necessary legal advice to the debtor in connection with this
Chapter 11 case.
Mr. Dunlap assured the court that he is a disinterested person as
defined by Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
John E. Dunlap, Esq.
Law Office of John E. Dunlap PC
3340 Polar Avenue, Suite 320
Memphis, TN 38111
Phone: (901) 320-1603
Fax: (901) 320-6914
Email: jdunlap00@gmail.com
About Clear The Way Supportive Housing Corp
Clear The Way Supportive Housing Corp is a non-profit company that
owns and operates numerous single family residential units in
Memphis, Shelby County, Tennessee. It employs property managers and
maintenance personnel.
Clear The Way Supportive Housing Corp sought protection for relief
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tenn. Case No.
20-24352) on Sep. 4, 2020. At the time of filing, the Debtor
estimated $1,000,001 to $10 million in assets and 100,001 to
$500,000 in liabilities. John Edward Dunlap, Esq. represents the
Debtor as its counsel.
CLEVELAND-CLIFFS INC: Fitch Affirms 'B' LongTerm IDR, Outlook Pos.
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Fitch Ratings has affirmed Cleveland-Cliffs Inc.'s Long-Term Issuer
Default Rating (IDR) at 'B', and AK Steel Corporation's IDR at 'B'.
Fitch has revised the Rating Outlook to Positive from Negative.
In addition, Fitch affirmed CLF's ABL credit facility at
'BB'/'RR1', CLF's first-lien secured notes at 'BB'/'RR1', AK
Steel's first-lien secured notes at 'BB'/'RR1', CLF's unsecured
convertible notes at 'CCC+'/'RR6', CLF unsecured notes not
benefitting from guarantees at 'CCC+'/'RR6' and AK Steel's
unsecured guaranteed notes at 'CCC+'/'RR6'.
Fitch has also placed CLF's senior unsecured guaranteed notes
'B-'/'RR5' rating on Rating Watch Positive. CLF's senior unsecured
notes could be upgraded to 'RR3' from 'RR5' due to updated recovery
assumptions following the acquisition of ArcelorMittal USA,
including a higher going-concern (GC) EBITDA driven by CLF's
addition of approximately 17 million tons of steelmaking capacity
and limited new secured debt. Fitch expects to resolve the Watch
upon closing of the acquisition.
The Positive Outlook reflects CLF entering into a definitive
agreement, pursuant to which CLF will acquire substantially all of
the operations of ArcelorMittal USA LLC for approximately $1.4
billion. CLF will acquire ArcelorMittal USA with a combination of
common stock ($500 million), non-voting preferred stock ($373
million) and $505 million in cash. The Positive Outlook reflects
Fitch's view that the acquisition is credit-positive as it is
deleveraging while resulting in increased size, scale and end
market diversification. Upon close of the transaction, CLF will be
the largest flat-rolled steel producer and largest iron ore pellet
producer in North America. Fitch believes the improved EBITDA
generation will create the ability to reduce debt. The transaction
is also expected to result in improved liquidity as the ABL
borrowing base increases.
Fitch could resolve the Outlook if total debt/EBITDA is expected to
trend toward 3.5x or below and FCF is expected to be positive and
is allocated toward gross debt repayment.
CLF's ratings reflect its vertical integrated operating profile,
its self-sufficiency in iron ore, its focus on higher value-added
steel production and its electric arc furnace (EAF)-focused,
Toledo, OH hot briquetted iron (HBI) facility. Fitch believes CLF's
internal requirements provide a stable source of iron ore demand.
CLF's ratings also reflect AK Steel's focus on higher value-added
steels, which have higher barriers to entry, fixed-price contracts,
premium pricing and are less susceptible to imports.
Rating concerns include CLF's high exposure to the automotive
market, which Fitch expects to be negatively impacted by the
coronavirus pandemic in 2020, resulting in significantly lower
shipments. Fitch expects the acquisition to increase end market
diversification and lower CLF's concentration in auto, which Fitch
views as credit positive; however, auto exposure will remain
relatively high. Fitch expects total debt/EBITDA to be
significantly elevated in 2020 but to trend lower over the ratings
horizon as the economy and steel fundamentals recover, in addition
to the acquisition of ArcelorMittal USA, which Fitch views as
deleveraging. Fitch forecasts CLF to have adequate liquidity and
the company has no material maturities until 2024. However, Fitch
views this as partially offset by expectations for significantly
lower EBITDA in 2020 and high interest and pension expenses.
including the assumption of $1.47 billion of pension/other
post-employment benefit (OPEB) obligations from ArcelorMittal USA.
KEY RATING DRIVERS
ArcelorMittal USA Acquisition: CLF announced it entered into a
definitive agreement to acquire substantially all of ArcelorMittal
USA's operations for approximately $1.4 billion. ArcelorMittal USA
will be acquired with a combination of $500 million of CLF's common
stock, $373 million of non-voting preferred stock and $505 million
in cash. Fitch views the acquisition as credit positive as it is
deleveraging, creates the opportunity for debt reduction and
results in increased size and scale and end market diversification.
Upon closing of the acquisition, CLF will be the largest
flat-rolled steel producer and largest iron ore pellet producer in
North America.
The transaction is also expected to improve liquidity due to an
increased ABL borrowing base. Fitch believes total debt/operating
EBITDA could trend to 3.5x or below by YE 2022 if CLF utilizes
excess cash to reduce debt.
Lower Concentration in Auto: Approximately 66% of AK Steel's 2019
sales were to the automotive market whereas roughly 27% of
ArcelorMittal USA's 2019 sales were to the automotive market. Fitch
views the increased end market diversification and reduced
concentration in auto positively. However, CLF will still have
relatively high auto exposure pro forma the acquisition and Fitch
believes auto demand will decline significantly in 2020 resulting
in significantly lower EBITDA generation and elevated leverage.
AK Steel is one of a few North American steel producers capable of
producing some of the most sophisticated grades of advanced
high-strength steels and value-added stainless-steel products, and
the only producer of non-oriented electrical steel, a critical
component of hybrid/electric vehicles' motors. AK Steel also
produces steel grades critical to automotive light-weighting steel
trends and is well positioned longer term to benefit from an auto
recovery and the transition to electric cars.
AK Steel Merger: CLF consummated a merger with its second-largest
iron ore pellet customer AK Steel on March 13, 2020, in which AK
Steel became CLF's wholly owned subsidiary. CLF's debt outstanding
increased by approximately $2.24 billion in 1Q20, and as part of
the merger, CLF assumed significant pension obligations of AK
Steel. However, on a normalized basis, Fitch would view the
transaction as relatively leverage-neutral, with additional
earnings offsetting the increase in debt.
The transaction created an integrated steel producer that is more
than 100% self-sufficient in iron ore, resulting in the ability to
continue to make third-party iron ore pellet shipments. Fitch views
the transaction positively, as it expands CLF's customer base,
provides a captive source of demand for a portion of its iron ore
and creates the opportunity for synergies.
Liquidity/Debt Maturity Profile: As of June 30, 2020, CLF had cash
and cash equivalents of $74 million and $904 million available
under its $2 billion ABL credit facility due 2025. CLF issued
$1.075 billion in secured notes in 2Q20, of which $736 million was
used to reduce previously outstanding debt and $120 million is
intended to be used to finance the construction of its HBI
production plant, resulting in $219 million of additional
liquidity. Fitch anticipates CLF's ABL credit facility could
increase to roughly $3.5 billion due to the increase in the
borrowing base following the acquisition of the ArcelorMittal USA
assets which Fitch views positively.
As a result of the coronavirus pandemic's impact on operations, CLF
announced it plans to suspend future dividends and has the ability
to defer capex by approximately $200 million. Fitch views the
marginal increase in debt as offset by improved liquidity to
weather a period of weak demand. Fitch believes CLF will use excess
cash to reduce borrowings under its ABL credit facility as market
conditions improve, as evidenced by its $250 million reduction in
2Q20.
Vertically Integrated Business Model: CLF's merger with AK Steel
created a vertically integrated steel producer self-sufficient in
iron ore, which Fitch expects to improve steel margins and provide
the opportunity for synergies. Following the close of the
ArcelorMittal USA acquisition, CLF will have roughly 17 million
tons of additional capacity. The transaction creates the
opportunity for further synergies and additional operational
flexibility.
HBI Strategy: EAF steel producers have been taking market share
from blast furnace producers in the U.S. As EAF steel producers
expand into higher value-added steel products, they will require a
higher quality, iron ore-based metallic, such as HBI, to produce
higher quality steel. CLF's strategy is to become a critical
supplier of HBI to EAFs, and as part of that strategy, began
construction on its Toledo HBI plant.
CLF expects to spend approximately $1 billion to construct its HBI
construction plant, of which, $894 million was spent as of June 30,
2020. CLF expects construction of the HBI plant to be completed in
4Q20, and expects it to have annual capacity of 1.9 million tonnes
once fully operational. HBI can also be used internally by AK
Steel's and ArcelorMittal USA's blast furnaces to improve
productivity.
Strong Operational Ties: Fitch equalized the IDRs of CLF and AK
Steel given the vertical integration between the entities, which
results in strong operational and strategic ties. Fitch believes AK
Steel will continue to account for a meaningful portion of CLF's
iron ore production. Fitch views CLF's financial performance as
linked to AK Steel's, as the steel and manufacturing segment will
account for the majority of sales of the combined company. Certain
of the CLF notes benefit from guarantees from AK Steel and some
subsidiaries providing legal ties between the entities. Fitch
believes additional borrowing will be at the CLF level and expects
the remaining AK Steel debt to be redeemed.
DERIVATION SUMMARY
CLF is comparable with EAF long steel producer Commercial Metals
Company (BB+/Stable) in terms of annual steel shipments, although
has less favorable credit metrics. CLF is smaller and less
diversified compared with integrated steel producer United States
Steel Corporation (B-/Negative) and globally diversified steel
producer ArcelorMittal S.A. (BB+/Negative). CLF is smaller in terms
of annual shipments and has less favorable credit metrics compared
with EAF producer Steel Dynamics, Inc. (BBB/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
-- CLF closes the acquisition of ArcelorMittal USA late in 4Q20;
-- Steel shipments decline significantly in 2020, recover in 2021
and approach approximately 16.5 million tons in 2023;
-- Capex of approximately $400 million in 2020 then roughly $500
million per year thereafter;
-- No dividends in 2020 after 1Q20, dividend reinstated in 2021;
-- No additional acquisitions or share repurchases through the
ratings horizon.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that CLF would be reorganized as a
going-concern (GC) in bankruptcy rather than liquidated. The GC
EBITDA reflects the company as currently constituted. Fitch has
assumed a 10% administrative claim and assumed the ABL credit
facility is 80% drawn in the recovery analysis.
GC Approach:
Fitch has assumed a bankruptcy scenario exit GC EBITDA of $900
million. The GC EBITDA estimate is reflective of a midcycle
sustainable EBITDA level upon which Fitch bases the enterprise
valuation.
The GC EBITDA estimate compares with a combined company EBITDA of
$1.155 billion in 2018 and combined company EBITDA of $937 million
in 2016. The combined EBITDA calculation includes CLF's iron ore
sales to AK Steel and is a straight addition (no synergies, for
example). Fitch's GC EBITDA estimate is on the lower end to reflect
CLF's high exposure to the cyclical automotive market and the
cyclical and volatile nature of steel prices.
Fitch generally applies EBITDA multiples that range from 4.0x-6.0x
for metals and mining issuers given the cyclical nature of
commodity prices. Fitch has applied a 5.0x multiple to the GC
EBITDA estimate to calculate a post-reorganization enterprise value
of $4.05 billion after an assumed 10% administrative claim. The
5.0x multiple compares with CLF's 5.6x acquisition multiple based
off AK Steel's LTM-adjusted EBITDA as of Sept. 30, 2019.
The allocation of value in the liability waterfall results in a
Recovery Rating (RR) of 'RR1' for the first-lien secured ABL credit
facility and the first-lien secured notes, which results in a 'BB'
rating; an 'RR5' for the CLF senior unsecured guaranteed notes,
which results in a 'B-' rating and an 'RR6' for the CLF unsecured
notes not benefitting from guarantees; the AK Steel guaranteed
unsecured notes and the CLF convertible notes resulting in a 'CCC+'
rating. The unsecured convertible notes and unsecured 2040 notes do
not benefit from guarantees and are therefore subordinated in the
recovery waterfall
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Total debt/EBITDA sustained below 3.5x;
-- Acquisition of ArcelorMittal USA operations have closed and
total debt/EBITDA is sustained below 4.0x;
-- Expectation of sustained positive FCF allocated toward gross
debt repayment.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total debt/EBITDA sustained above 4.5x;
-- Acquisition of ArcelorMittal USA operations are closed and
total debt/EBITDA sustained above 5.0x;
-- Weaker than expected auto demand, opportunistic capital
spending and/or slower than anticipated economic recovery resulting
in sustained negative FCF;
-- Deteriorating liquidity position.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of June 30, 2020, CLF had $73.7 million in
cash and cash equivalents, and $903.6 million available under its
$2 billion ABL credit facility due 2025. The ABL credit facility
matures in 2025, or 91 days prior to the stated maturity date of
any portion of existing debt if the aggregate amount of existing
debt that matures on the 91st day is greater than $100 million. The
ABL credit facility is subject to a springing 1.0x minimum
fixed-charge coverage covenant when availability is less than the
greater of (i) 10% of the lesser of (a) the maximum ABL amount
(currently $2 billion) and (b) the borrowing base; and (ii) $100
million. CLF suspended its dividend and has no material maturities
until 2024, but it has pension expense obligations.
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
CONNECTING CULTURES: Seeks to Hire Steinhilber Swanson as Counsel
-----------------------------------------------------------------
Connecting Cultures Inc. seeks authority from the U.S. Bankruptcy
Court for the Eastern District of Wisconsin to hire Steinhilber
Swanson LLP as its counsel.
The services Steinhilber will render are:
a. preparing bankruptcy schedules and statements;
b. assisting in preparing a plan of reorganization and
attendant negotiations and hearings;
c. preparing and reviewing pleadings, motions and
correspondence;
d. appearing at and being involved in various proceedings
before the court;
e. handling case administration tasks and dealing with
procedural issues;
f. assisting Debtor with the commencement of operations,
including the 341 meeting and monthly reporting requirements; and
g. analyzing claims and prosecuting claim objections.
The hourly rates of attorneys and paraprofessionals currently range
from $100 to $525.
Paul Swanson, Esq., a member of Steinhilber Swanson, assured the
court that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Paul G. Swanson, Esq.
Steinhilber Swanson LLP
107 Church Avenue
Oshkosh, WI 54901
Phone: 920-235-6690
Fax:920-426-5530
About Connecting Cultures Inc.
Connecting Cultures Inc. is a Wisconsin corporation that provides
translation services to medical patients in Northeast Wisconsin. It
specializes in translating Spanish, Hmong, and Somali to English.
Connecting Cultures services medical providers in several counties
in Northeast Wisconsin, including Prevea Medical Group, Managed
Health Services of Wisconsin, Catalpa Health, Aurora Sports
Medicine, ThedaCare, Baycare Physician Partners, Neurosciences
Group, and Valley Eye Associates, among others. The Debtor filed a
voluntary petition for relief under chapter 11 of the Bankruptcy
Code (Bankr. E.D. Wis. Case No. 20-26091) on September 4, 2020,
listing under $1 million in both assets and liabilities.
Paul G. Swanson of Steinhilber Swanson LLP is the counsel for the
Debtor.
COSMOLEDO LLC: Maison Kayser's U.S. Baking License Up for Auction
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Steven Church of Bloomberg News reports that the right to use the
artisanal French baking process of Maison Kayser in the U.S. will
be part of a bankruptcy court auction next month, when the brand;s
American license holder goes on sale. The lead bidder in the
auction is Aurify Brands, which recently bought competitor Le Pain
Quotidien as part of that company's bankruptcy. Aurify has not yet
said whether it will take over the Maison Kayser licensing
agreement, or simply bid on the baking hardware and New York
shops.
About Cosmoledo LLC
Cosmoledo, LLC and affiliates own and operate 16 fine casual bakery
cafes in New York City under the trade name "Maison Kayser." Maison
Kayser, a global brand, is an authentic artisanal French
boulangerie that has been doing business in New York since 2012.
For more information, visit https://maison-kayser-usa.com/
Cosmoledo, LLC, and its affiliates, including Breadroll, LLC,
sought Chapter 11 protection (Bankr. S.D.N.Y Lead Case No.
20-12117) on Sept. 10, 2020.
In the petitions were signed by CEO Jose Alcalay, the Debtors were
estimated to have assets in the range of $10 million to $50
million, and $50 million to $100 million in debt.
The Debtors tapped Mintz & Gold LLP as their bankruptcy counsel,
and CBIZ Accounting, Tax and Advisory of New York LLC as their
financial advisor, accountant and consultant. Donlin Recano & Co.,
Inc. -- https://www.donlinrecano.com/Clients/mk/Index -- is the
claims agent.
CYTODYN INC: All Four Proposals Passed at Annual Meeting
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CytoDyn Inc. held its Annual Meeting on Sept. 30, 2020, at which
the stockholders:
(a) elected Scott A Kelly, M.D., Nader Z. Pourhassan, Ph.D,
Alan P. Timmins, Jordon G. Naydenov, and Samir R. Patel,
M.D. as directors, each for a term that ends at the
Company's 2021 annual meeting of stockholders;
(b) approved the CytoDyn Inc. Amended and Restated 2012 Equity
Incentive Plan;
(c) ratified the selection of Warren Averett, LLC as the
Company's independent registered public accounting firm
for the fiscal year ending May 31, 2021; and
(d) approved, on an advisory basis, the compensation of the
named executive officers as disclosed in the Proxy
Statement under the caption "Executive Compensation".
About CytoDyn Inc.
Headquartered in Vancouver, Washington, CytoDyn Inc. --
http://www.cytodyn.com-- is a late-stage biotechnology company
focused on the clinical development and potential commercialization
of leronlimab (PRO 140), a CCR5 antagonist to treat HIV infection,
with the potential for multiple therapeutic indications.
CytoDyn reported a net loss of $124.40 million for the year ended
May 31, 2020, compared to a net loss of $56.19 million for the year
ended May 31, 2019. As of May 31, 2020, the Company had $50.51
million in total assets, $52.99 million in total liabilities, and a
total stockholders' deficit of $2.48 million.
Warren Averett, LLC, in Birmingham, Alabama, the Company's auditor
since 2007, issued a "going concern" qualification in its report
dated Aug. 14, 2020, citing that the Company incurred a net loss
for the year ended May 31, 2020 and has an accumulated deficit of
approximately $354,711,000 through May 31, 2020, which raises
substantial doubt about its ability to continue as a going concern.
CYTODYN INC: Registers 25M Shares Under 2012 Incentive Plan
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Cytodyn Inc. filed a Form S-8 registration statement with the
Securities and Exchange Commission to register an additional
25,000,000 shares of common stock, par value $0.001 per share, to
be issued under the Amended and Restated 2012 Equity Incentive
Plan, pursuant to General Instruction E on Form S-8. Following the
filing of the New Registration Statement, there will be an
aggregate of 50,000,000 shares of Common Stock registered to be
issued under the A&R 2012 Plan. A full-text copy of the prospectus
is available for free at:
https://www.sec.gov/Archives/edgar/data/1175680/000119312520259946/d25832ds8.htm
About CytoDyn Inc.
Headquartered in Vancouver, Washington, CytoDyn Inc. --
http://www.cytodyn.com-- is a late-stage biotechnology company
focused on the clinical development and potential commercialization
of leronlimab (PRO 140), a CCR5 antagonist to treat HIV infection,
with the potential for multiple therapeutic indications.
CytoDyn reported a net loss of $124.40 million for the year ended
May 31, 2020, compared to a net loss of $56.19 million for the year
ended May 31, 2019. As of May 31, 2020, the Company had $50.51
million in total assets, $52.99 million in total liabilities, and a
total stockholders' deficit of $2.48 million.
Warren Averett, LLC, in Birmingham, Alabama, the Company's auditor
since 2007, issued a "going concern" qualification in its report
dated Aug. 14, 2020, citing that the Company incurred a net loss
for the year ended May 31, 2020 and has an accumulated deficit of
approximately $354,711,000 through May 31, 2020, which raises
substantial doubt about its ability to continue as a going concern.
D & D CORPORATION: Seeks Approval to Hire Bankruptcy Attorney
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D & D Corporation seeks authority from the U.S. Bankruptcy Court
for the District of Puerto Rico to hire Juan Bigas-Valedon, Esq.,
an attorney practicing in Ponce, P.R., to handle its Chapter 11
case.
Mr. Bigas-Valedon will be paid at the rate of $250 for his services
and will receive reimbursement for work-related expenses incurred.
The retainer fee is $5,000.
Mr. Bigas-Valedon disclosed in court filings that he is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The counsel can be reached through:
Juan C. Bigas-Valedon, Esq.
P.O. Box 7011
Ponce, PR 00732-7011
Tel: 259-1000
Fax: 842-4090
About D & D Corporation
D & D Corporation sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. D.P.R. Case No. 20-03339) on Aug. 26,
2020, listing under $1 million in both assets and liabilities.
Judge Edward A. Godoy oversees the case. Juan C. Bigas-Valedon,
Esq., serves as Debtor's legal counsel.
D & D CORPORATION: Seeks Court Approval to Hire Accountant
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D & D Corporation seeks authority from the U.S. Bankruptcy Court
for the District of Puerto Rico to hire Angel Torres Mercado, an
accountant practicing in Penuelas, P.R.
The services that will be provided by the accountant are as
follows:
a. close out Debtor's books as of the date of the filing of
its Chapter 11 case and open new books;
b. establish a new bookkeeping system to replace the system
used by Debtors;
c. prepare periodic statements of Debtor's operations as
required by the rules of the court; and
d. prepare and file Debtors' state and federal tax return for
the fiscal year which ended in the semester prior to the date of
the filing of the case;
e. prepare general ledger and disbursement register;
f. reconcile the account;
g. prepare certified interim financial statements as needed;
h. prepare annual financial statements and returns;
i. provide tax and management counseling; and
j. represent in taxes investigations.
Debtor will pay the accountant $200 per month for her services.
Ms. Torres disclosed in court filings that she is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Ms. Torres can be reached at:
Angel J. Torres Mercado
P.O. Box 131
Penuelas, PR 00624
Phone: (787) 836-5001
Email: eagleacc@yahoo.com
About D & D Corporation
D & D Corporation sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. D.P.R. Case No. 20-03339) on Aug. 26,
2020, listing under $1 million in both assets and liabilities.
Judge Edward A. Godoy oversees the case. Juan C. Bigas-Valedon,
Esq., serves as Debtor's legal counsel.
DELCATH SYSTEMS: Appoints Gerard Michel as Chief Executive Officer
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Delcath Systems, Inc.'s Board of Directors appointed Gerard Michel
as chief executive officer, effective Oct. 1, 2020. Mr. Michel
will also serve as a member of the Delcath Systems Board of
Directors. In his most recent role, Mr. Michel was the chief
financial officer and vice president of Corporate Development at
Vericel Corporation. Mr. Michel was a key member of the executive
team that successfully restructured Vericel enabling it to become a
commercial leader in the fields of advanced Cell Therapy and
specialty Biologics.
In addition to Mr. Michel's appointment as CEO, John Purpura, was
appointed as chief operating officer. Mr. Purpura's leadership and
operational excellence in areas of regulatory affairs,
manufacturing and distribution have been a critical component of
preparing Delcath for its planned New Drug Application (NDA)
resubmission to the FDA in mid-2021.
"Following an intensive process, the Board determined that Gerard
is the right leader for Delcath at this critical juncture," said
Dr. Roger Stoll, chairman, Delcath Systems. "He is uniquely
qualified to take on this role given his track record of success
and experience across therapeutics classes. Gerard's extensive
experience in strategy, operations, commercialization, business
development and capital markets will be a tremendous asset." Dr.
Stoll added, "We thank John for successfully guiding Delcath as
interim CEO over recent months. On behalf of the Board, I
congratulate him on his appointment to COO."
Mr. Michel commented, "I am excited to join the talented Delcath
team ahead of a transformational year as we prepare to report phase
3 FOCUS trial data in metastatic ocular melanoma (mOM) in early
2021. I am committed to leading the organization towards its goal
of making Melphalan/HDS the first product specifically labeled for
metastatic ocular melanoma patients, a population which currently
has limited therapeutic options."
Mr. Michel added, "Interventional oncology is a rapidly growing
segment of comprehensive oncology care. Within that segment
Melphalan/HDS is a clinically differentiated, high-value platform
with the potential to address multiple cancer indications of
high-unmet medical need. I look forward to building value both
through the successful commercialization of Melphalan/HDS in mOM
and initiating additional targeted clinical programs to expand the
market opportunity of this platform technology."
Mr. Michel joins Delcath Systems with over 30 years of experience
in the pharmaceutical and medical technology industries across
multiple functional areas. Prior to Delcath, he was chief
financial officer of Vericel since June 2014 where he was a key
member of the management team which integrated a transformative
acquisition and revised the company's business model from a
research focused company to a fully integrated, profitable
commercial business. Mr. Michel also served as chief financial
officer and Vice President, Corporate Development of Biodel from
November 2007 to May 2014, and chief financial officer and vice
president of Corporate Development of NPS Pharmaceuticals Inc. from
August 2002 to November 2007. Prior to that, Mr. Michel was a
Principal at Booz Allen and held a variety of commercial roles at
both Lederle Labs and Wyeth Labs. Mr. Michel holds a M.S in
Microbiology from the University of Rochester School of Medicine,
an M.B.A. from the Simon School of Business, and a B.S. in both
Biology and Geology from the University of Rochester.
Pursuant to an employment agreement dated as of Aug. 31, 2020
between the Company and Mr. Michel, the term of Mr. Michel's
employment began on Oct. 1, 2020. Under the Employment Agreement,
Mr. Michel will receive an annual base salary of $450,000, subject
to annual review by the Board's Compensation and Stock Option
Committee, and will be eligible to participate in the Company's
annual incentive plan with a target annual cash bonus equal to 50%
of his then-current base salary.
Inducement Grant Under NASDAQ Listing Rule 5635(c)(4)
The Company also announced the grant of an option award to Mr.
Michel, which was approved by the Board on Aug. 31, 2020 as an
inducement material to his entering employment with the Company in
accordance with NASDAQ Listing Rule 5635(c)(4). The inducement
award was approved subject to his commencement of employment with
the Company on Oct. 1, 2020 and consists of an option to purchase
up to 498,000 shares of the Company's common stock. The option
will be exercisable at a price of $11.67 per share (the closing
price on Oct. 1, 2020) as to the first 396,000 shares to vest, (ii)
1.5 times the closing trading price per share of the Company's
common stock on Oct. 1, 2020 as to the next 51,000 shares to vest
and (iii) 2.0 times the closing trading price per share of the
Company's common stock on Oct. 1, 2020 as to the remaining 51,000
shares to vest and will vest ratably over thirty-six months,
provided that he remains employed by Delcath on each vesting date.
About Delcath Systems
Headquartered in New York, NY, Delcath Systems, Inc. --
http://www.delcath.com-- is an interventional oncology company
focused on the treatment of primary and metastatic liver cancers.
The Company's lead product candidate, Melphalan Hydrochloride for
Injection for use with the Delcath Hepatic Delivery System, or
Melphalan/HDS, is designed to administer high-dose chemotherapy to
the liver while controlling systemic exposure and associated side
effects. In Europe, Melphalan/HDS is approved for sale under the
trade name Delcath CHEMOSAT Hepatic Delivery System for Melphalan.
Delcath Systems reported a net loss of $8.88 million for the year
ended Dec. 31, 2019, compared to a net loss of $19.22 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$14.21 million in total assets, $20.57 million in total
liabilities, and a total stockholders' deficit of $6.36 million.
Marcum LLP, in New York, the Company's auditor since 2018, issued a
"going concern" qualification in its report dated March 25, 2020
citing that the Company has a significant working capital
deficiency, has incurred significant recurring losses and needs to
raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
DELTA TOPCO: S&P Assigns 'B-' ICR Amid Warburg Pincus Acquisition
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S&P Global Ratings assigned its 'B-' issuer credit rating to Delta
Holdco LLC (dba Infoblox).
S&P said, "At the same time, we are assigning our 'B-' issue-level
rating and '3' recovery rating to its $1.49 billion first-lien
credit facility, consisting of a $200 million revolving credit
facility due in 2025 and $1.29 billion first-lien term loan due in
2027. We also are assigning our 'CCC' issue-level rating and '6'
recovery rating to the $455 million second-lien term loan due in
2028."
Infoblox, a provider of network automation and security solutions,
has entered into a definitive agreement to be acquired by Warburg
Pincus and Vista Equity Partners' Fund VII. The current owner,
Vista's Fund VI, will exit the investment.
The $3.36 billion purchase price will be funded with $1.75 billion
in debt and cash equity.
Delta Topco will also be the borrower of the debt.
S&P said, "Our rating reflects Infoblox's high financial leverage,
small scale and narrow focus in DDI and DNS security products, and
potential competition from larger companies with significant
resources (e.g., Microsoft and Cisco). Offsets include good FOCF in
fiscal year 2020 that we expect to continue into 2021, 82%
recurring revenue, net retention rates of about 108%, and
third-party recognition as the market leader in DDI.
"Although we expect leverage above 10x through fiscal 2022,
FOCF-to-debt metrics and meaningful FOCF support our 'B-' rating.
Infoblox will increase debt to $1.75 billion at close of the
transaction, from $730 million, and double its annual cash interest
expense to around $90 million to $100 million. Leverage at close
(as of July 2020) will rise to 13x from 5.6x. Despite the strong
revenue growth forecast in 2021, driven by Infoblox's customer
migration to its subscription product through the current refresh
cycle, minimal deleveraging is expected over the next 12 months
(mid-12x in 2021). The increased gross profits will be mostly
offset by higher sales and research and development (R&D) expenses
over the next 12 months. We expect moderation of these expenses in
2022, allowing EBITDA to increase more rapidly and leverage to
improve to the mid-10x area in 2022. Despite high leverage over the
next several years, we view FOCF-to-debt metrics favorably. We
estimate these to be in the mid-single-digit percentage area over
the same time frame. In addition, the scale of Infoblox's FOCF of
about $130 million for 2020 and forecast at about $110 million in
2021, in addition to its proposed $200 million revolver (undrawn at
close), provide sufficient resources whereby we do not view the
capital structure as unsustainable."
Infoblox's 2020 performance materially exceeded both management's
and S&P Global Ratings' pre-COVID-19 forecasts. Fiscal 2020 is an
inflection year regarding FOCF, generating $130 million after three
years of negative to break-even cash flow (negative $7 million in
2017, negative $0.2 million in 2018, and $1 million in 2019).
Infoblox's 25% revenue growth in 2020 was significantly higher than
both management's (12%) and S&P Global Ratings' (6%) forecasts.
Higher than expected bookings and revenue contributed to FOCF
beating management's forecast by $65 million and ours by $75
million. S&P said, "We attribute the strong revenue performance to
Infoblox's subscription pricing model, with customers preferring
this refresh option versus legacy hardware/license and maintenance
options. Under this pricing model (as well as its adoption of ASC
606 accounting standards in fiscal 2020), Infoblox recognizes about
50% of its multiyear contracts (typically three years) as term
license revenue, in addition to billing the full contract value up
front. We also note that while Infoblox continued to incur
restructuring-related expenses in the second half of fiscal 2020,
averaging approximately $1.3 million per quarter, these are
trending lower, from an average of $4.5 million per quarter in the
first half. This compares to $14 million in 2018 and $17 million in
2019."
Based on Infoblox's preliminary 2020 results, the implied
fourth-quarter 2020 results (May-July) indicate continued strong
bookings and revenue performance during the COVID-19 pandemic even
when adjusting for about $20 million of third-quarter delayed
revenue that was subsequently recognized in the fourth quarter.
Several factors contributed to this performance, which we believe
will continue to allow for good growth. S&P views network
management as a mission-critical function within organizations.
Infoblox's ability to win new customers was disrupted as
information technology network administrators were likely not
willing to replace the incumbent provider and potentially risk a
major disruption to their networks. But Infoblox realized strong
demand for its products among existing customers as they looked to
refresh into the next generation of products. In addition,
Infoblox's less than 10% of bookings exposure to at-risk industries
(retail, hospitality, transportation, oil and gas) and the size of
its end customers (typically over 10,000 employees, 62% of Fortune
1000 firms), limits the risk of business disruption.
S&P expects the transition to subscription pricing during the
current product refresh cycle to spike short-term revenue growth
rates and FOCF, which will normalize once it reaches a critical
mass. Prior to Infoblox's subscription product, its revenue was
subject to typical hardware refresh cycles. Revenue ramps up in
these cycles as next-generation products are released, with lower
revenue in subsequent years until the next versions are launched.
With older versions being "end-of-lifed", customers generally
upgrade or risk running hardware critical in ensuring the uptime of
network infrastructure no longer supported by the vendor.
Infoblox has been offering a subscription pricing model for a few
years. However, due to product refresh cycles (about three years)
and customers wanting to extract the full value out of previous
purchases, customers have only recently begun migrating en masse to
this product. This is accelerating revenue and EBITDA, due in part
to ASC 606 accounting standards. Under ASC 605, there was little
difference to Infoblox's revenue recognition between maintenance
bought under a perpetual license model and subscription, as both
were equally ratably recognized. Now, as customers migrate to
subscription, which contains a term license recognized like a
perpetual license due to the lower revenue base in the prior year
under the legacy maintenance model, revenue growth appears much
stronger than it might otherwise look. The 25% revenue growth in
2020 and expected 11% in 2021 are partly attributed to this
dynamic. S&P believes longer term growth rates will normalize in
the mid-single–digit percentages once Infoblox's customers have
migrated to the subscription product.
Infoblox estimates it is roughly 35% through the current refresh
cycle, with 82% of these customers adopting its subscription
products. Infoblox expects the cycle to finish by the end of fiscal
2022. The transition completed thus far has already reduced the
volatility that prior product refresh cycles experienced, and we
expect it to make revenue, EBITDA, and FOCF performance more
predictable.
Additionally, 2020 FOCF benefits from the full value of the
subscription contract being collected up front. S&P said, "We view
this as atypical, as companies generally bill annually under
multiyear deals. Deferred balances are building up quicker than if
Infoblox were to bill annually. We expect the $100 million change
in deferred revenue in 2020 ($60 million in 2019) will decline over
time and eventually hit a steady state in the $30 million area in
2023. Attempting to normalize for the upfront cash collections for
purposes of a peer comparison, we estimate the change in deferred
revenue in 2020 to be about $35 million. This would imply 2020 FOCF
of approximately $65 million. On a comparable basis, we expect 2021
FOCF of about $75 million."
S&P said, "The stable outlook on Delta Topco reflects S&P Global
Ratings' view of the company's good liquidity in 2020, which we
expect to continue after negative to break-even FOCF in 2017-2019,
and that its migration toward a subscription pricing model will
lead to more predictable revenue, EBITDA, and FOCF performance. We
expect the company will maintain its leadership position in the DDI
market and continue to increase its subscription-based offerings in
DDI and DNS security.
"We could consider a higher rating over the long term if Infoblox
reduces leverage through positive FOCF generation and debt
repayment, resulting in sustained leverage below the mid-7x area.
This could occur if Infoblox continues its growth as customers'
networks become larger, with more devices needing to be connected
(driven by the growth in mobile devices along with the internet of
things), and as enterprise-grade solutions are needed to
effectively administer their increasing complexity.
"We could lower the rating if the company faces lower-than-expected
renewal rates and product sales due to increasing competition and
pricing pressure in its core DDI offering, or its
subscription-based model cannot further expand its revenue base,
such that FOCF becomes materially weaker and we view the capital
structure as unsustainable."
DENTALCORP HEALTH: S&P Affirms 'B-' ICR, Outlook Negative
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S&P Global Ratings affirmed its 'B-' rating on Dentalcorp Health
Services ULC.
S&P's negative outlook reflects its view that the dental industry
remains susceptible to further demand declines.
Dentalcorp has reduced costs and preserved cash during the
pandemic, thereby reducing risk for a potential downgrade.
Temporary clinic closures hurt second-quarter revenues, which were
down 73% compared to the same period last year. They bottomed out
in April, having declined 95% compared to April 2019. As provinces
started to reopen and elective dental procedures resumed in May,
Dentalcorp saw an uptick in demand and in July recorded revenues
close to 85% of revenues a year prior.
Dentalcorp reduced variable costs through furloughs, and it reduced
advertising and other general and administrative expenses. It also
reduced growth initiatives and capital expenditure (capex) to
preserve cash.
The company had about $196 million cash on its balance sheet and
access to its full $40 million revolver on June 30, 2020. S&P
expects Dentalcorp to have adequate liquidity to cover its fixed
costs, including its financial obligations.
Although S&P now projects Dentalcorp's performance could rebound to
2019 levels by 2021 given the recent improvement, the longer-term
effects of the pandemic remain uncertain. While revenues ramped up
in the summer after clinics reopened and patient volumes increased,
S&P believes after Dentalcorp fulfills the pent-up demand from
closures earlier, there is still a risk to future demand amid the
pandemic. Until there is a vaccine or cure for COVID-19, the
longer-term effects of any potential change in patient behavior
will remain uncertain, and some patients may choose to only seek
care when necessary. Thus, demand for preventive dental care could
fluctuate over the near term.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "Our negative outlook reflects our view that the dental
industry remains susceptible to further demand declines from the
ongoing spreading of coronavirus cases.
"We would consider a downgrade if performance weakens for a
prolonged period, leading to sustained negative free cash flow.
This scenario could result in the inability to refinance debt as it
comes due, or in the case of more severe cash flow deficits, a
liquidity crisis.
"We could revise the outlook to stable if we become more confident
that same-store visits have stabilized, resulting in leverage of
about 10x, similar to pre-pandemic levels."
DIOCESE OF CAMDEN: Case Summary & 20 Largest Unsecured Creditors
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Debtor: The Diocese of Camden, New Jersey
631 Market Street
Camden, NJ 08102
Business Description: The Diocese of Camden, New Jersey
is a nonprofit religious corporation
organized pursuant to Title 16 of
the Revised Statutes of New Jersey.
The Diocese is the secular legal
embodiment of the Roman Catholic Diocese of
Camden, a juridic person recognized under
Canon Law.
Chapter 11 Petition Date: October 1, 2020
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 20-21257
Judge: Hon. Jerrold N. Poslusny Jr.
Debtor's Counsel: Richard D. Trenk, Esq.
Robert S. Roglieri, Esq.
MCMANIMON, SCOTLAND & BAUMANN, LLC
75 Livingston Avenue
Second Floor
Roseland, NJ 07068
Tel: 973-622-1800
Email: rtrenk@msbnj.com
rroglieri@msbnj.com
Debtor's
Special
Counsel: COOPER LEVENSON, P.A.
Debtor's
Special
Counsel: DUANE MORRIS LLP
Debtor's
Financial
Advisor: EISNERAMPER, LLP
Debtor's
Claims &
Noticing
Agent: PRIME CLERK LLC
https://cases.primeclerk.com/camdendiocese
Total Assets: $53,575,365
Total Liabilities: $25,727,209
The petition was signed by Reverend Robert E. Hughes, vicar
general/vice president.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/7VTAD3I/The_Diocese_of_Camden_New_Jersey__njbke-20-21257__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. PNC Bank, NA Line of Credit $22,807,500
PO Box 1030
Oshtemo, MI 49009
Grace Anselmo
Tel: 215-585-1074
Email: grace.anselmo@pnc.com
2. PNC Bank Paycheck $2,372,000
Attn: Business Banking Protection
222 Delaware Avenue Program
Wilmington, DE 19801 Term Note
Grace Anselmo
Tel: 215-585-1074
Email: grace.anselmo@pnc.com
3. Immaculate Conception Trade Debt $96,465
Seminary
400 South Orange Avenue
South Orange, NJ 07079
Ewa Bracko
Tel: 973-761-9575
4. St. Mary's Villa Trade Debt $60,560
220 St Mary Drive
Cherry Hill, NJ 08003
Tel: 856-874-5400
5. Porter & Curtis LLC Trade Debt $25,772
225 State Road
Media, PA 19063
Bill Curtis
Tel: 610-891-9850
Email: bcurtis@portercurtis.com
6. New Jersey Catholic Trade Debt $24,360
Conference
149 North Warren Street
Trenton, NJ 08608
Deshawn Burnett
Tel: 609-989-1120
Email: deshawn.burnett@njcatholic.org
7. Matthews International Corp. Trade Debt $22,865
PO Box 536621
Pittsburgh, PA 15253-5908
Tel: 877-333-6438
8. Guest House Inc. Trade Debt $19,427
1601 Joslyn Road
PO Box 293
Lake Orion, MI 48361
Tel: 800-626-6910
Email: contact@gueshouse.org
9. PSE&G Trade Debt $16,451
PO Box 14444
New Brunswick, NJ
08906-4444
Vilna Gaston, Esq.
Tel: (973) 430-7000
Email: vilna.gaston@pseg.com
10. All Year Landscaping Trade Debt $14,600
145 W. Grant Avenue
Vineland, NJ 08360
11. St. Mary's Center Trade Debt $14,012
210 St Mary's Drive
Cherry Hill, NJ 08003
Tel: 856-874-5400
12. Telesystems Trade Debt $13,121
Block Line Systems
PO Box 826590
Philadelphia, PA 19182-6590
13. Northeast Mechanical Trade Debt $12,673
Services
402 Airport Drive
Williamstown, NJ 08094
Nick Edelman III
Tel: 856-262-2305
14. Bishop McHugh Trade Debt $12,000
Regional School
2221 North Route 9
Cape May Court
House, NJ 08210
Tom Maguire
Email: principal@bishopmchugh.com
15. PNC Bank Credit Card $11,167
c/o Zak Thomas, Esq.
501 Grant Street, Suite 200
Pittsburgh, PA
15219-4413
Zak Thomas, Esq.
Tel: 412-562-1614
Email: zakarij.thomas@bipc.com
16. Kiva Trade Debt $11,105
PO Box 246
Thorofare, NJ 08086
Tel: 877-777-5482
Email: tyler@kivafresh.com
17. Syndicate Strategies Trade Debt $10,450
1489 Baltimore Pike
Bldg 100, Suite 101
Springfield, PA 19064
Tel: 610-565-9640
18. Servants of the Trade Debt $9,835
Paraclete
Attn: Accounting
PO Box 539
Cedar Hill, MO 63016
Tel: 636-748-1933
19. Servicemaster TBS Div. Trade Debt $8,883
73 Coolidge Avenue
Bellmawr, NJ 08031
Tel: 856-931-3300
20. John Hacala Trade Debt $8,600
Primrose Unit 119
650 S. Dodon Road
Rogers, AR 72758
DIOCESE OF CAMDEN: Enters Ch. 11 Due to Losses, Payments to Victims
-------------------------------------------------------------------
The Diocese of Camden has filed for bankruptcy, citing revenue
losses because of the millions it paid out to clergy abuse victims
and the pandemic.
The filing on Oct. 1, 2020, comes after New Jersey eased its civil
statute of limitations in 2019 to make it easier for victims of
alleged sexual abuse at the hands of clergy to sue for damages.
"This year has seen historic difficulties in South Jersey, in our
country and across the world due to the effects of the COVID-19
pandemic to which our diocese has not been immune. The loss of life
and the fear of sickness from viral exposure have weighed heavily
on each of us. These pandemic ripples have taken many forms, among
which has been its effect on the finances of our diocese," the Most
Reverend Dennis J. Sullivan D.D., said in a statement.
"The effects of the pandemic, which have curtailed our revenue and
deeply impacted our parishioners and neighbors, were further
compounded by the over $8 million we have paid out this year
through the New Jersey Independent Victims Compensation Program to
victims of clergy abuse, money which we have had to borrow.
Additionally, the recent repeal of the statute of limitations has
resulted in over fifty lawsuits being filed against the diocese
involving long-ago claims of abuse. If it were just the pandemic,
or just the costs of the Victims Compensation Program, we could
likely weather the financial impact; however, the combination of
these factors has made that impracticable. Because of this, today I
announce that the Diocese of Camden is filing for reorganization
under Chapter 11 of the United States Bankruptcy Code."
About Catholic Diocese of Camden
The Roman Catholic Diocese of Camden is a Roman Catholic diocese of
the Latin Church in New Jersey, United States, consisting of 62
parishes and about 475,000 Catholics in the southern New Jersey
counties of Atlantic, Camden, Cape May, Cumberland, Gloucester, and
Salem.
The Diocese of Camden sought Chapter 11 protection (Bankr. D.N.J.
Case No. 20-21257) on Oct. 1, 2020. The case is pending before the
Honorable Jerrold N. Poslusny, Jr.
The Debtor tapped McManimon, Scotland & Baumann, LLC, as counsel.
Prime Clerk LLC is the claims agent.
DIOCESE OF ROCKVILLE: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: The Roman Catholic Diocese of Rockville Centre, New York
Diocese of Rockville Centre
50 North Park Avenue
Rockville Centre, NY 11570
Business Description: The Roman Catholic Diocese of Rockville
Centre, New York is the seat of the Roman
Catholic Church on Long Island. The Diocese
has been under the leadership of Bishop John
O. Barres since February 2017. The State of
New York established the Diocese as a
religious corporation in 1958. The Diocese
is one of eight Catholic dioceses in New
York, including the Archdiocese of New York.
The Diocese's total Catholic population is
approximately 1.4 million, roughly half of
Long Island's total population of 3.0
million. The Diocese is the eighth
largest diocese in the United States when
measured by the number of baptized
Catholics.
Chapter 11 Petition Date: September 30, 2020
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 20-12345
Judge: Hon. Shelley C. Chapman
Debtor's Counsel: Corinne Ball, Esq.
JONES DAY
250 Vesey Street
New York, NY 10281
Tel: (212) 326-3939
Email: cball@jonesday.com
Debtor's
Restructuring
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
Debtor's
Corporate
Communication
Consultant: SITRICK AND COMPANY, INC.
Debtor's
Claims &
Noticing
Agent: EPIQ CORPORATE RESTRUCTURING, LLC
https://dm.epiq11.com/case/rdrockville/dockets
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $100 million to $500 million
The petition was signed by Thomas Renker, chief operating officer
and general counsel.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/SPUGFYQ/The_Roman_Catholic_Diocese_of__nysbke-20-12345__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 35 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Jeff Anderson & Associates, P.A. Litigation Undetermined
55 West 39th Street, 11th Floor
New York, NY 10018
Attn: Jeffrey R. Anderson
Tel: 646-759-2551
Email: Jeff@AndersonAdvocates.com
2. PFAU Cochran Vertetis Amala PLLC Litigation Undetermined
403 Columbia Street Suite 500
Seattle, WA 98104
31 Hudson Yards, 11th Floor
Suite 36
New York, NY 10001-2170
Attn: Michael T. Pfau
Tel: 206-462-4335
Fax: 206-623-3624
Email: michael@pcvalaw.com
3. Marsh Law Firm PLLC Litigation Undetermined
151 East Post Road Suite 102
White Plains, NY 10601
Attn: James A. Marsh
Tel: 212-372-3030
Fax: 833-210-3336
Email: jamesmarsh@marsh.law
4. Simmons Hanly Conroy LLC Litigation Undetermined
112 Madison Avenue, 7th Floor
New York, NY 10016
Attn: Paul J. Hanly, Jr.
Tel: 212-784-6401
Fax: 212-213-5949
Email: phanly@simmonsfirm.com
5. Certain & Zilberg PLLC Litigation Undetermined
488 Madison Avenue 20th Floor
New York, NY 10022
Attn: Gary Certain
Tel: 212-687-7800
Email: gcertain@certainlaw.com
6. Slater Slater Schulman LLP Litigation Undetermined
488 Madison Avenue 20th Floor
New York, NY 10022
Attn: Adam Slater
Tel: 212-922-0906
Email: aslater@sssfirm.com
7. Herman Law Litigation Undetermined
434 W. 33rd Street, Penthouse
New York, NY 10001
Attn: Jeff Herman
Tel: 212-390-0100
Email: jherman@hermanlaw.com
8. Michael G. Dowd Litigation Undetermined
1981 Marcus Avenue, Suite 200
Lake Success, NY 11042
Attn: Michael G. Dowd
Tel: 212-751-1640
Fax: 212-872-1777
Email: michaelgdowd@gmail.com
9. Sweeney, Reich & Bolz, LLP Litigation Undetermined
1981 Marcus Avenue, Suite 200
Lake Success, NY 11042
Attn: Gerard J. Sweeney
Tel: 718-459-9000
Email: cxuereb@srblawfirm.com
10. Law Offices of Litigation Undetermined
Mitchell Garabedian
100 State Street, 6th Floor
Boston, MA 02109
Attn: Mitchell Garabedian
Tel: 617-523-6250
Email: mgarabedian@garabedianlaw.com
11. Merson Law PLLC Litigation Undetermined
150 East 58th Street, 34th Floor
New York, NY 10155
Attn: Jordan K. Merson
Tel: 212-603-9100
Fax: 347-441-4171
Email: jmerson@mersonlaw.com
12. James, Vernon & Weeks, P.A. Litigation Undetermined
1626 Lincoln Way
Coeur D'Alene, ID 83815
Attn: Leander L. James IV
Tel: 208-667-0683
Fax: 208-664-1684
Email: james@jvwlaw.net
13. Patrick Noaker, Litigation Undetermined
Noaker Law Firm, LLC
1600 Utica Avenue S, 9th Floor
St. Louis Park, MN 55416
Attn: Patrick Noaker
Tel: 952-491-6798
Email: patrick@noakerlaw.com
14. Tolmage, Peskin, Harris, Litigation Undetermined
& Falick
20 Vesey St., Suite 700
New York, NY 10007
Attn: Stephan H. Peskin
Tel: 212-964-1390
Fax: 212-608-4959
Email: peskin@tolmagepeskinlaw.com
15. Phillips & Paolicelli, LLP Litigation Undetermined
747 Third Avenue, 6th Floor
New York, NY 10027
Attn: Diane Paolicelli
Tel: 212-388-5100
Fax: 212-388-5100
Email: dpaolicelli@p2law.com
16. Dell & Dean PLLC Litigation Undetermined
1225 Franklin Avenue, Suite 450
Garden City, NY 11530
Attn: Joseph G. Dell
Tel: 516-880-9700
Fax: 516-880-9707
Email: JTipa@d2triallaw.com
17. Betti & Associates Litigation Undetermined
30 Wall Street, 8th Floor
New York, NY 10005
Attn: Mitchell M. Betti, Esq.
Tel: 646-895-0939
Email: mbettilaw@gmail.com
18. Desimone & Associates, LLC Litigation Undetermined
745 Fifth Avenue, Suite 500
New York, NY 10151
Attn: Ralph Desimone
Tel: 646-776-7425
Email: rdesimone@dlaw.net
19. Gair, Gair, Conason, Litigation Undetermined
Rubinowitz, Bloom,
Hershenhorn, Steigman & Mackauf
80 Pine Street, 34th Floor
New York, NY 10005
Attn: Rachel L. Jacobs &
Peter Saghir
Tel: 212-943-1090
Fax: 212-425-7513
Email: rjacobs@gairgair.com;
psaghir@gairgair.com
20. Janet, Janet & Suggs LLC Litigation Undetermined
4 Reservoir Circle, Suite 200
Baltimore, MD 21208
Attn: Andrew S. Janet
Tel: 410-653-3200
Fax: 410-653-9030
Email: sjanet@jjsjustice.com
21. Levy Konigsberg, LLP Litigation Undetermined
800 Third Avenue, 11th Floor
New York, NY 11231
Attn: Helene M. Weiss, & Vara Lyons
Tel: 212-605-6200
Email: vlyons@levylaw.com;
22. Rheingold Giuffra Ruffo & Litigation Undetermined
Plotkin LLP
551 Fifth Avenue 29th Floor
New York, NY 10016
Attn: Thomas P. Giuffa
Tel: 212-684-1880
Email: tgiuffra@Rheingoldlaw.com
23. The Law Office of Joshua Litigation Undetermined
W. Skillman
111 John Street, Suite 1050
New York, NY 10038
Attn: Joshua W. Skillman
Tel: 212-785-0808
Fax: 212-785-0177
Email: osh@skillmanlaw.nye
24.Buttafuoco & Associates, PLLC Litigation Undetermined
144 Woodbury Road
Woodbury, NY 11797
Attn: James S. McCarthy &
Ellen Buccholz
Tel: 516-746-81000
Email: jmccarthy@buttafuocolaw.com
25. Hach Rose Schirippa & Litigation Undetermined
Cheverie
112 Madison Avenue, 10th Floor
New York, NY 10016
Attn: Michael Rose & Hillary Nappi
Tel: 212-213-8311
Email: mrose@hrsclaw.com; Hnappi@hrsclaw.com
26. Hamburger, Maxson, Yaffe & Litigation Undetermined
McNally, LLP
225 Broadhollow Road, Suite 301E
Melville, NY 11747
Attn: Richard Hamburger
David N. Yaffe, & Douglas
McNally
Tel: 631-694-2400
Fax: 631-694-1376
Email: hamburger@hmylaw.com;
dmcnally@hmylaw.com;
dyaffe@hmylaw.com
27. Hurley McKenna & Mertz P.C. Litigation Undetermined
33 N. Dearborn Street, Suite 1430
Chicago, IL 60602
Attn: Christopher Hurley, Evan
Smola, & Mark McKenna
Tel: 312-553-4900
Email: churley@hurley-law.com;
esmola@hurley-law.com;
mmckenna@hurley-law.com
28. Laura A. Ahearn, Esq. PLLC Litigation Undetermined
3075 Veteran's Memorial Hwy
Suite 200
Ronronkoma, NY 11779
Attn: Laura A. Ahearn
Tel: 631-320-5204
Email: lahearn@lauraahearn.com
29. Law Offices of Ronald Litigation Undetermined
J. Kim, PC
P.O. Box 318
Saratoga Springs, NY 12866
Attn: Ronald J. Kim
Tel: 518-581-8416
Email: ron@ronaldkimlaw.com
30. Parker Waichman LLP Litigation Undetermined
6 Harbor Drive
Port Washington, NY 11050
Attn: Brett Zkowski & Fred
Rosenthal
Tel: 516-466-6500
Email: zekowski@yourlawyer.com;
frosenthal@yourlawyer.com
31. Romano & Associates Litigation Undetermined
350 Old Country Road, Suite 205
Garden City, NY 11530
Attn: Michael J. Romano
Tel: 516-248-8880
Email: mjr@romanofirm.com
32. Russo, Karl, Widmaier & Litigation Undetermined
Cordano PLLC
400 Townline Road, Suite 170
Hauppage, NY 11788
Attn: Christopher Gerace
Tel: 631-265-7200
Fax: 631-265-7578
Email: cg@rkwclaw.com
33. Silberstein, Awad Litigation Undetermined
& Miklos, P.C.
600 Old Country Road, Suite 505
Garden City, NY 11530
Attn: Michael Lauterborn
Tel: 516-832-7777
Fax: 516-832-7877
Email: mlaw@ask4sam.net
34. Sullivan Papain Block Litigation Undetermined
McGrath & Cannavo P.C.
120 Broadway 18th Floor
New York, NY 10271
Attn: Eric K. Schwarz
Tel: 212-266-4116
Fax: 212-266-4141
Email: Eschwarz@triallaw1.com
35. The Zalkin Law Firm, P.C. and Litigation Undetermined
Barasch McGarry Salzman & Penson
11 Park Place
New York, NY 10007
Attn: Bruce Kaye,
Dominique Penson,
Elizabeth Cate,
Devin Storey,
Irwin Zalkin,
Dana Cohen
TEl: 212-385-8000
Fax: 212-385-7845
Email: elizabeth@zalkin.com
dms@zalkin.com
irwin@zalkin.com
DIOCESE OF ROCKVILLE: Sexual Abuse Suits Lead to Chapter 11 Filing
------------------------------------------------------------------
Larry McShane of Daily News reports that the beleaguered Diocese of
Rockville Centre, facing dozens of sex abuse lawsuits, filed for
Chapter 11 bankruptcy Thursday, October 1, 2020.
The Long Island Catholic diocese -- one of the largest in the
country -- said the bankruptcy filing was necessary to move forward
while managing litigation costs, settlements with sexual abuse
survivors and disputes with its insurers.
The cases against them have been mounting ever since the state
Child Victims Act passed last year, opening the legal window for
victims to sue the Catholic Church and other institutions.
"We believe that this process offers the only way to ensure a fair
and equitable outcome for everyone involved, including abuse
survivors whose compensation settlements will be resolved by the
courts," said Bishop John Barres, head of the diocese. "This
decision was not made lightly."
Barres said the diocese's insurers failed to honor their
contractual obligations as the lawsuits increased, with close to
100 filed against Rockville Centre.
Three other New York state dioceses have already filed for Chapter
11, citing similar issues: Buffalo, Rochester and Syracuse.
"We carefully and prayerfully considered other alternatives, but
Chapter 11 was the only way to provide fair settlements to
survivors while continuing to be of service to the 1.4 million
Catholics ... in the Diocese of Rockville Centre," the bishop
said.
He also noted the steep drop in Sunday collection money due to the
COVID-19 crisis, with churches shuttered for an extended period.
The diocese typically generates roughly 40% of its annual revenue
from parishioners' donations.
Attorney Jeff Anderson, whose firm represents dozens of sexual
abuse accusers, quickly denounced the filing.
"We see the diocese's decision to declare bankruptcy as strategic,
cowardly and wholly self-serving," said Anderson. "At the heart of
these cases, we find a willful deceit on the diocese’s part —
persistent attempts to evade accountability and a concerted effort
to conceal information."
Gov. Cuomo signed the CVA into law in February 2019, and recently
extended the period for victims to file legal actions through Aug.
14, 2021.
About the Diocese of Rockville Centre
The Roman Catholic Diocese of Rockville Centre, New York is the
seat of the Roman
Catholic Church on Long Island. The Diocese has been under the
leadership of Bishop John O. Barres since February 2017. The State
of New York established the Diocese as a religious corporation in
1958. The Diocese is one of eight Catholic dioceses in New
York, including the Archdiocese of New York. The Diocese's total
Catholic population is
approximately 1.4 million, roughly half of Long Island's total
population of 3.0
million. The Diocese is the eighth largest diocese in the United
States when
measured by the number of baptized catholics.
The Roman Catholic Diocese of Rockville Centre, New York, filed a
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 20-12345) on Sept.
30, 2020.
The Diocese was estimated to have $100 million to $500 million in
assets and liabilities as of the filing.
The Hon. Shelley C. Chapman is the case judge.
The Diocese tapped JONES DAY as counsel; ALVAREZ & MARSAL NORTH
AMERICA, LLC, as restructuring advisor; and SITRICK AND COMPANY,
INC. as communications consultant.
EPIQ CORPORATE RESTRUCTURING, LLC, is the claims agent.
E.B.J.T. ENTERPRISES: Case Summary & Unsecured Creditor
-------------------------------------------------------
Debtor: E.B.J.T. Enterprises, LLC
11325 Glenoaks Blvd.
Pacoima, CA 91331
Business Description: E.B.J.T. Enterprises, LLC is the owner of
fee simple title to certain property located
at 1235 2nd St, Hermosa Beach, CA valued at
$3 million.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
Central District of California
Case No.: 20-11776
Judge: Hon. Martin R. Barash
Debtor's Counsel: Matthew Abbasi, Esq.
ABBASI LAW CORPORATION
8889 West Olympic Blvd.
Suite 240
Beverly Hills, CA 90211
Tel: (310) 358-9341
Email: matthew@malawgroup.com
Total Assets: $3,000,000
Total Liabilities: $2,601,761
The petition was signed by Tracie Carolyn Love, managing member.
The Debtor listed Asset Default Management, Inc. as its sole
unsecured creditor holding an unliquidated amount of claim.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/52LC5VI/EBJT_Enterprises_LLC__cacbke-20-11776__0001.0.pdf?mcid=tGE4TAMA
ENCOMPASS HEALTH: Moody's Rates New 2031 Sr. Unsecured Notes 'B1'
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Encompass Health
Corp.'s new senior unsecured notes due 2031. There is no change to
any of Encompass' existing ratings, including the Ba3 Corporate
Family Rating, Ba3-PD Probability of Default Rating, Baa3 ratings
on Encompass' senior secured revolving credit facility and term
loan, and B1 ratings on the existing senior unsecured notes. There
is also no change to the SGL-1 Speculative Grade Liquidity Rating.
The outlook is stable.
Proceeds from the new senior unsecured notes will be used with cash
to refinance the $700 million of senior unsecured notes due 2024.
"We view this transaction as being credit positive, given that the
benefits of the elongated maturity profile and moderate
deleveraging will more than offset the reduction in Encompass'
excess liquidity," stated Moody's Vice President/Senior Credit
Officer Jonathan Kanarek. Pro forma for the refinancing, Encompass'
adjusted debt/EBITDA is approximately 4.0 times as of June 30,
2020.
Ratings assigned:
Encompass Health Corp.
Senior unsecured notes due 2031 at B1 (LGD4)
RATINGS RATIONALE
Encompass Health's Ba3 Corporate Family Rating reflects the
company's high exposure to Medicare reimbursement and the potential
for adverse changes to Medicare rates for the company's services.
Moody's believes that reimbursement for post-acute services could
evolve in a way that would pressure Encompass' margins. That said,
Encompass has been making significant investments in IT and data
analytics that Moody's believes will help it gain operating and
cost efficiencies. This will better position Encompass to absorb
potential pressures associated with an evolving post-acute
reimbursement landscape. The Ba3 CFR also reflects the company's
considerable scale in the inpatient rehabilitation (IRF) sector and
good geographic diversification. Despite the near-term coronavirus
headwinds, Moody's expects that Encompass' debt/EBITDA will remain
around 4 times during the next 12-18 months.
The stable outlook reflects Moody's expectation that Encompass will
maintain solid credit metrics but will also remain highly reliant
on Medicare and vulnerable to potential reimbursement changes.
Moody's expects that the company's operating performance will be
moderately affected by the coronavirus outbreak, albeit much less
so than acute care hospitals. Acute care hospitals across the US
have postponed or canceled non-essential elective surgical
procedures and experienced significant volume declines in their
emergency rooms. While the vast majority of patients in IRFs are
recovering from severe medical conditions, such as strokes (as
opposed to elective surgeries), the lower acute care hospital
volumes have in turn resulted in lower volumes at Encompass' IRFs
to some degree. Further, reduced access to assisted living
facilities that had been in lockdown caused Encompass' home health
admissions to decline and challenged Encompass' ability to provide
in-person care to existing home health patients. Shelter at home
orders also likely delayed the onset of new hospice admissions.
From a governance perspective, the company operates with moderate
financial policies, particularly relative to its rated peers.
The company's SGL-1 Speculative Grade Liquidity Rating reflects its
very good liquidity, supported by stable, strong free cash flow and
significant availability under its revolver.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if operating performance weakens or
if liquidity declines significantly, or if Moody's expects adverse
developments in Medicare reimbursement for IRFs or home
health/hospice. Specifically, a downgrade could occur if Encompass
is expected to sustain debt/EBITDA above 4 times.
The ratings could be upgraded if the company's debt/EBITDA
approaches 3 times. Greater levels of business diversity or
increased visibility into prolonged stability of Medicare
reimbursement for key business lines could also support an
upgrade.
Headquartered in Birmingham, Alabama, Encompass Health Corporation
is the largest operator of inpatient rehabilitation facilities.
Encompass also provides home health and hospice services. Revenues
are approximately $4.6 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
ENCOMPASS HEALTH: S&P Rates New $400MM Senior Unsecured Notes 'B+'
------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '5'
recovery rating to Encompass Health Corp.'s proposed $400 million
senior unsecured notes due 2031. The company intends to use the
proceeds from these notes, along with $300 million of cash on hand,
to refinance its 5.75% senior unsecured notes due 2024. S&P views
this transaction as slightly credit positive because it will reduce
Encompass' leverage and interest expense and improve its debt
maturity profile.
S&P said, "The '5' recovery rating, the same rating on the
company's existing senior unsecured debt, indicates our expectation
for modest (10%-30%; rounded estimate: 25%) recovery in the event
of a payment default. This represents our expectation for slightly
better recovery prospects for the unsecured noteholders compared
with our previous expectation of 20% recovery due to Encompass'
lower debt levels following the transaction.
"All of our other ratings on the company, including our 'BB-'
issuer credit rating, remain unchanged. The stable outlook reflects
our expectation that Encompass will generate steady revenue and
EBITDA growth over the next 12 months as it gradually recovers from
the effects of the coronavirus pandemic."
ETS OF WASHINGTON: Case Summary & 9 Unsecured Creditors
-------------------------------------------------------
Debtor: ETS of Washington, LLC
1881 North Nash Street
#505
Arlington, VA 22209
Business Description: ETS of Washington, LLC is the owner of fee
simple title to a house under construction
located at 2207 Foxhall Road, NW,
Washington, DC, valued at $1.6 million.
Chapter 11 Petition Date: September 28, 2020
Court: United States Bankruptcy Court
District of Columbia
Case No.: 20-00397
Judge: Hon. Elizabeth L. Gunn
Debtor's Counsel: Kenneth L. Samuelson, Esq.
SAMUELSON LAW, LLC
2020 Pennsylvania Avenue, N.W. #417
Washington, DC 20006-1811
Tel: 202-494-0848
E-mail: ksamuelson@samuelson-law.com
Total Assets: $1,600,528
Total Liabilities: $698,756
The petition was signed by Jason Porcier, member manager.
A copy of the petition containing, among other items, a list of the
Debtor's nine unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MSMXWZQ/ETS_of_Washington_LLC__dcbke-20-00397__0001.0.pdf?mcid=tGE4TAMA
EVANGEL INT'L: Plan Exclusivity Period Extended Thru Nov. 15
------------------------------------------------------------
Judge Jeffrey P. Norman of the U.S. Bankruptcy Court for the
Southern District of Texas, Houston Division, extended the period
within which Evangel International Foods, Inc. has the exclusive
right to file a plan of reorganization through and including
November 15, 2020.
The Debtor has sought to obtain an SBA EIDL loan in the amount of
$96,100.00, as well as court authority to use cash collateral in
the amount of $100,000 to improve the company's refrigeration
system and purchase sufficient inventory to improve the Debtor's
cash flow during off-seasons. Lone Star Bank and the SBA both
consented to the request. On August 24, the Court entered an
"Unopposed Order Granting Motion To Borrow and Granting Motion To
Use Cash Collateral."
The Debtor and Lone Star Bank are working together to determine
acceptable terms to pay Lone Star Bank in a chapter 11 plan of
reorganization. Neither the Debtor nor Lone Star Bank will know
what will be accepted until the Debtor is able to increase the
inventory of food products and improve the company's refrigeration
storage capacity.
The Lone Star Bank and the Debtor believe this first extension of
the exclusivity rights will give the Debtor ample time to improve
the refrigeration system and purchase sufficient inventory prior to
filing its plan of reorganization.
About Evangel International Foods
Evangel International Foods, Inc. filed a voluntary petition for
relief under Chapter 11 of Title 11 of the United States Code
(Bankr. S.D. Tex. Lead Case No. 20-31480) on March 2, 2020, listing
under $1 million in both assets and liabilities. The Debtor tapped
Margaret M. McClure as a legal attorney.
FAHNESTOCK BUILDERS: Files Voluntary Chapter 7 Bankruptcy Petition
------------------------------------------------------------------
Fahnestock Builders Inc. filed for voluntary Chapter 7 bankruptcy
protection September 17, 2020 (Bankr. E.D. Pa. Case No. 20-13763).
According to the Philadelphia Business JOurnal, the Debtor listed
an address of 1110 Phoenixville Pike, W. Chester, and is
represented in court by attorney Gary E. Thompson. Fahnestock
Builders Inc. listed assets ranging from $0 to $50,000 and debts
ranging from $0 to $50,000. The filing did not identify a largest
creditor.
Fahnestock Builders Inc. is a general contractors of single-family
houses industry in West Chester, PA.
The Debtor's counsel:
GARY E. THOMPSON
Tel: 610-701-6361
E-mail: get24esq@aol.com
FAIRWAY GROUP: Court OKs Ch. 11 Plan, Saves 1,700 Jobs
------------------------------------------------------
Daniel Gill of Bloomberg Law reports that New York-area supermarket
chain Fairway Group Holdings Corp. won approval of a bankruptcy
plan that preserves some 1,700 jobs after sales of 12 stores and
related assets yielded about $90 million.
The Chapter 11 plan, approved Thursday by Judge James L. Garrity of
the U.S. Bankruptcy Court for the Southern District of New York,
creates a trust for general unsecured creditors that will be funded
initially with $1.5 million. The trust is the product of a global
settlement among Fairway, creditors, and various locals of the
United Food and Commercial Workers International Union.
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.
FAIRWAY GROUP: Wins Two-Month Extension of Plan Exclusivity
-----------------------------------------------------------
At the behest of Fairway Group Holdings Corp., now known as Old
Market Group Holdings Corp., and its affiliates, Judge James L.
Garrity, Jr., of the U.S. Bankruptcy Court for the Southern
District of New York extended the period within which the Debtors
have the exclusive right to file a chapter 11 plan and to solicit
acceptances by two months through and including November 23, 2020,
and January 22, 2021, respectively.
Since the last exclusivity motion was filed on April 23, 2020, the
Debtors have:
(i) consummated sale transactions;
(ii) negotiated and secured a Global Settlement, ensuring
support for the Plan from the Official Committee of Unsecured
Creditors, Consenting Creditors and the UFCW Parties; and
(iii) solicited the Plan embodying the Global Settlement.
Accordingly, out of an abundance of caution, by this motion, the
Debtors are seeking a further modest two-month extension of the
Exclusive Periods to complete prosecution of the Plan.
The Plan contemplates an orderly wind-down of the Debtors'
remaining assets and a distribution to creditors in accordance with
the global plan settlement embodied in the Plan and entered into by
and among the Debtors, the Creditors' Committee and the Consenting
Creditors as well as the UFCW Settlement by and among the Debtors
and the UFCW Parties. The Global Settlement and UFCW Settlement
together pave the way for a swift confirmation process and
resolution of these chapter 11 cases.
The Debtors said their relationship with their key economic
stakeholders, including the Consenting Creditors, the UFCW Parties,
and the Creditors' Committee and their professionals, is
transparent, cooperative, and constructive. The Debtors' conduct in
these chapter 11 cases, and in particular, the limited number of
contested issues that have required judicial intervention
(including the fact that the Debtors did not receive a single
objection to the approval of their Disclosure Statement), as well
as the support of their key stakeholders virtually every step of
the way, demonstrates that the Debtors are acting in a prudent and
transparent manner and are not seeking to artificially delay these
extensions. Indeed, the Creditors' Committee, UFCW Parties, and
Consenting Creditors already support the Plan.
The Plan and the Global Settlement embodied there involve complex
legal issues that have required substantial negotiation, including
issues in connection with the execution of the Sale Strategy and
resolution of the Debtors' significant labor issues with the UFCW
Parties pursuant to the UFCW Settlement. The Debtors worked
tirelessly to reach the UFCW Settlement and the Global Settlement,
as both had the ability to impact the analysis underlying the Plan,
and achieving both has enabled the Debtors to reach the consensual
Plan that the Debtors are soliciting.
If the exclusive periods are not extended and control of the
administration of the Debtors' estates is improperly wrested away
now, the Debtors' chapter 11 cases would be unnecessarily disrupted
and could cause further administrative expense burn.
On September 30, 2020, Judge Garrity, Jr., entered an Order
Confirming Joint Chapter 11 Plan of Old Market Group Holdings Corp.
and Its Affiliated Debtors.
About Fairway Group Holdings Corp.
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
January 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. Grant
Thornton LLP, serves as tax advisor to the Debtors.
FARR BUILDERS: Gets Approval to Hire Real Estate Broker
-------------------------------------------------------
Farr Builders, LLC received approval from the U.S. Bankruptcy Court
for the Western District of Texas to employ Daryl Zipp, a real
estate broker at Texas Realtors, to assist in the sale of its
property located at 601 E. Lachapelle, San Antonio, Texas.
The broker will receive a 3 percent commission from the sale. This
commission may be split with another broker, however, in no event
will Debtor pay more than 3 percent to any broker.
Mr. Zipp does not represent any interest adverse to Debtor and its
bankruptcy estate, according to court filings.
Mr. Zipp can be reached at:
Daryl Zipp
Texas Realtors
3834 Deerfield Drive
San Antonio, TX 78218
Mobile: 210-844-8683
About Farr Builders
Farr Builders, LLC, a general contractor based in San Antonio,
Texas, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Tex. Case No. 20-50324) on Feb. 7, 2020. At the time
of the filing, Debtor disclosed $3,792,881 in assets and $2,345,269
in liabilities. Judge Ronald B. King oversees the case. Debtor
has tapped Heidi McLeod Law Office as its bankruptcy counsel and
Daryl Zipp of Texas Realtors as its real estate broker.
FF FUND I: Court Extends Plan Exclusivity Periods Until November 19
-------------------------------------------------------------------
Chief Judge Laurel M. Isicoff of the U.S. Bankruptcy Court for the
Southern District of Florida, Miami Division, extended the FF Fund
I, L.P. and F5 Business Investment Partners, LLC's exclusive
periods to file a Chapter 11 plan and disclosure statement by 90
days through and including November 19, 2020, and to solicit
acceptances of the plan by 90 days through and including January
19, 2021.
Extending the exclusivity periods, the Debtors argued, will enable
them to:
(i) explore different and creative ways to monetize different
types of investments and categorizing then into different
"buckets";
(ii) continue negotiations with certain litigation targets to
try to reach a resolution of the issues without the cost, delay,
and risk of commencing litigation; and
(iii) continue discussions with one of the major stakeholders in
the case, and the Debtors are hopeful that they will result in a
consensual plan of liquidation.
About FF Fund I L.P.
FF Fund I L.P., an investment company based in Miami, Fla., filed a
voluntary petition for relief under Chapter 11 of Bankruptcy Code
(Bankr. S.D. Fla. Case No. 19-22744) on September 24, 2019. In the
petition signed by Soneet R. Kapila, chief restructuring officer,
the Debtor estimated $50 million to $100 million in assets and $1
million to $10 million in liabilities.
On January 24, 2020, F5 Business Investment Partners, LLC, an
affiliate of FF Fund, filed a Chapter 11 petition (Bankr. S.D.
Fla.Case No. 20-10996). The case is jointly administered with that
of FF Fund on February 4, 2020. At the time of the filing, F5
Business had estimated assets of between $10 million and $50
million and liabilities of between $1 million and $10 million.
Chief Judge Laurel M. Isicoff oversees the cases. Paul J.
Battista, Esq., at Genovese Joblove & Battista, P.A., represents
the Debtors as legal counsel.
No creditors' committee has been appointed in this case. In
addition, no trustee or examiner has been appointed.
FLY LEASING: Moody's Rates New Senior Secured Term Loan 'Ba3'
-------------------------------------------------------------
Moody's Investors Service assigned a rating of Ba3 to the $180
million senior secured term loan issued by Fly Willow Funding
Limited, Cayman Islands-based wholly-owned subsidiary of Fly
Leasing Limited (FLY, B1 Corporate Family Rating, negative). The
outlook is negative.
The disruption in air travel globally is related to the coronavirus
pandemic, which Moody's regards as a social risk under its
environmental, social and governance (ESG) framework, given the
substantial implications for public health and safety.
Assignments:
Issuer: Fly Willow Funding Limited
Senior Secured Term Loan, Assigned Ba3
Outlook, Assigned Negative
RATINGS RATIONALE
Moody's has rated FLY's new senior secured term loan Ba3, one notch
above the company's B1 Corporate Family Rating, reflecting the term
loan's relative priority and proportion in FLY's capital structure,
ahead of senior unsecured notes. The new notes will rank pari passu
with the $374 million senior secured bank credit facility due
August 2025 issued by Fly Funding II S.a.r.l. FLY plans to use the
proceeds of the $180 million term loan to pay down a portion of the
outstanding maturity ($180 million) on its existing $325 million
senior unsecured notes due October 2021. The rest of the senior
unsecured notes outstanding will be repaid with cash from the
balance sheet. As of 30 June 2020, FLY's cash position was $289
million.
Moody's considers the new issuance as credit negative, as pro-forma
for the transaction, the cash on the balance sheet would be
approximately $144 million as of 30 June 2020, and the company
would have limited unencumbered assets with limited capacity to
access alternative funding sources. This in turn will create
greater reliance on the repayment of rent deferrals in the amount
of approximately $50 million by the end of 2021 as anticipated by
FLY. The company does not currently have any external committed
revolving facilities.
FLY's ratings reflect its improved fleet composition, benefiting
from the company's sale of older aircraft and acquisition of newer
models, resulting in reduced aircraft remarketing and residual
risks. Additionally, the majority of FLY's fleet is comprised of
narrow-body aircraft used primarily in domestic travel, which,
Moody's believes, has better prospects of improved utilization rate
overtime as the domestic travel recovers. Moody's currently expects
that air passenger demand will recover strongly toward 2019 levels
during 2023. Nonetheless, the company does have a fair amount of
aircraft (approximately 26% of the entire fleet as at 30 June 2020)
coming up for renewal by the end of 2021, creating uncertainty
around the company's ability to re-lease some of its older
aircraft. This, in turn, increases the downside risks for FLY's
revenues, earnings and cash flow.
As such, Moody's anticipates that FLY's pro-forma for the
transaction debt-to-EBITDA leverage (6.7x for the last 12 months
ending 30 June 2020 incorporating Moody's standard adjustments)
will remain high as the earnings slightly decline with the
shrinking aircraft fleet. FLY's experienced external manager BBAM
Limited Partnership (BBAM) remains a source of operational and
remarketing strength for FLY, although its management relationships
with Incline Aviation Fund and Nomura Babcock and Brown Co., Ltd.
(Nomura Babcock & Brown) create conflict of interest concerns.
FLY's ratings also reflect its high airline lessee concentrations
and greater reliance than previously anticipated on confidence
sensitive secured funding that encumbers its assets. At 30 June
2020, FLY's top ten airline customers comprised approximately 62%
of the carrying value of its fleet, whereas its larger competitors'
customer concentration ranged more favorably from 30% to 45%, as at
the same reporting date.
The negative outlook reflects Moody's expectation that FLY's
earnings and liquidity could weaken more than anticipated in a
challenging near-term operating environment. It also incorporates
the assumption that FLY will collect the majority of its deferral
payments by the end of 2021 and that senior unsecured notes
refinancing will be completed on a timely basis.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. The rating action reflect the negative effects on FLY
of the breadth and severity of the shock, and the deterioration in
credit quality, profitability, capital and liquidity it has
triggered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if the company: 1) experiences
higher than expected deterioration in its topline and earnings; 2)
reduces its liquidity cushion through higher than expected loans'
capital calls, further payment deferrals or other cash needs; 3) is
unable to refinance its senior unsecured notes over the next three
months; or 3) experiences deterioration in other key metrics,
including tangible equity / tangible assets decline to less than
20%, stemming from challenging economic conditions.
The ratings could be upgraded if the company is able to exhibit
sustainability of its earnings structure by consistently renewing
its upcoming leases and maintaining its current scale, and is able
to maintain good liquidity profile.
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
FOOT LOCKER: Egan-Jones Hikes Senior Unsecured Ratings to BB-
-------------------------------------------------------------
Egan-Jones Ratings Company, on September 21, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Foot Locker Inc. to BB- from B.
Headquartered in New York, New York, Foot Locker, Inc. retails
footwear.
FOXWOOD HILLS: Taps Elliott Davis as Accountant
-----------------------------------------------
Foxwood Hills Property Owners Association, Inc. seeks approval from
the U.S. Bankruptcy Court for the District of South Carolina to
hire Elliott Davis, LLC as its accountant.
Debtor is in need of an accountant to prepare financial audit. The
estimated fee for the firm's services is $12,500.
Elliott Davis and its employees are disinterested persons as that
term is defined in Section 101(14) of the Bankruptcy Code,
according to court filings.
Elliott Davis can be reached through:
Scott McClelland, CPA
Elliott Davis, LLC
1901 Main Street, Suite 900
Columbia, SC 29201
Phone: 803-256-0002
About Foxwood Hills Property
Owners Association
Foxwood Hills Property Owners Association, Inc. is an organization
of owners of Foxwood Hills -- a lake front community of primary and
vacation homes nestled in the northwest corner of Oconee County,
S.C.
Foxwood Hills Property Owners Association filed its voluntary
petition under Chapter 11 of the Bankruptcy Code (Bankr. D.S.C.
Case No. 20-02092) on May 8, 2020. At the time of the filing,
Debtor disclosed $4,253,427 in assets and $219,780 in liabilities.
Judge Helen E. Burris oversees the case. Nexsen Pruet, LLC is
Debtor's legal counsel.
FTE NETWORKS: Munish Bansal Serving as US Home Rentals CEO
----------------------------------------------------------
FTE Networks, Inc. entered into an executive employment agreement
with Munish Bansal to serve as the chief executive officer of the
Company's wholly-owned subsidiary, US Home Rentals LLC, effective
Sept. 28, 2020. Pursuant to the Employment Agreement, Mr. Bansal
will transition to the role of chief executive officer of the
Company following the resumption of trading of the Company's common
stock on an over-the-counter market. Michael P. Beys will continue
to serve as the Company's interim chief executive officer until
such time.
Mr. Bansal previously served as the chief financial officer of Home
Partners of America, a single-family rental real estate investment
trust, from May 2016 to June 2018. Prior to that, Mr. Bansal
served as the portfolio manager and treasurer for the JP Morgan
Chase Mortgage business unit.
In connection with the Employment Agreement, Mr. Bansal is to
receive, among other things and subject to certain exceptions and
conditions set forth therein, (i) an annual base salary of $500,000
(pro-rated for 2020), which salary Mr. Bansal has agreed to defer
until the earlier of the closing of an equity capital raise of at
least $25 million, or six months, but in no event later than March
15, 2021; (ii) a target bonus equal to 100% of his annual base
salary upon the achievement of a performance milestone specified in
the Employment Agreement (and the opportunity to earn future cash
bonuses equal to 100% of his annual base salary based on
performance metrics to be determined annually by the Compensation
Committee) (iii) a restricted stock grant pursuant to the Company's
2017 Omnibus Incentive Plan, equal to six percent of the Company's
issued and outstanding common stock, calculated on a fully-diluted
basis and subject to certain exceptions and acceleration
provisions; (iv) future performance stock awards of up to eight
percent of the Company's issued and outstanding common stock under
the 2017 Plan upon the achievement of certain milestones and
subject to certain exceptions and acceleration provisions; (v)
customary non-solicitation, non-disparagement and confidentiality
provisions; (vi) and a severance for a termination without "cause"
or for "good reason."
About FTE Networks
Formerly known as Beacon Enterprise Solutions Group, FTE Networks,
Inc. -- http://www.ftenet.com/-- together with its wholly owned
subsidiaries, is a provider of innovative, technology-oriented
solutions for smart platforms, network infrastructure and
buildings. The Company provides end-to-end design, construction
management, build and support solutions for state-of-the-art
networks, data centers, residential, and commercial properties and
services Fortune 100/500 companies. FTE has three complementary
business offerings which are predicated on smart design and
consistent standards that reduce deployment costs and accelerate
delivery of innovative projects and services.
FTE Networks reported a net loss of $46.59 million for the year
ended Dec. 31, 2018, following a net loss of $92.08 million for the
year ended Dec. 31, 2017.
During March 2019, the Company received a series of letters from
the NYSE American concerning its failure to comply with various
continued listing requirements under the NYSE American Company
Guide. On Dec. 17, 2019, the Company received a letter from the
staff of NYSE Regulation, on behalf of the Exchange, stating that
it had determined to commence proceedings to delist the Company's
common stock from the Exchange because, according to the Exchange,
the Company or its management had engaged in operations that, in
the opinion of the Exchange, were contrary to the public interest.
On Dec. 17, 2019 at market close, the Company's common stock was
suspended from trading on the NYSE American Market. The Company
appealed this determination to the NYSE Listing Qualifications
Panel of the Exchange's Committee for Review, and a hearing
regarding the Company's continued listing was held on Feb. 13,
2020. On March 9, 2020, the NYSE Office of General Counsel
notified the Company that the Panel had determined to affirm the
Staff's decision to delist the Company's shares from NYSE. The
Company has since initiated steps to seek review of and/or appeal
the Panel's determination. As of May 11, 2020, the Company's
common stock was listed on the NYSE American Market under the
symbol FTNW but continued to be suspended from trading. In the
event the common stock is delisted from the NYSE American Market,
the Company intends to pursue other opportunities to have the
common stock traded on a stock market, which may include one of the
trading platforms operated by OTC Markets Group or another stock
market.
The Company has been unable to file its Annual Report on Form 10-K
for the fiscal year ended Dec. 31, 2019, within the prescribed time
without unreasonable effort or expense. The Company requires
additional time to compile data and finalize its financial
statements to be filed as part of the Form 10-K and assist its
auditors in completing their audit in connection with the Form
10-K. Additionally, the Company said it has been negatively
impacted by the COVID-19 pandemic, which has contributed to the
delay in compiling and completing its Form 10-K, due in part to the
disruptions in access to and timely exchange of information between
officers, auditors, professional advisors and other support staff.
FTE NETWORKS: Requires Additional Time to File its Form 10-Q
------------------------------------------------------------
FTE Networks, Inc. was unable to file its Quarterly Report on Form
10-Q for the quarter ended June 30, 2020, within the prescribed
time without unreasonable effort or expense. The Company requires
additional time to compile data and finalize its financial
statements to be filed as part of the Form 10-Q and assist its
auditors in completing their review in connection with the Form
10-Q.
Additionally, the Company has been negatively impacted by the
COVID-19 pandemic, which has contributed to the delay in compiling
and completing the Registrant's Form 10-Q (as well as reports for
prior periods), due in part to the disruptions in access to and
timely exchange of information between officers, auditors,
professional advisors and other support staff.
About FTE Networks
Formerly known as Beacon Enterprise Solutions Group, FTE Networks,
Inc. -- http://www.ftenet.com-- together with its wholly owned
subsidiaries, is a provider of innovative, technology-oriented
solutions for smart platforms, network infrastructure and
buildings. The Company provides end-to-end design, construction
management, build and support solutions for state-of-the-art
networks, data centers, residential, and commercial properties and
services Fortune 100/500 companies. FTE has three complementary
business offerings which are predicated on smart design and
consistent standards that reduce deployment costs and accelerate
delivery of innovative projects and services.
FTE Networks reported a net loss of $46.59 million for the year
ended Dec. 31, 2018, following a net loss of $92.08 million for the
year ended Dec. 31, 2017.
During March 2019, the Company received a series of letters from
the NYSE American concerning its failure to comply with various
continued listing requirements under the NYSE American Company
Guide. On Dec. 17, 2019, the Company received a letter from the
staff of NYSE Regulation, on behalf of the Exchange, stating that
it had determined to commence proceedings to delist the Company's
common stock from the Exchange because, according to the Exchange,
the Company or its management had engaged in operations that, in
the opinion of the Exchange, were contrary to the public interest.
On Dec. 17, 2019 at market close, the Company's common stock was
suspended from trading on the NYSE American Market. The Company
appealed this determination to the NYSE Listing Qualifications
Panel of the Exchange's Committee for Review, and a hearing
regarding the Company's continued listing was held on Feb. 13,
2020. On March 9, 2020, the NYSE Office of General Counsel
notified the Company that the Panel had determined to affirm the
Staff's decision to delist the Company's shares from NYSE. The
Company has since initiated steps to seek review of and/or appeal
the Panel's determination. As of May 11, 2020, the Company's
common stock was listed on the NYSE American Market under the
symbol FTNW but continued to be suspended from trading. In the
event the common stock is delisted from the NYSE American Market,
the Company intends to pursue other opportunities to have the
common stock traded on a stock market, which may include one of the
trading platforms operated by OTC Markets Group or another stock
market.
The Company has been unable to file its Annual Report on Form 10-K
for the fiscal year ended Dec. 31, 2019, within the prescribed time
without unreasonable effort or expense. The Company requires
additional time to compile data and finalize its financial
statements to be filed as part of the Form 10-K and assist its
auditors in completing their audit in connection with the Form
10-K. Additionally, the Company said it has been negatively
impacted by the COVID-19 pandemic, which has contributed to the
delay in compiling and completing its Form 10-K, due in part to the
disruptions in access to and timely exchange of information between
officers, auditors, professional advisors and other support staff.
GARRETT MOTION: Jones Day Represents Shareholders
-------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Jones Day submitted a verified statement that it is
representing Certain Shareholders in the Chapter 11 cases of
Garrett Motion Inc., et al.
In September 2020, certain Shareholders retained Jones Day to
advise them following Garrett Motion's August 16, 2020 announcement
that it was exploring alternatives for a balance sheet
restructuring. The Shareholders beneficially own, or manage or
advise funds and/or accounts that beneficially own disclosable
economic interests in relation to the Debtors. Attached hereto as
Exhibit A is a list of the names, addresses, nature, and amount of
all disclosable economic interests of each Shareholder in relation
to the Debtors as of September 25, 2020. The information set forth
in Exhibit A for each Shareholder is based on information provided
to Jones Day by such Shareholder. Jones Day submits this Statement
in an abundance of caution and without conceding that Bankruptcy
Rule 2019 applies.
Jones Day continues to represent each Shareholder. Jones Day does
not represent or purport to represent any other person or entity
with respect to these chapter 11 cases. Jones Day does not
represent the Shareholders as a "committee" and does not undertake
to represent the interests of, and is not a fiduciary for, any
other creditor, party in interest or other entity. In addition, as
of the date of this Statement, no Shareholder represents or
purports to represent any other entity in connection with these
chapter 11 cases.
As of Sept. 28, 2020, each Shareholder and their disclosable
economic interests are:
The Baupost Group, L.L.C.
10 St. James Ave., Suite 1700
Boston, MA 02116
* Equity Interests: 3,575,000 shares
Cyrus Capital Partners, L.P.
65 East 55th Street, Floor 35
New York, NY 10022
* Term Loan B Obligations: $2,000,000
* Senior Note Obligations: €15,379,000
* Equity Interests: 10,220,254 shares
FIN Capital Partners LP
336 W 37th Street Suite 200
New York, NY 10018
* Equity Interests: 370,000 shares
Hawk Ridge Master Fund, LP
12121 Wilshire Blvd., Suite 900
Los Angeles, CA 90025
* Equity Interests: 2,196,437 shares
Keyframe Capital Partners, L.P.
65 East 55th Street, Floor 35
New York, NY 10022
* Senior Note Obligations: €6,621,000
* Equity Interests: 1,506,050 shares
Newtyn Management, LLC
60 East 42nd Street, 9th Floor
New York, NY 10165
* Equity Interests: 2,807,075 shares
Owl Creek Credit Opportunities
Master Fund, L.P.
640 Fifth Avenue, 20th Floor
New York, NY 10019
* Equity Interests: 750,000 shares
Sessa Capital IM, L.P.
888 7th Ave 30th floor
New York, NY 10106
* Equity Interests: 6,912,204 shares
Warlander Asset Management, LP
250 West 55th Street, 33rd Floor
New York, NY 10019
* Equity Interests: 860,000 shares
Jones Day reserves the right to amend or supplement this Statement
in accordance with the requirements of Bankruptcy Rule 2019 with
any additional information that may become available.
Counsel for Certain Shareholders of Garrett Motion Inc. can be
reached at:
JONES DAY
Anna Kordas, Esq.
250 Vesey Street
New York, NY 10281
Telephone: (212) 326-3939
Facsimile: (212) 755-7306
E-mail: akordas@jonesday.com
- and -
JONES DAY
Bruce Bennett, Esq.
Joshua M. Mester, Esq.
555 S. Flower St., 50th Floor
Los Angeles, CA 90071
Telephone: (213) 489-3939
E-mail: bbennett@jonesday.com
jmester@jonesday.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/36qlKiz
About Garrett Motion
Based in Switzerland, Garrett Motion Inc. (NYSE: GTX) designs,
manufactures and sells highly engineered turbocharger and
electric-boosting technologies for light and commercial vehicle
original equipment manufacturers ("OEMs") and the global vehicle
and independent aftermarket.
Garrett Motion and its affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 20-12212) on Sept. 20, 2020.
Garrett disclosed $2,066,000,000 in assets and $4,169,000,000 in
liabilities as of June 30, 2020.
The Debtors tapped SULLIVAN & CROMWELL LLP as counsel; QUINN
EMANUEL URQUHART & SULLIVAN LLP as co-counsel; PERELLA WEINBERG
PARTNERS as investment banker; MORGAN STANLEY & CO. LLC as
investment banker; and ALIXPARTNERS LLP as restructuring advisor.
KURTZMAN CARSON CONSULTANTS LLC is the claims agent.
GENERAL MOTORS: Fitch Rates Series C Preferred Stock 'BB'
---------------------------------------------------------
Fitch Ratings has assigned a final rating of 'BB' to General Motors
Financial Company's Series C cumulative perpetual preferred stock.
The preferred shares are subordinated to existing unsecured debt
but senior to common shares. Distributions, when and if declared by
the board of directors, are payable semi-annually at a fixed rate
through September 2030. Following September 2030, the distribution
rate will reset and will be payable semi-annually at a fixed rate
based on the five-year U.S. Treasury rate plus a spread and will
continue to reset every five years. Distributions on the preferred
stock are cumulative from the date of issuance. The preferred stock
is perpetual in nature but may be redeemed, at GMF's option, 10
years after issuance. Holders of the Series C preferred stock will
have no rights to require redemption of the preferred shares.
Proceeds from the issuance are to be used for general corporate
purposes.
RATING ACTIONS
KEY RATING DRIVERS
The rating is two notches lower than GMF's Long-Term Issuer Default
Rating (IDR), in accordance with Fitch's "Corporate Hybrids
Treatment and Notching Criteria" (November 2019). The preferred
stock rating includes two notches for loss severity, reflecting the
preferred units' subordination and heightened risk of
nonperformance relative to other obligations, namely existing
secured and unsecured debt.
Fitch has afforded the issuance 50% equity credit given the
cumulative nature of the dividends and because the preferred stock
is perpetual in nature.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade are largely dependent on the ratings of its
parent, General Motors Company (GM), given GMF's ratings are linked
to the ratings of GM. The preferred stock rating is sensitive to
changes in GMF's Long-Term IDR and would be expected to move in
tandem with any changes to the IDR. A material increase in leverage
without a corresponding improvement in the risk profile of the
portfolio, an inability to access funding for an extended period,
consistent and sustained operating losses and/or significant
deterioration in the credit quality of the underlying loan and
lease portfolio, or material impairment of the liquidity profile
could become constraining factors for the parent and subsidiary
ratings.
Factors that could, individually or collectively, lead to positive
rating action/upgrade are largely dependent on the ratings of GM
given the rating linkage. Fitch expects GMF's ratings to move in
tandem with its parent, although any change in Fitch's view on
whether GMF remains core to its parent, based on an assessment of
its size, ownership, and strategic alignment with GM, could change
this rating linkage. Fitch cannot envision a scenario where GMF
would be rated higher than the parent.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
GMF's ratings and Rating Outlook are linked to those of its parent,
General Motors Company.
GLOBAL EAGLE: Committee Hires Akin Gump Strauss as Legal Counsel
----------------------------------------------------------------
The official committee of unsecured creditors of Global Eagle
Entertainment Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to retain Akin Gump
Strauss Hauer & Feld LLP as its legal counsel.
The services that will be provided by the firm are as follows:
(a) advise the committee with respect to its rights, duties
and powers in Debtors' Chapter 11 cases;
(b) assist and advise the committee in its consultations and
negotiations with Debtors and other parties in interest in
connection with the administration of the cases;
(c) assist the committee in analyzing the claims of creditors
and Debtors' capital structure and in negotiating with holders of
claims and equity interests;
(d) assist the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the Debtors
and their insiders and of the operation of the Debtors'
businesses;
(e) assist the committee in its analysis of, and negotiations
with, the Debtors or any third party concerning matters related to,
among other things, the assumption or rejection of certain leases
of non-residential real property and executory contracts, asset
dispositions, going concern sale transactions, financing
transactions, other transactions and the terms of one or more plans
of reorganization for the Debtors and accompanying disclosure
statements and related plan documents;
(f) assist and advise the committee as to its communications
to the general creditor body regarding significant matters in the
cases;
(g) represent the committee at all hearings and other
proceedings before this Court;
(h) review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise the
committee as to their propriety and, to the extent deemed
appropriate by the committee, support, join or object thereto;
(i) advise and assist the committee with respect to any
legislative, regulatory or governmental activities;
(j) assist the committee in its review and analysis of the
Debtors' various agreements;
(k) prepare pleadings;
(l) investigate and analyze any claims belonging to the
Debtors' estates; and
(m) perform such other legal services as may be required or
are otherwise deemed to be in the interests of the committee in
accordance with the committee's powers and duties as set forth in
the Bankruptcy Code, the Bankruptcy Rules or other applicable law.
2020 hourly rates charged by Akin Gump are:
Partners $995 – $1,995
Counsel $735 – $1,510
Associates $535 – $1,070
Paraprofessionals $100 – $455
Philip Dublin, Partner $1,595
Jason Rubin, Partner $1,350
Marty Brimmage Jr., Partner $1,595
Lacy Lawrence, Partner $1,350
Laura Warrick, Counsel $1,090
Christina Brown, Counsel $975
Alexander Antypas, Associate $775
In accordance with Appendix B-Guidelines for reviewing applications
for compensation and reimbursement of expenses filed under 11
U.S.C. Sec. 330 for attorneys in larger Chapter 11 cases, Akin Gump
made the following disclosures in response to the request for
additional information:
(a) Akin Gump did not agree to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement.
(b) No rate for any of the professionals included in this
engagement varies based on the geographic location of the
bankruptcy case.
(c) Akin Gump represented the Ad Hoc Convertible Noteholder
Group, of which one member of the committee was a member, prior to
the commencement of the Chapter 11 Cases.
(d) Akin Gump expects to develop a prospective budget and
staffing plan to reasonably comply with the U.S. Trustee's request
for information and additional disclosures, as to which Akin Gump
reserves all rights.
(e) The committee has approved Akin Gump's proposed hourly
billing rates.
Philip C. Dublin, Esq., partner of Akin Gump, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their/its estates.
Akin Gump can be reached through:
Philip C. Dublin, Esq.
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
Bank of America Tower
New York, NY 10036-6745
Tel: +1 212-872-1000
Fax: +1 212-872-1002
E-mail: pdublin@akingump.com
About Global Eagle Entertainment
Headquartered in Los Angeles, Global Eagle Entertainment Inc. is a
provider of media, content, connectivity and data analytics to
markets across air, sea and land. It offers a fully integrated
suite of media content and connectivity solutions to airlines,
cruise lines, commercial ships, high-end yachts, ferries and land
locations worldwide. Visit http://www.GlobalEagle.comfor more
information.
Global Eagle Entertainment and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11835) on July 22,
2020. In the petition signed by CFO Christian M. Mezger, Global
Eagle disclosed $630.5 million in assets and $1.086 billion in
liabilities.
Judge John T. Dorsey oversees the cases.
Debtors have tapped Latham & Watkins LLP (CA) and Young Conaway
Stargatt & Taylor, LLP as legal counsel; Greenhill & Co., LLC as
investment banker; Alvarez & Marsal North America, LLC as financial
advisor; and PricewaterhouseCoopers LLP as tax advisor. Prime
Clerk, LLC is the claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Aug. 5, 2020. The committee has tapped Akin Gump
Strauss Hauer & Feld LLP and Ashby & Geddes, P.A. as its legal
counsel, and Perella Weinberg Partners LP as its investment banker.
GLOBAL EAGLE: Committee Hires Ashby & Geddes as Co-Counsel
----------------------------------------------------------
The official committee of unsecured creditors of Global Eagle
Entertainment Inc. and its affiliates received approval from the
U.S. Bankruptcy Court for the District of Delaware to retain Ashby
& Geddes, P.A.
Ashby & Geddes will serve as co-counsel with Akin Gump Strauss
Hauer & Feld, LLP, the other firm handling Debtors' Chapter 11
cases.
Ashby & Geddes' standard hourly rates are as follows:
William P. Bowden Director $825
Michael D. DeBaecke Counsel $600
Katharina Earle Associate $350
Cathie Boyer McCloskey Paralegal $260
In accordance with Appendix B-Guidelines for reviewing applications
for compensation and reimbursement of expenses filed under 11
U.S.C. Sec. 330 for attorneys in larger Chapter 11 cases, Ashby &
Geddes made the following disclosures in response to the request
for additional information:
-- Ashby & Geddes has not agreed to a variation of its
standard or customary billing arrangements for this engagement;
-- None of the firm's professionals included in this
engagement have varied their rate based on the geographic location
of Debtors' cases;
-- Ashby & Geddes has not represented the committee in the 12
months prepetition; and
-- Ashby & Geddes and the committee expect to develop a budget
and staffing plan for the period from Aug. 7 to Sept. 30, 2020.
William Bowden, Esq., a partner at Ashby & Geddes, disclosed in
court filings that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
Ashby & Geddes can be reached at:
William P. Bowden, Esq.
Gregory A. Taylor, Esq.
Stacy L. Newman, Esq.
Katharina Earle, Esq.
Ashby & Geddes, P.A.
500 Delaware Ave.
Wilmington, DE 19899
Tel: (302) 654-1888
Fax: (302) 654-2067
Email: wbowden@ashbygeddes.com
GTaylor@ashbygeddes.com
SNewman@ashbygeddes.com
kearle@ashbygeddes.com
About Global Eagle Entertainment
Headquartered in Los Angeles, Global Eagle Entertainment Inc. is a
provider of media, content, connectivity and data analytics to
markets across air, sea and land. It offers a fully integrated
suite of media content and connectivity solutions to airlines,
cruise lines, commercial ships, high-end yachts, ferries and land
locations worldwide. Visit http://www.GlobalEagle.comfor more
information.
Global Eagle Entertainment and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11835) on July 22,
2020. In the petition signed by CFO Christian M. Mezger, Global
Eagle disclosed $630.5 million in assets and $1.086 billion in
liabilities.
Judge John T. Dorsey oversees the cases.
Debtors have tapped Latham & Watkins LLP (CA) and Young Conaway
Stargatt & Taylor, LLP as legal counsel; Greenhill & Co., LLC as
investment banker; Alvarez & Marsal North America, LLC as financial
advisor; and PricewaterhouseCoopers LLP as tax advisor. Prime
Clerk, LLC is the claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Aug. 5, 2020. The committee has tapped Akin Gump
Strauss Hauer & Feld LLP and Ashby & Geddes, P.A. as its legal
counsel, and Perella Weinberg Partners LP as its investment banker.
GLOBAL EAGLE: Committee Hires Perella Weinberg as Investment Banker
-------------------------------------------------------------------
The official committee of unsecured creditors of Global Eagle
Entertainment Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to retain Perella
Weinberg Partners LP as its investment banker.
The services that will be provided by the firm are as follows:
(a) Review, analyze and report to the committee with respect
to Debtors' financial condition and outlook;
(b) Evaluate Debtors' debt capacity in light of projected cash
flows;
(c) Review and analyze Debtors' total enterprise value,
various lines of business, and assets;
(d) Review and provide an analysis of any proposed capital
structure for Debtors on a reorganized or going concern basis;
(e) Attend meetings with the committee and due diligence
meetings with Debtors and other parties;
(f) Advise and assist in the committee's evaluation of
Debtors' near-term liquidity;
(g) Review, analyze and advise the committee with respect to
the existing debt structure of Debtors;
(h) Explore alternative strategies for Debtors as one or more
stand-alone businesses;
(i) Develop, evaluate and assess the financial issues and
options concerning any proposed transaction;
(j) Analyze and explain any transaction to the committee;
(k) Assist and participate in negotiations with Debtors;
(l) Participate in hearings before the court; and
(m) Provide such other advisory services.
Perella will receive a monthly fee of $150,000 and a transaction
fee of $2.25 million.
Michael Genereux, a partner at Perella Weinberg, disclosed in court
filings that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Perella Weinberg can be reached through:
Michael J. Genereux
Perella Weinberg Partners LP
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 287-3200
About Global Eagle Entertainment
Headquartered in Los Angeles, Global Eagle Entertainment Inc. is a
provider of media, content, connectivity and data analytics to
markets across air, sea and land. It offers a fully integrated
suite of media content and connectivity solutions to airlines,
cruise lines, commercial ships, high-end yachts, ferries and land
locations worldwide. Visit http://www.GlobalEagle.comfor more
information.
Global Eagle Entertainment and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11835) on July 22,
2020. In the petition signed by CFO Christian M. Mezger, Global
Eagle disclosed $630.5 million in assets and $1.086 billion in
liabilities.
Judge John T. Dorsey oversees the cases.
Debtors have tapped Latham & Watkins LLP (CA) and Young Conaway
Stargatt & Taylor, LLP as legal counsel; Greenhill & Co., LLC as
investment banker; Alvarez & Marsal North America, LLC as financial
advisor; and PricewaterhouseCoopers LLP as tax advisor. Prime
Clerk, LLC is the claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Aug. 5, 2020. The committee has tapped Akin Gump
Strauss Hauer & Feld LLP and Ashby & Geddes, P.A. as its legal
counsel, and Perella Weinberg Partners LP as its investment banker.
GLOBAL HEALTHCARE: CFO Zvi Rhine Quits from All positions
---------------------------------------------------------
Mr. Zvi Rhine tendered his resignation from all positions with
Global Healthcare REIT, Inc., including his positions as director,
president and chief financial officer.
To fill the vacancy created by Mr. Rhine's resignation, Lance
Baller, the Company's CEO, has been appointed interim chief
financial officer.
About Global Healthcare
Global Healthcare REIT, Inc., acquires, develops, leases, manages
and disposes of healthcare real estate, and provides financing to
healthcare providers. The Company's portfolio will be comprised of
investments in the following three healthcare segments: (i) senior
housing, (ii) post-acute/skilled nursing and (iii) bonds securing
senior housing communities.
Global Healthcare reported a net loss attributable to common
stockholders of $891,614 for the year ended Dec. 31, 2019, compared
to a net loss attributable to common stockholders of $2.02 million
for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company
had $39.88 million in total assets, $39.51 million in total
liabilities, and $366,650 in total equity.
MaloneBailey, LLP, in Houston, Texas, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
July 10, 2020, citing that the Company has suffered recurring
losses from operations and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
GREENEDEN US II: Moody's Affirms B3 CFR on Dividend, Outlook Stable
-------------------------------------------------------------------
Moody's Investors Service affirmed Greeneden U.S. Holdings II,
LLC's B3 corporate family rating (CFR) and B3-PD probability of
default rating ("PDR"). Concurrently, Moody's assigned a B3 rating
to the company's proposed first lien credit facility, comprised of
a $250 million revolver, a $2.825 billion-dollar denominated term
loan, and a $525 million euro-denominated term loan. The rating
action was driven by Genesys' announced plans to refinance the
company's existing debt [1] and partially fund a distribution to a
holding company, resulting in an increase in debt leverage of more
than 1x. Upon completion of this transaction, Moody's expects
Genesys' existing debt to be repaid and ratings on these
instruments to be withdrawn. The ratings outlook is stable.
Affirmations:
Issuer: Greeneden U.S. Holdings II, LLC
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Assignments:
Issuer: Greeneden U.S. Holdings II, LLC
$2,825M Gtd Senior Secured Term Loan, Assigned B3 (LGD3)
$525M Gtd Senior Secured Term Loan, Assigned B3 (LGD3)
$250M Gtd Senior Secured Multi Currency Revolver, Assigned B3
(LGD3)
Outlook Actions:
Issuer: Greeneden U.S. Holdings II, LLC
Outlook, Remains Stable
RATINGS RATIONALE
Genesys' B3 CFR is principally constrained by the company's
elevated debt leverage (Moody's adjusted) of more than 7x (over 8x
when expensing capitalized software costs), the competitive nature
of the contact center software market in which the company
operates, and ongoing, albeit moderating execution challenges as
Genesys continues to complete the shift of its revenue model from
license sales towards principally subscription-oriented and
cloud-based sales. Additionally, the company's concentrated private
equity ownership by Permira and Hellman & Friedman LLC also
constrains its credit profile, particularly with respect to
corporate governance concerns and support of aggressive financial
policies including the proposed dividend distribution as well as
potential debt-financed acquisitions.
The rapid spread of the coronavirus outbreak, weak global economic
outlook, low oil prices, and high asset price volatility have
created an unprecedented credit shock across a range of sectors and
regions. The enterprise software sector has been negatively
affected by the breadth and severity of this shock given its
sensitivity to business demand. Genesys' exposure to uncertain
near-term technology spending prospects across its end markets have
left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions, weighing on its credit quality.
Additionally, Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial credit
implications of public health and safety.
However, Genesys' credit rating benefits from the company's strong
market position, long-standing customer relationships, and sizable
base of recurring revenue that contributes to business
predictability. In addition, Genesys' healthy profitability margins
and annual free cash flow/debt of about 5% contribute to the
company's good liquidity and support its credit profile.
The B3 ratings for Genesys' proposed first lien bank debt reflect
the borrower's B3-PD PDR and a Loss Given Default ("LGD")
assessment of LGD3 for the bank credit facility. The B3 first lien
ratings are consistent with the CFR as the bank loans account for
the preponderance of Genesys' pro forma debt structure following
the completion of the refinancing.
As proposed, the new credit facility is expected to provide
covenant flexibility that if utilized could negatively impact
creditors including (i) incremental facility capacity not to exceed
the greater of $665 million and 100% of adjusted EBITDA, plus
additional amounts not to exceed the available capacity under the
General Debt Basket (as defined) plus an additional amount such
that pro forma first lien net leverage does not exceed 5x for pari
passu debt, (ii) collateral leakage permitted through the transfer
of assets to unrestricted subsidiaries, subject to carve-out
capacity; there are no additional blocker protections (iii)
requirement that only wholly-owned subsidiaries act as subsidiary
guarantors, raising the risk that guarantees may be released
following a partial change in ownership. The credit agreement
requires 100% of net cash proceeds of non-ordinary course sales or
other dispositions of property to be used to repay the credit
facility, if not reinvested, with step-downs on the
prepayment/reinvestment requirement to 50% and 0%, respectively,
based upon the achievement and maintenance of Consolidated First
Lien Debt to Consolidated EBITDA Ratios equal to or less than 4.5x
and 4x.
Despite a sizable cash outflow associated with the proposed
dividend distribution, Genesys' good liquidity is supported by a
pro forma cash balance of approximately $75 million following the
completion of the refinancing and dividend in conjunction with
Moody's expectation of free cash flow generation approximating 5%
of debt over the next 12 months. The company's liquidity is also
bolstered by an undrawn $250 million revolving credit facility.
Genesys' proposed term loans are not expected to be subject to a
financial maintenance covenant, but the revolver will be subject to
a springing covenant of a 7x maximum first lien secured net
leverage ratio that is not expected to be in effect over the next
12-18 months as excess availability should remain comfortably above
minimum levels.
The stable outlook reflects Moody's expectation that Genesys' top
line and EBITDA will increase moderately over the next 12 months as
the company enters the latter stages of the transition in its sales
model and growth in its cloud-based offerings, particularly for
mid-market clients, offset declining license revenues. Debt/EBITDA
(Moody's adjusted for operating leases) is expected to decline
modestly, but remain above 7x (over 8x when expensing capitalized
software costs) during this period.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Genesys reduces debt/EBITDA
(Moody's adjusted) to below 6x and sustains annual free cash flow
to debt above 5%.
The ratings could be downgraded if revenue contracts materially
from current levels and the company begins to generate free cash
flow deficits leading to expectations for diminished liquidity.
Based in Daly city, CA, Genesys is a provider of customer
experience and contact center solutions through both cloud services
and software licensing, including digital channel management, call
routing, interactive voice response, and enterprise workload
management, primarily serving the 100 seat and larger contact
center market. Genesys is owned by private equity firms including
Permira and Hellman & Friedman LLC. Moody's expects the company to
generate revenue in excess of $1.5 billion in FY2021 (ending
January 2021).
The principal methodology used in these ratings was Software
Industry published in August 2018.
GREENEDEN US II: S&P Affirms 'B-' ICR on Planned Debt Refinancing
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
U.S.-based provider of contact center and customer experience
software Greeneden U.S. Holdings II LLC (Genesys). At the same
time, S&P assigned its 'B-' rating to the proposed senior secured
debt facilities. S&P did not take any rating actions on the
existing debt facilities, as it intends to withdraw the ratings
when they are repaid.
Genesys is seeking to refinance its existing debt with $3.35
billion of new senior secured term loans that increase its
outstanding debt balance by about $500 million, while also
obtaining an upsized undrawn revolving credit facility (RCF). S&P
Global Ratings therefore expects leverage to rise to the mid-8x
area in fiscal 2021 (ending Jan. 31, 2021), even though the company
experienced stronger-than-expected bookings in the first half of
fiscal 2021 on demand from remote working and government
initiatives related to the COVID-19 pandemic.
The proposed debt refinancing raises expected near-term leverage
despite stronger-than-expected operating performance. With the
proposed refinancing increasing Genesys' total outstanding debt
balance by about $500 million, S&P now expects leverage to reach
the mid-8x area at the end of fiscal 2021 compared to our previous
forecast of about 8x. This debt increase is partly offset by the
company's strong performance so far this fiscal year, driven by
customers' need to move customer engagement functions to remote
working environments and the need to support government services
such as unemployment benefits. Retention rates for maintenance and
cloud revenues have also remained above 90%, reflecting the
critical nature of the company's offerings to its customers'
operations.
S&P said, "Our adjusted debt and EBITDA include the standard
adjustments for operating leases and share-based compensation. We
also expense capitalized development costs and adjust for the
purchase price accounting impact on revenue. We do not net any
surplus cash from our debt figures because we believe the company
will likely use it for purposes other than debt prepayment given
the company's financial-sponsor ownership.
"We are raising our base-case revenue and EBITDA margin forecasts.
We now expect low-single-digit-percent revenue growth in fiscal
2021 compared to our previous expectation of a low- to mid-single
digit-percent revenue decline, based on Genesys' year-to-date
performance. The COVID-19 pandemic has especially boosted demand
for cloud and, to some extent, on-premise subscriptions. In
addition to the impact of promotions during the pandemic and
further partnerships, the company's new bookings mix is now mostly
cloud- and subscription-based. We expect this to boost revenue
growth to the high-single-digit-percent area in fiscal 2022 given
reduced license revenue headwinds from the largely complete cloud
transition.
"We expect stable EBITDA margins in fiscal 2021 further supported
by lower discretionary spending. Although future EBITDA margins
should benefit from operating leverage, we expect this to be
largely offset in fiscal 2022 by significant investments in
research and development in order to improve Genesys' cloud
platform functionalities in areas such as artificial intelligence
and workforce engagement management."
Solid free operating cash flow (FOCF) generation and increased RCF
should provide sufficient liquidity. S&P said, "We expect Genesys
to generate at least $150 million of annual FOCF supported by
favorable net working capital changes from growing deferred revenue
related to recurring maintenance and cloud revenues, as well as
relatively modest capital expenditure (capex) of typically 1%-2% of
revenues excluding capitalized software development costs. In
addition to an increased $250 million RCF as part of the
refinancing, we expect Genesys to continue to maintain sufficient
liquidity even after accounting for potential shareholder dividends
or acquisitions."
S&P said, "The stable outlook reflects our expectation of modest
revenue growth and generally stable EBITDA margins in fiscal 2021
thanks to strong bookings in the first half of the fiscal year.
However, we expect a greater debt balance from the refinancing
transaction will increase leverage to the mid-8x area in fiscal
2021, before high-single-digit-percent revenue growth from
continued cloud adoption drives deleveraging below 8x in fiscal
2022.
"We could raise the rating over the next 12 months if Genesys is
able to maintain revenue growth and EBITDA margin expansion
supported by strong cloud bookings such that it is able to reduce
leverage toward the mid-7x area on a sustained basis, while
maintaining FOCF to debt above 5%.
"We could lower our rating if we deemed Genesys' capital structure
to be unsustainable due to a significant deterioration in the
company's liquidity or covenant headroom tightening to below 10%.
This could be driven by persistent weak FOCF from elevated product
investments combined with competitive pressures, causing revenue
declines and weakening EBITDA margins. It could also reflect
significant debt-funded acquisitions and dividends."
GROW INC: October 14 Plan & Disclosure Statement Hearing Set
------------------------------------------------------------
Judge Karen S. Jennemann will hold a hearing by video on October
14, 2020 at 2:45 p.m. in Orlando, Florida, to consider approval of
the disclosure statement explaining Grow, Inc.'s bankruptcy-exit
plan, as well as any objections.
If the Court determines the disclosure statement contains adequate
information under 11 U.S.C. Sec. 1125, Judge Jennemann will proceed
with a confirmation hearing, including hearing objections to
confirmation, 11 U.S.C. Sec.1129(b) motions, applications of
professionals for compensation, and applications for allowance of
administrative claims.
The Court may continue the hearing by announcement and without
further notice.
In an August 28 Order, Judge Jennemann conditionally approved the
Disclosure Statement and also ordered that:
* Creditors and other parties in interest shall file with the
clerk their written acceptances or rejections of the plan (ballots)
no later than seven days before the date of the Confirmation
Hearing.
* Any party objecting to the amended disclosure statement or
confirmation of the plan shall file its objection no later than
seven days before the date of the Confirmation Hearing.
* In accordance with Local Bankruptcy Rule 3018-1, Debtor's
counsel shall file a ballot tabulation no later than two days
before the date of the Confirmation Hearing.
* Four days prior to the Confirmation Hearing, the Debtor
shall file a confirmation affidavit which shall contain the factual
basis upon which the Debtor relies in establishing that each of the
requirements of 11 U.S.C. Sec. 1129 of the Bankruptcy Code are
met.
In an August 31 Order, but filed September 1, Judge Jennemann
extended the period within which the Debtor has the exclusive right
to propose and file a plan of reorganization by 120-day period to
August 31, and to obtain confirmation of the plan by 180-day period
through and including October 1, 2020.
Since the Petition Date, the Debtor has been diligently
administering its case and is taking steps to reach agreements with
its secured creditors in this case. There are 24 secured creditor
claims that will need to be valued in this case and have reached
agreements on value with 12 of these creditors. The Debtor hired
Bob Ewald in March to appraise the collateral on each of the
secured claims. The equipment inspection date was originally set
for March 21. Due to the Covid-19 pandemic, the equipment
inspection date was canceled and delayed. The Debtor has said it
would like to get appraisals on the collateral for the 12 creditors
that it has not reached an agreement on value with, and was working
with Bob Ewald to set up an inspection date.
In seeking an extension of the exclusivity periods, the Debtor said
it plans to try and resolve the values with each of the secured
creditors and intends to file motions to value if deals are not
made after its receipt of the appraisals. "We would like to have a
better idea as to what the allowed secured claims will be before
proposing a plan of reorganization," the Debtor said.
The Debtor originally asked to extend the plan exclusivity period
or through and including September 2, and the solicitation period
until the first hearing for confirmation of its proposed plan.
About Grow Inc.
Grow, Inc. is a privately held company whose principal assets are
located at 813 Lake McGregor Drive Fort, Myers, Fla.
Grow, Inc. sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Case No. 20-00959) on Feb. 3, 2020. In the
petition signed by Jeff Kaulbars, president, the Debtor estimated
$1 million to $10 million in both assets and liabilities.
Judge Karen S. Jennemann oversees the case. Michael A. Nardella,
Esq., at Nardella & Nardella, PLLC, is the Debtor's legal counsel.
No Official Committee of unsecured creditors is appointed in the
Debtor's case.
GRUPO AEROMEXICO: Bondholders and Apollo Clash Over $1B Loan
------------------------------------------------------------
Andrea Navarro of Bloomberg News and Justin Villamil of Bloomberg
Law reports that Apollo Global Management Inc. is clashing with a
group of bondholders over a $1 billion bankruptcy loan to Grupo
Aeromexico SAB, holding up the Mexican airline's restructuring
effort, said people familiar with the matter.
The disagreement stems from debate over how much power Apollo will
have to make key decisions, said the people, who asked not to be
named because the talks are private.
The bondholder group, which took part in the first $200 million
tranche of the debtor-in-possession financing led by Apollo, is
trying to hold on to bargaining power, the people said.
About Grupo Aeromexico
Grupo Aeromexico, S.A.B. de C.V. and three of its subsidiaries
sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No.
20-11563) on June 30, 2020. In the petitions signed by CFO Ricardo
Javier Sanchez Baker, the Debtors were estimated to have
consolidated assets and liabilities of $1 billion to $10 billion.
Grupo Aeromexico, S.A.B. de C.V. is a holding company whose
subsidiaries are engaged in commercial aviation in Mexico and the
promotion of passenger loyalty programs. Mexico's global airline
has its main hub at Terminal 2 at the Mexico City International
Airport. Its destinations network features the United States,
Canada, Central America, South America, Asia and Europe.
At the time of filing, the Group's operating fleet of 119 aircraft
is comprised of Boeing 787 and 737 jet airliners and Embraer 170
and 190 models. Aeromexico is a founding member of the SkyTeam
airline alliance, which celebrated its 20th anniversary, and serves
in 170 countries by the 19 SkyTeam airline partners. Aeromexico
created and implemented a Health and Sanitization Management
System
(HSMS) to protect its customers and employees at all steps of its
operations.
Davis Polk & Wardwell LLP and Cervantes Sainz are acting as
Aeromexico's legal counsel, Rothschild & Co. is acting as financial
advisor, and AlixPartners, LLP is serving as restructuring advisor
to the Company. Epiq Bankruptcy Solutions is the claims agent.
HAIRE TRUCKING : Files Voluntary Chapter 7 Bankruptcy Petition
--------------------------------------------------------------
Haire Trucking Co. LLC filed for voluntary Chapter 7 bankruptcy
protection on Aug. 27, 2020 (Bankr. N.D. Miss. Case No. 20-12642).
According to the Memphis Business Journal, the Debtor listed an
address of 120 Hwy. 341 S., Vardaman, Mississippi. Haire Trucking
Co. listed assets ranging from $100,001 to $500,000 and debts
ranging from $100,001 to $500,000. The filing did not identify a
largest creditor.
Haire Trucking Co. LLC is a trucking company running freight
hauling business from Vardaman, Mississippi.
The Debtor's counsel:
Robert Gambrell
Gambrell & Associates, PLLC
Tel: 662-281-8800
E-mail: rg@ms-bankruptcy.com
HARRISBURG UNIVERSITY: S&P Rates 2020 University Revenue Bonds 'BB'
-------------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term rating to the
Dauphin County General Authority, Pa.'s series 2020 university
revenue bonds, issued for Harrisburg University of Science and
Technology (HU). At the same time, S&P affirmed its 'BB' long-term
rating on HU's series 2017 bonds. The outlook on all ratings is
negative.
"The negative outlook reflects our opinion that in the face of the
ongoing global pandemic as well as the planned capital spending,
the university could face increased operating constraints, which
could potentially pressure its already below average available
resources," said S&P Global Ratings credit analyst Ruchika
Radhakrishnan. "This issuance will almost triple HU's outstanding
debt but despite this significant increase, the rating is
maintained due to management's history of generating substantial
operating margins, which should translate into balance sheet
growth. However, a lack of growth in the university's balance sheet
metrics may result in a lower rating," Ms. Radhakrishnan added.
S&P said, "In our view, higher education entities face elevated
social risk due to uncertainty on the duration of the COVID-19
pandemic and the uncertainty around its total effect on the
university's operations. We view the risks posed by COVID-19 to
public health and safety as a social risk under our ESG factors.
Despite elevated social risk, we consider HU's environment and
governance risks in line with our view of the sector."
Harrisburg University of Science and Technology is an independent
not-for-profit institution. It was incorporated in the commonwealth
of Pennsylvania in December 2001, making it the first independent
science and technology-focused, nonprofit university to be
established in Pennsylvania in more than 100 years.
HAWAIIAN AIRLINES: Fitch Cuts Ratings to B-, On Watch Negative
--------------------------------------------------------------
Fitch Ratings has downgraded Hawaiian Airlines, Inc. and its parent
company, Hawaiian Holdings, Inc. to 'B-' from 'B+'. The rating
downgrade is driven by the severe impact that the coronavirus
pandemic has had on air travel. The situation for Hawaiian is
exacerbated in the near-term by Hawaiian's reliance on tourist
travel to its home market and by travel restrictions in Hawaii,
which require a 14-day quarantine for anyone arriving to the
islands. The ratings have been placed on Negative Rating Watch,
reflecting the uncertainty around recovery in travel to the
Hawaiian Islands.
Although the state is set to allow travelers with a negative
COVID-19 test to bypass the quarantine starting in October, Fitch
expects the recovery in air travel to remain tepid while the
testing program remains in place and until vaccines or treatments
become more widely available.
KEY RATING DRIVERS
Market Concentration: Hawaiian's ratings have always been
constrained by its reliance on tourist travel to the Hawaiian
Islands. The coronavirus pandemic has highlighted that risk as
quarantine restrictions effectively pushed passenger travel down
95% in the second quarter. Fitch believes that there is a risk of a
longer recovery period for travel to Hawaii until a vaccine is
widely distributed due to the long-haul nature of the trip
segments, and the deterring nature a negative COVID-19 test
requirement prior to travel.
Hawaiian's neighbor island business may act as a partial offset to
weak long-haul demand; however, periodic local quarantine rules are
also having a major near-term impact on that market. The state of
Hawaii initially required a 14-day quarantine for all inter-island
travel, which was lifted in June and then partially reinstated in
August as COVID-19 cases increased.
Reduced Financial Flexibility: Fitch views Hawaiian as having
sufficient liquidity to survive through the crisis, assuming that
some level of demand starts to return over the course of 2021.
However, having utilized its loyalty program to secure a government
loan under the CARES Act and having accessed the EETC market with
previously unencumbered aircraft, Fitch believes that the company
has limited options to raise additional funds going forward. At
June 30, 2020, Hawaiian reported holding an estimated $860 million
worth of unencumbered aircraft. The sale-leaseback and enhanced
equipment trust certificate (EETC) markets have remained active
through the crisis and should ensure that Hawaiian can raise
additional capital on those assets. However, ensuring sufficient
liquidity will require a rebound in demand in the hard-hit Hawaiian
market.
Adequate Liquidity: Hawaiian ended the second quarter with a cash
balance of $761 million and an estimated cash burn rate of $3.2
million/day for the third quarter. After quarter end, the company
bolstered its liquidity with a $262 million EETC transaction and a
$114 million sale-leaseback. The company also secured access to
$420 million in loans through the CARES Act. Fitch expects these
actions to allow the company to reach year-end with a cash balance
of over $1 billion or roughly 12 months of cash cushion assuming no
improvement in cash burn rates. Fitch expects cash burn to improve
as a result of cost cuts and improving demand, particularly in the
second half of next year assuming continued progress on COVID-19
vaccines/treatments. Hawaiian's cash needs in 2021 are manageable
as it has no major debt maturities and limited planned capital
spending. The company is slated to take delivery of two 787-9s in
2021, but is currently in talks with Boeing on deferring those
deliveries, which would bring capex to a minimal level for next
year.
Intense Competition: Assuming that demand starts to return to the
market, the recovery for Hawaiian may be tempered by increased
competition as other U.S. carriers focus on winning more leisure
travel to offset declines in long-haul international and business
markets. For instance, United recently announced new routes to
Hawaii from Chicago and Newark starting next summer. A competitive
market and lower overall numbers of travelers may keep fares low
and limit Hawaiian's recovery in the near term.
Traffic Assumption Updates: Forecasting airline traffic beyond 2020
inherently involves a great deal of uncertainty due to unknowns
about future travel restrictions, the pace of new COVID-19 cases,
and importantly the timing/rollout of potential vaccines and
treatments. Nevertheless, Fitch's prior scenario, which anticipated
CY 2021 global traffic down by roughly 20% from the 2019 baseline
has become less likely. Updated forecasts for North American
airline rating cases will include 2021 traffic that is down by 30%
or more from the baseline. Traffic is unlikely to return to 2019
levels by 2023. Recovery will diverge between more domestic/leisure
focused airlines and carriers with heavier business travel and
international exposure, which will be slower to return. Lower
passenger traffic is partly offset by cargo demand, which has held
up relatively well, but still makes up a small portion of total
revenues. Scenarios may also vary by region across the globe as
countries exhibit more or less effective control of the virus.
Fitch's base case scenario for Hawaiian is more stressful than for
some other carriers due to the airlines' concentration in its home
market. The base forecast estimates that 2020 revenues are down by
nearly 70% from 2019 levels reflecting very limited rebound in the
third and fourth quarters. Fitch's model assumes that 2021 revenues
will remain down by more than 40% from 2019 with a rebound weighted
toward the second half of the year. These estimates compare to its
prior forecast that included revenue declines of approximately 50%
for 2020 and approximately 23% for 2021 compared with 2019 levels.
DERIVATION SUMMARY
Credit metrics have been pressured across airlines globally due to
the severe impact that the coronavirus pandemic has had on air
travel. The impact for Hawaiian has been more severe due to its
less diverse route structure that focuses heavily on travel to its
home market and significant travel restrictions that has deterred
air traffic to the state. None of the other North American airlines
in Fitch's rated universe exhibit such a high degree of reliance on
a single leisure-focused destination. Hawaiian's leverage metrics
are expected remain elevated over the next few years due to
increased debt and weakened profitability and are comparable to
American Airlines, which also exhibits leverage metrics below the
'B' category.
EETC Ratings
Hawaiian's EETC ratings were not covered in this review. Fitch
expects to complete a review of Hawaiian's EETC ratings in the
coming weeks. Rating actions are likely for subordinated tranches
that are linked to Hawaiian's issuer default rating.
KEY ASSUMPTIONS
Key assumptions in Fitch's rating case include:
-- Air traffic remaining materially below 2019 levels through the
next several years;
-- Jet fuel averaging around $1.55/gallon this year and $1.65 in
2021;
-- Yields remaining suppressed from 2019 levels through the
forecast period due to strained demand and increased competition.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Evidence of materially increasing traffic to the Hawaiian
Islands;
-- Cash burn rates trending towards breakeven;
-- Expectations for total adjusted debt/EBITDAR to fall below
5x;
-- FFO fixed-charge coverage moving toward 2x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to return to cash break-even over the next 9-12
months;
-- Total liquidity falling below $500 million;
-- FFO fixed-charge coverage sustained at or below 1x
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
HEARTLAND DENTAL: S&P Affirms 'CCC+' ICR & Alters Outlook to Stable
-------------------------------------------------------------------
S&P Global Ratings affirmed the 'CCC+' rating on Heartland Dental
LLC. And revised the outlook to stable from negative.
S&P's stable outlook reflects its expectation that Heartland will
sustain same-office growth and maintain a good liquidity position,
reducing the risk of a liquidity crisis during the next 12 months.
Heartland Dental demonstrated the ability to reduce costs and
preserve cash during the pandemic, thereby reducing the risk for a
downgrade. Second-quarter revenues were hurt by temporary clinic
closures, with revenues declining 40% on a year-over-year basis in
the second quarter, with a trough in April where revenues were down
90% compared to April 2019. As states started to reopen and
elective dental procedures resumed in May, the company began to see
a significant recovery in demand, recording close to 90% of
prior-year same-period revenues in July.
Heartland Dental also managed to reduce certain variable costs such
as dental supplies, lab fees, and marketing expenses. Its
compensation and benefit costs, however, increased as a percentage
of revenue because it decided to not furlough some dentists. It
also reduced growth initiatives and capital expenditures to
preserve cash.
The company has cash on the balance sheet of about $160 million and
the revolver that was previously drawn in March was fully repaid
after the second quarter. In addition, the company raised an
additional $200 million incremental first-lien term loan in August
which it has earmarked for new affiliations and building out new
offices. S&P expects the company to have adequate liquidity to
cover its fixed costs including financial obligations.
S&P said, "Although we project Heartland's performance could return
to similar to 2019 levels by 2021 given the recent improvement, the
longer-term impact of the pandemic remains uncertain. While
revenues ramped up in the summer with clinics reopened and patient
volumes increasing, we believe after fulfilling the pent-up demand
from earlier closures earlier, risk to the sustainability of future
demand in the middle of the pandemic remains." Until there is a
vaccine or cure for COVID-19, the longer-term impact of any change
in patient behavior will remain uncertain given the potential for
some patients choosing to seek care only when necessary and so the
demand for preventative dental care could fluctuate. Still, the
company's clinics are geographically diverse, which could provide
some ability to mitigate geographically limited outbreaks.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "Our stable outlook reflects our expectation that
Heartland will sustain same-office growth and maintain a good
liquidity position, reducing the risk for liquidity crisis for the
next 12 months and hence lower probability for a downgrade.
"We would consider a downgrade if performance weakens for a
prolonged period with no prospect for improvement, leading to
sustained negative free cash flow before growth capital
expenditure. In our view, this scenario could result in the
inability to refinance debt as it comes due or, in the case of more
severe cash flow deficits, a liquidity crisis.
"We could consider an upgrade if we believe the company can sustain
current debt levels over the long term. This would require a clear
deleveraging path to leverage around 9x-10x driven by EBITDA margin
expansion."
IANTHUS CAPITAL: Court Stalls Its $169M Debt Plan
-------------------------------------------------
Law360 reports that a beleaguered cannabis company iAnthus Capital
Holdings Inc. can't move forward with a plan to slash its $169
million in debt by more than a quarter, a Canadian court has ruled,
objecting to sweeping releases that would shield the company's top
brass from ongoing investor suits.
An Ontario judge on Monday said the company's plan to cut its debts
down to $121 million was fair and reasonable, dismissing the
arguments of investors who claim that it is tainted by
self-dealing, but he was uncomfortable with insulating iAnthus'
directors from claims by investors.
About iAnthus Capital Holdings Inc.
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).
On April 6, 2020, iAnthus said it did not make applicable interest
payments due on its 13.0% Senior Secured Debentures and 13.0%
Unsecured Convertible Debentures due on March 31, 2020. As of
March 31, 2020, the aggregate principal amount outstanding on
iAnthus' debt obligations total $159.2 million, including $97.5
million of Secured Debentures, $60.0 million of Unsecured
Debentures and $1.7 million of other debt obligations.
iAnthus explained that the decline in the overall public equity
cannabis markets, coupled with the extraordinary market conditions
that began in Q1 2020 due to the novel coronavirus known as
COVID-19 ("COVID-19") pandemic, have negatively impacted the
financing markets and have caused liquidity constraints for the
Company.
IMAGEWARE SYSTEMS: Secures $2.2 Million Equity Advance
------------------------------------------------------
ImageWare Systems, Inc., has closed a $2,187,000 senior secured
bridge loan, representing an advance against investor commitments
to purchase $10,935,000 in Series D Convertible Preferred Stock in
a proposed private placement.
The bridge loan matures on the six-month anniversary of the loan
and bears interest at the rate of 12% per annum. Upon closing of
the private placement of Series D Preferred, all principal and
accrued interest under the terms of the bridge loan will be
converted into shares of Series D Preferred. The bridge loan is
secured by all present after-acquired assets of the Company.
Proceeds from the bridge loan will be used for general corporate
and working capital purposes.
Kristin A. Taylor, President and CEO, said, "This strategic
financing, anchored by funds and accounts managed by Nantahala
Capital Management, LLC, supports ImageWare's plan for substantial
growth. We continue our focus of evolving ImageWare into a
"biometrics first" identity company. Our biometric solutions
enable Governments, Public Services, and Enterprises to transform
how they use identity to build trust with their employees,
partners, and customers, sell their products, and deliver their
services. We revolutionize traditional security models - providing
critical identity infrastructure, biometrically verified - to drive
effective employee and customer on-boarding, verification,
authentication, and access solutions, while giving the customer
full control of their data across a wide range of devices and
readers. We are targeting not only more public sector projects
(including state/local/federal law enforcement and public safety,
as well as national identity), but we are also carving out an
improved Enterprise offering.
"We are grateful to the institutional investors and existing
shareholders who believe in our organized new business plan and
talented management team," continued Taylor. "The successful
Series D Preferred commitments come on the heels of revenue from an
existing contract with the U.S. Department of Veterans Affairs to
provide smart badge technology and a new contract for professional
services to expand user functionality, valued at $1.2 million.
"These developments are in addition to our focus on rationalizing
our products and our operating expenses where we have eliminated
legacy products that were not generating revenue, and reduced
expenses that were weighing the business down. As a result of our
renewed focus, we are seeing measurable growth of our law
enforcement software and intend to aggressively go after more
international markets in the public safety sector in the coming
year," concluded Taylor.
Series D Preferred Financing
The private placement of Series D Preferred is expected to close in
approximately thirty days resulting in a minimum of $10 million and
a maximum of $15 million, subject to the satisfaction of certain
conditions to closing.
Organizational Restructuring
The Series D Preferred financing marks the beginning of many
proposed pivotal changes intended to increase shareholder value,
including:
* A restructuring of the Company's Board of Directors, leaving
only Kristin A. Taylor, president and CEO on the Board, with
four new members anticipated to join upon closing of the
Series D Preferred financing;
* A plan to list the Company's Common Stock on the NASDAQ
Capital Market;
* A strategic initiative to monetize the Company's
intellectual property with the objective of driving
incremental revenue through licensing its deep portfolio of
IP.
About ImageWare Systems
Headquartered in San Diego, CA, ImageWare Systems, Inc. --
http://www.iwsinc.com-- is a developer of mobile and cloud-based
identity management solutions, providing two-factor, biometric and
multi-factor cloud-based authentication solutions for the
enterprise. The company delivers next-generation biometrics as an
interactive and scalable cloud-based solution. ImageWare brings
together cloud and mobile technology to offer two-factor,
biometric, and multi-factor authentication for smartphone users,
for the enterprise, and across industries. The Company's products
are used to manage and issue secure credentials, including national
IDs, passports, driver licenses and access control credentials.
ImageWare recorded a net loss available to common shareholders of
$17.25 million for the year ended Dec. 31, 2019, compared to a net
loss available to common shareholders of $16.46 million for the
year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$7.81 million in total assets, $13.80 million in total liabilities,
$9.23 million in mezzanine equity, and a total shareholders'
deficit of $15.22 million.
Mayer Hoffman McCann P.C., in San Diego, California, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated May 15, 2020 citing that the Company does not generate
sufficient cash flows from operations to maintain operations and,
therefore, is dependent on additional financing to fund operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
INSPIRED CONCEPTS: Taps Adamy Valuation as Expert Valuation Witness
-------------------------------------------------------------------
Inspired Concepts, LLC seeks authority from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Adamy
Valuation Advisors, Inc. as its expert valuation witness.
Adamy Valuation will provide these services:
(i) attempting to reach a consensual resolution with Fifth
Third or
(ii) assisting Debtor in preparing for and providing expert
testimony during a valuation hearing at which the Court will
determine the amount of the Fifth Third secured claim.
The Debtor paid an initial refundable retainer of $10,000.
Adamy's hourly rates are:
Michelle Gallagher $400
Jacob Helwick $250
Other professionals $125 to $400
Michelle Gallagher, strategic partner of Adamy, attests that the
firm is a "disinterested person," as that term is defined 11 U.S.C.
Sec. 101(14); and (c) do not hold or represent an interest adverse
to Debtor's estate.
The firm can be reached through:
Michelle Gallagher
Adamy Valuation Advisors, Inc.
50 Louis St. NW Suite 405
Grand Rapids, MI 49503
Tel: 616-284-3700
About Inspired Concepts
Inspired Concepts LLC, a privately held investment and restaurant
management company in Mt. Pleasant, Mich., sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No.
20-20034) on Jan. 10, 2020. At the time of the filing, the Debtor
had estimated assets of between $500,000 and $1 million and
liabilities of between $1 million and $10 million. Judge Daniel S.
Oppermanbaycity oversees the case. Jeffrey Grasl, Esq., at Grasl,
PLC, was originally the Debtor's legal counsel. The Debtor later
hired Wernette Heilman PLLC as substitute counsel to Grasl, PLC.
INTELSAT SA: Examiner Hires Bernstein Shur Sawyer as Attorney
-------------------------------------------------------------
Robert Keach, Esq., the fee examiner appointed in the Chapter 11
cases of Intelsat S.A. and its affiliates, seeks approval from the
U.S. Bankruptcy Court for the Eastern District of Virginia to hire
his own firm, Bernstein, Shur, Sawyer & Nelson, P.A., as his legal
counsel.
The firm will provide these services:
a. Reviewing and assessing all Fee Applications and related
invoices for compliance with
i. Bankruptcy Code sections 327, 328, 329, 330, 331and/or
1103 as applicable, pursuant to each Retained Professional’s
retention order;
ii. the Federal Rules of Bankruptcy Procedure;
iii. the Local Rules;
iv. the Order (I) Establishing Certain Notice, Case
Management, and Administrative Procedures and (II) Granting Related
Relief [Docket No. 141] (the Case Management Order);
v. the Order (I) Establishing Procedures for Interim
Compensation and Reimbursement of Expenses for Retained
Professionals and (II) Granting Related Relief [Docket No. 425]
(the Interim Compensation Order); and
vi. the United States Trustee Guidelines for Reviewing
Applications for Compensation and Reimbursement of Expenses Filed
Under 11 U.S.C. Sec. 330, C.F.R. Part 58, Appendix A, and the
Guidelines for Reviewing Applications for Compensation and
Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 by
Attorneys in Large Chapter 11 Cases Effective as of November 1,
2013, at 28 C.F.R. Part 58, Appendix B (collectively the
Guidelines).
b. Assisting the Fee Examiner in any hearings or other
proceedings before the Court to consider the Fee Applications
including, without limitation, advocating positions asserted in the
reports filed by the Fee Examiner and on behalf of the Fee
Examiner;
c. Assisting the Fee Examiner with legal issues raised by
inquiries to and from the Retained Professionals and any other
professional services provider retained by the Fee Examiner;
d. Where necessary, attending meetings between the Fee
Examiner and the Retained Professionals;
e. Assisting the Fee Examiner with the preparation of
preliminary and final reports regarding professional fees and
expenses;
f. Assisting the Fee Examiner in developing protocols and
making reports and recommendations; and
g. Providing such other services as the Fee Examiner may
request.
Bernstein's hourly rates are:
Shareholders $335 to $610
Counsel $350 to $590
Associates $260
Paraprofessionals $190 to $230
The fees and expenses of the Fee Examiner and his counsel shall be
limited to an average of $200,000 per month.
The firm attests that it is a "disinterested person" within the
meaning of Sections 101(14) of the Bankruptcy Code.
The firm can be reached through:
Robert J. Keach, Esq.
BERNSTEIN, SHUR, SAWYER & NELSON P.A.
100 Middle Street
PO Box 9729
Portland, ME 04104-5029
Phone: 207 774-1200
Fax: 207 774-1127
About Intelsat
Intelsat S.A. 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. It is also a provider of commercial
satellite communication services to the U.S. government and other
select military organizations and their contractors. Intelsat's
administrative headquarters are in McLean, Va., and the company has
extensive operations spanning across the United States, Europe,
South America, Africa, the Middle East, and Asia. Visit
http://www.intelsat.comfor more information.
Intelsat and its affiliates concurrently filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va.
Lead Case No. 20-32299) on May 13, 2020. Debtors disclosed total
assets of $11,651,558,000 and total liabilities of $16,805,844,000
as of April 1, 2020. Judge Keith L. Phillips oversees the cases.
Debtors have tapped Kirkland & Ellis LLP and Kutak Rock LLP as
legal counsel, Alvarez & Marsal North America, LLC as restructuring
advisor, PJT Partners LP as financial advisor and investment
banker, Deloitte LLP as tax advisor, and Stretto as claims and
noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 27, 2020. The committee has tapped Milbank LLP and
Hunton Andrews Kurth LLP as legal counsel, FTI Consulting, Inc. as
financial advisor, Moelis & Company LLC as investment banker, Bonn
Steichen & Partners as special counsel, and Prime Clerk LLC and
Donlin, Recano & Company, Inc. as information agents.
INTELSAT SA: Examiner Hires Tavenner & Beran as Local Counsel
-------------------------------------------------------------
Robert Keach, Esq., the fee examiner appointed in the Chapter 11
cases of Intelsat S.A. and its affiliates, seeks approval from the
U.S. Bankruptcy Court for the Eastern District of Virginia to
retain Tavenner & Beran, PLC, as his local counsel.
The firm will provide these services:
a. Coordinating filings and assisting the Fee Examiner with
compliance with:
i. the Local Rules and practices of this Court;
ii. the Order (I) Establishing Certain Notice, Case
Management, and Administrative Procedures and (II) Granting Related
Relief [Docket No. 141] (the Case Management Order); and
iii. the Order (I) Establishing Procedures for Interim
Compensation and Reimbursement of Expenses for Retained
Professionals and (II) Granting Related Relief [Docket No. 425]
(the Interim Compensation Order); and
b. Attending hearings with the Fee Examiner as required by
Local Rule 2090-1(H).
Tavenner & Beran's hourly rate structure ranges from $275 to $495
for attorneys and $115 for paraprofessionals.
The firm attests that it is a "disinterested person" within the
meaning of Sections 101(14) of the Bankruptcy Code.
The firm can be reached through:
Lynn L. Tavenner, Esq. (Va. 30083)
Paula S. Beran, Esq. (Va. 34679)
David N. Tabakin, Esq. (Va. 82709)
TAVENNER & BERAN, PLC
20 North Eighth Street, Second Floor
Richmond, VA 23219
Telephone: (804) 783-8300
Fax: (804) 783-0178
Email: ltavenner@tb-lawfirm.com
Email: pberan@tb-lawfirm.com
Email: dtabakin@tb-lawfirm.com
About Intelsat
Intelsat S.A. 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. It is also a provider of commercial
satellite communication services to the U.S. government and other
select military organizations and their contractors. Intelsat's
administrative headquarters are in McLean, Va., and the company has
extensive operations spanning across the United States, Europe,
South America, Africa, the Middle East, and Asia. Visit
http://www.intelsat.comfor more information.
Intelsat and its affiliates concurrently filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va.
Lead Case No. 20-32299) on May 13, 2020. Debtors disclosed total
assets of $11,651,558,000 and total liabilities of $16,805,844,000
as of April 1, 2020. Judge Keith L. Phillips oversees the cases.
Debtors have tapped Kirkland & Ellis LLP and Kutak Rock LLP as
legal counsel, Alvarez & Marsal North America, LLC as restructuring
advisor, PJT Partners LP as financial advisor and investment
banker, Deloitte LLP as tax advisor, and Stretto as claims and
noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 27, 2020. The committee has tapped Milbank LLP and
Hunton Andrews Kurth LLP as legal counsel, FTI Consulting, Inc. as
financial advisor, Moelis & Company LLC as investment banker, Bonn
Steichen & Partners as special counsel, and Prime Clerk LLC and
Donlin, Recano & Company, Inc. as information agents.
IPC CORP: S&P Lowers ICR to 'CCC', Outlook Negative
---------------------------------------------------
S&P Global Ratings lowered all of its ratings on Global trading
communication systems, compliance solutions, and network services
provider IPC Corp. by one notch to 'CCC' from 'CCC+', including its
issuer credit rating, because S&P believes the timeframe for a
distressed exchange or bankruptcy filing is now within a year given
its August 2021 debt maturities.
The negative outlook reflects the potential that S&P will lower its
rating if it believes a default is likely in the next six months.
IPC Corp.'s debt burden remains elevated relative to its earnings
base with S&P Global Ratings-adjusted leverage of 9.8x for the 12
months ended June 30, 2020.
The downgrade reflects the heightened risk around the company's
ability to refinance about $785 million of first-lien debt maturing
in August 2021. S&P said, "Given IPC's capital structure, which we
view as unsustainable, and challenging longer-term business
prospects, we believe it will face difficulty in refinancing its
obligations as they come due and may pursue a restructuring as an
alternative. We would view this as tantamount to a default if its
investors receive less than they were originally promised under the
security."
S&P said, "We expect IPC's leverage to remain elevated at about
9.5x through 2021 as accruing paid-in-kind (PIK) interest on its
second-lien debt offsets a modest earnings improvement supported by
its earlier cost-cutting initiatives. Beyond 2021, we project flat
to modest earnings growth, as declines in the company's legacy
services partially offset growth in its subscription-based Unigy
business." Like its industry peers, IPC faces secular pressure in
part due to equity traders' need for voice trading systems, which
have has been replaced by computer automation. These competitive
pressures, coupled with the roll-out costs associated with the
company's entry into new markets and products, will limit its
earnings growth.
Despite IPC's leading position in a very niche market, it has a
concentrated product line primarily focused on the financial
services sector. Given the uncertainty in the global economy and
credit markets, any unexpected drop in trading volume could cause
financial institutions to scale back their capital markets
platforms or delay upgrades.
S&P said, "The negative outlook reflects the potential that we will
lower our rating if we believe a default is likely in the next six
months.
"We could lower our rating on IPC if we believe a default or
distressed exchange appears inevitable in the next six months.
"We could raise our rating on IPC by one notch if it successfully
extends its maturity profile beyond 2021, which would likely be due
to an unforeseen improvement in the company's legacy communications
products business."
IRON HORSE: Seeks Approval to Hire ARG Partners, Appoint CRO
------------------------------------------------------------
Iron Horse Tools, L.L.C seeks authority from the U.S. Bankruptcy
Court for the Southern District of Texas to hire ARG Partners, LLC,
and designate Chris Welsh as its chief restructuring officer.
Mr. Welsh is the managing partner of ARG Partners with 31 years of
experience in commercial lending, distressed transactions,
including restructuring, turnaround, workouts, going concern assets
sales.
The services Mr. Welsh and his firm will perform are as follows:
(a) analyzing the business, operations and financial condition
of Debtor;
(b) assisting the Debtor with managing short term liquidity,
including the preparation of, inter alia, 13-week cash flow
forecasts and monitoring short term liquidity;
(c) assisting the Debtor with preparing financial analyses;
(d) evaluating strategic alternatives;
(e) assisting the Debtor with the preparation of data in order
to prepare pleadings and fiduciary filings required in the Debtor's
bankruptcy proceeding;
(f) providing testimony on such matters that are within ARG's
expertise;
(g) executing restructuring initiatives, including structuring
plans of reorganization, assisting in the sale of all or parts of
the Debtor, including any marketing thereof and liquidating
assets;
(h) assisting the Debtor and its counsel in negotiations with
various parties in-interest; and
(i) supporting the Debtor in such matters as the board of
directors of the Debtor shall request or require from time to
time.
Debtor paid ARG a $36,000 retainer and agreed to pay the firm on an
hourly basis. The firm' hourly rates are as follows:
CRO $400 capped at $7,500 per week.
Principal $375
Director $300
Senior Consultant/Analysts $175
Mr. Welsh disclosed in court filings that ARG is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Christopher A. Welsh
ARG Partners, LLC
3245 Main St., Suite 235-330
Frisco, TX 75034
Phone: 214-604-5457
About Iron Horse Tools LLC
Founded in 2008, Iron Horse Tools, L.L.C --
http://www.ironhorsetools.com-- is a provider of pressure
control-related equipment and services, serving the oil and gas
plays throughout the United States. Iron Horse Tools equipment is
manufactured for the oilfield by Gardner Denver, T3 Energy
Services, and Cortec.
Iron Horse Tools filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No.
20-20272) on Aug. 18, 2020. The petition was signed by Joey
Phillips, manager and president. At the time of the filing, Debtor
had estimated assets of less than $50,000 and liabilities of
between $10 million and $50 million.
Judge David R. Jones oversees the case.
Howard Marc Spector, Esq. at Spector & Cox, PLLC, serves as
Debtor's legal counsel.
J.C. PENNEY: Akin Gump Represents First Lien Minority Group
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Akin Gump Strauss Hauer & Feld LLP submitted a
verified statement to disclose that it is representing the First
Lien Minority Group in the Chapter 11 cases of J.C. Penney Company,
Inc., et al.
The First Lien Minority Group comprising certain unaffiliated
holders of (i) term loans under that certain Amended and Restated
Credit and Guaranty Agreement, dated as of June 23, 2016, by and
among, inter alios, J.C. Penney Corporation, Inc., as borrower, and
the lenders party thereto, (ii) 5.875% first lien senior secured
notes due July 2023 issued by J.C. Penney Corp. on June 23, 2016
and (iii) 8.625% second lien secured notes due March 2025.
The First Lien Minority Group engaged Akin Gump Strauss Hauer &
Feld LLP on September 8, 2020 to represent it in connection with
the Debtors' chapter 11 cases.
Akin Gump represents only the First Lien Minority Group. Akin Gump
does not represent the First Lien Minority Group as a "committee"
and does not undertake to represent the interests of, and is not a
fiduciary for, any creditor, party in interest or other entity that
has not signed a retention agreement with Akin Gump. In addition,
the First Lien Minority Group does not represent or purport to
represent any other entities in connection with the Debtors'
chapter 11 cases.
As of Sept. 30, 2020, members of the First Lien Minority Group and
their disclosable economic interests are:
Aurelius Capital Management, LP
535 Madison Ave. 31st Floor
New York, NY 10022
* Term Loans: $45,384,990.00
* First Lien Notes: $8,000,000.00
* Unsecured Bonds: $2,000.00
* DIP Loans: $12,021,949.00
Avenue Europe International Management, L.P.
11 West 42nd St.
New York, NY 10036
* First Lien Notes: $8,616,000.00
* DIP Loans: $1,646,000.00
Bank of America, N.A.
900 West Trade St.
Charlotte, NC 28202
* Term Loans: $3,080,460.00
BofA Securities, Inc.
One Bryant Park
New York, NY 10036
* First Lien Notes: $12,562,000.00
* Second Lien Notes: $31,566,000.00
* Unsecured Bonds: $52,416,992.00
Canaras Capital Management, LLC
130 West 42nd St. Suite 1500
New York, NY 10036
* Term Loans: $3,957,971.74
Carlson Capital, L.P.
2100 McKinney Ave. Suite 1800
Dallas, TX 75201
* Term Loans: $20,901,587.84
* First Lien Notes: $5,000,000.00
* Second Lien Notes: $26,440,000.00
* DIP Loans: $4,952,741.94
Cetus Capital LLC
8 Sound Shore Dr. Suite 303
Greenwich, CT 06830
* Term Loans: $7,924,326.10
* First Lien Notes: $28,962,000.00
* Second Lien Notes: $43,125,000.00
* DIP Loans: $5,538,000.00
Credit Suisse Loan Funding LLC
Eleven Madison Ave. 4th Floor
New York, NY 10010
* Term Loans: $3,924,276.67
* First Lien Notes: $8,000,000.00
* Second Lien Notes: $11,798,000.00
* Unsecured Bonds: $6,812,000.00
* DIP Loans: $4,375,607.74
D.E. Shaw Galvanic Portfolios, L.L.C.
1166 Avenue of the Americas
9th Floor
New York, NY 10036
* Term Loans: $11,591,451.36
* First Lien Notes: $24,346,000.00
* DIP Loans: $2,014,174.66
First Pacific Advisors, LP
11601 Wilshire Blvd. Suite 1200
Los Angeles, CA 90025
* Term Loans: $30,894,957.47
* DIP Loans: $6,939,939.08
FS Global Advisor, LLC
201 Rouse Blvd.
Philadelphia, PA 19112
* Term Loans: $6,338,421.00
* First Lien Notes: $2,000,000.00
* DIP Loans: $1,596,006.00
GoldenTree Asset Management LP
300 Park Ave. 21st Floor
New York, NY 10022
* Term Loans: $6,621,309.00
* Second Lien Notes: $28,535,000.00
* DIP Loans: $1,265,978.00
LMR Partners LLC
363 Lafayette St. 10th Floor
New York, NY 10012
* First Lien Notes: $35,057,000.00
* DIP Loans: $2,576,000.00
MFP Partners, L.P.
909 3rd Ave. 33rd Floor
New York, NY 10022
* Term Loans: $4,197,456.70
* DIP Loans: $802,543.30
MSD Partners, L.P.
645 Fifth Ave. 21st Floor
New York, NY 10022
* Term Loans: $12,617,809.00
* First Lien Notes: $5,851,000.00
* DIP Loans: $7,031,190.54
Par Four Investment Management LLC
50 Tice Blvd. Suite 314
Woodcliff Lake, NJ 07677
* Term Loans: $4,583,143.84
Amounts set forth in this disclosure exclude accrued and unpaid
interest, costs, fees, redemption premiums or other amounts to
which the members of the First Lien Minority Group may be entitled.
Nothing contained herein should be construed as a limitation upon,
or waiver of, any of the First Lien Minority Group members' right
to assert, file and/or amend any claims in accordance with
applicable law and any orders entered in these chapter 11 cases.
Akin Gump reserves the right to amend or supplement this Verified
Statement in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel to the First Lien Minority Group can be reached at:
AKIN GUMP STRAUSS HAUER & FELD LLP
Marty L. Brimmage, Jr., Esq.
Lacy M. Lawrence, Esq.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Telephone: (214) 969-2800
Facsimile: (214) 969-4343
Email: mbrimmage@akingump.com
llawrence@akingump.com
- and -
Ira S. Dizengoff, Esq.
Philip C. Dublin, Esq.
Brad Kahn, Esq.
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Email: idizengoff@akingump.com
pdublin@akingump.com
bkahn@akingump.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/30wDDs8
About J.C. Penney
J.C. Penney Company, Inc. -- http://www.jcpenney.com/-- is an
apparel and home retailer, offering merchandise from an extensive
portfolio of private, exclusive, and national brands at over 850
stores and online. It sells clothing for women, men, juniors, kids,
and babies.
On May 15, 2020, J.C. Penney announced that it has entered into a
restructuring support agreement with lenders holding 70% of its
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, J.C. Penney 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). At the time of the filing, J.C. Penney disclosed
assets
of between $1 billion and $10 billion and liabilities of the same
range.
Judge David R. Jones oversees the cases.
The Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as
legal counsel; Katten Muchin Rosenman, LLP as special counsel;
Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as
restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk
is the claims agent, maintaining the page
http://cases.primeclerk.com/JCPenney
A committee of unsecured creditors has been appointed in Debtors'
Chapter 11 cases. The committee is represented by Cole Schotz,
P.C., and Cooley, LLP.
J.C. PENNEY: Court Delays $1-Mil. Shareholder Deal Ruling
---------------------------------------------------------
Jeremy Hill of Bloomberg News reports that J.C. Penney Co. has
agreed to give an additional $750,000 to an informal group of
shareholders to help it pay for advisers, but U.S. Bankruptcy Judge
David Jones delayed ruling on the deal and sought more input from
stockholders.
Judge Jones's decision came after a shareholder spoke in opposition
of the compromise in a Wednesday court hearing, saying he would
prefer official committee status
Jones instructed the shareholder to poll other stockholders on
their views and return for another hearing on Oct. 14, 2020.
Under the settlement, J.C. Penney would raise the ad hoc equity
committee's budget to $1 million.
About J.C. Penney Corp. Inc.
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
The Official Committee of Unsecured Creditors formed in the Chapter
11 cases tapped Cooley LLP and Cole Schotz P.C. as co-counsels and
FTI Consulting, Inc. as financial advisor.
J.C. PENNEY: Panel Seeks to Modify Compensation Terms for Jefferies
-------------------------------------------------------------------
The official committee of unsecured creditors of J.C. Penney
Company, Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to modify the
compensation terms for its investment banker, Jefferies LLC.
The modified compensation terms are as follows:
(a) The proposed transaction fee will be reduced by 50 percent
from $6 million to $3 million.
(b) The "plan support" toggle feature of the transaction fee
will be eliminated.
(c) Jefferies will forgo the transaction fee in the event the
Debtors confirm a liquidating plan.
Jefferies can be reached through:
Robert J. White
Jefferies LLC
520 Madison Avenue
New York, NY 10022
Telephone: (212) 284-2300
About J.C. Penney Corp.
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.
The Official Committee of Unsecured Creditors appointed to the
Chapter 11 cases tapped Cooley LLP and Cole Schotz P.C. as
co-counsel and FTI Consulting, Inc., as financial advisor.
J2 GLOBAL: Moody's Rates New $1.2BB Senior Notes Due 2030 'Ba3'
---------------------------------------------------------------
Moody's Investors Service affirmed J2 Global, Inc.'s B1 corporate
family rating (CFR) and B1-PD probability of default rating (PDR)
and assigned a Ba3 rating to the company's proposed $1.2 billion
senior notes due 2030 to be issued by J2. The Ba3 rating on the
existing $650 million senior unsecured notes due 2025, issued by j2
Cloud Services, LLC, is expected to be withdrawn upon transaction
close. The speculative grade liquidity (SGL) rating is unchanged at
SGL-1. The outlook is stable.
The rating actions follow the company's announcement [1] that it
had agreed to acquire RetailMeNot (RMN) for $420 million in cash.
The proceeds from the new notes will be used to repay the $650
million senior unsecured notes due 2025, fund the RMN acquisition
and the balance will be kept on balance sheet. A key driver of the
rating action is J2's financial policy which balances an appetite
for acquisitions with a publicly stated commitment to maintain
run-rate leverage at or below 3x (save for temporary spikes
following M&A).
Affirmations:
Issuer: J2 Global, Inc.
Probability of Default Rating, Affirmed B1-PD
Corporate Family Rating, Affirmed B1
Assignments:
Issuer: J2 Global, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD3)
Outlook Actions:
Issuer: J2 Global, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
J2's B1 CFR reflects strong credit metrics including the company's
stated guidance to maintain gross debt/EBITDA at a maximum of 3x on
a run-rate basis, allowing for increases in times of sizeable M&A.
The B1 CFR also reflects J2's history of steady revenue growth and
very good liquidity. J2's business model is one that requires low
capital intensity which, coupled with the company's low interest
costs, means that J2 is able to generate strong free cash flows. In
2020 Moody's expects the company to generate at least $320 million
of free cash flow. The company reinvests the bulk of its cash into
growing its businesses, with a focus on digital media, through
small to medium sized acquisitions. J2's M&A strategy focuses on
businesses where synergies are material and can be achieved within
12 months (24 months for more sizeable targets).
J2's CFR also reflects Moody's expectations that gross debt/EBITDA
(Moody's adjusted) will be around 3.5x for 2020 pro forma for the
incremental debt from the new $1.2 billion notes as well as the
expected EBITDA contribution from the RMN acquisition. While this
is above Moody's guidance of a leverage at or below 3x for the
current rating, the company's high cash balance, expected at nearly
$840 million by year end and Moody's expectation that leverage will
decline back to near 3x in the next 12-18 months mitigate the
temporary increase. While J2's strategy to grow through
acquisitions has proven accretive to both earnings and cash flows
in the past, it incorporates high execution risk. Also, most
acquisitions, as is the case for RMN, have focused on the company's
Digital Media segment which has good growth prospects but offers
lower margins and lower revenue visibility than J2's cloud segment.
The rating also incorporates concerns over the longevity of the
company's main Cloud Services' business, which is centered around
internet fax. With new digital platforms providing alternative
means for sending documents and with key patents expiring, the
company's competitive position in the internet fax market remains
at risk of weakening despite current customer stickiness, low price
points and functional value.
The response to the coronavirus outbreak with stay at home orders,
rapid unemployment increases and a deteriorating economic outlook
led to advertising demand -- which is correlated to the economic
cycle and consumer confidence -- declining materially in Q2 2020.
Moody's regards the current pandemic as a social risk under its ESG
framework, given the substantial implications for health and
safety. Despite J2's exposure to advertising (39% of revenue) the
company managed to grow its Digital Media segment's revenue by 7%
in Q2 2020 as its exposure to some of the most affected verticals
(such as travel, food, and auto) is very limited.
Despite its highly acquisitive growth strategy, J2 maintains a
well-defined financial policy regarding its leverage which it has
publicly committed to maintain around 3x (gross debt to EBITDA as
calculated by the company). In periods of a material acquisition,
such as for RMN, the company will allow its leverage to increase
above its guidance for a limited period. J2 is not currently a
buyer of its shares but may become one in the future by applying
some of the large cash balance it is expected to accumulate.
The SGL-1 speculative grade liquidity rating indicates a very good
liquidity profile, supported by high cash balances and strong free
cash flow generation. As of 30 June 2020, J2 had $617 million of
cash on hand and $100 million of availability under its $100
million revolver which is expected to remain fully available over
the coming 18 months. J2 continues to generate strong free cash
flow for the LTM period ended 30 June 2020, the company generated
FCF of $352 million. The company's cash balances, cash flows and
its revolving credit facility provide ample flexibility to
accommodate M&A. The revolver contains three financial covenants
which Moody's expects the company to be well in compliance with.
The company has no near-term maturities, with the next earliest
maturity being the revolver.
The instrument ratings reflect the probability of default of the
company, as reflected in the B1-PD Probability of Default Rating,
an average expected family recovery rate of 50% at default, and the
instruments' ranking in the capital structure. The Ba3 rating on
J2's new 2030 $1.2 billion of senior unsecured notes issued by J2
Global, Inc. reflects the fact the notes benefit from guarantees
from all material operating subsidiaries, and rank ahead of the
unrated convertible notes.
The stable outlook reflects Moody's view that the company will
maintain revenue growth, partly through acquisitions, and grow
EBITDA and free cash flow while leverage (Moody's adjusted)
declines back to around 3x in the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if leverage (Moody's adjusted)
declined below 2.0x on a sustained basis and free cash flow to debt
(Moody's adjusted) was sustained above 20%.
Moody's could downgrade the ratings if leverage (Moody's adjusted)
was sustained at or above 3.0x or free cash flow to debt (Moody's
adjusted) fell below 10% on sustained basis. Downward ratings
pressure would also ensue should the company's liquidity position
deteriorate.
Based in Los Angeles, CA, J2 Global, Inc. is a provider of business
cloud services and digital media. The company's main cloud services
subsidiary derives the majority of its revenue from telephone
number-based subscription services, such as unified voice and
electronic fax services, with the remainder derived from
non-telephone number-based services, specifically backup and
storage, email and endpoint security and customer relationship
management services. J2's digital media subsidiary mainly operates
web properties providing reviews of technology and gaming products
as well as lifestyle and healthcare articles, related news and
commentary.
The digital media subsidiary derives revenue primarily from display
and video advertising, performance-based advertising, and some
subscription-based products. For the last 12 months ended 30 June
2020, J2 generated approximately $1.41 billion in revenue and $560
million in EBITDA.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
JAGUAR HEALTH: Signs $5M Royalty Financing Transaction with Lender
------------------------------------------------------------------
Jaguar Health, Inc. has signed an agreement with a secured lender
for a non-dilutive royalty financing transaction, pursuant to which
Jaguar would sell to the Lender for an aggregate purchase price of
$5 million a royalty interest entitling the Lender to receive 2.0x
the Royalty Purchase Price of future royalties on sales of Mytesi
(crofelemer) and certain up-front license fees and milestone
payments from licensees and/or distributors. Upon mutual
agreement, the parties may agree to consummate additional royalty
financings of $5 million and $6 million in February 2021 and July
2021, respectively, for a total of $16.0 mm.
Jaguar intends to use the proceeds to support regulatory activities
associated with the Company's development pipeline, including
funding the pivotal clinical trial for Mytesi (crofelemer) for the
proposed indication of cancer therapy-related diarrhea (CTD). The
CTD trial is expected to initiate in the fourth quarter of 2020.
The agreement is binding subject to certain closing conditions.
"We are very pleased to have this option for non-dilutive funding
to fulfill our strategic planning to fund the pipeline
opportunities for Mytesi, a transaction which does not result in
any dilution of our shareholders," Lisa Conte, Jaguar's president
and CEO, commented. "The strength in the growth in sales of Mytesi
for the current indication of HIV-related diarrhea provides basis
for this important financial opportunity. We may consider entering
into similar agreements in the future and of course business
development relationships as additional sources of non-dilutive
funding."
Mytesi is a non-opiate, plant-based, chloride ion channel
modulating antidiarrheal medicine that is FDA approved for the
symptomatic relief of noninfectious diarrhea in adult patients with
HIV/AIDS receiving antiretroviral therapy. The only oral
plant-based prescription medicine approved under FDA Botanical
Guidance, Mytesi has a novel mechanism of action that works locally
in the gut by gently and effectively modulating and normalizing the
flow of water and electrolytes with minimal systemic absorption.
About Jaguar Health
Jaguar Health, Inc. -- http://www.jaguar.health-- is a commercial
stage pharmaceuticals company focused on developing novel,
sustainably derived gastrointestinal products on a global basis.
The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc.,
focuses on developing and commercializing proprietary human
gastrointestinal pharmaceuticals for the global marketplace from
plants used traditionally in rainforest areas. Its Mytesi
(crofelemer) product is approved by the U.S. FDA for the
symptomatic relief of noninfectious diarrhea in adults with
HIV/AIDS on antiretroviral therapy.
Jaguar reported a net loss of $38.54 million for the year ended
Dec. 31, 2019, compared to a net loss of $32.15 million for the
year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$37.58 million in total assets, $25.16 million in total
liabilities, $10.88 million in Series A redeemable convertible
preferred stock, and $1.54 million in total stockholders' equity.
Mayer Hoffman McCann P.C., in San Francisco, California, the
Company's auditor since 2019, issued a "going concern"
qualification in its report dated April 2, 2020 citing that the
Company has experienced losses since inception, significant cash
used in operations, and is dependent on future financing to meet
its obligations and fund its planned operations. These conditions
raise substantial doubt about its ability to continue as a going
concern.
JCP INDUSTRIES: Files Voluntary Chapter 7 Petition
--------------------------------------------------
JCP Industries LLC filed for voluntary Chapter 7 bankruptcy
protection (Bankr. N.D. Cal. Case No. 3:20-bk-30732) on Sept. 17,
2020. A meeting of creditors is scheduled for Oct. 21, 2020.
The debtor listed an address of 2011 Mezes Ave., Belmont,
California, and is represented in court by attorney Vaughn C. Taus.
JCP Industries listed assets up to $6,010 and debts up to
$3,346,902. The filing's largest creditor was listed as Travelers
Casualty and Surety Co. with an outstanding claim of $2,662,498.
The Debtor's counsel:
Vaughn C. Taus
Law Offices Of Vaughn C. Taus
Tel: 805-542-0155
E-mail: tauslawyer@gmail.com
About JCP Industries
Founded in 2005, JCP Industries LLC's line of business includes the
retail sale of a general line of apparel, dry goods, hardware,
housewares or home furnishings, and groceries.
JEFFERIES FINANCE: Fitch Rates $350MM Term Loan Due 2027 'BB'
-------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to the $350 million senior
secured term loan maturing in October 2027 issued by Jefferies
Finance LLC and its debt co-issuing subsidiary, JFIN Co-Issuer
Corporation.
The assignment of the final rating follows the receipt of documents
conforming to information already received. The final rating is the
same as the expected rating assigned to the term loan on Sept. 22,
2020. Fitch does not expect the issuance to have an impact on
JFIN's leverage as the company used the proceeds along with balance
sheet cash to repay $369.1 million of 7.250% senior unsecured notes
due August 2024.
KEY RATING DRIVERS
SENIOR DEBT
The rating on the new senior secured term loan is equalized with
the rating assigned to JFIN's existing senior secured term loan and
senior secured notes, as the new term loan ranks equally in the
capital structure. The secured debt rating is equalized with JFIN's
Long-Term Issuer Default Rating (IDR), reflecting Fitch's
expectation for average recovery prospects under a stressed
scenario.
As part of the transaction, JFIN also upsized the capacity under
its senior secured priority revolving credit facility by $20
million. Fitch rates JFIN's senior secured priority revolving
credit facility 'BB+', which is one notch above the Long-Term IDR,
reflecting Fitch's expectation for good recovery prospects given
strong asset coverage and the relatively low portion of first-out
debt in JFIN's funding profile.
JFIN uses term collateralized loan obligations (CLOs), revolver
CLOs and warehouse facilities to finance the funded loan portfolio
(portfolio funding debt), while the senior secured term loans and
senior notes issuances (collectively, non-funding debt) and
short-term fronting lines (funding debt) have been used to fund the
underwriting business. The firm also has a corporate revolver
(funding debt) to be used for general corporate purposes. At May
31, 2020 (fiscal 2Q20), unsecured debt represented 6% of JFIN's
total debt outstanding and 24.5% of non-funding debt. Following the
redemption of the 2024 notes, which occurred on Oct. 1, 2020, JFIN
has a fully secured funding profile.
Fitch believes an unsecured funding component enhances funding
flexibility, particularly in times of stress and, therefore, views
the redemption of the unsecured notes unfavorably. Still, Fitch
recognizes the benefits to fixed charge coverage resulting from the
reduction in interest expense and views JFIN's funding profile as
relatively diverse for its rating. Fitch believes JFIN's unsecured
debt issuance will be opportunistic over time as CLOs remain a
cost-effective way to fund the loan portfolio. In addition to the
debt funding sources, JFIN had $195.2 million of undrawn equity
commitments from Jefferies Group LLC (Jefferies) and Massachusetts
Mutual Life Insurance Company (MassMutual) at fiscal 2Q20. During
fiscal 2Q20, JFIN added $1.2 billion of short-term credit
facilities with $1 billion dedicated to underwriting commitments
and $200 million for revolver draws. While these facilities have
since been terminated, Fitch viewed the company's ability to access
additional liquidity sources amid the challenging market backdrop
favorably.
JFIN's ratings remain supported by the benefits of the firm's
relationship with Jefferies (BBB/Stable), which provides the firm
with access to underwriting deal flow and the resources of the
broader platform, JFIN's strong and experienced management team and
supportive ownership from Jefferies and MassMutual (AA/Stable).
Both Jefferies and MassMutual have provided JFIN with debt funding
and incremental equity investments over time to support business
expansion. JFIN's ratings also reflect its focus on senior lending
relationships in the funded portfolio, absence of material
portfolio concentrations, solid asset quality performance
historically, and sufficient liquidity.
Rating constraints include higher than peer leverage, a fully
secured funding profile, potential liquidity, and leverage impacts
of meaningful draws on revolver commitments, and sensitivity of
deal flow and syndication capabilities to market conditions. The
ratings also contemplate the aggressive underwriting conditions in
the broadly syndicated market in recent years, including higher
underlying leverage, meaningful EBITDA adjustments, and, in many
cases, the absence of financial covenants. Fitch believes a
sustained slowdown in the economy resulting from the coronavirus
pandemic is likely to translate to asset quality issues more
quickly, given the limited embedded financial cushion in most
portfolio credits and weaker lender flexibility in credit
documentation.
The Negative Rating Outlook for JFIN's Long-Term Issuer Default
Rating (IDR) reflects the recent earnings pressure resulting from
lower transaction volume following the onset of the coronavirus
pandemic and potential for weaker asset quality metrics. While
Fitch believes that syndication trends and transaction volume have
improved in recent weeks, which could translate into better
earnings for JFIN during the second half of fiscal 2020, increased
loan loss provisions, write-downs of investments and/or realized
losses could continue to negatively affect the firm's leverage.
SUBSIDIARY AND AFFILIATED COMPANY
The Long-Term IDR and debt ratings of JFIN Co-Issuer Corporation
are equalized with those of its parent, JFIN. JFIN Co-Issuer
Corporation is essentially a shell finance subsidiary, with no
material operations and is a co-issuer on the corporate revolver,
secured term loans and secured notes.
RATING SENSITIVITIES
SENIOR DEBT
The secured debt rating is sensitive to changes in JFIN's Long-Term
IDR and to the recovery prospects of the secured debt. The secured
debt rating is expected to move in tandem with JFIN's Long-Term
IDR.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Long-Term IDR
A revision of the Outlook to Stable could occur if JFIN maintains
leverage around or below 4.5x, successfully syndicates commitments
over the near to medium term without a material adverse impact on
earnings, maintains sufficient liquidity and demonstrates
relatively stable credit performance of the funded loan portfolio,
which would be evaluated in the context of realized losses and
underlying portfolio metrics.
Fitch believes the likelihood of a ratings upgrade over the medium
term is limited given the potential for weaker credit metrics and
the challenging economic backdrop from the coronavirus pandemic as
well as the fully secured funding profile resulting from the
redemption of the 2024 notes. Longer-term, positive rating momentum
could be driven by enhanced funding diversity, including a material
increase in the proportion of unsecured funding, a decline in
leverage approaching 3.0x, a continued improvement in the firm's
liquidity profile, particularly as it relates to undrawn revolver
commitments, as well as evidence of strong asset quality
performance of the funded loan portfolio, increased revenue
diversity, and improved consistency of operating performance over
time.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Long-Term IDR
An increase in total debt to tangible equity above 5.0x for
multiple quarters, non-funding debt to equity approaching or
exceeding the covenanted level, a material weakening in liquidity,
meaningful deterioration in asset quality, an extended inability to
syndicate transactions, which results in material operating losses
and/or weakens the firm's reputation and market position, or a
change in the firm's exclusive relationship with Jefferies could
lead to a rating downgrade.
SUBSIDIARY AND AFFILIATED COMPANY
JFIN Co-Issuer Corporation's ratings are expected to move in tandem
with JFIN's ratings.
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
JSAA REALTY: Case Summary & 4 Unsecured Creditors
-------------------------------------------------
Debtor: JSAA Realty, LLC
11505 Anaheim
Dallas, TX 75229
Business Description: JSAA Realty, LLC is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)). The Company is the
owner of fee simple title to certain
property located at 11505 Anaheim Drive
valued at $2.2 million.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 20-32504
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS
12770 Coit Road
Suite 1100
Dallas, TX 75251
Tel: 972-991-5591
Email: eric@ealpc.com
Total Assets: $2,200,000
Total Liabilities: $651,046
The petition was signed by Arpit Joshi, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's four unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/R6KA6YA/JSAA_Realty_LLC__txnbke-20-32504__0001.0.pdf?mcid=tGE4TAMA
KB US HOLDINGS: Ruling on Union CBAs Deferred Pending Bids
----------------------------------------------------------
Law360 reports that a New York bankruptcy judge said Thursday,
October 1, 2020, he would wait to see what bids KB U.S. Holdings
gets for a Chapter 11 sale of its assets before deciding if the
grocery chain owner can cancel its union contracts, while the union
promised to continue to fight the move on fairness grounds. At a
video hearing, U.S. Bankruptcy Judge Sean Lane said he would wait
another week and a half to see if offers KB receives for its Kings
Food and Balducci's supermarkets or talks with the union will make
the contract rejection unnecessary.
About KB US Holdings Inc.
KB US Holdings, Inc. is the parent company of King Food Markets and
Balducci's Food Lover's Market.
Headquartered in Parsippany, N.J., Kings Food Markets has been a
specialty and gourmet food market across the East Coast. In 2009,
Kings Food Markets acquired specialty gourmet retail grocer,
Balducci's Food Lover's Market. As of the petition date, the
Debtors operate 35 supermarkets across New York, New Jersey,
Connecticut, Virginia, and Maryland.
KB US Holdings and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D. N.Y. Lead Case No. 20-22962)
on Aug. 23, 2020. The petitions were signed by Judith Spires, chief
executive officer. At the time of the filing, Debtors disclosed
assets of between $100 million and $500 million and liabilities of
the same range.
Judge Sean H. Lane oversees the cases.
The Debtors tapped Proskauer Rose LLP as their legal counsel; PJ
Solomon, L.P. and PJ Solomon Securities, LLC as investment banker;
Ankura Consulting Group LLC as financial advisor; and Prime Clerk
LLC as claims, noticing and solicitation agent.
KLAUSNER LUMBER ONE: Hires Curtis Mallet-Prevost as Counsel
-----------------------------------------------------------
Klausner Lumber One LLC seeks authority from the U.S. Bankruptcy
Court for the District of Delaware to employ Curtis,
Mallet-Prevost, Colt & Mosle, LLP to handle litigation matters
relating to the EB5 Immigrant Investment Program.
The rates charged by the firm range from $885 to $1065 per hour for
partners, from $400 to $775 per hour for associates and special
counsel, and from $245 to $275 per hour for paraprofessionals. The
firm will also be reimbursed for out-of-pocket expenses incurred.
Robert Prusak, Esq., a partner at Curtis, disclosed in a court
filing that his firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Mr.
Prusak disclosed that his firm has not agreed to any variations
from, or alternatives to, its standard or customary billing
arrangements, and that no professional at the firm has varied his
rate based on the geographic location of Debtor's bankruptcy case.
Mr. Prusak also disclosed that Curtis was not retained by Debtor in
the 12 months prior to the petition date and that it began
representing Debtor post-petition pursuant to the engagement letter
dated July 15, 2020.
Debtor has already approved the firm's budget and staffing plan for
the period June 10 to Aug. 10, 2020, Mr. Prusak further disclosed.
The firm can be reached through:
Robert Prusak, Esq.
Curtis, Mallet-Prevost, Colt & Mosle LLP
101 Park Avenue
New York, NY 10178
Tel: (212) 696-6000
Fax: (212) 697-1559
About Klausner Lumber One
Klausner Lumber One, LLC, is a privately-held company in the lumber
and plywood products manufacturing industry. It is 100% owned by
non-debtor Klausner Holding USA, Inc.
Klausner Lumber One sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 20-11033) on April 30,
2020. At the time of the filing, Debtor disclosed assets of between
$100 million and $500 million and liabilities of the same range.
Debtor has tapped Westerman Ball Ederer Miller Zucker & Sharfstein,
LLP as its bankruptcy counsel, Morris, Nichols, Arsht & Tunnell,
LLP as local counsel, Asgaard Capital, LLC as restructuring
advisor, and Cypress Holdings, LLC as investment banker.
KNIGHTHOUSE MEDIA: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Knighthouse Media, Inc.
FDBA S&R Media Corp.
150 N. Michigan Ave.
Chicago, IL 60601
Business Description: Headquartered on North Michigan Avenue in
Chicago with a regional office in Beverly,
Mass., Knighthouse Media --
https://www.knighthousemedia.com -- is a B2B
content marketing company that also
publishes original content and advertising
programs through its portfolio of integrated
media brands.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
District of Delaware
Case No.: 20-12448
Judge: Hon. John T. Dorsey
Debtor's Counsel: Marc S. Casarino, Esq.
WHITE & WILLIAMS LLP
600 N. King Street, Suite 800
Courthouse Square
Wilmington, DE 19801-3722
Tel: 302-467-4520
Email: casarinom@whiteandwilliams.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Korry Stagnito, 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/GGLKSIY/Knighthouse_Media_Inc__debke-20-12448__0001.0.pdf?mcid=tGE4TAMA
LAREDO PETROLEUM: Moody's Lowers CFR to B3, Outlook Stable
----------------------------------------------------------
Moody's Investors Service downgraded Laredo Petroleum, Inc.'s
corporate family rating (CFR) to B3 from B1, Probability of Default
Rating (PDR) to B3-PD from B1-PD, senior unsecured notes rating to
Caa1 from B3 and the Speculative Grade Liquidity (SGL) Rating to
SGL-3 from SGL-2. The rating outlook is stable.
"Laredo's strategy is transforming its portfolio to focus on
increasing oil production and margins over time," commented Amol
Joshi, Moody's Vice President and Senior Credit Officer. "Laredo
faces increased execution risk exacerbated by weak operating
conditions and uncertainty about the pace of economic recovery,
while its sizeable but less oily legacy asset base endures lower
margins and cash flow even with a competitive cost structure."
Downgrades:
Issuer: Laredo Petroleum, Inc.
Probability of Default Rating, Downgraded to B3-PD from B1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2
Corporate Family Rating, Downgraded to B3 from B1
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5)
from B3 (LGD5)
Outlook Actions:
Issuer: Laredo Petroleum, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The downgrade of Laredo's CFR to B3 reflects Moody's view that the
low commodity price environment should lead to weaker cash flow and
leverage metrics along with a lower value of its less oily assets,
even as Laredo's commodity hedges and lower capital spending
temporarily boost cash flow-based leverage metrics in 2020.
Laredo's credit profile is constrained by its moderate scale and
geographically concentrated upstream operations, as well as low
proportion of crude oil in its existing production that is
reflected in lower capital efficiency compared to its oilier peers.
Laredo's strategy is to focus drilling on its oilier acreage to
raise the proportion of profitable production and to significantly
reduce new drilling activity on its legacy acreage. This could
gradually increase oil content in the company's production mix and
improve margins and returns, if capital and operating costs remain
under control. The strategy entails significant capital
expenditures required to develop new acreage and grow production of
oil.
Laredo's B3 CFR is supported by its production and reserve base in
the Permian's prolific Midland Basin with a drilling inventory
providing organic reserve development, high degree of operational
control, relatively low operating costs along with retained
gathering assets within its production corridors and management's
track record of hedging oil and gas production.
Moody's downgraded Laredo's senior unsecured notes to Caa1 from B3.
Laredo's notes are rated one notch below the B3 CFR, reflecting the
priority claim of its borrowing base senior secured credit facility
that has a first lien on most of Laredo's assets.
Laredo's SGL-3 Speculative Grade Liquidity Rating reflects its
adequate liquidity. At June 30, the company had $16 million of cash
and $275 million of borrowings with $44 million of letters of
credit outstanding under its credit facility. During the April 2020
redetermination, Laredo's borrowing base was reduced to $725
million from $950 million. The company will likely limit cash flow
outspend through 2021 if commodity prices remain weak. Availability
under its revolver should cover modest anticipated funding
shortfalls through 2021. The two financial covenants under Laredo's
credit facility are a maximum Consolidated Net Leverage Ratio of
4.25x and a current ratio of at least 1x. Laredo's revolver matures
in April 2023 and its nearest notes maturity is January 2025.
Moody's expects the company to have sufficient headroom under its
covenants through 2021 based on projected spending and debt
levels.
Laredo's stable rating outlook is based on Moody's expectation that
Laredo should maintain a competitive cost structure and manage its
capital program and liquidity prudently.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded in a more supportive commodity price
environment if Laredo successfully executes its strategy of
increasing oil production while keeping capital and operating costs
under control and its leveraged full cycle ratio (LFCR) comfortably
exceeds 1x. Moody's could consider a downgrade if the company's
capital productivity materially declines or its liquidity
significantly deteriorates.
Laredo Petroleum, Inc. is a Tulsa, Oklahoma based independent
exploration and production company with primary assets in West
Texas' Midland Basin.
LARIMER SKYVIEW: Subject to Involuntary Chapter 7 Petition
----------------------------------------------------------
Larimer Skyview Inc. is subject to an involuntary Chapter 7
petition (Bankr. D. Colo. Case No. 20-16046) filed on Sept. 10,
2020.
The petition was filed by alleged creditors CCX Corporation, Moons'
Industries (America), Inc., Pelonis Technologies, Inc., and
E3D-Online Limited.
The petitioners' counsel:
Aaron J. Conrardy
Tel: 303-296-1999
E-mail: aconrardy@wgwc-law.com
Larimer Skyview Inc. is a manufacturing company that produces
osource hardware for 3D printing with full support for Free and
open-source software.
LATAM AIRLINES: Dechert LLP Represents 6 Unsecured Claimants
------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Dechert LLP provided submitted a verified statement
that it is representing the Official Committee of Unsecured
Creditors in the Chapter 11 cases of LATAM Airlines Group S.A., et
al.
On Friday, June 5, 2020, the United States Trustee for Region 2
appointed the Committee pursuant to Section 1102(a) of Title 11 of
the United States Code in the above-captioned jointly administered
Chapter 11 cases [Dkt. 115]. On June 8, 2020, the Committee
selected Dechert LLP to serve as its proposed counsel. The
following six members comprise the Committee: (a) AerCap Holdings
N.V.; (b) Aircastle Limited; (c) The Bank of New York Mellon; (d)
Lufthansa Technik Aktiengesellschaft; (e) Sindicato de Empresa de
Pilotos de LATAM Airlines Group S.A.; and (f) Repsol, S.A. On June
12, 2020, former Committee member Campania de Seguros de Vida
Consorcio Nacional de Seguros S.A. resigned from the Committee.
As of Sept. 29, 2020, each Committee members and their disclosable
economic interests are:
AerCap Holdings N.V.
AerCap House, 65 St. Stephen's Green
Dublin DO2 YX20
Ireland
* The claims held by AerCap Holdings N.V. against the LATAM
Debtors' estates derive from (1) as of the May 26, 2020 petition
date, claims arising from 21 aircraft operating lease agreements
between LATAM, as lessee, and various indirect wholly-owned
subsidiaries of AerCap, as lessors, and claims arising from
various subleases with sublessees affiliated with the Debtors,
along with claims arising under related operative documents; and
(2) the associated framework agreement, dated May 28, 2013,
between AerCap and LATAM, pursuant to which the parties agreed,
as relevant here, to a financial accommodation relating to the
acquisition and use by the Debtors of two Boeing 787-9 aircraft
from LATAM's existing purchase order with the manufacturer that
were to be effected through sale-leaseback transactions.
The size of AerCap's ultimate claims for each of its above-
referenced transactions cannot be liquidated at this time as
such amounts will be materially affected by whether the Debtors,
as applicable, assume, reject and/or reinstate the above-
referenced agreements and related operative documents and/or
whether such agreements are amended or otherwise modified during
the course of the Debtors' bankruptcy cases. Additionally,
although the Debtors rejected two of AerCap's aircraft pursuant
to orders dated June 8, 2020 [Docket No. 126] and August 19,
2020 [Docket No. 899], AerCap is still in the process of
inspecting the aircraft and records to enable it to liquidate
the claims relating to such rejections.
Aircastle Limited
Aircastle Limited
201 Tresser Blvd – Suite 400
Stamford, Connecticut 06901
* Aircastle holds claims against the Debtors arising out of, or
related to, lease agreements between one or more of the Debtors
as lessee and Aircastle, as lessor. Aircastle's claims against
the Debtors are presently unliquidated, as such claims will
depend upon the Debtors' subsequent decisions and actions
arising out of, or related to, assumption, rejection, or other
treatment of each of the leases between the Debtors and
Aircastle.
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
* The Trustee holds claims of not less than $800 million in
aggregate principal amount, plus interest, fees, expenses and
other liabilities accruing under and evidenced by the Indenture
dated as February 11, 2019 with LATAM Finance Limited, as Issuer
and LATAM Airlines Group S.A., as Guarantor, pursuant to which
the 7.00% Notes were issued.
In addition, the Trustee holds claims of not less than $700
million in aggregate principal amount, plus interest, fees,
expenses and other liabilities accruing under and evidenced by
the Indenture dated as April 11, 2017 with LATAM Finance
Limited, as Issuer and LATAM Airlines Group S.A., as Guarantor,
pursuant to which the 6.875% Senior Notes Due 2024 were issued.
Lufthansa Technik
Aktiengesellschaft
Weg Beim Jager 193
22335 Hamburg
Fed. Rep. of Germany
* LHT holds claims against LATAM Airlines Group S.A., as of June
5, 2020, in the amount of not less than $49.5 million, plus
unliquidated amounts, arising out of contractual agreements,
which amounts may include amounts subject to offset or entitled
to priority under Section 503(b)(9) of the Bankruptcy Code or
otherwise. In addition, LHT is entitled to (a) administrative
expense treatment under Section 503 for goods and services
delivered on or after the petition date pursuant to the
contractual agreements or otherwise, and (b) possessory or other
liens for goods in its possession on or after the petition date.
Sindicato de Empresa de Pilotos
de LATAM Airlines Group S.A.
Cruz del Sur 133, Office 302
Las Condes, Santiago, Chile
* SPL is party to a collective bargaining/labor agreement with
LATAM Chile that was signed on October 15, 2019, with a three-
year effective period starting November 1, 2019 through October
31, 2022. The Union and Company signed an amendment to the
current CLA under which the members agreed to a 50% pay cut of
base pay for April 1, 2020 through June 30, 2020. No other
changes to the existing employment terms were made in the
amendment. SPL estimates the initial claim value of concessions
under the temporary agreement at $10 million, constituting the
reduction in wages. Pension obligations are not included.
SPL has not yet determined whether any amount of the temporary
reductions should be considered an administrative expense for
the period after the debtors' petition filing. The current
negotiations would reflect post-petition reductions to the CLA
and may have a different analysis of general unsecured vs.
administrative expense priority.
Repsol, S.A.
Av. Victor Andres Belaunde 147, Torre 5
Piso 3 San Isidro, Lima, Peru
* Repsol holds the following prepetition trade claims as a
supplier of Jet A-1 in Peru:
LATAM Airlines Group S.A.: $2,704,247.01
LATAM Airlines Perú S.A.: $6,000,587.96
Total: $8,704,834.97
Repsol also holds the following prepetition trade claims as a
supplier of Jet A-1 in Spain:
TAM Linhas Aereas, S.A.: €1,546,103.07
LAN Peru S.A.: €608,855.23
LATAM Airlines Group SA: €36,799.10
Total in EUR: €2,191,757.40
Total in USD: $2,430,658.96
The total in USD including Peru and Spain is $11,135,493.93
The Committee reserves the right to amend or supplement this
Verified Statement in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel for the Official Committee of Unsecured Creditors of LATAM
Airlines Group, S.A. can be reached at:
Allan S. Brilliant, Esq.
Craig P. Druehl, Esq.
David A. Herman, Esq.
DECHERT LLP
1095 Avenue of the Americas
New York, NY 10036
Tel: (212) 698-3500
Fax: (212) 698-3599
Email: allan.brilliant@dechert.com
craig.druehl@dechert.com
david.herman@dechert.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3jnMfsv
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 December 31, 2019.
The Honorable 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.
LATAM AIRLINES: Google Sues Airline for $8.2M Unpaid Services
-------------------------------------------------------------
Daniel Martínez Garbuno of Seeking Alpha reports that in the last
week of September 2020, Google filed a motion for relief to allow
termination of its agreements with LATAM Airlines Group and
discontinue the services it provides. According to the giant tech
company, LATAM owes over US$8.2 million for unpaid services.
LATAM Airlines Group filed for a Chapter 11 bankruptcy on May 26,
2020.
The largest South American carrier is trying to reduce costs,
labor, and fleet. It is also looking for over US$2 billion in
Debtor-In-Possession financing. In the meantime, LATAM has also
stopped paying the services of some providers, like Google.
According to Google's filing, it provided an ads program. The
services allowed LATAM "to reach potential customers as they search
for designated words and phrases or browse websites." Google also
offered Cloud program services.
On September 20, 2020, the Silicon Valley company filed proofs of
claim for unpaid services by LATAM. This is how much they owed:
Aerovias de Integracion Regional: US$27,378.52
LATAM Airlines Ecuador: US$40,993.42
Fidelidade Viagens e Turismo: US$70,925.23
LATAM Airlines Peru: US$468,096.07
TAM Linhas Aereas: US$1,536,665.27
LATAM Airlines Group: US$6,105,378.12
Google added that if the Court doesn't grant relief, it will cause
"significant hardship" because the company would be required to
continue to provide services to LATAM without payment. In contrast,
LATAM "may continue to operate its business without the services
provided by Google."
LATAM spent almost half a million in May 2020.
For airlines and companies under Chapter 11, it is not uncommon to
stop paying some suppliers. As they go through the reorganization
process, these companies prioritize cash preservation.
LATAM, like Avianca and Aeromexico, has taken some measures like
rejecting leasing contracts or furloughing staff. Nevertheless, it
is fascinating to see how much airlines spend on other services.
Google included many bills in its filing for the New York Southern
District Court. Some are small, a little over one dollar in
services, but others are quite big. In May, LATAM Airlines Group
spent US$454,600.63 in Google Cloud services, for instance. In July
2020, it also spent US$532,500 on Retail ITA.
We contacted the LATAM Airlines Group regarding this topic. The
airline said,
"We are in touch with the provider and following the procedures
from the New York Court to resolve possible problems."
DIP Financing
The New York Court recently approved LATAM's modified US$2.45
billion DIP Financing. For the South American carrier, the approval
was a relief after it got surprisingly rejected the first time due
to court doubts regarding the better treatment individual
shareholders would receive.
LATAM also recently announced its intentions to reject the leasing
contracts of 19 more airplanes. It has already returned 19 aircraft
to the lessors. Now, the company plans to offload mainly Airbus
A320 family planes.
Finally, the Administrative Council for Economic Defense in Brazil
approved Delta and LATAM's joint venture.
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.
LEHMAN BROTHERS: Junior Bondholders Will Get Payment After 12 Years
-------------------------------------------------------------------
Tasos Vossos of Bloomberg News reports that the investors in two
subordinated bonds from Lehman Brothers received word that a
payment is coming, just two weeks after the 12th anniversary of one
of the world's most spectacular banking collapses.
A proposed "initial interim payment" will go to owners of a 200
million euro ($234 million) note and a $500 million issue,
according to a statement from liquidators distributed on Tuesday,
September 29, 2020. The size of this payment will be disclosed in a
formal payment notice.
The collapse of the one of the world's largest investment banks on
Sept. 15 2008 was the iconic moment of the great financial crisis.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the
fourth largest investment bank in the United States. For more than
150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide.
Lehman Brothers Holdings filed for Chapter 11 bankruptcy (Bankr.
S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the largest
in U.S. history. Several other affiliates followed thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC
sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases were assigned to Judge James M. Peck.
Judge Shelley Chapman took over the case after Judge Peck retired
from the bench to join Morrison & Foerster.
A team of Weil, Gotshal & Manges, LLP, lawyers led by the late
Harvey R. Miller, Esq., serve as counsel to Lehman. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, served
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., served as the
Committee's investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant to
the provisions of the Securities Investor Protection Act (Case No.
08-CIV-8119 (GEL)). James W. Giddens was appointed as trustee for
the SIPA liquidation of the business of LBI. He is represented by
Hughes Hubbard & Reed LLP.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
LIGADO NETWORKS: Seeks $4B Debt Deal to Avert Bankruptcy
--------------------------------------------------------
Allison McNeely, Katherine Doherty and Davide Scigliuzzo of
Bloomberg News report that Ligado Networks LLC is preparing to sell
new debt to handle more than $4 billion of loans coming due in
December and stave off a return to bankruptcy, according to people
with knowledge of the matter.
The new first-lien debt would allow the satellite
telecommunications company to pay down its existing first-lien term
loan and deal with $700 million owed to Inmarsatat mid-month, the
people said. They asked not to be identified discussing
confidential matters.
All the holders of Ligado's second-lien term loan agreed to swap
into equity of the reorganized company, the people said.
About Ligado Networks
Ligado Networks, formerly known as LightSquared, is an American
satellite communications company. It creates innovative commercial
and technology solutions, delivers highly-secure and ultra-reliable
communications over Custom Private Networks, all to accelerate
investment in and deployment of 5G networks.
LILIS ENERGY: Court OKs $1M Payment of Employee Bonus Plan
----------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that bankrupt Lilis
Energy, Inc. received permission to pay its remaining 16 workers
more than a million dollars in bonuses after a bankruptcy court
concluded that the incentives could generate a higher sale price
for the oil and gas company and benefit unsecured creditors.
Lilis sought approval to pay a total ranging from $400,000 to
$700,000 to its two remaining senior managers in a Key Employee
Incentive Program (KEIP). The two employees are its CEO, who is
also serving as president, chief financial officer, and treasurer,
as well as a senior vice president who is serving as general
counsel.
About Lilis Energy
Lilis Energy, Inc. -- https://www.lilisenergy.com/ -- is a
publicly-traded, independent oil and natural gas company focused on
the exploration, development, production, and acquisition of crude
oil, natural gas, and natural gas liquids. Headquartered in Fort
Worth, Texas, Lilis is a pure play Permian Basin company with
focused operations in the Delaware Basin.
Lilis Energy and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-33274) on
June 28, 2020. As of Dec. 31, 2019, the Debtors had total assets
of $258.6 million and total liabilities of $251.2 million.
Judge David R. Jones oversees the cases.
The Debtors tapped Vinson & Elkins, LLP as legal counsel; Barclays
Capital, Inc., as investment banker and financial advisor; BDO, USA
LLP as accountant and tax advisor; and Stretto as notice, claims
and solicitation agent.
LITHIA MOTORS: S&P Alters Outlook to Stable & Affirms 'BB+' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Lithia Motors Inc. to
stable from negative and affirmed its the 'BB+' issuer credit
rating.
Lithia Motors, Inc.'s successful navigation through
pandemic-related lockdowns underscores the resiliency of its
business in S&P's view. Although total same-store results were
down 18% due to the impact of COVID-19, total gross profit fell
only 10% year-over-year in the second quarter. As an auto retailer,
the company benefited from countercyclical used-vehicle demand,
which was flat year-over-year. While total service, body and parts
revenue was down 18%, this segment still comprised about 31% of
total gross profit in the quarter. Also, total finance and
insurance contributed about 27% of gross profit.
To address the sharp fall-off in revenue at the beginning of the
quarter, management demonstrated its ability to cut costs quickly.
Selling, general, and administrative (SG&A) expense as a percentage
of gross profit was about 65% in the quarter, almost 500 basis
points better than the same quarter a year ago. The company
accomplished this in part by a 20% reduction in headcount and 40%
reduction in advertising expenditures. The question is whether this
cost improvement is sustainable, especially as sales and service
trends appeared to be normalizing as the second quarter progressed.
S&P would, therefore, expects some reversal of cost reduction in
the form of rising headcount and greater ad spending.
Planned debt and equity issuance will significantly increase
liquidity and help Lithia to fund future growth. The company is
now seeking to issue $500 million in senior unsecured notes and
make an equity offering of at least $700 million. Liquidity would
rise to $2.2 billion versus $1 billion as of June 30, 2020.
Moreover, this will help Lithia fund future growth through
acquisitions and internal investments.
The stable outlook on Lithia reflects S&P Global Ratings' view that
the company's weighted debt to EBITDA ratio will stay below 3.0x
and its FOCF-to-debt ratio remain above 15% over the next 12
months.
S&P said, "We could raise the ratings if the company is able to
increases its scale meaningfully and at the same time can keep
expanding EBITDA margins by controlling costs, despite sales
volatility arising from a resurgence of COVID-19 or an ongoing
economic downturn. We would also expect the company to keep its
debt-to-EBITDA ratio comfortably below 3.0x and its FOCF-to-debt
ratio above 15% on a sustained basis.
"We could lower the rating on Lithia Motors if we came to believe
that its FOCF-to-debt ratio would fall below 15% or its
debt-to-EBITDA ratio rise above our 3x on a sustained basis. This
could occur if government actions to restrict the spread of
COVID-19 are lifted but then have to be re-imposed because of a
substantial spike in infections or if consumer buying patterns fail
to normalize for the remainder of the year, thereby dampening sales
and compressing margins."
LONESTAR RESOURCES: Moody's Cuts PDR to D-PD on Bankruptcy Filing
-----------------------------------------------------------------
Moody's Investors Service downgraded Lonestar Resources America
Inc.'s Probability of Default Rating (PDR) to D-PD from Ca-PD.
Lonestar's other ratings were affirmed, including its Ca Corporate
Family Rating (CFR), and C rating on its senior unsecured debt. The
SGL-4 Speculative Grade Liquidity (SGL) Rating is unchanged. The
rating outlook is negative.
These actions follow the company's bankruptcy filing on September
30, 2020.
Downgrades:
Issuer: Lonestar Resources America Inc.
Probability of Default Rating, Downgraded to D-PD from Ca-PD
Affirmations:
Issuer: Lonestar Resources America Inc.
Corporate Family Rating, Affirmed Ca
Senior Unsecured Notes, Affirmed C (LGD5)
Outlook Actions:
Issuer: Lonestar Resources America Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The Chapter 11 bankruptcy filing [1] has resulted in a downgrade of
Lonestar's PDR to D-PD, reflecting the company's default on its
debt agreements. The affirmation of the Ca CFR and debt instrument
rating reflects Moody's view on expected recoveries. Shortly
following this rating action, Moody's will withdraw all Lonestar's
ratings.
Lonestar Resources America Inc., a wholly-owned subsidiary of
Lonestar Resources US Inc. (NASDAQ: LONE) headquartered in Fort
Worth, Texas, is an independent exploration and production company
with operations focused on the Eagle Ford Shale.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
LSC COMMUNICATIONS: Sale to Atlas for $63.4M Credit Bid Okayed
--------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that bankrupt publisher
LSC Communications Inc. received court approval to sell its
business to a fund affiliated with Atlas Holdings LLC, a
transaction that will pay off its bankruptcy expenses and keep the
company operating as a going concern.
"In uncertain economic times like these, it's good news to hear
that the going concern is going to continue," Judge Sean Lane of
the U.S. Bankruptcy Court for the South District of New York said
as he approved the sale Wednesday, September 29, 2020, during a
hearing.
Atlas affiliate ACR III Libra Holdings LLC will buy the publishing
company with a $63.4 million credit bid.
About LSC Communications
LSC Communications, Inc. -- http://www.lsccom.com/-- is a Delaware
corporation established in 2016 with its headquarters located in
Chicago, Illinois. The Company offers a broad range of traditional
and digital print products, print-related services, and office
products. The Company serves the needs of publishers,
merchandisers, and retailers worldwide, with a service offering
that includes e-services, logistics, warehousing and fulfillment
and supply chain management services. The Company prints magazines,
catalogs, directories, books, and some direct mail products, and
manufactures office products, including filing products, envelopes,
note-taking products, binder products, and forms. The Company has
offices, plants, and other facilities in 28 states, as well as
operations in Mexico, Canada, and the United Kingdom.
LSC Communications, Inc., based in Chicago, IL, and its
debtor-affiliates sought Chapter 11 protection (Bankr. S.D.N.Y.
Lead Case No. 20-10950) on April 13, 2020. In its petition, the
Debtor disclosed $1,649,000,000 in assets and $1,721,000,000 in
liabilities. The petition was signed by Andrew B. Coxhead, chief
financial officer.
The Debtors hire SULLIVAN & CROMWELL LLP as counsel; YOUNG CONAWAY
STARGATT & TAYLOR, LLP, as co-counsel; EVERCORE GROUP L.L.C., as
investment banker; ALIXPARTNERS LLP as restructuring advisor; and
PRIME CLERK LLC as notice, claims and balloting agent.
LUVU BRANDS: Swings to $860K Net Income in Fiscal 2020
------------------------------------------------------
Luvu Brands, Inc., filed with the Securities and Exchange
Commission its Annual Report on Form 10-K reporting net income of
$860,000 on $18.38 million of net sales for the year ended June 30,
2020, compared to a net loss of $157,000 on $17 million of net
sales for the year ended June 30, 2019.
As of June 30, 2020, the Company had $5.45 million in total assets,
$6.72 million in total liabilities, and a total stockholders'
deficit of $1.27 million.
Liggett & Webb, P.A., in Boynton Beach, Florida, the Company's
auditor since 2012, issued a "going concern" qualification in its
report dated Oct. 1, 2020, citing that the Company has a working
capital deficit and an accumulated deficit. The Company has
financed its working capital requirements primarily through the
issuance of debt. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Fiscal Fourth Quarter 2020 Results
Net sales increased 37% to $5.5 million, compared to $4.0 million
in the same year-ago quarter. Sales of Liberator products
increased 12% to $1.7 million from $1.5 million in the prior year.
Jaxx product sales totaled $1.6 million, up 50% from $1.1 million
in the fourth quarter of the prior fiscal year. Avana products
increased 127% to $1.8 million from $0.8 million in the prior year,
due to approximately $780,000 in PPE product sales and greater
sales of other Avana products.
Gross profit for the fourth quarter totaled $1.8 million, compared
to $865,000 in the prior year fourth quarter. Gross profit as a
percentage of net sales increased to 33% in the current year from
22% in the prior year, primarily driven by a shift to greater sales
through its ecommerce websites.
Operating expenses were $880,000 for the three months ended June
30, 2020, a decrease of 16%, or approximately $162,000, from the
prior year fourth quarter. The decrease included approximately
$272,000 of capitalized software costs relating to the e-commerce
website upgrade.
Net income for the quarter was $796,000, or $0.01 per share,
compared to a net loss of ($321,000), or ($0.00) per share in the
prior year fourth quarter.
Adjusted EBITDA for the three months ended June 30, 2020 was
$962,000 compared to $(130,000) in the prior year period.
Louis Friedman, chairman and chief executive officer, commented,
"Our fourth quarter and fiscal 2020 results reflect continued
momentum across our organization. The COVID-19 pandemic negatively
impacted our supply chain and sales channels during the third
quarter, but during the fourth quarter we came together as a team
and produced and shipped at record-breaking levels, including over
$780,000 of PPE products."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1374567/000101738620000391/luvu_2020jun30-10k.htm
About Luvu Brands
Luvu Brands, Inc. -- http://www.luvubrands.com/-- designs,
manufactures and markets a portfolio of consumer lifestyle brands
through the Company's websites, online mass / drug merchants and
specialty retail stores worldwide. Brands include: Liberator, a
brand category of iconic products for enhancing sensuality and
intimacy; Avana, medical and personal PPE products and inclined bed
therapy products, assistive in relieving medical conditions
associated with acid reflux, surgery recovery and chronic pain; and
Jaxx, a diverse range of casual fashion daybeds, sofas and beanbags
made from virgin and re-purposed polyurethane foam. Headquartered
in Atlanta, Georgia, the Company occupies a 140,000 square foot
vertically-integrated manufacturing facility and employs over 200
people.
M.C. TOWING & RECOVERY: Hires Consumer Law Attorneys as Counsel
---------------------------------------------------------------
M.C. Towing and Recovery LLC seeks authority from the U.S.
Bankruptcy Court for the Middle District of Florida, Tampa
Division, to hire Christopher Hixson, Esq. and Consumer Law
Attorneys as its counsel.
The Debtor requires the firm to:
a. take all necessary action to protect and preserve the
estate of the Debtor, including the prosecution of actions on its
behalf, the defense of any actions commenced against the Debtor,
negotiations concerning any litigation in which the Debtor may be
involved, and objections, when appropriate, to claims filed against
the estate;
b. prepare legal papers;
c. counsel the Debtor with regard to its rights and
obligations as a debtor-in-possession;
d. prepare and file schedules of assets and liabilities;
e. prepare and file a chapter 11 plan and corresponding
disclosure statement; and
f. perform all other necessary legal services in connection
with this chapter 11 case.
Consumer Law's current hourly rates range from $150 for paralegals
to $300 for attorneys.
Consumer Law and its attorneys neither hold nor represent any
interest adverse to the Debtor's estate, according to court
filings.
The counsel can be reached through:
Christopher Hixson, Esq.
CONSUMER LAW ATTORNEYS
2727 Ulmerton Rd, Ste 270
Clearwater, FL 33762
Phone: (877) 241-2200
Fax: (727) 623-4611
Email: chixson@consumerlawattorneys.com
About M.C. Towing and Recovery LLC
M.C. Towing & Recovery LLC is a comprehensive towing, recovery and
roadside assistance provider serving Port Richey, Fla., and
surrounding areas. It sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 8:20-bk-06280-MGW)
on August 19, 2020. It is represented in court by Christopher
Hixson, Esq. of Consumer Law Attorneys.
MARZILLI MACHINE: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Marzilli Machine Co.
621 S. Almond Street
Fall River, MA 02724
Business Description: Marzilli Machine Co. --
https://marzmachine.com -- is a manufacturer
of military, aerospace, medical, and
firearms components.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
District of Massachusetts
Case No.: 20-12007
Judge: Hon. Christopher J. Panos
Debtor's Counsel: David B. Madoff, Esq.
MADOFF & KHOURY LLP
124 Washington Street, Suite 202
Foxborough, MA 02035
Tel: 508-543-0040
Email: alston@mandkllp.com
Total Assets: $1,155,586
Total Liabilities: $1,763,992
The petition was signed by Lee Anne Marzilli, president.
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/MSGW7KY/Marzilli_Machine_Co__mabke-20-12007__0001.0.pdf?mcid=tGE4TAMA
MELISSAS' GOLF: Gets Approval to Hire Lori A. Sowers as Accountant
------------------------------------------------------------------
Melissas' Golf Carts, Inc. received approval from the U.S.
Bankruptcy Court for the Middle District of Florida to employ Lori
A. Sowers, CPA, PA, as its accountant.
The services that will be provided by the accountant are as
follows:
a. prepare and file tax returns and conduct tax research
including contacting the Internal Revenue Service;
b. perform normal accounting and other accounting services as
required by the Debtor; and
c. assist in preparing court-ordered reports, including the
U.S. Trustee reports and documents necessary to prepare Debtor's
disclosure statement.
The accountant will be paid as follows:
a. A $1,000.00 initial retainer to be billed against at:
i. An hourly rate of $175.00 for services rendered by the
accountant;
ii. a range of $100.00-$50.00 per hour for services rendered
by accounting staff; and
iii. reimbursement of out of pocket costs such as computer
charges, copies and postage for the accounting services;
Post-petition, the accountant did inadvertently receive $350 to
prepare the Debtor's amended 2017 tax return.
Lori A Sowers is a "disinterested person" within the meaning of
section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Lori A Sowers, CPA
Lori A Sowers, CPA, PA
220 N Broad St,
Brooksville, FL 34601
Phone: +1 352-797-0455
About Melissas' Golf Carts
Melissas' Golf Carts, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-05429) on July 17, 2020, listing under $1 million in both assets
and liabilities. Judge Michael G. Williamson oversees the case.
Debtor has tapped Buddy D. Ford, P.A. as its legal counsel.
MENDENHALL AUTO: Seeks to Hire Sharrard McGee as Accountant
-----------------------------------------------------------
Mendenhall Auto Auction, Inc. and Mendenhall Auction Company seek
approval from the U.S. Bankruptcy Court for the Middle District of
North Carolina to hire Sharrard, McGee & Co., PA as their
accountant.
Debtors are in need of an accountant to assist and provide services
relating to corporate tax return preparation.
The firm will charge $20,000 for the preparation of corporate tax
returns for Mendenhall Auction Company for the years 2016 to 2019
and for Mendenhall Auto Auction for the years 2017 to 2019.
Ken Fulp, the firm's accountant who will be providing the services,
disclosed in court filings that he has no interest adverse to
Debtor and its creditors.
The firm can be reached through:
Ken Fulp
Sharrard, McGee & Co., PA
1321 Long St.
High Point, NC 27262
Phone: +1 336-884-0410
About Mendenhall Auction Company
Mendenhall Auction Company, an estate sale company in High Point,
N.C., sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. M.D.N.C. Case No. 19-11406) on Dec. 30, 2019. At the time
of the filing, Debtor disclosed under $1 million in both assets and
liabilities. Judge Benjamin A. Kahn oversees the case. Ivey,
McClellan, Gatton & Siegmund, LLP, is Debtor's legal counsel.
MOUNTAIN PROVINCE: Shareholders Approve Assignment of $25M Debt
---------------------------------------------------------------
At Mountain Province Diamonds Inc.'s special meeting of
shareholders held on Sept. 29, 2020, its shareholders approved two
related party transactions that significantly strengthen the
Company's financial position as it responds to the challenges posed
by the COVID-19 pandemic.
At the Special Meeting, the disinterested shareholders approved the
assignment from the existing lenders to Dermot Desmond, or a
related company, of Mountain Province's indebtedness of
US$25,000,000 under its senior secured revolving credit facility.
The Assignment closed on Sept. 30, 2020 with the credit facility
being assigned to Dunebridge Worldwide Ltd., a company controlled
by Mr. Desmond.
In connection with the Assignment, certain amendments were made to
the Existing Credit Facility, including, among other things,
adjusting the interest rate to a fixed 5% per annum, payable
monthly, and removing certain financial covenants under a one-year
term. The effect of the Assignment is that Mr. Desmond has
provided a refinancing and extension of the Company's existing
US$25,000,000 credit facility. In connection with this
refinancing, the Company paid Mr. Desmond a fee equal to 1% of the
aggregate principal amount available under the facility.
The disinterested shareholders also approved at the Special Meeting
an increase from US$50,000,000 to US$100,000,000 in the sales
capacity under the existing diamond sales agreement between the
Company, certain of its subsidiaries and Dunebridge. The Sales
Capacity Increase gives the company the flexibility, should it need
it, to sell its run of mine diamonds (below 10.8 carats) at
prevailing market prices, and potentially share in the future
upside if and when Dunebridge elects to sell the diamonds.
Dunebridge is controlled by Dermot Desmond, an insider and related
party of Mountain Province. The Sales Capacity Increase and the
Assignment therefore each constitute a "related party transaction"
within the meaning of MI 61-101. Mountain Province is relying on
the exemption from the formal valuation requirement of MI 61-101
contained in Section 5.5(g) on the basis of financial hardship.
The terms of the Transactions were unanimously approved by the
independent members of Mountain Province's board of directors.
An ad hoc committee of independent directors of Mountain Province,
all of whom are independent of management and Mr. Desmond undertook
a deliberate and full consideration of the Transactions and various
alternatives and financing options available to Mountain Province
and concluded that the Transactions are reasonable and represent
the best options for Mountain Province in the circumstances, having
regard to the best interests of Mountain Province and its
stakeholders. The Independent Committee unanimously recommended
the Transactions to the board of directors of the Company. The
Board received the recommendations and findings of the Independent
Committee and, Mr. Jonathan Comerford and Mr. Brett Desmond having
declared conflicts of interest and not attending any part of any
meeting where the Transactions were discussed and not voting on the
Transactions, unanimously found that the Company is in serious
financial difficulty, that the Transactions are designed to improve
the financial position of the Company, that Section 5.5(f) of
National Instrument 61-101 is not applicable, and approved the
Transactions.
About Mountain Province Diamonds
Mountain Province Diamonds -- http://www.mountainprovince.com-- is
a 49% participant with De Beers Group in the Gahcho Kue diamond
mine located in Canada's Northwest Territories. The Gahcho Kue
Joint Venture property consists of several kimberlites that are
actively being mined, developed, and explored for future
development. The Company also controls 106,202 hectares of highly
prospective mineral claims and leases that surround the Gahcho Kue
Joint Venture property that include an indicated mineral resource
for the Kelvin kimberlite and inferred mineral resources for the
Faraday kimberlites.
Mountain Province reported a net loss of C$128.76 million for the
year ended Dec. 31, 2019, compared to a net loss of C$18.93 million
for the year ended Dec. 31, 2018.
* * *
As reported by the TCR on July 21, 2020, Moody's Investors Service
downgraded Mountain Province Diamonds Inc.'s Corporate Family
rating to Caa3 from Caa1. The downgrade of MPD's rating reflects
Moody's view that the company will be challenged to repay its
revolving credit facility as per its revolving credit facility
waiver agreement [1] given the current difficult rough diamond
market as the coronavirus pandemic has further weakened prices and
sales volumes, as well as the increased risk that the company
enters into a debt restructuring transaction.
In May 2020, S&P Global Ratings lowered its issuer credit rating on
Toronto-based Mountain Province Diamonds Inc. (MPV) and its
issue-level rating on the company's second-lien secured notes to
'CCC-' from 'CCC+'. "We believe MPV faces a high risk of
exhausting its liquidity within the next several months, and
increased likelihood for engaging in a debt restructuring
transaction we view as a distressed," S&P said.
As reported by the TCR on Aug. 28, 2020, Fitch Ratings downgraded
Mountain Province Diamonds Inc.'s (MPVD) Issuer Default Rating to
'CCC' from 'B-'. The downgrade reflects materially lower diamond
prices and the currently challenged diamond market due to
coronavirus pandemic implications.
MUSCLEPHARM CORP: Settles Lawsuit with Nutrablend
-------------------------------------------------
MusclePharm Corporation entered into a Settlement Agreement with
NBF Holdings Canada Inc. ("Nutrablend"), pursuant to which the
parties resolved and settled a civil action initiated by Nutrablend
against MusclePharm in the United States District Court for the
Central District of California. In consideration for a mutual
general release between the parties, Nutrablend agreed to dismiss
all claims asserted in the Litigation and MusclePharm agreed to (i)
pay approximately $3.1 million in monthly payments, according to a
schedule set forth in the Agreement, and (ii) issue monthly
purchase orders at minimum amounts accepted by Nutrablend.
MusclePharm agreed to issue Purchase Orders in a combined total
amount of at least (i) $1,500,000 from Sept. 1, 2020 through Nov.
30, 2020; (ii) $1,800,000 from Dec. 1, 2020 through Feb. 28, 2021;
(iii) $2,100,000 from March 1, 2021 through May 31, 2021; (iv)
$2,100,000 from June 1, 2021 through Aug. 31, 2021; and (v)
$1,400,000 from Sept. 1, 2021 through Oct. 30, 2021. Beginning on
Nov. 1, 2021, MusclePharm will be required to issue monthly
Purchase Order to Nutrablend in a minimum amount of $700,000 until
the Owed Amount is paid in full to Nutrablend.
In the event that MusclePharm pays the Owed Amount in full before
Sept. 1, 2021, MusclePharm is entitled to a rebate on all completed
Purchase Orders according to a schedule set forth in the Agreement.
Further, once the Monthly Payments, and any additional payments
that MusclePharm has made on the Owed Amount, reduce the
outstanding balance of the Owed Amount to below $2.0 million,
MusclePharm is eligible for an extension of a line of credit from
Nutrablend in an amount of up to $3.0 million.
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTCQB:MSLP) -- http://www.musclepharm.com/and
http://www.musclepharmcorp.com/-- develops, manufactures, markets
and distributes branded nutritional supplements. The Company
offers a broad range of performance powders, capsules, tablets and
gels that satisfy the needs of enthusiasts and professionals
alike.
MusclePharm reported a net loss of $18.93 million for the year
ended Dec. 31, 2019, compared to a net loss of $10.76 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$14.54 million in total assets, $42.49 million in total
liabilities, and a total stockholders' deficit of $27.95 million.
SingerLewak LLP, in Los Angeles, California, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated Aug. 24, 2020, citing that the Company has suffered recurring
losses from operations, accumulated deficit and its total
liabilities exceed its total assets. This raises substantial doubt
about the Company's ability to continue as a going concern.
NEIMAN MARCUS: Texas Court OKs Investor Defamation Lawsuit
----------------------------------------------------------
Law360 reports that a Texas appellate court green-lighted Neiman
Marcus to pursue defamation and business disparagement claims
alleging that Marble Ridge Capital launched a smear campaign to
manipulate the price of the luxury fashion retailer's debt.
The statements at the center of the claims, made by Marble Ridge
Capital LP, aren't protected speech under Texas law, a Fifth Court
of Appeals panel in Dallas said Wednesday. Neiman Marcus says
Marble Ridge falsely claimed the retailer could be in default after
a transfer of $1 billion in assets. Marble Ridge argued the
statements it made in two letters and one news release published in
September 2018.
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.
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.
NEONODE INC: Stockholders Pass All Proposals at Annual Meeting
--------------------------------------------------------------
Neonode Inc. held its 2020 Annual Meeting of Stockholders on Sept.
29, 2020, at which the stockholders:
1. re-elected Mr. Peter Lindell and Mr. Per Lofgren to the
Board of Directors for a three-year term as Class III
directors;
2. ratified the appointment of KMJ Corbin & Company LLC to
serve as the Company's independent auditors for the year
ended Dec. 31, 2020;
3. indicated their approval on the advisory vote related to
named executive officer compensation;
4. approved the Neonode Inc. 2020 Stock Incentive Plan;
5. approved, for purposes of complying with Nasdaq Listing
Rule 5635(d), the issuance of shares of common stock
underlying preferred stock sold in the Company's Aug. 5,
2020 private placement.
6. approved, for purposes of complying with Nasdaq Listing
Rule 5635(c), the issuance of shares of common stock
underlying preferred stock sold to directors and an
officer of the Company in the Company's Aug. 5, 2020
private placement; and
7. approved the amendment to the Company's Restated
Certificate of Incorporation, as amended, to increase the
number of authorized shares of common stock to 25,000,000
shares.
About Neonode
Neonode Inc. (NASDAQ:NEON) -- http://www.neonode.com-- is a
publicly traded company, headquartered in Stockholm, Sweden and
established in 2001. The company provides advanced optical sensing
solutions for touch, gesture control, and remote sensing. Building
on experience acquired during years of advanced optical R&D and
technology licensing, Neonode's technology is currently deployed in
more than 75 million products and the company holds more than 120
patents worldwide. Neonode's customer base includes companies in
the consumer electronics, office equipment, medical, avionics, and
automotive industries.
Neonode recorded a net loss attributable to the Company of $5.30
million for the year ended Dec. 31, 2019, compared to a net loss
attributable to the Company of $3.06 million for the year ended
Dec. 31, 2018. As of June 30, 2020, the Company had $5.59 million
in total assets, $4.64 million in total liabilities, and $946,000
in total stockholders' equity.
NEP/NCP HOLDCO: S&P Affirms 'B-' ICR on Improved Liquidity
----------------------------------------------------------
S&P Global Ratings assigned a 'B' issue-level and a '2' recovery
rating to live and broadcast production solutions provider NEP/NCP
Holdco Inc. (NEP) $125 million term loan due 2025. The '2'
recovery rating indicates substantial (70%-90%; rounded estimate:
70%) recovery in a payment default scenario.
S&P said, "We are affirming our issuer credit rating on NEP and
removing all of our ratings on the company from CreditWatch, where
we placed them with negative implications on March 13, 2020. The
outlook is negative.
"We are also affirming our 'B' issue-level rating on the first-lien
term loan facility and our 'CCC' issue-level rating on the
second-lien term loan facility. The '2' and '6' recovery ratings on
the first- and second-lien facilities, respectively, are
unchanged.
"The rating action reflects our view that with the covenant
amendment and the additional liquidity through the debt issuance,
NEP has alleviated its near-term liquidity concerns due to the
COVID-19-related impact on live events globally. The covenant
amendment allows the company to waive the requirements to maintain
its net leverage ratio covenant without affecting the company's
ability to access the revolving credit facility. The additional
debt issuance of about $125 million ensured the company was able to
stay current on its fixed charges, including debt service
expenses.
"The company is beginning to see revenue return as live sports in
the U.S. and globally resume in the third quarter of 2020, and we
expect the momentum to continue into 2021, when we anticipate the
return of live concerts/touring and corporate events in the second
half of the year to add to the benefit of the Tokyo Olympics, which
has been rescheduled for July 2021.
"The negative outlook reflects our view that there continues to be
the risk of another wave over the next six months that could result
in another lockdown or cancellation of the currently scheduled
sports programming." Furthermore, a delayed vaccine leading to a
prolonged pandemic well into 2021 could further affect expectations
for the volume of live events to begin returning to pre-COVID
levels beginning in the second half of 2021.
NEP's covenant amendment and additional debt alleviates near-term
liquidity concerns. The company secured $125 million in additional
liquidity in June 2020 that allowed it to maintain its operations
through the pandemic while continuing to service its debt
obligations. NEP also finalized its covenant amendment in September
2020 that waives covenant tests until at least Dec. 31, 2021. S&P
believes these two steps have alleviated the near-term risks to the
company's ability to continue operations while remaining compliant
on its debt service obligations.
As part of the amendment, as long as the covenant is in technical
effect (35% of the revolver is drawn) the company is limited to
incur additional debt of no more than $100 million and maintain a
cash balance of at least $50 million at the end of each reporting
period. S&P expects NEP will be fully compliant with these
requirements for the duration of the covenant amendment.
The company continues to benefit from the return of sports
programming in the second half of 2020, but the risk of another
outbreak and shutdown could derail revenue and cash flow growth
expectations over the next 12 months. NEP's operating performance
in the second quarter was severely affected during the COVID-19
shutdowns given its direct exposure to live and broadcast events,
including sports, concerts, and corporate events. The gradual
return of sports programming in the second half of 2020 will likely
reverse some of the material revenue declines. S&P currently
expects this trend to continue as the volume of games hosted by
sporting leagues normalizes heading into 2021.
However, there continues to be a risk of another wave of outbreaks
that triggers another round of shutdowns, reversing the positive
momentum NEP is currently experiencing. Furthermore, a delayed
development cycle for a vaccine could prolong the precautions put
in place during the pandemic, including limitations on live events
and crowd sizes, therefore delaying the expectations for an
increase in the volume of live concerts/touring and corporate
events in the second half of 2021.
S&P said, "The negative outlook reflects our view that adjusted
leverage will remain very elevated at over 13x in 2020 before
improving to the low-7x area in 2021. The outlook also reflects the
risk of another wave of COVID-19 infections that could result in
another round of shutdowns, which would rapidly deteriorate NEP's
improved liquidity position.
"We could lower our rating if we believed NEP would not generate
sufficient cash flow to service its debt obligations, including
interest and mandatory amortization payments. This could occur if a
new wave of COVID-19 infections resulted in another round of
shutdowns affecting sports programming. We could also lower the
ratings if we believed the volume of live events going into the
second half of 2021 would continue to be anemic, such that we don't
expect the company to be able to sustain its capital structure or
maintain its covenants when the waiver expires on Dec. 31, 2021.
"We could revise our outlook to stable if we believed adjusted
leverage would decline and remain in the low-7x area on a sustained
basis while the company returns to generating sufficient cash flows
to finance its operating needs, including capital expenditures and
debt service obligations. This could occur if there were no further
shutdowns affecting sports programming over the next 12 months and
if the volume of live events normalized beginning in the second
half of 2021."
NOBLE CORP: Gets Court Approval to Hire PwC as Auditor
------------------------------------------------------
Noble Corporation plc and its affiliates received approval from the
U.S. Bankruptcy Court for the Southern District of Texas to employ
PricewaterhouseCoopers, LLP as its auditor and tax consultant.
The services that will be provided by the firm are as follows:
Audit Services
a. perform an integrated audit of the consolidated financial
statements of the Debtors at December 31, 2020 and for the year
then ending and of the effectiveness of the Debtors' internal
control over financial reporting as of Dec. 31, 2020; and
b. perform reviews of the Debtors' unaudited consolidated
quarterly financial information for each of the first three
quarters in the year ending December 31, 2020, before the Form 10-Q
is filed. These reviews will be conducted in accordance with the
standards established by the Public Company Accounting Oversight
Board (United States) (the "PCAOB") and are substantially less in
scope than an audit.
Tax Consulting Services
a. analyze certain potential U.S. federal, state, local and
(where applicable) non-U.S. tax considerations, applicable to Noble
pursuant to the proposed restructuring scenarios, including:
i. estimate of potential taxable gain/step-up resulting,
as relevant;
ii. consider certain transfer taxes in non-U.S.
jurisdictions that may result under the proposed restructuring
scenarios;
iii. analyze U.S. federal income tax treatment and
consequences of any cancellation of indebtedness income ("CODI"),
taxability of CODI, tax attribute reduction analysis, and other
applicable tax consequences (e.g., acceleration of any excess loss
account "ELA" balances);
iv. analyze whether any proposed plan, reorganization, or
disregarded asset sale(s) may result in a change in tax basis to
shares or assets.
b. as part of its analysis, PwC will be required to understand
the Debtors' "outside" tax basis in shares and "inside" tax basis
of assets. If the existing tax basis in shares and/or assets
calculations are not available, PwC will prepare such calculations
for the Debtors' review and approval, which are strictly to be used
for purposes of this analysis only;
c. consider the implications to the Debtors' tax attributes
under the proposed restructuring scenarios (e.g., Sec. 382
limitation);
d. as requested, comment on and/or analyze the income tax
ramifications of the proposed restructuring scenario(s) that the
Debtors' are evaluating, using assumptions provided by the
Debtors;
e. participate in conference calls with the Debtors and its
other advisors, in order to assist and advise management;
f. read and provide comments strictly from a tax perspective
on legal agreements prepared by the Debtors' or their legal counsel
related to the proposed restructuring; and
g. deliver comments, notes, and/or draft tax calculations
illustrating the tax impacts of the proposed restructuring
scenarios. PwC will not prepare any documents or calculations
related to a bankruptcy petition.
PwC's will be compensated as follows:
a) Audit Services Compensation
1) a fixed fee of $1,769,000 for the integrated audit
services;
2) for non-recurring audit related services, an hourly rate
will be charged as follows:
Partner $1,039
Managing Director $781
Director $627
Senior Manager $585
Manager $482
Senior Associate $310
Experienced Associate $238
New Associates $182
Centers of Excellence $381
Acceleration Centers $126
3) a fixed fee of $607,223 for coordination and execution
of additional audit procedures by PwC for the statutory audits
performed for the Debtors and its affiliates;
4) a fixed fee of $100,000 for incremental audit procedures
relating to the Debtors' Hyperion implementation for the year
ending Dec. 31, 2020; and
5) a fixed fee of $50,000 for the incremental audit and
review procedures incurred during PwC's interim review of the three
and six-month periods ending June 30, 2020, including a long-lived
tangible asset impairment
trigger assessment, the going concern assessment and related
corporate income tax matters.
b) Tax Consulting Services Compensation
Federal International National
Tax & M&A Tax Tax
Partner $765 $995 $1,148
Director $655 $765 $936
Senior Manager $615 $747 n/a
Manager $540 $713 n/a
Senior Associate $430 $494 n/a
Associate $340 $408 n/a
Pre-petition, PwC received the following retainers: $250,000 on
account of the Audit Services, of which the entire amount remains
as of the Petition Date; and $75,000 on account of the Tax
Consulting Services, the entirety of which remains as of the
Petition Date.
PwC is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code, according to court filings.
PwC can be reached through:
Robert J. Welsh
PricewaterhouseCoopers LLP
1000 Louisiana Street, Suite 5800
Houston, TX 77002-5021
Tel: +1 (713) 356-4000
About Noble Corporation
Noble Corporation plc -- http://www.noblecorp.com/-- is an
offshore drilling contractor for the oil and gas industry. It
provides contract drilling services to the international oil and
gas industry with its global fleet of mobile offshore drilling
units. Noble Corporation focuses on a balanced, high-specification
fleet of floating and jackup rigs and the deployment of its
drilling rigs in oil and gas basins around the world.
On July 31, 2020, Noble Corporation and its affiliates filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Tex. Lead Case No. 20-33826). Richard B. Barker,
chief financial officer, signed the petitions. Debtors disclosed
total assets of $7,261,099,000 and total liabilities of
$4,664,567,000 as of March 31, 2020.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Skadden, Arps, Slate, Meagher & Flom LLP and
Porter Hedges LLP as legal counsel; Smyser Kaplan & Veselka,
L.L.P., McAughan Deaver PLLC, and Baker Botts L.L.P. as special
counsel; AlixPartners, LLP as financial advisor; and Evercore Group
LLC as investment banker. Epiq Corporate Restructuring, LLC is the
claims and noticing agent.
NTHUS4 CORP: Seeks to Hire Joyce W. Lindauer as Legal Counsel
-------------------------------------------------------------
NTHUS4, Corp. seeks authority from the U.S. Bankruptcy Court for
the Northern District of Texas to hire Joyce W. Lindauer Attorney,
PLLC as its legal counsel.
The firm will assist Debtor in the preparation of its plan of
reorganization and will provide other services in connection with
its Chapter 11 case.
The hourly rates for the firm's primary attorneys and paralegal who
will represent Debtor are as follows:
Joyce W. Lindauer $395
Kerry S. Alleyne, Contract Attorney $250
Guy H. Holman, Contract Attorney $205
Dian Gwinnup, Paralegal $125
Prior to Debtor's bankruptcy filing, the firm received a retainer
of $6,717, which included the filing fee of $1,717.
Joyce Lindauer, Esq., disclosed in court filings that her firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Joyce W. Lindauer, Esq.
Kerry S. Alleyne, Esq.
Guy H. Holman, Esq.
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
Email: joyce@joycelindauer.com
About NTHUS4, Corp.
NTHUS4, Corp. sought protection for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Texas Case No. 20-32296) on Aug. 31,
2020, listing under $1 million in both assets and liabilities.
Judge Stacey G. Jernigan oversees the case. Joyce W. Lindauer
Attorney, PLLC serves as Debtor's legal counsel.
OASIS PETROLEUM: Moody's Cuts PDR to D-PD on Bankruptcy Filing
--------------------------------------------------------------
Moody's Investors Service downgraded Oasis Petroleum Inc.'s
Probability of Default Rating to D-PD from B3-PD, Corporate Family
Rating (CFR) to Caa3 from B3, senior unsecured notes rating to Ca
from Caa1 and Speculative Grade Liquidity Rating to SGL-4 from
SGL-3. The rating outlook remains negative. These actions follow
the company's filing of voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Southern District of Texas to
implement its restructuring plan. Moody's will withdraw all ratings
for the company in the near future.
Downgrades:
Issuer: Oasis Petroleum Inc.
Probability of Default Rating, Downgraded to D-PD from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Corporate Family Rating, Downgraded to Caa3 from B3
Senior Unsecured Notes, Downgraded to Ca (LGD4) from Caa1 (LGD4)
Outlook Actions:
Issuer: Oasis Petroleum Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Oasis' Chapter 11 bankruptcy filing has resulted in a downgrade of
its PDR to D-PD. Moody's also downgraded the company's CFR to Caa3
and its senior unsecured notes rating to Ca, reflecting Moody's
view on the potential recoveries. Shortly following this rating
action, Moody's will withdraw all Oasis' ratings (refer to Moody's
rating withdrawal policy on moodys.com).
Oasis Petroleum Inc., headquartered in Houston, Texas, is an
independent E&P company with operations focused in the Williston
and Delaware Basins. Oasis conducts midstream services through its
MLP, Oasis Midstream Partners LP, which is about 32.5% owned by the
public (as of December 31, 2019).
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
OASIS PETROLEUM: Porter, Paul Represent Noteholder Group
--------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Porter Hedges LLP and Paul, Weiss, Rifkind,
Wharton & Garrison LLP submitted a verified statement to disclose
that they are representing the Ad Hoc Committee of Senior
Noteholders in the Chapter 11 cases of Oasis Petroleum Inc., et
al.
The Ad Hoc Committee of Senior Noteholders of (i) 6.5% Senior Notes
Due 2021, issued under that certain indenture, dated as of November
10, 2011, as amended, restated, amended and restated, supplemented
or otherwise modified from time to time; (ii) 6.875% Senior Notes
Due 2022, issued under that certain indenture, dated as of February
2, 2011, as amended, restated, amended and restated, supplemented
or otherwise modified from time to time; (iii) 6.875% Senior Notes
Due 2023, issued under that certain indenture, dated as of November
10, 2011 as amended, restated, amended and restated, supplemented
or otherwise modified from time to time; and (iv) 6.25% Senior
Notes Due 2026, issued under that certain indenture, dated as of
May 14, 2018.
In April 2020, certain members of the Ad Hoc Committee retained
Paul, Weiss, Rifkind, Wharton & Garrison LLP to represent them in
connection with a potential financed restructuring of the
above-captioned debtors and debtors-in-possession. In May 2020,
certain members of the Ad Hoc Committee retained Porter Hedges LLP,
as its co-counsel.
As of Sept. 30, 2020, members of the Ad Hoc Committee and their
disclosable economic interests are:
Aegon USA Investment Management, LLC
227 W. Monroe, Ste. 6000
Chicago IL, 60606
* 6.875% due 2022: 37,326,000
* 6.875% due 2023: 5,500,000
* 6.25% due 2026: 17,909,000
Aristeia Capital, LLC
One Greenwich Plaza, 3rd Fl.
Greenwich, CT 06830
* 6.875% due 2022: 17,754,000
* Converts: 4,825,000
* Equity: $(5,482,583)
Capital Research and Management Company
333 Hope St.
Los Angeles, CA 90071
* 6.875% due 2022: 121,872,000
* 6.875% due 2023: 5,700,000
* 6.25% due 2026: 16,410,000
J.P. Morgan Investment Management Inc.
1 E Ohio St
Indianapolis, IN 46204
* 6.875% due 2022: 37,073,000
* 6.875% due 2023: 67,166,000
* 6.25% due 2026: 87,336,000
* Converts: 7,530,000
Lonestar Partners, L.P.
3000 Sand Hill Rd.
Building 1, Suite 240
Menlo Park, CA 94025
* 6.875% due 2022: 1,291,000
* 6.875% due 2023: 5,625,000
* 6.25% due 2026: 9,250,000
* Converts: 3,740,000
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
* 6.875% due 2022: 136,298,000
* 6.25% due 2026: 20,552,000
New York Life Insurance Company
51 Madison Avenue Rm 203
New York, NY 10010
* 6.875% due 2022: 10,000,000
* 6.25% due 2026: 15,000,000
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
* 6.875% due 2022: 16,825,000
* 6.875% due 2023: 14,049,000
Paloma Partners Management Company
Two American lane
Greenwich, CT 06836-2571
* 6.875% due 2022: 8,078,000
* 6.25% due 2026: 19,058,000
* Converts: 47,032,000
Principal Financial Group, Inc.
711 High Street
Des Moines, Iowa 50392
* 6.875% due 2023: 2,465,000
* 6.25% due 2026: 22,445,000
* Equity: 2,105,637 shares
Western Asset Management Company, LLC
385 E. Colorado Blvd
Pasadena, CA 91101
* 6.5% due 2021: 15,556,000
* 6.875% due 2022: 31,454,000
* 6.875% due 2023: 48,647,000
* 6.25% due 2026: 4,000,000
Wexford Capital LP
777 South Flagler Dr., Ste 602
West Palm Beach, FL 33401
* 6.875% due 2022: 13,137,000
* 6.875% due 2023: 18,193,000
* 6.25% due 2026: 11,500,000
* Converts: 18,823,000
Whitebox Advisors
2500 Bee Caves Rd
Bldg 3, Ste 120
Austin, TX 78746
* Converts: 30,863,000
Counsel reserves the right to amend or supplement this Statement as
necessary in accordance with Bankruptcy Rule 2019.
Counsel to the Ad Hoc Committee can be reached at:
John F. Higgins, Esq.
PORTER HEDGES LLP
1000 Main St., 36th Floor
Houston, TX 77002
Telephone: (713) 226-6000
Facsimile: (713) 228-1331
Email: jhiggins@porterhedges.com
- and -
Andrew N. Rosenberg, Esq.
Alice Belisle Eaton, Esq.
Alexander N. Woolverton, Esq.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
Email: arosenberg@paulweiss.com
aeaton@paulweiss.com
awoolverton@paulweiss.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/30xoaIq
About Oasis Petroleum
Headquartered in Houston, Texas, Oasis --
http://www.oasispetroleum.com/-- is an independent exploration and
production company focused on the acquisition and development of
onshore, unconventional crude oil and natural gas resources in the
United States. Its primary production and development activities
are located in the Williston Basin in North Dakota and Montana,
with additional oil and gas properties located in the Delaware
Basin in Texas.
Oasis reported a net loss attributable to the company of $128.24
million for the year ended Dec. 31, 2019, compared to a net loss
attributable to the company of $35.29 million for the year ended
Dec. 31, 2018.
For the six months ended June 30, 2020, the Company reported a net
loss attributable to the company of $4.40 billion on $554.15
million of total revenues compared to a net loss attributable to
the company of $72.12 million on $1.10 billion of total revenues
for the same period in 2019.
As of June 30, 2020, the Company had $2.62 billion in total assets,
$3.21 billion in total liabilities, and a total stockholders'
deficit of $589.91 million.
On Sept. 30, 2020, Oasis Petroleum Inc. and its affiliates sought
Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-34771).
The Hon. Marvin Isgur is the case judge.
The Debtors tapped KIRKLAND & ELLIS LLP as counsel; JACKSON WALKER
L.L.P. as co-bankruptcy counsel; TUDOR, PICKERING, HOLT & CO. and
PERELLA WEINBERG PARTNERS LP as investment banker; and ALIXPARTNERS
LLP as financial advisor. KURTZMAN CARSON CONSULTANTS LLC is the
claims agent. PRICEWATERHOUSECOOPERS is the external auditor and
DELOITTE TOUCHE TOHMATSU LIMITED is the tax advisor.
Evercore is acting as financial advisor and Paul, Weiss, Rikind,
Wharton & Garrison LLP and Porter Hedges LLP are acting as legal
advisors to the Ad Hoc Committee of Senior Noteholders.
OCEANSHORE WINE: Files Voluntary Chapter 7 Petition
---------------------------------------------------
Oceanshore Wine Sushi & More LLC filed for voluntary Chapter 7
bankruptcy protection (Bankr. M.D. Fla. Case No. 20-2744) on Sept.
16, 2020. The debtor listed an address of 3468 Oceanshore Blvd.,
Flagler Beach, Florida, and is represented in court by attorney
Scott W. Spradley. Oceanshore Wine Sushi & More LLC listed assets
ranging from $0 to $50,000 and debts ranging from $0 to $50,000.
The filing did not identify a largest creditor.
The Debtor's counsel:
Scott W Spradley
Law Offices Of Scott W Spradley PA
Tel: 386-693-4935
E-mail: scott@flaglerbeachlaw.com
About Oceanshore Wine Sushi & More
Oceanshore Wine Sushi & More LLC is a limited liability company
located in Flagler Beach, Florida. It is in the restaurant
business.
OLD COLD: Creditors That Buy Assets Keep Leftover Property Lien
---------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that the First Circuit ruled
that a secured creditor that applies its credit to buy some of a
bankrupt company's assets doesn't automatically lose its lien on
the debtor's remaining assets that weren't bought.
A premise that secured creditors lose lien claim rights on unbought
assets in such credit-bid acquisitions -- as asserted by an
unsecured creditor in the bankruptcy case of fabric technology
licensor Old Cold LLC -- would turn some bankruptcy sales into
"lien laundries," the U.S. Court of Appeals for the First Circuit
said Thursday, October 1, 2020.
The unsecured creditor in the case, Mission Product Holdings LLC,
"provides no caselaw to justify such alchemy," the judge ruled.
On Dec. 18, 2015, the bankruptcy court entered an order approving
the sale of substantially all of the assets of the debtor, Old
Cold, LLC, formerly known as Tempnology, LLC, to Schleicher &
Stebbins Hotels, L.L.C. The bankruptcy court's approval of the
sale was the culmination of a process that took place over the
course of several months under the supervision of the bankruptcy
court, and with input from the U.S. Trustee and an independent
examiner, who was appointed to oversee the sale process because it
involved a proposed insider transaction and a credit bid under Sec.
363(k). Mission Product Holdings, an unsuccessful bidder for the
Debtor's assets and a counterparty to one of the Debtor's rejected
executory contracts, appealed the Sale Order, challenging the
bankruptcy court's approval of the sale and its finding that S&S
was a good faith purchaser.
About Old Cold
Based in Portsmouth, New Hampshire, Old Cold, LLC, is a material
innovation company, with the front-facing brands of Coolcore and
Dr. Cool. Coolcore, the global leader in chemical-free cooling
fabrics, has partnerships to develop fabrics for consumer brands
throughout the world. Dr. Cool is a consumer goods brand based on
the foundation of chemical-free cooling products.
Old Cold filed for Chapter 11 bankruptcy protection (Bankr. D.N.H.
Case No. 15-11400) on Sept. 1, 2015. The Debtor is represented by
Daniel W. Sklar, Esq., Christopher Desiderio, Esq., and Christopher
Fong, Esq., at Nixon Peabody LLP.
ONEWEB GLOBAL: Court OKs Bankruptcy Plan After Creditor Settlement
------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that OneWeb Global Ltd. received
court authorization to move forward with a consensual bankruptcy
sale plan following a negotiated global settlement with creditors
that raised their claims recovery.
Judge Robert Drain of the U.S. Bankruptcy Court for the Southern
District of New York approved the satellite operator's Chapter 11
plan during a telephonic hearing Oct. 2, 2020.
The Plan stems from an equity sale to an entity jointly owned by
the U.K. government and Indian telecom tycoon Sunil Mittal's Bharti
Enterprises Ltd. worth more than $1 billion. The purchase agreement
contemplates a $150 million cash payment, $100 million in equity
interests.
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, 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.
OXBOW CARBON: Moody's Rates First-Lien Bank Credit Facilities 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned B1 ratings to Oxbow Carbon LLC's
new $325 million revolver due 2024, $175 million term loan A (TLA)
due 2024 and $400 million term loan B (TLB) due 2025. At the same
time, Moody's affirmed Oxbow's B2 corporate family rating (CFR) and
B2-PD probability of default rating. The ratings of the existing
revolver, TLA and TLB will be withdrawn upon repayment. The outlook
is stable.
"The affirmation of Oxbow's B2 CFR reflects Moody's expectations
that despite challenging market conditions, the company will be
free cash flow positive, continue to pay down debt and that debt
protection metrics will remain appropriate for the rating", says
Botir Sharipov, the lead analyst for Oxbow.
Assignments:
Issuer: Oxbow Carbon LLC
Senior Secured Bank Credit Facility, Assigned B1 (LGD3)
Affirmations:
Issuer: Oxbow Carbon LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Outlook Actions:
Issuer: Oxbow Carbon LLC
Outlook, Remains Stable
The ratings are subject to the transaction closing as proposed and
receipt and review of the final documentation.
RATINGS RATIONALE
Oxbow's B2 CFR reflects its strong global industry position in the
production and sale of calcined petroleum coke (CPC), marketing and
distribution of fuel-grade petcoke (FGP), its broad geographic
diversification, high industry barriers to entry and adequate
liquidity. Oxbow benefits from relatively less volatile operating
margins than other producers given that operating earnings of its
calcining segment are generally based on the net spread between the
green petcoke (GPC) and CPC prices. The rating factors in Oxbow's
modest size and significant exposure to cyclical steel, aluminum,
cement and other industrial end-markets. Oxbow's rating is also
constrained by its limited business diversification, particularly
following the sale of two segments in 2019, which meaningfully
diminished its scale and increased its reliance on the calcining
and FGP marketing segments to generate the vast majority of its
revenues and cashflows.
The stable outlook reflects Moody's view that Oxbow's leverage will
be elevated in the next 12-18 months but will remain appropriate
for the B2 rating and that debt repayment and cost reduction
measures as well as the company's ability to consistently generate
positive free cash flow will continue to support its credit profile
in the challenging macro environment.
The rating also considers the lingering impact of the Indian
petcoke restrictions on the global petcoke market that was
exacerbated by the coronavirus pandemic. Since Oxbow does not have
calcining operations in India, petcoke restrictions have been
limited to the loss of demand from the steel industry and as a
result those tons are marketed to other industries and other
geographies. Nationwide lockdowns, automotive plant shutdowns, the
idling of the steelmaking capacity, reduced aluminum production in
certain markets and overall weak industrial demand resulted in
substantially lower y-o-y volumes, revenues and earnings in 1H2020.
Notwithstanding the recovery in aluminum and steel prices since
March-April lows, the resurgence of CPC exports from China amid the
rebound in the country's business activities, high LME inventories
and the uncertainty over the trajectory and the pace of the demand
recovery in key end-markets will likely temper any potential
improvement in CPC prices in the near term. Although utilization
rates of the US oil refiners have risen from the lows after oil
prices cratered, narrow refinery margins and reduced runs have
limited the availability of the FGP and green petcoke suitable for
calcining. That said, Oxbow's well-established sourcing platform
and long-term relationships with large producers of petcoke are
expected to alleviate some of the supply chain risk.
Free cash flow and the divestiture of the Sulphur and Activated
Carbon segments in 2019 have enabled Oxbow to repay a substantial
amount of debt in the last few years. Despite lower absolute debt
levels, Oxbow's leverage, measured as Moody's-adjusted debt/EBITDA,
climbed to 4.1x as of June 30, 2020 reflecting a significant
decline in earnings from prior years. Moody's believes that demand
for and pricing of carbon fuels supplied by the company are
unlikely to improve materially in the near term and that Oxbow debt
protection metrics will weaken as compared to 2019 but the credit
quality will remain appropriate for the B2 rating. Moody's
estimates that leverage will increase to 4.5-5.0x in 2020 and could
exceed 5.0x in 2021 before improving to mid-4.5x in 2022. Oxbow is
expected to generate moderate free cash flow that will be partly
used for debt repayment.
Oxbow faces a number of ESG risks as a producer of carbon-based
products and a supplier of key input ingredients for the steel and
primary aluminum industries. Environmental and social risks are
high as many of the company's calcining plants do not have flue-gas
desulfurization systems installed and are significant emitters of
sulfur dioxide issuance. Although Oxbow is a privately controlled
company which distributes a significant portion of earnings to its
owners, Moody's views the governance risk as average given that the
company follows a well-balanced financial policy that comprises
both the dividend payments and the debt reduction priorities.
Oxbow is expected to have an adequate liquidity supported by the
pro-forma cash and cash equivalents of $116m and about $200 million
available under the new $325 million revolver at the closing. The
TLA and TLB will be subject to mandatory annual amortization of 10%
and 5% (quarterly payments) respectively, amounting to a
contractual repayment of $37.5 million per year plus customary ECF
sweep. Moody's expects the company to remain in compliance with the
RCF and TLA financial covenants which include minimum consolidated
interest coverage ratio of 2.5x and maximum net leverage ratio of
4.75x for the quarter ending on December 31, 2020, 5x for 1Q21,
5.25x for 2Q21, 5.5x for 3Q21, 5.25x for 4Q21, 5x for 1Q22, 4.75x
for 2Q22 and 4.5x for 3Q22 and thereafter. Term loan B will not
have any financial covenants.
As proposed, the new credit facilities are expected to provide
covenant flexibility that could adversely impact creditors
including (i) an uncommitted incremental facility amount not to
exceed the $200 million reduced by junior lien indebtedness
incurred after the closing date plus an amount such that
consolidated net leverage does not exceed 3.25x with netting
ability capped at $50 million and (ii) ability to transfer assets
to unrestricted subsidiaries subject to the limitations in
investment and dispositions covenants, but will include prohibition
on the transfer of material intellectual property to unrestricted
subsidiaries. The credit agreement requires 100% of net cash
proceeds from asset sales to be used to repay the credit
facilities, subject to a $15 million basket and a 360-day
reinvestment period, with no step-downs on the prepayment.
The B1 ratings of the first-lien senior secured revolver and term
loans, one notch above B2 CFR, reflect their 1st lien priority
position in the capital structure with respect to claim on
collateral, which is substantially all assets of the company and
the stock of subsidiaries.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would be considered if the company maintains
consistently positive free cash flow and leverage is below 4.0x on
a sustainable basis. The ratings and/or outlook could be downgraded
if liquidity deteriorates, or if leverage is sustained persistently
above 5.5x.
Headquartered in West Palm Beach, Florida, Oxbow Carbon LLC (Oxbow)
is a major producer and supplier of calcined petroleum coke (CPC).
It is also among the world's largest distributors of carbon-based
fuels including fuel grade petcoke (FGP) and other products.
Revenue for the 12 months ended June 30, 2020 was $1.22 billion.
Oxbow is a subsidiary of Oxbow Carbon & Minerals Holdings, Inc., a
private company controlled by William I. Koch, with private equity
and strategic investors comprise the remaining shareholders. The
company does not publicly disclose financial information.
The principal methodology used in these ratings was Steel Industry
published in September 2017.
OXBOW CARBON: S&P Affirms 'B+' ICR on Refinancing, Outlook Neg.
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' rating on U.S.-based petroleum
and calcined coke processor and distributor Oxbow Carbon LLC. S&P
also assigned its 'BB-' issue-level and '2' recovery ratings to all
three of the company's proposed first-lien facilities.
S&P said, "The outlook is negative because while we expect leverage
will peak just below 6x over the next 18 months, if weak end-market
dynamics intensify or persist, adjusted debt to EBITDA could exceed
these levels, and liquidity could be constrained by tightening
financial covenants.
Oxbow Carbon plans to obtain $900 million in first-lien credit
facilities to refinance its capital structure. The proposed
facilities include a $325 million revolving credit facility due
2024 ($125 million drawn at closing), a $175 million term loan A
due 2024, and a $400 million term loan B due 2025.
S&P said, "We consider the transaction to be leverage neutral, and
therefore, we are affirming our 'B+' rating on the company.
"We expect a delayed earnings recovery as end markets struggle to
regain their footing following the COVID-19 pandemic. We expect
Oxbow will face challenging macroeconomic conditions through the
rest of 2020, amid lingering effects of the COVID-19 pandemic.
Revenue contributions by geography have shifted this year; the
North American share fell the most to about 25%, and other major
destinations such as Asia-Pacific have gained relative ground to
about 35% of total sales. We now estimate 2020 real GDP will
contract 4.2% and 1.6% in North America and the Asia-Pacific
region, respectively. Although we expect these regional economies
to regain ground lost in 2020 by the end of next year, we forecast
that recovery in North America, where Oxbow has seen the deepest
declines, will be the weakest. Furthermore, commodity-driven
subsectors may be slow to improve depending on how quickly
commodity prices recover. This includes the steel industries
supplied by Oxbow's fuel-grade petroleum coke (petcoke). We also
anticipate a muted recovery in sales of calcined petroleum coke
(CPC; a key input in manufacturing aluminum), as the auto,
aerospace, and construction industries--all acutely affected by the
pandemic--slowly rebuild their demand for aluminum. Finally, low
oil prices could suppress refinery utilization rates, restricting
volumes of the petroleum coke byproduct that serves as the input
for Oxbow's CPC. As a result, we forecast relatively flat revenue
growth in 2021 and a more pronounced recovery starting in 2022.
"We incorporate risks associated with uncertain trade policy as
economies move beyond pandemic-related concerns. Before the
pandemic took center stage and necessitated policies that brought
economic growth to a screeching halt, U.S.-China trade policy was
in flux, and negotiations were recurring. Trade policy was a
primary and mounting concern for transnational businesses. As
conditions normalize, negotiations could be revived, elevating
related uncertainties and possibly resulting in ongoing impact on
effective CPC prices. This would be compounded by weak global
demand for commodities, with many importers subject to relatively
weaker currencies. In our view, this could introduce some
volatility to Oxbow's earnings, given that more than 60% of Oxbow
products are marketed and distributed internationally.
"We view Oxbow's liquidity position as adequate, bolstered by this
refinancing. We anticipate Oxbow will have sufficient liquidity
sources over the next year. We base this on our expectation that
the company will maintain relatively steady margins and positive
free operating cash flow (FOCF; operating cash flow less capital
spending), despite ongoing low demand. Additionally, Oxbow has some
flexibility to reduce capital spending and distributions to cover
the close to $40 million in mandatory debt amortization in the
event that operating cash flow falls short of expectations.
Nevertheless, if leverage increases over the next year outpace the
trajectory of the maximum net leverage ratio covenant, availability
under the revolving credit facility could fall. This refinancing
precludes the risks associated with pursuing such a transaction at
a time where credit measures could be at their weakest. We forecast
the peak of Oxbow's financial distress will occur in 2021, which
would be within one year of the maturity of the existing revolving
credit facility and Term Loan A both due in January 2022.
"We adjust our anchor one notch higher to reflect that Oxbow's
credit measures compare favorably relative to peers in similar cash
flow and leverage categories. We expect continued debt repayments
due to mandatory amortization and excess cash flow sweep provisions
associated with the new facilities. This contributes to our
expectation that through the peak of its distress in 2021, Oxbow's
adjusted debt leverage will remain below 6x with positive FOCF.
"The outlook is negative because while we expect leverage will peak
just below 6x over the next 18 months, if weak end-market dynamics
intensify or persist, adjusted debt to EBITDA could exceed these
levels, and liquidity could be constrained by tightening financial
covenants.
"We could lower the rating if industrial end markets remain
stagnant, delaying the recovery for petroleum coke demand. This
could be the result of depressed commodity prices or muted economic
activity as economies transition from the pandemic. We could also
lower the rating if crude oil refineries do not provide enough
supply to meet petroleum coke demand." Specifically, S&P would
lower the rating if:
-- Adjusted leverage increases to above 7x;
-- FOCF is negative; or
-- Oxbow breaches its financial covenants.
S&P could revise the outlook to stable once the COVID-19 pandemic
appears to be contained and we have more clarity on global economic
prospects, including indications of stronger or at least the
bottoming out of commodity prices. In this scenario, it would
expect:
-- Leverage sustained below 7x; and
-- Adequate sources of liquidity to fund operations, including
mandatory debt amortizations.
PACIFIC DRILLING: Says Restructuring Could Lead to Bankruptcy
-------------------------------------------------------------
Pacific Drilling S.A. is on the brink of Chapter 11 bankruptcy.
Pacific Drilling S.A. said in a regulatory filing Oct. 1, 2020,
that it has elected not to make the approximately $31.4 million
interest payment (the "First Lien Interest Payment") due and
payable on October 1, 2020 with respect to its 8.375% First Lien
Notes due 2023 (the "First Lien Notes") and the approximately $19.6
million PIK interest payment (the "Second Lien PIK Interest
Payment" and,together with the First Lien Interest Payment, the
"Interest Payments") due and payable on October 1, 2020 with
respect to its11.0%/12.0% Second Lien PIK Notes due 2024 (the
"Second Lien PIK Notes" and, together with the First Lien Notes,
the "Notes").
Under the indentures governing the Notes, the Company has a 30-day
grace period to make the Interest Payments before such non-payment
constitutes an "event of default" with respect to the Notes. The
Company's election to use the grace period did not trigger a
cross-default under any of the Company's debt obligations as the
Company has obtained any necessary waiver or consent. The Company
has elected to use the 30-day grace period, which expires on Oct.
31, 2020, to continue its discussions with certain of its creditors
regarding the terms of a potential consensual comprehensive
restructuring of its indebtedness, which may be under the
protection of Chapter 11 of the U.S. Bankruptcy Code. No agreement
has yet been reached, and the Company cannot provide any assurance
whether, or when, the Company will reach an agreement with such
creditors or as to the terms ofany such agreement. As of September
30, 2020, the Company had approximately $218 million of cash and
cash equivalents and $6 million of restricted cash.
About Pacific Drilling
Pacific Drilling S.A. (NYSE: PACD) provides deepwater drilling
services. Pacific Drilling's fleet of seven drillships represents
one of the youngest and most technologically advanced fleets in the
world. Pacific Drilling has principal offices in Luxembourg and
Houston. On the Web: http://www.pacificdrilling.com/
On Nov. 12, 2017, Pacific Drilling S.A. and 21 affiliates each
filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
17-13193). Pacific Drilling S.A. in November 2018, emerged from
Chapter 11 of the Bankruptcy Code with $750 million in 8.375%
first-lien senior secured notes and $274 million in 11% cash/12%
paid-in-kind second-lien senior secured notes.
In the previous case, Togut, Segal & Segal LLP served as bankruptcy
counsel; Evercore Partners International LLP as investment banker;
AlixPartners, LLP, as restructuring advisor. The RCF Agent tapped
Shearman & Sterling LLP, as counsel, and PJT Partners LP, as
financial advisor. The ad hoc group of RCF Lenders engaged White &
Case LLP, as counsel. The SSCF Agent tapped Milbank Tweed, Hadley
& McCloy LLP, as counsel, and Moelis & Company LLC, as financial
advisor.
PACIFIC MAINTENANCE: Files Voluntary Chapter 7 Bankruptcy Petition
------------------------------------------------------------------
Pacific Maintenance Inc. filed for voluntary Chapter 7 bankruptcy
protection Sept. 16, 2020 (Bankr. W.D. Wash. Case No. 20-12385).
The meeting of creditors was scheduled for Oct. 13, 2020.
According to the Seattle Business Journal, the debtor listed an
address of 14108 3rd Ave. W., Everett, Washington, and is
represented in court by attorney Lance L. Lee. Pacific Maintenance
Inc. listed assets up to $40,316 and debts up to $260,097. The
filing's largest creditor was listed as Washington Dept. of Labor &
Industries with an outstanding claim of $260,097.
Pacific Maintenance Inc. provides building maintenance services.
The Company offers interior, biochemical, and semiconductor room
cleaning services.
The Debtor's counsel:
Lance L Lee
Law Offices Of Lance L. Lee
Tel: 206-332-9841
E-mail: ecf@lancelee.com
PAE HOLDING: Moody's Hikes CFR to B2, Outlook Stable
----------------------------------------------------
Moody's Investors Service upgraded its ratings for PAE Holding
Corporation, including the corporate family rating (to B2 from B3)
and probability of default rating (to B2-PD from B3-PD).
Concurrently, Moody's assigned B2 ratings to the company's first
lien debt that will feature a $740 million senior secured term loan
and a $150 million senior secured delayed draw term loan. Net
proceeds from the $740 million term loan tranche will enable PAE to
complete a small acquisition and repay all existing debts. A
speculative grade liquidity rating of SGL-2, denoting a good
liquidity profile, has also been assigned. The ratings outlook is
stable. Ratings for PAE's existing outstanding first and second
lien debt will be withdrawn once the outstanding debts are repaid
in conjunction with the debt recapitalization.
According to lead analyst Bruce Herskovics, "The upgrade of the
benchmark corporate family rating to B2 anticipates that PAE will
employ more conservative and balanced financial policies as a
publicly held business (since February 10, 2020) compared to what
was previously exhibited when PAE was wholly owned by a private
equity sponsor." Herskovics added, "In recent years the revenue
base became gradually more dynamic as acquisitions brought large
(but often non-definitized) contracts and greater technical
credentials, and we now expect 3% intermediate-term annual revenue
growth for PAE."
The rapid spread of the coronavirus outbreak, a deteriorating
global economic outlook, low oil prices and high asset price
volatility have created an unprecedented credit shock across a
range of sectors and regions. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety. The actions
reflect the impact on PAE of the modest deterioration in credit
quality it has triggered given its exposure to defense contracting,
which while less affected than most other sectors have not been
immune to the adverse impact of the pandemic and leaves the company
somewhat vulnerable to shifts in market demand and sentiment in
these unprecedented operating conditions.
The following rating actions were taken:
Upgrades:
Issuer: PAE Holding Corporation
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Corporate Family Rating, Upgraded to B2 from B3
Assignments:
Issuer: PAE Holding Corporation
Speculative Grade Liquidity Rating, Assigned SGL-2
Senior Secured Bank Credit Facility, Assigned B2 (LGD4)
Outlook Actions:
Issuer: PAE Holding Corporation
Outlook, Remains Stable
RATINGS RATIONALE
The B2 CFR broadly reflects a healthy backlog level; a
long-established presence as a US contractor supporting diplomatic,
humanitarian and military missions; and supportive financial
metrics, although PAE's acquisition spending will probably continue
apace in an effort to grow and expand its technical range and help
achieve a more competitive organizational scale. Leverage on a
Moody's adjusted basis and pro forma for the pending transactions
is expected to be in the low-4x range upon closing of the
transaction, but with a likelihood of somewhat more elevated levels
(potentially a turn higher) in consideration of anticipated
acquisitions.
Like other US defense service contractors working in support of
foreign missions, PAE often participates in joint ventures, and
while some are reported on a consolidated basis, others are not,
complicating visibility and making the free cash flow pattern more
difficult to forecast. PAE historically exhibited pronounced
volatility of free cash flows, but Moody's believes that volatility
would have been less severe in the past year had PAE's ISR unmanned
aerial vehicle venture not been so aggressively pursued; that
subsidiary was sold at a loss in 2019, and PAE plans to focus more
directly on its core defense service portfolio going forward.
The rating also considers PAE's evolving position within a
consolidating US defense services segment. The 6% EBITDA margin
level is relatively modest when compared to other publicly held
defense service contractors because the legacy mission support
business features less specialized labor and the underlying
contracts require costs related to subcontractors and materials --
which add revenue but carry limited fees for the lead contractor.
The margin profile is, however, developing more favorably through
M&A.
Moody's expects acquisitions to be a means through which margin
growth will occur. Owing to the company's mid-tier scale and the
pace of sector consolidation, the rating considers the potential
for business combination activity, potentially of a
transformational magnitude, to be elevated for PAE. Moody's expects
that PAE will minimally use the $150 million delayed draw tranche
of the first lien credit facility for acquisition spending near
term.
PAE's historical emphasis on US military and diplomatic mission
related services, particularly those serving the Mideast region,
also carries additional risks within a rapidly changing
geopolitical landscape where activity volumes could decline or
service requirements can radically shift.
The speculative grade liquidity rating of SGL-2, denoting a good
liquidity profile, benefits from cash of approximately $140 million
that will be on-hand at closing of the transaction, with
anticipated free cash flow of at least $70 million near term
against low scheduled debt amortization. A $175 million asset-based
multi-year revolving credit line will be arranged concurrent with
the term loan facility and will be undrawn at inception. PAE's only
financial maintenance covenant will be a springing minimum fixed
charge test under the revolver and the likelihood of compliance
with the same will be very high near term.
The B2 ratings assigned to the planned first lien term loans are on
par with the CFR and reflect the term loans' preponderance of
consolidated debt within PAE's overall capital structure. In a
stress scenario, the effectively senior $175 million asset-based
revolving credit facility and effectively junior unsecured non-debt
claims would compete for recovery such that the first lien facility
would likely recover near the 50% family rate, in Moody's
estimation.
The stable ratings outlook recognizes PAE's 2019 backlog of $6.4
billion, which gives good revenue visibility, as well as the
supportive budgetary setting near-term, and the variable cost
structure and low asset intensity of the defense services business
model which tends to support steady free cash flow generation even
when indebtedness is high. PAE's revenue diversity across US
defense, intelligence, homeland security and state departments also
benefit the ratings outlook.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward ratings momentum would depend on an encouraging backlog
trend and organic revenue growth suggestive of market share gains,
a high likelihood that leverage would be sustained close to 4x with
annual free cash flow-to-debt of 10%, and a good liquidity
profile.
Downward ratings pressure would mount with negative contract
developments, leverage exceeding 6x, and free cash flow-to-debt
below 3%.
The principal methodology used in these ratings was Aerospace &
Defense Methodology published in July 2020.
PAE Holding Corporation, headquartered in Falls Church, Virginia,
is a holding company that became publicly held on February 10, 2020
through a special purpose acquisition vehicle. Through its
subsidiary, Pacific Architects and Engineers Incorporated, PAE
provides contract support services to US government agencies,
international organizations and foreign governments. Revenues for
2019 were $2.8 billion.
PAE HOLDING: S&P Affirms 'B' ICR & Alters Outlook to Stable
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on the
Falls Church, Va.-based government services provider, PAE Holding
Corp. S&P assigned a 'B' issue-level and '4' recovery rating to
PAE's proposed $890 million first-lien term loan, which includes a
proposed $150 million delayed-draw term component, which will be
undrawn at close.
S&P said, "We are revising our outlook to stable from
positive,reflecting our view that leverage is likely to remain in
the area of 5x as PAE pursues future acquisitions.
"We expect PAE's debt to EBITDA will remain near 5x in 2020 as it
refinances its debt, funds potential acquisitions and positions
itself for future growth. The company is extending its debt
maturities as it focuses on strategic acquisitions and positions
itself for future growth. We expect PAE's leverage to improve
gradually in 2021, based on expected higher revenue and improving
margins. We believe the company may pursue significant future
acquisitions funded by debt that could substantially increase
leverage.
"The stable outlook reflects our view that despite revenue
challenges related to COVID-19, we expect the company's credit
metrics will remain in line with the rating. We now expect S&P
adjusted debt to EBITDA to improve to the 5x area in 2020 from 6.5x
in 2019, as the company focuses on strategic acquisitions. We
expect further improvement to the 4.5x-5x area in 2021 as revenue
growth increases and the company continues to integrate its
strategic acquisitions.
"We could lower our ratings over the next 12 months if we believe
debt to EBITDA will increase to 6x or higher for an extended
period. This could be due to the company failing to grow its
higher-margin contract base or due to significant debt-financed
acquisitions.
"We could raise the rating over the next 12 months if we believe
debt to EBITDA will drop below 5x and remain there even with
potential acquisitions. This could occur if the company is able to
improve its profitability by continuing to shift to higher-margin
programs and improving revenue growth."
PAPA'S 1 LLC: Files Voluntary Chapter 7 Bankruptcy Petition
-----------------------------------------------------------
Papa's 1 LLC filed for voluntary Chapter 7 bankruptcy protection on
Sept. 16, 2020 (Bankr. M.D. Fla. Case No. 20-02733).
According to the Jacksonville Business Journal, the Debtor is
represented in court by attorney Rehan N. Khawaja and listed an
address of 9475 Phillips Hwy. #8, Jacksonville, Florida. Papa's 1
LLC listed assets up to $60,200 and debts up to $61,305. The
filing's largest creditor was listed as Benitos Italian Cafe and
Pizza with an outstanding claim of $50,000.
Papa's 1 LLC is a limited liability company that is in restaurant
business.
PARKER'S QUALITY: Files Chapter 11 Bankruptcy Petition
------------------------------------------------------
Parker's Quality Wood Products LLC filed for voluntary Chapter 11
bankruptcy protection Aug. 27, 2020 (Bankr. W.D. Tex. Case No.
20-10961).
The Debtor's counsel:
Herbert C Shelton, II
Hajjar Peters
Tel: 512-637-4956
E-mail: cshelton@legalstrategy.com
According to the Austin Business Journal, the debtor listed an
address of 1008 S. Main St., Georgetown, Texas. Parker's Quality
Wood Products listed assets ranging from $100,001 to $500,000 and
debts ranging from $100,001 to $500,000. The filing did not
identify a largest creditor.
Parker's Quality Wood Products LLC provides wooden household
furniture. The Company designs and develops wooden outdoor
furniture, such as gliders, swings, rockers, chairs, and tables.
PATRIOT NATIONAL: Court Rejects Delaware Agency's Appeal
--------------------------------------------------------
Law360 reports that a U.S. district court judge in Delaware on
Wednesday, September 30, 2020, rejected a state insurance
commissioner's claim that confirmation of Patriot National Inc.'s
Chapter 11 plan in 2018 impeded federally protected state
management of another insurer's liquidation.
Judge Richard G. Andrews agreed in a 26-page memorandum opinion
with now-retired U.S. Bankruptcy Judge Kevin Gross' May 2018
finding that his decision did not foreclose Delaware Insurance
Commissioner Trinidad Navarro's future ability as a receiver for
Ullico Casualty Company to pursue claims against Patriot National's
post-confirmation estate. Navarro's agency opened a Chancery Court
case for rehabilitation or liquidation of Ullico in 2013.
About Patriot National
Fort Lauderdale, Florida-based Patriot National, Inc., also known
as Old Guard Risk Services, Inc., through its subsidiaries,
provides agency, underwriting and policyholder services to its
insurance carrier clients, primarily in the workers' compensation
sector. Patriot National -- http://www.patnat.com/-- provides
general agency services, technology outsourcing, software
solutions, specialty underwriting and policyholder services, claims
administration services and self-funded health plans to its
insurance carrier clients, employers and other clients. Patriot was
incorporated in Delaware in November 2013.
The Company completed its initial public offering in January 2015
and its common stock is listed on the New York Stock Exchange under
the symbol "PN."
Patriot National, Inc., and affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 18-10189) on Jan. 30, 2018. In the
petitions signed by CRO James S. Feltman, the Debtors disclosed
$159.4 million in total assets and $242.2 million in total debt as
of Dec. 31, 2017.
The Debtors have tapped Laura Davis Jones, Esq., James E. O'Neill,
Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones
LLP and Kathryn A. Coleman, Esq., Christopher Gartman, Esq., and
Jacob Gartman, Esq., at Hughes Hubbard & Reed LLP as bankruptcy
counsel; Pachulski Stang Ziehl & Jones LLP as co-counsel and
conflicts counsel; Duff & Phelps, LLC, as financial advisor; and
Conway Mackenzie Management Services, LLC, as provider of EVP of
Finance and related advisory services. Prime Clerk LLC --
https://cases.primeclerk.com/patnat -- is the Debtors' claims,
noticing and balloting agent.
James S. Feltman of Duff & Phelps, LLC, has been tapped as chief
restructuring officer to the Debtors.
The Office of the U.S. Trustee has named two creditors -- Jessica
Barad and MCMC LLC -- to serve on an official committee of
unsecured creditors in the Debtors' cases.
PHI GROUP: Delays Form 10-K Filing Due to Impact of COVID-19
------------------------------------------------------------
PHI Group, Inc. filed with the Securities and Exchange Commission a
Form 12b-25 notifying the delay in the filing of its Annual Report
on Form 10-K for the year ended June 30, 2020.
The Company was unable to file, without unreasonable effort and
expense, its Form 10-K for the fiscal year ended June 30, 2020, due
to the impact of the coronavirus pandemic and the requirement for
additional time by the auditors to review its financial information
to be included in the referenced Form 10-K.
About PHI Group
PHI Group -- http://www.phiglobal.com/-- primarily focuses on
mergers and acquisitions and invests in select industries and
special situations that may substantially enhance shareholder
value. In addition, the Company's wholly owned subsidiary, PHI
Capital Holdings, Inc. -- http://www.phicapitalholdings.com/--
provides M&A consulting services and assists companies to go public
and access international capital markets. The Company has also
been working diligently to organize PHILUX Global Funds with
several compartments for investment in renewable energy,
agriculture, real estate and multiple commodities. In addition,
PHI Luxembourg Development SA, a Luxembourg-based wholly owned
subsidiary of the Company, has been cooperating with reputable
international advisers and partners to organize a diamond exchange
center in Vietnam.
PHI Group reported a net loss of $2.03 million for the year ended
June 30, 2018, compared to a net loss of $1.56 million for the year
ended June 30, 2017.
DylanFloyd Accounting & Consulting, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
Oct. 12, 2018, citing that the Company has an accumulated deficit
of $40,551,299 and stockholders' deficit of $4,844,747 as of June
30, 2018. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
The Company has not yet filed its Form 10-K for the fiscal year
ended June 30, 2019, due to the requirement for additional time by
the auditors to review its financial information to be included in
the referenced Form 10-K. The Company is also delinquent in filing
its Quarterly Reports for the periods ended Sept. 30, 2019 and Dec.
31, 2019.
PHI GROUP: Engages M.S Madhava Rao as New Accountants
-----------------------------------------------------
The accounting firm of M.S Madhava Rao, a PCAOB-registered firm,
was engaged to serve as the new independent principal accountant to
audit PHI Group, Inc.'s financial statements for the fiscal year
ended June 30, 2019 and to perform interim reviews of the Company's
unaudited quarterly financial information for the periods ending
Sept. 30, 2019, Dec. 31, 2019 and March 31, 2020. During the
Company's two most recent fiscal years, and the subsequent interim
period prior to engaging that accountant, neither the Registrant
(nor someone on its behalf) consulted the newly engaged accountant
regarding either:
1. the application of accounting principles to any specified
transaction, either completed or proposed; or the type of
audit opinion that might be rendered on the Company's
financial statements, and neither a written report was
provided to the Company nor oral advice was provided that
M.S. Madhava Rao concluded was an important factor
considered by the Company in reaching a decision as to the
accounting, auditing, or financial reporting issue; or
2. any matter that was either the subject of a disagreement
(as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K and the related instructions thereto) or a
reportable event (as described in paragraph (a)(1)(v) of
Item 304 of Regulation S-K).
Effective on April 28, 2020, the independent accountant who was
previously engaged as the principal accountant to audit the
Company's financial statements, DylanFloyd Accounting & Consulting,
submitted a letter of resignation as auditor for the Registrant.
This accountant's reports on the financial statements for the
fiscal year ended June 30, 2018 and the reviews on the financial
statements for the quarters ended Sept. 30, 2018, Dec. 31, 2018 and
March 31, 2019 neither contained an adverse opinion or a disclaimer
of opinion, nor was qualified or modified as to uncertainty, audit
scope, or accounting principles other than a going concern
uncertainty. This accountant's decision to resign as auditor for
the Registrant was based upon scheduling conflict and its resources
and not based upon any issues related to the Registrant's audit.
During the Registrant's fiscal year ended June 30, 2018 and any
subsequent interim periods preceding such resignation, there were
no disagreements with the former accountant, whether or not
resolved, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which, if not resolved to DylanFloyd Accounting & Consulting's
satisfaction, would have caused it to make reference to the subject
matter of the disagreement in connection with any report on the
Registratiom's financial statements.
About PHI Group
PHI Group -- http://www.phiglobal.com/-- primarily focuses on
mergers and acquisitions and invests in select industries and
special situations that may substantially enhance shareholder
value. In addition, the Company's wholly owned subsidiary, PHI
Capital Holdings, Inc. -- http://www.phicapitalholdings.com--
provides M&A consulting services and assists companies to go public
and access international capital markets. The Company has also
been working diligently to organize PHILUX Global Funds with
several compartments for investment in renewable energy,
agriculture, real estate and multiple commodities. In addition,
PHI Luxembourg Development SA, a Luxembourg-based wholly owned
subsidiary of the Company, has been cooperating with reputable
international advisers and partners to organize a diamond exchange
center in Vietnam.
PHI Group reported a net loss of $2.03 million for the year ended
June 30, 2018, compared to a net loss of $1.56 million for the year
ended June 30, 2017.
DylanFloyd Accounting & Consulting, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
Oct. 12, 2018, citing that the Company has an accumulated deficit
of $40,551,299 and stockholders' deficit of $4,844,747 as of June
30, 2018. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
The Company has not yet filed its Form 10-K for the fiscal year
ended June 30, 2019, due to the requirement for additional time by
the auditors to review its financial information to be included in
the referenced Form 10-K. The Company is also delinquent in filing
its Quarterly Reports for the periods ended Sept. 30, 2019 and Dec.
31, 2019.
PHILADELPHIA SCHOOL OF MASSAGE: Files for Chapter 11 Bankruptcy
---------------------------------------------------------------
Philadelphia School of Massage & Bodywork Inc. filed for voluntary
Chapter 11 bankruptcy protection on Sept. 10, 2020 (Bankr. E.D. Pa.
Case No. 20-13642).
According to the Philadelphia Business Journal, the Debtor listed
an address of 241 N. 2nd St. #1F, Philadelphia, and is represented
in court by attorney Mark S. Danek. Philadelphia School of Massage
listed assets ranging from $0 to $50,000 and debts ranging from
$100,001 to $500,000. The filing did not identify a largest
creditor.
Philadelphia School of Massage & Bodywork Inc. offers quality and
affordable massage education and services.
The Debtor's counsel:
MARK S DANEK ESQ
The Danek Law Firm, LLC
Tel: 484-344-5429
E-mail: msd@daneklawfirm.com
PLATINUM GROUP: Added to the S&P/TSX SmallCap Index
---------------------------------------------------
Platinum Group Metals Ltd. has been added to the S&P/TSX SmallCap
Index as of Sept. 21, 2020. The S&P/TSX SmallCap Index provides an
investable index for the Canadian small cap market and was
developed with industry input as the ideal benchmark for those with
small cap exposure to the Canadian equity market. Platinum Group
Metals is listed on the TSX as PTM and on the NYSE.A as PLG. The
Company's main asset is the controlling interest in the Waterberg
palladium deposit in South Africa.
Commenting on the addition, Platinum Group's President and CEO, R.
Michael Jones, stated, "The key outcome of the 2019 Definitive
Feasibility Study for Waterberg is the development of one of the
largest and potentially lowest cash cost underground PGM mines
globally and the deposit is dominated by palladium. We are pleased
to be added to the S&P/TSX SmallCap Index as our business advances.
We are excited about the months ahead as we work towards securing
a Mining Right and a development plan with the Waterberg Joint
Venture partners."
About Platinum Group Metals
Headquartered in British Columbia, Canada, Platinum Group Metals
Ltd. -- http://www.platinumgroupmetals.net/-- is a platinum and
palladium focused exploration, development and operating company
conducting work primarily on mineral properties it has staked or
acquired by way of option agreements or applications in the
Republic of South Africa and in Canada. The Company's sole
material mineral property is the Waterberg Project. The Company
continues to evaluate exploration opportunities both on currently
owned properties and on new prospects.
PricewaterhouseCoopers LLP, in Vancouver, Canada, the Company's
auditor since 2007, issued a "going concern" qualification in its
report dated Nov. 25, 2019, citing that the Company has suffered
recurring losses from operations and has significant amounts of
debt payable without any current source of operating income. The
Company also has a net capital deficiency that raise substantial
doubt about its ability to continue as a going concern.
Platinum Group reported a net loss of $16.77 million for the year
ended Aug. 31, 2019, compared to a net loss of $41.02 million for
the year ended Aug. 31, 2018. As of Aug. 31, 2019, Platinum Group
had $43.66 million in total assets, $44.82 million in total
liabilities, and a total shareholders' deficit of $1.16 million.
PREMIER DENTAL: S&P Affirms 'CCC+' ICR, Outlook Negative
--------------------------------------------------------
S&P Global Ratings affirmed the 'CCC+' issuer credit rating on
Premier Dental Services Inc.
S&P's negative outlook reflects its view that the dental industry
remains susceptible to the risk of the ongoing spread of the
coronavirus, but it believes near-term default risk is now low.
Premier Dental's liquidity position has improved, thereby reducing
the risk of a further downgrade. Second-quarter revenue was
adversely affected by temporary clinic closures, declining 77%
compared with the same period last year. As states started to
reopen and elective dental procedures resumed in May, the company
began to see an uptick in demand, resulting in June revenue
rebounding to about 65% of previous levels.
Premier Dental managed to decrease variable costs, primarily
salaries and wages and supply expenses. It also reduced growth
initiatives and capital expenditures in order to preserve cash.
The company's liquidity position has slightly improved since the
trough and reported cash on balance sheet of $56 million on June
30, 2020. S&P expects the company to have adequate liquidity to
cover its fixed costs, including financial obligations.
S&P said, "Although we now project Premier Dental's performance
could return to levels similar to 2019's by 2021 given the recent
improvement, the longer-term impact of the pandemic remains
uncertain. While revenue ramped up in the summer, with clinics
reopened and patient volumes increased, we believe after fulfilling
the pent-up demand from closures earlier, the sustainability of
future demand is still at risk in the midst of the pandemic." Until
there is a vaccine or cure for COVID-19, the longer-term impact of
any potential change in patient behavior will remain uncertain,
with some patients choosing to only seek care when necessary, so
the demand for preventive dental care could fluctuate. Also, its
clinics are mostly located in California, making it more
challenging to mitigate geographically limited outbreaks.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "Our negative outlook reflects our view that the dental
industry remains susceptible to the risk of the ongoing spread of
the coronavirus, which could result in significant demand
fluctuations that could limit Premier's ability to sustain its
capital structure over the next year.
"We could revise the outlook to stable if we believe that same
store visits had stabilized, resulting in leverage of about 6x,
similar to pre-pandemic levels.
"We would consider a downgrade if performance weakened for a
prolonged period of time with no prospect for improvement, leading
to sustained negative free cash flow and increased risk in
refinancing. In our view, this scenario could result in a liquidity
crisis in the next six to 12 months."
PROSOURCE DENVER: Franchisee Files Chapter 11 Bankruptcy Protection
-------------------------------------------------------------------
Lily O'Neill of Business Den reports that the Denver franchisee of
wholesale flooring retailer ProSource has filed for Chapter 11
bankruptcy.
ProSource of Denver, which operates a showroom at 730 S. Jason St.
in the Athmar Park neighborhood, said in a Friday filing that it
owes between $1 million and $10 million to between 100 and 200
creditors. The company said it has assets in the same range.
A later section of the filing indicates that the company owes
approximately $3 million to its 20 largest creditors.
Companies use Chapter 11 bankruptcy protection to reorganize and
keep the business alive, paying creditors over time.
ProSource of Denver, which is led by Brett Martin, has been open
since the early 1990s.
Attorney Jamie Buechler of Denver-based Buechler Law Office, who is
representing the company in bankruptcy proceedings, said that it
had more than $10 million in sales in 2018, but was set back after
a former employee was caught stealing last year. Things got worse
with the pandemic as sales and cash flow began to slow down, she
said.
ProSource of Denver sells bathroom fixtures and flooring.
ProSource's corporate website lists the Denver showroom as closed,
but Buechler said that is not the case.
"The shop is open and Brett's continuing to operate, but they need
to staff up," Buechler said. "They're currently in the process of
acquiring financing through self-financing and multiple other
sources. And once the company has all that in place, they'll be
able to fund this business and, hopefully, propose a plan to repay
these debts over time in a consensual manner with the creditors,
and ultimately emerge from bankruptcy hopefully in six to nine
months."
Buechler added, "ProSource of Denver intends to be a good working
partner with the franchise. They have been quite successful
together. Brett enjoys working for them, and it’s a good name to
have. The company just needs some time to get some breathing room,
get some financing in place and begin the rebuilding process."
ProSource Wholesale was founded in 1990 in Earth City, Missouri,
and offers wholesale kitchen, bath, and flooring products in 136
franchise locations around the country.
PURDUE PHARMA: Court OKs $26M Employee Retention Payments
---------------------------------------------------------
Law360 reports that a New York bankruptcy judge on Wednesday gave
Purdue Pharma another five months free from opioid suits and
permission to make $26 million in employee retention payments after
being told claim distribution mediation between the drugmaker and
its creditors is bearing fruit.
U.S. Bankruptcy Judge Robert Drain granted the requests over the
course of a remote hearing after being told key agreements had been
reached in mediation on how Purdue's assets will be split between
the government and private parties claiming damages caused by the
company's opioid sales.
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell LLP and Dechert LLP as
legal counsel; PJT Partners as investment banker; AlixPartners as
financial advisor; and Prime Clerk LLC as claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A. represent the
official committee of unsecured creditors appointed in Debtors'
bankruptcy cases.
David M. Klauder, Esq., was appointed as fee examiner. The fee
examiner is represented by Bielli & Klauder, LLC.
PURDUE PHARMA: Senator Baldwin Raises Concerns on Court Location
----------------------------------------------------------------
Katie Adams of Beckers Hospital Review reports that Senator Tammy
Baldwin, D-Wis., wrote a letter to Purdue Pharma's board members
Sept. 29, 2020 requesting they release emails and any other
information related to the drugmaker's choice to change its New
York address for receiving legal documents from Albany to White
Plains.
White Plains, a suburb of New York City, has become a popular place
for companies undergoing financial woes, as Judge Robert Drain is
the only judge overseeing Chapter 11 bankruptcy cases there,
according to The Wall Street Journal. In August, the newspaper
reported that clusters of companies in financial trouble rented
short-term office spaces near White Plains so they could have their
upcoming bankruptcy cases heard by Mr. Drain.
"Given the significant public interest in the outcome of this case,
full transparency is needed to ensure public faith in the integrity
of the bankruptcy system," Ms. Baldwin wrote. "Therefore, I ask
that Purdue provide information documenting the decision —
approved by the board — to change its address to White Plains
immediately before filing for bankruptcy."
A spokesperson for Purdue Pharma told The Wall Street Journal the
change of address was appropriate, saying, "White Plains is about
15 miles from our corporate headquarters, and is the closest
federal bankruptcy courthouse."
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell LLP and Dechert LLP as
legal counsel; PJT Partners as investment banker; AlixPartners as
financial advisor; and Prime Clerk LLC as claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A. represent the
official committee of unsecured creditors appointed in Debtors'
bankruptcy cases.
David M. Klauder, Esq., was appointed as fee examiner. The fee
examiner is represented by Bielli & Klauder, LLC.
RAVE RESTAURANT: Pizza Chains Fighting for Survival
---------------------------------------------------
Cheyenne Buckingham of Yahoo! Life reports that two pizza chains
are currently fighting for survival:e Rave Restaurant Group's own
fast-casual pizza restaurant, Pie Five as well as the pizza buffet
chain, Pizza Inn. According to the parent company's most recent
financial filing, the pandemic has "dramatically reduced aggregate
in-store retail sales at Buffet Units and Pie Five Units" and
despite increased takeout and delivery sales, it's not enough to
keep both brands stable.
As a result, Rave Restaurant Group has had to cut base salaries by
20% and even furlough several of its employees. The parent company
has already closed 16 Pie Five and four Pizza Inn stores this year.
This isn't the first year Pie Five, which serves craft pies,
calzones, and salads, has had to close locations due to poor
performances. Between 2017 and 2018, the chain closed 27 locations
across the United States. Currently, Pizza Five only operates in 13
states. (Related: These 5 Classic American Restaurant Chains Are
Close to Disappearing)
Overall, Pie Five's total sales have dropped by over 37% this year,
with same-store sales declining nearly 16% during the fiscal year.
Pizza Inn's total sales while not as severe as Pie Five's also
plummeted, but only marginally so by 13.7%. Same-store sales for
the buffet-style pizza chain also only fell 8.8% this year.
The future of Pie Five and its sister brand Pizza Inn looks grim
based on Rave's latest financial report, however, the parent
company has yet to file for Chapter 11.
REMINGTON OUTDOOR: Assets Sale Okayed Despite Sandy Hook Objection
------------------------------------------------------------------
Law360 reports that an Alabama bankruptcy judge Tuesday approved
Remington Outdoor Co. 's $159. 2 million asset sale, overriding
concerns by families of victims of the 2012 mass shooting at Sandy
Hook Elementary School about how much will be left to cover their
claims.
At a telephonic hearing U.S. Bankruptcy Judge Clifton R. Jessup Jr.
approved Remington's proposal to split its assets between seven
different parties over the objections of the Sandy Hook families
group, but set a date next month to address questions they had
raised about the gunmaker's liability coverage.
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,
Remington 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 Aug. 6,
2020. The committee is represented by Fox Rothschild, LLP and Baker
Donelson Bearman Caldwell & Berkowitz, PC.
REMINGTON OUTDOOR: Sturm Ruger Not Buying Facilities, Real Estate
-----------------------------------------------------------------
Richard Craver of Winston-Salem Journal reports that the fate of
Remington Outdoor Co. Inc.'s operations in Rockingham County has
become cloudier after Sturm Ruger & Co. said Wednesday, September
30, 2020, it is not acquiring any Remington facilities or real
estate.
Remington had 103 employees in Madison on July 27, 2020 when it
entered Chapter 11 bankruptcy protection for the second time in
nearly 2 and a half years. It declared between $100 million and
$500 million in assets and liabilities.
On Aug. 6, 2020, Remington filed WARN Act notices in four states
that collectively warned that its entire workforce could be laid
off -- beginning Sept. 30, 2020 -- if it could not find a buyer.
Most employees have been furloughed.
Ruger committed during Tuesday's bankruptcy assets auction to
paying $30 million for the Marlin-branded firearms business.
There had been hope, with analyst speculation of Ruger's interest
in Remington firearms brands, that it would acquire the Madison
operations as well. Ruger has a major production plant eight miles
away in Mayodan, with 315 employees at last count.
However, Ruger issued a statement Wednesday saying that its
purchase "is exclusively for the Marlin Firearms assets. Once the
purchase is completed, the company will begin the process of
relocating the Marlin Firearms assets to existing Ruger
manufacturing facilities."
"Remington firearms, ammunition, other Remington Outdoor brands,
and all facilities and real estate are excluded from the Ruger
purchase."
Chris Killoy, Ruger's president and chief executive, said "the
value of Marlin and its 150-year legacy was too great of an
opportunity for us to pass up. The brand aligns perfectly with ours
and the Marlin product portfolio will help us widen our already
diverse product offerings.”
Vista spokesman Fred Ferguson said Tuesday "the corporate
operations in Madison were out of scope."
Rockingham economic officials say they do not have an update on the
Madison operations.
There were five other successful bidders for portions of
Remington's remaining assets: Roundhill Group LLC buying the
non-Marlin firearms business for $13 million; Sierra Bullets LLC
paying $30.5 million for its Barnes ammunition business; JJE
Capital Holdings LLC for the DPMS, H&R, Stormlake, AAC and Parker
brands; Franklin Armory Holdings LLC for the Bushmaster brand and
related assets; and Sportsman's Warehouse Inc. for the Tapco
brands.
Roundhill would acquire a gun factory in Ilion, N.Y., a handle
barrel factory in Lenoir City, Tenn., and other assets.
According to Law360.com, the non-Vista bids were worth a combined
$77.8 million.
Remington's bankruptcy filing comes as other firearms
manufacturers, most notably Ruger, have experienced a surge in
demand for products.
Vista said that Remington had $200 million in revenue in fiscal
2019. Vista expects the transaction to add to earnings, excluding
transaction and transition costs, in fiscal 2022.
Remington had been plagued by lawsuits filed after the 2012
Newtown, Conn., school shooting in which 20 first-graders and six
educators were killed. The gunman used a Remington-made rifle.
Cable news channel CNBC said Remington entered bankruptcy after
failing to reach an agreement with the Navajo Nation. The group
was reported to be considering purchasing Remington's assets.
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,
Remington 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 Aug. 6,
2020. The committee is represented by Fox Rothschild, LLP and Baker
Donelson Bearman Caldwell & Berkowitz, PC.
REVLON INC: Asks Bondholders for More Debt Exchange Turnaround Time
-------------------------------------------------------------------
Katherine Doherty of Bloomberg News reports that Revlon Inc. is
asking bondholders a second time to ease its debt load and give the
cosmetics giant more time to ride out pressures from the Covid-19
pandemic.
The company, hit hard by store closings to contain the virus,
issued a revised plan to exchange its 5.75% bonds due in 2021 after
Revlon's earlier offer attracted almost no takers.
Investors would get either cash or a combination of cash, term
loans and second lien notes, the firm said in a regulatory filing
Tuesday, September 29, 2020. The totals they'd receive are still
well below face value.
About Revlon Inc.
Headquartered in New York, New York, Revlon, Inc. conducts its
business exclusively through its direct wholly-owned operating
subsidiary, Revlon Consumer Products Corporation and its
subsidiaries. Revlon is an indirect majority-owned subsidiary of
MacAndrews & Forbes Incorporated, a corporation beneficially owned
by Ronald O. Perelman. Mr. Perelman is Chairman of Revlon's and
Products Corporation's Board of Directors.
* * *
In July 2020, S&P Global Ratings lowered issuer credit rating on
Revlon Inc. to 'CC' from 'CCC-'. Concurrently, S&P lowered its
issue-level rating on the company's $880 million Brandco first lien
term loan to 'CCC-' from 'CCC' and maintain '2' recovery rating. In
addition, S&P lowered its issue-level rating on the remaining
tranches of secured debt to 'C' from 'CC' and maintained '5'
recovery rating. Lastly, S&P affirmed its 'C' issue-level rating on
the company's two tranches of unsecured notes, the '6' recovery
ratings remain unchanged.
The negative outlook reflects S&P's expectation that it will lower
its issuer credit rating on Revlon to 'SD' (selective default) and
its issue-level rating on its February 2021 notes to 'D' after the
transaction closes.
The downgrade follows Revlon's announcement that it commenced an
offer to exchange any and all of its outstanding amounts of 5.75%
notes due February 2021 for a combination of new 5.75% notes due
February 2024 and an early tender/consent fee. The existing
noteholders will receive $750 principal amount of new notes for
every $1,000 of existing notes tender and $50 of cash as an early
tender/consent fee. Holders who tender their existing notes after
the early tender deadline (Aug. 7, 2020) will receive only $750
principal amount of new notes for every $1,000 principal amount of
existing notes tendered.
RGN-GROUP HOLDINGS: Gets Court Approval to Hire Duff & Phelps
-------------------------------------------------------------
RGN-Group Holdings, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to hire Duff
& Phelps LLC and appoint James Feltman, the firm's managing
director, to serve as "responsible
officer."
The services Mr. Feltman and Duff & Phelps will render are as
follows:
a. Conduct and oversee bankruptcy preparation and filing
activities;
b. Manage litigation impacting Debtors;
c. Coordinate activities and assist in communications with
outside constituents and advisors, including Debtors' lenders and
their advisors; and
d. Assist with such other matters as may be requested that
fall within Mr. Feltman's expertise.
Duff & Phelps's hourly rates are as follows:
Managing Director $1,210
Director $1,095
Vice President $865
Senior Associate $660
Analyst $460
Administrative $185
Debtors paid the firm an initial non-refundable cash payment of
$650,000.
Mr. Feltman disclosed in court filings that the firm is a
"disinterested person" as that term is defined by Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
James S. Feltman
Duff & Phelps LLC
55 East 52nd Street
New York, NY 10055
Phone: +1 212 871 2000
About RGN-Group Holdings
RGN-Group Holdings, LLC and its affiliates are primarily engaged in
renting and leasing real estate properties.
On Aug. 17, 2020, RGN-Group Holdings and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-11961). At the time of the filing, RGN-Group
Holdings disclosed total assets of $1,005,956,000 and total
liabilities of $946,016,000.
Judge Brendan Linehan Shannon oversees the cases.
Debtors have tapped Faegre Drinker Biddle & Reath LLP as their
bankruptcy counsel, Alixpartners as financial advisor, Duff &
Phelps LLC as restructuring advisor, and Epiq Corporate
Restructuring LLC as claims and noticing agent.
RGN-GROUP HOLDINGS: Hires Epiq as Administrative Advisor
--------------------------------------------------------
RGN-Group Holdings, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to hire Epiq
Corporate Restructuring, LLC as their administrative advisor.
The services to be rendered by Epiq are as follows:
(a) assist in the solicitation, balloting and tabulation of
votes, prepare any related reports in support of confirmation of a
Chapter 11 plan, and process requests for documents in connection
with such services;
(b) prepare an official ballot certification and, if
necessary, testify in support of the ballot tabulation results;
(c) assist in the preparation of Debtors' schedules of assets
and liabilities and statements of financial affairs and gather data
in conjunction therewith;
(d) provide a confidential data room, if requested; and
(e) manage and coordinate any distributions pursuant to a
Chapter 11 plan.
Epiq will be paid at hourly rates as follows:
Executives No Charge
Executive Vice President, Solicitation $215
Solicitation Consultant $190
Consultants/Directors/Vice Presidents $160-$190
Case Managers $70-$165
IT/Programming $65-$85
Clerical/Administrative Support $25-$45
Emily Young, a senior consultant of Epiq, disclosed in court
filings that the firm is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Emily Young
Epiq Corporate Restructuring, LLC
777 Third Avenue
11th and 12th Floors
New York, NY 10017
Phone: +1 212 225 9200
About RGN-Group Holdings
RGN-Group Holdings, LLC and its affiliates are primarily engaged in
renting and leasing real estate properties.
On Aug. 17, 2020, RGN-Group Holdings and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-11961). At the time of the filing, RGN-Group
Holdings disclosed total assets of $1,005,956,000 and total
liabilities of $946,016,000.
Judge Brendan Linehan Shannon oversees the cases.
Debtors have tapped Faegre Drinker Biddle & Reath LLP as their
bankruptcy counsel, Alixpartners as financial advisor, Duff &
Phelps LLC as restructuring advisor, and Epiq Corporate
Restructuring LLC as claims and noticing agent.
RGN-NEW YORK LVIII: Case Summary & Unsecured Creditor
-----------------------------------------------------
Debtor: RGN-New York LVIII, LLC
3000 Kellway Drive
Suite 140
Carrollton, TX 75006
Business Description: RGN-New York LVIII, LLC is primarily engaged
in renting and leasing real estate
properties.
Chapter 11 Petition Date: October 1, 2020
Court: United States Bankruptcy Court
District of Delaware
Case No.: 20-12446
Judge: Hon. Brendan Linehan Shannon
Debtor's Counsel: Ian J. Bambrick, Esq.
FAEGRE DRINKER BIDDLE & REATH LLP
222 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801
Tel: (302) 467-4200
Email: Ian.Bambrick@faegredrinker.com
Debtor's
Financial
Advisor: ALIXPARTNERS
Debtor's
Restructuring
Advisor: DUFF & PHELPS, LLC
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The petition was signed by James S. Feltman, responsible officer.
The Debtor listed SHS Uppercity NY III LLC as its sole unsecured
creditor holding a clai of $505,414.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/TSEMGAA/RGN-New_York_LVIII_LLC__debke-20-12446__0001.0.pdf?mcid=tGE4TAMA
The Debtor will move for joint administration of its case for
procedural purposes only pursuant to Rule 1015(b) of the Federal
Rules of Bankruptcy Procedure under the case captioned In re
RGN-Group Holdings, LLC (Bankr. D. Del. Lead Case No. 20-11961).
RGN-NEW YORK: Case Summary & Unsecured Creditor
-----------------------------------------------
Debtor: RGN-New York LVIII, LLC
3000 Kellway Drive
Suite 140
Carrollton, TX 75006
Business Description: RGN-New York LVIII, LLC is primarily engaged
in renting and leasing real estate
properties.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
District of Delaware
Case No.: 20-12447
Debtor's Counsel: Ian J. Bambrick, Esq.
FAEGRE DRINKER BIDDLE & REATH LLP
222 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801
Tel: (302) 467-4200
Email: Ian.Bambrick@faegredrinker.com
Debtor's
Financial
Advisor: ALIXPARTNERS
Debtor's
Restructuring
Advisor: DUFF & PHELPS, LLC
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by James S. Feltman, responsible officer.
The Debtor listed SHS Uppercity NY III LLC as its sole unsecured
creditor holding a claim of $505,414.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/T23UBQA/RGN-New_York_LVIII_LLC__debke-20-12447__0001.0.pdf?mcid=tGE4TAMA
The Debtor will move for joint administration of its case for
procedural purposes only pursuant to Rule 1015(b) of the Federal
Rules of Bankruptcy Procedure under the case captioned In re
RGN-Group Holdings, LLC (Bankr. D. Del. Lead Case No. 20-11961).
SAEXPLORATION HOLDINGS: Rapp, Paul Represent Whitebox, 2 Others
---------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Rapp & Krock, P.C. and Paul, Weiss, Rifkind,
Wharton & Garrison LLP submitted a verified statement to disclose
that they are representing the Ad Hoc Group of Certain Consenting
Creditors in the Chapter 11 cases of SAExploration Holdings, Inc.,
et al.
The Ad Hoc Group of Certain Consenting Creditors of certain
unaffiliated holders of loans or other indebtedness issued under
(i) the Third Amended and Restated Credit and Security Agreement,
dated as of September 26, 2018, by and among SAExploration, Inc.,
the guarantors from time to time party thereto, the lenders from
time to time party thereto, and Cantor Fitzgerald Securities, in
its capacity as administrative and collateral agent thereunder, (b)
the Term Loan and Security Agreement, dated as of June 29, 2016, by
and among SAExploration Holdings, Inc., the guarantors from time to
time party thereto, the lenders from time to time party thereto,
and Delaware Trust Company, as collateral and administrative agent
thereunder, and (c) the Senior Secured Convertible Notes Indenture,
dated as of September 26, 2018 by and among SAExploration Holdings,
Inc., as issuer, the guarantors party thereto, and Wilmington
Savings Fund Society, FSB.
In August 2019, the Ad Hoc Group of Certain Consenting Creditors,
along with certain other creditors of the above-captioned debtors
and debtors-in-possession, retained Paul, Weiss, Rifkind, Wharton &
Garrison LLP to represent them in connection with the announcement
of the Security and Exchange Commission's investigation of the
Debtors and an amendment to the Credit Agreement to provide for
additional loans. In April 2020, the Paul, Weiss representation of
the Ad Hoc Group of Certain Consenting Creditors evolved into
advice on restructuring negotiations.
As of Sept. 23, 2020, members of the Ad Hoc Group of Certain
Consenting Creditors and their disclosable economic interests are:
Assured Investment Management LLC
280 Park Ave, 12 Floor
New York, NY 10017
* Credit Agreement Obligations: $4,100,000.00
* Term Loan Obligations: $9,671,438.81
* Convertible Notes Obligations: $12,000,000.00
* Shares of SAExploration Holdings, Inc.: 240,432
* Series C Warrants of SAExploration Holdings, Inc.: 2,317,413
* Series D Warrants of SAExploration Holdings, Inc.: 4,734,991
* Series E Warrants of SAExploration Holdings, Inc.: 25,319,122
* Series F Warrants of SAExploration Holdings, Inc.: 171,901
Highbridge Capital Management, LLC
277 Park Ave, Floor 23
New York, NY 10172
* Credit Agreement Obligations: $6,115,833.33
* Convertible Notes Obligations: $17,900,000.00
* Shares of SAExploration Holdings, Inc.: 390,596
* Series F Warrants of SAExploration Holdings, Inc.: 256,419
Whitebox Advisors LLC
3033 Excelsior Blvd Suite 500
Minneapolis, MN 55416
* Credit Agreement Obligations: $8,165,833.33
* Term Loan Obligations: $11,230,242.80
* Convertible Notes Obligations: $23,900,000.00
* Shares of SAExploration Holdings, Inc.: 2,336,520
Nothing contained in this Statement is intended to or should be
construed to constitute (a) a waiver or release of any claims filed
or to be filed against the Debtors held by any member of the Ad Hoc
Group of Certain Consenting Creditors, its affiliates or any other
entity, or (b) an admission with respect to any fact or legal
theory. Nothing herein should be construed as a limitation upon, or
waiver of, any rights of any member of the Ad Hoc Group of Certain
Consenting Creditors to assert, file and/or amend any proof of
claim in accordance with applicable law and any orders entered in
these cases.
Paul, Weiss reserves the right to amend or supplement this
Statement as necessary in accordance with Bankruptcy Rule 2019.
Counsel for the Ad Hoc Group of Certain Consenting Creditors can be
reached at:
Henry Flores, Esq.
RAPP & KROCK, P.C.
1980 Post Oak Boulevard
Suite 1200
Houston, TX 77056
- and -
Andrew N. Rosenberg, Esq.
Brian Bolin, Esq.
Teresa Lii, Esq.
PAUL, WEISS, RIFKIND, WHARTON
& GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/34qi79o
About SAExploration Holdings
Based in Houston, Texas, SAExploration Holdings, Inc. and
affiliates are full-service global providers of seismic data
acquisition, logistical support and processing services to their
customers in the oil and natural gas industry that operate through
wholly-owned subsidiaries, branch offices and variable interest
entities in North America, South America, Asia Pacific, West Africa
and the Middle East. For more information, visit
https://saexploration.com/
SAExploration Holdings, Inc. and affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-34306) on August 27, 2020. The petitions were signed by Michael
Faust, chairman, chief executive officer, and president.
At the time of the filing, Debtors had estimated assets of between
$1 million to $10 million and liabilities of between $100 million
to $500 million.
Judge Marvin Isgur oversees the case.
The Debtors tapped Porter Hedges LLP as their bankruptcy counsel,
Imperial Capital, LLC and Winter Harbor LLC as financial advisors,
and Epiq Corporate Restructuring, LLC as claims, noticing,
solicitation and administrative agent.
SAEXPLORATION HOLDINGS: Taps Imperial Capital as Investment Banker
------------------------------------------------------------------
SAExploration Holdings, Inc. and affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Texas to hire
Imperial Capital, LLC as their investment banker.
Services Imperial will render are:
a. analyse the Debtors' business, operations, properties,
financial condition, competition, forecast, prospects and
management;
b. provide financial valuation of the ongoing operations of
the Debtors;
c. assist the Debtors in developing, evaluating, structuring
and negotiating the terms and conditions of various strategic
alternatives, including a potential Restructuring plan, including
the value of the securities, if any, that may be issued to certain
creditors/the equity holders under the Restructuring plan;
d. assist the Debtors in the preparation of solicitation
materials with respect to the Debtors' debt or equity securities,
any securities to be issued in connection with the Restructuring
and the Debtors;
e. assist the Debtors in preparing and/or refining the
Debtors' existing cash flow forecasts, related analyses and
reporting;
f. prepare other financial analysis and reporting as needed to
assist the Debtors in negotiations and discussions with the
Debtors' stakeholders;
g. participate in hearings before the Bankruptcy Court with
respect to the matters upon which Imperial has provided advice,
including, as relevant, coordinating with the Debtors' legal
counsel and providing testimony in connection therewith; and
h. provide such other investment banking services with respect
to the Debtors' financial issues as may from time to time be agreed
upon between the Debtors and Imperial.
Imperial will receive an advisory fee of $100,000 per month
(Monthly Advisory Fee), payable in advance during the first five
months of the engagement. Commencing on the sixth month, the
Monthly Advisory Fee shall be reduced to $50,000 per month.
Additionally, Imperial will charge a transaction fee of $650,000
(Restructuring Transaction Fee) payable upon the closing of the
Restructuring.
Sunny Cheung, managing director at Imperial, assures the court that
the firm represents no interest adverse to the Debtors, their
estates, or any other party-in-interest in the matters upon which
it is to be engaged, according to court filings.
The banker can be reached through:
Sunny Cheung
1330 Post Oak Blvd, Suite 2160
Houston, TX 77056e
Office: (713) 892-5601
About SAExploration Holdings Inc.
Based in Houston, Texas, SAExploration Holdings, Inc. and
affiliates are full-service global providers of seismic data
acquisition, logistical support and processing services to their
customers in the oil and natural gas industry that operate through
wholly-owned subsidiaries, branch offices and variable interest
entities in North America, South America, Asia Pacific, West Africa
and the Middle East. For more information, visit
https://saexploration.com.
SAExploration Holdings, Inc. and affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-34306) on August 27, 2020. The petitions were signed by Michael
Faust, chairman, chief executive officer, and president.
At the time of the filing, Debtors had estimated assets of between
$1 million to $10 million and liabilities of between $100 million
to $500 million.
Judge Marvin Isgur oversees the case.
Debtors have tapped Porter H Edges LLP as their bankruptcy counsel,
Imperial Capital, LLC and Winter Harbor LLC as financial advisors,
and Epiq Corporate Restructuring, LLC as claims, noticing,
solicitation and administrative agent.
SAMSON OIL: Moss Adams LLP Dismissed as Accountants
---------------------------------------------------
Adam Paul Nikitins and Samuel John Freeman ("the Administrators")
of EY, Level 23 Exhibition Street, Melbourne VIC 3000, Australia,
were appointed joint and several voluntary administrators of Samson
Oil & Gas Limited by the Company's directors. The Company's
directors resolved to appoint administrators based on their
determination that the Company is likely to become "insolvent" at
some future time pursuant to section 436A(1) of the Australian
Corporations Act 2001 (Cth).
Pursuant to section 435A of the Corporations Act, the object of
voluntary administration is to provide for the business, property
and affairs of an insolvent company to be administered in a way
that (a) maximises the chances of the company, or as much as
possible of its business, continuing in existence; or (b) if it is
not possible for the company or its business to continue in
existence – results in a better return for the company's
creditors and members than would result from an immediate winding
up of the company.
In light of the above, given the possibility that the Company will
not continue in existence following the voluntary administration
process and in an effort to preserve value for creditors, the
Administrators dismissed the Company's independent accountants,
Moss Adams LLP, effective Sept. 14, 2020. The reports of Moss
Adams on the financial statements of the Company for fiscal years
ending June 30, 2019 and June 30, 2018, did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope or accounting principles,
except that the audit report of Moss Adams on the Company's
financial statements for the fiscal year ended June 30, 2019 and
June 30, 2018, contained an explanatory paragraph indicating that
there was substantial doubt about the ability of the Company to
continue as a going concern.
During the two most recent fiscal years ended June 30, 2019 and
June 30, 2018, and through the subsequent interim period preceding
Moss Adams' resignation, there were no reportable events within the
meaning set forth in Item 304(a)(1)(v) of Regulation S-K, except
that for the fiscal year ended June 30, 2019, a material weakness
existed in the Company's internal control over financial reporting,
as described in Item 9A to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 2019, and in Item 4 of the
Company's quarterly report on Form 10-Q for the quarter ended March
31, 2020, and for the fiscal year ended June 30, 2018, a material
weakness existed in the Company's internal control over financial
reporting, as described in Item 9A to the Company's annual report
on Form 10-K for the fiscal year ended June 30, 2018.
During the Company's two most recent fiscal years and the
subsequent interim period preceding Moss Adams' dismissal, the
Company was not in any disagreement with Moss Adams on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if
not resolved to the satisfaction of Moss Adams, would have caused
it to make reference to the subject matter of the disagreement in
connection with its report. The Administrators have not appointed
a successor accountant.
About Samson Oil
Headquartered in Perth, Western Australia, Samson Oil & Gas Limited
-- http://www.samsonoilandgas.com/-- is an independent energy
company primarily engaged in the acquisition, exploration,
exploitation and development of oil and natural gas properties,
primarily with a focus in Montana and North Dakota.
Samson Oil reported a net loss of $7.15 million for the fiscal year
ended June 30, 2019, compared to a net loss of $6.04 million for
the fiscal year ended June 30, 2018. As of March 31, 2020, the
Company had $44.06 million in total assets, $52.64 million in total
liabilities, and a total stockholders' deficit of $8.58 million.
Moss Adams LLP, in Denver, Colorado, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
Oct. 15, 2019, citing that the Company is in violation of its debt
covenants, incurred a net loss from operations, has cash outflows
from operations, and its current liabilities exceed its current
assets as of and for the year ended June 30, 2019. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
SCULPTOR CAPITAL: Fitch Affirms B+ LongTerm IDR, Outlook Negative
-----------------------------------------------------------------
Fitch Ratings has affirmed Sculptor Capital Management, Inc., and
its related entities' (collectively, Sculptor) Long-Term Issuer
Default Ratings (IDRs) at 'B+'. Fitch has also affirmed the
company's senior secured debt at 'BB-'/'RR3'. The ratings have been
removed from Rating Watch Negative and assigned a Negative
Outlook.
KEY RATING DRIVERS
IDRs AND SENIOR DEBT
The removal of the Negative Rating Watch reflects the improvements
in Sculptor's fund performance and flows and the stabilization of
its assets under management (AUM) and management fees since 1Q
2020, which result in improved fee-related EBITDA (FEBITDA)
prospects. In addition, Sculptor has announced a recapitalization
transaction which, if executed, alongside continued mandatory debt
repayments related to a cash flow sweep, is expected to reduce
debt, and improve leverage metrics from current levels.
The rating affirmation reflects Sculptor's long-term performance
track record and franchise, particularly in its core multi-strategy
hedge fund business and continued expansion into credit and real
estate products, which have committed capital structures and
generate more consistent fee revenue.
Key rating constraints include the business model's sensitivity to
market risk due to the still meaningful amount of net asset
value-based management fees, weak FEBITDA margins, leverage, and
interest coverage metrics, and less diversified, albeit improving,
AUM relative to higher-rated alternative investment managers.
Reduced investor appetite for hedge funds as an asset class,
combined with challenged performance relative to benchmarks more
recently, has pressured fund flows and fees for the hedge fund
industry.
The Negative Rating Outlook reflects potential for future
performance volatility given the market backdrop (and the resultant
impacts on flows, AUM and FEBITDA), the yet-to-be completed
recapitalization transaction and the fact that the company
continues to face the risk of an adverse outcome from a ruling in
U.S. District court in August 2019 with respect to a restitution
claim brought by certain parties (Africo) related to the activities
of OZ Africa. Though some progress has been made with respect to
this litigation since Fitch's last rating review in April 2020,
with the parties having reached a final settlement agreement, it
remains to be approved by the judge. The current rating
incorporates the expectation that legal expenses and the ultimate
settlement amount will be in line with the proposed settlement
framework. A negative development related to Africo would result in
negative rating action for Sculptor given its impact on the
business and recapitalization prospects.
Sculptor has seen significant declines in AUM and management fees
in the last few years as the firm moved through a leadership
transition and legal issues. AUM and management fees seemed to have
stabilized year-to-date in 2020, but an improvement in management
fees from here is dependent on inflows, especially into the master
fund and other higher fee strategies. Fitch believes the
fundraising outlook for the master fund, though improved, remains
uncertain and is somewhat dependent on a successful resolution of
the legal issues.
On Sept. 25, 2020, Sculptor entered into a credit agreement with
Delaware Life Insurance Company to provide a $320 million senior
secured term loan facility and a $25 million senior secured
revolving credit facility. Proceeds will be used to repay the
existing term loan, subordinated credit facility and preferred
units. Sculptor has also agreed to issue to Delaware Life Insurance
Company, 10-year warrants or restricted stock enabling it to
purchase up to 7.5% of the fully diluted ownership of the company.
The proposed recapitalization transaction is expected to reduce
debt from $408.5 million at June 30, 2020 to $320.0 million by
capturing the available prepayment discounts of $60 million on the
existing subordinated debt and preferred units and partially
drawing down on existing cash reserves. The new term loan has an
incentive to paydown $100 million by May 2021 and will have a cash
flow sweep in place above a minimum cash reserve of $75 million for
the first $150 million of paydowns. Fitch views the reduction in
debt positively, but gross debt/FEBITDA will remain elevated for
the rating level until AUM and FEBITDA improves more meaningfully.
The recapitalization transaction also remains contingent on the
completion of the Africo settlement.
Sculptor's leverage was over 48x for the trailing 12 months (TTM)
ended June 30, 2020, which is well above the peer group and the
firm's historical metrics. Based on Sculptor's expense guidance for
2020, its AUM as of June 30, 2020, existing management fee rates,
and considering the recapitalization transaction and its cash sweep
requirements, Fitch expects Sculptor's leverage could fall within a
range of 24x-26x by YE20 and further improve to below 10x within
the Rating Outlook horizon. However, a decline in AUM could slow
the recovery in FEBITDA and keep the leverage ratio elevated,
despite the planned debt reduction.
Interest coverage was 0.7x for the TTM ended June 30, 2020. Based
on Sculptor's expense guidance for 2020, its AUM as of June 30,
2020, existing management fee rates, and considering the
recapitalization transaction and its higher interest payment
obligations, Fitch expects interest coverage to decline to 0.5x at
YE20 before recovering along with an improvement in FEBITDA.
Sculptor's FEBITDA margin was 3.5% for the TTM ended June 30, 2020,
which is well below Sculptor's longer-term historical range of 35%
to 45%. Using Sculptor's expense guidance for 2020, its AUM as of
June 30, 2020, existing management fee rates and considering the
recapitalization transaction, Fitch estimates that Sculptor's
FEBITDA margin could recover modestly by YE20 and approach high
single digits within the Rating Outlook horizon, which would still
be weak relative to the peer group and historical performance.
In its analysis of Sculptor, Fitch uses FEBITDA as a proxy for cash
flow, which consists of management fees, less compensation expenses
(including salary and a minimum level of bonus assumed to be the
higher of 25% of management fees or management guidance), less
operating expenses, plus depreciation and amortization. The
calculation excludes incentive income and incentive-related
compensation, which is approximated based on company disclosures.
Sculptor's liquidity profile serves as a mitigant to the high
leverage and weak interest coverage ratios. At June 30, 2020, the
company had $127.7 million in unrestricted cash and equivalents and
$206.4 million in long term U.S. Government obligations. Post the
Africo settlement and recapitalization transaction, Sculptor plans
to reduce its liquidity target to approximately $75 million in cash
reserves in addition to other balance sheet investments. The
company also plans to obtain a $25.0 million revolving credit
facility as part of the proposed recapitalization transaction,
which would add a contingent liquidity source. Fitch believes, the
lower liquidity levels would be manageable given the potential
reduction in uncertainty related to Africo liabilities in the
future as well as lower overall debt levels and the extension of
maturities.
The senior secured debt rating of 'BB-'/'RR3' reflects Fitch's
expectation for good recovery prospects for the instrument in a
stressed scenario given that term loan holders benefit from a
first-priority security interest in Sculptor's assets.
SUBSIDIARIES AND AFFILIATED COMPANIES
Sculptor is a publicly traded holding company, and its primary
assets are ownership interests in the operating group entities
(Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor
Capital Advisors II LP), which earn management and incentive fees
and are directly held through one intermediate holding companies.
Sculptor conducts substantially all its business through the
operating group entities. The IDRs assigned to Sculptor Capital LP,
Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP
are equalized with the ratings assigned to Sculptor, reflecting the
joint and several guarantees among the entities.
Sculptor Capital LP serves as the debt-issuing entity for
Sculptor's secured debt and benefits from joint and several
guarantees from the management and incentive-fee generating
operating group entities.
RATING SENSITIVITIES
IDRs AND SENIOR DEBT
Factors that could, individually or collectively, lead to positive
rating action/upgrade including a revision of the Outlook to
Stable:
A favorable resolution of Africo and closing of the
recapitalization transaction reducing debt from current levels.
Further positive actions could be driven by leverage declining
below 5.0x and interest coverage exceeding 3.0x on a sustained
basis. Positive ratings momentum would also be predicated on
improved fundraising, enhanced AUM diversity, maintenance of
investment performance and continued fee generation, along with
expense reduction, which yields improvement in the FEBITDA margin
above 15%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
An inability to close the recapitalization transaction and achieve
the planned reduction in debt, material increases in outflows from
the master fund or performance deterioration leading to a decline
in FEBITDA from current levels which would prevent the firm from
improving margins, interest coverage and leverage towards Fitch's
expectations. A reduction in the firm's liquidity position,
impairment of the firm's fundraising capabilities resulting from
significant reputational damage, or any material adverse impact on
the company's franchise or financial profile arising from the
restitution claim related to the activities of OZ Africa could also
have a negative rating impact.
The senior secured debt ratings are primarily sensitive to changes
in Sculptor's IDR and recovery prospects on the debt.
SUBSIDIARIES AND AFFILIATED COMPANIES
The ratings of Sculptor Capital LP, Sculptor Capital Advisors LP,
and Sculptor Capital Advisors II LP are linked to the IDR of
Sculptor and are, therefore, expected to move in tandem.
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
Sculptor has an ESG Relevance Score of '4' for Management Strategy
due to the importance of management on the operational
implementation of its strategy, which has had a negative impact on
the credit profile and is relevant to the rating in conjunction
with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
SECURITY FIRST: Gets Approval to Hire Sullivan Hazeltine as Counsel
-------------------------------------------------------------------
Security First Corp. received approval from the U.S. Bankruptcy
Court for the District of Delaware to hire Sullivan Hazeltine
Allinson, LLC as its bankruptcy counsel.
The services that will be provided by the firm are as follows:
a. advise Debtor of its rights, powers, and duties under
Chapter 11 of the Bankruptcy Code;
b. prepare legal papers and review financial reports to be
filed in the case;
c. assist in the negotiation and documentation of financing
agreements and related transactions;
d. review the nature and validity of liens asserted against
Debtor's property and advise Debtor concerning the enforceability
of such liens;
e. advise Debtor regarding its ability to initiate actions to
collect and recover property for the benefit of its estate;
f. advise and assist Debtor in connection with any potential
asset sales and property dispositions;
g. advise Debtor concerning the assumption, assignment,
rejection, restructuring or recharacterization of its executory
contracts and unexpired leases;
h. advise Debtor in connection with the formulation,
negotiation and promulgation of a plan of reorganization and
related transactional documents;
i. assist Debtor in reviewing, estimating and resolving claims
asserted against its estate;
j. commence and conduct litigation to assert rights held by
Debtor, protect assets of its estate or otherwise further the goal
of completing Debtor's successful reorganization; and
k. provide non-bankruptcy services if requested by Debtor.
Sullivan Hazeltine will be paid at hourly rates as follows:
William D. Sullivan, Member $425
William A. Hazeltine, Member $375
Elihu E. Allinson III, Member $350
Heidi M. Coleman, Paralegal $150
Sullivan Hazeltine received a retainer in the total amount of
$60,000. The firm will also be reimbursed for out-of-pocket
expenses incurred.
William Hazeltine, Esq., a member of Sullivan Hazeltine, disclosed
in court filings that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
Sullivan Hazeltine can be reached at:
William A. Hazeltine, Esq.
Sullivan Hazeltine Allinson, LLC
901 N Market St, Suite 1300
Wilmington, DE
Tel: (302) 428-8191
About Security First
Security First Corp. is a developer of advanced data-centric cyber
security solutions. Visit https://securityfirstcorp.com for more
information.
Security First sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del., Lead Case No. 20-12053) on Aug. 31, 2020.
Pankaj Parekh, chief executive officer, signed the petition. At
the time of the filing, Debtor had estimated assets of $1 million
to $10 million and estimated liabilities of $10 million to $50
million.
Judge Brendan Linehan Shannon oversees the cases.
William D. Sullivan, Esq., at Sullivan Hazeltime Allinson LLC,
serves as Debtor's legal counsel.
SELECTA GROUP: To Seek U.S. Recognition of UK Scheme of Arrangement
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Switzerland-based vending machine operator Selecta Group B.V. said
it intends to file for Chapter 15 bankruptcy protection in the U.S.
to seek recognition of its restructuring in the United Kingdom.
Selecta Group announced Sept. 22 that more than 80% of its
noteholders have undertaken to support the Company's
recapitalisation transaction to be implemented through a UK scheme
of arrangement.
The convening hearing -- a significant step in the process -- was
successfully concluded on Oct. 2.
According to the Oct. 2 statement by the company, the immediate
next steps are:
* Selecta Finance UK and (subject to all necessary creditor
consents being provided) Selecta Group BV filing for recognition of
the UK process in the US courts through a Chapter 15 filing; and
* On Oct. 21, 2020, the scheme meeting during which the holders
of the senior secured notes issued by Selecta may vote on the
proposed transaction.
The explanatory statement in respect of the scheme of arrangement
has been uploaded to the Scheme Website at
http://www.lucid-is.com/selecta
Noteholders are encouraged to review the explanatory statement, the
associated documentation, and to submit a completed account holder
letter to the Information Agent by the deadlines specified in the
explanatory statement. To the extent that any noteholder has any
questions with respect to completing an account holder letter, they
should contact the Information Agent:
Lucid Issuer Services Limited at
Lucid Issuer Services Limited
Tankerton Works 12 Argyle Walk
London WC1H 8HA United Kingdom
Telephone: +44 20 7704 0880
About KKR's Selecta
Selecta Group is Europe's leading route-based unattended
self-service provider, offering coffee and convenience food
solutions in the workplace and in public spaces. Every day it
serves beverages and snacks to more than 10 million people at
475,000 points of sale across Europe. Selecta has more than
10,000 employees.
Selecta's vending machines located in offices, train stations and
other public places throughout Europe. Because many people stayed
at home during the lockdown, sales collapsed during the coronavirus
crisis.
KKR is a major shareholder of Selecta.
SERVICEMASTER COMPANY: Moody's Hikes CFR to Ba2, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service upgraded The ServiceMaster Company, LLC's
corporate family rating to Ba2 from Ba3, probability of default
rating to Ba2-PD from Ba3-PD and senior unsecured notes issued by
The ServiceMaster Company (Old) and The ServiceMaster Company
Limited Partnership to B1 from B2. The senior secured credit
facility was affirmed at Ba1. The Speculative Grade Liquidity
rating remains SGL-1. The outlook remains stable.
The company announced it will use a portion of the $1.1 billion of
net proceeds from the previously-announced sale of its
ServiceMaster Brands business to repay in full its $750 million of
senior unsecured notes due 2024 and about $51 million of senior
secured term loans. On October 5, publicly-traded ServiceMaster
Global Holdings, Inc. ("SERV" and "TMX") will change its name to
Terminix Global Holdings, Inc. and trade under the ticker TMX upon
completion of the ServiceMaster Brands sale. The rating on the
unsecured notes due 2024 will be withdrawn when they are repaid.
RATINGS RATIONALE
"Terminix's plan to repay its $750 million 5.125% notes due 2024
reduces financial leverage pro forma for the sale of ServiceMaster
Brands by more than a turn to around 3.3 times from about 4.5
times, driving the corporate family rating upgrade to Ba2 from
Ba3," said Edmond DeForest, Moody's Vice President and Senior
Credit Officer.
The Ba2 CFR reflects Moody's expectations for steady revenue from
highly recurring subscriptions, steady high teens EBITA margins,
moderately high financial leverage, and steady free cash flow.
Terminix may pursue debt-financed acquisitions in excess of
internally-generated free cash flow to supplement organic revenue
growth which comes mostly from price increases. Debt to EBITDA
could peak above 3.5 times immediately after an acquisition, but
should return to around 3.0 times within 12 to 18 months of a
transaction.
Terminix has made over $500 million in acquisitions since 2017. In
the 4th quarter of 2019, Terminix purchased of two of its largest
Copesan commercial pest control members for approximately $150
million. In September 2019, Terminix acquired Nomor Holding AB for
about $200 million, expanding its pest control scope to Europe.
The company has limited organic net customer growth potential but
leading market positions and scale in residential termite and
residential and commercial pest management services. Recurring
subscriptions and high customer retention rates make revenues
predictable. Profitability has been pressured by service costs,
investments in marketing and technology and rising labor costs.
Additional support comes from good interest coverage with EBITA to
interest around 3.5 times and modest capital expenditure
requirements.
All financial metrics cited reflect Moody's standard analytical
adjustments. In addition, capitalized software costs are expensed.
There are environmental risks in the pest management business
surrounding the safe use of poisonous chemicals, and associated
social and reputational risks to the company should it mishandle
them and cause harm. The use of an illegal substance by a Terminix
employee in St. John, US Virgin Islands in 2015 caused two people
to become severely disabled. The incident led to about $100 million
in fines and other costs for Terminix.
Governance concerns include somewhat aggressive financial
strategies including the use of debt proceeds to make acquisitions.
Financial statements published at TMX may not fully reflect
Terminix as TMX neither guarantees the rated debt nor provides
consolidating financial statements detailing Terminix's financials.
The ability for TMX to make investments outside Terminix and
receive restricted payments from Terminix, among other structural
considerations, are limited by the terms of the secured debt
agreements. The rating assumes that there are no material assets or
liabilities in entities between audited ServiceMaster Global
Holdings, Inc., and issuer The ServiceMaster Company, LLC. The lack
of complete transparency regarding the consolidation of Terminix
into TMX weighs on further ratings upside.
The SGL-1 Speculative Grade Liquidity rating reflects Moody's
assessment of Terminix's liquidity profile as very good. Moody's
anticipates around $600 million of available cash including
retained ServiceMaster Brands sale proceeds, full availability of
the company's $400 million revolving credit facility due 2024,
which could be used to fund acquisitions, and around $200 million
of free cash flow. These cash sources provide ample coverage of the
limited required debt repayment needs anticipated over the next 12
months. Terminix may use a portion of its cash to repurchase its
shares or fund acquisitions. Flexibility within the revolver's
springing first lien leverage ratio is expected to remain wide.
The Ba1 rating on the senior secured revolver and term loan
reflects the Ba2-PD PDR and a loss given default assessment of
LGD3, reflecting their priority in Moody's modeled waterfall of
claims at default ahead of the unsecured debt. The credit facility
is secured by a first lien pledge of substantially all the domestic
assets of the guarantor subsidiaries through secured upstream
guarantees. A 10% deficiency claim is assumed in Moody's LGD model
to account for the value of collateral pledged under around $100
million of unrated vehicle financing arrangements.
The B1 rating on the senior unsecured notes due 2027 and 2038
reflects the Ba2-PD PDR and a loss given default assessment of
LGD6, reflecting their structural subordination to all other rated
debt and unsecured operating company obligations because of the
absence of upstream guarantees from operating subsidiaries.
The stable outlook reflects Moody's anticipation of debt to EBITDA
around 3.0 times and free cash flow to debt above 10%. The outlook
also reflects expectation that Terminix may make debt-financed
acquisitions or fund shareholder returns in excess of free cash
flow with the net proceeds of future debt incurrence.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Moody's expects: 1) no revenue
growth; 2) debt to EBITDA will be maintained above 3.5 times; 3)
free cash flow will remain around 8% of debt or lower; or 4) more
aggressive financial policies.
The ratings could be upgraded if Moody's expects: 1) increased
geographic scope and revenue scale and diversity through, for
instance, profitable revenue growth outside the US or a greater
share of commercial customers; 2) debt to EBITDA will remain below
3.0 times 3) free cash flow to debt will remain in the mid-teens
percentages of total debt; 4) Terminix establishes a track record
of conservative financial policies; and 5) Terminix gains
additional financial flexibility by reducing the proportion of
secured to total debt.
Moody's took the following rating actions and made the following
outlook statement:
Issuer: The ServiceMaster Company, LLC
Corporate Family Rating, upgraded to Ba2 from Ba3
Probability of Default Rating, upgraded to Ba2-PD from Ba3-PD
Senior Secured Revolving Credit Facility due 2024, affirmed at Ba1
(LGD3 from LGD2)
Senior Secured Term Loan due 2026, affirmed at Ba1 (LGD3 from
LGD2)
Speculative Grade Liquidity Rating, maintained SGL-1
Outlook, is Stable
Issuer: ServiceMaster Company (The) (Old)
Senior Unsecured, upgraded to B1 (LGD6) from B2 (LGD6)
Issuer: ServiceMaster Company LimitedPartnership(The)
Senior Unsecured, upgraded B1 (LGD6) from B2 (LGD6)
Terminix, a wholly-owned, indirect subsidiary of publicly-traded
ServiceMaster Global Holdings, Inc. and based in Memphis, TN, is a
provider of termite and pest control services in North America and
Europe under brands including Terminix, Copesan and Nomor through
company-owned operations, Terminix franchises and Copesan
association members.
Moody's expects 2021 revenue of over $2 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SESI LLC: Moody's Lowers CFR to Ca, Outlook Negative
----------------------------------------------------
Moody's Investors Service downgraded SESI, L.L.C.'s Corporate
Family Rating (CFR) to Ca from Caa3, Probability of Default Rating
(PDR) to Ca-PD from Caa3-PD, senior unsecured notes to C from Caa3,
and Speculative Grade Liquidity Rating (SGL) to SGL-4 from SGL-3.
SESI's rating outlook remains negative.
On September 30, 2020, SESI announced that it has entered into a
restructuring support agreement (RSA) with 69.2% of its noteholders
that would help reduce 100% of the company's long-term debt and
related interest costs. SESI plans to implement the RSA through a
pre-packaged voluntary plan of reorganization under Chapter 11 of
the U.S. Bankruptcy Code in the Southern District of Texas before
the end of 2020.
Downgrades:
Issuer: SESI, L.L.C.
Corporate Family Rating, Downgraded to Ca from Caa3
Probability of Default Rating, Downgraded to Ca-PD from Caa3-PD
Senior Unsecured Notes Rating, Downgraded to C (LGD5) from Caa3
(LGD4)
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Outlook Actions:
Issuer: SESI, L.L.C.
Outlook, Remains Negative
RATINGS RATIONALE
The Ca-PD PDR reflects the high probability of an imminent
bankruptcy filing. The Ca CFR and C senior unsecured rating reflect
Moody's view on expected loss and potential recovery for
bondholders, respectively. The SGL-4 rating captures the maturity
risk involving the $800 million senior unsecured notes that are
coming due in December 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The PDR would be downgraded to D-PD upon bankruptcy filing.
The principal methodology used in these ratings was Global Oilfield
Services Industry Rating Methodology published in May 2017.
SESI, L.L.C. is a wholly-owned subsidiary of Superior Energy
Services, Inc., which is a publicly-traded diversified oilfield
services company headquartered in Houston, Texas.
SHAKER RD LLC: Taps Hire Fitzgerald Attorneys as New Counsel
------------------------------------------------------------
Shaker Rd, LLC, seeks approval from the U.S. Bankruptcy Court for
the District of Massachusetts to employ Fitzgerald Attorneys at
Law, P.C. as its new counsel.
The firm will substitute Hendel, Collins & O'Connor, P.C. as
counsel after the latter's attorneys joined Fitzgerald Attorneys.
The firm will continue to provide legal services to the Debtor in
connection with its Chapter 11 case.
The retainer fee of $13.500.50 previously paid to Hendel Collins
will be transferred to Fitzgerald Attorneys and held subject to
approval of a fee application.
The hourly rates to be charged by the Fitzgerald Attorneys in the
case are consistent with the rates charged to other clients in
non-bankruptcy matters and with the rates charged by Hendel
Collins.
Andrea M. O'Connor, Esq., at Fitzgerald Attorneys, disclosed in
court filings that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Andrea M. O'Connor, Esq.
FITZGERALD ATTORNEYS AT LAW, P.C
46 Center Square
East Longmeadow, MA 01028
Telephone: (413) 486-1110
E-mail: amo@fitzgeralatlaw.com
About Shaker Rd LLC
Shaker Rd, LLC, based in East Longmeadow, MA, filed a Chapter 11
petition (Bankr. W.D. Mass. Case No. 20-30338) on June 17, 2020.
HENDEL, COLLINS & O'CONNOR, P.C., serves as bankruptcy counsel to
the Debtor. In the petition signed by Louis Masaschi, manager, the
Debtor was estimated to have $1 million to $10 million in both
assets and liabilities.
SOUTHEAST SUPPLY: Moody's Cuts Senior Unsecured Rating to Ba1
-------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured rating of
Southeast Supply Header, LLC to Ba1 from Baa3. Concurrently,
Moody's assigned a Ba1 Corporate Family Rating, a Ba1-PD
probability of default (PD) rating, and a Speculative Grade
Liquidity (SGL) rating at SGL-2. The rating outlook is negative.
This rating action concludes the review for downgrade initiated on
31 July 2020.
RATINGS RATIONALE
"SESH's rating downgrade reflects the expiration of its largest
capacity contract," stated Edna Marinelarena, Moody's analyst.
"Approximately 50% of the pipeline's capacity is uncontracted
leading to more volatile revenue and cash flow production with the
ratio of FFO to debt weakening materially in 2021."
The Ba1 CFR reflects the uncontracted nature of the pipeline.
SESH's financial metrics had been strong thanks to the contracted
nature of the pipeline's revenues that are based on fixed rate
payments irrespective of volumes shipped. Most of the executed
contracted rates were set in 2008, when the pipeline originally
came online during a period of high natural gas prices. However,
over the years, the pipeline's competitive position has weakened as
natural gas prices have fallen, substantial new supply has been
added from shale gas regions and additional pipeline capacity has
been built to serve the critical Florida market. These dynamics are
evident in SESH's failure to extend its largest contract, a 500,000
dekatherms (Dth) per day contract with Florida Power & Light
Company (FPL, A1 stable), which was the pipeline's largest contract
at about 50% of pipeline capacity and revenue in 2019. The company
has thus far been unable to secure a contract with another
high-quality shipper for either a portion or for the full capacity
available.
The company remains in a period of significant recontracting risk
as the original 2008 contracts expire or near their two-year
notification period. In 2021 SESH, has contracts that are nearing
their two-year notification date, including contracts with Duke
Energy Florida, LLC (A3 stable) and FPL, which the company reports
making good progress towards renewal. Positively, the balance of
the pipeline's shippers continues to be other highly rated utility
companies of which operate in service territories with growing
natural gas demand driven by population growth and power generation
fleet conversions to natural gas from coal, which should support
the pipeline's credit quality longer term.
While negotiations with FPL and other shippers are ongoing, the
inability to recontract a large portion of the available capacity
raises the level of credit risk associated with the pipeline.
Moody's expects SESH to experience revenue volatility over the next
12 months as the company navigates markets sales for its available
capacity. Additionally, Moody's expects any new contract to be at
lower pricing than the original 2008 contracted rates resulting in
less revenue generation.
SESH's cash flows are falling. The ratio of FFO to debt as of LTM
Q2 2020 was 15.5%. Moody's expects FFO to debt will decline close
to 13% in 2020 due to the loss of the FPL contract. Over the next
12 months, FFO to debt will be volatile and, based on its scenario
analysis, Moody's forecasts the ratio to range between 6% and 10%
assuming 50% to 100% of volumes sold. A more stressed scenario
shows FFO to debt could drop to 3% should the company's utilization
materially decline resulting in only 25% of available capacity.
These weak credit metrics further assume no parent level support.
The rapid spread of the coronavirus outbreak, severe global
economic shock, low oil prices, and asset price volatility are
creating a severe and extensive credit shock across many sectors,
regions, and markets. The combined credit effects of these
developments are unprecedented. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety. Moody's
expects SESH to be resilient to recessionary pressures related to
the coronavirus because half its revenue is generated from
contractual agreements with pipeline shippers and Florida's
reliance on natural gas for power generation. Nevertheless, Moody's
continues to evaluate possible long-term impacts of the virus, such
as on contract renegotiations. As the events related to the
coronavirus unfold, Moody's is taking into consideration a wider
range of potential outcomes, including more severe downside
scenarios.
Environmental, social and governance considerations incorporated
into its credit analysis for SESH are primarily related to carbon
regulations and social risks related to health and safety and
demographic and societal trends. From an environmental perspective,
Moody's views the natural gas pipeline sector as having low
exposure to carbon transition risks. In addition, Moody's believes
the pipeline sector has moderate exposure to social risks. From a
governance perspective, financial strategy and risk management are
key considerations, although the pipeline's financial policies are
established by its respective owners.
The SGL-2 reflects the company's good liquidity for the next 12 to
18 month and lack of external liquidity. SESH is expected to
maintain about $30 million in unrestricted cash balance and is
expected to generate about $50 million in cash flow, which has been
sufficient to meet its obligation including capex. Like most of its
peers in the natural gas pipeline sector, SESH does not have an
external bank revolving credit facility and dividends its free cash
flow to its sponsors. With only $400 million of unsecured debt,
Moody's thinks alternate liquidity sources could include the
ability to pledge security if necessary.
Outlook
The negative outlook reflects the uncertainty surrounding the
pipeline's utilization and volume risk that if decline could lead
to very weak financial metrics. The outlook further incorporates
the uncertainty around any new agreement, or various agreements,
that may be reached over the medium-term, as it relates to tenor,
price, and quality of the shippers. The outlook could return to
stable if the pipeline's utilization remains consistent with
historic levels and sales produce sufficient revenue to maintain an
FFO to debt in the 10% range.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade
Although unlikely over the next 12 to 18 months, a rating upgrade
could occur if SESH contracts most of its available capacity,
either with one or multiple high rated shippers, for a period that
would lead to predictable cash flow generation over the long-term
and sufficient to sustain an FFO to debt above 13%.
Factors that could lead to a downgrade
The rating could be downgraded if the pipeline's utilization
declines below 80% or if FFO to debt falls below 9%.
SESH is a 287-mile header system with approximately 1.1 Bcf/d
transportation capacity extending from northern Louisiana, through
Mississippi and into Alabama where it interconnects with the
Gulfstream Natural Gas System L.L.C. (Baa2 stable). SESH is a joint
venture owned 50% by a wholly owned subsidiary of Enbridge Inc.
(Baa2 positive) and 50% by affiliates of Enable Midstream Partners,
LP (Baa3 stable).
Assignments:
Issuer: Southeast Supply Header, LLC
Corporate Family Rating, Assigned Ba1
Probability of Default Rating, Assigned Ba1-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Downgrades:
Issuer: Southeast Supply Header, LLC
Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from
Baa3
Outlook Actions:
Issuer: Southeast Supply Header, LLC
Outlook, Changed To Negative From Rating Under Review
The principal methodology used in these ratings was Natural Gas
Pipelines published in July 2018.
SPIRIT AEROSYSTEMS: S&P Rates $400MM 1st Lien Secured Notes 'BB-'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' rating to Spirit AeroSystems
Inc.'s proposed $400 million first-lien secured notes due Jan. 15,
2025. The recovery rating is '1', indicating its expectations of
very high (90%-100%, rounded estimate: 95%) recovery in a default
scenario. Other ratings on the company are not affected, as S&P
considered this issuance when it assigned ratings to the proposed
first-lien term loan on Sept. 22, 2020.
Spirit AeroSystems plans to use the proceeds from the new notes and
new $400 million term loan to repay $327 million of existing term
loans and add cash to the balance sheet. The company recently
terminated its planned $420 million acquisition of ASCO. The
acquisition would have modestly helped customer and program
diversity by adding more Airbus and military work. However, the
termination of the acquisition provides additional liquidity
cushion, which is a credit positive in light of the significant
effect of the coronavirus on aircraft demand.
SPON COMPUTER: Gets Court Approval to Hire Accountant
-----------------------------------------------------
Spon Computer Corporation received approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to hire Ariel Lugo
Figueroa, an accountant practicing in Adjuntas, P.R.
The services that will be provided by the accountant include the
filing of monthly operating reports and documents necessary to file
Debtor's disclosure statement and Chapter 11 plan of
reorganization.
The accountant will charge a flat rate of $200 per month.
Mr. Figueroa assured the court that he is a disinterested person
within the meaning of Section 101(14) of the Bankruptcy Code.
The accountant can be reached at:
Ariel E. Lugo Figueroa
P.O. Box 1082
Adjuntas, PR 00601
Phone: (787) 614-8127
About Spon Computer
Spon Computer Corporation sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-02906)
on July 24, 2020, listing under $1 million in both assets and
liabilities. Judge Enrique S. Lamoutte Inclan oversees the case.
Noemi Landrau Rivera, Esq., at Landrau Rivera & Associates, serves
as Debtor's legal counsel.
SUMMIT MIDSTREAM: Signs Support Agreement with Term Loan Lenders
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Summit Midstream Partners Holdings, LLC and Summit Midstream
Partners, LLC, subsidiaries of Summit Midstream Partners, LP, and,
for limited purposes, the Partnership, entered into a Transaction
Support Agreement with an ad hoc group of SMP Holdings' lenders
under the Term Loan Agreement, dated as of March 21, 2017, among
SMP Holdings, as borrower, the lenders party thereto and Credit
Suisse AG, Cayman Islands Branch, as Administrative Agent and
Collateral Agent. The TSA sets forth the terms agreed between SMP
Holdings, the beneficial owners of approximately 66% of the
aggregate principal amount of claims under the Term Loan that
initially signed the TSA and any other Term Loan Lender that
becomes a party to the TSA via joinder with respect to a consensual
debt discharge and Term Loan restructuring transaction. At the
closing of the TL Restructuring and pursuant to the terms of the
TSA and the Strict Foreclosure Agreement, all Term Loan Claims,
including the approximately $155.2 million in principal amount
outstanding under the Term Loan, will be satisfied, and the Term
Loan will be fully repaid and will cease to exist.
The TL Restructuring will occur concurrently with the execution of
the definitive documentation to fully settle the $180.75 million
deferred purchase price obligation that the Partnership owes to SMP
Holdings under the Contribution Agreement, dated as of Feb. 25,
2016, as amended by and between the Partnership and SMP Holdings.
In connection with the DPPO settlement, the Partnership will make
cash payments to SMP Holdings of $20.0 million and $6.5 million.
On the closing date of the TL Restructuring, pursuant to the terms
of the TSA and the Strict Foreclosure Agreement between SMP
Holdings and the Term Loan Agent, the Directing Lenders, as
Required Lenders under the Term Loan, will direct the Term Loan
Agent to execute a strict foreclosure on behalf of the Term Loan
Lenders on the 34,604,581 common units representing limited partner
interests in the Partnership currently held by SMP Holdings and
pledged as collateral under the Term Loan, which shall be
distributed to the respective Term Loan Lenders on a pro rata
basis. In addition to the Strict Foreclosure, pursuant to the TSA,
SMP Holdings will pay (i) to each of the Directing Lenders and
Transaction Consenting Lenders (as defined in the TSA), its pro
rata share of the Consent Premium and (ii) to each of the Term Loan
Lenders, its pro rata share of the Additional Consideration. In
exchange, all Term Loan Claims, as well as any claims arising under
the DPPO, will be satisfied, the non-economic general partner
interest will be released from the collateral package under the
Term Loan, and the Term Loan will be fully repaid and will cease to
exist.
Until Oct. 14, 2020, or such later date) as agreed to by SMP
Holdings and the Requisite Directing Lenders (as defined in the
TSA), each Term Loan Lender may execute a joinder agreement to
become a Directing Lender or execute a consent agreement to become
a Transaction Consenting Lender and, in either case, receive its
pro rata share of the Consent Premium in addition to its pro rata
share of the Additional Consideration. The Solicitation Period may
also be extended by up to 5 business days in the discretion of the
Requisite Directing Lenders.
The TSA contains certain covenants on the part of each of SMP
Holdings and the Directing Lenders, including, among other things,
(i) limitations on SMP Holdings' and the Directing Lenders' ability
to pursue alternative transactions, (ii) commitments by the
Directing Lenders to support, and at SMP Holdings' sole expense,
take all commercially reasonable actions necessary or reasonably
requested by SMP Holdings to facilitate the consummation of the TL
Restructuring in accordance with the terms, conditions and
applicable deadlines set forth in the TSA, (iii) commitments by the
Directing Lenders to not exercise any right to enforce, collect or
recover any of the Term Loan Claims against SMP Holdings other than
in accordance with the TSA, (iv) commitments by the Directing
Lenders to execute and deliver the Strict Foreclosure Direction (as
defined in the TSA) to the Term Loan Agent consistent with the
terms of the TSA, and (v) commitments of SMP Holdings and the
Directing Lenders to negotiate in good faith to finalize the
documents and agreements governing the TL Restructuring. The TSA
also contains covenants by the Partnership (a) to make the
Partnership Contribution and (b) that are intended to facilitate
the prompt sale by the Term Loan Lenders of the Specified
Collateral, which may include the filing of a registration
statement with the Securities and Exchange Commission covering the
resale of up to all of the common units constituting the Specified
Collateral. The TSA also provides for certain conditions to the
obligations of the parties and for termination upon the occurrence
of certain events, including without limitation, the failure to
achieve certain milestones and certain breaches by the parties
under the TSA.
Pursuant to the TSA, the closing of the TL Restructuring is subject
to the satisfaction of certain conditions, including that the
holders of at least 73% of the aggregate principal amount of all
outstanding Term Loan Claims and at least two unaffiliated Term
Loan Lenders that are not Initial Directing Lenders or affiliates
of the Partnership have executed the TSA or the Consent Agreement
as of the end of the Solicitation Period, as well as other
customary conditions.
If the Closing Date does not occur within 60 days following the end
of the Solicitation Period, the Requisite Directing Lenders may
terminate the TSA unless SMP Holdings and Summit Investments agree
to implement the TL Restructuring through a chapter 11 plan of
reorganization (or as otherwise agreed to by the Requisite
Directing Lenders and SMP Holdings) that would become effective
prior to February 15, 2021, pursuant to which, according to the
terms of the TSA, the treatment of the Term Loan Claims held by
Directing Lenders and Transaction Consenting Lenders shall be on
the same terms contemplated therein and for all other Term Loan
Claims recovery shall be no greater than the terms set forth in the
TSA. Although SMP Holdings intends to pursue the TL Restructuring
in accordance with the terms set forth in the TSA, there can be no
assurance that SMP Holdings will be successful in completing the TL
Restructuring or any other similar transaction on the terms set
forth in the TSA, on different terms or at all.
About Summit Midstream Partners
Summit Midstream Partners is a value-driven limited partnership
focused on developing, owning and operating midstream energy
infrastructure assets that are strategically located in
unconventional resource basins, primarily shale formations, in the
continental United States. SMLP provides natural gas, crude oil
and produced water gathering services pursuant to primarily
long-term and fee-based gathering and processing agreements with
customers and counterparties in six unconventional resource basins:
(i) the Appalachian Basin, which includes the Utica and Marcellus
shale formations in Ohio and West Virginia; (ii) the Williston
Basin, which includes the Bakken and Three Forks shale formations
in North Dakota; (iii) the Denver-Julesburg Basin, which includes
the Niobrara and Codell shale formations in Colorado and Wyoming;
(iv) the Permian Basin, which includes the Bone Spring and Wolfcamp
formations in New Mexico; (v) the Fort Worth Basin, which includes
the Barnett Shale formation in Texas; and (vi) the Piceance Basin,
which includes the Mesaverde formation as well as the Mancos and
Niobrara shale formations in Colorado. SMLP has an equity
investment in Double E Pipeline, LLC, which is developing natural
gas transmission infrastructure that will provide transportation
service from multiple receipt points in the Delaware Basin to
various delivery points in and around the Waha Hub in Texas. SMLP
also has an equity investment in Ohio Gathering, which operates
extensive natural gas gathering and condensate stabilization
infrastructure in the Utica Shale in Ohio. SMLP is headquartered in
Houston, Texas.
SMLP reported a net loss of $369.83 million for the year ended Dec.
31, 2019, compared to net income of $42.35 million for the year
ended Dec. 31, 2018. As of June 30, 2020, the Company had $2.58
billion in total assets, $1.71 billion in total liabilities, $78.56
million in mezzanine capital, and $796.24 million in total
partners' capital.
* * *
As reported by the TCR on Aug. 11, 2020, S&P Global Ratings raised
its issuer credit rating on Summit Midstream Partners L.P. (SMLP)
to 'CCC' from 'SD'. "We could lower our rating on SMLP if it
announced a restructuring of its general partner's debt or missed
an interest or amortization payment over the next 6 months," S&P
said.
SUPERIOR ENERGY: To File for Chapter 11 With Prepackaged Plan
-------------------------------------------------------------
Superior Energy Services (OTCQX: SPNX) announced Sept. 30, 2020
that it has entered into a restructuring support agreement (the
"Restructuring Support Agreement") with a group of its senior
noteholders (the "Ad Hoc Noteholder Group") that collectively hold
or control approximately 69.2% of the Company's senior unsecured
notes. The proposed comprehensive financial recapitalization would
deleverage 100% of the Company's long-term debt and related
interest costs, provide access to additional financing and
establish a capital structure that the Company believes will allow
the Company to thrive in a low-commodity-price environment. The
transactions contemplated by the Restructuring Support Agreement
are expected to close before the end of 2020.
Superior expects to implement the transactions contemplated by the
Restructuring Support Agreement through a "pre-packaged" plan of
reorganization (the "Plan of Reorganization") through the filing of
voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in
the Southern District of Texas. Superior intends to continue
engaging in discussions with its creditors that are party to the
Restructuring Support Agreement. Senior noteholders that execute
the Restructuring Support Agreement within five business days of
the date of the Restructuring Support Agreement will receive a cash
payment equal to the amount of outstanding accrued interest on such
senior noteholders' notes.
Business as Usual
The Restructuring Support Agreement contemplates that the Company
will continue operating its businesses and facilities without
disruption to its customers, vendors and employees, including that
all trade claims against the Company (whether arising prior to or
after the commencement of the Chapter 11 Cases) will be paid in
full in the ordinary course of business. David Dunlap, President
and CEO of Superior added, “The Superior team and our many
partners have worked tirelessly to lessen the impacts of external
challenges on the Company in recent months. I would like to express
my gratitude to all of our loyal employees, customers and vendors
for their ongoing support of our business. We do not anticipate any
operational interruptions as a result of this announcement and we
feel that our 'fortress' balance sheet and strategic positioning
following the restructuring will allow us to continue to provide
the same quality of high-end products and services to our
customers.”
Potential Separation of the North American Service Business
As part of the recapitalization, the Company and the Ad Hoc
Noteholder Group are contemplating separating Superior's business
into two separate companies. To the extent the separation occurs,
Superior's U.S. onshore businesses, including service rigs, coiled
tubing, wireline, pressure control, flowback, fluid management,
accommodations, and discontinued pressure pumping assets would
become a new consolidation platform for U.S. onshore assets
("NAM"). The Company’s globally diversified service lines would
remain with Superior, including premium drill pipe rentals, bottom
hole assemblies, completion tools and products, hydraulic workover,
snubbing and production services, and well control services
("RemainCo").
Key Financial Restructuring
Under the terms of the Restructuring Support Agreement, the
Company's senior noteholders have the right to decide whether or
not to separate the business into two companies (RemainCo and NAM)
upon completion of the restructuring transactions.
A separation of NAM and RemainCo would result in the following
economic terms upon emergence from Chapter 11:
* RemainCo: The Company's senior noteholders would receive 98.5%
of RemainCo's equity, while existing shareholders would receive
1.5% of such equity (along with 5-year warrants to purchase 10% of
RemainCo equity at a price equivalent to par plus accrued interest
on the senior unsecured notes (the "RemainCo Warrants")), in each
case subject to dilution on account of a management incentive plan
(the "MIP") and RemainCo warrants.
* NAM: The Company's senior noteholders would receive 95% of
NAM's equity, while existing shareholders would receive 5% of such
equity, in each case subject to dilution from the MIP.
If the Company remains consolidated, upon emergence from Chapter 11
the Company's senior noteholders would receive 98% of Consolidated
Superior’s equity, while existing shareholders would receive 2%
of such equity (along with 5-year warrants to purchase 10% of
Consolidated Superior equity at a price equivalent to par plus
accrued interest on the notes (the "Consolidated Superior
Warrants")), in each case subject to dilution from the MIP and the
Consolidated Superior Warrants.
The Company is in discussions with its credit providers to secure
financings that would be provided under either scenario.
Additionally, certain members of the Ad Hoc Noteholder Group have
executed a commitment letter to provide up to $200 million in a
Delayed Draw Term Loan (the "DDTL") to Consolidated Superior or
RemainCo, as the case may be, if needed.
Ducera Partners and Johnson Rice & Company are acting as financial
advisors for the Company, Latham & Watkins, LLP as legal counsel,
and Alvarez & Marsal as restructuring advisor. Evercore is acting
as financial advisor for the Ad Hoc Noteholder Group and Davis Polk
& Wardwell LLP as legal counsel.
About Superior
Superior Energy serves the drilling, completion and
production-related needs of oil and gas companies worldwide through
a diversified portfolio of specialized oilfield services and
equipment that are used throughout the economic life cycle of oil
and gas wells. For more information, visit
http://www.superiorenergy.com/
SUPERIOR ENERGY: Will be Delisted from NYSE on Oct. 13
------------------------------------------------------
The New York Stock Exchange notified the Securities and Exchange
Commission of its intention to remove the entire class of common
stock of Superior Energy Services, Inc. from listing and
registration on the Exchange on Oct. 13, 2020, pursuant to the
provisions of Rule 12d2-2(b) because, in the opinion of the
Exchange, the Common Stock is no longer suitable for continued
listing and trading on the NYSE. The Exchange reached its decision
pursuant to Section 802.01B of the Listed Company Manual because
the Company fell below the continued listing standard requiring a
listed company to maintain an average global market capitalization
over a consecutive 30 trading day period of at least $15 million.
The Exchange, on Sept. 17, 2020, determined that the Common Stock
of the Company should be suspended from trading, and directed the
preparation and filing with the Commission of this application for
the removal of the Common Stock from listing and registration on
the NYSE. The Company was notified by phone and letter on Sept.
17, 2020. Pursuant to the above authorization, a press release
regarding the proposed delisting was issued and posted on the
Exchange's website on Sept. 17, 2020. Trading in the Common Stock
was suspended at the close of the market on Sept. 17, 2020. The
Company had a right to appeal to a Committee of the Board of
Directors of the Exchange the determination to delist the Common
Stock, provided that it filed a written request for such a review
with the Secretary of the Exchange within ten business days of
receiving notice of the delisting determination. The Company did
not file such request within the specified time period.
Consequently, all conditions precedent under SEC Rule 12d2-2(b) to
the filing of this application have been satisfied.
About Superior Energy Services
Headquartered in Houston, Texas, Superior Energy Services (NYSE:
SPN) -- htttp://www.superiorenergy.com -- serves the drilling,
completion and production-related needs of oil and gas companies
worldwide through a diversified portfolio of specialized oilfield
services and equipment that are used throughout the economic life
cycle of oil and gas wells.
Superior Energy incurred net losses of $255.7 million in 2019,
$858.1 million in 2018, and $205.92 million in 2017. As of June
30, 2020, the Company had $1.73 billion in total assets, $222.87
million in total current liabilities, $1.28 billion in long-term
debt, $135.68 million in decommissioning liabilities, $54.09
million in operating lease liabilities, $2.53 million in deferred
income taxes, $125.74 million in other long-term liabilities, and a
total stockholders' deficit of $95.13 million.
On March 30, 2020, the Company received a written notice from the
New York Stock Exchange notifying the Company that it was not in
compliance with the continued listing standards set forth in
Section 802.01B of the NYSE Listed Company Manual because the
average global market capitalization of the Company's common stock
over a consecutive 30 trading-day period was less than $50 million
and, at the same time, its stockholders' equity was less than $50
million.
TAILORED BRANDS: Committee Hires Norton Rose as Co-Counsel
----------------------------------------------------------
The official committee of unsecured creditors of Tailored Brands,
Inc. seeks authority from the United States Bankruptcy Court for
the Southern District of Texas to retain Norton Rose Fulbright US
LLP and Norton Rose Fulbright
Canada LLP.
Both law firms will serve as co-counsel with Pachulski Stang Ziehl
& Jones, LLP, the other firm handling Debtors' Chapter 11 cases.
The Committee requires Norton Rose to:
a. advise the Committee with respect to its rights, duties and
powers in the Debtors' Chapter 11 Cases;
b. assist and advise the Committee in its consultations and
negotiations with the Debtors relative to the administration of the
Debtors' Chapter 11 Cases;
c. assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests;
d. assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the Debtors
and their insiders and of the operation of the Debtors'
businesses;
e. assist the Committee in its analysis of, and negotiations
with, the Debtors or any third party concerning matters related to,
among other things, the assumption or rejection of certain leases
of non-residential real property and executory contracts, asset
dispositions, financing of other transactions and the terms of one
or more plans of reorganization for the Debtors and accompanying
disclosure statements and related plan documents;
f. assist and advise the Committee as to its communications to
the general creditor body regarding significant matters in the
Debtors' Chapter 11 Cases;
g. represent the Committee at all hearings and other
proceedings before this Court;
h. review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise the
Committee as to their propriety and, to the extent deemed
appropriate by the Committee, support, join or object thereto;
i. advise and assist the Committee with respect to any
legislative, regulatory or governmental activities;
j. assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the Committee's
interests and objectives;
k. assist the Committee in its review and analysis of all of
the Debtors' various agreements;
l. prepare, on behalf of the Committee, any pleadings,
including, without limitation, motions, memoranda, complaints,
adversary complaints, objections or comments in connection with any
matter related to the Debtors or the Debtors' Chapter 11 Cases;
m. investigate and analyze any claims that are property of the
Debtors' estates;
n. advise the Committee with respect to Canadian corporate
governance, banking, finance, and restructuring matters (including
any cross border insolvency issues); and
o. perform such other legal services as may be required or are
otherwise deemed to be in the interests of the Committee in
accordance with the Committee's powers and duties as set forth in
the Bankruptcy Code, Bankruptcy Rules or other applicable law.
Norton Rose will be paid at these hourly rates:
Partners $625 - $1165
Of Counsel $350 - $1265
Senior Counsel $465 - $825
Senior Associates $410 - $750
Associates $315 - $750
Paraprofessionals $110 - $415
William R. Greendyke $1,115
Jason L. Boland $880
Bob B. Bruner $805
Evan Cobb $625
Julie Goodrich Harrison $605
Maria Mokrzycka $430
Norton Rose will also be reimbursed for reasonable out-of-pocket
expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
a. Norton Rose did not agree to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement;
b. No rate for any of the professionals included in this
engagement varies based on the geographic location of the
bankruptcy case;
c. Norton Rose did not represent any member of the Committee
prior to its retention by the Committee;
d. Norton Rose expects to develop a prospective budget and
staffing plan to reasonably comply with the U.S. Trustee's request
for information and additional disclosures, as to which Norton Rose
reserves all rights; and
e. The Committee has approved Norton Rose's proposed hourly
billing rates. The Norton Rose attorneys and paraprofessionals
staffed on the Chapter 11 Cases, subject to modification depending
upon further development.
Jason L. Boland, a partner of Norton Rose Fulbright US LLP, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and (a) is not
creditors, equity security holders or insiders of the Debtors; (b)
has not been, within two years before the date of the filing of the
Debtors' chapter 11 petition, directors, officers or employees of
the Debtors; and (c) does not have an interest materially adverse
to the interest of the estate or of any class of creditors or
equity security holders, by reason of any direct or indirect
relationship to, connection with, or interest in, the Debtors, or
for any other reason.
Norton Rose can be reached at:
Jason L. Boland, Esq.
NORTON ROSE FULBRIGHT US LLP
2200 Ross Avenue, Suite 3600
Dallas, TX 75201-7932
Telephone: (214) 855-8000
Facsimile: (214) 855-8200
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formalwear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com. Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
On August 11, 2020, the Office of the United States Trustee
appointed the Committee pursuant to section 1102 of the Bankruptcy
Code. The Committee tapped Pachulski Stang Ziehl & Jones LLP as
its lead counsel.
TAILORED BRANDS: Committee Hires Pachulski Stang as Counsel
-----------------------------------------------------------
The official committee of unsecured creditors of Tailored Brands,
Inc. seeks authority from the United States Bankruptcy Court for
the Southern District of Texas to retain Pachulski Stang Ziehl &
Jones, LLP as its legal counsel.
The Committee requires Pachulski Stang to:
a. assist, advise, and represent the Committee in its
consultations with the Debtors regarding the administration of
these cases;
b. assist, advise, and represent the Committee in analyzing
the Debtors’ assets and liabilities, investigating the extent and
validity of liens and participating in and reviewing any proposed
asset sales, any asset dispositions, financing arrangements and
cash collateral stipulations or proceedings;
c. assist, advise, and represent the Committee in any manner
relevant to reviewing and determining the Debtors’ rights and
obligations under leases and other executory contracts;
d. assist, advise, and represent the Committee in
investigating the acts, conduct, assets, liabilities, and financial
condition of the Debtors, the Debtors’ operations and the
desirability of the continuance of any portion of those operations,
and any other matters relevant to these cases or to the formulation
of a plan;
e. assist, advise, and represent the Committee in its
participation in the negotiation, formulation, and drafting of a
plan of liquidation or reorganization;
f. advise the Committee on the issues concerning the
appointment of a trustee or examiner under section 1104 of the
Bankruptcy Code;
g. assist, advise, and represent the Committee in
understanding its powers and its duties under the Bankruptcy Code
and the Bankruptcy Rules and in performing other services as are in
the interests of those represented by the Committee;
h. assist, advise, and represent the Committee in the
evaluation of claims and on any litigation matters, including
avoidance actions and claims against directors and officers and any
other party; and
i. provide such other services to the Committee as may be
necessary or appropriate in these cases.
Pachulski Stang will be paid at these hourly rates:
Partners $750 - $1,495
Of Counsel $675 - $1,125
Associates $625 - $725
Paraprofessionals $395 - $425
Pachulski Stang will also be reimbursed for reasonable
out-of-pocket expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed postpetition, explain the
difference and the reasons for the difference.
Response: Not applicable.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: Pachulski Stang is developing a budget and staffing
plan that will be presented for approval by the Committee and
anticipates filing a Committee-approved budget at the time it files
its interim and final fee applications.
Jeffrey N. Pomerantz, a partner at Pachulski Stang Ziehl & Jones
LLP, assured the Court that the firm is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code and
(a) is not creditors, equity security holders or insiders of the
Debtors; (b) has not been, within two years before the date of the
filing of the Debtors' chapter 11 petition, directors, officers or
employees of the Debtors; and (c) does not have an interest
materially adverse to the interest of the estate or of any class of
creditors or equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in, the
Debtors, or for any other reason.
Pachulski Stang can be reached at:
Jeffrey N. Pomerantz, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
780 Third Avenue, 34th Floor
New York, NY 10017
Tel: (212) 561-7700
Fax: (212) 561-7777
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formalwear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com. Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
On August 11, 2020, the Office of the United States Trustee
appointed the Committee pursuant to section 1102 of the Bankruptcy
Code. The Committee tapped Pachulski Stang Ziehl & Jones LLP as
its lead counsel.
TAILORED BRANDS: Committee Taps M-III Advisory as Financial Advisor
-------------------------------------------------------------------
The official committee of unsecured creditors of Tailored Brands,
Inc. seeks authority from the United States Bankruptcy Court for
the Southern District of Texas to retain M-III Advisory Partners,
L.P. as its financial
advisor.
The professional services that M-III Advisory Partners will render
to the Committee include:
(a) reviewing and analyzing the Debtors' operations, financial
condition, business plan, strategy, and operating forecasts;
(b) assisting the Committee in evaluating any proposed
debtor-in-possession financing;
(c) advising the Committee in assessing the Debtors' executory
contracts, including the determination of whether certain executory
contracts should be assumed or rejected by the Debtors;
(d) assisting and advising the Committee in connection with
strategies to maximize recovery for unsecured creditors under the
Debtors' Chapter 11 plan;
(e) assisting the Committee in evaluating, structuring, and
negotiating the terms and conditions of the proposed plan of
reorganization, or any alternative plan/transaction pursued by the
Debtors;
(f) assisting the Committee in its analysis of the Debtors'
plan of reorganization and related disclosure statement;
(g) assisting the Committee and its legal counsel on any
investigations or other claims against the Debtors or any of their
stakeholders, including the Committee's investigation into certain
claims and causes of action concerning the Designation and
Distribution of MyTheresa, the PropCo Transactions, and the
Recapitalization Transactions;
(h) if required, assisting in the evaluation of any asset sale
process, including identifying potential buyers and evaluating
terms, conditions, and impact of any asset sale transactions
proposed by the Debtors;
(i) providing testimony, as required, in any proceeding before
the Bankruptcy Court; and
(j) providing other services incidental and ancillary to the
foregoing and such other services as M-III and the Committee shall
otherwise agree in writing.
M-III Advisory Partners will not duplicate the services of other
professionals retained by the Committee.
M-III Advisory Partners will be paid on an hourly basis, subject to
the approval of the Court. The firm's current standard hourly rates
are:
Managing Partner $1,150
Managing Director $900 - $1,025
Director $725 - $825
Vice President $650
Senior Associate $550
Associate $475
Analyst $375
The firm will also charge the Committee for its reasonable and
necessary out-of-pocket expenses.
Mohsin Y. Meghji, a managing partner at M-III Advisory Partners LP,
disclosed in court filings that the firm is a "disinterested
person" as that term is defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Mohsin Y. Meghji
M-III ADVISORY PARTNERS LP
130 West 42nd Street, 17th Floor
New York, NY 10036
Telephone: (212) 716-1492
E-mail: mmeghji@miiipartners.com
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formalwear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com. Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
On August 11, 2020, the Office of the United States Trustee
appointed the Committee pursuant to section 1102 of the Bankruptcy
Code. The Committee tapped Pachulski Stang Ziehl & Jones LLP as
its lead counsel.
TAILORED BRANDS: Landlords & Creditors Object Bankruptcy Plan
-------------------------------------------------------------
Josh Saul of Bloomberg News, citing court filings, reports that the
bankruptcy plan of Tailored Brands Inc. is drawing objections from
landlords, unsecured creditors and others.
The Committee of unsecured creditors objects to the plan, saying it
undervalues the co. and underpays them.
"What appears clear is that the Term Lenders have hijacked the plan
process" and are trying to divert value from unsecured creditors,
according to filing.
A group of landlords objects to the Plan because it doesn't give
them enough time or information to evaluate their treatment under
the proposal, according to the filing.
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formal wear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com.Its brands include Men's Wearhouse, Jos. A.
Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
TATUNG COMPANY: Hires David Agler Law as Special Tax Counsel
------------------------------------------------------------
Tatung Company of America, Inc. received approval from the U.S.
Bankruptcy Court for the Central District of California to hire the
Law Office of David Agler as its special tax counsel.
The firm will provide tax legal services in connection with the
filing of a Chapter 11 plan that Debtor intends to propose.
David Agler, Esq., the firm's attorney who will be providing the
services, will be paid at the rate of $700 per hour.
The firm neither holds nor represents any interest materially
adverse to the interest of Debtor's estate, according to court
filings.
The firm can be reached through:
David Agler, Esq.
Law Office of David Agler
12450 Magnolia Blvd # 3960
Valley Village, CA 91607-2451
Phone: (818) 528-8015
Fax: (818) 475-1309
Email: David.Agler@Aglerlaw.com
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 oversees the case.
Debtor has tapped Levene, Neale, Bender, Yoo & Brill, LLP as its
legal counsel and E&W Consulting, LLC as its financial advisor.
Jason Chen of E&W Consulting is Debtor's acting chief restructuring
officer.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Oct. 22, 2019. Goldstein & McClintock, LLP and RSR
Consulting, LLC serve as the committee's legal counsel and
financial advisor, respectively.
THG PROPERTIES: Plan Exclusivity Extended Thru January 11
---------------------------------------------------------
Judge Frank J. Bailey of the U.S. Bankruptcy Court for the District
of Massachusetts, Eastern Division, extended to to January 11,
2021, the period within which THG Properties LLC has the exclusive
right exclusive right to file a plan of reorganization to coincide
with the end of co-debtor Town Hospitality Group, Inc.'s 180-day
exclusive period to file its small business plan of
reorganization.
The fates of the Debtor and Town Hospitality are intertwined and
depend upon the success of the other, so a plan of reorganization
for THG Properties, LLC alone is not practical, THG Properties
said. The Debtors are current with their adequate protection
payments, so Avidia Bank, the only party affected by this request,
is not prejudiced.
In seeking an exclusivity extension, THG Properties noted that
within two weeks of the Petition Date, the economy was shattered by
the Covid-19 pandemic. The hotel and restaurant industries were
particularly devastated. The Waterford Inn and Spindlers became
virtually non-operational for three months, with only limited
business in June. Because of that, Town Hospitality had been unable
to pay rent to THG and, in turn, the Debtor had been unable to pay
Avidia Bank its adequate protection payments.
Now, the Debtors are emerging from the financial disaster caused by
the Covid-19 pandemic. The Town Hospitality applied and received a
Paycheck Protection Program loan to pay its rent and re-hire its
employees, and was able to put together a financially successful
summer season when the restrictions were softened. This allowed
both the Debtor and Town Hospitality to stay current on the
adequate protection payments to Avidia Bank.
But Avidia Bank was not satisfied with the result, despite getting
paid by the Debtor. It scheduled a secured party sale of all of
its collateral for mid-June. This action forced Town Hospitality to
file its Chapter 11 petition, although Town Hospitality was current
with all of its vendors and was having a successful summer season.
Assuming Avidia Bank continues its refusal to consider a bootstrap
plan that would allow both parties to restructure the Avidia debt,
Town Hospitality will use the granted time to continue the efforts
that had been ongoing with the Debtor to obtain financing that will
take out Avidia. Any such financing will necessarily involve THG,
and therefore necessarily requires a further extension of time for
THG to file its plan.
Without the granted exclusivity extension to THG, the unsecured
creditors of Town Hospitality will likely receive nothing on
account of their claims. By Order dated June 1, 2020, the deadline
for the Debtor's compliance and the exclusive period was extended
to September 4, 2020. Further, the Debtor has commenced making
adequate protection payments, so the deadline of September 4 is no
longer a fixed one.
About THG Properties
THG Properties LLC is a Massachusetts Limited Liability Company
that owns and operates the real property located at 386 Commercial
Street, Provincetown, Massachusetts. The Property is tenanted by a
15-room guest house known as the Waterford Inn and a restaurant
called Spindlers. The Inn and Restaurant are owned by Town
Hospitality, a Massachusetts corporation. Both are owned by the
same individuals. The Property has an appraised value of $5.94
million.
THG Properties sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Mass. Case No. 20-10644) on March 5, 2020. The
petition was signed by James Derosier, manager. At the time of
filing, the Debtor had $5,988,300 in assets and $3,571,822 in
debts. THG Properties LLC is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)).
Town Hospitality Group filed for Chapter 11 (Bankr. D. Mass. Case
No. 20-11496) on July 14, 2020, listing under $500,000 in estimated
assets and $1 million to $10 million in estimated liabilities.
The two cases are jointly administered.
Judge Frank J. Bailey oversees the case. The Debtors are
represented by David B. Madoff, Esq., at Madoff & Khoury, LLP. No
creditors' committee has been appointed in either case.
TM HEALTHCARE: Seeks to Hire Shraiberg Landau as Bankruptcy Counsel
-------------------------------------------------------------------
TM Healthcare Holdings, LLC and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Florida to
hire Shraiberg, Landau & Page, P.A. as their bankruptcy counsel.
The professional services Shraiberg Landau will render are as
follows:
a. advise the Debtors generally regarding matters of
bankruptcy law in connection with the case;
b. advise the Debtors of the requirements of the Bankruptcy
Code, the Federal Rules of Bankruptcy Procedure, and applicable
bankruptcy rules;
c. represent the Debtors in all proceedings before the court;
d. prepare legal documents;
e. negotiate with creditors, prepare and seek confirmation of
a plan of reorganization and related documents, and assist the
Debtors with implementation of any plan; and
f. perform all other legal services for the Debtors.
The firm's hourly rates are as follows:
Bradley S. Shraiberg $600
Eric Pendergraft $400
Joshua Lanphear $325
Alexander Lewitt $325
Legal assistants $325
Attorneys $325 to $600
Prior to the petition date, on August 12, 2020, Shraiberg Landau
received a sum of $500,000 as retainer from Debtor Treatment
Management Company, LLC.
Bradley S. Shraiberg, Esq., at Shraiberg Landau disclosed in court
filings that the firm does not hold or represent any parties with
interests adverse to the Debtors' estates and is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Bradley S. Shraiberg, Esq.
Joshua Lanphear, Esq.
SHRAIBERG, LANDAU & PAGE, P.A.
2385 NW Executive Center Drive, Suite 300
Boca Raton, FL 33431
Telephone: (561) 443-0800
Facsimile: (561) 998-0047
E-mail: bss@slp.law
jlanphear@slp.law
About TM Healthcare Holdings, LLC
TM Healthcare Holdings, LLC, a Stuart, Fla.-based company in the
health care business, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 20-20024) on September
17, 2020. The petition was signed by Paul Kamps, chief financial
officer.
At the time of the filing, Debtor had estimated assets of less than
$50,000 and liabilities of between $50 million and $100 million.
Judge Erik P. Kimball oversees the case. Shraiberg Landau & Page
P.A. is Debtor's legal counsel.
TMK HAWK: Moody's Cuts Senior Secured Credit Facilities to 'Ca/C'
-----------------------------------------------------------------
Moody's Investors Service affirmed TMK Hawk Parent, Corp.'s
(TriMark) Caa2 Corporate Family Rating (CFR) and its Caa2-PD
Probability of Default Rating (PDR). At the same time, Moody's
downgraded the company's senior secured first lien term loan due
August 2024 to Ca from Caa2, and its senior secured second lien
term loan due September 2025 to C from Ca. The outlook remains
negative.
The rating actions follow TriMark's recent recapitalization
transaction that provided the company with $120 million of new
capital provided by a majority of its first lien term loan holders.
The company issued a new $120 million super priority first out term
loan due May 2024 (unrated), and a new $307.5 million super
priority second out term loan due August 2024 (unrated). Net
proceeds from the first out term loan were used to increase cash
liquidity available for general corporate purposes, including
investments in working capital. Proceeds from the new second out
term loan were used to repurchase an equivalent $307.5 million of
the company's existing first lien term loan from the participating
first lien holders in an open market purchase at par value.
Through an amended intercreditor agreement, the new super priority
term loan facilities are senior to the existing senior secured term
loan facilities. The downgrade of the company's existing senior
secured credit facilities reflects these facilities are now
effectively subordinated to the new super priority term loans,
resulting in a weaker collateral coverage relative to the new super
priority term loans and lower recovery prospects.
The ratings affirmation reflects the transaction improved TriMark's
liquidity because of the $120 million of new money funding, which
provides the company with some financial flexibility to fund
upcoming working capital needs and business seasonality.
The negative outlook reflects Moody's view that the company's
capital structure remains unsustainable given its very high
financial leverage, significant interest expense and the
expectation that liquidity will subsequently decline due to
negative free cash flow generation over the next 12-18 months,
increasing the risk of a debt restructuring.
Affirmations:
Issuer: TMK Hawk Parent, Corp.
Corporate Family Rating, Affirmed Caa2
Probability of Default Rating, Affirmed Caa2-PD
Downgrades:
Issuer: TMK Hawk Parent, Corp.
Senior Secured 1st Lien Bank Credit Facility, Downgraded to Ca
(LGD5) from Caa2 (LGD4)
Senior Secured 2nd Lien Bank Credit Facility, Downgraded to C
(LGD6) from Ca (LGD5)
Outlook Actions:
Issuer: TMK Hawk Parent, Corp.
Outlook, Remains Negative
RATINGS RATIONALE
TriMark's Caa2 CFR reflects its unsustainable capital structure
given its very high financial leverage with debt/EBITDA over 16x
for the twelve months period ending June 26, 2020 (pro forma for
the recapitalization transaction and excluding extraordinary
add-backs), and Moody's expectation for negative free cash flow
generation over the next 12-18 months. TriMark has end market
concentration in the foodservice/restaurant sector and the majority
of its revenue relates to equipment sales which tend to exhibit
some level of cyclical client spending. The deteriorating operating
environment due to the coronavirus outbreak will continue to
negatively impact demand at least through the current outbreak. As
a result, Moody's expects financial leverage will remain very high
and free cash flow generation pressured over the next 12-18 months.
However, the rating also reflects the company's strong market
position in the foodservice equipment and supplies distribution
industry, its relatively recurring revenue stream from supply
replenishment and equipment replacement, and low capital
expenditure requirement. TriMark's weak liquidity reflects its
relatively good cash balance of around $140 million as of June 26,
2020, offset by its high interest burden and negative free cash
flow expected over the next 12 months that will erode cash on
hand.
Environmental, Social and Governance considerations
The rapid spread of the coronavirus outbreak, deteriorating global
economic outlook, low oil prices, and high asset price volatility
have created an unprecedented credit shock across a range of
sectors and regions. Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety. The foodservice
equipment and supplies distribution industry is one of the sectors
most meaningfully affected by the coronavirus because of exposure
to the restaurant industry. Social risk factors also consider the
company's foodservice customers are exposed to changes in consumer
discretionary spending power and shifts in consumer spending trends
such as food at-home and away from home.
TriMark's environmental impact remains low and the associated risks
are limited. Environmental considerations are not a material factor
in the rating.
Governance risks factors include the company's aggressive financial
policies under majority ownership by private equity sponsors,
including the recent recapitalization transaction that effectively
subordinated existing senior secured term loan lenders, its very
high financial leverage, and its debt-financed growth through
acquisition strategy.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if leverage materially declines
driven by improved operating results and less reliance on external
sources of liquidity. The ratings could be downgraded if there is a
deterioration in liquidity, highlighted by increasing revolver
reliance, or if the probability of a debt restructuring or event of
default increases for any reason.
TMK Hawk Parent, Corp. is a distributor of foodservice equipment
and supplies in North America, providing all non-food products used
by restaurants and other foodservice operators. TMK is majority
owned by Centerbridge Partners, L.P. In addition, the company
performs construction management services (which include design,
procurement, installation, and construction management) for
foodservice operations. The company is private and does not
publicly disclose its financials. The company generated
approximately $1.8 billion of revenue for the twelve months ended
June 26, 2020.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
TNT CRANE: Court Approves Debt-for-Equity Exit Plan
---------------------------------------------------
Daniel Gill of Bloomberg Law reports that TNT Crane & Rigging Inc.,
one of the largest crane operators in North America, won approval
of its Chapter 11 bankruptcy plan giving equity to lenders and
paying unsecured creditors in full. The plan, approved Oct. 1,
2020, by Judge Brendan L. Shannon of the U.S. Bankruptcy Court for
the District of Delaware, was accepted by an "overwhelming
majority" of creditors who had voting rights based on their claims,
TNT said in a court filing. First lien lenders will get 97% of the
company, with the remaining 3% going to junior lien creditors.
About TNT Crane & Rigging
TNT Crane & Rigging, Inc. and its affiliates provide operated and
maintained (O&M) crane services and comprehensive lifting services.
As a provider of O&M services, the Company offers their customers
with highly-skilled operators, technical expertise and project
engineering and design in connection with their equipment rentals.
On Aug. 23, 2020, TNT Crane & Rigging and five of its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
Del. Lead Case No. 20-11982). The petitions were signed by Michael
Appling, Jr., chief executive officer.
At the time of the filing, the Debtors estimated their consolidated
assets to be $500 million to $1 billion and their consolidated
liabilities to be $500 million to $1 billion.
The Debtors tapped Simpson Thacher & Bartlett LLP as their
bankruptcy counsel, Young Conaway Stargatt Taylor LLP as Delaware
counsel, Miller Buckfire & Co. as restructuring advisor, Stifel
Nicolaus & Co., Inc. as investment banker, FTI Consulting Inc. as
financial advisor, and Prime Clerk LLC as claims and noticing
agent. Deloitte Tax LLP provides tax services to Debtors.
TOWN SPORTS: Authorized to Borrow $15-Mil. to Pay Rent
------------------------------------------------------
Steven Church of Bloomberg News reports that the owner of New York
and Boston Sports Clubs, Town Sports International, won court
permission to borrow as much as $15 million to pay rent and other
expenses as it tries to reorganize in bankruptcy while fighting a
lawsuit by the Attorney General of New York over gym dues.
Town Sports International will likely need to come back in a week
to ask the judge overseeing its reorganization to let it borrow
another $5m, company attorney Joshua M. Altman said during a court
hearing held by telephone. In the short term, the New York lawsuit
should not interfere with the bankruptcy, Altman said.
About Town Sports
Town Sports International, LLC and its subsidiaries are owners and
operators of fitness clubs in the United States, particularly in
the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, the
Company operated 186 fitness clubs under various brand names,
collectively serving approximately 605,000 members. Town Sports
owns and operates brands such as New York Sports Clubs, Boston
Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs,
Lucille Roberts and Total Woman.
Town Sports and several of its affiliates filed for bankruptcy
protection (Bankr. D. Del. Lead Case No. 20-12168) on Sept. 14,
2020. The petitions were signed by Patrick Walsh, chief executive
officer.
The Debtors were estimated to have $500 million to $1 billion in
consolidated assets and consolidated liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
Young Conaway Stargatt & Taylor, LLP, and Kirkland & Ellis LLP have
been tapped as bankruptcy counsel to the Debtors. Houlihan Lokey,
Inc. serves as financial advisor and investment banker to the
Debtors, and Epiq Corporate Restructuring LLC acts as claims and
noticing agent to the Debtors.
TOWN SPORTS: Boston Sports Club Closing Some Locations
------------------------------------------------------
WCVB reports that Boston Sports Club closed three locations
effective Thursday, October 1, 2020. The gym is closing its
Bradford, Canton and West Newton locations. Members of BSC Canton
received an email about the news.
Some members at all three locations were notified by staff when
they went to work out on Sept. 30, 2020.
"Attention BSC Canton members," the email read. "Thank you for your
commitment to health and fitness at our club, unfortunately, our
time at BSC Canton will conclude on September 30th 2020."
BSC Canton said members can test out WOW in Norwood during the
month of October 2020, which will be waiving all cancel terms over
the next 30 days.
"While we are deeply saddened of our departure your health and
wellness are still of paramount importance to us and we are hopeful
this relocation allows a seamless transition," the email said.
In September 2020, the owner of Boston Sports Clubs filed for
bankruptcy protection, adding to the frustrations of its customer
base amid the coronavirus pandemic. Town Sports International, the
parent company for Boston Sports Clubs, filed for Chapter 11
bankruptcy Sept. 14, 2020.
There are 28 Boston Sports Clubs in Massachusetts, and one location
in Rhode Island.
In a statement on its website posted earlier this month, the
company said they're not going out of business and their facilities
will operate as usual, adding that members should not notice any
changes.
Boston Sports Clubs came under fire at the start of the pandemic
for charging members after they shut down and laid off staff.
Massachusetts Attorney General Maura Healey's Office got involved
after several members complained about the company's practices.
BSC members received an email from the gym Sept. 13, 2020, saying
all members will be receiving 45 days of credit toward membership
dues and/or services.
According to records from bankruptcy court, the parent company of
Boston Sports Clubs has filed a motion asking permission to reject
the leases at 33 gym locations in several states, including at
least seven in Massachusetts.
The judge has not yet ruled on the motion, and a hearing is set for
Oct. 14, 2020.
About Town Sports
Town Sports International, LLC and its subsidiaries are owners and
operators of fitness clubs in the United States, particularly in
the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, the
Company operated 186 fitness clubs under various brand names,
collectively serving approximately 605,000 members. Town Sports
owns and operates brands such as New York Sports Clubs, Boston
Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs,
Lucille Roberts and Total Woman.
Town Sports and several of its affiliates filed for bankruptcy
protection (Bankr. D. Del., Lead Case No. 20-12168) on Sept. 14,
2020. The petitions were signed by Patrick Walsh, chief executive
officer.
The Debtors estimated $500 million to $1 billion in consolidated
assets and consolidated liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
Young Conaway Stargatt & Taylor, LLP and Kirkland & Ellis LLP have
been tapped as bankruptcy counsel to the Debtors. Houlihan Lokey,
Inc. serves as financial advisor and investment banker to the
Debtors, and Epiq Corporate Restructuring LLC acts as claims and
noticing agent to the Debtors.
TRANSPAC FOOD: Gets Approval to Hire Blythe Grace as Counsel
------------------------------------------------------------
Transpac Food Management, Inc. received approval from the U.S.
Bankruptcy Court for the District of Arizona to hire Blythe Grace
PLLC as its legal counsel.
The services that will be provided by the firm are as follows:
a. provide Debtor with legal advice with respect to its
Chapter 11 case;
b. represent Debtor in connection with negotiations involving
secured and unsecured creditors;
c. represent Debtor at hearings set by the court in the case;
and
d. prepare legal papers.
The individuals presently designated to represent Debtor and their
current rates are as follows:
Gregory W. Seibt, Attorney $395
Alexandra Mijares Nash, Attorney $395
Kiri T. Semerdjian, Attorney $255
Carla S. Lief, Certified Paralegal, MBA $165
Legal Assistants and Law Clerks $115
Debtor provided the firm with a retainer of $25,000.
Blythe Grace does not represent interests adverse to Debtor and its
estate, according to court filings.
The firm can be reached through:
Gregory W. Seibt (021321)
Alexandra Mijares Nash (023364)
Kiri T. Semerdjian (033775)
Blythe Grace PLLC
4040 East Camelback Road, Suite 275
Phoenix, AZ 85018
Tel: (602) 237-5366
Fax: (602) 237-5426
Email: greg@blythegrace.com
anash@blythegrace.com
kiri@blythegrace.com
About Transpac Food Management Inc.
Transpac Food Management, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
20-09943) on Aug. 31, 2020, listing under $1 million in both assets
and liabilities. Judge Daniel P. Collins oversees the case.
Gregory W. Seibt, Esq., at Blythe Grace PLLC, serves as Debtor's
legal counsel.
TUESDAY MORNING: Court Approves Bankruptcy Sale Procedures
----------------------------------------------------------
Alex Wolfe of Bloomberg Law reports that Tuesday Morning Corp.
received court approval to launch a bankruptcy sale process, giving
the home decor retailer an opportunity to sell the business or
advance a financial restructuring plan.
Judge Harlin Hale of the U.S. Bankruptcy Court for the Northern
District of Texas approved the company's Chapter 11 auction
procedures during a telephonic hearing Tuesday, September 28, 2020,
allowing the retailer to decide between selling to a top bidder or
pushing for a reorganization plan. The company has until Oct. 26,
2020 to make a determination.
During the hearing, Tuesday Morning adjusted the proposed dates for
an auction and final bid submissions.
About Tuesday Morning Corp.
Tuesday Morning Corporation, together with its subsidiaries, is a
closeout retailer of upscale home furnishings, housewares, gifts,
and related items. It operates under the trade name "Tuesday
Morning" and is one of the original "off-price" retailers
specializing in providing unique home and lifestyle goods at
bargain values. Based in Dallas, Tuesday Morning operated 705
stores in 40 states as of Jan. 1, 2020. For more information, visit
http://www.tuesdaymorning.com/
On May 27, 2020, Tuesday Morning and six affiliates sought Chapter
11 protection (Bankr. N.D. Tex. Lead Case No. 20-31476). Tuesday
Morning disclosed total assets of $92 million and total liabilities
of $88.35 million as of April 30, 2020.
The Hon. Harlin Dewayne Hale is the case judge.
The Debtors tapped Haynes and Boone, LLP as general bankruptcy
counsel; Alixpartners LLP as financial advisor; Stifel, Nicolaus &
Co., Inc. as investment banker; A&G Realty Partners, LLC as real
estate consultant; and Great American Group, LLC as liquidation
consultant. Epiq Corporate Restructuring, LLC is the claims and
noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 9, 2020. The committee is represented by Munsch
Hardt Kopf & Harr, P.C.
TUNNEL HILL: Moody's Cuts CFR & Senior Secured Rating to Caa1
-------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Tunnel Hill
Partners, LP, including the corporate family rating and senior
secured rating to Caa1 from B2, and probability of default rating
(PDR) to Caa1-PD from B2-PD. The rating outlook is stable.
The downgrades are a result of expectations for underperformance
relative to Moody's projections at the time of the rating
assignment -- which included debt-to-EBITDA in the 4x-range (modest
relative to other rated waste industry peers) and comfortably
positive free cash flow by year-end 2020. Underperformance to date
has led to high leverage and weak liquidity characterized by
heightened concerns about cash burn and covenant compliance
issues.
RATINGS RATIONALE
The ratings reflect THP's small scale (revenues of approximately
$300 million) and niche focus as a waste-by-rail provider operating
primarily in the Northeast US. Scale concerns are highlighted by
the limited number of landfills (3) and transfer stations (14) as
meaningful underperformance from, or a major disruption to, any one
of these key assets could have an adverse impact on results. The
ratings also consider THP's reliance on construction and demolition
(C&D) and specialty waste volumes (over 80% of total waste volumes
handled) that are more correlated to economic cycles than municipal
solid waste (MSW) volumes as seen by the impacts of the coronavirus
in the first half of 2020. Additionally, THP's operating model
includes heavy dependence on a single railcar service provider,
creating potential concentration issues.
THP benefits from owning key assets in a region that is
experiencing sharply declining disposal capacity. Landfill closures
and escalating tipping fees have resulted in several states
exporting waste to landfills located outside of the region. Rail
service is an effective solution to the region's capacity
constraints, with the majority of THP's transfer stations and
handled waste volumes connected to rail lines.
Moody's adjusted debt-to-EBITDA is in the mid-6x range with
year-to-date June 30, 2020 reported free cash flow (cash flow from
operations fewer capital expenditures) at negative $22 million
after generating negative $15 million for full year 2019. Moody's
anticipates leverage to remain elevated (near 6x) and free cash
flow negative through 2021 even as THP's results modestly rebound
over the next several quarters from the coronavirus impacts. The
EBITDA margin is expected in the low-20% range, improving steadily
with the benefit of higher volumes, especially the recovery in
higher margin C&D volumes, and steadily rising disposal pricing.
Governance considerations acknowledge private equity ownership and
the risk that THP could consider a debt-funded distribution or
large acquisition to enhance scale. To date, acquisitions have been
minimal, and the sponsor provided a modest equity infusion to
restore covenant compliance for the revolving credit facility for
the quarter ended June 30, 2020.
The rating outlook is stable, indicative of the relatively steady
performance of the solid waste industry and THP's strategic
position within the waste disposal-deficient northeast region of
the US. However, earnings over the near-to-intermediate term will
continue to experience lingering softness from coronavirus-driven
economic shutdowns while capital expenditures for the buildout of
infrastructure/fleet will constrain cash flow.
THP has weak liquidity that currently includes roughly $40 million
of cash but with Moody's expectation for free cash flow to be
negative through 2021. The $75 million revolving credit facility
set to expire in 2024 had approximately $10 million of availability
after $65 million was drawn in the first half of 2020. The
revolving facility is subject to a springing senior secured net
leverage ratio tested if the aggregate amount of outstanding
borrowings exceeds a set percentage of the facility - the term loan
does not have financial maintenance covenants. This ratio was
tested at June 30, 2020 and resulted in an equity infusion from the
sponsor to restore compliance. Extended weakness in earnings could
require additional sponsor contributions to maintain access to this
facility.
With the secured revolving facility and term loan, there are
limited sources of alternate liquidity as substantially all assets
are pledged. There is a commitment in place from the sponsor to
support the ongoing business.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with improved liquidity due to
progress towards positive free cash flow and/or greater
availability under the revolving credit facility, along with
meaningfully greater scale and asset diversity. Accelerated growth
in more stable MSW volumes while improving margins would also be
viewed favorably. Debt-to-EBITDA in the 5x-range and
EBIT-to-interest approaching 1.5x on a sustained basis would be
critical elements for an upgrade. The ratings could be downgraded
if liquidity deteriorates further, highlighted by increasingly
negative free cash flow and the need for additional equity cures to
meet covenant compliance, or if debt-to-EBITDA remains above 6x. In
addition, sustained weakness in volume trends and/or a falloff in
higher-return C&D and special waste volumes could place downward
pressure on ratings. Unfavorable developments with the railcar
service provider would also be viewed negatively.
Moody's took the following rating actions on Tunnel Hill Partners,
LP:
- Corporate Family Rating downgraded to Caa1 from B2
- Probability of Default Rating downgraded to Caa1-PD from B2-PD
- Senior Secured Bank Credit Facility downgraded to Caa1 (LGD3)
from B2 (LGD3)
- Rating outlook Stable
Tunnel Hill Partners, LP is an integrated waste-by-rail company in
the US, owning and operating a network of collection, transfer
station and recycling facility assets in the Northeast US and
disposal sites in Ohio and Pennsylvania. Most of its transfer
stations are connected to rail lines for disposal of waste volumes
into the company's owned disposal sites. Latest twelve-month
revenues for the period ended June 30, 2020 were approximately $300
million.
The principal methodology used in these ratings was Environmental
Services and Waste Management Companies published in April 2018.
U.S. OUTDOOR: Seeks to Hire Vanden Bos & Chapman as Counsel
-----------------------------------------------------------
U.S. Outdoor Holding LLC seeks authority from the United States
Bankruptcy Court for the District of Oregon to hire Vanden Bos &
Chapman, LLP as its legal counsel.
The Debtor requires Vanden Bos to:
(a) give Debtor legal advice with respect to Debtor's powers
and duties as debtor-in-possession in the operation of Debtor's
business;
(b) institute such adversary proceedings as are necessary in
the case;
(c) represent Debtor generally in the proceedings and to
propose on behalf of Debtor as a debtor-in-possession necessary
applications, answers, orders, reports and other legal papers; and
(d) perform all other legal services for a
debtor-in-possession or to employ an attorney for such professional
services.
To secure such employment, Debtor paid Vanden Bos a $25,000
pre-petition retainer.
The firm's current hourly rates are:
Ann K. Chapman, Managing Partner $455
Douglas R. Ricks, Partner $405
Christopher N. Coyle, Partner $375
Daniel C. Bonham, Associate $275
Certified Bankruptcy Assistants $250
Legal Assistants $135
The firm attests that it is a "disinterested person" within the
meaning of Sections 101(14) of the Bankruptcy Code.
The firm can be reached through:
Douglas R. Ricks, Esq.
Vanden Bos & Chapman, LLP
319 SW Washington, Suite 520
Portland, OR 97204
Tel: 503-241-4869
Fax: 503-241-3731
Email: doug@vbcattorneys.com
About U.S. Outdoor Holding LLC
U.S. Outdoor Holding LLC -- https://www.usoutdoor.com/ -- is a
family-owned dealer of many top outdoor brands. It has been
operating since 1957.
U.S. Outdoor Holding filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Ore. Case No.
20-32571) on Sep. 4, 2020. The petition was signed by Edward A.
Ariniello, member manager. At the time of the filing, Debtor
disclosed $1,531,809 in assets and $3,352,108 in liabilities.
Douglas R. Ricks, Esq., at Vanden Bos & Chapman, LLP, represents
Debtor as counsel.
UC COLORADO: Plan Exclusivity Period Extended Until November 16
---------------------------------------------------------------
The Honorable Joseph G. Rosania, Jr., granted UC Colorado
Corporation's motion for extension of its exclusive period to file
a plan of reorganization by 120 days to November 16, 2020, and to
obtain acceptance of the plan by 180 days to January 15, 2021.
The extension provides the Debtors sufficient time to prepare a
plan and disclosure statement, and negotiate and execute essential
financing and processing agreements that will facilitate their
ongoing business operations and their ability to fund a plan of
reorganization.
United Cannabis Corporation ("UCANN") has no substantive operations
and is akin to a holding company. UCANN is the sole owner of UC
Colorado.
The Debtors' bankruptcy filings were precipitated by three
significant events:
(i) A dramatic decline in the price of cannabidiol in November
2019;
(ii) The spread of COVID-19 struck a major blow to the global
economy resulting in reduced sales of CBD, industrial hemp, and
products made from industrial hemp;
(iii) In the week preceding the Debtors' bankruptcy filings, a
creditor, Miner's Delight, LLC, commenced ex parte pre-judgment
writ of attachment proceedings in the District Court for Jefferson
County, Colorado, the execution of which would have resulted in the
complete cessation of operations to the detriment of the creditor
body and significant, if not complete, loss of jobs.
In the weeks following their bankruptcy filing, the Debtors focused
their efforts on curing their deficient filings and responding to
the U.S. Bankruptcy Court for the District of Colorado's Order to
show cause and Miner's Delight, LLC's motion to dismiss.
Under the shelter of the automatic stay, the Debtors were also able
to refocus and streamline their operations. To that end,
post-petition and in the ordinary course of their business, the
Debtors negotiated and executed a processing agreement that has
allowed UC Colorado to resume the processing of hemp into CBD and
the manufacture and sale of CBD products, which will provide the
Debtors much-needed revenue and will serve as a critical source of
funding for the Debtors' plan of reorganization.
The Debtors have also invested a significant amount of time and
effort in negotiating and drafting a DIP financing agreement. Upon
the Court's approval of the DIP Financing Agreement, the Debtors
will be able to begin to formulate a plan of reorganization and
negotiate with their creditors to garner support, since this DIP
financing is critical to Debtors' ability to fund ongoing
operations and also to pay their bills and payroll taxes as they
come due.
About UC Colorado Corporation
UC Colorado Corporation is a wholly-owned subsidiary of United
Cannabis Corporation based in Golden, Colo., that focused on
extracting products from industrial hemp plants, which it uses to
create unique therapeutics for a wide range of diseases that can be
utilized by patients globally.
UC Colorado filed a petition under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 20-12689) on April 20, 2020. The
petition was signed by John Walsh, the Debtor's chief financial
officer. At the time of the filing, the Debtor had estimated
assets of between $1 million and $10 million and estimated
liabilities of the same range.
Judge Joseph G. Rosania Jr. oversees the case. Wadsworth Garber
Warner Conrardy, P.C., is the Debtor's legal counsel. The Debtor
tapped Gibraltar Business Valuations to conduct a valuation of its
business and assets.
UNITED AIRLINES: Egan-Jones Lowers Senior Unsecured Ratings to B-
-----------------------------------------------------------------
Egan-Jones Ratings Company, on September 21, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by United Airlines, Inc. to B- from B.
Headquartered in Chicago, Illinois, United Airlines, Inc. provides
commercial airline services.
US REAL ESTATE: Case Summary & 18 Unsecured Creditors
-----------------------------------------------------
Debtor: US Real Estate Equity Builder Dayton LLC
2104 W 125th St.
Leawood, KS 66209
Business Description: US Real Estate Equity Builder Dayton LLC
is primarily engaged in renting and leasing
real estate properties.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
District of Kansas
Case No.: 20-21359
Judge: Hon. Robert D. Berger
Debtor's Counsel: George J. Thomas, Esq.
PHILLIPS & THOMAS LLC
5200 W 94th Terrace Suite 200
Prairie Village, KS 66207-2521
Tel: 913-385-9900
Total Assets: $6,754,000
Total Liabilities: $5,455,938
The petition was signed by Sean Tarpenning, president.
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/W3R7ANI/US_Real_Estate_Equity_Builder__ksbke-20-21359__0001.0.pdf?mcid=tGE4TAMA
US REAL ESTATE: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: US Real Estate Equity Builder LLC
2104 W 125th St
Leawood, KS 66209
Business Description: US Real Estate Equity Builder LLC is
primarily engaged in renting and leasing
real estate properties.
Chapter 11 Petition Date: October 2, 2020
Court: United States Bankruptcy Court
District of Kansas
Case No.: 20-21358
Judge: Hon. Robert D. Berger
Debtor's Counsel: George J. Thomas, Esq.
PHILLIPS & THOMAS LLC
5200 W 94th Terrace Suite 200
Prairie Village, KS 66207-2521
Tel: 913-385-9900
Total Assets: $5,281,000
Total Liabilities: $13,985,020
The petition was signed by Sean Tarpenning, president.
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/WLQBBRA/US_Real_Estate_Equity_Builder__ksbke-20-21358__0001.0.pdf?mcid=tGE4TAMA
VENUS CONCEPT: Signs 14th Amendment to Madryn Credit Agreement
--------------------------------------------------------------
Venus Concept entered into an amendment to its credit agreement
dated as of Oct. 11, 2016, by and among Venus Concept Canada Corp.,
an Ontario corporation and Venus Concept USA Inc. (collectively,
the "Borrower"), the Company, as a Guarantor, Venus Concept Ltd.,
as a Guarantor, the other Guarantors from time to time party
thereto, the lenders from time to time party thereto, and Madryn
Health Partners, LP, as Administrative Agent. The Fourteenth
Amendment to Credit Agreement dated as of Sept. 30, 2020, by and
among the Company, the Borrowers, the Lenders and Madryn, amends
the Madryn Credit Agreement to (i) require that 50% of the interest
payments for the period beginning July 1, 2020 and ending on, and
including, Sept. 30, 2020, be paid in cash, (ii) the remaining 50%
of the interest payments for the Second PIK Period, be paid in
kind, and (iii) increase the interest rate applicable to the Second
PIK Period Paid-in-Kind Interest from 9.00% per annum to 10.50% per
annum during the Second PIK Period.
Master APA Amendment
Venus Concept Ltd., an Israeli corporation and wholly-owned
subsidiary of Venus Concept Inc., entered into an amendment to its
master asset purchase agreement dated as of Jan. 26, 2018, by and
among Venus Concept Ltd., Amalgo Corporation, an Ontario
corporation, as Canadian Vendor, Amalgo Holding Corp., a Delaware
corporation, Amalgo Solutions Corp., a Delaware corporation, and
Amalgo US Corp., a Delaware corporation, as US Vendors, Amalgo
(formerly Societe De Promotion Et Diffusion D'equipement Medical
Medicamat), a French corporation, as French Vendor and Miriam
Merkur, an individual resident in the Province of Ontario, together
with the Canadian, US and French Vendors, the "Vendor Parties".
The amendment to the MAPA dated as of Sept. 25, 2020 by and among
Venus Concept Ltd. and the Vendor Parties amends the terms of the
MAPA in accordance with Section 1.12 of the MAPA to establish an
installment payment plan for the remaining portion of the Earn-Out
Amount due under the MAPA.
About Venus Concept
Toronto, Ontario-based Venus Concept Inc. is an innovative global
medical technology company that develops, commercializes, and
delivers minimally invasive and non-invasive medical aesthetic and
hair restoration technologies and related practice enhancement
services. The Company's aesthetic systems have been designed on a
cost-effective, proprietary and flexible platform that enables the
Company to expand beyond the aesthetic industry's traditional
markets of dermatology and plastic surgery, and into
non-traditional markets, including family and general practitioners
and aesthetic medical spas. In the years ended Dec. 31, 2019 and
in 2018, a substantial majority of its systems delivered in North
America were in non-traditional markets.
Venus Concept incurred a net loss of $42.29 million in 2019
following a net loss of $14.21 million in 2018. As of March 31,
2020, Venus Concept had $155.26 million in total assets, $108.68
million in total liabilities, and $46.57 million in stockholders'
equity.
MNP LLP, in Toronto, Canada, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated March
30, 2020, citing that the Company has reported recurring net losses
and negative cash flows from operations, which raise substantial
doubt about the Company's ability to continue as a going concern.
VIPER ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of Viper Energy Partners LP and Viper Energy Partners LLC at
'BB-'. Fitch also affirmed the senior secured revolving credit
facility at 'BB+'/'RR1' at Viper Energy Partners LLC and the senior
unsecured notes at 'BB-'/'RR4' at Viper Energy Partners LP. The
Rating Outlook is Stable.
Viper's ratings reflect its non-operated status, which Fitch
believes is mitigated by its strategic relationship with
Diamondback Energy, Inc. (BBB/Stable), providing unique visibility
into development plans, and the company's differentiated
third-party strategy. Other supporting factors include Viper's
organic growth opportunities, high-margin cost structure,
through-the-cycle positive FCF after dividends, and strong credit
metrics with average debt/EBITDA in the 2.0x range in the base
case. Fitch also recognizes the steps Viper has taken to defend its
credit profile in the current price downturn, including the
establishment of a hedging position and a reduction in its
distributions in order to generate positive through-the-cycle FCF.
Another consideration is Diamondback Energy Inc.'s near-term
drilling focus on Viper acreage, increasing the company's
production 'floor' and providing organic growth, which helps reduce
volumetric and cash flow uncertainty.
Offsetting factors include the company's relatively small asset
base (production, reserves and net royalty acres), longer-term M&A
funding risk, its variable payout MLP structure, volume risk from
the non-operated part of the portfolio, and potential dilution of
Diamondback's ownership in Viper in the future due to third party
expansion opportunities, which could weaken the linkage to the
parent.
KEY RATING DRIVERS
Unique Asset Base: Viper's asset base is unique relative to
growth-oriented independent E&Ps; the company is the leading public
consolidator of royalty mineral ownership across the Permian.
Viper's net royalty acreage is highly contiguous and largely
undeveloped (less than 30% developed in the Midland and less than
15% developed in the Delaware). Given the royalty structure, the
asset requires no operating expenses and provides organic growth
opportunities without capital costs, resulting in higher margin
than operating peers in the Permian.
Reduced Distribution Credit Supportive: When commodity prices
dropped in 1Q20 and persisted through 2Q20, Viper reduced its
variable distribution to 25% of FCF. The decision to decrease the
distribution supported management's decision to prioritize the
balance sheet and liquidity, using the positive FCF to repay
borrowings under the credit facility and buying back unsecured
notes ($14 million) at a discount. Management indicated that the
distribution will potentially increase in 2H20 and into 2021,
depending on commodity prices, but Fitch does not currently expect
the distribution rate to reach its previous level of 100% of FCF
over the medium-term. Fitch has assumed a distribution rate of
around 75% in 2021 and beyond, under the base case, to reflect the
credit-conscious shift in payouts.
The reduced distribution, coupled with the company's high margins,
should support positive through-the-cycle FCF which provides
additional financial flexibility. Fitch expects positive FCF to be
allocated towards some gross debt reduction, in line with
management's focus on strengthening the balance sheet. Over the
long term, Fitch believes a portion of the positive FCF may be used
for M&A funding, reducing the company's dependency on capital
markets. The payout change, however, could have knock-on negative
implications for future M&A growth and funding.
Hedging Introduced: Viper layered on hedges, largely collars, to
protect against additional downside risk in the middle of the
commodity price downturn. The company has collars for 14,000 boepd
at a weighted average floor of $28.86/bbl and a ceiling of
$32.33/bbl for 2H20. Fitch estimates that the company is 90% hedged
for the remainder of 2020 and 60% hedged for 2021. Fitch notes that
the 2020 hedges are below its base case price deck and will result
in realized hedge losses. While management does not have a stated
hedging policy, the commencement of some hedging activity will
benefit the company's cash flow, liquidity and leverage profiles
over the longer-term.
FANG-Linked Production: Viper's net royalty production attributed
to Diamondback operating activity is forecast to increase from
approximately 60% in 2020 to 65% in 2023. In the current commodity
price environment, operators have materially reduced capital
budgets and shifted drilling and completion activity to their
highest return acreage. FANG's highest return wells are on Viper's
net royalty acres in the Northern Midland Basin. Additionally,
approximately 65% of FANG's drilled uncompleted wells (DUCs) are on
Viper royalty acres, which should provide near-term production
tailwinds. Fitch believes this linkage provides a production floor
and drives Viper's production growth through the forecast. Fitch
expects Viper's production from third party operators to remain
relatively flat through the forecast.
In general, Viper has strong insight into Diamondback's volumes and
drilling plans, reducing volumetric and cash flow risks, and
considerably less visibility and certainty around volumes from
third party non-operated interests. Consolidation of mineral
interests on third party acreage could result in additional cash
flow risk in the longer-term. Viper attempts to offset this risk by
targeting royalty interests on acreage that is highly contiguous
and core to targeted third party operators.
Equity Weighted M&A: Viper has conservatively funded its M&A
activity, approximately 75% equity-linked since its IPO in 2014.
Fitch believes Viper will continue to fund M&A, over the
longer-term, in an improved commodity price backdrop, through
revolver borrowings, positive FCF, and equity issuances. The
company's 2020 acquisition of $63 million was funded with cash and
revolver debt. Fitch believes continued equity offerings will
likely reduce Diamondback's ownership stake, which may weaken the
Diamondback/Viper linkage.
Improving Leverage Metrics: Fitch expects Viper's debt/EBITDA ratio
to average 2.2x through the forecast period, eclipsing 2.0x in
2022, in line with management's leverage target. Fitch expects
leverage to trend below 1.5x in the outer years of the forecast.
Uplift from Linkage with Parent: Under its parent-subsidiary
linkage criteria, Fitch has notched Viper's IDR up one notch due to
the moderate linkage between the company and its higher rated
parent, Diamondback. The moderate linkage reflects the lack of
strong legal ties (debt guarantees, cross defaults) but the
significant current operational and strategic ties between the two
entities.
DERIVATION SUMMARY
Viper is an independent E&P focused on owning the mineral interests
of the liquids-oriented Delaware and Midland basins with
second-quarter 2020 net production of 24.5 mboe/d. Production size,
as of June 30, 2020, due to the nature of the royalties business,
is substantially smaller than its 'BB' category E&P peers, Murphy
Oil Corporation (BB+/Negative), Endeavor Energy Resources, L.P.
(BB/Stable), CNX Resources Corporation. (BB/Positive) and Vermilion
Energy Inc. (BB-/Negative), all of whom produce at least 100
mboe/d.
As a minerals owner, Viper has minimal operating costs and resulted
in a Fitch calculated unhedged cash netback of $9.1/boe (62%
margin) for 2Q20, better than the entire peer group. Viper's parent
and largest counterparty had daily production of 294 mboepd with a
cash netback of $6.9/boe (45% margin). The other 'BB' rated peers
had cash net-backs under $3.0/boe and margins under 20%. Netbacks
and margins should improve, under Fitch's base case price
assumptions.
Viper's high unhedged cash netbacks and no capital expenditures
result in a best in class FFO margin albeit at a much smaller
amount. Viper's MLP-linked distributions historically resulted in a
neutral FCF profile, but the recent payout reduction should
facilitate positive FCF going forward. This capital allocation
structure improves financial flexibility.
On a debt/EBITDA basis, Fitch expects Viper's leverage to be 2.2x
on average, with leverage trending towards 1.5x, under the base
case. Debt/EBITDA metrics are in line with the 'BB' category
thresholds and Permian-focused E&P peer group.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- WTI Oil price of $38/bbl in 2020, $42/bbl in 2021, $47/bbl in
2022 and $50/bbl in 2023;
- Henry Hub natural gas price of $2.10/mcf in 2020 and $2.45/mcf
thereafter;
- Robust double-digit production growth in 2020, followed by
low-single digit declines in 2021;
- Distribution rate of 25% in 2020, increasing to around 75%
thereafter;
- Free cash flow after dividends used to repay revolver
borrowings, until fully repaid in 2022;
- No M&A activity through the forecast.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Increased size and scale evidenced by larger daily production
volumes and/or reduced volumetric risk;
- Mid-cycle debt/EBITDA maintained below 2.0x (FFO-adjusted
leverage below 2.0x) on a sustained basis;
- Debt/flowing barrel sustained below $20,000/bbl.
Leverage sensitivities are consistent with higher-rated peers and
are unlikely to change upon future rating upgrades.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Production trending below 15-20 mboe/d and/or increased
volumetric risk;
- Erosion in Diamondback's credit profile, or material reduction
in parent support for Viper (on an ownership, acreage and/or
production basis);
- Change in financial policy, particularly publicly stated
leverage targets and M&A funding appetite;
- Mid-cycle debt/EBITDA above 3.0x (FFO Adjusted Leverage below
3.0x) on a sustained basis;
- Debt/flowing barrel sustained above $25,000/bbl.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: At June 30, 2020, Viper has cash of $10 million
and availability under the revolver credit facility of $426 million
($154 million outstanding; $580 million borrowing base). During
1Q20 and 2Q20, Viper retained 75% of distributable free cash flow
to strengthen the balance sheet by repaying revolver borrowings and
repurchasing the senior unsecured notes at a discount. Fitch
believes management's financial policy decisions will continue to
prioritize liquidity preservation and balance sheet strength over
the near-term.
Simple Debt Structure: Viper's senior secured revolver matures in
April 2023, and the company's 5.375% senior unsecured notes are due
in November 2027.
Distribution Limitations: Viper's distributions are limited by the
indenture under the company's 5.375% senior unsecured notes due
2027. Outside of the builder basket, Viper is able to make
restricted payments as long as leverage is under 3.0x.
Additionally, to the extent the company is above 3.0x, Viper has a
general basket up to the greater of $50 million or 4% of ACNTA.
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
Viper Energy Partners LP: Group Structure: 4
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
VIZITECH USA: Court Extends Plan Exclusivity Until October 23
-------------------------------------------------------------
At the behest of ViziTech USA, LLC, Judge James P. Smith extended
the period within which the Debtor has the exclusive right to file
a plan of reorganization to October 23, 2020, and to obtain
confirmation of the plan through and including December 21, 2020.
The extension, the Debtor said, is essential to permit it to
propose a plan of reorganization. The Debtor also will be able to
continue the discussions with potential buyers for the sale of the
Debtor's assets which would result in a substantial lump payment to
its creditors.
About ViziTech USA
ViziTech USA, LLC -- https://www.vizitechusa.com/ -- is an
education and training company specializing in 3D technology,
augmented reality (AR), and virtual reality (VR) learning programs.
Headquartered in Eatonton, Georgia, ViziTech has utilized its 3D
and virtual training technologies to federal, state, and local
government entities and familiar private companies such as
Gulfstream, Lockheed Martin, Verizon, and Mercedes-Benz.
The Company takes complex concepts and processes, such as frog
dissection in the classroom or safety training in the workplace,
and recreates them virtually for an interactive, safe learning
experience. The company serves school districts across the
southeast, commercial clients, and government clients.
On December 26, 2019, the company sought Chapter 11 protection
(Bankr. M.D. Ga. Case No. 19-52416) in Macon, Georgia. On the
Petition Date, the Debtor was estimated to have between $100,000
and $500,000 in assets, and between $1 million and $10 million in
liabilities.
The petition was signed by Charles Stewart Rodeheaver, sole member,
and manager. Judge James P. Smith oversees the case. Stone &
Baxter, LLP, is serving as the Debtor’s counsel. The Debtor
tapped David Giddens, CPA as its accountant. No committee has been
appointed.
WALKER COUNTY HOSPITAL: Wants Plan Exclusivity Extension Thru 2021
------------------------------------------------------------------
Walker County Hospital Corporation requests the U.S. Bankruptcy
Court for the Southern District of Texas, Houston Division, to
extend the Debtor's exclusive periods to file a plan and solicit
acceptances of such plan for a period of 120 days up to and
including January 4, 2021, and March 7, 2021, respectively.
The Debtor says it is working expeditiously in consultation with
the Official Committee of Unsecured Creditors and other parties in
interest to prepare and file a chapter 11 plan as soon as possible.
However, considering the complexities of the Chapter 11 Case and
remaining open issues in connection with the sale of the Debtor's
assets, the Debtor may be unable to meet the existing deadline. The
requested extension of the exclusive periods will permit the
planning process to move forward in an orderly fashion and with
better information for all stakeholders and will enable the Debtor
to continue to formulate a comprehensive chapter 11 plan and allow
for adequate time for the Debtor and parties in interest to
negotiate any changes to the plan prior to it being filed.
The Debtor continues to operate its business and from the proceeds
of the Sale and additional assets the Debtor is undertaking to
liquidate. The Debtor has paid, and will continue to pay, its
administrative expenses in accordance with the Bankruptcy Code.
While some administrative payments have been delayed due to an
extended reconciliation process in connection with the Sale, the
Debtor has worked diligently to ensure the correct owing amounts
have been or will promptly be fully paid.
The Debtor submits the requested extension is reasonable and
necessary, will not prejudice the legitimate interest of creditors
and other parties in interest, and will afford the Debtor a
meaningful opportunity to pursue a feasible and consensual plan.
Absent an extension, the Debtor's current exclusivity period to
file a plan was set to expire on September 6, 2020, and the
exclusive solicitation period is set to expire November 7, 2020.
About Walker County Hospital Corp.
Walker County Hospital Corporation d/b/a Huntsville Memorial
Hospital -- https://www.huntsvillememorial.com/ -- operates a
community hospital located in Huntsville, Texas. It is the sole
member of its non-debtor affiliate, HMH Physician Organization.
Founded in 1927, the Facility provides health care services to the
residents of Walker County and its surrounding communities.
Walker County Hospital Corporation sought Chapter 11 protection
(Bankr. S.D. Tex. Case No. 19-36300) on November 11, 2019, in
Houston. At the time of filing, the Debtor was estimated with
assets and liabilities both at $10 million to $50 million. The
petition was signed by Steven Smith, chief executive officer.
The Honorable David R. Jones is the case judge. The Debtor tapped
Waller Lansden Dortch & Davis, LLP, and Morgan Lewis as legal
counsel; Healthcare Management Partners, LLC as financial and
restructuring advisor; and Epiq Corporate Restructuring, LLC as
notice and claims agent.
The Office of the U.S. Trustee appointed an Official Committee of
unsecured creditors on Nov. 23, 2019. The Committee tapped Arent
Fox LLP as legal counsel; Gray Reed & McGraw LLP as local counsel;
and FTI Consulting, Inc. as a financial advisor.
WATERTECH HOLDING: Sale to 3rd Party Despite Bad Faith Allegation
-----------------------------------------------------------------
J. Ronald Jones, Jr. of Smith Debnam Narron Drake Saintsing &
Myers, LLP wrote an article on JDSupra titled "Court Approves Sale
of Assets to Third Party Despite Stalking Horse Bad Faith
Allegations Against Purchaser."
United States Bankruptcy Judge John E. Waites approved a sale of
substantially all the assets of a small business Chapter 11 Debtor
over the protests of a "Stalking Horse" bidder who claimed the
successful bidder was acting in bad faith. In a decision entered by
the Court August 14, 2020, Judge Waites held that "[i]n determining
a challenge to a purchaser's good faith status, the Fourth Circuit
has indicated that '[t]ypically the misconduct that would destroy a
purchaser's good faith status at a judicial sale involves fraud,
collusion between the purchaser and other bidders or the trustee,
or an attempt to take grossly unfair advantage of other bidders.'"
(Quoting, Willemain v. Kivitz, 764 F.2d 1019, 1023 (4th Cir.
1985)). In re: Watertech Holdings, LLC, C/N 20-00662-jw (August 14,
2020). The opinion stands for the proposition that the Bankruptcy
Code's good faith requirement should be focused less upon the
motives of and relationship between the bidders, and more on the
fairness and openness of the sale itself and the benefit to the
estate and its creditors.
Watertech Holdings, LLC ("Watertech") filed Chapter 11 in the
District of South Carolina on February 6, 2020, and operated and
managed its business and assets as a debtor in possession pursuant
to 11 U.S.C. §§1107(a) and 1108. Watertech was formed to develop
products and disinfecting technologies. Prior to the petition,
several groups negotiated with Watertech to purchase the property,
with the expectation of a §363 sale process. On the petition date,
Watertech filed a Motion to sell substantially all its assets and
sought approval for the sale bidding procedures. The Stalking Horse
Bidder initially sought to purchase the assets for $125,000.00 in
cash, plus waiver of a number of claims and the payment of a
royalty based upon post-sale profits. Objections eventually
resulted in an amended Stalking Horse Bid in the form of an Asset
Purchase Agreement ("APA"), which included a payment of $250,000.00
in cash and a closing within twenty (20) days of a final Order
approving the sale. The Bid Procedures Order required: (1) a modest
marketing period for the assets to other potential purchasers; (2)
a deadline for submission of any qualified competing bid; (3) an
purchase agreement substantially in the form of the Stalking Horse
APA; (4) a deposit in the amount of $125,000.00; and, (5) "topping
bids" of at least $25,000.00 more than the Stalking Horse Bid.
Though the Bidding Procedures Order provided a deadline for the
submission of competing bids, the Court retained the ultimate
authority to determine what constituted a qualified competing bid.
The sale was delayed and the deadline for bids was extended in
compliance with the Court's COVID Restrictions. After the deadline
for competing bids had passed and less than a week before the
hearing on the §363 Sale Motion, PureCycle, LLC submitted an
untimely competing bid. The bid met all requirements set forth in
the Bidding Procedures Order except for timeliness. PureCycle's
principal had been involved with businesses affiliated with the
Stalking Horse and its principal. Though the principals were
involved in business disputes through other entities, neither
PureCycle nor its principal was affiliated with the Stalking Horse.
At the hearing, the Stalking Horse objected to the late bid filed
by PureCycle and also asserted that PureCycle was not acting in
good faith.
First, the Court found that it had absolute discretion to determine
whether a party was a qualified bidder. The Court then determined
that the PureCycle bid was superior to the Stalking Horse bid and
met every other requirement under the Bidding Procedures Order. The
Court further noted that the Debtor, exercising sound business
judgment, had urged the Court to find that the PureCycle bid was a
qualified bid allowing for the auction process envisioned by the
Bid Procedures Order with all the parties able to proceed. The
auction, held in open Court, ended with a sale to PureCycle for
$525,000.00 in cash with a closing to take place within ten (10)
days.
As to the issue of good faith, the Court noted that there was an
"apparently contentious relationship between principals and members
of [the Stalking Horse] and PureCycle" arising from their joint
participation other business relationships and that these
"antagonistic relationships should not be a distraction from the
ultimate goal of the case – to sell the Debtor's assets in a fair
manner for the best price for the benefit of creditors." The Court
found that the good faith determination is based on findings that
the terms and conditions of the sale are fair and reasonable and/or
appropriate, that they were reached through arms-length
negotiations and bargaining between the Debtor and potential
bidders, and that the process was open and fair to all
participants.
Finally, the Court stated "it is not the Court's role to examine
the motives for, or even the wisdom in, the bids offered for assets
to be sold at a bankruptcy sale. Considering all of the
circumstances of this case, "the Court found "that PureCycle is a
good faith purchaser entitled to the protections afforded to sale
transactions under §363(m)" and the objection of the Stalking
Horse based upon "the alleged lack of good faith [was] overruled."
Postscript: The Stalking Horse later filed a Motion to Stay the
Sale and a Motion to Reconsider both of which were overruled by the
Court after an additional hearing.
About Watertech Holdings
Watertech Holdings, LLC, is in the disinfecting services business.
Watertech Holdings sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Cal. Case No. 20-00662) on Feb. 6,
2020. In the petition signed by Robert Fei, manager, the Debtor
disclosed $2,115,000 in assets and $2,187,115 in liabilities. The
firm is represented by G. William McCarthy Jr., Esq. at McCarthy,
Reynolds & Penn, LLC.
WESTJET: Fitch Lowers LongTerm IDR to 'B', Outlook Negative
-----------------------------------------------------------
Fitch Ratings has downgraded WestJet's Long-Term Issuer Default
Rating (IDR) to 'B' from 'B+'. The Rating Outlook is Negative. In
addition, Fitch has downgraded WestJet's senior secured term loan
and revolver ratings to 'BB-'/'RR2' from 'BB+'. The downgrade is
driven by Fitch's updated base case, which shows a slower than
expected rebound in air traffic driven by health concerns and
government restrictions on travel. Partly offsetting the drop in
travel, is the company's material reduction in workforce and
efforts to date to raise liquidity. Although Fitch does not believe
nominal debt will materially increase at year end, it expects
adjusted leverage to be in line with the 'B' rating category
throughout the forecast period. Fitch has also assigned a
'BB-'/'RR2' rating to the revolving credit facility under the
WestJet Airlines, Ltd. entity, reflecting that entity's position as
a co-borrower.
KEY RATING DRIVERS
Slower Recovery Expected: Forecasting airline traffic beyond 2020
inherently involves a great deal of uncertainty, due to unknowns
about future travel restrictions, pace of new coronavirus cases,
and importantly, the timing/rollout of potential vaccines and
treatments. Nevertheless, Fitch's prior scenario, which anticipated
2021 global traffic down by roughly 20% from 2019 baseline, has
become less likely.
Fitch's base case shows WestJet's 2020 revenue down ~60% from 2019
levels. WestJet suspended commercial operations for international
and transborder flights on March 22, 2020, while simultaneously
reducing its domestic routes by 50%. Although WestJet has begun
flying to select leisure and international destinations, the
recovery to date has been muted. Fitch expects a divergence between
leisure/domestic focused airlines and carriers with heavy business
and international exposure. WestJet is more focused on leisure
travel. Leisure exposure is expected to benefit WestJet's recovery;
however, the shape of travel recovery is dependent on international
travel restrictions and the pace of new coronavirus cases.
International route exposure accounts for nearly 39% of revenue
(primarily U.S., Caribbean, and European destinations).
Fitch's base case assumes that a vaccine or treatment remains
unavailable at scale through 2021, but that a combination of
increased comfort with airlines' efforts to mitigate risks from the
virus, lower case numbers, and quarantine-fatigue cause a modest
rebound from 2020's very low levels of demand. Fitch is also
revising its stress case scenarios to include the possibility of
plateauing demand at levels well below the 2019 base case,
reflecting a potential outcome if little progress is made towards
controlling the coronavirus outbreak over the next year.
Fitch has updated its assumptions on traffic to be down more than
70% and 60% in the 3rd and 4th quarters, respectively. With
revenues down ~60% in 2020, recovery prospects in 2021 are expected
to be lower than Fitch's original assumptions. Fitch now
anticipates revenues for 2021 may be ~40% below 2019 levels, as the
concerns related to travel restrictions and health concerns
continue to suppress consumer behavior.
Canadian Travel Restrictions: On March 18, 2020, the Canadian
government closed the U.S. border to non-essential travel. This
restriction has been extended through Oct. 21, 2020, with
additional restrictions that do not allow foreign nationals to
travel to Canada even if they have a valid visa. Fitch notes that
WestJet holds material risk of ongoing or re-occurring travel
restrictions by the Canadian government, which may impact the
recovery moving forward. The current restrictions have reduced
transborder and international travel by ~97%. Fitch expects
performance to rebound as these travel restrictions lift and the
airline increases capacity on its leisure routes.
Adequate Liquidity and Access to Capital Markets: Fitch views
WestJet's current liquidity position as adequate to manage through
the crisis. The company entered the pandemic with the strong
liquidity position, slightly above 33% of TTM revenue as of Dec.
31, 2019. WestJet's financial flexibility benefits from its ability
to release collateral from its main term loan subject to a minimum
collateral coverage ratio of 1.25x. Much of the collateral under
WestJet's term loan consists of good quality aircraft, which Fitch
believes are readily financeable. The Canadian Emergency Wage
Subsidy (CEWS) program has also helped to offset salaries and
benefit expenses.
Recovery Analysis: Fitch has also revised its recovery analysis,
which has resulted in a downgrade of WestJet's senior secured
credit facility to 'BB-'/'RR2' from 'BB+'. The downward revision of
the recovery estimate incorporates the ongoing level of pressure on
the global airline industry. Fitch's recovery analysis assumes that
WestJet would be reorganized as a going concern in bankruptcy
rather than liquidated. Fitch has assumed a 10% administrative
claim. The going concern (GC) EBITDA estimate reflects Fitch's view
of a sustainable, post-reorganization EBITDA level upon which the
enterprise valuation is based. Fitch uses a GC EBITDA estimate of
$600 million and a 5x multiple generating an estimated GC
enterprise value (EV) of $2.7 billion after the estimated 10% in
administrative claims. These assumptions lead to an estimated
recovery for senior secured positions in the 71%-90% (RR2) range.
DERIVATION SUMMARY
WestJet's 'B' rating is two notches below the rating of its primary
domestic competitor, Air Canada. The two-notching difference
between WestJet and Air Canada reflects WestJet's higher near-term
leverage and relative size. Those factors are partially offset by
WestJet's favorable cost structure, liquidity, and domestic/leisure
focus.
WestJet compares favorably to other airlines rated in the 'B'
category. Fitch believes that WestJet's leverage will remain better
than American's (recently downgraded to B-), and WestJet has better
prospects for improving financial metrics over the next several
years than some other similarly rated issuers.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Total adjusted debt/EBITDAR at or below 4.5x;
-- FFO fixed charge coverage above 2x;
-- EBIT margins increasing towards the mid-single digits;
-- Maintenance of liquidity above 20% of LTM revenues.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Longer than expected drop in demand due to coronavirus leading
to longer-term impact on the balance sheet/ financial flexibility;
-- Total adjusted debt/EBITDAR remaining above 5.5x;
-- FFO fixed charge coverage below 1.5x;
-- Continued cash burn through the first part of 2021.
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
WIRTA HOTELS 3: Owner Files Chapter 11 to Keep Hotel
----------------------------------------------------
Matthew Nash of Sequim Gazette reports that Bret Wirta, owner of
the Holiday Inn Express & Suites, 1441 W. Washington St., is
looking to maintain his ownership of the 10-year-old hotel by
filing for chapter 11 bankruptcy.
His attorneys filed Sept. 18 in the U.S. Bankruptcy Court Western
District of Washington with their first hearing held on Sept. 28.
In an interview, Wirta -- a Ballard resident who owns and operates
Wirta Hotels 3, LLC with his wife Patricia "Trisha" Wirta -- said
they are seeking to pause payments and restructure the mortgage
following the economic impact caused by the COVID-19 pandemic.
"Everyone is experiencing the pandemic in different ways," he said.
"For the year, we've lost about one-third of our revenue, maybe a
little more (for the hotel)."
Wirta said his other properties -- the neighboring Black Bear
Diner, 1471 E. Washington St., and Quality Inn & Suites at Olympic
National Park, 134 River Road -- have been impacted similarly.
Wirta said he's in discussions with their lending banks about
mortgage payments and doesn't face potentially losing them like the
Holiday Inn.
"There are a lot of businesses in our position," Wirta said.
According to court documents, he owes Holiday Inn's lending bank,
Wilmington Trust, National Association, about $575,000 in claims.
Wirta said that about a month ago bank representatives placed a
notice on the hotel's doors that there was going to be a receiver,
a new operator, put in place for the company. That prompted him to
seek chapter 11 bankruptcy.
"My wife Trisha and I decided to do our best to get them to pause,"
he said. "We felt chapter 11 bankruptcy was the best thing for us
and the community."
Attorney input
Attorney John S. Kaplan represents the bank that is trustee for a
Citigroup Commercial Mortgage Trust, and he contests multiple
points made by Wirta and his attorneys, including the impact of new
operators of the hotel, and Wirta's ability to pay.
According to court documents, Kaplan said Wirta’s phrase that a
new operator would be "devastating" is incorrect because the
proposed company, GF Hotels and Resorts, operates 21 similar hotels
within the InterContinential Hotels Group (IHG) that holds the
Holiday Inn Express franchise.
Kaplan added that Wirta has "sufficient cash to make the required
debt service payments to (the bank), but chose not to do so."
In court documents, Kaplan states that Wirta has about $811,226 in
cash available that could be used to make a monthly debt service of
about $46,880.
Wirta said he lost money throughout the winter and they need the
bank to agree for them to skip a few payments in the spring to pay
them in the future.
"That being said we have money in the account ready to make
payments and would make these payments tomorrow but the bank
refuses to negotiate, all while unilaterally attempting to
foreclose and put a receiver in place," he said.
"We believe seizing our hotel is an unfair solution, to put it
mildly, especially since all of this was due to the worldwide
pandemic."
Kaplan also states that Wirta doesn't plan to pay with his own
money for a planned property improvement plan (PIP) estimated at
$1.5 million to update the hotel as part of the franchise's
requirement by May 31, 2022.
Wirta said his plan through federal court will be similar to what
he proposed to the bank to pause payment and add them to the end of
the loan.
"We're not redoing terms or protection; all we're asking for is an
extension," he said.
The next hearing is tentatively set for Oct. 22, 2020.
COVID response
As Wirta awaits a decision from the court, staff continue to say
visitations are growing.
Namaste Cousins, the Holiday Inn Express general manager, said
they've been at about 90 percent of capacity since June compared to
their lowest total in April 2020 at 15 percent of revenue
projections.
She said they have 29 employees (20 full-time at the hotel now)
compared to 49 last year.
Wirta's company received between $150,000-$350,000 through the
federal Paycheck Protection Program to support 28 jobs.
"Big thanks to the taxpayers because that helped get us through,"
Wirta said. "While we've been hurt, we're doing OK. We're coming
back, and that's wonderful."
Cousins said they've listened to visitors to hear what makes them
comfortable during the pandemic. Inside rooms, staff removed
difficult to clean items, such as throw pillows, notepads and phone
books. Towels are limited and even though bedding and towels may be
unused they are cleaned after each stay. Items like coffee cups and
coffee pods are thrown away regardless of use, too.
Cousins helped develop a "housekeeping menu" for visitors staying
more than one night where they can check needed items for
housekeepers to leave hanging on the door or, if OK with the
resident, inside a room. She said IHG is looking to adopt the model
as well.
Sequim's Holiday Inn Express is the only one in the franchise
Cousins knows of that serves a full, hot breakfast with staff
cooking and serving meals to visitors. Other hotels only offer cold
grab-and-go items, she said.
About Wirta Hotels 3
Wirta Hotels 3, LLC, owner of the Holiday Inn Express & Suites,
1441 W. Washington St., at Sequim, Washington, filed a Chapter 11
petition (Bankr. W.D. Wash. Case No. 20-12398) on Sept. 18, 2020.
In the petition signed by Bret Wirta, manager, the Debtor disclosed
$2,365,830 in assets and $2,805,775 in total liabilities. The Hon.
Marc Barreca is the case judge. FOSTER GARVEY, PC, led by Tara J.
Schleicher, Esq., is the Debtor's counsel.
WPX ENERGY: S&P Puts 'BB-' ICR on Watch Pos. on Devon Energy Merger
-------------------------------------------------------------------
S&P Global Ratings placed all its ratings on WPX Energy Inc.,
including its 'BB-' issuer credit and 'BB-' issue-level ratings, on
CreditWatch with positive implications, reflecting the likelihood
of an upgrade following the close of the merger, which S&P expects
to take place in the first quarter of 2021.
The CreditWatch placement reflects the likelihood that S&P will
raise its ratings on WPX Energy after the close of its merger with
higher-rated Devon Energy. The combined company will operate as
Devon Energy.
Oklahoma-based crude oil and natural gas exploration and production
companies Devon Energy Corp. and WPX Energy Inc. announced their
intent to combine through an all-stock merger of equals agreement.
The merger of equals is an all-stock transaction that will result
in a combined company enterprise value of about $12 billion. WPX
Energy's shareholders will own approximately 43% of the combined
entity, with existing Devon Energy shareholders owning the
remaining 57%. Each company's board of directors has approved the
transaction, which remains subject to regulatory and shareholder
approvals.
The CreditWatch positive placement reflects the likelihood that S&P
will raise the ratings on WPX Energy when the deal closes, assuming
the transaction is completed as proposed and there are no material
changes to its current operating assumptions.
ZINC-POLYMER PARENT: S&P Raises ICR to 'B-', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
Zinc-Polymer Parent Holdings LLC (Jadex) to 'B-' from 'CCC+' and
its issue-level rating on its senior secured credit facilities to
'B-' from 'CCC+'. S&P's '3' recovery rating on the facilities
remains unchanged.
The company's exposure to the medical and consumer end markets, as
well as its renewed contracts with established customers, have
supported the company's overall relatively good operating
performance despite the global macroeconomic weakness stemming from
COVID-19. The company's Polymer segment (representing 73% of 2019
revenues) grew sequentially in the first half of 2020, although
flat to first half 2019, primarily due to an increase in demand for
its medical products across the board. Still, the segment faced
challenges due to lower sales in its electronics and engineered
nylons. S&P said, "We anticipate that the Polymer segment will
expand in the back half of 2020 on increased demand for recyclable
and disposable tabletop cutlery (used in social-distancing
activities and to promote health and hygiene), as well as medical
products. We also expect the company to see increased demand for
its lawn and garden products as consumers stay home due to the
pandemic. In addition, we anticipate new product offerings in its
LifeMade business to enhance its sustainable product portfolio and
a new contract win producing COVID-19 test kit components for a
major pharmaceutical company, to help drive top-line growth going
forward."
Positively, Jadex renewed its long-term contract with the U.S.
Mint, which will help it maintain margins in its Artazn segment
despite lower volumes in the first half of the year. Lower zinc
cost pass-throughs as well as lower coinage volume from the U.S.
Mint translated to lower sales in the second quarter of 2020. The
U.S. Mint has experienced a coin shortage due to COVID-19 in April
and May, but Jadex saw an increase in U.S. Mint orders starting in
June. S&P believes the new pricing structure of the contract with
the U.S. Mint, as well as the new business making 20-Piso coins for
the Philippines in collaboration with the Royal Canadian Mint, will
help support good operating performance.
S&P said, "We continue to monitor the company's transaction-related
expenses, though expect S&P-adjusted debt leverage to improve to
the low-6x area in 2020. Jadex outperformed our expectations for
the first half of 2020. While we continue to expect headwinds from
some of the company's customers and end markets, including
automotive and retail, we no longer expect it to experience
significant revenue and EBITDA deterioration. We also anticipate
that its one-time transaction and restructuring costs will continue
to gradually roll off. Additionally, we expect Jadex's new contract
wins and product launches in the second half of 2020 to offset its
transaction costs and provide it with modest margin stability. We
expect the company's S&P-adjusted debt-to-EBITDA to be in the
low-6x area over the next 12 months supported by its favorable
product volume and cost mix and a modest recovery in its
performance in the second half of 2020.
"We anticipate the company will generate modest positive free cash
flow and maintain an adequate liquidity position throughout the
forecast period. As of June 30, 2020, Jadex had $11.2 million of
cash on its balance sheet and approximately $40 million in
borrowing capacity under its $50 million revolving credit facility.
We expect Jadex to generate modest positive free cash flow in the
$5 million-$10 million range in 2020 supported largely by better
inventory management and operational streamlining. However, the
company does not plan to cut any of its growth capital expenditure
(capex) for 2020 given its addition of a key customer and new
product development. The company also has no significant debt
maturities until 2024 when its revolving credit facility matures.
"The stable outlook on Jadex reflects our expectation that it will
be able to generate modest positive free operating cash flow over
the next 12 months and will reduce its debt leverage to the 6x area
given its relatively supportive end-market performance,
specifically in its medical and consumer end markets.
"We could lower our rating on Jadex if its end markets perform
worse than we expect, such that the company is unable to generate
moderate free operating cash flow over the next 12 months and there
is a meaningful reduction in its liquidity position. We could also
downgrade the company if its debt leverage rises to levels we view
as unsustainable.
"We could raise our rating on Jadex if we expect the global
economic environment to improve such that leverage is trending
below 6x and that the company is able to generate positive free
operating cash flow on a sustained basis."
[*] Businesses Facing Uncertain Future Due to Covid-19 Pandemic
---------------------------------------------------------------
Samuel Stebbins and Grant Suneson of 24/7 Wall St presents the
economic fallout associated with the COVID-19 pandemic has proved
too much for many American businesses to absorb. Small businesses
across the country were forced to shut down in order to help
contain the novel coronavirus. According to a recent report from
online review platform Yelp, as many as 60% of businesses that use
their platform may never reopen. These are the small businesses
that need the most help during the pandemic.
Larger companies were by no means immune. There was a nearly 50%
jump in Chapter 11 bankruptcy filings in May 2020 compared to a
year prior.
Larger businesses often decide to seek bankruptcy protection to
restructure their debt and turn their business around. While some
succeed and exit bankruptcy better positioned to compete in their
industry, others do not and have to liquidate. 24/7 Wall St.
reviewed some of the high profile companies that filed for
bankruptcy in recent months to determine which American businesses
may not survive coronavirus.
These companies are not ranked in a particular order, but are
either facing an uncertain future after having recently declared
bankruptcy, or are in the process of downsizing considerably. Some
of the companies have already made the decision to liquidate all
assets.
Many of the companies on this list are retailers that depend on
sales in their brick-and-mortar stores. Often, these companies were
in financial trouble even before the pandemic as competition from
e-commerce has resulted in substantial sales declines and undercut
profitability for more traditional retailers. For these businesses,
the coronavirus pandemic greatly exacerbated existing problems.
While the bankruptcies on this list may spell the end of some
iconic American brands, mass closures and liquidations are also
putting millions of Americans out of work. Decreased economic
activity during the pandemic, and the resulting bankruptcies of
major companies, have led to the worst unemployment crisis this
country has faced in modern history.
Here are these businesses that might not survive the pandemic and
might file bankruptcy protection.
1. Stein Mart
Industry: Discount department-store
Stein Mart, a discount retailer that has 279 locations in 30
states, declared bankruptcy in July 2020. Though already
struggling, the company said the COVID-19 pandemic caused much of
its financial distress. The chain began liquidation almost
immediately after filing for Chapter 11 bankruptcy protection and
plans on closing all of its stores for good.
2. Ascena Retail Group
Industry: Clothing
Ascena Retail Group, the company behind brands such as Ann Taylor,
LOFT, Lane Bryant, and other women's retailers, filed for
bankruptcy in July 2020. Like many other brick-and-mortar retailers
on this list, Ascena was struggling before COVID-19, reporting only
one profitable year in the last five. Under the bankruptcy
agreement, the company will shut down about 1,600 of its 2,800
retail stores in an attempt to reduce its debt load.
3. RTW Retailwinds
Industry: Clothing
RTW Retailwinds, the company behind women’s clothing store New
York & Co. filed for bankruptcy on July 13, 2020. Already
struggling because of the rise of e-commerce, the retailer's
problems were exacerbated by COVID-19. New York & Co. locations
were reopened during the pandemic for liquidation sales. In August
2020, the company announced a deal to sell its online business to
Sunrise Brands LLC for $20 million in cash and the assumption of
liabilities.
4. Brooks Brothers
Industry: Clothing
Faltering sales during the coronavirus pandemic led Brooks
Brothers, a two-century old clothing retailer, to file for
bankruptcy in July 2020. The brand, known for its preppy clothing
and suits, reported steep sales decline as American consumers began
to favor more casual clothing during the pandemic.
Brooks Brothers was purchased in August by Sparc Group — which
has acquired other clothing brands during the pandemic — to the
tune of $325 million. Under the terms of the reorganization, the
chain will likely shutter many of its 250 brick-and-mortar stores.
5. Lucky Brand
Industry: Clothing
Lucky Brand, a clothing company known for its denim jeans, declared
bankruptcy on July 3, 2020. According to a company press release,
the COVID-19 pandemic had a severe impact on sales. As part of its
restructuring plan, the company will permanently shutter 13 North
American brick-and-mortar locations and sell itself to Sparc Group,
a company that has bought other bankrupt retailers, including
Aeorpastle, Brooks Brothers, and Forever 21.
6. NPC International
Industry: Restaurant franchising
NPC International is a franchising company that operates about
1,200 Pizza Hut and 400 Wendy’s restaurants. The company, based
in Leawood, Kansas, declared bankruptcy on July 1, 2020. As part of
its restructuring plans, NPC will sell all of its Wendy’s
businesses and focus on Pizza Hut. Even before the added strain of
the COVID-19 pandemic, the company was struggling. NPC missed an
interest payment in January 2020, which led to a credit downgrade.
It also received $35 million in emergency liquid capital the same
month.
7. GNC
Industry: Nutrition
Following the COVID-19 forced shutdown of 1,200 of its U.S.
brick-and-mortar locations, vitamin and nutritional supplement
retailer GNC filed for bankruptcy in late June 2020. Already before
the pandemic GNC’s financial situation was poor, and it had
closed hundreds of stores in both 2018 and 2019 in an attempt to
reduce its debt load. The company's future remains uncertain as it
weighs restructuring options that range from asset reduction to
selling itself to a Chinese pharmaceutical company.
8. CEC Entertainment
Industry: Entertainment
CEC Entertainment, parent company of Chuck E. Cheese, a popular
venue for children’s birthday parties that features pizza and
arcade games, filed for Chapter 11 in June 2020. Saddled with
nearly a billion dollars in debt, the company was already
struggling when the COVID-19 pandemic forced it to temporarily
shutter its 560 locations. Many of those locations have since
reopened, and experts speculate that the company will likely
survive the pandemic but will likely emerge looking much
different.
The company lacked the liquidity to get through the bankruptcy
process and was recently given a $200 million lifeline to find a
buyer.
9. JCPenney
Industry: Retail
JCPenney’s multi-billion dollar debt load, combined with the
chain temporarily closing most of its stores nationwide because of
COVID-19-imposed restrictions, have cast the company's future into
doubt. The department store chain filed for bankruptcy in May 2020,
and announced in June 2020 it would close nearly 150 of its 846
stores. The company disclosed in September 2020 it struck a deal to
be purchased by a group of mall owners and bankruptcy lenders.
However, the company missed a filing deadline and asked for a
four-month extension on both that deadline and its reorganization
period.
10. 24 Hour Fitness
Industry: Fitness
Gyms around the country, including 24 Hour Fitness, were shuttered
as a result of COVID-19 in the earlier months of the pandemic. The
company filed for bankruptcy on June 15, 2020, blaming the
pandemic. The fitness chain permanently shuttered over 130 of its
locations, leaving around 300 gyms, many of which have reopened
since with restrictions. Many state and local governments are still
barring gyms from operating at full capacity.
The pandemic only served to add to the challenges chains like 24
Hour Fitness were already facing as Americans switched to cheaper
gyms, boutique fitness options like spin or barre classes, or home
fitness options like Peloton.
11. Hertz
Industry: Car rental
With more than $25.8 billion in assets, car rental company Hertz
became the largest business to declare bankruptcy in the fallout of
COVID-19 when it filed for Chapter 11 bankruptcy protection in May.
With nonessential travel all but canceled in the earlier months of
the pandemic, Hertz has been struggling with a lack of revenue.
As it navigates bankruptcy proceedings, Hertz will move on to its
third CFO in just a few months, as it was announced R. Eric Esper
would leave the post Nov. 1, 2020 after taking over just in August.
The company was blocked from selling stock amid its bankruptcy and
it is currently seeking a loan of up to $1.5 billion.
12. Chesapeake Energy
Industry: Energy
Oil and gas company Chesapeake Energy filed for bankruptcy in June
2020 after losing over $8 billion in the first quarter of 2020,
adding to an already substantial debt load. The global oil industry
was devastated by a price war between Russia and Saudi Arabia and a
historic plunge in oil prices stemming from a lack of demand during
the global lockdowns in the earlier months of the pandemic. In
April 2020, the price of West Texas Intermediate oil futures set
for May 2020 fell below zero for the first time. While prices have
rebounded, they remain low, hovering under $40 per barrel through
September. Prices had been above $50 a barrel throughout 2019.
13. Lord & Taylor
Industry: Retail
While many companies use their time in bankruptcy protection as an
opportunity to lower debt and streamline operations, Lord & Taylor
has shut down for good. Lord & Taylor announced in August 2020,
just a few weeks after filing for bankruptcy protection, that all
of its remaining stores would permanently close. Lord & Taylor,
which opened in 1826, was considered the oldest department store in
the country. The store was struggling with the same issues many
department stores were facing even before the pandemic,
experiencing declining revenue and lower foot traffic as online
shopping became more common.
14. Pier 1 Imports
Industry: Retail
Home-decor retailer Pier 1 Imports was struggling already before
the coronavirus pandemic. The company filed for bankruptcy in
February 2020 and planned to close about half of its stores. Pier 1
began liquidation sales in May, but the brand may live on as an
e-commerce destination. The company was purchased by Retail
Ecommerce Ventures in July 2020 and debuted a new online
marketplace in August 2020.
15. Advantage Rent A Car
Industry: Car rental
After leisure and business travel ground to a halt in the earlier
months of the pandemic, car rental companies were left with lots
full of cars but no one to drive them. Advantage Rent A Car filed
for bankruptcy on May 26, 2020 just a few days after car rental
competitor Hertz. Advantage had also filed for bankruptcy
protection in 2008 and 2013. The company is reportedly struggling
with a debt load of around $500 million. In July 2020, it sold 10
airport locations in places like New York, Boston, Houston, and Las
Vegas to German rental company Sixt.
[*] House Judiciary Advances Bill That Limits Ch. 11 Exec. Bonuses
------------------------------------------------------------------
Law360 reports that the House Judiciary Committee advanced a
Democrat-backed bill to the full chamber Tuesday that would limit
the bonuses doled out to senior executives of companies in Chapter
11 while improving protections for the benefits of rank-and-file
workers in bankruptcy, a measure touted as a necessary remedy for
inequalities in the restructuring process.
Democrats on the committee said that H. R. 7370 -- or the
Protecting Employees and Retirees in Business Bankruptcies Act of
2020 -- is a much-needed fix for the challenges faced by workers
whose employers have sought protection under Chapter 11 of the
bankruptcy code.
[*] Retail Closures and Bankruptcy Filings in DC Area in 2020
-------------------------------------------------------------
Jacqueline Tynes of Washingtonian reports that numerous retailers
have closed down and filed bankruptcy protection in DC area in
2020.
DC-area retailers have struggled since early March 2020, when many
were forced to close their doors to help prevent the spread of
coronavirus. But many have had to close for good even as
jurisdictions around the area have have reopened.
Here's a list of retail closures in 2020.
* Buffalo Exchange
The vintage and used-clothing store that's been open since 2012
announced in early September 2020 that it would close its 14th
Street location, citing the impact of Covid-19.
* Brooks Brothers
The retailer, which filed for bankruptcy in July 2020, closed its
Georgetown location temporarily in March 2020, and now lists the
location as permanently closed on its website.
*Cherub Antiques Gallery
After 36 years, this Georgetown antique gallery closed its showroom
in 2020. It's since moved its collection online, offering fine
barware, Art Deco objects, pottery, and more.
* J. Crew
The Men's Shop: J. Crew filed for bankruptcy in early May. J.
Crew's Logan Circle menswear storefront closed on August 20, 2020.
* Jos. A. Bank
Parent company Tailored Brands, which also owns Men's Wearhouse,
filed for Chapter 11 bankruptcy this summer of 2020. Its Union
Station storefront is still listed as "temporarily closed" on Union
Station's website, but recent customers waiting on their orders
have said the closure is permanent.
* Lord & Taylor
The venerable retailer announced this summer of 2020 that it would
close all its stores, including the Friendship Heights location.
* Modell's Sporting Goods
The century-old sporting goods company closed all its stores in
2020 after filing for bankruptcy.
* Neiman Marcus
The chain, which declared bankruptcy in May 2020, announced last
April 2020 that its Mazza Gallerie location would close.
* Old School Hardware
The decade-old hardware store in Mount Pleasant announced this
spring of 2020 that it would close.
* Sylene
The Chevy Chase designer lingerie store announced in September 2020
that it would close after 45 years in business.
* The Neighborgoods
Shaw's go-to for home goodies and gift sets announced this fall
that it would close its storefront. Owner Jodi Kostelnik says the
store will still sell online.
[*] Stone Point Escapes Antitrust Bankruptcy Fee Claims
-------------------------------------------------------
Mike Leonard of Bloomberg Law reports that Stone Point Capital LLC
dodged claims in Connecticut federal court that it led a
subsidiary's scheme to gouge bankruptcy estates on support services
by altering the industry's traditional fee model after the 2008
financial crisis.
The lawsuit's core claims were doomed by the rule barring antitrust
damages for "indirect purchasers," like debtors that stand
economically "downstream" from their bankruptcy estates, Judge
Janet Bond Arterton said.
"Any injury caused by the price-fixing conspiracy would have first
harmed the estate and thereby reduced the funds available to
creditors," Arterton wrote. "Only after creditors were paid could
the debtor have received any residue."
[^] BOND PRICING: For the Week from Sept. 28 to Oct. 2, 2020
------------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
24 Hour Fitness Worldwide HRFITW 8.000 0.250 6/1/2022
24 Hour Fitness Worldwide HRFITW 8.000 1.259 6/1/2022
AMC Entertainment Holdings AMC 5.750 22.367 6/15/2025
AMC Entertainment Holdings AMC 6.125 22.904 5/15/2027
AMC Entertainment Holdings AMC 5.875 21.157 11/15/2026
Acorda Therapeutics ACOR 1.750 78.504 6/15/2021
American Airlines 2013-1
Class B Pass
Through Trust AAL 5.625 91.050 1/15/2021
American Energy- Permian
Basin LLC AMEPER 12.000 1.616 10/1/2024
American Energy- Permian
Basin LLC AMEPER 12.000 1.616 10/1/2024
American Energy- Permian
Basin LLC AMEPER 12.000 1.616 10/1/2024
BPZ Resources BPZR 6.500 3.017 3/1/2049
Basic Energy Services BASX 10.750 20.530 10/15/2023
Basic Energy Services BASX 10.750 19.762 10/15/2023
Bristow Group Inc/old BRS 6.250 6.125 10/15/2022
Bristow Group Inc/old BRS 4.500 6.125 6/1/2023
Buffalo Thunder
Development Authority BUFLO 11.000 50.125 12/9/2022
CBL & Associates LP CBL 5.250 38.500 12/1/2023
CEC Entertainment CEC 8.000 7.220 2/15/2022
Calfrac Holdings LP CFWCN 8.500 10.073 6/15/2026
Calfrac Holdings LP CFWCN 8.500 10.046 6/15/2026
California Resources Corp CRC 8.000 1.250 12/15/2022
California Resources Corp CRC 6.000 1.500 11/15/2024
California Resources Corp CRC 8.000 1.745 12/15/2022
California Resources Corp CRC 6.000 1.858 11/15/2024
Callon Petroleum Co CPE 6.250 43.633 4/15/2023
Callon Petroleum Co CPE 6.125 34.321 10/1/2024
Callon Petroleum Co CPE 6.375 27.710 7/1/2026
Callon Petroleum Co CPE 8.250 30.912 7/15/2025
Chaparral Energy CHAP 8.750 1.000 7/15/2023
Chaparral Energy CHAP 8.750 3.574 7/15/2023
Chesapeake Energy Corp CHK 11.500 13.938 1/1/2025
Chesapeake Energy Corp CHK 5.500 3.260 9/15/2026
Chesapeake Energy Corp CHK 11.500 15.000 1/1/2025
Chesapeake Energy Corp CHK 7.000 3.750 10/1/2024
Chesapeake Energy Corp CHK 6.625 3.500 8/15/2020
Chesapeake Energy Corp CHK 4.875 3.500 4/15/2022
Chesapeake Energy Corp CHK 5.750 4.000 3/15/2023
Chesapeake Energy Corp CHK 8.000 3.750 6/15/2027
Chesapeake Energy Corp CHK 8.000 3.750 1/15/2025
Chesapeake Energy Corp CHK 7.500 4.000 10/1/2026
Chesapeake Energy Corp CHK 8.000 3.637 3/15/2026
Chesapeake Energy Corp CHK 8.000 3.599 1/15/2025
Chesapeake Energy Corp CHK 8.000 3.637 3/15/2026
Chesapeake Energy Corp CHK 8.000 3.562 6/15/2027
Chesapeake Energy Corp CHK 8.000 3.562 6/15/2027
Chesapeake Energy Corp CHK 8.000 3.637 3/15/2026
Chesapeake Energy Corp CHK 8.000 3.599 1/15/2025
Chinos Holdings CNOHLD 7.000 0.332 N/A
Chinos Holdings CNOHLD 7.000 0.332 N/A
Chukchansi Economic
Development Authority CHUKCH 9.750 20.000 5/30/2020
Chukchansi Economic
Development Authority CHUKCH 10.250 20.000 5/30/2020
Coca-Cola Co/The KO 2.200 102.481 5/25/2022
Continental Airlines 2000-1
Class A-1 Pass
Through Trust UAL 8.048 94.840 11/1/2020
Continental Airlines 2000-1
Class B Pass
Through Trust UAL 8.388 94.364 11/1/2020
Continental Airlines 2012-2
Class B Pass
Through Trust UAL 5.500 97.579 10/29/2020
Dean Foods Co DF 6.500 1.300 3/15/2023
Dean Foods Co DF 6.500 1.719 3/15/2023
Diamond Offshore Drilling DOFSQ 7.875 9.625 8/15/2025
Diamond Offshore Drilling DOFSQ 5.700 10.000 10/15/2039
Diamond Offshore Drilling DOFSQ 4.875 9.625 11/1/2043
Diamond Offshore Drilling DOFSQ 3.450 10.125 11/1/2023
ENSCO International VAL 7.200 11.500 11/15/2027
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 9.375 0.001 5/1/2024
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 8.000 0.428 2/15/2025
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 9.375 0.029 5/1/2024
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 8.000 0.428 2/15/2025
EnLink Midstream Partners LP ENLK 6.000 43.500 N/A
Endologix ELGX 3.250 93.875 11/1/2020
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 1.034 0.072 1/30/2037
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 30.690 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 30.265 7/15/2023
Extraction Oil & Gas XOG 7.375 26.500 5/15/2024
Extraction Oil & Gas XOG 5.625 25.000 2/1/2026
Extraction Oil & Gas XOG 7.375 25.691 5/15/2024
Extraction Oil & Gas XOG 5.625 22.400 2/1/2026
FTS International FTSINT 6.250 34.375 5/1/2022
Federal Home Loan Banks FHLB 1.990 99.842 4/6/2035
Federal Home Loan Banks FHLB 3.050 99.523 10/7/2044
Federal Home Loan
Mortgage Corp FHLMC 1.020 99.205 4/8/2025
Federal Home Loan
Mortgage Corp FHLMC 0.450 99.786 4/6/2023
Ferrellgas Partners LP /
Ferrellgas Partners
Finance Corp FGP 8.625 21.125 6/15/2020
Ferrellgas Partners LP /
Ferrellgas Partners
Finance Corp FGP 8.625 20.000 6/15/2020
Fleetwood Enterprises FLTW 14.000 3.557 12/15/2011
Foresight Energy LLC /
Foresight Energy
Finance Corp FELP 11.500 0.469 4/1/2023
Foresight Energy LLC /
Foresight Energy
Finance Corp FELP 11.500 0.469 4/1/2023
Frontier Communications FTR 10.500 42.500 9/15/2022
Frontier Communications FTR 7.125 39.000 1/15/2023
Frontier Communications FTR 7.625 40.000 4/15/2024
Frontier Communications FTR 8.750 39.500 4/15/2022
Frontier Communications FTR 9.250 37.000 7/1/2021
Frontier Communications FTR 6.250 39.250 9/15/2021
Frontier Communications FTR 10.500 42.034 9/15/2022
Frontier Communications FTR 10.500 42.034 9/15/2022
GNC Holdings GNC 1.500 1.375 8/15/2020
General Electric Co GE 5.000 80.125 N/A
Global Marine GLBMRN 7.000 16.998 6/1/2028
Goodman Networks GOODNT 8.000 43.000 5/11/2022
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 58.001 9/30/2021
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 57.946 9/30/2021
Grizzly Energy LLC VNR 9.000 6.000 2/15/2024
Grizzly Energy LLC VNR 9.000 6.000 2/15/2024
Hertz Corp/The HTZ 6.250 42.017 10/15/2022
Hi-Crush HCR 9.500 5.979 8/1/2026
Hi-Crush HCR 9.500 7.180 8/1/2026
High Ridge Brands Co HIRIDG 8.875 3.500 3/15/2025
High Ridge Brands Co HIRIDG 8.875 3.000 3/15/2025
HighPoint Operating Corp HPR 7.000 24.323 10/15/2022
HighPoint Operating Corp HPR 8.750 25.320 6/15/2025
ION Geophysical Corp IO 9.125 72.664 12/15/2021
ION Geophysical Corp IO 9.125 70.937 12/15/2021
ION Geophysical Corp IO 9.125 70.937 12/15/2021
ION Geophysical Corp IO 9.125 70.937 12/15/2021
International Wire Group ITWG 10.750 89.250 8/1/2021
International Wire Group ITWG 10.750 88.750 8/1/2021
J Crew Brand LLC /
J Crew Brand Corp JCREWB 13.000 54.544 9/15/2021
JC Penney Corp JCP 5.875 30.625 7/1/2023
JC Penney Corp JCP 7.400 0.730 4/1/2037
JC Penney Corp JCP 6.375 0.650 10/15/2036
JC Penney Corp JCP 7.625 0.430 3/1/2097
JC Penney Corp JCP 8.625 2.250 3/15/2025
JC Penney Corp JCP 5.875 30.936 7/1/2023
JC Penney Corp JCP 8.625 2.500 3/15/2025
JC Penney Corp JCP 6.900 0.196 8/15/2026
JCK Legacy Co MNIQQ 6.875 0.621 3/15/2029
JCK Legacy Co MNIQQ 6.875 9.995 7/15/2031
JCK Legacy Co MNIQQ 7.150 1.676 11/1/2027
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 11.125 10/15/2025
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 10.365 10/15/2025
K Hovnanian Enterprises HOV 5.000 10.771 2/1/2040
K Hovnanian Enterprises HOV 5.000 10.771 2/1/2040
LSC Communications LKSD 8.750 15.500 10/15/2023
LSC Communications LKSD 8.750 15.088 10/15/2023
Lexicon Pharmaceuticals LXRX 5.250 78.700 12/1/2021
Liberty Media Corp LMCA 2.250 47.250 9/30/2046
Lonestar Resources America LONE 11.250 14.694 1/1/2023
Lonestar Resources America LONE 11.250 15.721 1/1/2023
MAI Holdings MAIHLD 9.500 16.178 6/1/2023
MAI Holdings MAIHLD 9.500 16.178 6/1/2023
MAI Holdings MAIHLD 9.500 16.178 6/1/2023
MBIA Insurance Corp MBI 11.535 26.631 1/15/2033
MBIA Insurance Corp MBI 11.535 26.631 1/15/2033
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
Mashantucket Western
Pequot Tribe MASHTU 7.350 16.000 7/1/2026
Men's Wearhouse Inc/The TLRD 7.000 2.000 7/1/2022
Men's Wearhouse Inc/The TLRD 7.000 1.516 7/1/2022
NWH Escrow Corp HARDWD 7.500 41.625 8/1/2021
NWH Escrow Corp HARDWD 7.500 41.625 8/1/2021
Nabors Industries NBR 5.750 32.443 2/1/2025
Nabors Industries NBR 0.750 26.750 1/15/2024
Nabors Industries NBR 5.750 32.425 2/1/2025
Nabors Industries NBR 5.750 32.408 2/1/2025
Neiman Marcus Group LLC/The NMG 7.125 4.187 6/1/2028
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.750 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 5.153 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.747 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 5.153 10/25/2024
Neiman Marcus Group Ltd LLC NMG 8.000 58.750 10/15/2021
Neiman Marcus Group Ltd LLC NMG 8.750 53.625 10/15/2021
Neiman Marcus Group Ltd LLC NMG 8.000 58.750 10/15/2021
Neiman Marcus Group Ltd LLC NMG 8.750 53.625 10/15/2021
Nine Energy Service NINE 8.750 29.985 11/1/2023
Nine Energy Service NINE 8.750 29.713 11/1/2023
Nine Energy Service NINE 8.750 30.147 11/1/2023
Northwest Hardwoods HARDWD 7.500 35.750 8/1/2021
Northwest Hardwoods HARDWD 7.500 35.250 8/1/2021
OMX Timber Finance
Investments II LLC OMX 5.540 0.573 1/29/2020
Oasis Petroleum OAS 6.875 23.375 3/15/2022
Oasis Petroleum OAS 6.875 23.000 1/15/2023
Oasis Petroleum OAS 6.250 23.202 5/1/2026
Oasis Petroleum OAS 2.625 23.000 9/15/2023
Oasis Petroleum OAS 6.500 22.226 11/1/2021
Oasis Petroleum OAS 6.250 24.500 5/1/2026
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 65.250 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 64.976 6/1/2021
Party City Holdings PRTY 6.125 24.750 8/15/2023
Party City Holdings PRTY 6.125 36.582 8/15/2023
Peabody Energy Corp BTU 6.000 50.317 3/31/2022
Peabody Energy Corp BTU 6.000 49.956 3/31/2022
Pride International LLC VAL 6.875 7.570 8/15/2020
Pride International LLC VAL 7.875 10.125 8/15/2040
Renco Metals RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 5.750 34.668 2/15/2021
Revlon Consumer Products REV 6.250 14.572 8/1/2024
Rolta LLC RLTAIN 10.750 4.458 5/16/2018
SESI LLC SPN 7.750 28.030 9/15/2024
SESI LLC SPN 7.125 28.663 12/15/2021
SESI LLC SPN 7.125 30.250 12/15/2021
SanDisk LLC SNDK 0.500 95.516 10/15/2020
SandRidge Energy SD 7.500 0.500 2/15/2023
Sears Holdings Corp SHLD 6.625 4.124 10/15/2018
Sears Holdings Corp SHLD 6.625 4.124 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 0.835 10/15/2027
Sears Roebuck Acceptance SHLD 6.500 0.740 12/1/2028
Sears Roebuck Acceptance SHLD 7.000 0.547 6/1/2032
Sears Roebuck Acceptance SHLD 6.750 0.495 1/15/2028
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
Senseonics Holdings SENS 5.250 45.750 2/1/2023
Summit Midstream Partners LP SMLP 9.500 14.000 N/A
TerraVia Holdings TVIA 5.000 4.644 10/1/2019
Tesla Energy Operations TSLAEN 3.600 94.441 11/5/2020
Tilray TLRY 5.000 41.000 10/1/2023
Transworld Systems TSIACQ 9.500 27.000 8/15/2021
Ultra Resources Inc/US UPL 11.000 5.750 7/12/2024
Voyager Aviation
Holdings LLC / Voyager
Finance Co VAHLLC 8.500 49.760 8/15/2021
Voyager Aviation
Holdings LLC / Voyager
Finance Co VAHLLC 8.500 50.819 8/15/2021
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***